Only taking part in the strike cannot be consider ineligible for payment of bonus and it should be treated unfair labour practice under Sec 28 of ULP Act 1971

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION

WRIT PETITION NO.8867 OF 2011

1.Municipal Corporation of Gr.Mumbai

having its office at Mahapalika Marg,

Opp.C.S.T.Station, Fort, Mumbai 400 001.

2. The Municipal Commissioner,

Municipal Corporation of Gr.Mumbai

having its office at Mahapalika Marg,

Opp.C.S.T.Station, Fort, Mumbai 400 001 .. Petitioners

V/s

Municipal Mazdoor Union, Mumbai

Bal Dandavate Smruti, 237-239,

N.M.Joshi Marg, Opp.Bawla Masjid,

Mumbai 400 012. .. Respondents

Mr.A.V.Bukhari, with Ms.U.H.Deshpande and Mr.M.O.Patil for the

petitioners.

Mr.S.U.Kamdar, Senior Advocate with Ms.Neeta Karnik and

Mr.M.D.Nagle for the Respondents.

CORAM: R.G.KETKAR, J.

DATED: 2ND DECEMBER, 2011.

Judgment Reserved on 9th November, 2011.

Judgment pronounced on 2nd December, 2011.

JUDGEMENT:

1. Heard Mr.A.V.Bukhari, learned counsel for the petitioners and Mr.S.U.Kamdar, learned Senior Counsel for the Respondents at length. Rule. Mr.M.D.Nagle waives service on behalf of the Respondents. By consent of the parties and in view of the order dated 26.10.2011 passed in Letter Patent Appeal, Rule is made returnable forthwith and is heard finally.

2. By this petition under Article 226 of the Constitution of India, the Municipal Corporation of Greater Mumbai (for short ‘the Corporation’) being Petitioner No.1 and the Municipal Commissioner being Petitioner No.2 have challenged the judgment and order dated 20.10.2011 passed by the learned Member, Industrial Court, Mumbai (for short ‘the Tribunal’) below Exhibit U-2 in Complaint (U.L.P.) No.326 of 2011. By that order, the Tribunal has allowed the application Exhibit U-2 made by the Municipal Mazdoor Union, Mumbai, Respondents herein (for short ‘the Union’) and directed the petitioners to pay exgratia amount of Rs.11000/- as per the Circular dated 15.10.2011 to the members of the Union alonwith the other allied unions and the payment of ex-gratia amount of Rs.11000/- should not be disallowed to the members of the Union on the ground that they have participated in the strike of 19th & 20th September, 2011. The relevant and material facts that are necessary for the disposal of this petition, briefly stated, are as under.

3. The union instituted complaint (U.L.P.) 326 of 2011 complaining of commission of unfair labour practices under section 28 (1) read with Items 5 & 9 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (for short ‘the 1971 Act’). In the complaint it is asserted that the union is registered as a trade union under the Trade Unions Act, 1926. It is claimed that the union is having largest membership of workmen employed in the Corporation as their members. The union has been recognized by the Corporation way back in the year 1957. The union has signed several settlements, agreements, MOUs with the Corporation as well as their officials. The union has been representing the workmen employed in the Corporation for the last almost five decades or so. Because of honest, sincere and bonafide efforts of the union which believes in the process of collective bargaining that the workmen employed in the Corporation could get periodical revisions in wages, allowances, leave facilities and other terms and conditions of employment from time to time. The union has challenged the action of the Corporation in issuing the circular dated 15.10.2011 and in particular clause 2 (1) thereof. By that clause, the employees of the Corporation who took part in the strike of 19th and 20th September, 2011 are not eligible for payment of ex-gratia amount. The union challenged this clause on the ground that the same is arbitrary, unjustified and discriminatory and amounts to discrimination and/or unfair labour practice under Item 5 of Schedule IV of the Act. It was further averred that the ex-gratia payment is for the period of 01.04.2010 to 31.03.2011. The relevant period therefore is 01.04.2010 to 31.03.2011. However, by virtue of clause 2(1) of the said Circular, the employees who participated in the strike on 19th & 20th September, 2011 are held ineligible. The said dates are posterior to the period of financial year for which the ex-gratia is paid. There is therefore no justification in denying the payment of ex-gratia to those employees who participated in the strike of 19th & 20th September, 2011. The Corporation has thus created artificial discrimination in the matter of the payment of ex-gratia. The Union also specifically contended that there has been a long standing practice in the Corporation that whenever bonus/ exgratia is paid, it is paid to all the employees without discrimination. However, during certain years there was no declaration of bonus/ ex-gratia and no employee of the Corporation was paid any bonus / ex-gratia. In support of this contention, the union relied upon the chart showing the years during which the employees of the Corporation were paid bonus/ ex-gratia without discrimination. Thus, the long standing practice has ripened into an agreement and the breach of this agreement amounts to unfair labour practice under Item 9 of Schedule IV of the Act.

4. During the pendency of this complaint, the Union took out an application for interim relief under section 30 (2) of the Act. The Union prayed that the petitioners herein may be directed to pay ex-gratia to all the municipal employees including the members of the Union @ Rs.11,000/- per employee.

