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Rayala Corporation (P.) Ltd. Vs. the Facit Asia and Rayala Corporation Employees' Union and Ors. (16.11.1971 - MADHC) - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtChennai High Court
Decided On
Judge
Reported in(1972)IILLJ389Mad
AppellantRayala Corporation (P.) Ltd.
RespondentThe Facit Asia and Rayala Corporation Employees' Union and Ors.
Cases Referred and Utkal Machinery Ltd. v. Santi Patnaik
Excerpt:
.....will execute all kinds of civil, mechanical, building, draughtsmanship-drawings, and tracing work diligently to the best of his power and skill and will carry out his duties and obligations at such place or places from time to time as the company of their representative direct. , as he then was, speaking for the court observed at page 670: ft is well-settled that industrial adjudication under the provisions of the industrial disputes act 14 of 1947 is given wide powers and jurisdiction to make appropriate awards in determining industrial disputes brought before it. it is always open to industrial adjudication to consider the conditions of employment of labour and to vary them if it is found necessary, unless the employer can justify an extraordinary condition like this by reasons..........to the trainees only by the factory manager. he also admits that the trainees after doing drawing work worked in other departments also.6. the question to be considered in the light of the foregoing evidence is whether the second respondent was employed in a supervisory capacity within the meaning of section 2(s)(iv) of the act. on behalf of the petitioner-company reliance was placed on the decision of the supreme court in b.s.o.s. & co. v. management staff association : (1970)iillj590sc , in which one of the questions considered was whether a district engineer whose status was in controversy was a workman or not. on the evidence it was found that his duties consisted of assessing suitability of sites for depots from the point of view of technical and engineering aspects, suggesting lay.....
Judgment:
ORDER

Palaniswamy, J.

1. On a reference under Section 10 of the Industrial Disputes Act by the State Government, the Labour Court, Madras, held that the non-employment of Cherian Mathew, the second respondent, whose case has been espoused by the Facit Asia and Rayala Corporation Employees' Union, the first respondent, was not justified. This petition by the management is directed against that award. The relevant facts are these. The petitioner-company is engaged in the manufacture of Halda typewriters. The second respondent has acquired qualification in drawing. On 13th March, 1963, an agreement was. entered into between the petitioner-company and the second respondent whereby the second respondent agreed to serve the company for a period of five years from 1-4-1963 on certain terms which would be presently adverted to in detail. The second respondent was designated as drawing office chief. The term of five years expired by 1-4-1968. By a communication, dated 9th March, 1968, the petitioner-company informed the second respondent saying that the contract of service stood terminated with effect from 31-3-1968, that the company was not desirous of extending the contract of service or renewing the contract and that the second respondent may contact the accounts department and collect the amounts due to him under the terms of the agreement. The second respondent did not act up to that letter. Thereupon, the company sent a cheque for Rs. 2701.55 to the second respondent saying that it was being paid in full and final settlement of his claims against the company. Thereafter, the second respondent was not given any work. The matter was taken up by the first respondent-union and it was under those circumstances that the Government made a reference to decide the question of non-employment of the second respondent.

2. Before the Labour Court, the first respondent filed a claim statement contending that the petitioner-company was in the habit of victimising the union workers, that the termination of the service of the second respondent was unlawful and was an act of victimisation because of the second respondent becoming a member of the union in spite of the warning given to him by the company. The management filed a counter-statement, contending that the contract stood terminated by efflux of time on 31-3-1968, that the second respondent was not a workman within the meaning of the Industrial Disputes Act, that the company had abolished and closed down several departments including outside jobs and manufacture of tools and consequently, there was no work in the drawing office and that moreover the contract of the second respondent also came to an end. The allegations of victimisation were denied.

3. Before the Labour Court the second respondent gave evidence as W.W. 1 and examined two witnesses. On the side of the petitioner-company two witnesses were examined. The Labour Court on a consideration of the evidence found that the agreement did not provide for the termination of service of the second respondent on the expiry of five years, that the agreement merely stipulated a condition that the second respondent should serve for a minimum period of five years, that it was not open to the petitioner-company to terminate the service of the second respondent on the expiry of five years, that the petitioner-company was guilty of arbitrary exercise of power of termination of the contract in violation of the standing orders, that the termination of the service was not bona fide and was against principles of natural justice. The Labour Court did not record a specific finding on the contention of the second respondent that the termination of the service was a measure of victimisation. In the result, the Labour Court held that the non-employment was not justified and that the second respondent was entitled to back wages.

