Holding

The Supreme Court held that the Industrial Court lacked jurisdiction under the Maharashtra Trade Unions Act, 1971, and directed the employer to pay each retrenched employee an amount equivalent to two years' wages within eight weeks, without prejudice to the pending writ petition.

Summary

The employer, Mis. S.V. Tank & Vessel Pvt. Ltd., retrenched 33 employees and faced a strike. The Engineering Workers Association filed a complaint in the Industrial Court challenging the retrenchment, alleging it was illegal. The Industrial Court set aside the retrenchment and ordered back wages and other benefits, but the employer contended that the Industrial Court lacked jurisdiction, asserting that only the Labour Court could hear the matter. The Bombay High Court, on appeal, stayed parts of the Industrial Court’s order and directed the employer to furnish a bank guarantee of 50% of the wages payable. The Supreme Court held that the Industrial Court indeed had no jurisdiction under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971, and, considering the circumstances, directed the employer to pay each affected employee an amount equivalent to two years’ wages within eight weeks, without prejudice to the pending writ petition, and ordered the High Court to expedite disposal. The appeal was dismissed with no costs.

Issues considered

Whether the Industrial Court had jurisdiction to entertain the complaint challenging the retrenchment under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971.
Whether the order of retrenchment was justifiable under labour law.
Whether the Bombay High Court could conditionally direct the employer to furnish a bank guarantee of 50% of the wages payable.
Whether the employer is liable to pay back wages and other benefits as ordered by the Industrial Court.

Legislation cited

Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971

Subjects

Industrial Court jurisdictionRetrenchmentBank guaranteeBack wagesLabour lawMaharashtra Trade Unions ActIndustrial disputeInterim orderHigh Court

Judgment

MIS. S.V. TANK & VESSEL PVT. LTD. A
v.
ENGINEERING WORKERS ASSOCIATION

APRIL 18, 2005

[ARIJIT PASAYAT AND S.H. KAPADIA, JJ.] B

Interim Order-Bank guarantee for payment of dues of workers-
Retrenchment of workers-Challenged before Industrial Court-Jurisdiction
of Industrial Court questioned-It was pleaded that instead, the labour court C
had jurisdiction-Industrial court set aside order ofretrenchment and directed
the employer to pay wages of all retrenched employees as also of striking
employees-Writ petition before High Court-Interim order by High Court
staying operation of the order-Division Bench of High Court directing
employer to furnish bank guarantee to the extent of 50% of wages due-Held,
employer would pay two years ' wages to each employee concerned-High D
Court to dispose ofexpeditiously the writ petition involving the issues relating
to jurisdiction of Industrial Court and justifiability of retrenchment order-
Labour Law-Retrenchment.

Appellant-employer retrenched some of its employees. A large number
of employees went on strike. Employer did not allow some of the striking E
employees to resume their work. Later, the respondent-Association filed a
complaint in the Industrial Court challenging the retrenchment. The appellant
contended that the Industrial Court had no jurisdiction and the matter could
be dealt with only by the labour court. The Industrial Court set aside the
retrenchment order and gave direction for payment of back wages of the F
retrenched employees and the dues of striking employees with effect from
1991. The employer filed a writ petition before the High Court and the single
Judge, by an interim order, partly stayed operation of the order of the
Industrial Court. On appeal by the respondent-Association, the Division Bench
of the High Court directed the employer to furnish security/bank guarantee
to the extent of50% of the amount of wages payable to the employees as per G
order of Industrial Court. Aggrieved, the employer filed the present appeal.

Disposing of the appeal, the Court

HELD : Basic issue relates to jurisdiction of the Industrial Court.
651 II
652 SUPREME COURT REPORTS [2005) 3 S.C.R.

A Additionally, the justifiability of the order of retrenchment has to be gone
into. Taking the peculiar facts into account, interest of justice would be best .
.---
served if the appellant pays each of the employees concerned an amount
equivalent to two years' wages on the basis of the last wages drawn without
prejudice to the claims involved in the writ petition. Considering the limited
B nature of the controversy, the High Court would explore the possibility of
early disposal of the writ petition. [654-C-EJ

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 2657-2658
of 2005.

From the Judgment and Order dated 5.1.2004 of the Bombay High
C Court in L.P.A. No. 143/2003 with C. Application No. 261/2003 against
W.P. No. 6229 of 2003.

Bim Rao Naik, Sishil Karanjkar and V .R. Anumolu with him for the
Appellant.
D Ajay Majithia, Mahesh Jain and Dr. Kailash Chand for the Respondent.