5. On behalf of the Corporation, Mr.Makarand Narahari Mule, Dy.Chartered Accountant (Establishment-I) made an affidavit. It was contended that the payment of ex-gratia is purely a matter of grace arising out of favour or indulgence and it cannot be demanded as a matter of right. It was contended that there was no discrimination as alleged by the Union. In other words, it was contended that all the employees of the Corporation whether belonging to the Union or any other Union who participated in the strike of 19th & 20th September, 2011 were held ineligible for payment of ex-gratia. It was further contended that the Corporation is under no legal obligation to pay ex-gratia as it is neither arising out of any statutory provision nor out of any agreement / settlement/ award. It was submitted that the Corporation filed complaint before the Tribunal prohibiting its employees from going on strike. By order dated 17.09.2011 the Tribunal issued injunction restraining the employees of the Corporation from going on strike. Despite this order the employees of the Corporation, some of whom are members of the Union participated in the strike. It is in these circumstances they are not entitled to payment of ex-gratia amount. The Corporation also denied that the long standing practice has ripened into an agreement and the breach of agreement amounts to unfair labour practice under Item 9 of Schedule IV of the Act. The Corporation also denied that there was hostile discrimination or favouritism or partiality and consequently denied commission of unfair labour practice under Item 5 of Schedule IV of the Act.

6. By the impugned order dated 20.10.2011 the Tribunal held that the Corporation has prima-facie committed unfair labour practice under Item 5 of Schedule IV of the Act. It is against this order, the Corporation has preferred this writ petition.

7. In support of this petition, Mr.Bukhari raised the following contentions:

(i) The first petitioner being a local authority is exempt from the purview of Payment of Bonus Act, 1965, by virtue of section 32 (iv) thereof. As a result of this, the employees of the Corporation in law are not entitled to get bonus from the Corporation. Thus there is no statutory and legal right vested in the employees of the Corporation to claim bonus.

(ii) No award as contemplated under section 2(b) of the Industrial Disputes Act, 1947 (for short ‘the 1947 Act’) is passed by any Tribunal after adjudication for payment of bonus or exgratia to the employees of the Corporation. Equally there is no bilateral settlement and bilateral agreement as contemplated under section 2 (p) of the 1947 Act between the Corporation and the union in respect thereof. Thus there is no legal obligation on the Corporation to pay bonus and correspondingly there is no legal right vested in the employees of the Corporation to claim bonus/ ex-gratia. The right to receive ex-gratia flows from the unilateral and voluntary action/ decision of the Corporation.

(iii) The dictionary meaning of the word ‘ex-gratia’ is as under:-

- “Given as favour or gratuitously where no legal obligation exists and the ex-gratia payment”.

- “As a favour not compelled by legal right; ‘ex-gratia’ payments made to non striking workers”.

The corporation issued circular dated 15.10.2011 which was itself unilateral and voluntary policy decision for payment of ex-gratia. By virtue of clause 2 thereof, the Corporation took conscious decision to deny ex-gratia to certain category of employees including those employees who went on strike on 19th & 20^th September, 2011 in breach and violation of the Tribunal’s order dated 17.09.2011 and the said decision is perfectly legal, valid and justified.

(iv) The payment of ex-gratia is neither an implied term ofagreement, nor is a condition of service. In order to ascertain as to whether the same is implied agreement, the following tests are

required to be complied with simultaneously;

(a) Payment must be over an unbroken series of years,

(b) It must be for a sufficient long period,

(c) The circumstances for which the payment was made should be such as to exclude the payment made out of bounty. At any rate, whether it is implied term of employment is a mixed question of fact and law and not pure question of law and the same is required to be adjudicated and determined on the basis of evidence adduced before the Tribunal. In support of this proposition, he relied upon the judgments of the Apex Court in the cases of Ispahani Limited V/s Ispahani Employees Union, AIR 1959 SC 1147 and Gaziabad Zilla Sahakari Bank Limited V/s.Additional Labour Commissioner, 2007 Lab.I.C.1525, and in particular Paragraph 69.

(v) He further submitted that the payment of ex-gratia is not in the nature of customary or traditional bonus. For deciding the said issue the Tribunal will have to consider -

(a) whether the payment has been over an unbroken series of years,

(b) whether it has been for a sufficient long period, though length of the period might depend on the circumstances of each case, even so the period may normally have to be longer to justify an inference of traditional and customary bonus .... may be the case with bonus based on an implied term of employment.

(c) the circumstances that the payment depended upon the earning of profits, would have to be excluded and therefore it must be shown that payment was made in years of loss.

(d) the payments have been made at the uniform rate throughout.

He submitted that this is also the mixed question of fact and law and not pure question of law, which requires proper evidence and adjudication by the Tribunal. In support of this proposition he relied upon the judgments of the Apex Court in the cases of Graham Trading Company (India Limited) V/s.Their Workmen, AIR 1959 SC 1151 and in particular Paragraph 6 thereof and Munshi Dass V/s.Mal Singh, (1977) 4 SCC 65.

(vi) The action of the Corporation in excluding employees who participated in the strike on 19th & 20th September, 2011 in terms of clause 2(1) of the Circular dated 15.10.2011 does not amount to unfair labour practice within the meaning of Item 5 of Schedule IV of the 1971 Act. The said item has been interpreted by the Apex Court in the case of CEAT Limited V/s.Anand Abasaheb Hawaldar, 2006 LAB. I.C. 1675.

