Case BriefsTribunals/Commissions/Regulatory Bodies

National Company Law Tribunal, Mumbai Bench: The Coram of Janab Mohammed Ajmal (Judicial Member) and V. Nallasenapathy (Technical Member),  decided the issue of whether the Resolution Plan could be shared with the employees of Jet Airways.

Who all are the applicants?

Pilots of Jet Airways (Corporate Debtor) were represented by a Union named National Aviators’ Guild, Maintenance Engineers of the Corporate Debtor under the umbrella of Jet Aircraft Maintenance Engineers’ Welfare Association, Bhartiya Kamgar Sena (BKS) and Jet Airways Cabin Crew Association (JACCA) respectively representing 70% of the ground staff and the majority of the Cabin Crew of the Corporate Debtor and All India Jet Airways Officers’ and Staff Association, they all sought a direction to Respondent (Resolution Professional) to furnish each of the entities/applicants a full copy of the entire Resolution Plan approved by the CoC.

Reasoning | Why do the applicants want to know the details of Resolution plan?

Applicants state that they are unaware of the details of the Resolution Plan and hence they needed to know what was provided under the RP for its members and employees.

Vital concern of the applicants is with regard to the terms and conditions of the Resolution Plan. Further, it has been added that any revival plan, for that matter, both in terms of employment and provision for outstanding wages/dues, is vital for their sustenance and mutual benefit.

Some of the employees have lingered on the rolls of the Corporate Debtor despite the financial hardships and difficulty it entailed.

Adding to the above, it has also been stated that natural justice demands that the applicants remain aware of the Plan and how it is going to take care of their interests or adversely affects them.

Applicants would be the most affected by the orders of this Authority approving or rejecting the Resolution Plan. Thus, it becomes imperative that the Applicants are made privy to the Resolution Plan before it is considered.

Further, the applicants claimed that the Resolution Plan could not be held to be confidential as far as the employees of the Corporate Debtor were concerned.

It is settled law that the interest of the Corporate Debtor is of utmost importance and should be scrupulously protected. 

In view of the above stated, the present application has been filed.

Respondent submitted that the IP Regulations mandate the Resolution Professional to ensure and maintain the confidentiality of the information related to the Insolvency Resolution Process since it contains sensitive information and could only be presented to the CoC.

Analysis, Law and Decision

Bench observed that the applicants interest in the Resolution Plan revolves around the payment/recovery of their dues such as remuneration/wages, other perquisites including terminal benefits if any.

What does Regulations 9 & 22 of the CIRP Regulation lay down?

The stated provision lays down the procedure for the workmen and employees to submit their claims before the IRP/RP.

Regulation 22 of the IP Regulations mandates that an Insolvency Professional must ensure that the confidentiality of the information relating to the insolvency resolution process, liquidation or bankruptcy process is maintained at all time.

Hence, Tribunal held that in view of the above-discussed provisions, the reluctance and refusal of the respondent in sharing the copy of the Resolution Plan with the applicants cannot be faulted.

Natural Justice

Recourse to principles of natural justice and audi alteram partem can be taken when the provisions made in a statute fall short of the requirement and the constitutional validity of the Code has been upheld by the Supreme Court in Swiss Ribbons v. Union of India (2019) 4 SCC 17.

Adjudicating Authority cannot digress from the express provisions of the Statute and act in the manner not provided thereunder or sanctioned by the statute.

Tribunal further explained that in view of express provisions in relation to the Resolution Plan, it is clear that the statutory mandate requires that the Resolution Plan can only be presented to the CoC for its approval and presented before the Adjudicating Authority for its satisfaction in approving the same.

Code or the Regulations thereunder do not contemplate presentation or supply of the Resolution Plan or a copy thereof to any other body or entity. 

Bench agreed with the decision in Anil N. Surwade v. Prashant Jain (IA No. 1033 of 2020 in C.P. (IB) No. 1799 of 2018 decided on 28-09-2020).

“…workmen being at par with the secured creditors are also entitled to privileges of a member of CoC would be fallacious and would go against the grain of the intent and purpose of the Code. “

Bench also added that the applicants are Operational Creditors and the Supreme Court has observed that the role of the Operational Creditors is very limited and confined to the satisfaction of their claims.

