Management of National Carbon Company vs Purushothaman C. and Others

V.S. Sirpurkar, J.—The management of National Carbon Company (hereinafter called ""the employer""), challenges the order of the learned

single Judge dated July 21, 1997, in W. P. No. 10566 of 1988 whereby, he set aside the order passed by the Presiding Officer/First Additional

Labour Court, Madras, in Claim Petition No. 52 of 1984, dated October 27, 1987, and remanded the matter for fresh trial of the original claim

petition. The Labour Court initially had dismissed the said claim petition filed by the respondents-workers herein. The said claim petition was u/s

33-C(2) of the Industrial Disputes Act, 1947, claiming certain wages, which were held back by the employer.

It was, inter alia, the case of the workers before the Labour Court that they were entitled to receive from the employer the personal pay in terms of

a settlement dated February 9, 1988, u/s 12(3) of the Industrial Disputes Act, between the employer and the workers, that this personal pay was

to be treated as basic wages for all purposes and that it could not be reduced. They pleaded that they were working as general factory workers

prior to the settlement and even after the date of the settlement and thereafter, they were sought to be transferred to the engineering department

and more particularly to group 6-IV thereof, which had the better wage rate. It is their case that while fixing their pay in this new category of

engineering department where they were transferred, the employer altered the same and reduced the personal pay, they contended that because of

the illegal reduction of the personal pay, they suffered a loss which was calculated in terms of each of the respondent and further prayed that the

amounts of the loss caused due to the illegal reduction of the personal pay were liable to be paid to them. According to them, the said amounts

were crystallised in their favour because of the settlement and as such there was no question of the reduction.

The employer filed a counter-statement and pointed out that the service conditions of the workmen were governed by the long-term settlement.

It is pointed out by the employer that prior to 1978 there were two categories, viz., general factory workmen and the workmen working in

engineering department. It was pointed out further that the general factory workmen were grouped in one wage group whereas the engineering

department was grouped in four wage groups. The basic wages of workmen consisted of a starting basic wage pertaining to his wage group plus

service benefits which was the total sum of the annual increments and service weightage. Besides the basic wages, the general factory workmen

were also entitled to the job premium, which was dependable on the work done by the general factory workers, but was fixed in case of

engineering workmen. Their further case is that prior to 1978 there were three elements in the wages, viz., starting basic wage, service benefits and

job premium.

According to the employer, it was a general practice that whenever a general factory workman was shifted to the engineering department, on

being selected, he used to be given training and he was given three additional increments in his existing scale and then the total pay received by a

workman after adding three increments was to be redistributed at the time of making a fitment of such workers in the engineering scales. In short,

the employer pleaded that a promotion of a general factory worker to the engineering department earned only three increments to him, to his

existing emoluments as general factory worker and nothing more and such final figure was redistributed for the purposes of his fitment in the new

scale. It is the further case of the employer that after the settlement dated February 9, 1978, the practice of paying job premium was discontinued.

Instead, the basic wages were increased and new scales created taking into consideration the new rates by which the workers were to be paid.

The employer further pleaded that the concerned workman was thereafter fitted in the new scales and his salary was distributed for the purpose of

fitment in the following three factors, they being, (1) new starting basic as per the agreement; (2) service benefits at the same rate as before; and

(3) the remainder, if any, as personal pay. The employer has admitted that each of the worker, whose pay fixation was made after the 1978

settlement, earned the basic wages as per the settlement and in addition to it, had the service benefit which included the amount of increments

earned by him and yet, his erstwhile pay being more than the one which was fixed after the settlement, such worker was left with some remainder

which was treated as personal pay. In paragraph 8 of the counter-statement, the said personal pay of each of the respondent herein has been

shown. The case of the employer, therefore, is that if these workers were shifted to the engineering department, the total pay which consisted of

basic pay plus service benefit plus personal pay was added with three increments and then such figure was distributed on the basis of the scales

made available in the engineering department and it was for that reason, it was necessary to make an adjustment in the personal pay. In short, the

contention was that the personal pay was not an independent component but could be interfered with, considering the total emolument earned by

the worker owing to the addition of three increments on his promotion to the engineering category. The employer, therefore, denied that there was

any personal pay to which the workers were entitled. Apart from this, the employer contended by way of preliminary objection that this question

could not be raised by a claim petition u/s 33-C(2) and could be gone into only by reference before the Labour Court in the proper proceedings,

as this amounted to an industrial dispute.

