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                     [REPORTABLE] IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 8246 OF 2013

(Arising out of Special Leave Petition (Civil) No. 20494 of 2011) M/s. Tata Iron & Steel Co. Ltd. …….Appellant(s)

Versus

State of Jharkhand & Ors.           ……Respondent(s)

WITH

C.A. No. 8247/2013 (@ SLP(C) No. 21086 of 2011)

J U D G M E N T

A.K. SIKRI, J.

1. Leave granted.

2. We heard the Counsel  for the parties  at length.  Having regard to the  

nature of issue involved that needs to be answered by us, it would be enough to  

to  take  note  of  some  admitted  facts,  eschewing  detailed  factual  discussion  

which may unnecessarily burden this judgment.

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3. The appellant  before us is  M/s.  Tata  Iron & Steel  Company Limited  

(rechristened  as  Tata  Steel  Ltd.).  Apart  from  manufacturing  steel,  its  core  

business, the appellant company was having cement division as well. In the era  

of globalization, liberalization and also because of economic compulsions, the  

appellant decided to follow the policy of disinvestment.  Persuaded by these  

considerations it sold its cement division to Lafarge India Pvt. Ltd (hereinafter  

to  be referred as ‘M/s.  Lafarge’)  vide Business  Transfer  Agreement  (BTA)  

dated 9.3.1999 which was to  be effected from 1.11.1999.   This  agreement,  

inter alia provided that M/s. Lafarge would take over the company personnel,  

including, in terms of Section 25 FF of the Industrial Disputes Act, 1947. It  

was on the condition that:

(a)  The  services  of  the  company  personnel  shall  not  be  or  deemed to be interrupted by such transfer.

(b) The  terms  and  conditions  of  service  applicable  to  the  company personnel after such transfer are not in any way  less  favourable  to  the  company  personnel  than  those  applicable to them immediately before the transfer.

(c) The purchaser is, under the terms of transfer herein, legally  liable to pay to the company personnel in the event of their  retrenchment, compensation on the basis that services have  been  continued  and  have  not  been  interrupted  by  the  transfer of business.  

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4. This  decision  to  hive  off  and  transfer  the  cement  division  by  the  

appellant to M/s Lafarge was communicated to the employees of the cement  

division as well. According to the appellant, consequent upon this agreement,  

with the transfer of business, the employees working in the cement division  

were also taken over by M/s Lafarge & M/s Lafarge issued them fresh letters of  

appointments.  These  included  Respondent  Nos.  8-82  herein  who  started  

working with M/s Lafarge.  

5. It  appears  that  these  workers  were  not  satisfied  with  the  working  

conditions  in  M/s.  Lafarge.  They  submitted  a  statement  of  demand  to  the  

appellant on 15.9.2003, stating inter alia that they were directed to work with  

M/s.  Lafarge  without  taking  their  consent.  As  per  these  respondents/  

employees, impression given to them was that they would work in different  

departments  in  M/s.  Lafarge  for  some days  for  smooth  functioning of  that  

establishment,  which was a part of the appellant organization and thereafter  

they would be posted back to the parent department. They had obeyed these  

orders faithfully believing in the said representation. However, the concerned  

employees were not given all  the benefits by M/s Lafarge which they were  

enjoying in their parent department. Thus, the demand was made to take them  

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back with the appellant company. The company did not pay any heed to this  

demand.  These  employees  approached  the  Deputy  Labour  Commissioner,  

Jamshedpur, raising their grievances and requesting to resolve the dispute.  

6. Notices were issued to the appellant to participate in the Conciliation  

Proceedings.  The  appellant  appeared  and  took  the  plea  that  on  and  from  

1.11.1999, the cement division was sold to M/s. Lafarge and these workmen  

had  become  the  employees  of  M/s.  Lafarge.  It  was  also  stated  that  fresh  

appointment  letters  issued  by  M/s.  Lafarge  and  they  ceased  to  be  the  

employees of the appellant. Since no amicable settlement could take place and  

conciliation proceedings resulted in failure. The failure report was sent by the  

Labour Department  to  the Government  of  Jharkhand which resulted in two  

reference  orders,  thereby  referring  the  disputes  between  the  parties  to  the  

Labour Court, Jamshedpur, for adjudication. The dispute was referred under  

Section 10(1) of the Industrial Dispute Act,  1947 with following terms and  

reference.

