M/S. TATA IRON & STEEL CO. LTD.versusSTATE OF JHARKHAND & ORS.

                    [2013] 9 S.C.R. 437


           M/S. TATA IRON & STEEL CO. LTD.                       A
                              v.
             STATE OF JHARKHAND & ORS.
              (Civil Appeal No. 8246 of 2013)
                  SEPTEMBER 16, 2013
                                                                 B
     [K. S. RADHAKRISHNAN AND A.K. SIKRI, JJ.]

    Industrial Disputes Act, 1947:

     s.10(1) - Reference of disputes to Labour Court -           c
Jurisdiction of Labour Court - Explained.

     s.10(1) - Reference of dispute to Labour Court -
Defective reference - Held: In the instant case, the reference
does not reflect the real dispute between the parties - On the
contrary, the manner in which the reference is worcJed, shall    D
preclude the appellant to put forth and prove its case as it
would deter the Labour Court to go into those issues - The
reference also implies that the appropriate Government has
itself decided the contentious issues and assumed the role
of an adjudicator which is, otherwise, reserved for the Labour   E
Court/ Industrial Tribunal - The reference being defective, is
quashed - Appropriate Government directed to make
reference afresh, incorporating real essence of the dispute as
discussed in the judgment.
                                                                 F
     The appellant sold its cement division to Mis Lafarge
India Pvt. Ltd in terms of Business Transfer Agreement
(BTA) dated 9.3.1999 which was to be effected from
1.11.1999. According to the appellant, consequent upon
the agreement, the employees working in its cemen~               G
division including respondent Nos. 8-82 we're also taken
over by Mis Lafarge and the latter issued them fresh
letters of appointments. Subsequently, the said
employees submitted a statement of demand to the
                             437                                 H
   438     SUPREME COURT REPORTS               [2013] 9 S.C.R.


A appellant on 15.9.2003, stating that they were directed to
   work with M/s. Lafarge without taking their consent and
   they should be taken back with the appellant company.
   The Conciliation Proceedings having failed, two
   references u/s. 10(1) of the Industrial Dispute Act, 1947
B were made for adjudication to the Labour Court to the
   effect: whether or not to take back the workmen of
   appellant in the service after their transfer to Mis Lafarge
   was justified; and if not, what relief they were entitled to.
   The appellant filed writ petitions before the High Court
c seeking to quash of the references. The stand of the
   appellant was that the manner in which the references
   were worded did not depict the true nature of the dispute
   between the parties, as the workmen were no longer in
   their employment and, therefore, could not have raised
   the grievance or any dispute against the appellant
0
  'company. The Single Judge dismissed the writ petitions
   with the observation that the Labour Court couJd
   adjudicate and answer the reference after considering all
   the points raised by the parties. The Intra court appeals
E preferred by the appellant were dismissed by the Division
   Bench of the High Court.
         Allowing the appeals, the Court
      HELD: 1.1. The High Court is right in holding that the
F Industrial Dispute has arisen between the parties. In the
  instant cases, the appellant is denying the respondents
  to be its workmen. On the other hand, respondents are
  asserting that they continue to be the employees of the
  appellant company. This, as per s. 2(k) of the Industrial
G Disputes Act, 1947, itself would be a "dispute" which has
  to be determined by means of adjudication. Once these
  respective contentions were raised before the Labour
  Department, it was not within the powers of the Labour
  pepartment/ appropriate Government to decide this
  dispute and assume the adjudicatory role. Therefore, this
H facet of dispute also needs to be adjudicated upon by the
     TATA IRON & STEEL CO. LTD. v. STATE OF            439
                  JHARKHAND
 Labour Court. It cannot, therefore, be said that no dispute A
 exists between the parties. Of course, in a dispute like
 this, Mis. Lafarge also becomes a necessary party. [Paras
 10 and 11) [444-D; 445-A-D]
      1.2. Industrial Tribunal/ Labour Court constituted
 under the Industrial Disputes Act is a creature of that 8
 statute. It acquires jurisdiction on the basis of reference
 made to it. The Tribunal has to confine itself within the
 scope of the subject matter of reference and cannot travel
 beyond the same. Therefore, it becomes the bounden
 duty of the appropriate Government to make the C
 reference appropriately which is reflective of the real/
 exact nature of "dispute" between the parties. Though
 the jurisdiction of the Tribunal is confined to the terms of
 reference, but at the same time it is empowered to go into
 the incidental issues. [para 13, 18 and 19) [446-C; 449-F, D
 G-H]
      National Engineering Industries Limited v. State of
                                           =
· Rajasthan & Ors. 1999 (5) Suppl. SCR 87 2000 (1) SCC
  371; ~nd Moolchand Kharati Ram Hospital vs. Labour E
                                               =
  Commissioner and Ors. 2000 (2) Suppl. JT 204 2002 (10)
  sec 708 - relied on
     Indian Tourism Development Corporation (/TDC) v. Delhi
 Administration and Ors. 1982 (LAB) IC 1309; Moolchand
 Kharati Ram Hospital vs. Labour Commissioner and Ors.        F
 1998 (Ill) LLJ 1139 Del - referred to
      1.3. In the instant case, the issue is as to whether the
 respondent workmen were simply transferred by the
 appellant to Mis. Lafarge or their services were taken over
 by it and they became its employees. Second incidental G
 question which would follow would be as to whether the
 respondent-workmen have right to join back the services
 with the appellant in case their service conditions
 including salary etc. which they were enjoying with the
 appellant are not protected by Mis. Lafarge. If it is proved H
    440     SUPREME COURT REPORTS               [2013] 9 S.C.R.


