Summary of Question- Section 17B of I.D Act when to be complied
Question – Whether the provisions of Section 17 B of the Industrial Disputes Act is applicable and the Management is required to pay to the workmen full wages last drawn by him during pendency of LPA in a case where the Labour court / Industrial Tribunal has given Award for reinstatement, Award is challenged in Writ Application, Writ Application dismissed and LPA has been filed by the Management.
Answer - Yes. The Management is required to pay to the workman last pay drawn by him even during pendency of the LPA.
1. Section 17B of the I.D Act reads as quoted below:- ,
“Where in any case, a Labour Court, Tribunal or National Tribunal by its award directs reinstatement of any workman and the employer prefers any proceedings against such award in a High Court or the Supreme Court, the employer shall be liable to pay such workman, during the period of pendency of such proceedings in the High Court or the Supreme Court, full wages last drawn by him, inclusive of any maintenance allowance admissible to him under any rule if the workman had not been employed in any establishment during such period and an affidavit by such workman had been filed to that effect in such Court :
Provided that where it is proved to the satisfaction of the High Court or the Supreme Court that such workman had been employed and had been receiving adequate remuneration during any such period or part thereof, the Court shall order that no wages shall be payable under this section for such period or part, as the case may be".
1.1. In short, there are following three ingredients of the said section 17B :-
(i) There should be an award for reinstatement by a labour court or tribunal;
(ii) The Award is under challenge in a proceeding in High Court or Supreme Court;
(iii) The workmen is not gainfully employed in any establishment during pendency of the said proceedings.
1.2. Further, it appears from the said section 17B that the workman is required to prove by affidavit that he had not been employed in any establishment . Thereafter the employer may prove the contrary. In other words, if the workmen has discharged his onus by affirming an affidavit that he is not employed in any establishment then the claim of the workman may be resisted by the employer by proving to the satisfaction of the Court that the workman has been employed in any establishment and has been receiving adequate remuneration so as to deny to him the benefits of section 17B.
1.3. The objective of the said section 17B may be found in the following observation of the Hon’ble Supreme Court in the case of Dena Bank vs. Kirtikumar [AIR 1998 SC 511] at para 20:-
“ Section 17-B has been enacted by Parliament with a view to give relief to a workman who has been ordered to be reinstated under the award of a Labour Court or the Industrial Tribunal during the pendency of proceedings in which the said award is under challenge before the High Court or the Supreme Court. The object underlying the provision is to relieve to a certain extent the hardship that is caused to the workman due to delay in the implementation of the award. The payment which is required to be made by the employer to the workman is in the nature of subsistence allowance which would not be refundable or recoverable from the workman even if the award is set aside by the High Court or this Court. Since the payment is of such a character Parliament thought it proper to limit it to the extent of the wages which were drawn by the workman when he was in service and when his services were terminated and therefore used the words "full wages last drawn" ”
2. Now the question is whether benefit of section 17B is applicable when the writ Court has confirmed the award of reinstatement and the employer has filed LPA. As in the LPA, the award of reinstatement remains under challenge, the provision of 17 B is also applicable during pendency of the LPA. In this connection, decision of Hon’ble Kerala High Court in the case of K. Bhaskaran vs. R. Janardan Pillai [1990(I) LLJ 484] may be of relevance. In this case the petitioner was ordered to be reinstated by Labour Court which was confirmed by writ court. Thereafter, the employer had filed appeal. The workman claimed wages during pendency of the appeal in terms of section 17B. Even though the employer resisted application of section 17B on the plea that establishment has been closed, the Hon’ble Court held that the workmen is entitled to the benefit of section 17B.
Summary of Question- To whom Contract Labour Act applies
Question- What are the implications of the words - “establishment”, “ principal employer” and the phrase- “the person responsible for supervision and control of the establishment” under the Contract Labour (Regulation & Abolition) Act, 1970 (for short Act).
1. ‘Establishment’ is defined in section 2(e) of the Act to mean (i) any office or department of the Government or a local authority, or (ii) any place where any industry, trade, business, manufacture or occupation is carried on. Vide section 2(g) (iv) of the Act, ‘Principal employer’ pertaining to an establishment means a person responsible for the supervision and control of the establishment.
1.1. In the case of Gian singh vs. Food Corporation of India [1991 (63) FLR 832] decided by the Hon’ble Punjab & Haryana High Court, Food Corporation of India employed three types of labourers (i) departmentlised labour who are its regular employees (ii) direct paid labour and (iii) contract labour, who are employed by the Corporation through the intermediary of the contractors. The contractor was running the business of security and deployment services and provided Security Guards to various establishments whenever an Establishment asks for such services. The contractor deployed Security Guards according to the requirement of the Corporation. The Hon’ble Court held –
“………… each godown is a separate establishment and it would have to be seen whether in any of these godowns, the number of persons employed through the contractor is more than 20. It has been specifically averred by the Corporation that in none of these establishments, more than 15 persons as Security Guards have been employed through the contractor. That being so, the question of any right flowing to such Security Guards under the Act would not arise.”