4. On behalf of the petitioner-company two contentions were urged before me, firstly, that the second respondent was not a workman within the meaning of Section 2(s) of the Industrial Disputes Act and secondly that the contract between the petitioner-company and the second respondent was not that the second respondent should serve a minimum period of five years, that the contract was only for a period of five years on the expiry of which the contract automatically came to an end, and that as a matter of fact there was no termination of the service of the second respondent by the petitioner-company. It was, therefore, contended that the conclusion of the Labour Court is erroneous.

5. The contention that the second respondent was not a workman cannot be accepted. To find out whether the second respondent was a workman within the meaning of the Act, it is necessary to advert to the agreement which specifies the duties enjoined on him and also to the evidence on this aspect. On this aspect the agreement merely says that the second respondent will execute all kinds of civil, mechanical, building, draughtsmanship-drawings, and tracing work diligently to the best of his power and skill and will carry out his duties and obligations at such place or places from time to time as the company of their representative direct. It is also provided that in other respects the second respondent stated that he merely carried out the work allotted to him by the engineer, and that there was no other person working in the section, when he joined the service. He also stated that for few months three trainees worked with him. It was contended on behalf of the petitioner that the second respondent was exercising supervisory control over the work of those trainees and that on that account (sic) the second respondent in the course of his cross-examination do not support that contention. The trainees merely used to work for some time under the second respondent and to go away to work in other departments during other hours, It is not elicited from him that he was exercising any sort of control over those trainees, nor does it appear that he had the power to take any action against the trainees or power to grant them leave. Shantharam, M.W. 1, was one of those trainees. He stated in his chief examination that he used to do drawing work under the instructions of the second respondent and that the second respondent checked his work. He further stated that the other two trainees named Jagannathan and Subramanian were also working in the same way. But in cross-examination he admits that after working with the second respondent for some time, he used to go to other sections for the purpose of getting training in those sections. He says that he does not know who granted leave to him. He and the other two trainees worked under the second respondent only for about two or three months. He further admits that apart from the three trainees including himself, no other person worked under the second respondent. The factory engineer in the petitioner-company M.W. 2 stated in his chief-examination that the second respondent was to assign work to the draftsman assigned to him and supervise and check the drawings. But in cross-examination he admits that leave was granted to the trainees only by the factory manager. He also admits that the trainees after doing drawing work worked in other departments also.

6. The question to be considered in the light of the foregoing evidence is whether the second respondent was employed in a supervisory capacity within the meaning of Section 2(s)(iv) of the Act. On behalf of the petitioner-company reliance was placed on the decision of the Supreme Court in B.S.O.S. & Co. v. Management Staff Association : (1970)IILLJ590SC , in which one of the questions considered was whether a District Engineer whose status was in controversy was a workman or not. On the evidence it was found that his duties consisted of assessing suitability of sites for depots from the point of view of technical and engineering aspects, suggesting lay out for construction of depots of service stations, seeing that the estimates prepared by the draughtsmen were correct from the technical point of view, scrutinising tenders for construction work given to the contractor, certifying bills submitted by contractors for the work done by them and preparing estimates for maintenance work in respect of depots. In substance it was found that the principal work for which the engineer was employed was one of supervision, inasmuch as he was required to supervise the work done by others instead of doing the work by himself. It was held that even though he had to use his technical knowledge for the purpose of properly carrying on supervision, it cannot be held that he was employed to do technical work and that as he was drawing in excess of Rs. 500 per month, he cannot be held to be a workman. This decision on which reliance was placed on behalf of the petitioner is, on facts, not applicable to the facts of the instant case. The evidence on record so far as this case is concerned does not show that the second respondent had to do any supervisory work. The short period of three months during which three trainees worked under him partly is the only circumstance upon which reliance is placed to show that the second respondent was serving in a supervisory capacity. The evidence shows that even during that time he had no control on those trainees who worked with him. Thus, on the evidence it cannot be said that the second respondent was employed in a supervisory capacity, though he was drawing more than Rs. 500 per month. He was doing the the work assigned to him by the engineer without any supervisory work. Therefore, the Labour Court was right in its conclusion that the second respondent was a workman.

