Hot Off The PressNews

Supreme Court: The bench of Ranjan Gogoi, CJ and Sanjiv Khanna, J has issued notice to the Centre in a writ petition challenging the Constitutional validity of Section 327 (7) of the Companies Act, 2013 qua Section 53 of the Insolvency and Bankruptcy code, to the extent that Section 327 (7) renders the meaning of the Explanation (II) to Section 53 of the Code meaningless.

The petition was filed by a group of workmen comprising the Moser Baer Karamchari Union. Swarnendu Chatterjee and Shriya Maini, the advocates appearing for the Union argued before the Court that since Section 327(7) bars the application of Section 326 and Section 327 Companies Act, 2013 to the proceedings under the Code, it denies the workmen their legitimate dues for the services rendered in the company for a long period of time, which runs contrary to the concept to Right to Livelihood enshrined under Article 21 of the Constitution of India.

The Union also submitted that the Legislation undertaken for the benefit of the labour or workmen cannot be so construed so as to prejudiced the right and welfare of the labour. It would be an illegitimate method of interpretation of a statute or any provision whose dominant purpose is to protect the workmen. The petition read,

“The present provision; Section 327 (7) of the Companies Act, 2013 creates an artificial embargo by ousting the application of Section 326 of Companies Act, 2013 to the proceedings under IBC, 2016 which results in exclusion of “Workmen Dues” which results in violation of Right to Livelihood as the statutory dues which are rights of every employee/workmen gets denied.”

It was argued that “by not defining “Workmen Dues” in the Code itself and also by debarring the application of companies Act by the impugned Section, a void has been created, with respect to the definition of workmen dues under the Insolvency and Bankruptcy Code, 2016.  On the other hand, by excluding the applicability of Companies Act, especially Sections 326 and 327 from the proceedings under the Code, it has created an ambiguity as it fails to define as to what will constitute “Workmen’s Dues” under the Code, being in stark violation of Article 21 of the Constitution.”

The petition stated,

“when Legislature in its wisdom has categorically mentioned that the definition of workmen dues will be taken/borrowed/shall have the same meaning as defined in Section 326 of the Companies Act, 2013, Section 327(7) frustrates the object and purpose of the explanation (II) which results in conflict between two central statutes and ultimately results in denial of statutory dues of the workmen such as gratuity, pension, provided fund and all other wages and salaries which have been guaranteed under Section 326 of the Companies Act, 2013, in effect rendering the Companies Act and its applicability to the Code to a level of a mere rubber stamp. Such denial in effect actually frustrates the social welfare aspect of the beneficial provision which results in denial of hard earned money and welfare rights of the workmen guaranteed under Article 21 of the Constitution.”

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]

Business NewsNews

The concept of fixed term employment defines the tenure of employment as well as other associated conditions of service and remunerations, which are provided to regular employees under various labour laws. The government has extended the facility of hiring workers on fixed term employment to all sectors for improving the ease of doing business for players intending to hire people for completing specified projects, tasks or orders. The facility of fixed term employment was introduced in apparel manufacturing sector in Industrial Employment (Standing Order ) Act in October, 2016.

[Key highlights] As per a notification issued by the labour ministry to amend the Order :-

  • The words “fixed term employment in apparel manufacturing sector” will be replaced by “fixed term employment” meaning that facility would be available/extended to all sectors.
  • The worker employed for short period will get better working and service conditions as compared to a contract worker.
  • No notice of termination of employment shall be necessary in case of temporary and badli workmen.
  • The fixed term employment is defined as a workman employed on a contract basis for a fixed period. Thus the services of the workman will be automatically terminated as a result of non-renewal of contract between the employer and the workman concerned.
  • A fixed term worker would not be entitled to any notice or pay in lieu of that, if his services are terminated or in case of non-renewal of contract or expiry of term of employment.
  • Also a temporary workmen who has completed 3 months of continuous service, shall be given 2 weeks notice of the intention to terminate his employment if such termination is not in accordance with the terms of the contract. In case he has not completed 3 months of continuous service, he shall be informed for the reasons for termination in writing.
  • Any services of temporary nature shall not be terminated as punishment unless the employee has been given an opportunity of explaining the charges of misconduct alleged against him.
  • A separation of service of the workman as a result of non-renewal of the contract of employment between the employer and workman concerned shall not be construed as termination of employment. This facility will aid the industry to employ worker in sectors which are of seasonal nature and witness fluctuation of demand and hence requires flexibility in employing workers.
  • Under the fixed term employment the working conditions in terms of working hours, wages, allowances and other statutory dues would be at par with a permanent workmen and no less than that.
  • A fixed term worker will also be eligible for all statutory benefits available to a permanent workman proportionately according to the period of service rendered by him even though his period of employment does not extend to the qualifying period of employment required in the statute.
  • The employer can directly hire a worker for a fixed term without mediation of any contractor.

[Source: The Economic Times]

Photo Courtesy: Financial Tribune,

Amendments to existing lawsLegislation Updates

In a corrigendum notification S.O. 1049(E) issued by the Ministry of Labour and Employment, the new S. 11-A which provides for the provision of a creche facility by an employer which employs more than 50 persons shall be applicable from July 1, 2017. The Notification erroneously refers to “sub-section (1) of of Section 4” which shall come into force on July 1, 2017. The earlier notification S.O. 1026(E) had referred to “sub-section (5) of Section 3” coming into force on July 1, 2017. The Amendment Act does not have S. 3(5).