1.2. Section 1(4) (a) of the Act provides that the Act applies to every establishment in which twenty (20) or more workmen are employed on any day preceding 12 months as a contract labour. It is, therefore, clear that the Act applies to an establishment only if (twenty) 20 or more contract labours are or were employed in the preceding 12 months on any day in that particular establishment of an organization.
1.3. It is, therefore, clear that each branch / office of an organization is a separate establishment from other for the purpose of the Act and Rules framed thereunder.
1.3.1. But one important question which may arise is whether all contract labour doing different types of work for a particular establishment be taken together to arrive at the figure of twenty contract labour. The answer is in affirmative in view of the observation of the Hon’ble Andhra Pradesh High Court in the case of Pola Satyanarayana vs. Secretary, Govt of India, Ministry of Labour [(2000) 2 LLJ 1278 at page 1298] which is quoted below:-
“From Section 1(4) of the Act, it is seen that the Act is made applicable to every establishment in which 20 or more workmen are employed on any day of the preceding 12 months as contract labour. From this it is evident that the whole establishment is treated as a single unit without reference to the nature of work that is being executed by the contract labour and if more than 20 workmen in all are employed as contract labour on any day of the year, the Act is applicable.”
2. With regard to the point as to who can be principal employer in respect of a particular establishment, the case of Uday Kotak, Vice- Chaiman & MD, Kotak Mahinda Bank Ltd. Vs. State [2005 (2) LLJ 92. Mad] may be referred to. In this case, prosecution was initiated for the alleged non-compliance of certain provisions of the Act. One of the grounds taken by the petitioner was that as per section 2(g)(iv) of the Act, ‘Principal Employer’ is defined as a person responsible for supervision and control of the ‘establishment’ ; the vice chairman and the Managing Director can, at no stretch of imagination, be deemed to be in the control and supervision of the establishment because the vice chairman and the M.D of the Bank is not based at Chennai where the establishment is located. The Hon’ble court held that the petitioners are not the ‘principal employer’ who can be prosecuted.
2.1. Incidentally, it is the administrative decision of an organization as to who is designated as the person responsible for supervision and control of establishments where contract labour is to be deployed so that such person can be termed as Principal Employer for the purpose of the Act & Rules. After such decision is taken, his name and address need be mentioned against the column no. 3 & 4 of the Form I, and it shall be responsibility of that official as the principal employer to see and ensure that the provisions of the Act and the Rules are complied with.
Summary of Question- Forfeiture of Gratuity by Employer
Question – Whether Gratuity can be forfeited by Employer.
1. Section 4(6)(a) of the Payment of Gratuity Act 1972 provides that Gratuity of an employee shall be forfeited if services of the Employee have been terminated for any act, willful omission or negligence causing any damage or loss to, or destruction of property belonging to the employer to the extent of the damage or loss so caused.
2. Vide section 4(6)(b) of the Payment of Gratuity Act, 1972, the gratuity payable to an employee may be wholly or partially forfeited :
(i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or
(ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in course of his employment.
Summary of Question- Forfeiture of Gratuity on resignation
Question- Whether Gratuity can be forfeited in case of resignation of an employee
1. In the case reported in 2005 (III) LLJ 637, the employee was issued a notice to show cause to explain certain irregularities to which he replied ; No charge sheet was issued nor was any disciplinary proceeding convened in respect of the subject matter of the notice ; The employee, after sometime, tendered his resignation from service which was accepted by the employer ; The employer stated that the amount of gratuity had been adjusted on account of the recovery of dues.
2. The Hon’ble Court observed and held at para 13 as quoted below:-
“Ex-facie clause (a) of sub-section (6) contemplates a forfeiture of gratuity where the services of the employee have been terminated for any act, willful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer. Clause (b) of subsection (6) refers to a situation where the services of the employee have been terminated for riotous or disorderly conduct or any other act of violence or any act which constitutes an offence involving moral turpitude. None of these conditions are attracted in the present case. The Petitioner admittedly resigned from service and his resignation was accepted by the Bank. His services were never terminated for any act of misconduct causing damage or loss to the employer; for riotous or disorderly conduct or for any offence involving moral turpitude. In Bombay Gas Public Ltd. Co. v. Papa Akbar 1990 I LLJ 220, Mrs. Justice Sujata Manohar (as the Learned Judge then was), speaking for this Court held that the provisions of Section 4(6)(a) do not come into operation unless there is a termination on the grounds set out in that sub-section. The statutory provision for forfeiture of gratuity, the Learned Judge held, must be construed strictly and in the absence of grounds stipulated in Section 4(6), the employer is not entitled to forfeit gratuity. This decision was followed in Air India v. Appellate Authority [1999(II)LLJ-93Bom] by a Single Judge of this Court. In Dunlop India Limited v. Union of India [2003 III LLJ 1125], Mukul Mudgal, J. speaking for the Delhi High Court held that where the services of an employee have not been terminated on one of the grounds set out in Section 4(6), but the employee has resigned, the provisions for forfeiture would not be attracted.”