“Whether not to take back Shri K. Chandrashekhar Rao and 73  other workmen (list enclosed) of M/s TISCO Limited, Jamshedpur  in service by their own TISCO Management after their transfer to  M/s. Lafarge India Limited, is justified?  If not what relief they are  entitled to?”

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Other reference was also worded identically.

7. According  to  the  appellant,  the  manner  in  which  the  references  are  

worded, do not depict the true nature of the dispute between the parties. It was  

their  submission  that  the  concerned  workmen  were  no  longer  in  their  

employment and, therefore, could not have raised the grievance or any dispute  

against  the appellant  company and thus,  no industrial  dispute  at  all  existed  

between the appellant and the respondent workmen. They took a specific plea  

that if M/s. Lafarge did not provide assured service terms, these respondents  

could raise the dispute only against M/s. Lafarge which was their real employer  

and M/s. Lafarge was not even made partial in the present proceedings. As per  

the appellant, the Conciliation Officer had not considered material on record  

and  without  applying  its  mind  submitted  the  failure  report  leading  to  the  

reference in question. On that basis, Writ Petitions were filed by the appellant  

before the High Court of Jharkhand at Ranchi seeking quashing of the said  

reference.  

8. These  Writ  Petitions  came  up  before  the  learned  Single  Judge  who  

dismissed  these  Writ  Petitions  with  the  observation  that  the  Labour  Court,  

which was already in seisin of the matter, can very well adjudicate and answer  

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the reference after considering all the points raised by the parties and on the  

basis  of  evidence  led by the parties  in  the reference proceeding before  the  

Labour  Court.  Intra  Court  Appeals  preferred  by  the  appellant  have  been  

dismissed by the Division Bench of the said Court observing that as there is a  

dispute  between  parties  and,  therefore,  the  learned  Single  Judge  rightly  

dismissed the Writ Petitions.

9. It is how the parties are before us in the present proceedings.

10. At the outset, we would like to observe that the High Court is right in  

holding that the Industrial Dispute has arisen between the parties in as much as  

the contention of the workers is that they are entitled to serve the appellant as  

they  continued  to  be  the  workers  of  the  appellant  and  were  wrongly  

“transferred” to M/s. Lafarge. On the other hand, the appellant contends that  

with  the  hiving  off  the  cement  division  and  transferring  the  same  to  M/s.  

Lafarge  along  with  the  workers  who  gave  their  consent  to  become  the  

employees  of  the  transferee  company,  the  relationship  of  employers  and  

employees ceased to exist and, therefore, the workmen have no right to come  

back to the appellant. This obviously is the “dispute” within the meaning of  

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Section  2(k)  of  the  Industrial  Disputes  Act.  Section  2  (k)  of  the  Industrial  

Disputes Act which defines Industrial Dispute reads as under:

“2(k) “industrial  dispute”  means  any  dispute  or  difference  between employers and employers, between employers and  workmen,  or  between  workmen  and  workmen,  which  is  connected with the employment or non-employment or the  terms of employment or with the conditions of labour, of  any person.”

11. No doubt,  as  per  the aforesaid provision,  industrial  dispute has to be  

between the employer  and its  workmen.  Here,  the appellant  is  denying the  

respondents to be its workmen. On the other hand, respondents are asserting  

that they continue to be the employees of the appellant company. This itself  

would be a “dispute” which has to be determined by means of adjudication.  

Once these respective contentions were raised before the Labour Department, it  

was not within the powers of the Labour Department/ appropriate Government  

decide this dispute and assume the adjudicatory role as its role is confined to  

discharge administrative function of referring the matter to the Labour Court/  

Industrial Tribunal. Therefore, this facet of dispute also needs to be adjudicated  

upon by the Labour Court. It cannot, therefore, be said that no dispute exists  

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between  the  parties.  Of  course,  in  a  dispute  like  this,  M/s.  Lafarge  also  

becomes a necessary party.

12. Having said so, we are of the opinion that the terms of reference are not  

appropriately worded in as much as these terms of reference do not reflect the  

real  dispute  between  the  parties.  The  reference  pre-supposes  that  the  

respondents workmen are the employees of the appellant. The reference also  

proceeds on the foundation that their services have been “transferred” to M/s.  

