Structured Summary of the Opinion (Writ Petition challenging I.D.No.115 of 2000)

Factual and Procedural Background

The petitioner is the management of M/s. Sundaram Industries Ltd., which operates a rubber factory at Kochadai, Madurai. The petitioner challenged an Award dated 30.01.2010 passed by the First Respondent Industrial Tribunal in I.D.No.115 of 2000 by way of a writ petition under Article 226 of the Constitution of India. The Industrial Tribunal's Award arose out of a Government reference in G.O.(D).No.271, Labour and Employment dated 27.03.2002 concerning the dismissal of 16 workmen (raised by the second respondent Trade Union).

The Tribunal's Award (30.01.2010) resolved the claims in varying degrees: some workmen who had resigned or settled accounts (e.g., Velusamy; Ramasamy and Rajendaran) were held ineligible for relief; some who had reached superannuation (e.g., Mahadevan, Mani, Thangasamy) were deemed to be in service and were awarded 50% of backwages from dismissal until superannuation; and excluding those five, the dismissals of the remaining ten workmen were set aside with reinstatement and continuity of service but with 50% of backwages. The writ petition was admitted on 27.04.2010.

Pending the writ petition, this Court in M.P.Nos.1 to 10 of 2010 granted interim relief on condition that the Management deposit 50% of the backwages to the credit of the Industrial Tribunal. The Tribunal was directed to invest the amounts in long-term fixed deposits initially for three years. Specific interim directions included an ad hoc payment of Rs.25,000/- to A. Govindan (who had reached superannuation on 04.04.2010 and was not eligible under Section 17-B) and monthly payments of Rs.4,065/- under Section 17-B for certain other workmen, subject to adjustment if they obtained gainful employment.

Procedurally, the trade union had raised an industrial dispute and filed a claim statement dated 14.03.2001; the Management filed a counter statement dated 12.07.2002. Before the Tribunal, 14 workmen testified (W1–W14) and the Management examined one witness (M.W.1). The workers filed 151 documents (Exs.W1–W151) and the Management filed 248 documents (Exs.M1–M248). The Tribunal framed six issues for determination and adjudicated the matter by its Award dated 30.01.2010. The present opinion considers the petition challenging that Award.

Legal Issues Presented

Whether there was a violation of Section 33 of the Industrial Disputes Act (specifically Section 33(1)(a)).
Whether the domestic enquiries conducted by the Management (and, where applicable, ex parte enquiries) suffered from procedural infirmities and violated principles of natural justice.
Whether the penalties imposed on the workmen were appropriate in view of the magnitude, nature and degree of misconduct and circumstances of each case (Issues 5 and 6 framed by the Tribunal).
Whether the Industrial Tribunal correctly exercised its power under Section 11-A of the Industrial Disputes Act in determining quantum of relief (including backwages) and whether that exercise was legal and justified (identified by the Court as the principal question for consideration).

Arguments of the Parties

Petitioner Management's Arguments

The Management argued against soft or lenient treatment of delinquent workers on the ground that such treatment could result in chaos and undermine discipline in industry (citing a judgment reported at 1988 II CLR 142, Central India Flour Mills, Bhopal v. Mohd Ishaq Sagir and Another).
Relying on a 2002 decision (2002 (1) CLR 879, G.M.M.Co. Ltd v. Labour Court, Madras and another), the Management contended that while exercising jurisdiction under Section 11-A of the I.D. Act the Labour Court should go into the evidence before deciding the matter.
The Management relied on the Supreme Court's decision in 2006 SCC (L&S) 429 (State of M.P. v. Arjunlal Rajak) to submit that backwages should not be granted mechanically even where termination is held invalid.
The Management cited the 2009 (4) LLN 91 decision (Biecco Lawrie Ltd. v. State of West Bengal and another) to contend that reinstatement should not be ordered where workmen abused supervisors or were negligent in duty.
It further cited 2009 (4) LLN 720 (Uttar Pradesh State Road Transport Corporation v. Nanhe Lal Kushwaha) as an authority where dismissal of a person in a position of trust for misappropriation was held valid; the citation was used to contend that serious misconduct may justify dismissal without reinstatement.