(vii) The Tribunal has not recorded any prima-facie finding about Item 9 of Schedule IV of the Act. The judgment in the case of BEST V/s.BEST Kamgar Sena, 1986 (52) FLR 39 is not applicable in the present case as the said case arose out of the decision of the Tribunal after a full fledged trial. In the present case we are concerned with the impugned order passed at the interim stage.

(viii) The Tribunal was not justified in granting interim relief which is in the nature of final relief. In support of this proposition he relief upon the following judgments;

(a) State of U.P. and Others V/s.Sandeep Kumar Balmiki & Ors., 2009 III CLR 550,

(b) M.S.R.T.C. Nagpur V/s.Raju Mahadevrao Bhagwatkar, 2003 II CLR 797,

(c) V.K.Engineering Workers Private Ltd. V/s.V.B.Gunjotikar, 1997 I CLR 1144.

8. On the other hand Mr.Kamdar raised following contentions;

(i) The present case is squarely covered by the judgment of the learned Single Judge of this Court in the case of BEST V/s.BEST Kamgar Sena (supra). Relying upon this judgment, he submitted that the said judgment is a binding precedent and if this Court is inclined to take a different view, the only option available is to refer the matter to a larger Bench.

(ii) The payment of ex-gratia is not by way of gratis, but is a matter of right as per Part I of the Circular dated 15.10.2011. By clause 1 of Part I of the Circular the ex-gratia is admissible to all the full time employees appointed in the regular pay scale. The right to receive ex-gratia is crystalised by this clause. Clause 2(1) of the Part II of the said circular is ex-facie arbitrary, discriminatory and it amounts to an unfair labour practice covered by Item 5 of Schedule IV of the Act as it takes away the right so crystalised.

(iii) Clause 2(1) of the Circular dated 15.10.2011 is in the nature of imposition of penalty, without following the due process of law. This is also contrary to sections 22, 23 and 26 of the 1947 Act, and consequently clause 2(1) of the said Circular is invalid and illegal.

(iv) Clause 2 (1) of the said Circular amounts to unfair labour practice under Item 9 of Schedule IV of the 1971 Act. In the instant case, on the basis of material available on record, the payment of ex-gratia amount is established as a long standing custom, usage and practice. The chart produced by the Union alongwith the complaint indicates that the payment of ex-gratia amount in lieu of bonus was made right from the year 1985 to 2010 excluding the period of three years i.e. 1999-2000, 2000-2001 and 2001-2002. During this period the amount was not paid because of the financial problem faced by the Corporation. In any case, whenever the payment of ex-gratia was made, it was made uniformly to all the employees which in itself has become a long standing practice and therefore it is now an implied term of agreement and has become a condition of service. At any rate the assertions made by the Union in that regard were not denied by the Corporation. In support of his submissions, Mr.Kamdar relied upon the following judgments;

(a) BEST V/s.BEST Kamgar Sena, 1986 (52) FLR 39,

(b) R.D.Gupta & Ors V/s.Lt.Governor, Delhi Administration & Ors, (1987) 4 SCC 505,

(c) Premier Automobiles Ltd. V/s. Engineering Mazdoor Sabha, 1982 Lab.I.C.1759,

(d) Bombay Tyres International Limited V/s.All India, Bombay, 2000 II CLR 874,

(e) Tata Tea Ltd. (Bombay) Employees Union V/s. Tata Tea Limited, 2007 (6) Bom.C.R.491,

(f) M/s.Richardson & Cruddas 1971 Ltd. V/s.Mahadeo, 1984 Lab.I.C.1227.

9. I have considered the rival contentions raised by learned counsel appearing for the parties. I have also gone through the written sub missions submitted by them. In the instant case, it is not seriously in dispute that the employees of the Corporation are not entitled to payment of bonus under section 32 (iv) of the Payment of Bonus Act, 1965. There is also no serious dispute between the parties as regards absence of any interim or final award/ an arbitration award under section 2(b) of the 1947 Act. Equally there is no settlement/ express written agreement entered into between the parties towards payment of ex-gratia under section 2(p) of the 1947 Act. It is the case of the union that there is a long standing practice for payment of ex-gratia amount on the basis of chart indicating payment made from the year 1985 to 2010 excepting the three years. This long standing practice has become an implied agreement between the parties and is now a condition of service.

10.The question that arises in the present petition is whether this can be decided at an interim stage or whether it requires leading of evidence by both sides. In order to answer this question, it is necessary to refer to the judgment of the Apex Court in the case of Ispahani Ltd. (supra). Paragraph Nos.6 & 7 of that report read as under:-

“6.Puja is a special festival in Bengal and it has become usual with many firms there to give bonus before puja to their workmen. This matter came up before the Appellate Tribunal in Mahalaxmi Cotton Mills Ltd., Calcutta v.Mahalaxmi Cotton Mills Workers’s Union, 1952 Lab AC 370 (LATI). In that case puja bonus was claimed as a matter of right, payable by the employer at a special season of the year, namely at the time of the annual Durga Puja. This right was not based on the general principle that labour and capital should share the surplus profits available after meeting prior charges. It was held in that case that this right rested on an agreement between the employer and the the employees, and that the agreement might be either express or implied. Where the agreement was not express, circumstances might lead the tribunal to an inference of implied agreement. The following circumstances were laid down in that case as material for inferring an implied agreement:

(1) The payment must be unbroken;

(2) It must be for a sufficiently long period; and

(3) The circumstances in which payment was made should be

such as to exclude that it was paid out of bounty.