A   that their service conditions are violated, another question
    would be as to whether they can claim the service
    benefits/ protection from Mis. Lafarge or they have the
    right to go back to the appellant. [Paras 19] [449-H; 450-
    A-C]
B      1.3. This Court is of the opinion that the reference is
  clearly defective as it does not state the' correct and
  precise nature of the dispute between the parties. On the
  contrary, the manner in which the reference is worded
  shows that it has already been decided that the
C respondent workmen continue to be the employees of
  the appellant and further that their services were simply
  transferred to M/s. Lafarge. This shall preclude the
  appellant to put forth and prove its case as it would deter
  the Labour Court to go into those issues. It also implies
D that by presuming so, the appropriate Government has
  itself decided those contentious issues and assumed the
  role of an adjudicator which is, otherwise, reserved for
  the Labour Court/ Industrial Tribunal. [Para 20] [450-C-E]
E        1.4. The impugned judgment of the High Court is set
    aside. The reference is quashed. The appropriate
    Government is directed to make reference afresh,
    incorporating real essence of the dispute as discussed
    in the judgment. [Para 21] [450-F-G]

F                       Case Law Reference:
      2000 (2) Suppl. JT 204     relied on            Para 17
      1982 (LAB) IC 1309         referred to          Para 14
      1998 (Ill) LLJ 1139 Del    referred to          Para 16
G     1999 (5) Suppl. SCR 87 relied on                Para 18
        CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    8246 of 2013.

        From the Judgment & Order dated 22.06.2011 of the High
H   Court of Jharkhand at Ranchi in LPA No. 511 of 2006.
     TATA IRON & STEEL CO. LTD. v. STATE OF                 441
                  JHARKHAND

                             WITH                                   A

C.A. No. 8247 of 2013.

    Raju Ramachandran for the Appellant.

    K. Radhakrishnan, S.K. Verma, M.A. Chinnasamy,                  B
Venkateswara Rao Anumolu, Tapesh Kumar Singh for the
Respodents.

    The Judgment of the Court was delivered by

    A.K. SIKRI, J. 1. Leave granted.                                c
     2. We heard the Counsel for the parties at length. Having
regard to the nature of issue involved that needs to be answered
by us, it would be enough to to take note of some admitted facts,
eschewing detailed factual discussion which may unnecessarily       D
burden this judgment.

      3. The appellant before us is M/s. Tata Iron & Steel
Company Limited (rechristened as Tata Steel Ltd.). Apart from
manufacturing steel, its core business, the appellant company
was having cement division as well. In the era of globalization,    E
liberalization and also because of economic compulsions, the
appellant decided to follow the policy of disinvestment.
Persuaded by these considerations it sold its cement division
to Lafarge India Pvt. Ltd (hereinafter to be referred as 'M/s.
Lafarge') vide Business Transfer Agreement (BTA) dated              F
9.3.1999 which was to be effected from 1.11.1999. This
agreement, inter a/ia provided that M/s. Lafarge would take
over the company personnel, including, in terms of Section 25
FF of the Industrial Disputes Act, 1947. It was on the condition
that:                                                               G

      (a)    The services of the company personnel shall not
            be or deemed to be interrupted by such transfer.

