CHAIRMAN AND MANAGING DIRECTOR,THE FERTILIZERS AND CHEMICALS TRANVANCORE LTD. & ANR.versusGENERAL SECRETARY FACT EMPLOYEES ASSOCIATION & ORS.

740                       [2019]
               SUPREME COURT     5 S.C.R. 740
                              REPORTS                        [2019] 5 S.C.R.


A     CHAIRMAN AND MANAGING DIRECTOR,THE FERTILIZERS
          AND CHEMICALS TRANVANCORE LTD. & ANR.
                                         v.
      GENERAL SECRETARY FACT EMPLOYEES ASSOCIATION &
                           ORS.
B
                         (Civil Appeal No. 3803 of 2019)
                                 APRIL 11, 2019
                     [ABHAY MANOHAR SAPRE AND
                           INDU MALHOTRA, JJ.]
C
             Code of Civil Procedure, 1908 – s.11 – Res judicata –
      Industrial Disputes Act, 1947 – s.10 – Central Government directed
      Appellant No.1-PSU to reduce the retirement age of pre-1978
      employees from 60 years to 58 years – Respondents-Trade Unions
      filed writ petition against the direction – Single Judge of the High
D
      Court dismissed the writ petition – In intra-Court appeal, the Division
      Bench of the High Court affirmed the order of the Single Judge of
      the High Court – Aggrieved, Trade unions filed special leave petitions
      in the Supreme Court, which were dismissed – Thereafter, State
      Government made an industrial reference at the instance of the Trade
E     unions to the Labour Court regarding the same issue – The Labour
      Court held that the reference made by the State was barred by the
      principle of res judicata – Aggrieved, Trade unions filed another
      writ petition against the award passed by the Labour Court – High
      Court quashed the award passed by the Labour Court and held
      that reference was not barred by res judicata – On appeal, held:
F
      After the dismissal of the Special Leave Petitions filed by the Trade
      Unions, the issue in relation to reduction of age had attained finality
      – The High Court was not justified in setting aside the awards of
      the Labour Court, which had rightly held that it (Labour Court)
      had no jurisdiction to entertain the reference and nor it had the
G     jurisdiction to answer it on merits – No judicial forum at the instance
      of any party to the Lis had jurisdiction to try these issues again on
      its merits – It was barred for being tried again by virtue of principles
      of res judicata contained in Section 11 of the Code, which has also
      application to the labour/industrial proceedings.
H
                                        740
  CHAIRMAN AND MANAGING DIR., FERT. & CHEM. TRANVANCORE                741
             LTD. v. GEN. SEC. FACT EMP. ASSOC.


      Allowing the appeals, the Court                                  A
       HELD: 1. In the instant case, it is not in dispute that the
issue in relation to reduction of age from 60 to 58 years was raised
by the Trade Unions/Respondents in the first round of litigation
by filing the original petitions in the Kerala High Court. These
writ petitions were dismissed by the Single Judge on merits by         B
order dated 12.08.2003. The respondents/Trade Unions then
carried the issue in intra court appeals before the Division Bench.
The appeal was dismissed by the Division Bench by order dated
18.12.2003. The Trade Unions/respondents then filed special
leave to appeals in this Court and by order dated 23.04.2004,
this Court dismissed the SLPs and affirmed the order of the            C
Division Bench.[Para 28][749-C-E]
       2. The effect of passing of these orders was that the issue
in relation to reduction of age from 60 to 58 years including all
incidental issues arising therefrom, attained finality because they
were already decided on the merits between the parties to the          D
Lis. [Para 29][749-F]
      3. No judicial forum at the instance of any party to the Lis
had jurisdiction to try these issues again on its merits. It was
barred for being tried again by virtue of principles of res judicata
contained in Section 11 of the Civil Procedure Code, which has         E
also application to the labour/industrial proceedings. [Para 30]
[749-G]
      4. The State had, therefore, no jurisdiction to make a
reference(s) to the Labour Court under Section 10 of the
Industrial Disputes Act to re-examine the question of age              F
reduction made by the appellant(PSU). A fortiori, the Labour Court
had no jurisdiction to entertain the reference(s) to adjudicate the
question(s) referred in the reference(s).[Para 31][749-G; 750-A]
      R.C. Tiwari v. MP State Co-operative Marketing
      Federation Ltd. & Ors. (1997) 5 SCC 125 : [1997]                 G
      3 SCR 795 ; Pondicherry Khadi & Village Industries
      Board v. P. Kulothangan & Anr. (2004) 1 SCC 68 :
      [2003] 5 Suppl. SCR 62 ; Executive Engineer, ZP Engg.
      Divn. & Anr. v. Digambara Rao & Ors. (2004) 8 SCC
      262: [2004] 4 Suppl. SCR 716 – relied on.
                                                                       H
742             SUPREME COURT REPORTS                           [2019] 5 S.C.R.