Summary of Question- Forfeiture of Gratuity on punishment of compulsory retirement.
Question- Whether Gratuity can be forfeited in case of punishment of compulsory retirement.
Answer- Yes. It can be forfeited under section 4(6)(a) of the Payment of Gratuity Act. There is a three Judges Bench decision of one Hon’ble High Court.
Summary of Question- Interest on Gratuity payable
Question- When an employee is entitled for interest on the amount of Gratuity payable to him.
1. Sub section 3A of section 7 of Payment of Gratuity Act is relevant on the point as to under which circumstances Interest on the amount of Gratuity is payable. In brief , Interest on the amount of Gratuity is not payable if the delay in the payment is due to the fault of the employee and the employer has obtained permission in writing from the controlling authority.
1.1. The said sub section 3A of section 7 reads as under :
“ If the amount of gratuity payable under sub-section (3) is not paid by the employer within the period specified in sub-section (3), the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long-term deposits, as that Government may, by notification specify:
Provided that no such interest shall be payable if the delay in the payment is due to the fault of the employee and the employer has obtained permission in writing from the controlling authority for the delayed payment on this ground.”
2. Vide the said section 7(1), a person eligible for gratuity has to make an application to the employer for payment. Section 7(2), however, provides, whether an application is sent or not , that the employer has to determine the amount of gratuity and give notice in writing to the employee and the controlling authority (an official of Labour Deptt) specifying the amount of gratuity so determined. Vide section 7(3), the employer shall arrange to pay the gratuity within 30 days from the date it becomes payable. Then section 3-A says that if the gratuity is not paid as per section 7(3) i.e., within 30 days, the employer shall pay interest from the date the gratuity becomes payable provided that no interest shall be payable if the delay is due to fault of the employee and the employer has obtained permission from the controlling authority for them delayed payment on this ground
2.1. It has been held by Hon’ble Delhi High Court in the case reported 2005 (1) LLJ 252 that payment of interest is exempted only if the delay is on account of fault of the employee and the employer obtain permission of the controlling authority for delayed payment. The Hon’ble court relied on the Supreme Court decision in the case reported in 2003 (3) SCC 40 in which the Apex court has observed as under:-
“It is evident from Section 7(2) that as soon as gratuity becomes payable, the employer, whether any application has been made or not, is obliged to determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount of gratuity. Under Section 7(3), the employer shall arrange to pay the amount of gratuity within 30 days from the date it becomes payable. Under Sub-section 3(A) of Section 7, if the amount of gratuity is not paid by the employer within the period specified in Sub-section (3), he shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate not exceeding the rate notified by the Central Government from time to time for repayment of long term deposits; provided that no such interest shall be payable if the delay in the payment is due to the fault of the employee and the employer has obtained permission in writing from the controlling authority for the delayed payment on that ground. From the provisions made in Section 7, a clear command can be seen mandating the employer to pay the gratuity within the specified time and to pay interest on the delayed payment of gratuity. No discretion is available to exempt or relieve the employer from payment of gratuity with or without interest as the case may be. However, under the proviso to Section 7(3-A), no interest shall be payable if delay in payment of gratuity is due to the fault of the employee and further condition that the employer has contained permission in writing from the controlling authority for the delayed payment on that ground.”
Summary of Question- Govt. cannot modify Reference already sent to Labour Court
Question- Once a Government has referred an dispute to a Labour Court or Tribunal for adjudication under section 10(1) of the Industrial Disputes Act, 1947, whether the Government is empowered to modify the Reference.
Answer – No. The Govt. is empowered under section 10(5) of the I.D Act only to add other parties to the dispute pending for adjudication.
It has been held AIR 1958 SC 1018 as quoted below:
“………after the dispute is referred to the tribunal, during the continuance of the reference proceedings, it is the tribunal which is seized of dispute and which can exercise jurisdiction in respect of it. The appropriate Government can act in respect of a reference pending adjudication before a tribunal only under section 10(5) of the Act, which authorizes it to add other parties to the pending dispute subject to the conditions mentioned in the said provision. It would therefore be reasonable to hold that except for cases falling under section 10(5) the appropriate Government stands outside the reference proceeding, which are under the control and jurisdiction of the tribunal itself…”
Summary of Question- Power of Conciliation Officer under I.D Act
Question- Whether a conciliation officer holding conciliation under section 12 of the Industrial Disputes Act is empowered to require a particular authority of the Management to attend and participate in the conciliation proceedings.
