CHAIRMAN AND MANAGING DIRECTOR,THE FERTILIZERS AND CHEMICALS TRANVANCORE LTD. & ANR. versus GENERAL SECRETARY FACT EMPLOYEES ASSOCIATION & ORS. on 11 April 2019

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SUPREME COURT REPORTS

[2019] 5 S.C.R.

ACHAIRMAN AND MANAGING DIRECTOR,THE FERTILIZERSAND CHEMICALS TRANVANCORE LTD. & ANR.

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GENERAL SECRETARY FACT EMPLOYEES ASSOCIATION &ORS.

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(Civil Appeal No. 3803 of 2019)

APRIL 11, 2019

[ABHAY MANOHAR SAPRE AND

INDU MALHOTRA, JJ.]C

Code of Civil Procedure, 1908 – s.11 – Res judicata –Industrial Disputes Act, 1947 – s.10 – Central Government directedAppellant No.1-PSU to reduce the retirement age of pre-1978employees from 60 years to 58 years – Respondents-Trade Unionsfiled writ petition against the direction – Single Judge of the HighDCourt dismissed the writ petition – In intra-Court appeal, the DivisionBench of the High Court affirmed the order of the Single Judge ofthe High Court – Aggrieved, Trade unions filed special leave petitionsin the Supreme Court, which were dismissed – Thereafter, StateGovernment made an industrial reference at the instance of the TradeEunions to the Labour Court regarding the same issue – The LabourCourt held that the reference made by the State was barred by theprinciple of res judicata – Aggrieved, Trade unions filed anotherwrit petition against the award passed by the Labour Court – HighCourt quashed the award passed by the Labour Court and heldthat reference was not barred by res judicata – On appeal, held:FAfter the dismissal of the Special Leave Petitions filed by the TradeUnions, the issue in relation to reduction of age had attained finality– The High Court was not justified in setting aside the awards ofthe Labour Court, which had rightly held that it (Labour Court)had no jurisdiction to entertain the reference and nor it had theGjurisdiction to answer it on merits – No judicial forum at the instanceof any party to the Lis had jurisdiction to try these issues again onits merits – It was barred for being tried again by virtue of principlesof res judicata contained in Section 11 of the Code, which has alsoapplication to the labour/industrial proceedings.

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Allowing the appeals, the Court

HELD: 1. In the instant case, it is not in dispute that theissue in relation to reduction of age from 60 to 58 years was raisedby the Trade Unions/Respondents in the first round of litigationby filing the original petitions in the Kerala High Court. Thesewrit petitions were dismissed by the Single Judge on merits byorder dated 12.08.2003. The respondents/Trade Unions thencarried the issue in intra court appeals before the Division Bench.The appeal was dismissed by the Division Bench by order dated18.12.2003. The Trade Unions/respondents then filed specialleave to appeals in this Court and by order dated 23.04.2004,this Court dismissed the SLPs and affirmed the order of theDivision Bench.[Para 28][749-C-E]

2. The effect of passing of these orders was that the issuein relation to reduction of age from 60 to 58 years including allincidental issues arising therefrom, attained finality because theywere already decided on the merits between the parties to theLis. [Para 29][749-F]

3. No judicial forum at the instance of any party to the Lishad jurisdiction to try these issues again on its merits. It wasbarred for being tried again by virtue of principles of res judicatacontained in Section 11 of the Civil Procedure Code, which hasalso application to the labour/industrial proceedings. [Para 30][749-G]

4. The State had, therefore, no jurisdiction to make areference(s) to the Labour Court under Section 10 of theIndustrial Disputes Act to re-examine the question of agereduction made by the appellant(PSU). A fortiori, the Labour Courthad no jurisdiction to entertain the reference(s) to adjudicate thequestion(s) referred in the reference(s).[Para 31][749-G; 750-A]

R.C. Tiwari v. MP State Co-operative MarketingFederation Ltd. & Ors. (1997) 5 SCC 125 : [1997]3 SCR 795 ; Pondicherry Khadi & Village IndustriesBoard v. P. Kulothangan & Anr. (2004) 1 SCC 68 :[2003] 5 Suppl. SCR 62 ; Executive Engineer, ZP Engg.Divn. & Anr. v. Digambara Rao & Ors. (2004) 8 SCC262: [2004] 4 Suppl. SCR 716 – relied on.

