- Bookmark
- Share
- CaseIQ
Kamani Tubes Ltd. v. Kamani Employees Union And Another
Factual and Procedural Background
The appellant is a public limited company with approximately 700 workmen at its factory in Kurla and its head office in Bombay. The 1st respondent is the trade union representing those workmen. The 1st respondent filed a complaint in the Industrial Court alleging that the appellant committed the unfair labour practice listed at Item 9 in Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act — namely, “failure to implement award, settlement or agreement.” The complaint asserted that the appellant had not paid wages for the months of November and December 1984 and up to the date the complaint was filed (28 February 1985).
The Industrial Court heard the matter on arguments only (not oral evidence) and concluded that the appellant's inability to pay wages did not constitute a defence to the Item 9 allegation; non-payment on the due dates fell within Item 9. The appellant challenged the Industrial Court's order by a writ petition under Article 226. A learned Single Judge summarily dismissed the writ petition, finding that the contract of employment created a liability to pay wages that amounted to an agreement within Item 9 and that there was a settlement about wages; accordingly the Industrial Court's decision was proper. The appellant appealed to the court issuing this opinion.
Legal Issues Presented
- Whether non-payment of wages due to an employer's financial inability constitutes a "failure to implement award, settlement or agreement" under Item 9 of Schedule IV of the Maharashtra Act.
- Whether the employer's motive, reason or financial incapacity can be taken into account as a defence to the Item 9 allegation (i.e., whether inability to pay negates "failure").
- Whether relief under Article 226 is appropriate in the circumstances where an employer's own conduct has led to its financial incapacity to pay wages.
Arguments of the Parties
Appellant's Arguments
- The appellant contended that there had been no "failure" to pay wages because it was not in a financial position to do so; inability to pay was presented as a defence.
- Through its counsel, the appellant outlined its recent financial history: it advanced a loan of Rs. 64.12 lakhs to a sister company (Jaipur Metals and Electricals Ltd.), financed by borrowing from another sister concern (Kamani Metallic Oxide Ltd.); Jaipur Metals was declared a relief undertaking and the advance became irrecoverable; subsequent disputes led Kamani Metallic Oxide Ltd. to recall loans and commence winding-up proceedings, leaving the appellant in financial distress and unable to meet its wage bill.
1st Respondent's Position
- The 1st respondent (the trade union) alleged that the appellant failed to pay wages as required and invoked Item 9 of Schedule IV of the Maharashtra Act for the unfair labour practice of "failure to implement award, settlement or agreement."
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The court analysed Item 9 of Schedule IV, observing that Item 9 makes an employer's "failure to implement award, settlement or agreement" an unfair labour practice. The court reasoned as follows:
- The plain and unambiguous language of Item 9 covers non-payment of wages on the due dates where wages are payable under an agreement, settlement or award; such non-payment falls within the mischief Item 9 addresses.
- The phrasing of Item 9 affords no scope for consideration of the employer's motive, reason or cause for the failure; to read an exception for inability to pay would be to insert the words "without good cause" into the provision, which the court regarded as impermissible judicial legislation.
- The Industrial Court's conclusion that the company's financial difficulties were not a defence was therefore justified by the statutory language.
- The learned Single Judge correctly held that the contract of employment creates a liability to pay wages and thereby constitutes an "agreement" within the meaning of Item 9, and that there was a settlement about wages — supporting the Industrial Court's decision.
Holding and Implications
Holding: The appeal is dismissed. The learned Single Judge and the Industrial Court were justified in their conclusions that non-payment of wages on due dates constitutes a failure to implement an agreement or settlement under Item 9 and that financial inability is not a defence to that unfair labour practice. The appellant was ordered to pay the costs of the appeal to the 1st respondent.
Implications: The direct effect of the decision is that the appellant remains liable for the unfair labour practice finding and must pay the costs ordered. The court applied Item 9 strictly according to its language and rejected inability to pay as an excusing circumstance; the opinion does not set out any broader, novel precedent beyond this interpretation and the refusal to entertain Article 226 relief in these facts.