The Appellate Tribunal further pointed out that it was not possible to lay down in terms what should be the length of period to justify the inference of implied agreement and that would depend upon the circumstances of each case. It also pointed out that the fact of payment in a year of loss would be an important factor in excluding the hypothesis that the payment was out of bounty and in coming to the conclusion that it was as a matter of obligation based on implied agreement. As to the quantum of bonus it was laid down that even if payment was not at a uniform rate throughout the period, the implied agreement to pay something could be inferred and it would be for the tribunal to decide what was the reasonable amount to be paid as puja bonus. The tests laid down in that case have since been followed in a number of cases by the Industrial Tribunals and the Labour Appellate Tribunal. We do not think it necessary to refer to all those cases. It may now be taken as well settled that puja bonus in Bengal stands on a different footing from the profit bonus based on the Full bench formula evolved in Mill Owners’s Association, Bombay v. Rashtriya Mill Mazdoor Sangh, Bombay, 1950-2 Lab LJ 1247 (FB) (LATI-Bom). The claim for puja bonus in Bengal is based on either of two grounds. It may either be a matter of implied agreement between employers and employees creating a term of employment for payment of puja bonus, or (secondly) even though no implied agreement can be inferred it may be payable as a customary bonus. In the present case we are concerned with the first category, (namely, that based on an implied agreement creating a term of employment between the employer and the employees), and so we shall confine ourselves to that category. It was this kind of bonus which was considered by the Appellate Tribunal in Mahalaxmi Cotton Mills Case, 1952 Lab AC 370 (LATI). We are of opinion that the tests laid down in that case for inferring that there was an implied agreement for grant of such a bonus are correct and it is necessary that they should all be satisfied before bonus of this type can be granted.”

“7. This brings us to the two questions raised on behalf of the company, as set out above. The first question, (namely, that the Appellate Tribunal had no jurisdiction to interfere with the finding of the Industrial Tribunal that being a question of fact) can be easily disposed of. We are of opinion that the decision whether there is an implied term of employment is a mixed question of fact and law and not a pure question of fact. This is similar to the decision, for example, on a question whether a custom has been established or whether adverse possession has been proved, or whether a Hindu family has ceased to be joint as a matter of law accepting the facts proved. The Appellate Tribunal will therefore have jurisdiction to consider whether on the facts proved before the Industrial Tribunal an inference in law can be drawn that an implied term of employment for grant of puja bonus has been established. The Appellate Tribunal therefore had jurisdiction to consider this matter.”

11.Mr.Kamdar, during the course of argument submitted that the claim made by the Union for payment of ex-gratia is based upon long standing practice and is not based upon the custom. The long standing practice in the matter of payment of ex-gratia is evident and established from the chart produced by the Union along with the complaint and no evidence is required to be adduced for that purpose.

12.I have already noted earlier that excluding the period of three years i.e.1999-2000, 2000-2001 and 2001-2002, the Corporation paid ex-gratia amount in lieu of bonus from the year 1985 to 2010. In the case of Espahani Ltd. (supra), the Apex Court was considering the tests applied by the Appellate Tribunal in inferring the implied agreement. It was observed in Paragraph 6 of that report that where an agreement was not express, the circumstances might lead the Tribunal to an inference of implied agreement. The following circumstances were laid down in that case as material for inferring an implied agreement:-

(i) The payment must be unbroken;

(ii) It must be for a sufficiently long period; and

(iii) The circumstances in which payment was made should be such as to exclude that it was paid out of bounty. The Appellate Tribunal therein, further pointed out that it was not possible to lay down in terms what should be the length of period to justify the inference of implied agreement and that it would depend upon the circumstances of each case. It was also pointed out that the fact of payment in a year of loss would be an important factor in excluding the hypothesis that the payment was out of bounty and in coming to the conclusion that it was as a matter of obligation based on an implied agreement. Thus, primafacie at this stage, on the basis of judgment of the Apex Court in the case of Ispahani Ltd. (supra) it is not possible to accept the submission of the Union that it has established a long standing practice, as admittedly during the three years noted above the Corporation did not make payment of ex-gratia.

13.In the case of B.N.E. & Co.Employees Union (supra), the case of the appellants therein was that, that they were entitled to bonus as a condition of service irrespective of profit or loss. According to the appellants the bonus was always paid from 1942 to 1952. The Respondents contended that they were not in a prosperous condition and were unable to pay any further bonus besides what had already been paid for the years in dispute. It was denied by them that these payments were paid as a condition of service or as an implied term of agreement irrespective of profit or loss. In Paragraph 5 of that report, the Apex Court noted that the evidence showed that though payment was made uninterruptedly from 1942 to 1952 three times a year to the clerical staff and four times a year to the subordinate staff, it was made clear every time the payment was made that it was an ex gratia payment. Further, the receipts given by the employees, a sample of which was produced showed that the bonus was accepted as ex-gratia bonus. As is pointed out in M/s.Graham Trading Co.(supra), it would not be possible to imply a term of service on the basis of an implied agreement when the payment was clearly made ex-gratia and had even been accepted as such. In the instant case, prima-facie from the year 1985 to 2010 excepting the three years, the Corporation made payment of ex-gratia which was also accepted by the employees of the Corporation as ex-gratia payment. In view of this, prima-facie at this stage, in the absence of any evidence on record, it cannot be said that there is implied agreement between the parties or that it has become a condition of service.