1. In this connection, section 11(4) of the Industrial Disputes Act, which is relevant, reads as under:
“ A conciliation officer may enforce the attendance of any person for the purpose of examination of such person or call for and inspect any document which he has ground for considering to be relevant to the industrial dispute or to be necessary for the purpose of verifying the implementation of any award or carrying out any other duty imposed on him under this Act, and for the aforesaid purposes, the Conciliation Officer shall have the same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908 (5 of 1908), in respect of enforcing the attendance of any person and examining him or of compelling the production of documents”
2. In the matter of the provisions contained in section 11(4) of the I.D. Act, following observation of the Hon’ble Bombay High Court in Mafatlalal Engineering Industries Ltd. vs. Mafatlal Engineering Industries Employees’ Union [1992 (II) LLJ 657] at para 20 is also relevant:
“It is true that the Industrial Disputes Act does not define specifically any of the functions of a Conciliation Officer, nor does it set out the procedure that he is required to follow in a conciliation proceedings. However, there is a reference to Section 11 of the Industrial Disputes Act. One may certainly conclude that the Conciliation Officer is not expected to perform the role of a silent spectator or the role of a mediator alone. In areas of friction, Conciliation Officer is certainly required to use his good offices to bring about a possible solution. Section 11 of the Act, however, invests the Conciliation Officer with the powers that are analogous to those vested in the Civil Court under the Code of Civil Procedure. Section 11 (4) of the Industrial Disputes Act specially states that a conciliation officer may enforce the attendence of any person, witnesses, inspect documents etc. It is quite clear, therefore, that the Conciliation Officer is required to play a function both of importance and of significance in so far as he is required to examine the correctness and genuineness of the contentions and issues that arise in that proceeding. This would be necessary because at this point of time where certain rival contentions are canvassed or disputed questions of fact arise, the Authority must be vested with the power to duly investigate into them and of finding out the true and right position”
Summary of Question- Specific Order required for Forfeiture of Gratuity
Question- Whether specific order by employer for forfeiture of Gratuity is necessary is case of forfeiture of Gratuity under section 4(6)(a) of the Payment of Gratuity Act.
1. Facts of the case, in short, in the case reported in 2008 (III) LLJ 30 DB, was that an employee retired as Assistant General Manager ; he was subjected to disciplinary proceedings because of grave misconduct on his part which caused huge loss to the Food Corporation of India ; the penalty orders were passed on proof of the charges and an amount of Rs.7.50 lacs was ordered to be recovered ; since the petitioner was on the verge of retirement, a lenient view was taken and only a partial loss out of the huge loss suffered was ordered to be recovered by the Food Corporation of India. The Hon’ble Court held at para 9 as quoted below:-
“A perusal of Clause (a) of Section 4(6) of the Act, would show that a gratuity of an employee shall be forfeited to the extent of damage or financial loss caused by his act, wilful omission or negligence. The orders of punishment appended as R-1 to R-3 with the written statement, as confirmed by the Appellate Authority on 29.1.2008, would show that the punishment of recovery of loss has been imposed upon the petitioner. Therefore, such recovery of loss is mandatorily required to be effected from the amount of gratuity in terms of Clause (a) of Section 4(6) of the Act. The forfeiture of gratuity under Clause (a) of Section 4(6) of the Act is mandatory to the extent of loss caused, but in respect of a forfeiture within the ambit of Sub-clause (b), the competent authority is required to pass an order of forfeiture of gratuity wholly or partly. Since the order of punishment has imposed the penalty of recovery of the loss, therefore, the amount of gratuity is required to be forfeited in terms of Section 4(6)(a) of the Act. The circular issued by the Corporation has to be read in consonance with the statutory provisions of the Act and, therefore, in terms of the interpretation of the statutory provisions it cannot be held that the gratuity cannot be forfeited without any specific order even if the penalty imposed is on account of loss suffered by the Corporation.”
Summary of Question- Precaution to be taken by Management to take labour from Contractor
Question – What are the precautions to be taken by a Management (Principal Employer) in case of supply of labour by a contract labour to obviate any possibility claiming of permanent status by the contract employees.
Answer- Following points should also be ensured by the Management :
(i) Salary is paid by contractor ;
(ii) Right to regulate employment is with the contractor,
(iii) Ultimate supervision and control on the labour lies with the contractor ;
(iv) After the labour is supplied by the contractor, the directions, supervision and control of the principal employer shall be only with regard to work of the labour ;
(v) Principal Employer will not otherwise exercise any control on the labour.