A                               Case Law Reference
      [1997] 3 SCR 795                   relied on                 Para 24
      [2003] 5 Suppl. SCR 62             relied on                 Para 26
      [2004] 4 Suppl. SCR 716            relied on                 Para 27
B           CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3803
      of 2019.
            From the Judgment and Order dated 25.01.2017 of the High Court
      of Kerala at Ernakulam in Writ Appeal No. 1820 of 2012.
              With
C
              Civil Appeal No. 3804 of 2019.
            J. P. Cama, P. V. Surendranath, Sr. Advs., Ritin Rai, Rohan
      Dhariwal, Vidor Bhatia, Siddhartha Jha, Abhipsit Mishra, Ms. Anindita
      Mitra, Ms. Resmitha R. Chandran, Ms. Lekha Sudhakaran, Roy
D     Abraham, Ms.Seema Jain, Ms. Reena Roy, Akhil Abraham, Himinder
      Lal, C. M. Patel, Raji Joseph, Advs. for the appearing parties.
            The Judgment of the Court was delivered by
            ABHAY MANOHAR SAPRE, J. 1. Leave granted.

E           2. These appeals are directed against the final judgment and order
      dated 25.01.2017 passed by the High Court of Kerala at Ernakulam in
      W.A. Nos.1820 and 1824 of 2012 whereby the Division Bench of the
      High Court dismissed the writ appeals filed by the appellants herein and
      affirmed the judgment dated 21.08.2012 passed by the Single Judge of
      the High Court in W.P. Nos.33938/2008 and 2556 of 2009.
F
             3. These appeals involve a short point as would be clear from the
      facts stated infra.
             4. The appellants herein are the respondents and the respondents
      herein (respondent Nos.1-10) are the writ petitioners of the writ petitions,
      out of which these appeals arise.
G
            5. Appellant No.1 is a Public Sector Undertaking and engaged in
      the business of manufacture and sale of various kinds of fertilizers and
      chemicals. It has a factory at Travancore in the State of Kerala.
      Respondent Nos.1 to 10 are the Trade Unions of the workers working in
      the manufacturing unit of appellant No.1 at the relevant time.
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  CHAIRMAN AND MANAGING DIR., FERT. & CHEM. TRANVANCORE                     743
  LTD. v. GEN. SEC. FACT EMP. ASSOC. [ABHAY MANOHAR SAPRE, J.]