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Case Law Reference

BCIVIL APPELLATE JURISDICTION : Civil Appeal No. 3803of 2019.

From the Judgment and Order dated 25.01.2017 of the High Courtof Kerala at Ernakulam in Writ Appeal No. 1820 of 2012.

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Civil Appeal No. 3804 of 2019.

J. P. Cama, P. V. Surendranath, Sr. Advs., Ritin Rai, RohanDhariwal, Vidor Bhatia, Siddhartha Jha, Abhipsit Mishra, Ms. AninditaMitra, Ms. Resmitha R. Chandran, Ms. Lekha Sudhakaran, RoyDAbraham, Ms.Seema Jain, Ms. Reena Roy, Akhil Abraham, HiminderLal, C. M. Patel, Raji Joseph, Advs. for the appearing parties.

The Judgment of the Court was delivered by ABHAY MANOHAR SAPRE, J. 1. Leave granted.

2. These appeals are directed against the final judgment and orderdated 25.01.2017 passed by the High Court of Kerala at Ernakulam inW.A. Nos.1820 and 1824 of 2012 whereby the Division Bench of theHigh Court dismissed the writ appeals filed by the appellants herein andaffirmed the judgment dated 21.08.2012 passed by the Single Judge ofthe High Court in W.P. Nos.33938/2008 and 2556 of 2009.

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3. These appeals involve a short point as would be clear from thefacts stated infra.

4. The appellants herein are the respondents and the respondentsherein (respondent Nos.1-10) are the writ petitioners of the writ petitions,out of which these appeals arise.

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5. Appellant No.1 is a Public Sector Undertaking and engaged inthe business of manufacture and sale of various kinds of fertilizers andchemicals. It has a factory at Travancore in the State of Kerala.Respondent Nos.1 to 10 are the Trade Unions of the workers working inthe manufacturing unit of appellant No.1 at the relevant time.

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6. On 23.01.1978, a Memorandum of Settlement was executedbetween appellant No.1 (PSU) and respondent Nos.1 to 10, i.e., (TradeUnions) wherein it was inter alia agreed between the parties that theexisting superannuation age of 60 years will remain unchanged in respectof all the workers working in the appellant’s Undertaking atUdyogamandal Division, Head Office including those who are on therolls of the Undertaking as on the date of settlement.

7. It was also agreed that those who are recruited on and afterMemorandum of Settlement in question shall retire on attaining the ageof 58 years.

8. On 19.05.1998, the Central Government issued a direction toall the Public Sector Undertakings of the Central Government and directedthem to increase the age of superannuation upto below board-levelemployees from 58 years to 60 years. This was made compulsory to allthe PSUs. Appellant No.1 accordingly ensured its compliance and madeit applicable to their employees by a resolution dated 27.05.1998.

9. Since the financial condition of the appellant (PSU) wasdeteriorating day-by-day, it had become difficult for them to give effectto the aforesaid decision/direction. The appellant (PSU), therefore,brought this fact to the notice of the Central Government. By lettersdated 02.09.1999 and 11.07.2001, the Central Government directed theappellant (PSU) to take several measures to improve their financialperformance and also undertake the work of rationalization of theirworkers and bring it to a manageable level. This included lowering ofthe age of retirement of the employees. After extensive deliberationsand making several efforts for reducing the financial losses, the CentralGovernment eventually by letter dated 25.04.2003 directed the appellant(PSU) to change the retirement age of pre-1978 employees from 60years to 58 years. In compliance with the letter dated 25.04.2003 of theCentral Government, the appellant(PSU) issued an order dated 29.04.2003to reduce the retirement age of pre-1978 employees from 60 years to 58years.

10. This gave rise to filing of the original petitions by therespondents (Trade Unions) in the Kerala High Court (OP Nos.14598,14599 & 14976/2003) challenging therein the legality and correctness ofthe order dated 29.04.2003.