1. In this connection, it may be relevant to refer to the decision of the Hon’ble Supreme court reported in AIR 2009 SC 3063 in which the issue regarding claim of permanent status by the contract employees was considered. The Apex Court held that it is open to the Industrial Adjudicator to grant the relief sought for by the workmen, if it finds that contract between principal employer and the contractor was sham, nominal and merely a camouflage to deny employment benefits to the employees and that there is in fact a direct employment. The Supreme Court indicated the following tests in such matters.
(i) Who pays the salary;
(ii) who has the power to remove/dismiss from service or initiate disciplinary action;
(iii) who can tell the employee the way in which the work should be done,
(iv) who has direction and control over the employee.
- The Apex Court at para 20 of the said judgment, in the matter of supply of labour, observed as quoted below:
“………… if the contract is for supply of labour , necessarily, the labour supplied by the contractor will work under the directions, supervision and control of the principal employer but that would not make the worker a direct employee of the principal employer, if the salary is paid by contractor, if the right to regulate employment is with the contractor, and the ultimate supervision and control lies with the contractor. The principal employer only controls and directs the work to be done by a contract labour, when such labour is assigned/allotted/sent to him. But it is the contractor as employer, who chooses whether the worker is to be assigned/allotted to the principal employer or used otherwise. In short worker being the employee of the contractor, the ultimate supervision and control lies with the contractor as he decides where the employee will work and how long he will work and subject to what conditions. Only when the contractor assigns/sends the worker to work under the principal employer, the worker works under the supervision and control of the principal employer but that is secondary control. The primary control is with the contractor.”
2. Therefore, in view of the said observation of the Hon’ble Supreme Court, following points are to be ensured by the Management :
(i) Salary is paid by contractor ;
(ii) Right to regulate employment is with the contractor,
(iii) Ultimate supervision and control on the labour lies with the contractor ;
(iv) After the labour is supplied by the contractor, the directions, supervision and control of the principal employer shall be only with regard to work of the labour ; but the Principal Employer will not otherwise exercise any control on the labour ; the Principal Employer will regulate the employment e.g., by framing any rule to regulate the leave etc. of the labour.
Summary of Question- Withholding of Gratuity
Question- Whether payment of Gratuity to an employee can be withheld by his employer on the ground that a criminal case pertaining to corruption & misappropriation allegedly committed by the employee in the course of his employment is pending.
Answer- No. However, if there is any provision in the service Rule for forfeiture of Gratuity on the Ground of pendency of a criminal case then the employer may forfeit the Gratuity in the light of the Apex court decision reported in 1993 (1) LLJ 962.
1. In the case reported in (2005) I LLJ 400 Guj , facts of the case, in short, were that that the respondent was working as Manager (Agro Project) and in view of the serious irregularities with regard to misusing authority & power as well as committing act of misappropriation etc., he was placed under suspension ; subsequently in view of the aforesaid acts, which also amounts of moral turpitude, the respondent was served with the charge-sheet ; a criminal complaint was also filed against the respondents ; the petitioner ultimately discharged the respondent from the service by making payment of three months' salary in lieu of notice.
1.1. One of the contentions of the learned counsel for the petitioner was that a criminal case is pending and till those proceedings are not completed, the petitioner is entitled to withhold the amount of gratuity. The Hon’ble court held that the same cannot be accepted in view of the decision of Bombay High Court reported in 2002 (92) FLR 689 wherein a Division Bench of the Hon’ble Bombay High Court Court held at para 4 as under :
" It would be seen that sub-sec. (1) of Sec. 4 of the Payment of Gratuity Act, 1972, provides that gratuity shall be payable to an employee on termination of his employment after he has rendered continuous service for not less than five years. The termination of the employment may be on superannuation or on retirement or resignation or death or disablement due to accident or disease of the employee. Thus, an employee becomes entitled to payment of gratuity under the statute. Sub-sec. (6) is an exception to sub-sec. (1) and makes a provision of forfeiture of the gratuity wholly or partially in the circumstances mentioned therein. According to sub-sec. (6), gratuity of an employee may be forfeited to the extent of damage or loss caused to the employer if service of the employee has been terminated for any act, willful omission or negligence on that ground. The gratuity payable to an employee may also be forfeited wholly or partially if the service of such employee has been terminated for his riotous or disorderly conduct or any other act of violence on his part or service of such employee has been terminated for any act constituting an offence involving moral turpitude. Though a criminal case was registered against the petitioner by C.B.I. in the year 1993, the fact is that petitioner's services have been terminated simpliciter on his superannuation and not for any of the grounds mentioned under sub-sec. (6) of Sec. 4 of the Payment of Gratuity Act, 1972. As a matter of fact, admittedly, till petitioner's superanuation and even till date no departmental proceedings of misconduct have been initiated against the petitioner. In this backdrop of facts, it was not open to the respondents to refuse to release the gratuity amounts to the petitioner."