Both the sides tendered oral evidence in support of their claims. The Labour Court firstly, held that the objection as regards the jurisdiction was

untenable as the claim of the workers was not involving determination of the question whether the right of the personal pay which was claimed

existed or not. It held that the dispute was only over the quantum of such personal pay. However, on the question of merits, the Labour Court

came to the conclusion that the said personal pay could not be said to be an independent component and as such it was not protected and in case

of the employees who were transferred from the general factory workers category to the engineering category, the existing pay would be added

only with three increments and the final amount of emoluments would then be readjusted in the new pay scale of engineering workers wherein the

basic wage would be as per the scale, the wage benefit would be as per the increments earned by him and if the total emoluments is more than

these two added together, then the remainder would be treated as personal pay.

The order of the Labour Court was challenged before this Court and the learned single Judge has set aside the said order and directed the

parties to go back to the Labour Court and to offer fresh evidence and has directed the Labour Court to decide the whole question afresh. It is this

order of the learned single Judge, which has been assailed in the present writ appeal by the employer.

6.Learned counsel Mr. Ibrahim Kalifulla, appearing on behalf of the employer, firstly contended that the original application u/s 33-C(2) itself was

not tenable, as the controversy involved a question of determination of the right of the worker to get a fixed personal pay and such right could not

be enquired into or determined by the Government in the proceedings u/s 33-C(2). According to him, the Labour Court had erred in holding that

such 1 question could be covered in the present claim. He secondly contended that there was no question of any personal pay being protected at

the time of the transfer, or, as the case may be, the promotion. According to him, the emoluments earned by the workmen could not be said to be

comprising of the independent three components, viz., (1) basic wages, (2) the wage benefit, and (3) personal pay. According to him, the total

emoluments alone could be said and considered to be the subject of the wage settlement and as such, the workmen could not insist upon the

protection of a component like the personal pay, as there did not exist any such component. Thirdly, learned counsel suggests that the subject of

promotion was not covered by the settlement and the settlement was silent about it. However because of Clause 18 in the settlement, all the

questions, which were not the subject-matter of the settlement were to remain unchanged during the period of the operation of the settlement.

Learned counsel argues that prior to the settlement, all that the worker got at the time of this promotion was his total emoluments plus the amount

covered by three increments. Learned counsel points out that precisely the worker would, therefore, be entitled to get only that much of amount by

way of emoluments and nothing more and for that purpose, the employer was fully justified in making a pay fixation in the light of that amount and

while doing so, if the amount of personal pay had to be lessened, that could legitimately be done by the employer. Learned counsel urged that since

the order of remand by the learned single Judge is a non-speaking order, being totally without any reasons, he has to argue the matter on merits

and show that the order passed by the Labour Court was a correct order, at least in so far as it rejected the claim petition on merit.

Mr. Prasad, learned counsel appearing for the contesting respondents, however, supported the remand and pointed out that the Labour Court

has fully misread the settlement deed and had also ignored the fact that the settlement deed itself recognised the component of personal pay.

According to learned counsel, even a remand was unnecessary and the original claim petition u/s 33-C(2) was liable to be allowed in this appeal

itself. In so far as the tenability of the claim petition was concerned, Mr. Prasad, learned counsel, relied on the order of the Labour Court to that

extent.

On seeing the order of the learned single Judge, it is apparent that there are no reasons given for remanding the matter afresh. Hence, it will have

to be decided by us as contended by learned counsel for the appellant as to whether the findings of the Labour Court are correct so as not to

require a fresh trial.

9.Learned counsel appearing for the employer firstly attacked the finding regarding the tenability of the claim petition suggesting that the question

involved in the claim petition was as to whether the workers were entitled to the protection of their personal pay. Learned counsel strenuously

argued, that in short, the workers, claim that the personal pay was one of the components of the total emoluments and as such the said components

could not be changed to the detriment of those workers. According to learned counsel, this was the question of right being determined and,

therefore, outside the scope of the Labour Court in a claim petition u/s 33-C(2). Learned counsel pointed out that the union had approached the

employer and sent a notice dated July 2, 1979, whereby the union had decried the adverse change made in the personal pay in case of a worker

who was promoted from the general factory category to the engineering category. Learned counsel further pointed out that this subject was then

taken to the Assistant Commissioner of Labour. Learned counsel pointed out that the union then did not pursue this subject but the workers

straightaway filed a claim petition u/s 33-C(2). By reference to the earlier two communications, learned counsel wanted to suggest that this was a

dispute in respect of which the union had taken a stand that it was a disputed question of a right in respect of which there could be conciliation in

between the workers and the employer and on failure of the conciliation, the matter could have been decided upon by the Labour Court on a

reference made to it. Relying on this, learned counsel suggests that having approached the conciliation authority, the workers could not turn back