Therefore after a wholesome discussion, Tribunal denied any relief to the applicants with a reasoned order.[National Aviators’ Guild v. Ashish Chhawchharia, 2021 SCC OnLine NCLT 50, decided on 22-02-2021]


Image credits of the aircraft: Business Today

Case BriefsHigh Courts

Punjab and Haryana High Court:The Division Bench of Ravi Shanker Jha, CJ. and Arun Palli, J., upheld the impugned order of Single Judge whereby, the Single Judge had held that the appellant is not entitled to pensionary benefits as he has resigned from service.

The petitioner joined the services of Punjab National Bank in the year 1963 and due to personal reasons, after rendering 25 years of service; he submitted his resignation on 05-01-1988, which was accepted belatedly by the bank on 14-10-1991 with effect from 05-02-1988. Petitioner requested the Bank to release his retiral benefits including gratuity, provident fund, leave encashment, sick leave salary and arrears of increments. The claim of the petitioner had been resisted by the Bank in view of Regulation 22(1) of the Punjab National Bank(Employees’)Pension Regulations, 1995, Which is extracted herein below:-

22. Forfeiture of service(1) Resignation or dismissal or removal or termination of an employee from service of the Bank shall entail forfeiture of his entire past service and consequently shall not qualify for pensionary benefits.”

The Single Judge while considering the issue of pension relied on the judgment of Supreme Court rendered in Senior Divisional Manager, Life Insurance Corporation of India v.. Shree Lal Meena, (2019) 4 SCC 479, and Uco Bank v. Sanwar Mal, 2004(4) SCC 412, wherein, the Court had held that, In a self financing scheme, a separate fund is earmarked as the Scheme is not based on budgetary support but on adequate contributions from the members of the fund. Retirement is allowed only on completion of qualifying service which is not there in the case of resignation. When such a retiree opts for self financing Pension Scheme, he brings in accumulated contribution earned by him after completing qualifying number of years of service under the Provident Fund Rules whereas a person who resigns may not have adequate credit balance to his provident fund account. Similarly, the pension payable to the beneficiaries under the Scheme would depend on income accruing on investments and unless there is adequate corpus, the Scheme may not be workable and, therefore, Regulation 22 prescribes a disqualification to dismissed employees and employees who have resigned.

 On the basis of above-mentioned precedent, the Single Judge had held that there was no doubt that the petitioner had invited the forfeiture of pension by his own conduct and, therefore, no interference was called for by the Court to that extent. However, regarding the other claims, the Court observed that the same had been withheld by the Bank without any plausible explanation.  Therefore, the Court had directed the Bank to make requisite calculations and give benefits of all the retiral benefits except pension, to the petitioner by reckoning his date of resignation as 14-10-1991. The petitioner was also granted interest at 8% per annum on the amount, which was found due and payable to him.

In the light of above, the Bench dismissed the appeal holding that it did not find any reason to interfere with the order passed by the Single Judge, as the Single Judge had already granted adequate relief to the appellant. [Kanwar Kesri Singh v. Punjab National Bank, 2020 SCC OnLine P&H 2359, decided on 19-02-2020]

Case BriefsHigh Courts

And, that’s a wrap!

Here’s the list of our coverage on Negotiable Instruments Act in the year 2020.

 [Allahabad High Court]

All HC | Can a complaint filed in light of S. 138 NI Act be dismissed on ground of one day delay? Read Court’s reasoned order

[Pankaj Sharma v. State of U.P., 2020 SCC OnLine All 1339, decided on 22-09-2020]

All HC | Principle contained in S. 141 of NI Act is not applicable to a sole-proprietary concern, firm need not be arraigned as an accused while making a claim for recovery under S. 138 of the NI Act

[Dhirendra Singh v. State of U.P., 2020 SCC OnLine All 1130, decided on 13-10-2020]

All HC | Once the intention of the party is clear that he does not wish to make payment, should complainant wait for 15 days to file a complaint for dishonour of cheque? HC answers

[Ravi Dixit v. State of U.P., 2020 SCC OnLine All 1056, decided on 23-09-2020]


[Bombay High Court]

Bom HC | Does NI Act authorises a complainant to fill an incomplete cheque? Court discusses while reversing acquittal of accused under S. 138 NI Act

[Kiran Rameshlal Bhandari v. Narayan Purushottam Sarada, 2020 SCC OnLine Bom 3562, decided on 07-12-2020]

Bom HC | Appeal filed against conviction under S. 138 NI Act cannot be dismissed for non-payment of fine without going into merits of appeal

[Adesh Prakashchand Jain v. Harish Punamchand Une, 2020 SCC OnLine Bom 96, decided on 08-01-2020]

Bom HC | S. 139 NI Act imposes evidentiary burden and not a persuasive burden; acquittal upheld where complainant failed to prove capacity to give loan