Lafarge.  On these suppositions the limited scope of adjudication is confined to  

decide  as  to  whether  appellant  is  under  an  obligation  to  take  back  these  

workmen  in  service.  Obviously,  it  is  not  the  reflective  of  the  real  dispute  

between  the  parties.  It  not  only  depicts  the  version  of  the  respondents  

workmen,  but  in  fact  accepts  the  same viz.  they are  the  employees  of  the  

appellant and mandates the Labour Court/ Industrial Tribunal to only decide as  

to  whether  the  appellant  is  required  to  take  them back  in  its  fold.  On the  

contrary, as pointed out above, the case set up by the appellant is that it was not  

the case of transfer of the workmen to M/s Lafarge but their services were  

taken over by M/s. Lafarge  which is a different company/ entity altogether. As  

per  the  appellant  they  were  issued  fresh  appointment  letters  by  the  new  

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employer  and the  relationship  of  employer-employee  between the  appellant  

and the workmen stood snapped. This version of the appellant goes to the root  

of the matter.   Not only it is not included in the reference, the appellant’s right   

to put it as its defence, as a demurrer, is altogether shut and taken away, in the  

manner the references are worded.  

13. We would hasten to add that, though the jurisdiction of the Tribunal is  

confined to the terms of reference, but at the same time it is empowered to go  

into  the incidental  issues.  Had the reference  been appropriately  worded,  as  

discussed later in this judgment, probably it was still open to the appellant to  

contend and prove that the Respondent workmen ceased to be their employees.  

However, the reference in the present form does not leave that scope for the  

appellant at all.

14. A full  Bench of  High Court  of  Delhi  in  the case  of  Indian Tourism  

Development  Corporation  (ITDC) v.  Delhi  Administration  and  Ors. 1982  

(LAB) IC 1309 had an occasion to deal with issue of this nature i.e. pertaining  

to the “Terms of Reference”.  Various writ petitions were heard together and  

disposed of by the common judgment. One of the writ petitions, in which this  

issue arose,  was C.W.P No. 1472/1981. One worker working at  the sweets  

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counter  of  the  Sona  Rupa  Restaurant  of  the  management  was  caught  red  

handed  while  misappropriating  the  sale  proceeds  of  sweets  sold  to  the  

customers. Though initially he admitted the theft but later he instigated other  

employees  to  resort  to  militant  and  violent  acts  in  which  various  workers  

indulged in and abstained from work. In view of the violent and subversive  

activities of the workers, the management decided to close down the restaurant  

and informed the workmen accordingly. Notice  of  closure  was  issued  

wherein workmen were informed that there accounts would be settled in full  

and final.  The workmen approached the Labour  Department  and raised  the  

dispute alleging that there was a “lock-out” declared by the management. The  

management appeared in the conciliation proceedings and stated that it was a  

case  of  “closure”  of  the  restaurant  and  not  of  lock-out.  Since  conciliation  

proceedings failed, the matter was referred by the appropriate Government to  

the  Industrial  Tribunal,  Delhi,  for  adjudication  with  following  terms  of  

reference:

“Whether the workmen as shown in Annexure ‘A’ are entitled  to wages for a period of lock-out w.e.f. 1.1.81 and if so, what  directs are necessary in this respect.”

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15. The Management filed the Writ Petition under Article 226 challenging  

the notification of reference on the plea that the real dispute about the existence  

or otherwise of the lockout had not been referred to.  Instead lock- out was  

presumed in the reference itself on imaginating and fictitious basis with the  

result, it was not open to the management to urge before the Tribunal whether  

there was at all a lock out, and instead it was a case of closure, prompted by  

workers’ violent attitude. The High Court accepted these contentions on the  

analogy  that  the  jurisdiction  of  the  Court/  Industrial  Tribunal  in  industrial  

disputes is limited to the points specifically referred for its adjudication and the  

matters incidental thereto and it is not permissible for it to go beyond the terms  

of reference. The High Court further pointed out that though the existence of  

lock-out itself was the real dispute between the management and its workmen,  

the terms of reference proceeded on the assumption that there was a lock-out  

declared by the management. This way the management was precluded from  

proving before the Industrial Tribunal that there was no lock out and, in fact it   

was a case of closure. Thus, the real dispute between the parties as to whether  

there  was at  all  a  lock-out  or  whether there  was violence by the workmen  

which compelled the management to close the restaurant, was not referred.