14.Mr.Kamdar strenuously relied upon the judgment of the learned Single Judge of this Court in the case of B.E.S.T. Undertaking (supra). The said order reads as under:-

“Admittedly the petitioner refused to pay to the workers on whose behalf the complaint was filed the ex-gratia payment in lieu of bonus for the accounting year 1983-84 which as per the Resolution dated 3rd October, 1984 was payable to the entire staff. The payment was refused on the basis of a subsequent resolution dated 15th October, 1984 which made the amount payable only to those workers who attended duty at least for three days during the period when some workers were on strike. This resolution was ridiculously discriminatory, unreasonable and arbitrary and itself amounted to an unfair labour practice, within the meaning of item 5 of Sch.IV of the MRTU & PULP Act, 1971. The learned Member of the Industrial Court is also right in holding that the practice of paying ex-gratia amount in lieu of bonus to all workers for several years has ripened into an agreement which was breached by the impugned agreement. The question that the concerned authorities of the undertaking did not sanction the amount required for payment to the concerned workers, is irrelevant. Hence rejected. ”

15.Perusal of extracted portion indicates that as per the resolution dated 03.10.1984 the bonus was payable for the accounting year 1983-1984 to the entire staff. The payment was refused on the basis of subsequent resolution dated 15.10.1984 which made the amount payable only to those workers who attended the duties atleast for three days during the period when some workers were on strike. The facts therein appear that the strike was for a period longer than three days. By Resolution of 15.10.1984 the amount was made payable to those workers who attended the duty atleast for three days during the period when some of the workers were on strike. Thus further classification was made between the employees who participated in the strike. The payment was made under Resolution dated 15.10.1984 to those who attended the duties atleast for three days and was denied to those employees tho did not attend the duties for atleast three days during the strike period. It is in that context it was observed that the Resolution dated 15.10.1984 was ridiculously discriminatory, unreasonable and arbitrary and that it is amounted to unfair labour practice within the meaning of Item 5 of Schedule IV of the 1971 Act. The learned Single Judge of this Court affirmed the finding of the Tribunal that the practice of paying ex-gratia amount in lieu of payment of bonus to all workers for several years has ripened into an agreement. In my opinion, the question where the practice for payment of ex-gratia amount has ripened into an agreement is a disputed question of fact which has to be established by the parties by leading evidence in support of their respective contentions. The judgment in the case of BEST (supra) was decided by the Tribunal after a full fledged trial. After considering the material on record, the Tribunal recorded a finding that the practice of paying ex-gratia in lieu of bonus has ripened into an agreement. In the present case while allowing the application Exhibit U-2, the Tribunal has not recorded any finding as regards commission of unfair labour practice under Item 9 of Schedule IV of the 1971 Act. That apart, the Tribunal is considering the application for interim relief where the parties have yet to substantiate their rival case by leading evidence. I am therefore of the considered opinion that at the interlocutory stage, the judgment in the case of BEST undertaking (supra) will not be applicable.

16.Mr.Kamdar heavily relied upon the judgment of the Apex Court in the case of R.D.Gupta (supra). In that case, the question was about the grant of pay-scales at the rates recommended by the Shivshankar Committee (SS Committee) for the employees of Delhi Electricity Supply Undertaking (DESU) to only section of ministerial staff of New Delhi Municipal Committee (NDMC), who happened to be working in the electricity wing at the relevant time. One of the questions that was raised in C.W.280 of 1979 was pertaining to the grant of ex-gratia payment to only section of NDMC employees. In the Union Territory of Delhi, there are two main civic bodies viz. NDMC and the Municipal Corporation of Delhi (MCD). The NDMC comprises of New Delhi as it existed prior to 1947 and was constituted under the Punjab Municipal Act, 1911. The NDMC discharges all civic functions including supply of water and electricity in the area falling within its jurisdiction. The MCD was constituted in pursuance of the Delhi Municipal Corporation Act, 1957 by amalgamating within itself few other smaller civic bodies, which existed independent of NDMC and the resultant position was that the rest of the areas fell within the jurisdiction of the MCD.

17.The NDMC forming a compact unit had divided civic work into various departments. Besides engaging technical staff, the NDMC engaged non-technical staff, such as municipal staff, clerks, etc for working in various departments including the electricity and water supply. In so far as non technical staff are concerned, they constitute one unified cadre and are liable to be transferred from one department to another. They are governed by a common channel of seniority, in respect of each class of employees with common seniority list. The set up of the MCD is however different since the Delhi Municipal Corporation Act provides for constitution of three separate and independent wings viz. (i) electricity wing, (ii) general wing and (iii) water, sewage and disposal Wing. The electricity wing came to be designated as DESU and is governed by independent budget and headed by a separate and independent General Manager and its employees are governed by a separate cadre and a separate seniority list. The general wing of the MCD performs the other general civic duties and functions. The third wing is concerned with distribution of water and disposal of sewage etc. and it is also independent of the general wing.