[Tasneem Murshedkar Mazhar v. Ramesh, 2020 SCC OnLine Bom 20, decided on 02-01-2020]


[Delhi High Court]

Del HC | Can a director who has resigned from company be held liable for cheques subsequently issued and dishonoured? HC explains in light of S. 141 NI Act

[Alibaba Nabibasha v. Small Farmers Agri-Business Consortium, 2020 SCC OnLine Del 1250, decided on 23-09-2020]

Del HC | Proceedings under S. 138 NI Act quashed against Independent Non-executive Directors not involved in day-to-day affairs of Company

[Sunita Palta v. Kit Marketing (P) Ltd., Crl. MC No. 1410 of 2018, decided on 03-03-2020]

Del HC | Ss. 143-147 NI Act lay down Special Code for trial, recourse to S. 482 CrPC as a substitute for initiating second revision petition denied

[Tathagat Exports (P) Ltd. v. PEC Ltd., 2020 SCC OnLine Del 405, decided on 20-01-2020]


[Himachal Pradesh High Court]

HP HC | Legislative intent of NI Act, 1881 is not to send the people to suffer incarceration but to execute recovery of cheque amount by showing teeth of penalty loss; conviction set aside

[Gaurav Sharma v. Ishwari Nand, 2020 SCC OnLine HP 2464, decided on 13-11-2020]

HP HC | Whether the trial court can exercise any discretion while entertaining an application under S.145 of the NI Act; HC elucidates upon procedural nuances

[Vikas Sharma v. Vishant Bali,  2020 SCC OnLine HP 2876, decided on 08-12-2020]

HP HC | While exercising power under S. 147 of NI Act the Court can proceed to compound the offence even after recording of conviction

[Satish Kumar v. Rahul Kumar, 2020 SCC OnLine HP 338, decided by 03-03-2020]


[Jharkhand High Court]

 Jhar HC | Object of NI Act is primarily compensatory; Court can discharge accused on full payment and amicable settlement

[Alok Kumar v. State of Jharkhand, Cr. Revision No. 694 of 2019, decided on 06-03 2020]


[Kerala High Court]

[Negotiable Instruments Act] Ker HC | What determines commencement of period of presentation is date of cheque and not the date of delivery of cheque

[Subanamma Ninan v. George Veeran, 2020 SCC OnLine Ker 4151, decided on 18-09-2020]


[Karnataka High Court]

 Kar HC | In a case where both the complainant and the accused remained continuously absent, Court ought to have “dismissed the complaint for non-prosecution under S. 256 CrPC and not on merits”

[Karage Gowda v. S. Nagaraj, 2020 SCC OnLine Kar 2012, decided on 11-12-2020]

Kar HC | If the complainant produces evidence regarding the transaction as well as dishonour of cheque, is it still necessary to examine the banker to prove the endorsement issued by him? HC decides

[M. Narayanaswamy v. Nagaraj N.S., 2020 SCC OnLine Kar 2013, decided on 11-12-2020]

Kar HC | No legal basis for Family Courts insisting on personal presence of petitioners at the time of filing cases; Presence of complainant while filing S. 138 NI Act case not necessary

[High Court of Karnataka v. State of Karnataka, 2020 SCC OnLine Kar 543 , decided on 03-06-2020]


[Madras High Court]

Madras HC | Can a ‘Non-Executive Director’ who is not responsible for day-to-day affairs of company be made vicariously liable for offence committed by the company? Court’s interpretation in light of S. 141 NI Act

[Vijaya Arun v. New Link Overseas Finance Ltd., Crl. OP Nos. 5, 8 & 11 of 2020, decided on 18-08-2020]

[Malafide Litigation] Madras HC | Proceedings under S. 420 IPC quashed for being counterblast to complaint instituted under S. 138 NI Act

[M. Chandrasekar v. R. Rajamani, 2020 SCC OnLine Mad 4777, decided on 24-08-2020]


[Madhya Pradesh High Court]

[Dishonour of Cheque] MP HC | Director/MD/JD/other officers and employees of a company can not be prosecuted under S. 138 of NI Act unless the company is impleaded as an accused

[Bhupendra Suryawanshi v. Sai Traders, 2020 SCC OnLine MP 1277, decided on 09-06-2020]


[Punjab and Haryana High Court]

[S. 138 NI Act] P&H HC | Do sympathetic consideration have any role to play in the matter of sentencing? Court discusses

