Cal HC | Labour Dispute| Duty of HC to only interfere in such matters where there is an egregious error in law

Calcutta High Court: Shekhar B. Saraf, J., while dismissing the present petition and upholding the interpretation placed by the Labour Court with regard to the “Service” Charge”, quoted prose by V.R. Krishna Iyer, J., —

“The Constitution of India is not a non-aligned parchment but a partisan of social justice with a direction and destination which it sets in the Preamble and Art. 38, and so, when we read the evidence, the rulings, the statute and the rival pleas we must be guided by the value set of the constitution. We not only appraise Industrial Law from this perspective in the disputes before us but also realize that ours is a mixed economy with capitalist mores, only slowly wobbling towards a socialist order, notwithstanding Sri Garg’s thoughts. And, after all, ideals apart, “law can never be higher than the economic order and the cultural development of society brought to pass by that economic order.”

Coming to the present application, filed which is with respect to a dispute between the Management and Labour, wherein Management assailed an award passed by Labour Court.

Issue before the Labour Court was:

“Interpretation of Clause 5 of the ‘Settlement Agreement’ that had been reached between the petitioner company and the employees of the petitioner company in reference under Section 36 A of the Industrial Disputes Act, 1947.”

Contentions

Counsel for the petitioner company, Ranjay De submitted that the service charge that is collected on Food and Beverage sales was decided to be disbursed amongst all the employees and the managerial personnel connected with the hotel functioning.

Adding to his submissions, he stated that, Service charge is only payable to personnel who are functioning in the hotel, and not to personnel that have been suspended.

There was no question of service charge being treated as part of wages.

Placing reliance on Section 2(rr) of West Bengal Payment of Subsistence Allowance Act, 1969 counsel for the petitioner canvassed the argument that unless the employee was functioning, he could not be entitled to any service charge.

Bank of India v. T.S. Kelawala, (1990) 4 SCC 744:

Petitioner’s counsel placed reliance on the above case to buttress the argument that wages are payable to the employees only upon fulfilment of the contract and not otherwise.

State of Punjab v. Jaswant Singh Kanwar, (2014) 13 SCC 622:

Supreme Court held that a person, who is suspended would be debarred from any privilege.

“…increment is an incidence of employment and an employee gets an increment upon working the full year and drawing full salary, and therefore, if he is under suspension, no such increment can be given to him.”

With reference to the present application and decision of Labour Court, the counsel submitted that:

Labour Court erred in law in holding that the service charge was payable to employees that were under suspension. Interpretation of the clause ‘service charge’ collected on Food and Beverage sales will be disbursed amongst all employees including managerial personnel connected with the hotel functioning by the tribunal is absolutely incorrect, as the Tribunal has held that the term ‘connected with the hotel functioning’ is redundant.

Counsel appearing on behalf of the Union of Employees, argued that there was no scope for interference by the High Court to Labour Court’s Order.  He further submitted that, Supreme Court in several of its decisions has held that,

“…beneficial interpretation is required to be given in favour of the employees, wherein settlement has been reached between the management and the workers.”

Justice V.R. Krishna Iyer in KCP Employees’ Assn. v. Management of KCP Ltd, (1978) 2 SCC 42 stated that,

“…In Industrial Law, interpreted and applied in the perspective of Part IV of the Constitution, the benefit of reasonable doubt on law and facts, if there is such doubt, must go to the weaker section, that is labour.”

Justice Ashok Ganguli in Harjinder Singh v. Punjab State Warehousing Corpn., (2010) 3 SCC 192, held that,

“…it is the Court’s duty to interpret statute with social welfare benefits in such a way as to further the statutory goal and not to frustrate the same.”

Conclusion

To get a clear understanding of the issue at present, Bench has quoted Clause 5:

5. SERVICE CHARGE

It is agreed between the parties that effective 1st October 1994, 70% of Service Charge collected on Food & Beverage sales will be disbursed amongst all employees including managerial personnel connected with the hotel functioning. The Industrial Trainees and the hotel operation trainees coming for on the job training from different Institutes/source will not get share of service charge. The tipping zone employees will get 50% less service charge than the amount payable to the non-tipping zone employees. From 1st October 1996 disbursement of service charge will be 75%.”

Court while concluding its decision, stated that, it is clear that the service charge is not a part of the exclusive clause. It further appears that the same may not be part of the inclusive clause either as the service charge is neither an allowance or is it a payment for house accommodation/travelling concession/commission payable.

“Service charge comes within the first portion of Section 2(rr) of the West Bengal Payment of Subsistence Allowance Act, 1969 wherein it is stated that ‘wages’ means all remuneration capable of being expressed in terms of money.”

High Court while reasoning and upholding the Labour Court’s decision stated that the term ‘hotel functioning’ would only apply to the managerial personnel due to the fact that the settlement agreement is between the management and the employees.

With regard to service charge, agreement clarifies that the managerial personnel connected to the hotel functioning shall also obtain a share as they are actively involved in the ‘service’ being provided to the customers.

“Treating the term ‘employees’ in the said clause as only employees that are presently working and excluding those who are suspended would amount to a very narrow interpretation of the said clause.”

Hence, to eschew delay that is deleterious to the Labour, it is the duty of the High Court to only interfere in such matters where there exists gross perversity in findings and/or the High Court finds an egregious error in law. [Peerless Inn v. First Labour Court, 2020 SCC OnLine Cal 335, decided on 10-02-2020]

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