1.3. In the said decision, the Hon’ble Bombay High Court distinguished the decision of the Apex Court reported in 1993 (1) LLJ 962 which was cited in support of the contention that gratuity can be withheld by the employer if any judicial proceedings are pending relating to misconduct or negligence during the period of service of the employee. The Hon’ble Bombay High Court observed at para 5 :
“We are afraid the judgment of the Apex Court in Jarnail Singh (supra) has no application in the facts and circumstances of the case before us. The Apex Court in the case of Jarnail Singh (supra) was concerned with the provisions of Central Civil Services (Pension) Rules, 1972 and in the light of the specific Rules 3, 9, 69(l)(c), 71 and 73 held that there was nothing wrong in the order of the President in withholding the gratuity of the employee. In the present case, none of the Rules under consideration before the Apex Court or the similar Rules are applicable but the petitioner is governed by the provisions of the Payment of Gratuity Act, 1972 and as per Section 4(1) petitioner has a statutory right to receive gratuity from his employer save and except in the circumstances provided under Sub-section (6) of Section 4. We have already indicated that none of the circumstances provided in Sub-section (6) is applicable in the present case and, therefore, we do not find any justifiable cause on the part of the respondents in withholding the gratuity. Mere pendency of a criminal case lodged by CBI shall not disentitle the petitioner from receiving gratuity nor shall entitle the respondents not to release the gratuity to the petitioner as petitioner's services came to an end on his attaining superannuation simpliciter.”
Summary of Question- Death of Workman during pendency of conciliation proceedings under section 12 Industrial Disputes Act does not abate the Conciliation Proceedings.
Question- Whether Legal representative of the workman can come on record and continue/contest the conciliation proceedings for the benefit of the deceased workman if the workman dies during pendency of Conciliation Proceedings.
It has been held by the Hon’ble Karnataka High Court in the case reported in 1986 (II) LLJ 54 Kant as under:
“For the foregoing reasons, the legal representatives of the workman who dies either during the conciliation proceedings or during the proceedings under S. 10(1) of the Act or before the Labour Court or Tribunal during the pendency of the adjudication could come on record and continue/contest the proceedings for the benefit of the deceased workman.”
Summary of Question- Ex-Parte Award ; Functus Officio
Question – Whether Industrial tribunal / Labour Court is functus officio after the award has become enforceable and thus prevented from considering an application for setting aside ex parte Award. ?
Answer - No.
A three Judges Bench of the Hon’ble Supreme Court in the case reported in (2018) III LLJ 1 SC observed and held as under:
“Merely because an award has become enforceable, does not necessarily mean that it has become binding. For an award to become binding, it should be passed in compliance with the principles of natural justice. An award passed denying an opportunity of hearing when there was a sufficient cause for non-appearance can be challenged on the ground of it being nullity. An award which is a nullity cannot be and shall not be a binding award. In case a party is able to show sufficient cause within a reasonable time for its non-appearance in the Labour Court/Tribunal when it was set ex parte, the Labour Court/Tribunal is bound to consider such an application and the application cannot be rejected on the ground that it was filed after the award had become enforceable. The Labour Court/Tribunal is not functus officio after the award has become enforceable as far as setting aside an ex parte award is concerned. It is within its powers to entertain an application as per the scheme of the Act and in terms of the rules of natural justice. It needs to be restated that the Industrial Disputes Act, 1947 is a welfare legislation intended to maintain industrial peace. In that view of the matter, certain powers to do justice have to be conceded to the Labour Court/Tribunal, whether we call it ancillary, incidental orinherent.
We may also add that when an application for setting aside an ex parte award is made at the instance of the management, the Labour Court/Tribunal has to balance equities……”
Summary of Question- Maternity Leave to Daily Wager
Question – Whether Daily Wager is entitled for Maternity Leave.
Answer - Yes.
The Hon’ble Supreme Court in a case reported in 2000(3) SCC 224 observed and held as under:
“ A woman employee, at the time of advanced pregnancy cannot be compelled to undertake hard labour as it would be detrimental to her health and also to the health of the foetus. It is for this reason that it is provided in the Act that she would be entitled to maternity leave for certain periods prior to and after delivery. We have scanned the different provisions of the Act, but we do not find anything contained in the Act which entitles only regular women employees to the benefit of maternity leave and not to those who are engaged on casual basis of on muster roll on daily wage basis.”
Summary of Question- Contractual employee and Maternity benefits
Question – Whether a contractual employee is entitled to maternity benefits.
Answer - Yes.
