Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No. 3803 OF 2019
(Arising out of S.L.P.(C) No.99 of 2018)
Chairman and Managing Director,
The Fertilizers And Chemicals
Tranvancore Ltd. & Anr. ….Appellant(s)
VERSUS
General Secretary FACT Employees
Association & Ors. ….Respondent(s)
WITH
CIVIL APPEAL No. 3804 OF 2019
(Arising out of S.L.P.(C) No.100 of 2018)
J U D G M E N T
Abhay Manohar Sapre, J.
1. Leave granted.
Signature Not Verified
2. These appeals are directed against the final
Digitally signed by
ANITA MALHOTRA
Date: 2019.04.11
17:17:57 IST
Reason:
judgment and order dated 25.01.2017 passed by
the High Court of Kerala at Ernakulam in W.A.
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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.
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.110) are
the writ petitioners of the writ petitions, out of
which these appeals arise.
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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6. On 23.01.1978, a Memorandum of Settlement
was executed between appellant No.1 (PSU) and
respondent Nos.1 to 10, i.e., (Trade Unions) wherein
it was agreed between the parties that the
inter alia
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
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 all the Public Sector
Undertakings of the Central Government and
directed them to increase the age of superannuation
upto below boardlevel employees from 58 years to
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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.
9. Since the financial condition of the appellant
(PSU) was deteriorating daybyday, 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 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
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directed the appellant (PSU) to change the
retirement age of pre1978 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 pre1978 employees
from 60 years to 58 years.
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.
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
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Trade Unions had agreed vide settlement dated
28.08.2001 that having regard 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 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.
12. The respondents (Trade Unions) felt aggrieved
and carried the matter in intra court appeal (WA
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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
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 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).
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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 following
industrial reference (No.10/2004) at the instance of
the Trade 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?’
“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:
“Whether the action of the management of
FACT, Ltd. Udyogamandal Ltd. terminating
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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 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 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) in the High
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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
The Single Judge then awarded 30% of
judicata.
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
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
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Court was justified in holding that the 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 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 & 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
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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.
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.
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
cooperative 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.Cooperative Society Act. The Deputy
Registrar upheld the finding of the misconduct
12
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 bad in law. The employer,
therefore, filed a writ petition in the High 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 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.
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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
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, 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 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 &
(2004) 1 SCC 68. In this case also, this Court
Anr.,
again examined the question as to whether the
principle of res judicata including the principles of
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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 that the industrial
dispute pertained to the same subjectmatter
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 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 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
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
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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 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 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 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.
The “lesser relief” of reinstatement which
was the subjectmatter 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 order in the writ petition, it was not
open to the respondent 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.”
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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 (supra) with
R.C. Tiwari
these words:
“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 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
17
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
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 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 contained in Section 11 of the Code, which
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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 reexamine
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 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.
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33. Once we hold that the references made to the
Labour Court 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.
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.
.………...................................J.
[ABHAY MANOHAR SAPRE]
…...……..................................J.
[INDU MALHOTRA]
New Delhi;
April 11, 2019
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