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Diffusion Engineering Limited v/s Prithviraj Patle

    Writ Petition No. 2768 of 2019

    Decided On, 25 April 2019

    At, In the High Court of Bombay at Nagpur


    For the Appearing Parties: M.G. Bhangde, V.P. Marpakwar, R.N. Sen, Advocates.

Judgment Text

In view of notice for final disposal of the writ petition issued earlier, the learned Counsel for the parties have been heard.

2. Rule. Heard finally with the consent of the learned Counsel for the parties.

3. The petitioner - employer is aggrieved by the award dated 15-2-2019 passed by the learned Member of the Industrial Court dated 15-2-2019 whereby the reference as made under Section 73(2) of the Maharashtra Industrial Relations Act, 1946 has been answered in the affirmative holding the respondents - employees entitled for a raise in wages, allowances and other monetary benefits

4. It is the case of the petitioner which is a public limited company that it is operating four different units undertaking manufacture of various engineering products. The dispute in question relates to one of its units wherein in the year 2012, about 248 workmen were engaged. The respondents in their capacity as elected representatives of the workmen therein made various demands and matter was considered by the Dy. Commissioner of Labour, Nagpur. Since conciliation was not possible a failure report was submitted on 19-12-2012. The State Government thereafter in exercise of powers under Section 73(2) of the said Act referred the industrial dispute to the Industrial Court for adjudication. A statement of claim was filed by the respondents seeking increase in wages, allowances along with other monetary benefits. The claim was opposed by the employer. Evidence was led by the workmen while the employer examined its Personnel Manager. The learned Judge of the Industrial Court after considering the material as placed recorded a finding that the respondents were justified in raising various demands as made in the statement of claim. It was held that the workmen were entitled for a rise in wages, dearness allowance, travelling allowance, special attendance allowance, house rent allowance, washing allowance and medial allowance. Similarly, the aspect of entitlement to casual leave, other forms of leave and payment of bonus was also accepted. Award was accordingly passed answering the reference on 15-2-2019. Being aggrieved the petitioner has challenged the aforesaid judgment.

5. Shri M. G. Bhangde, learned Senior Advocate for the petitioner made the following submissions:

(a) That the learned Judge of the Industrial Court while answering the reference failed to take into consideration that the workmen were demanding fair wages and therefore it was necessary for them to have proved that other industries undertaking similar activities in the region concerned were paying to their workmen similar wages as were being claimed by the respondents herein. According to him, the employer was already paying minimum wages to its workers as fixed by the State Government and as there was a claim for grant of fair wages, the burden was on the workmen to prove by leading appropriate evidence that the employer had the financial capacity to bear the additional expenditure. Merely on the basis of oral evidence, the workmen sought increase in the amount of wages and had prayed for grant of fair wages. He referred to the evidence on record led by the workmen and submitted that said evidence was totally silent as regards any comparable instances of similar wages being paid in the adjoining area. Placing reliance on the decisions in Workmen of Balmer Lawrie and Co. Ltd. v. Balmer Lawrie and Co. Ltd and another, (1964) AIR SC 728, Remington Rand of India Ltd. vs. Workmen,1969 19 FLR 46 and M/s. Woolcombers of India Ltd. vs. Woolcombers Workers Union and another, (1974) 3 SCC 318, it was submitted that in absence of any documentary evidence to indicate the aspect of comparability and merely on the basis of oral evidence the Industrial Court was not justified in accepting the demand of fair wages.

(b) That the workmen did not place on record any documentary material or even the balance-sheets of the employer that were available in public domain. Referring to the provisions of Section 137 and Section 399 (1) of the Companies Act 2013 (for short, the Act of 2013) it was submitted that the workmen could have placed that material on record to enable the Industrial Court to have taken into consideration the financial position of the employer. The burden in that regard was on the workmen and the mere fact that the employer had not placed the same on record would not be a reason to draw adverse inference against the employer. It was submitted that no application was moved by the workmen calling upon the employer to produce the said balance-sheets on record. Referring to the observations in paragraph 53 of the decision in Standard Chartered Bank vs. Andhra Bank Financial Services Ltd. and others, (2006) 6 SCC 94 as well as the decision in Union of India vs. Ibrahim Uddin and another, (2012) 8 SCC 148, it was submitted that in absence of the employer being called upon to produce such documents, the Industrial Court erred in drawing an adverse inference against the workmen on that basis. On that count also, the impugned award was liable to be set aside.

(c) Further, except making some suggestions to the witness examined by the employer, the aspect with regard to grant of fair wages could not have been considered. He referred to the deposition of said witness and the suggestion given in the cross examination that if the workload of the employees was increased the salary would be increased. It was submitted that such suggestion in the cross-examination cannot take the form of substantive evidence especially when there was no other positive evidence brought on record. At the most, the suggestion as given could be termed as an aimless suggestion. In that regard the learned Senior Advocate referred to the judgment of the Division Bench in Radhesham S/o Govardhan Bhagat vs. The State of Maharashtra, (2000) AllMR(Cri) 62 and the judgment of the Andhra Pradesh High Court in The Revenue Divisional Officer vs. Raja J. Rameswara Rao and others, (1992) 1 APLJ 493.