Case BriefsSupreme Court

Supreme Court: Dealing with the question as to whether temporarily engaged employees (daily-wage employees, ad-hoc appointees, employees appointed on casual basis, contractual employees and the like), are entitled to minimum of the regular pay-scale, alongwith dearness allowance (as revised from time to time) on account of their performing the same duties, which are discharged by those engaged on regular basis, against sanctioned posts, the Court said that the principle of ‘equal pay for equal work’ constitutes a clear and unambiguous right and is vested in every employee – whether engaged on regular or temporary basis.

The bench of J.S. Khehar and S.A. Bobde, JJ said that in a welfare state, an employee engaged for the same work, cannot be paid less than another, who performs the same duties and responsibilities. Such an action besides being demeaning, strikes at the very foundation of human dignity as any one, who is compelled to work at a lesser wage, does not do so voluntarily.

The Court, however, clarified the legal position for the application of the principle of ‘equal pay for equal work’. Some of the principles highlighted by the Court are as follows:

  • The ‘onus of proof’, of parity in the duties and responsibilities of the subject post with the reference post, under the principle of ‘equal pay for equal work’, lies on the person who claims it.
  • Mere fact that the subject post occupied by the claimant, is in a “different department” vis-a-vis the reference post, does not have any bearing on the determination of a claim, under the principle of ‘equal pay for equal work’. However, for equal pay, the concerned employees with whom equation is sought, should be performing work, which besides being functionallyequal, should be of the same quality and sensitivity.
  • Persons performing the same or similar functions, duties and responsibilities, can also be placed in different pay-scales. Such as – ‘selection grade’, in the same post. But this difference must emerge out of a legitimate foundation, such as – merit, or seniority, or some other relevant criteria.
  • The reference post, with which parity is claimed, under the principle of ‘equal pay for equal work’, has to be at the same hierarchy in the service, as the subject post.
  • A comparison between the subject post and the reference post, under the principle of ‘equal pay for equal work’, cannot be made, where the subject post and the reference post are in different establishments, having a different management. Or even, where the establishments are in different geographical locations, though owned by the same master.
  • Different pay-scales, in certain eventualities, would be permissible even for posts clubbed together at the same hierarchy in the cadre if the duties and responsibilities of one of the posts are more onerous, or are exposed to higher nature of operational work/risk, the principle of ‘equal pay for equal work’ would not be applicable and also when, the reference post includes the responsibility to take crucial decisions, and that is not so for the subject post.

In the present case, all the temporary employees in the present bunch of appeals, were appointed against posts which were also available in the regular cadre/establishment. It was also accepted by the State of Punjab, that during the course of their employment, the concerned temporary employees were being randomly deputed to discharge duties and responsibilities, which at some point in time, were assigned to regular employees. The Court hence, held that there can be no doubt, that the principle of ‘equal pay for equal work’ would be applicable to all the concerned temporary employees, so as to vest in them the right to claim wages, at par with the minimum of the pay-scale of regularly engaged Government employees, holding the same post. [State of Punjab v. Jagjit Singh, , 2016 SCC OnLine SC 1200, decided on 26.10.2016]

New releases

The book India: The Business Opportunity was released at the Nehru Centre in London. The book release was attended by Mr Srinivas Gotru, Director of the Nehru Centre, Mr Rakesh Shukla, Team Modi, BJP and Mr C.B. Yadav, AAG, Govt. of U.P. The book release was followed by a panel discussion on Opportunities and Challenges in doing business in India. The panel discussion was moderated by Prof. Stuart Weinstein, Prof at the Faculty of Business and Law, University of Coventry. The panellists included Mr Rakesh Shukla, Team Modi, BJP, Mr Ravi Kulkarni, Senior Partner, Khaitan & Co., Mr Philip Bouverat, Director, JCB, Dr. Diwakar Sukul, Founder Kamkus Group of Clinics, Mr Praveen Pandey, Consultant, Singhania & Co., Mr Karnik Dujmajjan & Ms. Anushka Sinha, Laura Devine, Solicitors, Mr C.B. Yadav, AAG, Govt. of U.P. and Dr Linda Spedding, International Lawyer. The book has been published by Eastern Book Company.

Book Reviews:

This book comes at an opportune time and provides the reader the much-needed comprehensive understanding of the Indian market dynamics. Dr. Linda Spedding being an aficionado in the comparative commercial sphere adds another edition to her oeuvre in 18 chapters spread over 700 pages. The theme of the book is to touch major aspects that ought to have a bearing on business in India either directly or indirectly. The assigning of chapters on niche areas to advocates practicing in those very subjects has given greater depth to the book. One appreciable pattern in every chapter is the ease with which the Authors start to explain the basic concept and slowly graduate from an elementary level to a professional level. With the increasing awareness/knowledge/specialization in field specific work today, ‘India – The Business Opportunity’ comes as an ideal capsule for investors, analysts and lawyers alike because it gives a detailed account of all laws impacting Indian commerce in a single compilation. – India Law Journal. For the full review click here

For the story on the contributors see here.

The book is available from all legal booksellers. To buy a copy online in India, click here and to buy a copy in the UK click here and in Continental Europe click here