      (b)   The terms and conditions of service applicable to
                                                                    H
    442     SUPREME COURT REPORTS                  [2013] 9 S.C.R.


A               the company personnel after such transfer are not
                in any way less favourable to the company
                personnel than those applicable to them
                immediately before the transfer.

          (c)   The purchaser is, under the terms of transfer herein,
B
                legally liable to pay to the company personnel in the
                event of their retrenchment, compensation on the
                basis that services have been continued and have
                not been interrupted by the transfer of business.

C      4. This decision to hive off and transfer the cement division
  by the appellant to M/s Lafarge was communicated to the
  employees of the cement division as well. According to the
  appellant, consequent upon this agreement, with the transfer of
  business, the employees working in the cement division were
D also taken over by M/s Lafarge & M/s Lafarge issued them
  fresh letters of appointments. These included Respondent Nos.
  8-82 herein who started working with Mis Lafarge.

         5. It appears that these workers were not satisfied with the
E   working conditions in M/s. Lafarge. They submitted a statement
    of demand to the appellant on 15.9.2003, stating inter alia that
    they were directed to work with Mis. Lafarge without taking their
    consent. As per these respondents/ employees, impression
    given to them was that they would work in different departments
    in M/s. Lafarge for some days for smooth functioning of that
F   establishment, which was a part of the appellant organization
    and thereafter they would be posted back to the parent
    department. They had obeyed these orders faithfully believing
    in the said representation. However, the concerned employees
    were not given all the benefits by Mis Lafarge which they were
G   enjoying in their parent department. Thus, the demand was
    made to take them back with the appellant company. The
    company did not pay any heed to this demand. These
    employees approached 1he Deputy Labour Commissioner,
    Jamshedpur, raising their grievances and requesting to resolve
H   the dispute.
    TATA IRON & STEEL CO. LTD. v. STATE OF                     443
           JHARKHAND [AK. SIKRI, J.]
     6. Notices were issued to the appellant to participate in         A
the Conciliation Proceedings. The appellant appeared and took
the plea that on and from 1.11.1999, the cement division was
sold to Mis. Lafarge and these workmen had become the
employees of M/s. Lafarge. It was also stated that fresh
appointment letters issued by M/s. Lafarge and they ceased             B
to be the employees of the appellant. Since no amicable
settlement could take place and conciliation proceedings
resulted in failure. The failure report was sent by the Labour
Department to tile Government of Jharkhand which resulted in
two reference orders, thereby referring the disputes between           c
the parties to the Labour Court, Jamshedpur, for adjudication.
The dispute was referred under Section 10(1) of the Industrial
Dispute Act, 1947 with following terms and reference.
    "Whether not to take back Shri K. Chandrasherhar Rao
    and 73 other workmen (list enclosed) of Mis TISCO                  D
    Limited, Jamshedpur in service by their own TISCO
    Management after their transfer to M/s. Lafarge India
    Limited, is justified? If not what relief they are entitled to?"
    Other reference was also worded identically.
                                                                       E
     7. According to the appellant, the manner in which the
references are worded, do not depict the true nature of the
dispute between the parties. It was their submission that the
concerned workmen were no longer in their employment and,
therefore, could not have raised the grievance or any dispute
                                                                       F
against the appellant company and thus, no industrial dispute
at all existed between the appellant and the respondent
workmen. They took a specific plea that if M/s. Lafarge did not
provide assured service terms, these respondents could raise
the dispute only against M/s. Lafarge which was their real
employer and Mis. Lafarge was not even made partial in the             G
present proceedings. As per the appellant, the Conciliation
Officer had not considered material on record and without
applying its mind submitted the failure report leading to the
reference in question. On that basis, Writ Petitions were filed
by the appellant before the High Court of Jharkhand at Ranchi          H
    444     SUPREME COURT REPORTS                 [2013] 9 S.C.R.