It was thus submitted that when the impugned award is examined in the light of aforesaid contentions it was clear that the same was not in accordance with law and it was liable to be set aside.

6. On the other hand, Shri R. N. Sen, learned Counsel for the respondents supported the impugned award. According to him, there was no wage settlement between the employer and the workmen. Even if minimum wages were being paid to the workmen, they were entitled to claim and receive fair wages as stated by them in the statement of claim. He submitted that the demands as made by the workmen could not be treated to be exorbitant or on a higher side. The witness examined by the workmen had clearly deposed that the facilities and benefits claimed by the workmen in the statement of claim were being provided to workmen in other industries and hence, there was material on record to indicate similar monetary benefits being given to industries located in the vicinity. The financial condition of the employer was sound and the unit was not running into losses. The employer failed to place on record any documents to substantiate its stand that it was not possible for it to satisfy the claims as made. The audited statement of accounts were also not placed on record by it. Since the procedure as prescribed by the Code of Civil Procedure, 1908 was not applicable and as no material was placed on record by the employer, an adverse inference was rightly drawn by the Industrial Court. He referred to various heads on which demands were made by the workmen and submitted that the amounts presently being paid were on a lower side and the employer was in a position to pay fair wages and other allowances as demanded. Since the year 2012 there was no wage settlement and therefore, the increase as sought by the statement of claim was liable to be granted. The learned Counsel submitted that after considering the entire evidence on record the fair demands made by the workmen had been granted and hence there was no reason to interfere with the impugned award. It was thus submitted that the writ petition was liable to be dismissed.

7. I have heard the learned Counsel for the parties at length and I have also perused the material placed on record. It would first be necessary to refer to the statement of claim as filed by the workmen. In the statement of claim as filed, it was stated that the employer was not paying salary to the workmen equally though they were doing the same work. Travel allowance was not being paid. Further house rent allowance was being paid only at the rate of 5% of the basic pay and it was demanded at 15% of the basic pay. Increase in the allowance of education amount to the extent of 10% was also sought. Washing allowance also at the rate of 10% of the basic pay was demanded. Demand of medical allowance as well as casual leave was also made. In response to the said statement of claim it was stated by the employer that wages as prescribed for the engineering industry were being paid to the workmen. The provisions of the Minimum Wages Act, 1946 were being complied with. All other allowances were also paid in accordance with the law. It was further pleaded that the benefits prayed for in the statement of claim were not being granted by any other similarly situated industry. Other industries in the region were not extending such facilities as claimed by the workmen. Thereafter the workmen examined an elected member of the Union in support of the statement of claim. As per his deposition the employer was earning huge profits but wages and other allowances were being paid as per the whims of the employer. The demand as made was from the year 2012 but the same was not being granted. The witness referred to the charter of demands dated 21-9-2012. In his cross-examination it was stated that the facilities and benefits claimed in the statement of claim were being provided to workmen in Mahindra and Mahindra Company and M/s Star Surclips. It was admitted that all facilities as per the Factories Act, 1948 were being extended. The suggestion that the unit in question was running in loss was denied.

Thereafter another elected representative was also examined and he reiterated the stand as taken by the earlier witness. In his cross-examination he admitted that House Rent Allowance was being received as per law. Benefits under the Employees State Insurance Act, 1948 were also being given. The said witness placed on record certain pay slips to indicate the monthly wages being paid. This was the evidence brought on record by the workmen.

8. As regards employer, its Personnel Manager was examined. He stated that wages were being paid in accordance with law. Various other industries in the region had been closed for want of proper business and financial difficulties. He deposed that the employer was incurring losses. In his cross-examination he admitted that special allowance was not being paid to the workmen and that regular increment was given only to the members of the office staff. It was also admitted that travelling allowance was not being paid nor were twelve casual leaves given in a year.

Another witness examined was a Senior Executive of the employer. He too deposed on the same lines as the earlier witness. According to him, if the demands as made by the workmen were accepted, the business would have to be closed down. In his cross-examination it was stated that documents to indicate yearly increments was placed on record. He also stated that the workload of staff employees had increased and therefore their salary was increased. This is the evidence brought on record by the employer.

9. Before considering the aspect as to whether the Industrial Court had applied the correct principles before adjudicating the reference proceedings, it would be necessary to refer to certain legal principles laid down by the Hon'ble Supreme Court in the decisions relied upon by the learned Senior Advocate for the petitioners. In Workmen of Balmer Lawrie and Co. Ltd. (supra) demands were made by the workmen in respect of pay scales as well as grant of leave. It was observed therein that while considering the question in respect of revision of wage scales, the aspect of res judicata would not be applicable. The aspect of comparable concerns was referred to and it was observed that while dealing with the comparable character of industrial undertakings, such adjudication does not rely only upon oral evidence. The question has to be considered in the light of the material facts and circumstances that are generally proved by documentary evidence. The total capital invested in the concern, the extent of its business, the nature of profits made, the dividends paid, the number of employees employed as well as the standing of the industry in question in comparison with other industries are factors that have to be considered in the matter of fixing of fair wages. These questions cannot be decided merely on the basis of the interested testimony either of the workmen or of the employer and his witnesses. After making these observations the proceedings were remanded to the Industrial Tribunal with a liberty to the parties to lead additional evidence.