The Hon'ble Kerala High Court, vide decision dated 11.12.2018, in WP(C).No. 5507 of 2018 in the case of RASITHA Vs. STATE OF Kerala observed and held
"4. The maternity benefit is not merely a statutory benefit or a benefit flowing out of an agreement. This court consistently held that it is attached with the dignity of a woman. This Court, in Mini Vs. Life Insurance Corporation of India [2018 (1) KLT 530] and Rakhi P.V. and Others V. State of Kerala & Another [2018 (2) KHC 251] held that a women cannot be compelled to choose between motherhood and employment."
" 5. In Rakhi's case (supra) this Court has specifically referred to the claim of maternity leave due to women employees who are working under contract and this Court held that such women cannot be denied the maternity benefits. It is submitted in the Bar that the judgment in Rakhi's case (supra) was affirmed by the Division Bench as well."
Summary of Question- Back wages on reinstatement.
Question – Whether there can be entitlement of back wages automatically on reinstatement.
Answer - No. Even partial back wages depends upon the facts and circumstances of each case.
In a case reported in 2018 (11) SCALE 297, the Hon’ble Supreme Court observed and held:
“In our considered opinion, the Courts below completely failed to see that the back wages could not be awarded by the Court as of right to the workman consequent upon setting aside of his dismissal/termination order. In other words, a workman has no right to claim back wages from his employer as of right only because the Court has set aside his dismissal order in his favour and directed his reinstatement in service.”
“It is necessary for the workman in such cases to plead and prove with the aid of evidence that after his dismissal from the service, he was not gainfully employed anywhere and had no earning to maintain himself or/and his family. The employer is also entitled to prove it otherwise against the employee, namely, that the employee was gainfully employed during the relevant period and hence not entitled to claim any back wages. Initial burden is, however, on the employee.”
“In some cases, the Court may decline to award the back wages in its entirety whereas in some cases, it may award partial depending upon the facts of each case by exercising its judicial discretion in the light of the facts and evidence. The questions, how the back wages is required to be decided, what are the factors to be taken into consideration awarding back wages, on whom the initial burden lies etc. were elaborately discussed in several cases by this Court wherein the law on these questions has been settled.”
Summary of Question- Interest on compensation under Workmen’s Compensation Act.
Question – Whether interest on compensation amount , allowed under Workmen’s Compensation Act, has to be awarded from the date of accident.
Answer - Yes.
In the CIVIL APPEAL No.7470 OF 2009 , decided by Apex Court on November 2nd. 2018, short facts were that Commissioner allowed the claim petition and awarded a sum of Rs. 3,79,120/- with a direction to the employer to deposit the awarded sum within 45 days, failing which, the awarded amount would carry interest at the rate of 12% per annum. Apex Court observed and held as under:
“As early as in 1975, a four Judge Bench of this Court in Pratap Narain Singh Deo v. Srinivas Sabata and Anr. speaking through Singhal, J. has held that an employer becomes liable to pay compensation as soon as the personal injury is caused to the workman in the accident which arose out of and in the course of employment. It was accordingly held that it is the date of the accident and not the date of adjudication of the claim, which is material.”
“ Another question analogues to the main question arose before the Three Judge Bench of this Court in the case of Kerala State Electricity Board and Anr. v. Valsala K. and Anr. as to whether increased amount of compensation and enhanced rate of interest brought on statute by amending Act 30/1995 with effect from 15.09.1995 would also apply to cases in which the accident took place before 15.09.1995. Their lordships, placing reliance on the law laid down in Pratap Narain's case (supra) held that since the relevant date for determination of the rate of compensation is the date of accident and not the date of adjudication of the claim by the Commissioner and hence if the accident has taken place prior to 15.09.1995, the rate applicable on the date of accident would govern the subject.”
“ After these two decisions, this Court in two cases (both by the Two Judge Bench) viz. National Insurance Co. Ltd. v. Mubasir Ahmed and Anr. and Oriental Insurance Co. Ltd. v. Mohmad Nasir and Anr. without noticing the law laid down in Pratap Narain and Valsala cases (supra) took a contrary view and held that payment of compensation would fall due only after the Commissioner's order or with reference to the date on which the claim application is made."
“ This conflict of view in the decisions on the question was noticed by this Court (Two Judge Bench) in Oriental Insurance Co. Ltd. v. Siby George and Ors. Justice Aftab Alam speaking for the Bench referred to afore-mentioned decisions and explaining the ratio of each decision held that since the two later decisions rendered in the cases of Mubasir and Mohmad Nasir (supra) which took contrary view without noticing the earlier two decisions of this Court rendered in Pratap Narain and Valsala cases (supra) by the larger Benches (combination of four and three Judges respectively) and hence later decisions rendered in Mubasir and Mohmad Nasir cases (supra) cannot be held to have laid down the correct principles of law on the question and nor can, therefore, be treated as binding precedent on the question.”