A   seeking quashing of the said reference.
        8. These Writ Petitions came up before the learned Single
  Judge who dismissed these Writ Petitions with the observation
  that the Labour Court. which was already in seisin of the matter,
  can very well adjudicate and answer the reference after
B considering all the points raised by the parties and on the basis
  of evidence led by the parties in the reference proceeding
  before the Labour Court. Intra Court Appeals preferred by the
  appellant have been dismissed by the Division Bench of the
  said Court observing that as there is a dispute between parties
C and, therefore, the learned Single Judge rightly dismissed the
  Writ Petitions.
        9. It is how the parties are before us in the present
    proceedings.

D       10. At the outset, we would like to observe that the High
  Court is right in holding that the Industrial Dispute has arisen
  between the parties in as much as the contention of the workers
  is that they are entitled to serve the appellant as they continued
  to be the workers of the appellant and were wrongly
E "transferred" to Mis. Lafarge. On the other hand, the appellant ·
  contends that with the hiving off the cement division and
  transferring the same to Mis. Lafarge along with the workers
  who gave their consent to become the employees of the
  transferee company, the relationship of employers and
  employees ceased to exist and, therefore, the workmen have
F no right to come back to the appellant. This obviously is the
  "dispute" within the meaning of Section 2(k) of the Industrial
  Disputes Act. Section 2 (k) of the Industrial Disputes Act which
  defines Industrial Dispute reads as under:

G         "2(k) "industrial dispute" means any dispute or
                difference between employers and employers,
                between employers and workmen, or between
                workmen and workmen, which is connected with the
                employment or non-employment or the terms of
                employment or with the conditions of labour, of any
H                                                                     -·
     TATA IRON & STEEL CO. LTD. v. STATE OF                   445
            JHARKHAND [A.K. SIKRI, J.]
            person."                                                  A
      11. No doubt, as per the aforesaid provision, industrial
dispute has to be between the employer and its workmen.
Here, the appellant is denying the respondents to be its
workmen. On the other hand, respondents are asserting that
they continue to be the employees of the appellant company.           B
This itself would be a "dispute" which has to be determined by
means of adjudication. Once these respective contentions were
raised before the Labour Department, it was not within the
powers of the Labour DepartmenU appropriate Government
decide this dispute and assume the adjudicatory role as its role      C
is confined to discharge administrative function of referring the
matter to the Labour CourU Industrial Tribunal. Therefore, this
facet of dispute also needs to be adjudicated upon by the
Labour Court. It cannot, therefore, be said that no dispute exists
between the parties. Of course, in a dispute like this, Mis.          D
Lafc;irge also becomes a necessary party.
     12. Having said so, we are of the opinion that the terms
of reference are not appropriately worded in as much as these
terms of reference do not reflect the real dispute between the
parties. The reference pre-supposes that the respondents              E
workmen are the employees of the appellant. The reference
also proceeds on the foundation that their services have been
"transferred" to Mis. Lafarge. On these suppositions the limited
scope of adjudication is confined to decide as to whether
appellant is under an obligation to take back these workmen           F
in service. Obviously, it is not the reflective of the real dispute
between the parties. It not only depicts the version of the
respondents workmen, but in fact accepts the same viz. they
are the employees of the appellant and mandates the Labour
Court/ Industrial Tribunal to only decide as to whether the           G
appellant is required to take them back in its fold. On the
contrary, as pointed out above, the case set up by the appellant
is that it was not the case of transfer of the workmen to Mis
Lafarge but their services were taken over by Mis. Lafarge
which is a different company/ entity altogether. As per the           H
    446     SUPREME COURT REPORTS                   [2013) 9 S.C.R.
                                                                 #



