Supreme Court Revisits Wage Dispute: VVF Employees Union vs. VVF India Ltd. (2024)

Date of the Judgment: April 09, 2024
Citation: 2024 INSC 302
Judges: Aniruddha Bose, J., Sanjay Kumar, J.
Can a High Court, while exercising its powers of judicial review, re-evaluate factual findings of an Industrial Tribunal on wage disputes? The Supreme Court of India recently addressed this question in a case involving the VVF Ltd. Employees Union and VVF India Limited. This case examines the extent to which a High Court can interfere with an Industrial Tribunal’s award, particularly when it comes to determining fair wages and allowances for workers. The judgment was authored by Justice Aniruddha Bose, with Justice Sanjay Kumar concurring.

Case Background

The dispute originated from a charter of demands raised by the VVF Ltd. Employees Union on March 4, 2008, on behalf of 146 workmen across two units of VVF India Limited located in Sewree and Sion, Mumbai. The demands primarily concerned revisions in pay scales, wages, and various allowances. The original corporate entity, VVF Ltd., underwent a demerger, and the units at Sion and Taloja were transferred to VVF India Ltd. during the pendency of the dispute.

Timeline:

Course of Proceedings

The Industrial Tribunal, in its award dated March 29, 2014, granted partial relief to the employees, increasing allowances such as House Rent Allowance, Shift Allowance, Travelling Conveyance Allowance, Medical Allowance, Education Allowance, and Leave Travel Allowance. However, it rejected the demands for revision in pay scales, adjustment of wages, Fixed Dearness Allowance, and Variable Dearness Allowance. Both the employer and the union challenged this award by filing separate writ petitions before the High Court of Bombay.

The High Court, in its judgment dated July 25, 2019, partly allowed the union’s writ petition, setting aside the Tribunal’s award regarding the first four demands (revision in pay scale/salary, adjustment, fixed dearness allowance, and variable dearness allowance) and upholding the Tribunal’s decision on the remaining demands. The High Court also dismissed the employer’s writ petition. The union filed a review petition, which was dismissed on June 22, 2021.

Legal Framework

The core legal principle in this case is the “industry-cum-region test,” which is used to determine fair wages and allowances for industrial workers. This test involves comparing the prevailing pay and allowances with similarly situated industrial units in the same region. The financial capacity of the employer is also a significant factor in determining comparability.

The Supreme Court considered the scope of the High Court’s jurisdiction under Article 226 of the Constitution of India, particularly in the context of reviewing awards passed by Industrial Tribunals.

Arguments

The Union’s primary submission was that the Tribunal had failed to consider the plea of the workmen for parity with similarly situated units in the vicinity, as well as their claim for overtime allowances. The Union argued that the proposed revision would bring the salaries of the Mumbai workmen on par with their counterparts in the Taloja unit.

The employer, on the other hand, argued that the High Court exceeded its jurisdiction by re-appreciating facts and substituting the Tribunal’s findings with its own. The employer contended that the units used for comparison by the High Court were not similarly situated, considering their industrial output and financial position. They also argued that the High Court should have remanded the matter back to the Tribunal instead of undertaking the exercise of revision of pay scale and wages itself. The employer also contested the grant of various allowances, stating that they were granted without proper evidence.

The employer’s submissions included:

• The High Court erred in identifying comparable units.
• The High Court should not have called for fresh charts during the writ petition hearing.
• The company was making losses, and this should have been considered.
• The Taloja unit was not comparable due to different activities and post-demerger status.
• Various allowances were granted without evidence.

The Union’s submissions included:

• The Tribunal failed to consider parity with similar units.
• The Tribunal failed to consider the claim for overtime allowances.
• The revision was necessary to bring the Mumbai workmen on par with their Taloja counterparts.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a numbered list but the core issue that the court addressed was:

• Whether the High Court exceeded its jurisdiction under Article 226 of the Constitution of India by re-appreciating facts and substituting the findings of the Industrial Tribunal with its own, particularly in the context of wage revision and allowances.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

Judgment

The Supreme Court held that the High Court had overstepped its jurisdiction by re-appreciating the evidence and substituting its own findings for those of the Tribunal. The Court emphasized that while the High Court has the power of judicial review, it should not act as an appellate court and re-evaluate the evidence.

