Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1967 Supreme(SC) 2

SUPREME COURT OF INDIA
M. HIDAYATULLAH, V. BHARGAVA AND G.K. MITTER, JJ.
M/s. National Iron and Steel Co. Ltd., and others, Appellants
Versus
The State of W.B. and another, Respondents.
Civil Appeal No. 497 of 1965,
D/- 17-1-1967.
Advocates appeared
Mr. Niren De, Addl. Solicitor-General of India, (M/s. Arun Bahadur and Sardar Bahadur, Advocates, with him), for Appellants; M/s. Janardan Sharma and P. K. Ghosh. Advocates, for Respondent No. 2 (1).

Advocates:
ARUN BAHADUR, JANARDAN SHARMA, NIREN DEY, P.K.GHOSH, SARDAR BAHADUR SAHARYA

Industrial adjudication should not encourage the employment of contract labour, and the abolition of such labour can be ordered by an Industrial Tribunal if justified by the facts.

Headnote:
INDUSTRIAL DISPUTES - Reference - Validity - Separate references for different issues - Functional integrality between employers - Commonality of interests - Scheme for gratuity - Financial position of employer - Retrenchment - Compliance with S. 25F of the Industrial Disputes Act - Abolition of contract labour - Discrimination.
Fact of the Case:

Four public limited companies, National Iron and Steel Co. Ltd., Britannia Building and Iron Co. Ltd., National Screw and Wire Products Ltd., and Tatanagar Foundry Co. Ltd., were engaged in different engineering businesses in the same premises. A reference was made under S. 10 of the Industrial Disputes Act, 1947, for adjudication of nine issues, including gratuity, sickness benefit, leave rules, abolition of contract labour, and retrenchment of a workman. The companies challenged the validity of the reference, the scheme for gratuity, the retrenchment of the workman, and the abolition of contract labour.
Finding of the Court:

The Court held that the reference was valid as there was sufficient functional integrality between the companies to justify one order of reference. The scheme for gratuity was reasonable and justified based on the financial position and profit-making capacity of the National Iron and Steel Co. Ltd. The retrenchment of the workman was illegal as it did not comply with S. 25F of the Industrial Disputes Act. The abolition of contract labour was justified as it was not discriminatory and was in line with the principle of discouraging the employment of contract labour.
Issues: 1. Validity of the reference for adjudication of multiple issues involving different companies. 2. Reasonableness of the scheme for gratuity considering the financial position of the employer. 3. Legality of the retrenchment of a workman in compliance with S. 25F of the Industrial Disputes Act. 4. Justification for the abolition of contract labour and potential discrimination among similar businesses.
Ratio Decidendi: 1. Functional integrality between employers, commonality of interests, and the need for industrial peace and harmony justified a single reference for adjudication of multiple issues involving different companies. 2. The financial position and profit-making capacity of the employer are crucial factors in determining the terms of a gratuity scheme. 3. Strict compliance with S. 25F of the Industrial Disputes Act is necessary for the legality of retrenchment, including the payment of wages in lieu of notice at the time of termination. 4. The abolition of contract labour can be ordered by an Industrial Tribunal if justified by the facts, and it is not discriminatory if it applies equally to all similar businesses.
Final Decision: The appeal was dismissed, upholding the validity of the reference, the scheme for gratuity, the illegality of the retrenchment, and the abolition of contract labour.

Judgement

MITTER, J. : This is an appeal by special leave from an award of the Third Industrial Tribunal, West Bengal, dated September 14, 1963. The appellants are four public limited companies all separately registered under the Indian Companies Act and all carrying on business in the same premises at Belur in the district of Howarh, the respondents being two unions, viz., NISCO Karmachari Sangha, Belur and Howrah and Belur Iron and Steel Workers Union, Howrah. National Iron and Steel Co Ltd., was engaged in the business of steel rolling and steel casting. Britannia Building and Iron Co Ltd. was engaged in steel fabrications work while National Screw and Wire Products was engaged in the manufacture of wires and nails. Tatanagar Foundry Co. Ltd. carried on the business of manufacturing cast-iron sleepers for railways. By an order, dated August 25, 1959, the Government of West Bengal made a reference under S. 10 of the Industrial Disputes Act, 1947 of what was described as an industrial dispute between "Messrs. National Iron and Steel Co. Ltd., and their allied Concerns, viz., Tatanagar Foundry Co. Ltd., Britannia Building and Iron Co. Ltd., and National Screw and Wire Products Ltd., all of P.O. Belur, District Howrah , of the one part and their workmen represented by the two unions on the other- regarding the matters specified in the schedule for adjudication. Nine issues were set forth in the schedule. Issue No. 9 was abandoned at the hearing before the Tribunal and need not be considered at all. The other issues were as follows :-

"1. Gratuity.

2. Sickness benefit.

3. Leave Rules.

4. Abolition of contract labour.

5. Whether termination of service of Shri Bhadreswar Ghose is justified ?

6. Whether the durwans and other members of the Watch and Ward staff are entitled to weekly rest ?

7.Whether retirement of Shri Gopal Das and Shri Ramjatin Pandit at the age 55years is justified? To what relief, if any, are they entitled?

8. Whether the action of the Company in retrenching the following masons is justified ? To what relief, if any, are they entitled ? (i) Shri Sushil, (ii) Shri Sarojit, (iii) Shri Sukdeo, (iv) Shri Khalil

* * * *".

Issue No. 8 referred to the retrenchment of four workmen. Of the four, the case of the first workmen, viz., Sushil, alone was pressed at the hearing before the Tribunal. There is no dispute that all the four companies were not concerned with all the issues. Messrs National Iron and Steel Co. Ltd., was primarily concerned with almost all of them. Britannia Building and Iron Co. Ltd. was not concerned with issues 7 and 8 while National Screw Wire Products Ltd., was not interested in issues 4, 5, 7 and 8. Tatanagar Foundry Co. Ltd., was not interested in issues 5, 7 and 8. All the companies were interested in the first three issues.

2. The award went against the companies and they have come up in appeal. Appearing on behalf of the appellants, the learned Additional Solicitor-General raised four points. First, he challenged the validity of the order of reference and contended that as all the companies were not concerned in all the items of dispute, one order of reference embracing all of them in some of which some of the appellants were interested while in others they were not, should not have been made. His next contention was that the award as regards gratuity was bad inasmuch as the Tribunal considered only the balance sheets and profit and loss accounts and other documents of National Iron and Steel Co. Ltd. The Tribunal did not have before it similar accounts of the other companies and therefore a comprehensive order of gratuity purporting to be binding on all the companies was bad. The third point raised by the learned counsel was that the award on the question of retrenchment of the workman Sushil was not justified for grounds which will be discussed hereafter. His last contention was that the abolition of contract labour employed by Tatanagar Foundry Co. Ltd. ordered by the Tribunal was wrong inasmuch

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1967 Supreme(SC) 2

Industrial adjudication should not encourage the employment of contract labour, and the abolition of such labour can be ordered by an Industrial Tribunal if justified by the facts.

Cases Referred (4)