[Rakesh Kumar v. Jasbir Singh, 2020 SCC OnLine P&H 1197, decided on 11-08-2020]


[Tripura High Court]

Tri HC | What is the purpose of a serving a ‘Statutory Notice’ under Negotiable Instruments Act? Detailed analysis of significance of ‘Statutory Presumption’

[Nitai Majumder v. Tanmoy Krishna Das, 2020 SCC OnLine Tri 537, decided on 17-11-2020]


Also Read:

2020 Wrap Up — Flashback of Stories on Consumer Cases

2020 Wrap-Up — Family Law & Allied Provisions

Case BriefsTribunals/Commissions/Regulatory Bodies

National Company Law Tribunal (NCLT): The Coram of Dr Deepti Mukesh (Judicial Member) and Sumita Purkayastha (Technical Member), reiterated that any shortfall in gratuity payable to employees has to be made over by the Resolution Professional and payment of dues has to be paid outside the waterfall mechanism provided under Section 53 of the Insolvency and Bankruptcy Code, 2016.

The instant application was filed by Sandeep Tyagi on behalf of 52 Ex-Employees of MOSER BAER ELECTRONICS LTD. who sought directions to release the lawful dues of the ex-employees who submitted their resignation prior to the initiation of the CIRP process.

FACTS

Facts pertaining to the present case are that the Corporate Debtor is a wholly-owned subsidiary of MOSER BAER INDIA LIMITED. It is stated that all the employees were forced to resign by the ex-management by March 2019. Further, it was stated that, they were not paid their dues.

The dues were not settled by the ex-management of the Corporate Debtor citing financial instability.

As an application for CIRP was preferred by Autonix Lighting Private Limited (Operational Creditor) under Section 9 of the IBC on account of default. Mr Hemant Sharma was appointed at the Interim Resolution Professional of the Corporate Debtor.

Applicant stated that the Corporate debtor did not deposit Provident Fund till their dates of resignation respectively. The salary slips of the ex-employees show that Provident Fund was deducted every month but admittedly it was not deposited with the EPFO.

Applicant relied on the decision of Principal Bench in CA (PB) No. 19 (PB) of 2019 dated 19-03-2019 filed by the Moser Baer Karamchari Union of the MOSERBAER INDIA LIMITED (Holding Company) against the Resolution Professional in CP No. (IB) 378(PB)/2017 Alchemist Asset Reconstruction Co. Ltd. v. Moser Baer India Limited for release of their dues.

It was observed that the above-stated Order dated 19-03-2019 of the Adjudicating Authority had been challenged before the Appellate Authority. In the Order dated 19-08-2019, the Appellate Authority upheld the same and stated the following:

“Para 24- Once the liquidation estate/asset of the Corporate Debtor under Section 36(1) read with Section 36(3), do not include all sum due to any workman and employees from the provident fund, the pension fund and the gratuity fund, for the purpose of distribution of assets under Section 53, the provident fund, the pension fund and the gratuity fund cannot be included.

Para 25- The Adjudicating Authority having come to such finding that the aforesaid funds i.e., the provident fund, the pension fund and the gratuity fund do not come within the meaning of liquidation estate’ for the purpose of distribution of assets under Section 53. we find no ground to interfere with the impugned order dated 19th March, 2019.”

Bench while parting with the decision held that it would like to fall in line with the ratio laid down by the Principal Bench:

“…any shortfall in gratuity has to be made over by the Resolution Professional and payments of the dues has to be paid outside the waterfall mechanism.”

Bench directed the Resolution Professional to release the dues of the ex-employees and deposit the Provident Fund with EPFO and release Gratuity dues forthwith.[Autonix Lighting Industries (P) Ltd. v. Moser Baer Electronics Ltd., 2020 SCC OnLine NCLT 1111, decided on 19-11-2020]


Advocates for parties:

For Resolution Professional: Milan Singh

For Applicant: Advocate Swarnendu Chatterjee


Ed. Note: See, however, the judgment of NCLAT in Savan Godiwala v. Apalla Siva Kumar, 2020 SCC OnLine NCLAT 191.

Legislation UpdatesRules & Regulations

Union Ministry of Labour and Employment has notified the draft rules under the Code on Social Security, 2020 on 13.11.2020 inviting objections and suggestions, if any, from the stakeholders. Such objections and suggestions are required to be submitted within a period of 45 days from the date of notification of the draft rules.