Second Respondent (Trade Union)'s Arguments

The Trade Union argued that the Tribunal had taken into account all relevant factors and had balanced competing considerations before granting relief.
The Union pointed out that the Tribunal had rejected the workmen's procedural challenges regarding the enquiries and had rejected their challenge to introduction of new production rules; the Tribunal nonetheless found the dismissals unjustified in quantum and therefore reduced the relief to 50% backwages combined with a minor penalty (denial of annual increment for one year).
The Union submitted that, given the Tribunal's findings and the reduction of backwages to 50%, the Award did not call for interference by this Court.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
1988 II CLR 142 — Central India Flour Mills, Bhopal v. Mohd Ishaq Sagir and Another	Cited by the Management to support the proposition that lenient treatment of delinquent workers can lead to breakdown of discipline in industry (refer para 8 of that judgment).	The Management relied on this precedent in argument; the Court noted the reliance but ultimately did not accept the Management's overall contentions and upheld the Tribunal's Award.
2002 (1) CLR 879 — G.M.M.Co. Ltd v. Labour Court, Madras and another	Submitted by the Management to contend that while exercising jurisdiction under Section 11-A of the I.D.Act, the Labour Court/Labour Tribunal ought to go into the evidence and then decide the matter.	The Management placed reliance on this decision in submissions; the Court recorded the reliance as part of the arguments but upheld the Tribunal's exercise of power under Section 11-A.
2006 SCC (L&S) 429 — State of M.P. & others v. Arjunlal Rajak	Authority for the proposition that backwages should not be granted mechanically even if termination is held invalid.	The Management relied on this principle when contesting the grant of backwages; the Court considered the submissions but upheld the Tribunal's decision to award 50% backwages.
2009 (4) L.L.N. 91 — Biecco Lawrie Ltd. & another v. State of West Bengal & another	Cited for the proposition that where workmen abused supervisors or were negligent, reinstatement may not be appropriate.	The Management relied upon this case in support of resisting reinstatement; the Court nonetheless accepted the Tribunal's approach of reinstatement with reduced backwages in the present facts.
2009 (4) L.L.N. 720 — Uttar Pradesh State Road Transport Corporation v. Nanhe Lal Kushwaha	Cited to show that a person in a position of trust found guilty of misappropriation may be validly dismissed (supporting the proposition that serious misconduct can justify dismissal).	This case was cited by the Management; the Court noted the reliance but proceeded to uphold the Tribunal's Award which imposed lesser sanctions in the circumstances of the present disputes.
2009 1 SCC 695 — Laxmi Rattan Cotton Mills Ltd. v. State of Uttar Pradesh	Holds that Labour Courts have wide discretion in awarding backwages but such discretion must be exercised judiciously.	The Court expressly referred to this decision (para 19) to support the view that the Tribunal had a discretion and that, in the present case, it had struck a balance by awarding 50% backwages; this formed part of the rationale for upholding the Award.

Court's Reasoning and Analysis

The Court summarized the factual matrix and the Tribunal's findings and then reviewed the parties' submissions. The Tribunal had framed six issues and made specific findings:

Issue 1 — Violation of Section 33(1)(a) of the I.D.Act: the Tribunal found no violation.
Issues 2–4 — Conduct of enquiries (including ex parte enquiries): the Tribunal found no procedural infirmity and held that sufficient opportunities were given to the workers.
Issues 5–6 — Penalties: the Tribunal held that the Management did not properly consider magnitude, nature and degree of misconduct and circumstances under which misconduct occurred; it noted that imposition of major penalties for minor misconduct could constitute an "unfair labour practice" under Section 25-T read with Schedule V; the Tribunal therefore reduced the punishment to denial of annual increment for one year and awarded 50% of backwages where it deemed appropriate.

In the course of the writ proceedings the Management relied on several authorities to show that backwages and reinstatement should not be granted routinely and to argue that lenient treatment would undermine discipline. The Trade Union countered that the Tribunal had weighed relevant factors and appropriately moderated the relief (reinstatement with only 50% backwages and a minor penalty) and that the Award did not merit interference.