18.To satisfy the demands of the employees of the MCD and NDMC etc, the Government accepted the report of the Third Pay Commission appointed by it, and the pay-scales as recommended by the Pay Commission were also accepted by NDMC as well as general wing of the MCD. The technical staff of DESU claimed higher scales of pay as they were not satisfied with the pay-scales recommended by the Pay Commission. The Government therefore constituted SS Committee to go into the question of revision of pay-scales of the technical staff alone of DESU and the SS Committee submitted report in 1973. The non technical or ministerial staff of DESU who were not governed by the report of the SS Committee, demanded and agitated that they should also be granted pay at the rates recommended by the SS Committee. At its meeting held in May, 1973 the DESU conceded the demands of the ministerial staff and decided to revise the payscales of the non technical staff working in DESU to the level recommended by the SS Committee. Since the technical and ministerial staff working in DESU were granted SS Committee pay-scales by the MCD, on the assumption that the staff working in the electricity wing of the NDMC were performing the same or similar functions & duties, as those performed by the staff of DESU, the NDMC was of the view that the technical and ministerial staff working in the electricity wing of NDMC should also have the benefit of revised pay-scales recommended by the SS Committee and hence the parity of pay and allowances should be maintained. Accordingly, the NDMC passed resolution on 19.10.1073 that the benefits of pay & allowances as per the SS Committee, be given to the staff of electricity wing of NDMC. By another resolution dated 07.01.1974 the NDMC decided to give benefit of the revised pay-scales w.e.f.01.04.1972 to fall in the line with actions of DESU.

19.The grant of SS Committee pay-scales to only those members of the ministerial staff working in the electricity wing brought about discontentment among the staff working in the general wing of the NDMC. They claimed that they should also be paid at the rate prescribed by the SS Committee and not as per the pay-scales recommended by the Third Pay Commission. The petition was filed in the Delhi High Court and the Delhi High Court directed the NDMC to consider afresh the question of revision of payscale for all the sections of ministerial staff in accordance with law. After giving an opportunity to all sections of the employees to make their representations, the NDMC passed resolution on 27.06.1978 constituting the electricity wing w.e.f. 01.05.1978 among other things.

20.The said resolution was challenged in the Delhi High Court. In so far as CW 280 of 1979 is concerned, it pertained to the grant of ex-gratia payment to the only section of NDMC employees. Ever since 1972, the employees and their unions were demanding exgratia payment on the ground that since the employees of DESU were being paid ex-gratia amount they should also be paid likewise. By letter dated 01.02.1972 the Delhi Administration permitted the NDMC to make ex-gratia payment to the employees of electricity wing on the same lines as was being valid in DESU. Similarly, on 07.02.1973 the Delhi Administration permitted the grant of ex-gratia payment to the employees working in the water supply and sewage disposal wing of the NDMC also on the ground that their counter parts in the water supply and sewage disposal undertaking in the MCD were being paid ex-gratia amount.

21.The ministerial staff in the general wing who were not granted exgratia payment raised the protest. Eventually the NDMC passed the resolution on 25.07.1977 that the ex-gratia payment be made to all the employees of common categories such as clerks, superintendents etc. and the payment be made subject to the condition that the employees would refund the amounts if the proposal was not approved by the Delhi Administration. Subsequently the Delhi Administration did not approve the proposal and consequently, the NDMC called upon the staff of the general wing to refund the ad-hoc payment given by way of advance towards the ex-gratia payment, which gave rise to filing of CW 280 of 1978.

22.In so far as the refusal to grant payment of ex-gratia amount to the staff of the general wing of NDMC is concerned, the High Court saw justification in payment of ex-gratia amounts to the employees in the electricity wing and water supply & sewage disposal wing also because of the nature of their duties and because of the precedent afforded by the MCD in granting such payment to the staff of the DESU and the water supply & sewage disposal department. However the High Court took into consideration long delay that had occurred and the hardship that would result to the employees of the general wing by complying with the order of refund, and therefore, directed the NDMC to treat the payment as one time special ad-hoc payment, not serving as a precedent, and refrain from recovering the said amount. In that context, the Apex Court observed in Paragraph 29 as under:-

 “29.We are unable to appreciate the reasoning of the High Court and sustain its conclusion on this aspect of the matter. The High Court has failed to see that no rational or acceptable reason is put forward for justifying the ex gratia payment only to the ministerial staff working in the electricity wing and the waterworks wing and denying the same to the staff working in the general wing. The only reason given is that the payment of ex gratia amount is patterned on the lines of the DESU and the Water Supply and Sewage Disposal Undertaking of the MCD. The pattern of payment adopted by the MCD cannot have any binding force on the NDMC because the three units of MCD are different and distinct entities whereas the three wings of the NDMC are interdependent wings of an integrated Municipal Committee. Therefore, in the absence of justifiable reasons of a compulsive nature, the payments, whether as salary or as ex gratia amount have to be on the same and equal basis and not differently for the different wings of the NDMC. In fact, what all we have said regarding the payment of uniform pay at the scales recommended by SS Committee would squarely apply to the payment of ex gratia amount also. Hence CA No.2969 of 1983 and SLP No. 11270 of 1982 (CA No.1688) deserve to succeed.”.