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A11. The Single Judge by order dated 12.08.2003 upheld the orderdated 29.04.2003 and dismissed the original petitions. The Single Judgeinter alia held that first, the appellant (PSU) was facing acute financialcrisis and hence to improve the financial crisis some positive action wasalso taken for the survival of the appellant’s industry; Second, the TradeUnions had agreed vide settlement dated 28.08.2001 that having regardBto the emergent situation which had arisen, the employment strengthwas reduced by 20% to save the industry; Third, there did not appearany justifiable reason to retain the retirement age of 60 years only topre-1978 employees; Fourth, the decision to reduce the retirement agewas not violative of Article 14 of the Constitution inasmuch as it wasCdone to make the retirement age uniform to all the workers with a viewto save the industry; and Fifth, if it had not been done, it would havebeen impossible to continue with the existing industry. (See Paras 11 and12 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 towork out their other remedies available in law.D

12. The respondents (Trade Unions) felt aggrieved and carriedthe matter in intra court appeal (WA Nos. 1565,1595, 2112 & 2113/2003) before the Division Bench. By order dated 18.12.2003, the DivisionBench dismissed the appeals and affirmed the order of the Single Judge.The Division Bench inter alia held that, first, the acceptance of theEdemand raised by about 10% of the total employees is likely to affectadversely the interest of about 90% of the employees; Second, theappellant (PSU) was facing acute financial crisis and, therefore, havingregard to the totality of the circumstances, there are no grounds tointerfere; Third, clause 14 of the Memorandum of Settlement providedFthat the dispute arising between the parties in relation to the settlementshould be resolved by means of arbitration, i.e., by the LabourCommissioner and the same having been entertained by the LabourCommissioner, the same be pursued. (See Para 8 of the order of theSingle Judge).

G13. The Trade Unions (respondents) felt aggrieved and filed specialleave petitions (CC Nos.3653-3655/2004) in this Court. By order dated23.04.2004, this Court dismissed the SLPs.

14. It is with this background, the State Government by orderdated 18.05.2004 as amended by GO dated 22.01.2008, made the H

CHAIRMAN AND MANAGING DIR., FERT. & CHEM. TRANVANCORELTD. v. GEN. SEC. FACT EMP. ASSOC. [ABHAY MANOHAR SAPRE, J.]

following industrial reference (No.10/2004) at the instance of the TradeUnions 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 superannuationof pre 1978 workers from 60 years to 58 years is justifiableor 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 tothe Labour Court to decide the following question:

“Whether the action of the management of FACT, Ltd.Udyogamandal Ltd. terminating the service of 42 workmenis justifiable or not? If not, what relief the workmen areentitled to?”

16. The Labour Court, by award dated 02.07.2008 answered thereference (No.10/2004) against the Trade Unions and in favour of theappellant(PSU). It was held that since the question referred to the LabourCourt in the reference was already dealt with in the earlier round oflitigation by the High Court and the Supreme Court and the same havingattained finality consequent upon the dismissal of the SLPs by this Courtby order dated 23.04.2004, the reference made by the State was barredby the principle of res judicata. So far as the other reference (No.4/2005) was concerned, it was accordingly disposed of by award dated02.08.2008 on the same lines.

17. The Trade Unions/employees (respondents herein) feltaggrieved and filed the writ petitions (Nos.33938/2008 and 2556/2009)in the High Court of Kerala against the award dated 02.07.2008.

18. The Single Judge by order dated 21.08.2012 allowed the writpetitions and quashed the awards dated 02.07.2008 and 02.08.2008 ofthe Labour Court. It was held that the reference made by the State tothe Labour Court was not barred by res judicata. The Single Judgethen awarded 30% of the wages payable to each employee instead ofgranting 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 A

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Athe order of the Single Judge, which has given rise to filing of the presentappeals by the appellant(PSU) after obtaining the special leave to appealfrom this Court.