7. The second contention urged on behalf of the petitioner is that under the terms of the contract the service of the second respondent stood terminated automatically by efflux of period of five years stipulated in the agreement. It is therefore, contended that this is not a case of termination of the contract of service by the management, but one of expiry of the term of the contract according to its terms. The agreement is in a simple form consisting of 10 paragraphs. The first paragraph is in the nature of a preamble setting out the description of the two parties to the agreement. In paragraph 2 it is stated that the company has decided to have the services of essential employees on a long term contract for the mutual benefit and in pursuance of the same had discussions with the second respondent and that the parties agreed to the terms contained therein. It is provided in paragraph 3 that the second respondent should in the first instance be on probation for a period of three months and that subject to his being found satisfactory, he would be confirmed. The company also reserved their right to extend the period of probation by another three months. Paragraph 4 which is important reads thus:

The drawing office chief undertakes to serve the company for a period of five years certain from 1-4-1963 and shall be started on a basic salary of Rs. 430 per month plus Factory D.A. The drawing office chief will be entitled to an increment of Rs. 30 per year, but the increment will take effect only from the date of confirmation.

Paragraph 5 gives the details of the work which the second respondent should carry out. It is stipulated in paragraph 6 that in all other matters not specifically dealt with under the agreement the second respondent will be governed by the company's standing orders. Paragraph 7 provides that if the second respondent should leave the services of the company during the period of contract of his own accord or resile from the agreement or the company is forced to terminate the service of the second respondent for any misconduct under the company's standing orders the company is entitled to terminate the contract and claim and recover from the second respondent 12 months' salary including factory clearness allowance as liquidated damages for each year of service not rendered under this contract and pro rata if the period of service to be rendered is less than one year. In paragraph 8 it is stipulated that the company shall not terminate theservice of the second respondent under the contract. Paragraph 9 imposes restriction upon the second respondent against working in another company or any other place unless authorised by the company. It is provided in paragraph 10 that the second respondent will faithfully observe and carry out all the terms and conditions of the agreement.

8. It is contended on behalf of the petitioner-company that as per the above terms of the contract it should be held that the agreement provided only a period of five years on the expiry of which the contract automatically came to an end without any right in favour of the second respondent to insist upon either renewal or continuance of service. The Labour Court has taken the view that the agreement merely provides for a minimum period of five years during which the second respondent should serve and that the agreement does not entitle the company to ask the second respondent to stop away merely on the expiry of the period of five years. In other words the conclusion of the Labour Court is that except that the second respondent should serve for the minimum period of five years, the agreement entitles him to continue in service subject to the standing orders, providing for age of retirement, etc. Though on first impression the argument of the petitioner-company that the contract is only for the period of five years may appear plausible, a careful examination of all the relevant provisions contained in the agreement shows that the agreement though it provides for the minimum period of five years does not automatically come to an end on the expiry of the period of five years. It is important to remember in this connection that there is no clause in the agreement providing that the contract comes to an end on the expiry of five years. The agreement provides for a period of probation which is normally not required in the case of a contract for a fixed term. The contract further provides a basic salary plus increment per year. It is provided that the increment will take effect from the date of confirmation. These are circumstances which negative the theory that the contract was only for a fixed term of five years. The fact that on the expiry of five years, there is nothing to prevent the second respondent from asking to be relieved is not a ground to hold that on the expiry of five years the agreement comes to an end. As the agreement itself shows the parties entered into a long term contract for the mutual benefit, with a view to provide that the second respondent should at least serve for a minimum period. The parties made stipulations as regards that aspect with the consequence in case of breach of that part of the contract by the second respondent. Thus, on an examination of all provisions of the agreement, I am of the view that the contract cannot be said to have come to an end automatically on the expiry of the period of five years.

9. The above is a reasonable view to take having regard to the terms of the contract. Even if it is conceded for the sake of argument that the view pressed for on behalf of the petitioner-company is also possible, the question is whether the Labour Court was in error in holding that the agreement did not come to an end by mere efflux of time. This Court in exercise of jurisdiction under Article 226 of the Constitution would not be justified in interfering with this finding of the Labour Court even if the view pressed for on behalf of the petitioner ;s more plausible under the circumstances. In deciding industrial disputes the jurisdiction of the Tribunal is not confined to the administration of justice in accordance with law. Mukherjee, J., as he then was1, has observed in Bharat Bank Ltd., Delhi v. Employees of the Bharat Bank Ltd., Delhi 1950 II L.L.T. 921, that the Tribunal 'can confer rights and privileges on either party which it considers reasonable and proper, though they may not be within the terms of any existing agreement. It has not merely to interpret or pive effect to the contractual rights and obligations between them which it considers essential for keeping industrial peace'.