The draft rules provide for operationalization of provisions in the Code on Social Security, 2020 relating to Employees’ Provident Fund, Employees’ State Insurance Corporation, Gratuity, Maternity Benefit, Social Security and Cess in respect of Building and Other Construction Workers, Social Security for Unorganised Workers, Gig Workers and Platform Workers.

The draft rules also provide for Aadhaar based registration including self-registration by unorganised workers, gig workers and platform workers on the portal of the Central Government. Ministry of Labour and Employment has already initiated action for the development of such portal. For availing any benefit under any of the social security schemes framed under the Code, an unorganised worker or a gig worker or platform worker shall be required to be registered on the portal with details as may be specified in the scheme.

The rules further provide for Aadhaar based registration of Building and Other Construction Workers on the specified portal of the Central Government and the State Government or the State Welfare Board. Where a building worker migrates from one State to another he shall be entitled to get benefits in the State where he is currently working and it shall be the responsibility of the Building Workers Welfare Board of that State to provide benefits to such a worker.

Provision has also been made in the rules regarding gratuity to an employee who is on fixed-term employment.

The rules also provide for single electronic registration of an establishment including cancellation of the registration in case of closure of business activities.

Provision has also been made regarding manner and conditions for exiting of an establishment from EPFO and ESIC coverage.

The procedure for self-assessment and payment of Cess in respect of building and other construction workers has been elaborated in the rules. For the purpose of self-assessment, the employer shall calculate the cost of construction as per the rates specified by the State Public Works Department or Central Public Works Department or on the basis of return or documents submitted to the Real Estate Regulatory Authority.

The rate of interest for delayed payment of such cess has been reduced from 2 per cent every month or part of a month to 1 per cent. Under the existing rules, the Assessing Officer has the power to direct that no material or machinery can be removed or disturbed from the construction site. Such power for indefinitely stopping of construction work has been withdrawn in the draft rules. Further, under the draft rules, the assessing officer can visit the construction site only with the prior approval of the Secretary of the Building and Other Construction Workers Board.

The rules have also provided for the manner of payment of contribution by the aggregators through self-assessment.

For Draft Notification of Rules (Hindi & English) under Code on Social Security please click on the Link


Ministry of Labour and Employment

[Press Release dt. 15-11-2020]

[Source: PIB]

Legislation UpdatesStatutes/Bills/Ordinances

The Code on Social Security, 2020 received Presidential Assent on 28-09-2020.

The Code on Social Security, 2020

Second National Commission on Labour, which submitted its report in June, 2002 had recommended that the existing set of labour laws should be broadly amalgamated into the following groups, namely:—

(a) industrial relations; (b) wages; (c) social security; (d) safety; and (e) welfare and working conditions.

With the introduction of the Code, the following Acts are repealed:

 1. The Employee’s Compensation Act, 1923;

2. The Employees’ State Insurance Act, 1948;

3. The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952;

4. The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959;

5. The Maternity Benefit Act, 1961;

6. The Payment of Gratuity Act, 1972;

7. The Cine-Workers Welfare Fund Act, 1981;

8. The Building and Other Construction Workers’ Welfare Cess Act, 1996;

9. The Unorganised Workers Social Security Act, 2008.

Benefit of amalgamation of the above-stated laws:

It will remove the multiplicity of definitions and authorities without compromising the basic concepts of welfare and benefits to workers.

Widening the scope of the benefits to the fixed-term employees would be a big step towards equity.

Features of the Bill:

(i) to amend and consolidate the laws relating to social security with the goal to extend social security to all employees and workers either in the organised or unorganised or any other sectors;

(ii) to provide for an establishment to be covered under Chapter III relating to Employees’ Provident Fund (EPF) and under Chapter IV relating to Employees State Insurance Corporation (ESIC) on a voluntary basis even if the number of employees in that establishment is less than the threshold. It further seeks to make those Chapters inapplicable to such establishments on fulfilment of certain conditions;

(iii) to define various expressions used in the Bill such as, “career centre”, “aggregator”, “gig worker”, “platform worker”, “wage ceiling”, etc. Further, the definition of “employee” has been comprehensively elaborated to cover maximum number of employees and workers;

(iv) to provide for registration, electronically or otherwise, of every establishment to which the Bill applies, within such time and in such manner as the Central Government may by rules determine. It further provides for an option for cancellation of registration by any establishment whose business activities are in the process of closure, subject to the conditions as may be prescribed by the Central Government;