“ In other words, the law laid down in Pratap Narain and Valsala cases (supra) was held to hold the field throughout as laying down the correct principle of law on the subject. The Two Judge Bench in Oriental Insurance Co. Ltd. v. Siby George and Ors. (supra) accordingly followed the principle of law laid down in Pratap Narain and Valsala cases (supra) and decided the case instead of following the law laid down in Mubasir and Mohmad Nasir cases (supra) which was held per incuriam.”
“ In our opinion, the afore-mentioned direction of the Commissioner in awarding the interest on the awarded sum is contrary to law laid down by this Court in Pratap Narain's case (supra) and hence not legally sustainable.”
“ Accordingly and in view of the foregoing discussion, the order of the Commissioner dated 23.04.2002 is modified in favour of the Respondent to the extent that the awarded sum of Rs. 3,79,120/- shall carry interest at the rate of 12% per annum from the date of accident i.e. 06.04.1999.”
Summary of Question- Section 25(H) and Regularization of Existing Employee
Question – Whether a retrenched employee is entitled to seek employment invoking Section 25 (H) of the I. D. Act on the ground that the management has regularized its existing employee.
Answer - No.
The Hon’ble Supreme Court in the case reported in (2019) I LLJ 257 SC observed and held :
" Section 25(H) of the ID Act applies to the cases where employer has proposed to take into their employment any persons to fill up the vacancies. It is at that time, the employer is required to give an opportunity to the “retrenched workman” and offer him reemployment and if such retrenched workman offers himself for reemployment, he shall have preference over other persons, who have applied for employment against the vacancy advertised."
" The object behind enacting Section 25(H) of the ID Act is to give preference to retrenched employee over other persons by offering them reemployment in the services when the employer takes a decision to fill up the new vacancies."
" Section 25(H) of the ID Act is required to be implemented as per the procedure prescribed in Rule 78 of the Industrial Disputes (Central) Rules, 1957 (hereinafter referred to as “the ID Rules”) which, in clear terms, provides that Section 25(H) of the ID Act is applicable only when the employer decides to fill up the vacancies in their set up by recruiting persons. It provides for issuance of notice to retrenched employee prescribed therein in that behalf."
" So, in order to attract the provisions of Section 25(H) of the ID Act, it must be proved by the workman that firstly, he was the “retrenched employee” and secondly, 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."
" In our view, 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 re- employment in the services. The reason is that by such act the employer 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."
" In our view, there lies a distinction between the expression ‘employment’ and ‘regularization of the service”. 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."
Summary of Question- Section 25 F of I.D Act and illegal appointment
Question – Whether section 25 F of the I.D. Act has to be complied with even if the appointment is illegal and void .
1. A Full Bench decision of the Hon’ble Patna High Court in CWJC Nos. 1754,3838 & 3839 all of 1996 ( reported in 2009 (2) PLJR 1017) held that section 25F of the I. D Act was not applicable in case of termination of an illegal appointment.
1.1. Short facts of the said case were that the learned Labour Court came to the conclusion that since the workers had the continuous service of one year, their services ought to have been terminated only after complying with the procedures laid down in Section 25F of the ID Act and, therefore, their retrenchment, which is violative of Section 25F of the ID Act, was illegal and liable to be set aside. The Labour Court further found that even though termination of service of the workers was illegal since it violated the procedure prescribed in Section 25F of the ID Act, their reinstatement virtually amounts to perpetuating illegality. Therefore, the Labour Court did not award reinstatement with backwages, but it limited the relief to compensation equivalent to 3.33 years' salary, including admissible allowance, on the basis of last pay and allowances drawn by the employees concerned.
2. Appeals were filed against the decisions of the Hon’ble Patna High Court in CWJC No. 3838/1996 & CWJC No. 3839/1996 in the Hon'ble Supreme Court vide CIVIL APPEAL No(s). 7340-7341/2013 (BIHAR STATE SCHEDULED CASTE COOPERATIVE DEVELOPMENT LTD. Vs. STATE OF BIHAR. And the Supreme Court , by order dated 22nd. May 2019, ordered :
" 1. It was submitted that the appointment was illegal as it was invalid as such Section 25F of the Industrial Disputes Act (hereinafter referred to as ‘the ID Act’) was not applicable.
2. We are not able to accept the aforesaid submission as invalid appointment is not covered in the Exceptions under section 2 (OO) of the ID Act. Thus, Section 25F of the ID Act is clearly applicable and is attracted.
3. Consequently, the retrenchment has rightly been held to be illegal.
4. The appeals are, accordingly, dismissed………………………………."
3. Although the Supreme Court dismissed the Appeals, it held that section 25 F of the I.D Act is even if the appointment is illegal.