23.Relying upon this judgment, Mr.Kamdar contended that the Corporation has shown favouritism or partiality between the two sets of its employees regardless of merits. The members of the Union who participated in the strike of 19th & 20th September, 2011 are also the employees of the Corporation. However, exgratia payment is denied to them on the ground that they participated in the strike on 19th & 20th September, 2011. He has submitted that the Corporation has discriminated between the employees of the Corporation and thus violated Article 14 of the Constitution of India. In paragraph 29 extracted herein-above, the Apex Court recorded that there was no rational or acceptable reason put forward for justifying ex-gratia payment only to the ministerial staff working in the electricity wing and water supply wing and denying the same to the staff working in the general wing. The only reason given was that the payment of ex-gratia amount is patterned on the lines of DESU and the water supply and sewage disposal undertaking of the MCD. The pattern of payment adopted by the MCD cannot have any binding force on the NDMC because the three units of MCD are different and  istinct entities where as the three wings of the NDMC are interdependent wings of an integrated Municipal Committee. Therefore, in the absence of justifiable reasons of compulsive nature, the payments, whether as a salary or as ex-gratia amount,had to be on the same and equal basis and not differently for different wings of the NDMC.

24.In the instant case the Corporation prima-facie has reason to deny ex-gratia payment to those employees, whether they are the members of the Union or any other allied union on account of their participation in the strike of 19th & 20th September, 2011, despite the order of injunction issued on 17.09.2011 by the Tribunal. Though there was the order of injunction restraining the employees of the Corporation from going on strike inforce, some of the employees including some of the members of the union went on strike on 19th & 20th September, 2011. Since the Corporation is a civic body and is under a statutory obligation to provide several amenities to the residents within its municipal limits, the Corporation was justified, in order to maintain discipline, to deny ex-gratia payment to those employees who participated in the strike on 19th & 20th September, 2011. By clause 2(1) of the Circular dated 15.10.2011, the Corporation has denied the said payments to the employees who participated in the strike on 19th & 20th September, 2011, irrespective of the fact whether they belong to the Respondent union or any other union.

25.That apart, as observed by the Apex Court in the case of CEAT Ltd. (supra) in paragraph 11, the Legislature has consciously used the words “favouritism or partiality between the set of workers’ in Item 5 of Schedule IV of 1971 Act and not differential treatment. The mental element of bias is necessary to be established by cogent evidence. Thus, at the interlocutory stage, in my opinion, prima-facie the Tribunal was not justified in recording the finding to the effect that the Corporation has committed unfair labour practice covered by Item 5 of Schedule IV of the Act. In paragraph 14 of the said report, the Apex Court has observed that it is not every kind of differential treatment which in law, is taken to vitiate an Act. It must be prejudice which is not founded on reason and actuated by self interest – whether pecuniary or personal. As noted earlier, in the present case, the evidence is yet to be recorded and at the interim application stage, in my opinion, the Tribunal was not prima-facie justified in arriving at this finding in the absence of any evidence on record.

26.Mr.Kamdar submitted that at any rate, the Corporation committed serious error in denying payment of ex-gratia amount on the specious ground that these employees participated in the strike of 19th & 20th September, 2011, particularly when the ex-gratia payment is for the accounting/ financial year 2010-2011 i.e.to say  for the period from 01.04.2010 to 31.03.2011. The employees participated in the strike on 19th & 20^th September, 2011, which is posterior to the period of said financial year for which the ex-gratia is paid. There is therefore no justification in denying ex-gratia on the spacious ground of participation in the strike of 19th & 20th September, 2011.

27.Mr.Bukhari countered this submission by contending that in the Circular dated 15.10.2011 the period 01.04.2010 to 31.03.2011 is given only for the purpose of calculation of actual working days, on the basis of which the pro-rata ex-gratia payment is to be made to the employees and it is nothing to do with the accounting/ financial year, as the Corporation is not making the payment on the basis of profits earned during the said accounting/ financial year. Perusal of Circular dated 15.10.2011 and in particular clauses (2) & (3) of Part I, prima-facie supports the contention of Mr.Bukhari. In order to calculate the actual working days, on the basis of which pro-rate ex-gratia payment is to be made to the employees, it is necessary to identify the period.

28.Mr.Kamdar further submitted that the right of the employees of the Corporation is crystalized in clause 1 of Part I of the said Circular, and that cannot be taken away by clause 2 (1) of Part II.

29.Mr.Bukhari is right when he contends that the Circular has to be read in its entirety and if read as a whole, it cannot be said that by clause 1 of Part I right is conferred and by Part II the said right is taken away. For instance under clause (4) of Part II the teaching staff in the Municipal Medical College & Hospital and who are getting pay-scale of U.G.C., are excluded from payment of exgratia, though they may be permanent and appointed on regular basis.