(v) constitution of various social security organisations for the administration of the Bill, namely, (a) the Central Board of Trustees of the Employees’ Provident Fund (Central Board), (b) the Employees’ State Insurance Corporation (Corporation), (c) the National Social Security Board for Unorganised Workers (National Social Security Board), (d) the State Unorganised Workers’ Social Security Board and (e) the State Building Workers Welfare Boards;

(vi) to provide that the medical education institutions and training institutes of the Employees’ State Insurance Corporation may be run by the Corporation itself or on the request of the Corporation, by the Central Government, any State Government, any Public Sector Undertaking of the Central Government or the State Government or any other body notified by the Central Government;

(vii) to empower the Central Government to frame schemes for unorganised workers, gig workers and platform workers and the members of their families for providing benefits relating to Employees’ State Insurance Corporation;

(viii) provisions for maternity benefits such as prohibition from work during certain periods, provision of nursing breaks, crèche facility, claim for maternity benefits, etc.;

(ix) to empower the Central Government, by notification, to assign additional work, including administration of any other enactment or scheme relating to social security, to any of the social security organisations and the expenses towards such additional work shall be borne by the Central Government;

(x) to empower the Central Government to frame schemes for the purposes of providing social security benefits to self-employed workers or any other class of persons;

(xi) to empower the Central Government to specify by notification, rates of employees’ contributions to the Employees’ Provident Fund Scheme and the period for which such rates shall apply for any class of employee;

(xii) to provide for an appeal against an order passed by any authority in regard to determination and assessment of dues and levy of damages relating to Employees’ Provident Fund by an employer only after depositing with Social Security Organisation concerned, twenty-five per cent. of the amount due from him as determined by the authority against whose order the appeal has been preferred;

(xiii) to provide that in the case of an employee employed on fixed-term employment or a deceased employee, the employer shall pay gratuity on a pro-rata basis and not on the basis of continuous service of five years;

(xiv) to make provision for payment of cess by an employer in case of building and other construction work, payable under Chapter VIII on the basis of his self-assessment;

(xv) to provide for the registration of every unorganised worker, gig worker or platform worker on the basis of self-declaration electronically or otherwise, along with such documents including Aadhaar number, in such form and in such manner, containing such information as may be prescribed by the Central Government;

(xvi) to empower the Central Government by order, to defer or reduce employer’s contribution, or employee’s contribution, or both, payable under Chapter III or Chapter IV, as the case may be, for a period up to three months at a time, in respect of establishment to which Chapter III or Chapter IV, as the case may be, applies, for the whole of India or part thereof in the event of a pandemic, endemic or national disaster;

(xvii) to provide for establishment and maintenance of separate accounts under social security fund, for the welfare of unorganised workers, gig workers and platform workers; and a separate account for the amount received from the composition of offences under the Bill or under any other central labour laws.

Read the detailed Act, here: Code on Social Security, 2020


Ministry of Law and Justice

Case BriefsHigh Courts

Himachal Pradesh High Court: Ajay Mohan Goel J., dismissed the petition being devoid of merits.

The facts of the case are that the petitioner worked as a Senior Assistant in Government Senior Secondary School, Hatwar whose headmaster lodged a complaint stating that the petitioner had withdrawn an amount of Rs 1,60,000 and Rs 1,00,000 from the GPF account of Smt. Shakuntala Devi and Rs 60,000 from the GPF account of Smt. Pushp Lata fraudulently and in an unauthorized manner without any request being made for such withdrawal by the account holders. Subsequent to the complaint, the petitioner was called for show cause to which no response was made reason for which was ill-health as submitted later. The Director of Higher Education, H.P., ordered that Rs 1,60,000 plus interest be recovered from the petitioner by way of attachment of his 1/3rd salary per month and the same be paid under proper receipt every month in equal amount both to Shakuntala Devi and Pushp Lata till the recovery of their respective embezzled amount with interest of 3% over and above the prevailing rate of interest on GPF, vide order dated 25-11-2014. Aggrieved by the same the instant petition was filed to quash the order and stop the recovery.

Counsel for the petitioner Vijay Bhatia submitted that the act of the petitioner was bonafide as the GPF payments were released on a request made by the employees concerned. It was further submitted that no proceedings were initiated in consonance with the provisions of CCS (CCA) Rules, 1965 and therefore the impugned order is bad in law and not sustainable whereas the respondents were represented by counsels Somesh Raj, Dinesh Thakur, Sanjeev Sood and Varun Chandel who opposed the submissions.