The Court identified the decisive legal question before it as whether the Tribunal had correctly exercised its power under Section 11-A of the I.D.Act and whether such exercise was legal and justified. Applying the relevant legal principles (including the principle articulated in Laxmi Rattan Cotton Mills that discretion to award backwages must be exercised judiciously), the Court held that the Tribunal had struck a balance in the circumstances:

The workers' grievance related to additional work introduced by Management and payment for that work. The Court noted that merely because other workers performed the extra work without claiming additional payment did not justify severe punishment of those who insisted on payment.
The Tribunal's reduction of relief (granting only 50% backwages and imposing a minor penalty of denial of annual increment for one year) appropriately reflected the Tribunal's assessment that the dismissals were excessive as penalties but that some diminution of backwages was justified because the workers had not proved illegality of the Management's actions.
Given these considerations, and the Tribunal's findings on issues of procedure and Section 33, the Court concluded that the Tribunal's exercise of discretion under Section 11-A was legal and justified in the facts of the case.

Holding and Implications

HOLDING: The Court upheld the Industrial Tribunal's Award dated 30.01.2010 and dismissed the writ petition.

Implications / Consequences:

The direct effect of the decision is that the Tribunal's award (including reinstatements, continuity of service where ordered, the grant of 50% backwages to eligible workmen, the finding of ineligibility for some who had resigned or settled accounts, and the special treatment for those who had reached superannuation) stands confirmed.
Interim directions previously made remain subject to the Court's order; in particular, it is open to the second respondent Trade Union to move the Tribunal for withdrawal of the amounts deposited in compliance with the interim order.
The Court expressly recorded that it was not inclined to accept the contentions of the Management and imposed no costs.
No broader precedent or new legal principle was announced by this decision beyond affirming that a Tribunal's discretionary award of backwages under Section 11-A must be a judicious exercise of discretion; the Court applied existing authorities to the facts and upheld the Tribunal's balanced approach.

Note: This summary is confined to the contents and reasoning expressly contained in the provided opinion and does not introduce information not present in the text.

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The Management of Sundaram Industries Ltd.Rubber Factory, Madurai v. The Industrial Tribunal, Chennai & Another

(Prayer: Petition under Article 226 of the Constitution of India praying for a Writ of Certiorari, to call for the records and quash the Award dated 30.1.2010 of the First Respondent Industrial Tribunal, Chennai in I.D.115 of 2000.)

1. The petitioner is the Management of M/s.Sundaram Industries Ltd., running its Rubber Factory located at Kochadai, Madurai. They have filed the writ petition, seeking to challenge the Award passed by the first respondent Industrial Tribunal made in I.D.No.115 of 2000 dated 30.01.2010.

2. By the impugned Award, the Tribunal dealt with the dismissal of the 16 workmen covered by the Government Order of reference in G.O.(D).No.271, Labour and Employment, dated 27.03.2002 which was raised by the second respondent Trade Union.

3. The Industrial Tribunal, by its Award dated 30.01.2010 held that in respect of Sl.No.15, Velusamy as he had resigned and settled his account, he is not eligible to get any benefit. In so far as Sl.Nos.11 and 15 M/s.Ramasamy and Rajendaran were concerned, no relief was granted to them as they have also settled their accounts. In so far as Sl.No.13 Mahadevan, Sl.No.2 Mani and Sl.No.1 Thangasamy were concerned as they had reached the age of superannuation, though the order of dismissal as against them was set aside, the Tribunal, after declaring that they are deemed to be in service also held that they were entitled to 50% of the backwages from the date of dismissal till the date of superannuation. Excluding those 5 workers, the dismissal orders of other 10 workers were set aside and they were directed to be reinstated with continuity of service but only with 50% of the backwages.

4. The writ petition was admitted on 27.04.2010. Pending the writ petition, in M.P.Nos.1 to 10 of 2010, this Court granted them interim relief on condition that the petitioner Management deposits 50% of the backwages to the credit of the ID. On such deposit, the Tribunal was directed to invest the amounts in a long term Fixed Deposits, initially for a period of three years. In respect of A.Govindan, it was noted that he had reached the age of superannuation on 04.04.2010 and he was not eligible for payment under Section 17-B of the Industrial Disputes Act. But the Management was directed to pay Rs.25,000/- as adhoc payment. In respect of Mp.Nos.3 to 10 filed by other workers, a direction was given to pay Rs.4,065/- as monthly salary towards 17-B wages with liberty to the Management to move the Court in case any workmen is engaged on gainful employment.

