Case BriefsSupreme Court

Supreme Court: A Division Bench of A.M. Khanwilkar and Dinesh Maheshwari, JJ., while addressing a contempt petition held that,

“…to constitute civil contempt, it must be established that disobedience of the order is wilful, deliberate and with full knowledge of consequences.”


Non compliance of direction to Food Corporation of India to regularise and departmentalise workers concerned who had initiated industrial disputes before Industrial Tribunal, Chennai under Section 10(1)(d) of Industrial Disputes Act.

The employees concerned were employed as daily-rated labour or casual labour and had been working for some time with some cases of 15 to 20 years.

Contempt Petition against FCI

FCI contended that it had already regularised the eligible employees who were under Direct Payment System (DPS) and nothing further was required to be done.

Further the Corporation stated that claim was restricted to regularisation of the employees concerned after abolition of the contract labour system. There was no prayer for absorbing the concerned employees under any specific system of regular labour prevailing in the Corporation. The Corporation has four systems of labour engagement, namely, (i) Departmental Labour System, (ii) Direct Payment System, (iii) No­-Work-­No-­Pay System and (iv) Mate System.

Corporation’s Stand

In the decision of SAIL v. National Union Waterfront Workers, (2001) 7 SCC 1 (Constitution Bench), it was held that, contract labour need not be absorbed after abolition of contract labour system.

Taking reference from the above, Corporation stated that the provision of FCI and its primary duty is to undertake purchase, storage, movement, transport, distribution and sale of food grains and other food stuff.

Continuing its’ contention, Corporation stated that, If all the regular workers in the Corporation are brought under the Departmental Labour System, there will be recurring liability on public exchequer to the tune of Rs 3,000 crore per annum and if arrears are also given with effect from 2003, there will be additional financial burden of more than Rs 40,000 crore.

As per the extant policy, the respondent could have regularised the workers concerned only under theDirect Payment System and therefore, it is certainly not a case of disobedience, much less wilful or deliberate disobedience of the order passed by this Court.

Decision of the Court

Bench adverted to the exposition of Supreme Court’s decision in Ram Kishan v. Tarun Bajaj, (2014) 16 SCC 204, wherein the Court had delineated the contours for initiating civil contempt action.

Excerpts from the referred SC decision:

“…in order to punish a contemnor, it has to be established that disobedience of the order is “wilful”. The word “wilful” introduces a mental element and hence, requires looking into the mind of a person/contemnor by gauging his actions, which is an indication of one’s state of mind.”

“Even if there is a disobedience of an order, but such disobedience is the result of some compelling circumstances under which it was not possible for the contemnor to comply with the order, the contemnor cannot be punished.”

Court in the present case observed that, neither the relief in the References was specific for regularisation in Departmental Labour System only nor the Tribunal, the Madras High Court/Kerala High Court or this Court was called upon to deal with that issue specifically.

Subject References, as well as, the direction issued by the Tribunal, which has been upheld upto this Court is silent about the system in which the concerned workers have to be regularised and departmentalised, therefore, it is incomprehensible as to how it would be a case of disobedience.

Therefore, Court held that, no specific direction had been given to the Corporation to regularise the workmen concerned only in the Departmental Labour System.

Furthermore, the Departmental Labour System is now a dying cadre and the policy of the Corporation at the relevant time entailed regularisation of such workmen only under the Direct Payment System (DPS).

Hence, no contempt action can be initiated on the basis of general direction to the respondents to regularise and departmentalise the concerned workmen.

Petition stands dismissed in the above view. [Workmen v. Ravuthar Dawood Naseem, 2020 SCC OnLine SC 461 , decided on 19-05-2020]

Case BriefsForeign Courts

Supreme Court of the Democratic Socialist Republic of Sri Lanka: A Full Bench of Sisira J. de Abrew, Murdu N.B. Fernando and S. Thurairaja, JJ., allowed an appeal filed in terms of Article 154(P) of the Constitution read with Section 31-DD of the Industrial Disputes Act (as amended) and Section 9 of the High Court of the Provinces (Special Provisions) Act No. 19 of 1990.

The Applicant-Respondent, in this case, was the Manager attached to Thanamalwila Branch of Uva Development Bank.  His services were terminated by the Bank and there were several charges levelled against him at the domestic inquiry, the President of the Labour Tribunal had decided that the Applicant-Respondent of the said Bank had not acted with 100% honesty in dealing with affairs of the bank, subsequently an appeal was filed in the High Court where they had affirmed the order of the Labour Tribunal who had held that the termination of services of the Applicant-Respondent was unjustified and had ordered reinstatement and  ½ back wages. Being aggrieved by which the Employer-Appellant had filed the instant petition.