and straightaway proceed to file a claim petition u/s 33-C(2). The argument is clearly incorrect. Firstly, there is nothing in the communications

dated November 2, 1979, through which we have been taken to suggest that these communications are on behalf of the present respondents. The

first communication seems to be from the General Secretary, while the second communication dated April 4, 1981, seems to be a reply filed by the

employer to a letter dated January 10, 1981, which was allegedly sent to it by the Union Carbide Employees Union. Strangely enough, even that

letter dated January 19, 1981, is not on record. The communication dated November 2, 1979, was on behalf of the present respondents who

were merely the workers. That apart, merely because the union did not pursue their demand would not come in the way of the worker to file a

claim petition u/s 33-C(2), if otherwise such claim petitions are maintainable. According to us, the said claim petitions were perfectly maintainable,

as they pertained to the quantum of the personal pay. The concept of personal pay is the child of the settlement. While according to the employer

such personal pay could be reduced, according to the employee workman, such personal pay was protected and was part of the basic wages

which was payable under any circumstances. Thus, the question here was not of the existence of the right but of the execution of that right and,

therefore, perfectly covered under the provisions of Section 33-C(2) of the Act. Learned counsel in this behalf; relied on the reported decision in

Central Inland Water Transport Corporation Limited Vs. The Workmen and Another, : wherein the Supreme Court has held that if the question

related to the workers'' right to relief and the corresponding liability of the employer, it would be outside the scope of an application u/s 33-C(2),

but if the question is regarding the extent of the employer''s liability, then such question would certainly come within the scope of Section 33-C(2)

of the Act. There can be no dispute with the principles. However, learned counsel has not been able to show as to how the present enquiry is in

respect of the existence of the workers'' right and the corresponding liability of the employer. In fact, it is clearly regarding the extent of the right of

the personal pay, the concept of which has been recognised by the settlement deed. Learned counsel then relied upon the reported ruling in

Municipal Corporation of Delhi Vs. Ganesh Razak and Another, where again the Supreme Court has clarified the scope of an enquiry u/s 33-C(2)

of the Act and has approved the aforementioned ruling in Central Inland Water Transport Corporation''s case (supra). We have already shown

that the enquiry here cannot be said to be an investigation into the existence of a right of , the worker. From the above, it will be clear that the claim

petition u/s 33-C(2) of the Act was perfectly in order. As if these are not sufficient, it is seen that in the writ appeal the appellant has not even

assailed the finding given by the Labour Court against it while supporting the other findings of the Labour Court. In this behalf; learned counsel tried

to rely on a ruling in Oriental Insurance Co. Ltd. Vs. T. Mohammed Raisuli Hassan, . However, the ruling will not be applicable, as in this ruling the

Supreme Court was considering the scope of Order 41, Rule 22 of the C.P.C. and had held that the respondent in the appeal could support the

decree made in his favour urging that the issue held against him by the Courts below ought to have been held in his favour. We can only say this

much, that the present writ appeal is not under the provisions of Order 41, Rule 22 of the Code of Civil Procedure. We would have expected

some grounds questioning the finding of the Labour Court on the tenability. That having not been done, in fact, we would not allow learned counsel

to urge the question before us. However, even otherwise, we have found that the claim u/s 33-C(2) was perfectly tenable and as such the

argument of the appellant on that behalf must be rejected.

The next two questions raised by the appellant, which have been indicated above in the earlier paragraph, can be considered together.

The contention of learned counsel is that there was no necessity of setting aside the order of the Labour Court, in so far as it pertains to the merits

of the claim. Learned counsel took us through the settlement deed and pointed out Clause 18 thereof, which suggests that the terms and conditions,

which have not been covered in the said settlement deed would remain unchanged during the period of the operation of the settlement. He pointed

out that the question of promotion of the employee or transfer of an employee from the general factory worker to the engineering category is not a

subject-matter of the settlement deed, therefore, the conditions and terms of such promotion would remain unchanged. In this behalf; he invited our

attention to the evidence of the workmen as also the evidence of the representative of the employer. He pointed out that in his evidence, the

employees representative had stated that such a promoted or transferred worker would be entitled only to three increments which would be added

to his existing pay (the pay prior to the promotion) and then his pay would be refixed in the promoted category, whereby his basic pay would be as

per the settlement deed, his service benefit also would remain unchanged and his personal pay, if any, would then be readjusted and could be

changed adversely or brought down. Learned counsel also suggested that even in the evidence let in on behalf of the employees, this position was

admitted. We have seen the evidence ourselves. In the first place, the question to be decided would not be governed by the evidence at all,

because everything would depend upon the interpretation of the settlement deed, which has covered all the questions. The basic error committed

by the Labour Court is that it has also chosen to rely on the evidence instead of considering the clauses of the settlement deed.