5. Heard the arguments of Ms.D.Veda, learned counsel for the petitioner Management and Mr.V.Prakash, learned Senior Counsel leading Mr.T.Ramkumar, counsel for the second respondent Trade Union.

6. It is the case of the second respondent Trade Union that the petitioner Management was part of the larger TVS Group and they never allowed any healthy trade Union to come up in the industry. Extraordinary conditions were unilaterally on them. After the formation of the second respondent Union, they have raised several disputes. In the petitioner company, the work of the moulders involved in the process of cures of rubber products. The quality control of the manufacturing products was done by a separate team consisting of a Manager, a Supervisor and 10 workmen. The Management disbanded the said quality control team and directed the moulders themselves to do the quality control work on the promise that they will be paid higher wages for the extra work done by them. They also directed the moulders to put all the produced rubber washers in a gunny bag and to tie them. Earlier this work was done by another Work team. For doing this extra work, the Management also promised to pay higher wages. If the work which was given additionally, if done by the workmen, it may require one hour more to finish the work. For doing the work for extra one hour, no over time wages were paid to them. There was also no work load settlement with the Union regarding production norms. During the year 1998, unilaterally, the work load of the workers were increased without due notice.

7. The Union raised an industrial dispute and the dispute is still pending. Even during the pendency of the dispute, the Management brought a weighing machine to the production area and orally directed the workers to weigh all the manufactured items after the shift hours. This action of the Management was contrary to Section 33(1)(a) of the I.D.Act as no approval of the Conciliation Officer was obtained. But their dispute relating to the unilateral imposition of service condition was declined to be referred by the Government. When the members of the second respondent Union reported to work, the Management refused to permit them to do the old type of work and hence, they suspended 16 workers. Subsequent to their suspension, charge memos were given to them and domestic enquiries were conducted only in respect of 13 workers. In respect of M/s.Thangasamy and Harimurthy, they were straightaway dismissed without affording any opportunities. The enquiries were held against the principles of natural justice.

8. Thereafter, an industrial dispute was raised which was referred to for adjudication by G.O.(D).No.271 Labour and Employment, dated 27.03.2002. On such reference, the second respondent Union filed a claim statement dated 14.03.2001. Notice was issued to the petitioner Management. On receipt of the notice, the Management filed a counter statement dated 12.07.2002 justifying the dismissal.

9. Before the Industrial Tribunal, 14 workers examined themselves individually as W1 to W14. On the side of the Management, one K.Damotharan was examined as M.W.1. While on the side of the workers, 151 documents were filed and marked as Exs.W1 to W151, on the side of the petitioner Management, 248 documents were filed and marked as Exs.M1 to M248.

10. It must be noted that the same Trade Union's dispute in I.D.No.14 of 1997 relating to the introduction of production targets without notice under Section 9A of the I.D.Act was upheld by the Tribunal vide Award dated 20.09.2007 when the second respondent Union challenged the said Award in W.P.No.13921 of 2000, it was rejected by this Court vide judgment dated 22.03.2010. This Court held that there was no case for interfering with the introduction of new production norms.

11. The Industrial Tribunal framed six issues on the Industrial Dispute. The first issue was whether there was any violation of Section 33 of the I.D.Act? The Tribunal found that there was no violation of Section 33(1)(a). With reference to issue Nos.2 to 4 relating to the conduct of the enquiries, the Tribunal found that there was no infirmity with the procedures adopted in the enquiry. Even in case of the ex parte enquiries, it held that sufficient opportunities were given to the workers. With reference to the last two issues, viz., 5 and 6 relating to the penalties, the Tribunal found that the Management did not take into consideration the magnitude, nature and degree of misconduct and the circumstances under which misconduct was exhibited. It noted that in respect of minor misconducts, awarding of major penalties themselves can be construed to be "unfair labour practice" prohibited under Section 25-T read with Schedule V of the I.D.Act. The Tribunal found that the case was pending for more than 10 years and that imposition of a penalty of denial of annual increment for one year will be a sufficient punishment. However, on the question of awarding of backwages, it held that the same is not automatic and therefore, in the interest of justice 50% of backwages can be given to the workmen.