A appellant they were issued fresh appointment letters by the new
  employer and the relationship of employer-employee between
  the appellant and the workmen stood snapped. This version of
  the appellant goes to the root of the matter. Not only it is not
  included in the reference, the appellant's right to put it as its
B defence, as a demurrer, is altogether shut and taken away, in
  the manner the references are worded.
        13. We would hasten to add that, though the jurisdiction
  of the Tribunal is confined to the terms of reference, but at the
  same time ifis empowered to go into the incidental issues. Had
C the reference been appropriately worded, as discussed later
  in this judgment, probably it was still open to the appellant to
  contend and prove that the Respondent workmen ceased to be
  their employees. However, the reference in the present form
  does not leave that scope for the appellant at all.
D         14. A full Bench of High Court of Delhi in the case of Indian
    Tourism Development Corporation (/TDC) v. Delhi
    Administration and Ors. 1982 (LAB) IC 1309 had an occasion
    to deal with issue of this nature i.e. pertaining to the "Terms of
    Reference". Various writ petitions were heard together and
E   disposed of by the common judgment. One of the writ petitions,
    in which this issue arose, was C.W.P No. 1472/1981. One
    worker working at the sweets counter of the Sona Rupa
    Restaurant of the management was caught red handed while
    misappropriating the sale proceeds of sweets sold to the
F   customers. Though initially he admitted the theft but later he
    instigated other employees to resort to militant and violent acts
    in which various workers indulged in and abstained from work.
    In view of the violent and subversive activities of the workers,
    the management decided to close down the restaurant and
G   informed the workmen accordingly. Notice of closure was
    issued wherein workmen were informed that there accounts
    would be settled in full and final. The workmen approached the
    Labour Department and raised the dispute alleging that there
    was a "lock-out" declared by the management. The
H   management appeared in the conciliation proceedings and
     TATA IRON & STEEL CO. LTD. v. STATE OF                     447
            JHARKHAND [A.K. SIKRI, J.]
stated that it was a case of "closure" of the restaurant and· not       A
of lock-out. Since conciliation proceedings failed, the matter
was referred by the appropriate Government to the Industrial
Tribunal, Delhi, for adjudication with following terms of reference:
     "Whether the workmen as shown in Annexure 'A' are
     entitled to wages for a period of lock-out w.e.f. 1.1.81 and       B
     if so, what directs are necessary in this respect."
      15. The Management filed the Writ Petition under Article
226 challenging the notification of reference on the plea that
the real dispute about the existence or otherwise of the lockout        C
had not been referred to. Instead lock- out was presumed in
the reference itself on imaginating and fictitious basis with the
result, it was not open to the management to urge before the
Tribunal whether there was at all a lock out, and instead it was
a case of closure, prompted by workers' violent attitude. The
High Court accepted these contentions on the analogy that the           D
jurisdiction of the Court/ Industrial Tribunal in industrial disputes
is limited to the points specifically referred for its adjudication
and the matters incidental thereto and it is not permissible for
it to go beyond the terms of reference. The High Court further
pointed out that though the existence of lock-out itself was the        E
real dispute between the management and its workmen, the
terms of reference proceeded on the assumption that there was
a lock-out declared by the management. This way the
management was precluded from proving before the Industrial
Tribunal that there was no lock out and, in fact it was a case of       F
closure. Thus, the real dispute between the parties as to whether
there was at all a lock-out or whether there was violence by the
workmen which compelled the management to close the
restaurant, was not referred.
     16. Later this judgment was followed by a Single Bench             G
of Delhi High Court in the case of Moolchand Kharati Ram
Hospital vs. Labour Commissioner and Ors. 1998 (Ill) LLJ
1139 Del, where also dispute was as to whether the workmen
had resorted to strike, as contended by the management or it
is the management which had declared a lock-out, which was              H
    448     SUPREME COURT REPORTS                   (2013] 9 S.C.R.