       6. On 23.01.1978, a Memorandum of Settlement was executed            A
between appellant No.1 (PSU) and respondent Nos.1 to 10, i.e., (Trade
Unions) wherein it was inter alia agreed between the parties that the
existing superannuation age of 60 years will remain unchanged in respect
of all the workers working in the appellant’s Undertaking at
Udyogamandal Division, Head Office including those who are on the
                                                                            B
rolls of the Undertaking as on the date of settlement.
      7. It was also agreed that those who are recruited on and after
Memorandum of Settlement in question shall retire on attaining the age
of 58 years.
        8. On 19.05.1998, the Central Government issued a direction to      C
all the Public Sector Undertakings of the Central Government and directed
them to increase the age of superannuation upto below board-level
employees from 58 years to 60 years. This was made compulsory to all
the PSUs. Appellant No.1 accordingly ensured its compliance and made
it applicable to their employees by a resolution dated 27.05.1998.
                                                                            D
       9. Since the financial condition of the appellant (PSU) was
deteriorating day-by-day, it had become difficult for them to give effect
to the aforesaid decision/direction. The appellant (PSU), therefore,
brought this fact to the notice of the Central Government. By letters
dated 02.09.1999 and 11.07.2001, the Central Government directed the
appellant (PSU) to take several measures to improve their financial         E
performance and also undertake the work of rationalization of their
workers and bring it to a manageable level. This included lowering of
the age of retirement of the employees. After extensive deliberations
and making several efforts for reducing the financial losses, the Central
Government eventually by letter dated 25.04.2003 directed the appellant     F
(PSU) to change the retirement age of pre-1978 employees from 60
years to 58 years. In compliance with the letter dated 25.04.2003 of the
Central Government, the appellant(PSU) issued an order dated 29.04.2003
to reduce the retirement age of pre-1978 employees from 60 years to 58
years.
                                                                            G
       10. This gave rise to filing of the original petitions by the
respondents (Trade Unions) in the Kerala High Court (OP Nos.14598,
14599 & 14976/2003) challenging therein the legality and correctness of
the order dated 29.04.2003.

                                                                            H
744            SUPREME COURT REPORTS                          [2019] 5 S.C.R.


A             11. The Single Judge by order dated 12.08.2003 upheld the order
      dated 29.04.2003 and dismissed the original petitions. The Single Judge
      inter alia held that first, the appellant (PSU) was facing acute financial
      crisis and hence to improve the financial crisis some positive action was
      also taken for the survival of the appellant’s industry; Second, the Trade
      Unions had agreed vide settlement dated 28.08.2001 that having regard
B
      to the emergent situation which had arisen, the employment strength
      was reduced by 20% to save the industry; Third, there did not appear
      any justifiable reason to retain the retirement age of 60 years only to
      pre-1978 employees; Fourth, the decision to reduce the retirement age
      was not violative of Article 14 of the Constitution inasmuch as it was
C     done to make the retirement age uniform to all the workers with a view
      to save the industry; and Fifth, if it had not been done, it would have
      been impossible to continue with the existing industry. (See Paras 11 and
      12 of the order of the Single Judge). However, in the concluding Para,
      the Single Judge observed that it shall be open to the writ petitioners to
      work out their other remedies available in law.
D
             12. The respondents (Trade Unions) felt aggrieved and carried
      the matter in intra court appeal (WA Nos. 1565,1595, 2112 & 2113/
      2003) before the Division Bench. By order dated 18.12.2003, the Division
      Bench dismissed the appeals and affirmed the order of the Single Judge.
      The Division Bench inter alia held that, first, the acceptance of the
E     demand raised by about 10% of the total employees is likely to affect
      adversely the interest of about 90% of the employees; Second, the
      appellant (PSU) was facing acute financial crisis and, therefore, having
      regard to the totality of the circumstances, there are no grounds to
      interfere; Third, clause 14 of the Memorandum of Settlement provided
F     that the dispute arising between the parties in relation to the settlement
      should be resolved by means of arbitration, i.e., by the Labour
      Commissioner and the same having been entertained by the Labour
      Commissioner, the same be pursued. (See Para 8 of the order of the
      Single Judge).
G           13. The Trade Unions (respondents) felt aggrieved and filed special
      leave petitions (CC Nos.3653-3655/2004) in this Court. By order dated
      23.04.2004, this Court dismissed the SLPs.
            14. It is with this background, the State Government by order
      dated 18.05.2004 as amended by GO dated 22.01.2008, made the
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  CHAIRMAN AND MANAGING DIR., FERT. & CHEM. TRANVANCORE                      745
  LTD. v. GEN. SEC. FACT EMP. ASSOC. [ABHAY MANOHAR SAPRE, J.]