The Court while allowing the appeal relied on the judicial decisions of National Savings Bank v. Ceylon Bank Employees Union, 1982 (2) SLR 629 and Bank of Ceylon v. Manivasagasivam, 1995(2) SLR 79, held that the President of Labour Tribunal who stated that the Manager had not acted with 100% honesty when he was dealing with his duties cannot be ordered to be reinstated in the same bank with back wages. Thus, the decision of both the President of the Labour Tribunal and the High Court Judge were held to be wrong and were set aside making the termination of the Applicant-Respondent justified. [Uwa Development Bank v. Ceylon Bank Employees Union, SC Appeal No. 39 of 2016, decided on 02-07-2019]

Legislation UpdatesNotifications

S.O. 1614(E) — Whereas the Central Government is satisfied that public interest so requires that the services engaged in the Banking industry, which is covered under item 2 of the First Schedule to the Industrial Disputes Act, 1947 (14 of 1947), to be a public utility service for the purposes of the said Act;

And whereas the Central Government has lastly declared the said industry to be public utility service for the purposes of the said Act for a period of six months from the 21-10-2018 vide notification of the Government of India in the Ministry of Labour and Employment number S.O.5326(E), dated 18-10-2018 published in the Gazette of India, Extraordinary, Part II, section 3, sub-section (ii), dated the 18-10-2018;

And whereas the Central Government is of the opinion that public interest requires the extension of the public utility service status to the said industry for a further period of six months;

Now, therefore, in exercise of the powers conferred by the proviso to sub-clause (vi) of clause (n) of Section 2 of the Industrial Disputes Act, 1947 (14 of 1947), the Central Government hereby declares the services engaged in the Banking industry to be a public utility service for the purposes of the said Act for a period of six months with effect from the 21-04-2019.

[Notification dt. : 18-04-2019]

Ministry of Labour and Employment

Case BriefsHigh Courts

Himachal Pradesh High Court: A Division Bench of Surya Kant, C.J. and Sandeep Sharma, J. dismissed a letters patent appeal finding no merit in the case as the issue stood settled between the parties in the earlier round of litigation.

In the pertinent matter, the respondent was a workman engaged on daily wage basis as a Beldar, who continuously worked for more than 240 days in each year. On 30-3-1996 he was allegedly retrenched. The respondent-workman, after 14 years, raised a Demand Charter, to give rise to conciliation of proceedings under the Industrial Disputes Act. However, the Labour Commissioner, vide order dated 30-6-2011, eventually declined to refer the matter to Industrial Tribunal-cum-Labour Court, as according to him, there was no justification to raise the dispute after a period of more than 14 years. The Reference was thus declined. The respondent-workman then approached the Court where the matter was ordered to be referred to Labour Court-cum-Industrial Tribunal and the question of limitation of appeal was directed to be kept in view “while moulding the relief”. The appellants did not challenge the order and instead, the matter was referred to the Industrial Tribunal-cum-Labour Court, which further ordered the reinstatement of the respondent with seniority from the date of the demand notice was served and no back wages were granted. The Tribunal found that some juniors to the respondent were allegedly retained in the employment and this Principle of Last Come First Go was violated.

The impugned judgment was then challenged by the appellants-State before the learned Single Judge where the Court held that the State authorities, “cannot be permitted time and again to raise the plea of inordinate delay in raising the dispute”. Industrial Tribunal-cum-Labour Court, in deference to those observations, denied the reinstatement or seniority to the respondent-workman from the date of alleged retrenchment and restricted those benefits from the date when the Demand Notice was served. Therefore, no unjust enrichment has been allowed by denying the back wages to the workman.

The Court opined that “True it is that unexplained and inordinate delay in raising the Industrial Dispute can be effectively fatal to the claim itself but this issue stands already settled between the parties in the earlier round of litigation”. Further, it held that any view contrary to the Judgment already given will nullify the mandate of the same.[Chief Secretary (PW) v. Ram Gopal, 2019 SCC OnLine HP 403, Order dated 03-04-2019]

Case BriefsSupreme Court

Supreme Court: In the matter where an illegally terminated workman had sought reinstatement claiming preference over other persons being a “retrenched workman” as per Section 25(H) of the Industrial Disputes Act, 1947 (ID Act), the bench of Abhay Manohar Sapre and Indu Malhotra, JJ held that it was not a case of a retrenchment of the respondent from service as contemplated under Section 25(H) of the ID Act as the workman had already accepted the compensation awarded to him in lieu of his illegal termination.