12. Attacking the relief given by the Tribunal, the learned counsel for the petitioner Management contended that a soft glove treatment to the delinquent workers in a factory is likely to result in chaos, ultimately harming and damaging beyond repair the national discipline (Refer para 8 of the judgment reported in 1988 II CLR 142 [Manager, Central India Flour Mills, Bhopal v. Mohd Ishaq Sagir and Another]

13. The learned counsel further relied upon a judgment of this Court reported in 2002 (1) CLR 879 [G.M.M.Co. Ltd v. Labour Court, Madras and another] for contending that while exercising jurisdiction under Section 11-A of the I.D.Act, the Labour Court ought to have gone into the evidence and then decide the matter.

14. The learned counsel also relied upon the judgment of the Supreme Court reported in 2006 SCC (L&S) 429 [State of M.P. And others v. Arjunlal Rajak] for contending that backwages should not be granted mechanically, even if the Court had come to a conclusion that a termination was invalid.

15. The learned counsel further referred to the judgment of the Supreme Court reported in 2009 (4) L.L.N.91 [Biecco Lawrie, Ltd., and another v. State of West Bengal and another] for contending that even in cases where workmen were found guilty of abusing the supervisors and found negligent in duty the Court should not order reinstatement. If the work assigned to a worker is not performed even in such circumstances, it should not be a ground to set aside a valid dismissal order.

16. Lastly, the learned counsel relied upon the judgment of the Supreme Court reported in 2009 (4) L.L.N.720 [Uttar Pradesh State Road Transport Corporation v. Nanhe Lal Kushwaha] to show that in that case a Conductor who was holding a position of trust was found guilty of misappropriation and his dismissal was held to be valid.

17. Per contra, Mr.V.Prakash, learned Senior Counsel for the second respondent Union submitted that the Tribunal had taken note of all relevant factors before granting appropriate relief. He also submitted that the Tribunal had rejected the grounds raised by the workmen with reference to the procedure adopted in the enquiry as well as on the introduction of new Rules relating to achieving production targets. It is only on the question of quantum of punishment, the Tribunal found that the dismissal was unjustified. While ordering reinstatement in respect of eligible workers, the Tribunal had reduced the quantum of backwages to 50%. Hence, the Award did not call for any interference.

18. Since the second respondent Trade Union has not filed any separate writ petition challenging the denial of 50% of the backwages as well as other findings recorded by the Tribunal, it is unnecessary to go into other issues. The only question arises for consideration is whether the Tribunal had correctly exercised its power under Section 11-A of the I.D. Act and whether it was legal and justified? 19. In this case, the Tribunal while awarding 50% of the backwages had really struck a balance. The Supreme Court vide its judgment reported in 2009 1 SCC 695 [Laxmi Rattan Cotton Mills Ltd. v. State of Uttar Pradesh] has held that though the Labour Court has wide discretion in the matter of awarding of backwages, but however, the said power must be exercised judiciously.

20. In the present case, all that the concerned workers sought from the Management was that they should be paid separately for the extra work introduced by the Management. The mere fact that the other workers started doing the extra work without demanding extra payment and it is the only the workmen who were dismissed were insisting for extra payment will not make the action of the Management any way justified so as to inflict a serious punishment on these workmen. May be they were advised by the Union to stand together to resist the Management from imposing new conditions of employment. But the fact that they have failed in proving the illegality of such a move can be a good ground to deny a portion of the backwages. The Tribunal not only denied 50% of the backwages but also imposed a minor penalty viz., increment cut for one year as a sufficient punishment.

21. Under the circumstances, this Court is not inclined to accept the contentions of the petitioner Management. The Award of the Industrial Tribunal dated 30.01.2010 is upheld. The writ petition stands dismissed. No costs. In view of the dismissal of the writ petition, it is open to the second respondent Union to move the Tribunal for withdrawal of the amount lying in deposit.

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