The Court found that the High Court should not have entered into a fact-finding exercise, especially concerning the comparability of the units and the financial status of the company. The Court also noted that the High Court had not properly analyzed the employer’s evidence regarding its financial position.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily driven by its concern that the High Court had overstepped its jurisdictional limits by re-evaluating factual findings of the Industrial Tribunal. The Court emphasized that the High Court’s role in judicial review is not to act as an appellate body and substitute its own findings. The Court also highlighted the importance of the industry-cum-region test and the financial capacity of the employer in wage determination. The Court’s reasoning also weighed on the fact that the High Court did not analyse the employer’s evidence regarding its financial position.

The Supreme Court’s reasoning was based on the principle that the High Court should not re-appreciate evidence and substitute its own findings for those of the Tribunal. The Court emphasized that the High Court’s role is limited to judicial review and ensuring that the Tribunal has followed the correct legal principles. The Court also noted that the High Court did not properly analyze the employer’s evidence regarding its financial position, which is an important factor in wage determination.

The Court considered the argument that the High Court had the jurisdiction to go into facts, but it clarified that this did not mean the High Court could act as an appellate authority. The Court held that the High Court had overstepped its jurisdiction by independently assessing the comparability of units and the financial position of the company.

The Supreme Court quoted from the judgment:

• “In the exercise of certiorari jurisdiction, the High Court proceeds on an assumption that a court which has jurisdiction over a subject-matter has the jurisdiction to decide wrongly as well as rightly. The High Court would not, therefore, for the purpose of certiorari assign to itself the role of an appellate court and step into reappreciating or evaluating the evidence and substitute its own findings in place of those arrived at by the inferior court.”
• “though the High Court ought not to reappreciate evidence and substitute its own finding for that of the Tribunal, it would not be beyond the jurisdiction of the High Court in its power of judicial review to altogether eschew such a process.”
• “In the given facts where the employer seriously contested the use of the concerned units as comparable ones, and highlighted its difficult financial position, the proper course would have been to remit the matter to the Industrial Tribunal rather than entering into these factual question independently in exercise of the writ jurisdiction.”

Key Takeaways

• The High Court should not re-appreciate evidence and substitute its own findings for those of the Industrial Tribunal.
• The High Court’s role in judicial review is limited to ensuring that the Tribunal has followed the correct legal principles.
• The industry-cum-region test and the financial capacity of the employer are important factors in wage determination.
• The matter has been remanded to the Industrial Tribunal for fresh consideration.

Directions

The Supreme Court set aside the judgment of the High Court and the Tribunal’s award. The Court directed the Tribunal to re-examine the cases of the respective parties afresh and conclude the reference within a period of six months.

Specific Amendments Analysis

There were no specific amendments discussed in the judgment.

Development of Law

The ratio decidendi of this case is that the High Court, while exercising its powers of judicial review, should not re-appreciate factual findings of an Industrial Tribunal. The Court reiterated that the High Court’s role is limited to ensuring that the Tribunal has followed the correct legal principles and has not acted beyond its jurisdiction. This judgment reinforces the principle that the High Court should not act as an appellate court and substitute its own findings for those of the Tribunal. This is a reiteration of the existing position of law.

Conclusion

In conclusion, the Supreme Court set aside the High Court’s judgment and the Tribunal’s award, remanding the matter back to the Industrial Tribunal for fresh consideration. The Court emphasized that while the High Court has the power of judicial review, it should not act as an appellate court and re-evaluate the evidence. The Court also highlighted the importance of the industry-cum-region test and the financial capacity of the employer in wage determination.