Bharucha, J.:— The appellant is a public limited company. It employs some 700 workmen at its factory at Kurla and its head Office is in Bombay. The 1st respondent is the trade Union of these workmen. The 1st respondent filed a complaint in the Industrial Court alleging that the appellant was guilty of the unfair labour practice listed at Item 9 in Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, that is, of “failure to implement award, settlement or agreement”. The 1st respondent complained that the appellant's workmen had not been paid wages for the months of November and December 1984 and uptil the date upon which the complaint was filed i.e 28th February, 1985.
2. The Industrial Court noted that there was no scope for oral evidence in the complaint and proceeded to dispose it of on arguments.
3. It found it difficult to accept the submission made by counsel on behalf of the appellant that the appellant's inability to pay wages would not amount to a failure to implement a settlement or agreement. In view of the clear and unambiguous words of Item 9, the non-payment of wages by the appellant on the due dates squarely fell within the mischief of the unfair labour practice therein described. It said, “The financial difficulties of the company, though real, would not be a defence.”
4. The appellant impugned the Industrial Court's order in the writ petition. The writ petition was summarily dismissed. The learned Single Judge found that the contract of employment itself created a liability to pay wages and was, therefore, an agreement within the meaning of Item 9. Besides, there was a settlement about wages. The decision of the Industrial Court was, therefore, proper.
5. On behalf of the appellant what is argued is that there had been no “failure” to pay the wages because the appellant was in no financial position to do so.
6. Item 9 makes the employer's “failure to implement award, settlement or agreement” an unfair labour practice. When an employer does not implement an award, settlement or agreement he fails to implement the award, settlement or agreement. There is then a failure on the part of the employer to implement an award, settlement or agreement and he is guilty of the unfair labour practice set out in Item 9. The phraseology of Item 9 affords no scope for the taking, into account of motive or reason or cause for the failure. To read Item 9 in any manner other than as set out above would be to do violence to its language. To read Item 9 as suggesting that there would be no failure if there was inability to implement would be to read into it the words “without good cause”, and that would be impermissible. The Industrial Court was, therefore, justified in reading Item 9 in this manner.
7. Mr. Cama, learned counsel for the appellant, in the course of telling us that the appellant was in grave financial difficulty and unable to pay the wages, took us through what we may call its comparatively recent financial history. This starts with a loan of Rs. 64.12 lakhs given by the appellant to a sister public limited company Jaipur Metals and Electricals Ltd. For the purpose of making this advance the appellant borrowed from another sister concern, Kamani Metallic Oxide Ltd. Jaipur Metals & Electricals Ltd. was then declared a relief undertaking and the appellant was unable to recover the money it had advanced. Thereafter, because of disputes among the members of the Kamani family, Kamani Metallic Oxide Ltd. recalled the loan advanced to the appellant and started winding-up proceedings. The appellant was left high and dry. It is not necessary for the purposes of what we are aiming at to go on with this dismal tale. The point we are making is that for the purposes of the so-called “Kamani Group” the appellant disregarded prudent business practices and the interests of, inter alia, its workmen and placed itself in a position of such financial embarrassment that it could not even meet its wage bill. It is to protect workmen against employers such as the appellant that Item 9 has been framed in a manner which admits of no excuse. Where there has been non-implementation of an award, settlement or agreement there is an unfair labour practice.
8. There is yet another reason why the appellant's writ petition cannot be entertained. The appellant has, by its cynical indifference to its obligations, brought financial calamity upon itself and, which is more relevant for our purpose, upon its innocent workmen. It is not proper that the machinery of Article 226 should, in the circumstances, be made available to the appellant.
9. The learned Single Judge was, therefore, justified in rejecting the petition.
10. The appeal is dismissed.
11. The appellant shall pay to the 1st respondent the costs of the appeal.
Appeal dismissed.
Alert