following industrial reference (No.10/2004) at the instance of the Trade     A
Unions to the Labour Court, Ernakulum to decide the following question:
         “Whether the action of the management of FACT, Ltd.
      Udyogamandal in having reduced the age of superannuation
      of pre 1978 workers from 60 years to 58 years is justifiable
      or not?’                                                               B
          “If not, what relief the workmen are entitled to?”
      15. The State Government also made another reference (No.4/
2005) at the instance of the Trade Unions by order dated 02.03.2005 to
the Labour Court to decide the following question:
                                                                             C
      “Whether the action of the management of FACT, Ltd.
      Udyogamandal Ltd. terminating the service of 42 workmen
      is justifiable or not? If not, what relief the workmen are
      entitled to?”
        16. The Labour Court, by award dated 02.07.2008 answered the         D
reference (No.10/2004) against the Trade Unions and in favour of the
appellant(PSU). It was held that since the question referred to the Labour
Court in the reference was already dealt with in the earlier round of
litigation by the High Court and the Supreme Court and the same having
attained finality consequent upon the dismissal of the SLPs by this Court
by order dated 23.04.2004, the reference made by the State was barred        E
by the principle of res judicata. So far as the other reference (No.4/
2005) was concerned, it was accordingly disposed of by award dated
02.08.2008 on the same lines.
       17. The Trade Unions/employees (respondents herein) felt
aggrieved and filed the writ petitions (Nos.33938/2008 and 2556/2009)        F
in the High Court of Kerala against the award dated 02.07.2008.
       18. The Single Judge by order dated 21.08.2012 allowed the writ
petitions and quashed the awards dated 02.07.2008 and 02.08.2008 of
the Labour Court. It was held that the reference made by the State to
the Labour Court was not barred by res judicata. The Single Judge            G
then awarded 30% of the wages payable to each employee instead of
granting them a relief of reinstatement in service.
     19. The appellant (PSU) felt aggrieved and filed intra court appeals.
The Division Bench by impugned order dismissed the appeals and upheld
                                                                             H
746             SUPREME COURT REPORTS                           [2019] 5 S.C.R.


A     the order of the Single Judge, which has given rise to filing of the present
      appeals by the appellant(PSU) after obtaining the special leave to appeal
      from this Court.
              20. So, the short question, which arises for consideration in these
      appeals, is whether the High Court was justified in holding that the
B     reference made by the State to the Labour Court was not barred by the
      principle of res judicata. In other words, a question, which arises for
      consideration, is when the issue referred by the State in reference was
      already decided by the High Court between the parties in the writ petitions,
      writ appeals and lastly in SLPs by this Court in the earlier round of
      litigation, whether the State had the jurisdiction to refer the same issue
C     to the Labour Court in reference under Section 10 of the Industrial
      Disputes Act, 1947 (hereinafter referred to as “ID Act”) for its fresh
      adjudication.
           21. Heard Mr. J.P. Cama, learned senior counsel for the appellants
      and Mr. P.V. Surendranath, learned senior counsel, Mr. Roy Abraham
D     & Mr. C.M. Patel, learned counsel for the respondents.
              22. Having heard the learned counsel for the parties and on perusal
      of the record of the case including the written submissions, we are inclined
      to allow these appeals and while setting aside the impugned order restore
      the awards dated 02.07.2008 and 02.08.2008 of the Labour Court.
E
             23. In our considered view, the question, as to whether the principle
      of res judicata defined in Section 11 of the Code of Civil Procedure,
      1908 (hereinafter referred to as “the Code”) applies to the labour
      proceedings or not, remains no more res integra and stands answered
      by three decisions of this Court.
F
            24. The first case is R.C. Tiwari vs. MP State Co-operative
      Marketing Federation Ltd. & Ors. (1997) 5 SCC 125. In this case,
      an employee of a co-operative society was dismissed from the services.
      He, therefore, referred the dispute of his termination to the Registrar
      under Sections 55 and 64 of the M.P.Co-operative Society Act. The
G     Deputy Registrar upheld the finding of the misconduct recorded in the
      domestic inquiry against the employee and upheld the termination as
      being legal and proper. The State then made a reference to the Labour
      Court under Section 10 of the ID Act for deciding the legality of the
      termination by the Labour Court. The Labour Court, however, declared
      the domestic inquiry invalid and, in consequence, held the termination as
H
  CHAIRMAN AND MANAGING DIR., FERT. & CHEM. TRANVANCORE                      747
  LTD. v. GEN. SEC. FACT EMP. ASSOC. [ABHAY MANOHAR SAPRE, J.]