A the stand of the workmen. However, the terms of reference
  stipulated were: whether the workmen were entitled to wages
  for the lock-out period? The Court concluded that since there
  was a dispute about the existence of lock-out itself, this kind
  of reference would not permit the management to prove that it
8 was   in fact a case of "strike" resorted to by the workmen.
  Reference was accordingly quashed. The court relied upon the
  full Bench judgment in ITDC(supra). Some judgments of this
  Court were also referred to for the proposition that the
  jurisdiction of the Tribunal is limited to the extent of what is
C referred to it. We would like to reproduce that portion of the
  judgment where decisions of this Court are discussed:-
          "25. Their Lordship of the Supreme Court in the matter
               of Management of Express Newspapers (Private)
               Ltd., Madras v. The Workers and Ors.,MANU/SC/
D              0267/1962: (1962)11LLJ227SC, held that "since the
               jurisdiction of the Industrial Tribunal in dealing with
               industrial disputes referred to it under Section 10
               is limited by Section 10(4) to the point specifically
               mentioned in the reference and matters incidental
               thereto, the appropriate Government should frame
E
               the relevant orders of reference carefully and the
               questions which are intended to be tried by the
                Industrial Tribunal should be so worded as to leave
                no scope for ambiguity or controversy. An order of
                reference hastily drawn or drawn in casual manner
F              often gives rise to unnecessary disputes and
               thereby prolongs the life of industrial adjudication
               which must always be avoided.
          26.   In Sindhu Resettlement Corporation Ltd. v.
G               Industrial Tribunal of Gujarat and Ors. MANU/SC/
                0233/1967 : (1968)1LLJ834SC , their Lordships of
                the Supreme Court have emphasised the
                importance of drafting of reference under Section
                10 of the Industrial Disputes Act. This has been
                observed in this case as under at p. 839 :
H
    TATA IRON & STEEL CO. LTD. v. STATE OF                  449
           JHARKHAND [A.K. SIKRI, J.]
            "If no dispute at all is raised by the employees with   A
            the management, any request sent by them to the
            Government would only be a demand by them and
            not an industrial dispute between them and their
            employer. An industrial dispute, as defined, must
            be a dispute between employers and workmen.             B
            The Government has to come to an opinion that an
            industrial dispute does exist and that opinion can
            only be formed on the basis that there ·was a
            dispute between the employee and the employer.
            Where the retrenched employee and the Union had         C
            confined their demand to the management to
            retrenchment compensation O;llly and did not make
            any demand for reinstatement the reference made
            by the Government under Section 10 in respect of
            reinstatement is not competent."                        D
     17. Appeals against the aforesaid decision was dismissed
by this Court in Moolchand Kharati Ram Hospital vs. Labour
Commissioner and Ors. 2002 (10) SCC 708. This shows that
view of the Delhi High Court in the aforesaid cases has been
given imprimatur by this Court.                                     E

      18. The Industrial Tribunal/ Labour Court constituted under
the Industrial Disputes Act ·is a creature of that statute. It
acquires jurisdiction on the basis of refer"lnce made to it. The
Tribunal has to confine itself within the scope of the subject      F
matter of teference and cannot travel beyond the same. This
is the view taken by this Court in number of cases including in
the case of National Engineering lndustrjes Limited v. State
of Rajasthan & Ors. 2000 (1) SCC 371.
     19. It is for this reason that it becomes the bounden duty     G
of the appropriate Government to make the reference
appropriately which is reflective of the real/ exact nature of
"dispute" between the parties. In the instant case, the bone of
contention is as to whether the respondent workmen were
simply transferred by the app-ellant to Mis. Lafarge or their       H
    450     SUPREME COURT REPORTS                  [2013] 9 S.C.R.


A services were taken over by Mis. Lafarge and they became the
  employees of the M/s. Lafarge. Second incidental question
  which would follow therefrom would be as to whether they have
  right to join back the services with the appellant in case their
  service conditions including salary etc. which they were enjoying
B with the appellant are not given or protected by M/s. Lafarge?
  If it is proved that their service conditions are violated, another
  question would be as to whether they can claim the service
  benefits/ protection from M/s. Lafarge or they have the right to
  go back to the appellant?
C      20. It follows from the above that the reference in the
  present form is clearly defective as it does not take care of the
  correct and precise nature of the dispute between the parties.
  On the contrary, the manner in which the reference is worded
  shows that it has already been decided that the respondent
D workmen continue to be the employees of the appellant and
  further that their services were simply transferred to M/s.
  Lafarge. This shall preclude the appellant to put forth and prove
  its case as it would deter the labour court to go into those
  issues. It also implies that by presuming so, the appropriate
E Government has itself decided those contentious issues and
  assumed the role of an adjudicator which is, otherwise,
  reserved for the Labour Court/ Industrial Tribunal.
        21. As a consequence, this appeal is allowed and the
  impugned judgment of the High Court is set aside. Sequitur to
F that would be to quash the references made in the present
  form. However, at the same time, direction is given to the
  appropriate Government to make fresh reference, incorporating
  real essence of the dispute as discussed in this judgment, within
  a period of two months from the date of receipt of the copy of
G this judgment.
         22. The appeals are allowed and disposed of in the
    aforesaid term.s with no order as to costs.
    R.P.                                          Appeals allowed.
H