The aforesaid decision was referred to and relied upon in the subsequent decision in M/s. Woolcombers of India Limited (supra). Reference was made to the aspect of comparable concerns by observing that such evidence was necessary in that regard. As there was absence of documentary evidence on record in that respect, it was observed that the same was a fatal defect and absence thereof rendered the adjudication by the Tribunal unsustainable. In this case also the proceedings were remanded for fresh adjudication.

From the aforesaid, it can be seen that the aspect of comparable character of industrial undertakings in the region is a material aspect that is required to be taken into consideration in the matter of revision of pay scales. The issue of revision of pay scales or grant of fair wages has to be adjudicated on the basis of documentary material and not merely on the basis of the interested testimony either of the workmen or of the employer and its witnesses.

10. Besides the aspect of comparable instances, in Remington Rand of India Limited (supra), the aspect of the employer being able to bear the burden of revised pay scales was held not to be the criterion for making such revision. Mere fact that a particular concern could bear the additional liability would by itself be no ground to impose upon it such extra obligation. The aspect of uniformity of conditions of service in comparable concerns in the industry in the region was given importance by observing that in absence thereof there was possibility of migration of labour to the place where conditions were more favourable from the places where the conditions were less favourable.

In the present case, it is seen that except the oral testimony of the elected representatives, the workmen did not place on record any material to indicate comparison of pay scales in respect of similarly situated industrial concerns. As noted above, merely on the basis of oral testimonies of witnesses the aspect of wage revision cannot be undertaken.

11. The Industrial Court in the impugned order has referred to non-production of material documents such as audited balance-sheet, profit and loss accounts and other audited accounts by the employer. After observing that these documents were in exclusive possession of the employer, the Industrial Court proceeded to draw an adverse inference against the employer for non-production of the same. In this regard it is to be noted that the workmen did not give any notice to produce the said document to the employer. It would have been a different matter that such documents were not produced despite a notice to produce the same having been given. As observed in Ibrahim Uddin (supra) the aspect as to whether the other side could have sought production of relevant documents or could have filed interrogatories was a material factor. All relevant pros and cons were required to be examined before drawing any adverse inference. Moreover, such inference could be drawn if other larger evidence on record is shown to the contrary. Thus, in absence of even a demand being made to the employer to produce the audited statement, it was not permissible for the Industrial Court to have straight way drawn an adverse inference due to absence of such material on record.

12. Similar is the case as regards an admission by one of the witnesses of the employer which is sought to be relied upon by the workmen. It is to be noted that a stray admission by itself would not be sufficient to hold that the employer had admitted to the revision of pay scale. Documentary evidence was very much necessary for being brought on record but no efforts in that regard were taken by the respondents. Merely on the basis of some stray admission which is more of an aimless suggestion would not be sufficient to arrive at a conclusion that such admission was sufficient evidence to indicate or justify the revision in pay scales or other demands in the statement of claim.

13. It is thus found that the material on record brought by the workmen is insufficient to sustain the impugned award. The award is based merely on the oral deposition of

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the witnesses without there being any comparable instances with regard to other industries in the vicinity. There is no documentary material on record and the adjudication by the Industrial Court is based merely on guess work and notions of the learned Presiding Officer. It is thus found that the adjudication by the Industrial Court has not been undertaken on the basis of the law laid down that has been referred to herein above. 14. In the light of the fact that the reference with regard to revision of pay scales came to be made in view of various demands of the workmen, a fresh adjudication by complying with necessary legal requirements is warranted. The Hon'ble Supreme Court after laying down aforesaid such principles in Workmen of Balmer Lawrie and another as well as in Woolcombers of India Ltd. (supra) has granted an opportunity to the workmen to justify the statement of claim as made. I am therefore inclined to follow a similar course as was done in the aforesaid cases. 15. In that view of the matter, the award as passed by the Industrial Court on 15-2-2019 while answering the reference as made is set aside. The proceedings are remanded to the Industrial Court for adjudicating the statement of claim in the light of the legal position referred to herein above. The parties would be free to place on record additional material to substantiate their respective stands. The Industrial Court shall answer the reference on its own merits without being influenced by the fact that the impugned order has been set aside. The reference proceedings be decided expeditiously and preferably within a period of four months from the date of appearance. The parties shall appear before the Industrial Court on 3-6-2019 to facilitate such adjudication. All respective contentions are kept open for being considered by the Industrial Court. 16. Rule is made absolute in aforesaid terms with no orders as to costs.