30.Mr.Kamdar further contended that at any rate, it amounts to imposition of penalty without following the due process of law. While elaborating this submission, he relied upon sections 22, 23 and 26 of the 1947 Act. Section 22 prohibits the persons employed in public utility service from going on strike in breach of contract without complying the mandatory requirements set out

therein. Section 23 prohibits the workmen from going on strike in breach of contract as also prohibits the employer of any such workmen from declaring lockout without complying with the

requirements set out therein. Section 24 declares the strike or the lockout as the case may be illegal, if it is commenced or declared in contravention of section 22 or 23. Section 26 provides that any workmen who commences, continues or otherwise acts in furtherance of the strike which is illegal under the 1947 Act, shall be punishable with imprisonment for a term which may extend to one month or with fine which may extend to 50 rupees or both. Relying upon these provisions, Mr. Kamdar submitted that even the penalty of denying ex-gratia to those employees who participated in the strike of 19th & 20th September, 2011 is not authorised by the statute. I do not find any substance in this submission. In the first place, prima-facie I have already held that in order to maintain discipline and having regard to the very nature of functioning of the Corporation, the Corporation is justified in denying ex-gratia to those employees who participated in the strike on 19th & 20th September, 2011 despite the order of injunction issued against them. Secondly, having regard to the scheme of section 22 to 26 of the 1947 Act, the authority to impose penalty is conferred upon the Court. Thirdly, the Corporation has denied ex-gratia to the employees who participated in the strike on 19th & 20th September, 2011, and the

said denial cannot be termed as penalty, as prima-facie, the said payment is based neither on an agreement nor on any settlement. The said right is also not flowing from any statutory provision

and is purely given as a measure of grace.

31.Mr.Kamdar further submitted that the Corporation violated Article 14 of the Constitution of India while denying ex-gratia to those employees who participated in the strike of 19th & 20th September, 2011. I do not find any substance in this submission for the reasons already recorded.

32.Mr.Kamdar further contended that the timing to make payment of ex-gratia is very significant. The Corporation is paying ex-gratia during the festival of Diwali every year. The Tribunal was therefore justified in ordering the payment of ex-gratia and no interference is called for. At any rate, the interest of the Corporation is properly secured by the Tribunal. It is undoubtedly true that the festival of Diwali has significance through out India. However, what is important to note is that the right of the employees of the Corporation flows from the Circular. I have already noted that prima-facie, at this stage, it cannot be said that the Union has established its case either of an implied term of agreement or a condition of service. I therefore do not find any substance in this submission. 33.Finally, Mr.Kamdar submitted that the Tribunal has power under section 30 (2) to grant appropriate interim relief under the 1971 Act. There is no dispute with this proposition. Section 30 (2)  undoubtedly, empowers the Tribunal to grant interim relief and declare engagement of unfair labour practice and further directing and specifying any person to cease and desist from practicing such unfair labour practice.

34.While the Tribunal has jurisdiction to grant interim orders, such orders ought not be passed as a matter of course unless prima facie case is made out in regard to commission of unfair labour practice. Equally the Labour Courts under the 1971 Act do have ower to grant interim relief and in exceptional cases may grant relief of mandatory nature, but, this power has to be exercised sparingly and with great caution in the cases such as where the employer is acting manifestly malafide and for extraneous purposes. Otherwise, the interference by the Labour Court at an interlocutory stage is unwarranted and such interference is likely to impede the efficiency of service and to lead to grave consequences, particularly in the context of an employer such as the Corporation who discharges duties having a bearing on the provision of utility service to the public and the community at large.

35.The question is whether in the facts and circumstances of the present case the Tribunal is justified in passing such interim order  In the first place, in my considered view, the Corporation was justified in denying ex-gratia payment to those employees who participated in the strike on 19th & 20th September, 2011 having regard to the very nature of functioning of the Corporation.

Secondly, despite the Tribunal granting injunction on 17.09.2011 thereby prohibiting the employees of the Corporation from going on strike, some of the employees of the Corporation participated in the strike. To say the least, prima-facie this amounts to acting in breach of the said order dated 17.09.2011. Whether the strike of 19th & 20th September, 2011 is legal or illegal will be decided at the appropriate stage, but nonetheless, prima-facie, in my opinion, in the teeth of the order of the Tribunal dated 17.09.2011 the employees of the Corporation were not justified in participating in the strike. This is necessary for maintaining the discipline in the establishment, otherwise the employees who participated in the strike would get signal that despite acting contrary to the order passed by the competent Court, they are getting benefits conferred on the other employees who did not participate in the strike. In other words it will amount to putting premium on the wrong doer.

36.Taking overall view of the matter, I am clearly of the opinion that the Tribunal committed serious error in passing the impugned order in the nature of granting monetary relief at the interim stage. The impugned order cannot be sustained and requires to be quashed and set aside and it is accordingly set aside. Application Exhibit U-2 in Complaint (U.L.P.) No.326 of 2011 stands dismissed. Rule is made absolute in terms of prayer clause (a). In the circumstances of the case, there shall be no order as to costs.

37.It is expressly made clear that the observations made and the findings recorded herein are only for the purpose of disposal of an Application Exhibit U-2 and the Tribunal will decide the

complaint on the basis of material on record and on its own merits, in accordance with law, without being influenced by the observations made and the findings recorded herein.

38.At this stage, Ms.Neeta Karnik, learned counsel for the Respondent Union has orally prayed for stay of this order. Learned counsel for the Corporation opposes the said application. Having regard to clause (iv) of the order dated 26.10.2011 passed by this Court in LPA, it is not possible to grant stay of this order. The oral application for stay is accordingly rejected.

(R.G.KETKAR, J.)