bad in law. The employer, therefore, filed a writ petition in the High       A
Court of MP. The High Court allowed the writ petition and set aside the
award of the Labour Court. The employee then carried the matter to
this Court in appeal. This Court dismissed the appeal and affirmed the
view taken by the High Court.
       25. This Court ruled that the reference to the Labour Court made      B
by the State under Section 10 of ID Act was hit by the principle of res
judicata defined under Section 11 of the Code and, therefore, the
reference made to the Labour Court was barred. It was held that the
issue of termination of the employee was earlier gone into by the Deputy
Registrar on its merits and the same once answered against the employee,
it could not be again gone into in the reference proceedings by the Labour   C
Court. This is what is held in Para 4:
      “4. Admittedly, there is a finding recorded by the Deputy
      Registrar upholding the misconduct of the petitioner. That
      constitutes res judicata. No doubt, Section 11 CPC does
      not in terms apply because it is not a court, but a tribunal,          D
      constituted under the Societies Act is given special
      jurisdiction. So, the principle laid down thereunder mutatis
      mutandis squarely applies to the procedure provided under
      the Act. It operates as res judicata. Thus, we find that the
      High Court is well justified in holding that the Labour Court          E
      has no jurisdiction to decide the dispute once over and the
      reference itself is bad in law.”
       26. The second case is Pondicherry Khadi & Village
Industries Board vs. P. Kulothangan & Anr., (2004) 1 SCC 68. In
this case also, this Court again examined the question as to whether the     F
principle of res judicata including the principles of constructive res
judicata applies to the industrial adjudication or not. Though this Court
did not notice the law laid down in the case of R.C.Tiwari (supra), yet
it took the same view, as is clear from Paras 10 and 11:
      “10. In our opinion, the appellant has correctly contended             G
      that the industrial dispute pertained to the same subject-
      matter dealt with in the earlier writ proceedings and was
      barred by the principles of res judicata. It is well established
      that although the entire Civil Procedure Code is not
      applicable to industrial adjudication, the principles of res
      judicata laid down under Section 11 of the Code are                    H
748     SUPREME COURT REPORTS                       [2019] 5 S.C.R.


A     applicable1 including the principles of constructive res
      judicata. Thus in State of U.P. v. Nawab Hussain2 it was
      held that the dismissal of a writ petition challenging
      disciplinary proceedings on the ground that the charged
      officer had not been afforded reasonable opportunity to
      meet the allegations against him, operated as res judicata
B
      in respect of the subsequent suit in which the order of
      dismissal was challenged on the ground that it was
      incompetently passed. This Court also held: (SCC p. 808)
      It may be that the same set of facts may give rise to two or
      more causes of action. If in such a case a person is allowed
C     to choose and sue upon one cause of action at one time and
      to reserve the other for subsequent litigation, that would
      aggravate the burden of litigation. Courts have therefore
      treated such a course of action as an abuse of its process.
      11. The principle of res judicata operates on the court. It is
D     the courts which are prohibited from trying the issue which
      was directly and substantially in issue in the earlier
      proceedings between the same parties, provided the court
      trying the subsequent proceeding is satisfied that the earlier
      court was competent to dispose of the earlier proceedings
E     and that the matter had been heard and finally decided by
      such court. Here the parties to the writ petition filed by the
      respondent in the Madras High Court and the industrial
      dispute were the same. The cause of action in both was the
      refusal of the appellant to allow the respondent to rejoin
      service. The Madras High Court was competent to decide
F     the issue which it did with a reasoned order on merits and
      after a contested hearing. This was not a case where the
      earlier proceedings had been disposed of on any technical
      ground as was the case in Workmen v. Board of Trustees
      of the Cochin Port Trust3 and Pujari Bai v. Madan Gopal4.
G     The “lesser relief” of reinstatement which was the subject-
      matter of the industrial dispute had already been claimed
      by the respondent in the writ petition. This was refused by
      the High Court. The correctness of the decision in the writ
      proceedings has not been challenged by the respondent.
      The decision was, therefore, final. Having got an adverse
H
  CHAIRMAN AND MANAGING DIR., FERT. & CHEM. TRANVANCORE                        749
  LTD. v. GEN. SEC. FACT EMP. ASSOC. [ABHAY MANOHAR SAPRE, J.]