In the present case, the respondent had claimed that since the appellant company had regularised the services of 2 peons, he become entitled to claim re­employment in terms of Section 25 (H) of ID Act.  The Court, however, rejected the claim and held that the respondent was not entitled to invoke the provisions of   Section   25(H) of   the ID Act and seek reemployment by citing the case of another employee (Peon) who was already in employment and whose services were only regularized by the appellant on the basis of his service record in terms of the Rules.

The Bench said:

“the regularization of an employee already in service does not give any right to retrenched employee so as to enable him to invoke Section 25(H) of the ID Act for claiming reemployment in the services. The reason is that by such act the employers do not offer any fresh employment to any person to fill any vacancy in their set up but they simply regularize the services of an employee already in service.  Such act does not amount to filling any vacancy.”

It was explained that in order to attract the provisions of Section 25(H) of the ID Act, the workman needs to prove that:

  • he was the “retrenched employee”
  • his ex­employer has decided to fill up the vacancies in their set up and, therefore, he is entitled to claim preference over those persons, who have applied against such vacancies for a job while seeking re­employment in the services.

Explaining the difference between the terms ‘employment’ and ‘regularization of the service”, the Bench said:

“the   expression ‘employment’   signifies   a fresh employment to fill the vacancies whereas the expression ‘regularization of the service’ signifies that the employee, who is already in service, his services are regularized as per service regulations.”

[Management of the Barara Cooperative Marketing­cum Processing Society Ltd v. Workman Pratap Singh, 2019 SCC OnLine SC 1, decided on 02.01.2019]

Case BriefsHigh Courts

Bombay High Court: A Single Judge Bench comprising of S.C. Gupte, J. allowed a writ petition filed by ‘IDBI Bank Ltd.’ and dismissed the order of the Central Government Industrial Tribunal (Mumbai) passed in an application preferred by the respondent- workers union under Section 33 of Industrial Disputes Act, 1947.

The petitioner-Bank outsourced its non-core activities like house-keeping to a couple of contractors. The contractors further engaged the services of respondent workers. The services of three of the workers were terminated by the contractors in the year 2005. An industrial dispute was raised against the petitioner Bank. The matter which travelled to the High Court was dismissed on the ground that no employer-employee relationship existed between the parties. In 2012, the demand of the respondent workers for regularisation of service met with the same fate. Subsequently, in 2017, the respondent workers filed another application demanding status quo of their service conditions. The Tribunal, vide the impugned order, granted the application. Aggrieved by the same, the Bank filed the instant petition.

The High Court perused the record and noted that the factum of the workers’ employed by the contractor, was established. The Court rejected the submission made on behalf of the respondent workers that they were entitled to the relief of status quo as the Industrial Court has powers to pass an interim order pending the adjudication of a reference under Section 33. The High Court observed, before any industrial adjudicator makes any order under Section 33 for maintenance of service conditions, it must be found that at least prima facie the person alleged to be an employer and against whom an order under Section 33 is sought, is really the employer of the applicant-workmen. Since the employer-employee relationship was not established between the parties, the High Court held that order of the Tribunal was preposterous. Holding that the impugned order suffered from jurisdictional error, the High Court held that the same could not be sustained. Accordingly, the petition was allowed and the impugned order was set aside. [IDBI Bank Ltd. v. Bhartiya Kamgar Sena,2018 SCC OnLine Bom 1285, decided on 15-06-2018]

Case BriefsHigh Courts

Karnataka High Court: While passing the order in a criminal petition filed under Section 482 of CrPC, a Single Judge Bench of Aravind Kumar, J. held that in light of the parties having entered into settlement, the Court was of considered view that continuation of proceedings would not sub-serve the ends of justice and it would be an abuse of process of law.

The petitioner was seeking to quash the proceedings pending before the Metropolitan Magistrate, in a criminal case for the offence punishable under Section 29 of the Industrial Disputes Act, 1947. He contended that the Management and the Employees Union have entered into a settlement and as such the proceedings may be quashed.

Learned advocates appearing for the parties filed a joint memorandum of settlement entered into between the parties. The parties were present before the court and the complainant submitted that he had no objection to the proceedings being quashed. The parties submitted that they had entered into the settlement out of their own free will and volition.

In light of the parties having entered into settlement and the submissions made by the complainant, the Court allowed the petition and quashed the proceedings pending before the MM. Accordingly, the Court acquitted the accused of the offence punishable under Section 29 of IDA, 1947. [Ashok Mathur v. Sri P.I. Antoo, Criminal Petition No. 4868/2014, dated August 14, 2017]