The Judgment of the Court was delivered by

ARIJIT PASAYAT, J. Leave granted.

E The appellant (hereinafter referred to as the 'Employer') calls in question
legality of the· judgment rendered by a Division Bench of the Bombay High
Court directing it to furnish security/bank guarantee of a Nationalised Bank
to the extent of 50% of the amount of wages as per the calculation to be
made on the basis of the order passed by the Industrial Court, Maharashtra
F at Thane .

. TJle background facts as projected by the appellant are as follows :-

The employer retrenched 33 employees after giving notice of
retrenchment alongwith cheques covering the notice pay and retrenchment
G compensation. Some of the workers refused to accept the same. On account
of financial stringency and reduction of work force, Voluntary Retirement
Scheme was announced which was availed by 72 employees. The respondent-
r=
J
'
Association, however, instigated some of the employees not to opt for the
scheme. Some of the employees took law into their own hands and tried to
destroy the appellant's properties and this created chaotic conditions for which
H the appellant was forced to lodge complaint in the Industrial Court and orders
MIS. S. V. TANK & VESSEL PVT. LTD. v. ENGINE. WORKERS ASSON. [PASA YAT, J.] 653

were passed prohibiting some workmen from coming within a radius of 100 A
meters of the appellant's establishment. With a view to be charitable to the
employees, letters were addressed to workers to join work, who refused to
work and continued with the strike. Complaint was filed by the respondent-
Association in the Industrial Court questioning retrenchment. Appellant filed
a Written Statement and claimed that the relief claimed could not be
adjudicated by the Industrial Court and it has no jurisdiction to deal with the B
- matter. According to the appellant, it was only the Labour Court which could
deal with the matter. The Industrial Court passed an order holding that the
retrenchment of the concerned workers to be illegal. The Industrial Court,
inter a/ia, gave the following directions :

"(a) ..... Reinstate 33 workmen in Annexure-C with full back wages.
c
Their retrenchment order is set aside.

(b) They are directed to pay bonus at the rate of 22% for the year
1990-91 to the workmen except the persons who are not collected
including 33 retrenched workmen.
D
(c) Respondent to provide as per the terms of settlement pair of safty
shoes and uniforms.

(d) Allow other non-retrenched employees on duty and to pay them
the dues from the days when they are not allowed to do the work i.e.
from 24.10.1991. E
(e) They are directed to pay salary and wages of the workmen on the
due dates i.e. 7th of every month."

The stand of the appellant is that in terms of The Maharashtra
Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, F
1971 (in short the 'Act') the proceedings before the Industrial Court were
clearly not maintainable and order passed by the Industrial Court is without
jurisdiction.

A Writ Petition was filed by the employer before the Bombay High
Court. A learned Single Judge passed an interim order, and stayed operation G
of directions 3(c) to 3(e).

The interim order was challenged in a writ appeal before the Division
Bench by the respondent-Association and the direction for furnishing security/
bank guarantee as noted above was given.
H
654 SUPREME COURT REPORTS [2005] 3 S.C.R.

A In support of the appeal learned counsel for the appellant submitted
that without indicating as to how learned Single Judge's interim order was in
any way illegal or deficient, a Division Bench should not have directed
furnishing of security/bank guarantee. The proceedings before the Industrial
Court were clearly without jurisdiction and this aspect has not been considered
B by the Division Bench.

In response, learned counsel for the respondent-Association submitted
that blanket order of stay was passed by learned Single Judge. Division
Bench was justified in protecting the interest of the workman in whose favour
the Industrial Court had decided. Therefore, this is not a fit case which calls
C any interference as dispute revolves round ;.1terim protection given to the
successful employees.

Division Bench has thought it proper to make ·1he interim order
conditional. Basic issue relates to jurisdiction of the Industrial Court.
Additionally, the justifiability of the orders of retrenchment has to be gone
D into. It is pointed out by the learned counsel for the appellant that the back
wages on the basis of the Industrial Court's order have to be paid from 1991
and if the impugned order is maintained, the appellant who is not in good
financial state would be required to provide nearly rupees 40 lakhs for the
purpose of obtaining bank guarantee. Taking peculiar facts into account we
feel interest of justice would be best served if the appellant pays each of the
E concerned employees an amount equivalent to two years' wages on the basis
of the last wages drawn within eight weeks from today, without prejudice to
the claims involved in the Writ Petition. Considering the limited.nature of the
controversy, the High Court is requested to explore the possibility of early
disposal of the writ petition.
F
The appcdls are accordingly disposed of. No costs.

R.P. Appeals disposed of.