The Court after hearing the facts and submissions in the instant case observed that neither any record has been placed which proves that the withdrawn amount were handed over to the employees concerned nor both the employees have been made party in the petition. The Court further observed that the entire reason for delay being given as ill health is just a concocted story and it is imprudent to agree with the excuse as the petitioner could have asked for an extension instead of remaining silent till the time impugned order was passed. In view of the observations given, it was held that choosing to remain silent to the show cause results in impliedly agreeing to the allegations. The Court further held that argument regarding provisions of CCS (CCA) Rules, 1965 holds no merit as the provisions are attracted in a disciplinary proceeding against a delinquent employee which is not the case in the instant petition.

In view of the above, the Court rejected the prayer for quashing the impugned order and disposed of the petition. [Rajesh Kumar v. State of H.P., 2020 SCC OnLine HP 1563, decided on 24-08-2020]


Arunima Bose, Editorial Assistant has put this story together

Case BriefsHigh Courts

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]

Case BriefsHigh Courts

Karnataka High Court: Krishna S. Dixit, J. allowed a writ petition praying for quashing of a circular whereby overtime dues were denied to employees of the respondent.

The petitioner herein was not granted an allowance for the overtime job done by him, and aggrieved thereby he filed the present writ petition under Articles 226 and 227 of the Constitution of India praying to quash the impugned circular.

The respondent resisted the writ petition banking upon the impugned circular.

The Court opined that the impugned circular contained a strange reason for variability for denying the overtime allowance. Thus, it did not have the force of law, nor justification. It was held that a legal claim of an employee cannot be negated by quoting such a circular.

The Court further opined that withholding the amount payable amounted to acquiring property sans compensation, therefore, the same is violative of Article 300-A of the Constitution of India.

Reliance was placed on the case of State of Gujarat v. High Court of Gujarat, (1998) 7 SCC 392, where the right of sentence serving prisoners to wages for the work done in prison was recognized and denial of overtime allowance was held to be an infringement of Article 23 of the Constitution of India.

In view of the above, the writ petition was allowed and the impugned circular was quashed; holding that the amount payable for the overtime is ascertainable and variability spoken of by the circular offends law, reason and logic.

The Court directed the respondent to consider and grant the allowance to the petitioner within a period of eight weeks and held that any delay in payment of the allowance would amount to an additional payment of Rs 20,000 by the respondent to the petitioner.[G.M. Poovaiah v. KSRTC, WP No. 2463 of 2015, decided on 28-11-2019]

Case BriefsHigh Courts

Madras High Court: Abdul Quddhose, J., dismissed a writ petition filed against the order passed by the Employees Provident Fund Appellate Tribunal holding that the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 have to be interpreted only in the favour of employees.

An order was issued against the petitioner by the Regional Provident Fund Commissioner under Section 7-A of the EPF & MP Act stating that a sum of over Rs 14.40 lakhs was due and payable by them towards 194 employees, for whom, EPF contributions were not paid by them. The petitioner filed a review of this order, which was dismissed. An appeal filed thereagainst before the EPF Appellate Tribunal met with the same fate. The petitioner’s case was that the 194 employees concerned apprentices and temporary employees.

While considering the matter, the High Court observed: “The purpose of the enactment of the said Act is to cultivate the spirit of saving amongst the workers regularly. It is, therefore, a beneficial legislation to protect the interest of the employees. Therefore, this Court will have to necessarily interpret the provisions only in favour of the employees whenever there requires any interpretation.”

Not satisfied with the stand taken by the petitioner, the High Court said: “It is impossible for the factory to have more number of apprentices than regular employees, that too about in the ratio 1:3. Further, there is no dispute regarding the number of persons, who were working at the time of inspection by the enforcement wing officials in the factory premises of the petitioner in the year 2006.”

The Court noted that the evidence was duly considered by the Commissioner. Stating that it cannot re-appreciate the evidence under Article 226 jurisdiction, the Court dismissed the present petition finding no perversity in the impugned order. [Kumar Spinning Mills (P) Ltd. v. Employees Provident Fund Appellate Tribunal, 2019 SCC OnLine Mad 937, dated 02-04-2019]

Case BriefsInternational Courts

European Court of Justice (ECJ): The Bench comprising of K. Lenaerts, President; R. Silva de Lapuerta, Vice-President; J.C. Bonichot, A. Arabadjiev, A. Prechal, C. Toader and C. Lycourgos (Rapporteur), Presidents of Chambers, directed equal treatment for all employees until the Austrian legislation was amended.