This view was reiterated by the Supreme Court in Bidi, Bidi Leaves and Tobacco MerchantsAssocn. v. State of Bombay : (1961)IILLJ663SC . Gajendragadkar, J., as he then was, speaking for the Court observed at page 670:

ft is well-settled that industrial adjudication under the provisions of the Industrial Disputes Act 14 of 1947 is given wide powers and jurisdiction to make appropriate awards in determining industrial disputes brought before it. An award made in an industrial adjudication may impose new obligations on the employer in the interest of social justice and with a view to secure peace and harmony between the employer and his workmen and full co-operation between them. Such an award may even alter the terms of employment if it is thought fit and necessary to do so.

10. Industrial adjudication may involve the extension of an existing agreement or the making of a new one or in general the creation of new obligation and modifications of old ones. This position of law has been affirmed by the Supreme Court in Bombay Labour Union v. International Franchises Ltd. : (1966)ILLJ417SC , Wanchoo, J., as he then was, observed ;

It is too late in the day now to stress the absolute freedom of an employer to impose any condition which he likes on labour. It is always open to industrial adjudication to consider the conditions of employment of labour and to vary them if it is found necessary, unless the employer can justify an extraordinary condition like this by reasons which carry conviction.

11. In the instant case the contention of the second respondent, whose cause was espoused by the first respondent-union, was that the company was in the habit of employing such persons as the second respondent and terminating the services on the expiry of the term fixed in the agreement and employing new hands in the same post. The second respondent stated in his evidence that his predecessor's services were also terminated as in his case on the plea that there was no work and that thereafter he was appointed. This part of his evidence was not challenged in the cross-examination, nor was it controverted by the two witnesses examined on the side of the management. The management stated in its counter-statement before the Labour Court that the company had abolished and closed down several departments including outside jobs and manufacture of tools and that consequently there was no work in the drawing office. By these allegations the management wanted to imply evidently that the services of the second respondent were no longer required. To controvert that position, the second respondent said in his evidence that after his services were terminated, the work which he was attending to was being attended to by one Subramanian. He also stated that there was enough work for him and that even after the termination of his services, the same volume of work continued. There is no contra-evidence on this aspect. Thus, on the facts as established by the evidence it is reasonable to conclude that even though the work for which the second respondent was appointed continued, his services were terminated merely on the ground that the period of five years under the agreement expired. The Labour Court on a consideration of this aspect was of the view that the termination was not bona fide. In the notice issued to the second respondent by the management, the reason now given, namely, that there were closure of departments and consequent want of work was not mentioned. The notice merely stated that the contract of service stood terminated as per the terms of the agreement with effect from 31-3-1968. On a consideration of the evidence, the Labour Court found that this was not a bona fide act on the part of the management. Even if it is conceded for the sake of argument that acting under the terms of the agreement the petitioner was entitled to say that the contract of service stood terminated on the expiry of five years, still it was open to the Labour Court to examine the question whether the said Act on the part of the petitioner-company was bona fide or not. If the termination of service is colourable exercise of the power, it is open to the Labour Court to intervene and set aside the termination. The form of the order in such a case is not conclusive. The Tribunal can go behind the order to find out the reasons which led to the order and then consider for itself, whether the termination was a colourable exercise of the power or was a result of victimisation or unfair labour practice. If the Labour Court comes to the conclusion that the termination was a colourable exercise of the power or was a result of victimisation or unfair labour practice it would have the jurisdiction to intervene and set aside such termination : vide Assam Oil Co. v. Its Workmen : (1960)ILLJ587SC , Murugan Mills Ltd. v. Industrial Tribunal, Madras : (1965)ILLJ422SC , and Utkal Machinery Ltd. v. Santi Patnaik : (1966)ILLJ398SC .

12. For the foregoing reasons, the finding of the Labour Court that the action of the management was not bona fide cannot be said to be erroneous. Apart from the foregoing two contentions no other point was urged on behalf of the petitioner.

13. The petition fails and is dismissed. There will be no order as to costs.


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