In this behalf; it would have been better for the Labour Court to concentrate on Clause 3(c) of the settlement, which runs as under :

(c) Premium earnings and personal pay.-The standard premium earnings of indirect workman and the variable premium which each direct

workman would earn at the equivalent production level of 108,000 cells per 36 bar cooker shift, will be worked out and will be merged in basic

wages as applicable, in the manner explained hereinafter and the balance will be paid as ''personal pay'', if any, as illustrated in annexure B.

''Personal pay'' will be treated as basic wages for all practical purposes.

It will be seen that this settlement is on the basis of the charter of demands dated March 27, 1975, and it came into being somewhere in the year

1978, which is an admitted position. The wage structure itself was revised both in case of the general factory workers and the engineering

department workers. All these persons were grouped into different categories, the general factory workers were grouped into four categories,

whereas, the engineering department workers were adjusted in three categories, and each of the categories of engineering department worker had

four sub-categories. Clause 3(c) specifically provides that while fixing the worker in a particular category, his wage would be fixed on the basis of

a particular production level and then his basic wages and a fitment would be done for fixing him on a particular slab. The following words in

Clause 3(c) are very important: and the balance will be paid as ""personal pay"", if any, as illustrated in annexure B. ""Personal pay"" will be treated as

basic wages for all practical purposes. This only suggests that if the worker is fixed in a particular slab on the basis of his production level and if his

actual pay earlier to the settlement is much more than the level where he is fixed, then such remainder of the pay would be protected as a personal

pay and would be treated as basic wages for all practical purposes. The terminology ""all practical purposes"" would engulf even the ""promotional

purposes"". The Labour Court has failed to take into account this particular terminology and the language and the effect of the settlement and has

proceeded to decide the issue on the basis of the oral evidence. That is where the Labour Court has erred. In our opinion, the Labour Court has to

give the finding taking into consideration the precise language of the settlement wherein the extra pay of the worker, particularly the worker whose

pay was much more than the level at which it was fixed in the new wage structure, has been saved as a personal pay and has been fossilised, and

such extra pay has been treated as a personal pay by treating it to be the basic wage itself. The Labour Court was bound to take into consideration

this aspect, which it has ignored. We will not probe into the matter further and give an independent finding as there is a remand ordered by the

learned single Judge on all issues. We are only indicating that the findings of the Labour Court, which were essentially based on oral evidence,

were wholly incorrect, as the Labour Court had completely ignored Clause 3(c) of the settlement. The Labour Court should have considered the

oral evidence on the basis of and on the backdrop of the said settlement deed.

Same error has been committed by the learned Labour Court in presuming that at the time of promotion, all that the worker was entitled to,

was three increments. In our opinion, this could have been the position prior to the increment but it is was not necessary that the same position

could continue even after the agreement, the effect of which was granting a permanent status to the personal pay earned by the worker. The

reliance placed by the employer on Clause 18 of the settlement has to be tested in the light of the earlier Clause 3(c). The Labour Court has:

proceeded on the basic presumption that in case of promotion, the worker could earn only three increments. According to us, even there, the

Labour Court is wholly incorrect. It has to test the question as to whether in case of promotion, when the worker is paid three increments, the

personal pay, which has been fossilised and treated as basic wages, could be reduced. We are afraid the Labour Court has not addressed itself on

this important question. It will be for the reason that the Labour Court would have to go into these questions afresh in tune with the direction given

by the learned single Judge. The learned counsel appearing on behalf of the workers, Mr. Prasad, insisted on a final finding at this stage itself. We

are afraid we may not be able to do it at this stage, particularly because the workers have not chosen to challenge the order of the learned single

Judge ordering remand and they have accepted the remand as a fait accompli by not filing any appeal against the order of the learned single Judge.

We have dealt with the arguments of learned counsel for the employer and chosen to express our opinion only in so far as it relates to the order of

the Labour Court, since the contention before us was that the Labour Court was right in rejecting the claim petition on merits and the learned single

Judge was incorrect in setting aside that order and ordering the remand. We agree that the learned single Judge has not given any reasons and that

is why we have proceeded to give our reasons as to why the Labour Court was incorrect in outright rejecting the claim petition. The matter will

now go before the Labour Court and the Labour Court will dispose of the matter as early as possible, and under any circumstances, within four

months of the receipt of the order by the Labour Court. We are fixing the time limit as the matter is pending unnecessarily for all these long years.

With these observations, we dismiss the appeal with costs, which are quantified at Rs. 5,000. Consequently, C.M.P. is dismissed.