20. So, the short question, which arises for consideration in theseappeals, is whether the High Court was justified in holding that theBreference made by the State to the Labour Court was not barred by theprinciple of res judicata. In other words, a question, which arises forconsideration, is when the issue referred by the State in reference wasalready 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 oflitigation, whether the State had the jurisdiction to refer the same issueCto the Labour Court in reference under Section 10 of the IndustrialDisputes Act, 1947 (hereinafter referred to as “ID Act”) for its freshadjudication.

21. Heard Mr. J.P. Cama, learned senior counsel for the appellantsand Mr. P.V. Surendranath, learned senior counsel, Mr. Roy AbrahamD& Mr. C.M. Patel, learned counsel for the respondents.

22. Having heard the learned counsel for the parties and on perusalof the record of the case including the written submissions, we are inclinedto allow these appeals and while setting aside the impugned order restorethe awards dated 02.07.2008 and 02.08.2008 of the Labour Court.

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23. In our considered view, the question, as to whether the principleof res judicata defined in Section 11 of the Code of Civil Procedure,1908 (hereinafter referred to as “the Code”) applies to the labourproceedings or not, remains no more res integra and stands answeredby three decisions of this Court.F

24. The first case is R.C. Tiwari vs. MP State Co-operativeMarketing Federation Ltd. & Ors. (1997) 5 SCC 125. In this case,an employee of a co-operative society was dismissed from the services.He, therefore, referred the dispute of his termination to the Registrarunder Sections 55 and 64 of the M.P.Co-operative Society Act. TheGDeputy Registrar upheld the finding of the misconduct recorded in thedomestic inquiry against the employee and upheld the termination asbeing legal and proper. The State then made a reference to the LabourCourt under Section 10 of the ID Act for deciding the legality of thetermination by the Labour Court. The Labour Court, however, declaredthe domestic inquiry invalid and, in consequence, held the termination asH

bad in law. The employer, therefore, filed a writ petition in the HighCourt of MP. The High Court allowed the writ petition and set aside theaward of the Labour Court. The employee then carried the matter tothis Court in appeal. This Court dismissed the appeal and affirmed theview taken by the High Court.

25. This Court ruled that the reference to the Labour Court madeby the State under Section 10 of ID Act was hit by the principle of resjudicata defined under Section 11 of the Code and, therefore, thereference made to the Labour Court was barred. It was held that theissue of termination of the employee was earlier gone into by the DeputyRegistrar on its merits and the same once answered against the employee,it could not be again gone into in the reference proceedings by the LabourCourt. This is what is held in Para 4:

“4. Admittedly, there is a finding recorded by the DeputyRegistrar upholding the misconduct of the petitioner. Thatconstitutes res judicata. No doubt, Section 11 CPC doesnot in terms apply because it is not a court, but a tribunal,constituted under the Societies Act is given specialjurisdiction. So, the principle laid down thereunder mutatismutandis squarely applies to the procedure provided underthe Act. It operates as res judicata. Thus, we find that theHigh Court is well justified in holding that the Labour Courthas no jurisdiction to decide the dispute once over and thereference itself is bad in law.”

26. The second case is Pondicherry Khadi & VillageIndustries Board vs. P. Kulothangan & Anr., (2004) 1 SCC 68. Inthis case also, this Court again examined the question as to whether theprinciple of res judicata including the principles of constructive resjudicata applies to the industrial adjudication or not. Though this Courtdid not notice the law laid down in the case of R.C.Tiwari (supra), yetit took the same view, as is clear from Paras 10 and 11:

“10. In our opinion, the appellant has correctly contendedthat the industrial dispute pertained to the same subject-matter dealt with in the earlier writ proceedings and wasbarred by the principles of res judicata. It is well establishedthat although the entire Civil Procedure Code is notapplicable to industrial adjudication, the principles of resjudicata laid down under Section 11 of the Code are A

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SUPREME COURT REPORTS

applicable1 including the principles of constructive resjudicata. Thus in State of U.P. v. Nawab Hussain2 it washeld that the dismissal of a writ petition challengingdisciplinary proceedings on the ground that the chargedofficer had not been afforded reasonable opportunity tomeet the allegations against him, operated as res judicatain respect of the subsequent suit in which the order ofdismissal was challenged on the ground that it wasincompetently passed. This Court also held: (SCC p. 808)

It may be that the same set of facts may give rise to two ormore causes of action. If in such a case a person is allowedto choose and sue upon one cause of action at one time andto reserve the other for subsequent litigation, that wouldaggravate the burden of litigation. Courts have thereforetreated such a course of action as an abuse of its process.