      order in the writ petition, it was not open to the respondent            A
      to reagitate the issue before the Labour Court and the
      Labour Court was incompetent to entertain the dispute
      raised by the respondent and redecide the matter in the
      face of the earlier decision of the High Court in the writ
      proceedings.”
                                                                               B
       27. The third case is Executive Engineer, ZP Engg. Divn. &
Anr. vs. Digambara Rao & Ors., (2004) 8 SCC 262. In this case also,
this Court placing reliance on the decision in Kulothangan (supra)
reiterated the same view, earlier taken by this Court in the case of R.C.
Tiwari (supra) with these words:
                                                                               C
      “15………..It is now well settled that the general principle
      of res judicata applies to an industrial adjudication.”
       28. Now coming to the facts of this case, it is not in dispute that
the issue in relation to reduction of age from 60 to 58 years was raised
by the Trade Unions/Respondents in the first round of litigation by filing     D
the original petitions (O.P. Nos.14598, 14599 & 14976/2003) in the Kerala
High Court. These writ petitions were dismissed by the Single Judge on
merits by order dated 12.08.2003. The respondents/Trade Unions then
carried the issue in intra court appeals (No.1565, 1595, 2112 & 2113/
2003) before the Division Bench. The appeal was dismissed by the
Division Bench by order dated 18.12.2003. The Trade Unions/respondents         E
then filed special leave to appeals in this Court and by order dated
23.04.2004, this Court dismissed the SLPs and affirmed the order of the
Division Bench.
       29. In our view, the effect of passing of these orders was that the
issue in relation to reduction of age from 60 to 58 years including all        F
incidental issues arising therefrom, attained finality because they were
already decided on the merits between the parties to the Lis.
      30. In our opinion, no judicial forum at the instance of any party to
the Lis had jurisdiction to try these issues again on its merits. It was
barred for being tried again by virtue of principles of res judicata           G
contained in Section 11 of the Code, which has also application to the
labour/industrial proceedings.
       31. In our opinion, the State had, therefore, no jurisdiction to make
a reference(s) to the Labour Court under Section 10 of the ID Act to re-
                                                                               H
750                SUPREME COURT REPORTS                        [2019] 5 S.C.R.


A     examine the question of age reduction made by the appellant(PSU). A
      fortiori, the Labour Court had no jurisdiction to entertain the reference(s)
      to adjudicate the question(s) referred in the reference(s).
             32. In view of the foregoing discussion, we are of the considered
      opinion that the High Court was not justified in setting aside the awards
B     of the Labour Court, which had rightly held that it (Labour Court) had no
      jurisdiction to entertain the reference and nor it had the jurisdiction to
      answer it on merits. The High Court should have upheld the awards of
      the Labour Court.
              33. Once we hold that the references made to the Labour Court
C     by the State were without jurisdiction, it is not necessary to examine the
      merits of the case. Indeed, it is not legally permissible because it does
      not survive for consideration having once decided in the earlier round of
      litigation upto this Court which resulted in termination of the dispute
      against the respondents/Trade Unions.
D           34. In the light of the foregoing discussion, the appeals succeed
      and are accordingly allowed. The impugned order is set aside and the
      awards of the Labour Court are restored.

      Ankit Gyan                                                   Appeals allowed.

E




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G




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