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16. Later  this  judgment  was  followed  by  a  Single  Bench  of  Delhi  High  

Court  in  the  case  of  Moolchand  Kharati  Ram  Hospital vs.  Labour  

Commissioner and Ors. 1998 (III) LLJ 1139 Del, where also dispute was as to  

whether the workmen had resorted to strike, as contended by the management  

or it is the management which had declared a lock-out, which was the stand of  

the workmen. However, the terms of reference stipulated were: whether the  

workmen were entitled to wages for the lock-out period? The Court concluded  

that since there was a dispute about the existence of lock-out itself, this kind of  

reference would not permit the management to prove that it was in fact a case  

of “strike” resorted to by the workmen. Reference was accordingly quashed.  

The  court  relied  upon  the  full  Bench  judgment  in  ITDC(supra).   Some  

judgments  of  this  Court  were  also  referred  to  for  the  proposition  that  the  

jurisdiction of the Tribunal is limited to the extent of what is referred to it. We  

would like to reproduce that portion of the judgment where decisions of this  

Court are discussed:-

“25. Their  Lordship  of  the  Supreme  Court  in  the  matter  of  Management  of  Express  Newspapers  (Private)  Ltd.,  Madras  v.  The Workers and Ors.,MANU/SC/0267/1962:  (1962)IILLJ227SC, held that "since the jurisdiction of the  Industrial  Tribunal  in  dealing  with  industrial  disputes  

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17. Appeals against the aforesaid decision was dismissed by this Court in  

Moolchand Kharati  Ram Hospital vs.  Labour Commissioner and Ors.  2002  

(10) SCC 708.  This shows that view of the Delhi High Court in the aforesaid  

cases has been given imprimatur by this Court.

18. The Industrial Tribunal/ Labour Court constituted under the Industrial  

Disputes Act is a creature of that statute. It acquires jurisdiction on the basis of  

reference made to it. The Tribunal has to confine itself within the scope of the  

subject matter of reference and cannot travel beyond the same. This is the view  

taken  by  this  Court  in  number  of  cases  including  in  the  case  of  National  

Engineering Industries Limited v. State of Rajasthan & Ors. 2000 (1) SCC 371.

19. It is for this reason that it becomes the bounden duty of the appropriate  

Government to make the reference appropriately which is reflective of the real/  

exact nature of “dispute” between the parties. In the instant case, the bone of  

contention is as to whether the respondent workmen were simply transferred by  

the appellant to M/s. Lafarge or their services were taken over by M/s. Lafarge  

and  they  became  the  employees  of  the  M/s.  Lafarge.  Second  incidental  

question which would follow therefrom would be as to whether they have right  

to join back the services with the appellant  in case their  service conditions  

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including salary etc. which they were enjoying with the appellant are not given  

or protected by M/s. Lafarge?   If it is proved that their service conditions are  

violated, another question would be as to whether they can claim the service  

benefits/ protection from M/s. Lafarge or they have the right to go back to the  

appellant?

20. It follows from the above that the reference in the present form is clearly  

defective as it does not take care of the correct and precise nature of the dispute  

between the parties.  On the contrary,  the manner in which the reference is  

worded shows that it has already been decided that the respondent workmen  

continue to be the employees of the appellant and further that their services  

were simply transferred to M/s. Lafarge. This shall preclude the appellant to  

put forth and prove its case as it would deter the labour court to go into those  

issues. It also implies that by presuming so, the appropriate Government has  

itself decided those contentious issues and assumed the role of an adjudicator  

which is, otherwise, reserved for the Labour Court/ Industrial Tribunal.  

21. As a consequence, this appeal is allowed and the impugned judgment of  

the High Court is set aside. Sequitur to that would be to quash the references  

made in the present form. However, at the same time, direction is given to the  

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appropriate Government to make fresh reference, incorporating real essence of  

the dispute as discussed in this judgment, within a period of two months from  

the date of receipt of the copy of this judgment.

22. The appeals are allowed and disposed of in the aforesaid terms with no  

order as to costs.

 ..…………………………....J.      [K.S. RADHAKRISHNAN]

...…………………………..J. [A.K. SIKRI]

NEW DELHI SEPTEMBER 16, 2013

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