11. The principle of res judicata operates on the court. It isthe courts which are prohibited from trying the issue whichwas directly and substantially in issue in the earlierproceedings between the same parties, provided the courttrying the subsequent proceeding is satisfied that the earliercourt was competent to dispose of the earlier proceedingsand that the matter had been heard and finally decided bysuch court. Here the parties to the writ petition filed by therespondent in the Madras High Court and the industrialdispute were the same. The cause of action in both was therefusal of the appellant to allow the respondent to rejoinservice. The Madras High Court was competent to decidethe issue which it did with a reasoned order on merits andafter a contested hearing. This was not a case where theearlier proceedings had been disposed of on any technicalground as was the case in Workmen v. Board of Trusteesof the Cochin Port Trust3 and Pujari Bai v. Madan Gopal4.The “lesser relief” of reinstatement which was the subject-matter of the industrial dispute had already been claimedby the respondent in the writ petition. This was refused bythe High Court. The correctness of the decision in the writproceedings has not been challenged by the respondent.The decision was, therefore, final. Having got an adverse CHAIRMAN AND MANAGING DIR., FERT. & CHEM. TRANVANCORELTD. v. GEN. SEC. FACT EMP. ASSOC. [ABHAY MANOHAR SAPRE, J.]

order in the writ petition, it was not open to the respondentto reagitate the issue before the Labour Court and theLabour Court was incompetent to entertain the disputeraised by the respondent and redecide the matter in theface of the earlier decision of the High Court in the writproceedings.”

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 R.C.Tiwari (supra) with these words:

“15………..It is now well settled that the general principleof res judicata applies to an industrial adjudication.”

28. Now coming to the facts of this case, it is not in dispute thatthe issue in relation to reduction of age from 60 to 58 years was raisedby the Trade Unions/Respondents in the first round of litigation by filingthe original petitions (O.P. Nos.14598, 14599 & 14976/2003) in the KeralaHigh Court. These writ petitions were dismissed by the Single Judge onmerits by order dated 12.08.2003. The respondents/Trade Unions thencarried the issue in intra court appeals (No.1565, 1595, 2112 & 2113/2003) before the Division Bench. The appeal was dismissed by theDivision Bench by order dated 18.12.2003. The Trade Unions/respondentsthen filed special leave to appeals in this Court and by order dated23.04.2004, this Court dismissed the SLPs and affirmed the order of theDivision Bench.

29. In our view, the effect of passing of these orders was that theissue in relation to reduction of age from 60 to 58 years including allincidental issues arising therefrom, attained finality because they werealready decided on the merits between the parties to the Lis.

30. In our opinion, no judicial forum at the instance of any party tothe Lis had jurisdiction to try these issues again on its merits. It wasbarred for being tried again by virtue of principles of res judicatacontained in Section 11 of the Code, which has also application to thelabour/industrial proceedings.

31. In our opinion, the State had, therefore, no jurisdiction to makea reference(s) to the Labour Court under Section 10 of the ID Act to re- A

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Aexamine the question of age reduction made by the appellant(PSU). Afortiori, 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 consideredopinion that the High Court was not justified in setting aside the awardsBof the Labour Court, which had rightly held that it (Labour Court) had nojurisdiction to entertain the reference and nor it had the jurisdiction toanswer it on merits. The High Court should have upheld the awards ofthe Labour Court.

33. Once we hold that the references made to the Labour CourtCby the State were without jurisdiction, it is not necessary to examine themerits of the case. Indeed, it is not legally permissible because it doesnot survive for consideration having once decided in the earlier round oflitigation upto this Court which resulted in termination of the disputeagainst the respondents/Trade Unions.

D34. In the light of the foregoing discussion, the appeals succeedand are accordingly allowed. The impugned order is set aside and theawards of the Labour Court are restored.

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Ankit Gyan

Appeals allowed.

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