The respondent who was employed under a private detective agency was denied public holiday pay for the work he did on a ‘Good Friday’ which he claims to be arbitrary and demands to be treated at par with the employees who were members of Evangelical Churches of the Augsburg and Helvetic Confessions, the Old Catholic Church and the United Methodist Church, for which he seeks pay from the petitioner.

The question raised in this case was regarding the Austrian law of a paid public holiday, which was only given to practice the religion on a given specified day for which the consent of the employer was not needed and if the employee for some reason has to work on that day he stands reimbursed by the employer. The principle of ‘equal treatment’ under Article 2(2) (a) of  Directive 2000/78 of European Union law was submitted wherein discrimination occurred where one person was treated less favourably than another in a comparable situation on account of religion.

The Court was of the view that if the execution of legislation demands bestowing some freedom only upon a certain religion, it was purely detrimental for the others. It also noted that relaxation was not given to perform a particular religious duty, but was subject only to the condition that such an employee must formally belong to one of those churches. Accordingly, it stated that until the Country reinstates measures to abolish this arbitrariness, observance of the principle of equality can be ensured only by granting to persons within the disadvantaged category the same advantages as those enjoyed by persons within the favoured category.

Thus the principle of Article 21 of the Charter of Fundamental Rights of the European Union was applied which says that until the Member State concerned has amended its legislation restoring an equal treatment towards the ‘other’ employees, a duty be imposed upon the employer to allow the employee to be absent from work on the prescribed holiday if not compensate him for the same.[Cresco Investigation GmbH v. Markus Achatzi, C-193/17, order dated 22-01-2019]

Case BriefsHigh Courts

Uttaranchal High Court: A Single Judge Bench comprising of Sudhanshu Dhulia, J. directed the State to follow the rule of equity while granting payment to its employees.

The petitioners were Junior Residents working in a Government Medical College also pursuing a post graduation course along with it. The issue that arose was with respect to the remuneration received by them, which was less than what was being given to junior residents not undergoing any post graduation course with due consideration to the fact that work and duties performed by them were same in nature. Also, the benefit of the 7th pay commission was not been given to them.

The Court thereby highlighting the principle of equal pay and equal work, directed the respondent on the principle of equity to grant the benefit of the 7th pay commission to both the categories of junior residents irrespective of them undergoing any post graduation or not. Accordingly, the writ petition was disposed of. [Ravi Saini (Dr.) v. State of Uttarakhand, 2017 SCC OnLine Utt 1784,  order dated 06-10-2017]

Case BriefsSupreme Court

Supreme Court: The Vacation Bench comprising of Adarsh Kumar Goel and Ashok Bhushan JJ., allowed the Centre to go ahead with the reservation in promotion for employees belonging to the cadre of SC/ST in accordance to law.

Centre had stated various submissions for explaining their concern on the whole process of promotion being “standstill” due to the various orders passed by the High Courts and apex court.  The government also cited the cases on the issue of quota in promotion in government jobs by placing the apex court’s decision in M Nagaraj v. Union of India, (2006) 8 SCC 212  would be applicable, as in reference to the said case, creamy layer concept cannot be applied to the ST/SC for promotions as decided in the verdict of Indra Sawhney v. Union of India; 1992 Supp (3) SCC 210 and E.V Chinnaiah v. State of A.P; (2005) 1 SCC 394.

ASG Mahinder Singh also referred to an order passed on May 17th in which it was said that “pendency of petition before it shall not stand in the way of the Centre taking steps for the promotion”. He also mentioned Article 16 (4A) of the Constitution, which enabled the state to provide reservation in matters of promotion to SC/ST which in its view was not effectively represented for services.

By a decision of the Supreme Court in M Nagaraj v. Union of India (2006) 8 SCC 212, the constitutional validity of Article 16(4), (4A) and (4B) was upheld.
Subsequent to the pronouncement of law in M Nagaraj, there were decisions by the Supreme Court stating that the government could not blindly provide for reservation in promotions, in favour of SCs and STs unless, prior thereto, the requisite exercise, to acquire quantifiable data regarding lack of representation of SCs and STs in public services was undertaken.

On noting the Delhi High Court verdict of August 23, 2017, in which the government was restrained from granting any reservation, in promotion to SC/ST, in exercise of the power conferred by Article 16 (4A) of the Constitution, without, in the first instance, carrying out the necessary preliminary exercise of acquiring quantifiable data indicating inadequacy of representation, the instant petition was filed and till any further decision of the Constitution bench, as per law permission has been granted in regard to the promotions. [State of Maharashtra v. Vijay Ghogre, 2018 SCC OnLine SC 589, order dated 05-06-2018]