Employment Law Alert - January - May 2022

Employment Law Alert - January - May 2022

Employment Law Alert - January - May 2022


January

The Supreme Court reiterates that acquittal in a criminal trial has no bearing on disciplinary proceedings.[1]

Setting aside the orders passed by the Industrial Court and the Bombay High Court, the Supreme Court on 3rd January 2022 in the matter of Maharashtra State Road Transport Corporation Vs. Dilip Uttam Jayabhay[2], through a two-judge Bench comprising Justice M.R. Shah and Justice B.V. Nagarthna refused to allow reinstatement with back wages of a driver engaged by the MSRTC, after he was dismissed from service following a departmental enquiry for rash and negligent driving.

 

Observation and decision:

Ruling in favour of the Appellant, the Apex Court held that the order of the Industrial Court is bad in law  as the dismissal in the present case cannot be said to be disproportionate to the misconduct proved.

The driver was acquitted of charges U/s 279 and 304(a) IPC because the prosecution failed to prove that the incident occurred due to rash and negligent driving of the accused. Hence, he is not absolved from the misconduct allegation.

The Court noted- "As per the cardinal principle of law an acquittal in a criminal trial has no bearing or relevance on the disciplinary proceedings as the standard of proof in both the cases are different and the proceedings operate in different fields and with different objectives."

 

In disciplinary proceedings, a delinquent employee has the legal right to appoint a Defence Assistant: MP HC[3]

A Division Bench of Madhya Pradesh High Court in the case of Deenbandhu Saket v. State of Madhya Pradesh[4], allowed the petition filed under Article 226 of the Constitution of India, by an employee facing disciplinary proceedings.

The Division Bench, comprising Sheel Nagu and Purushaindra Kumar Kaurav, JJ held that the delinquent employee in a disciplinary proceeding has a statutory right under Rule 18(4) of M.P. Civil Services (Classification, Control and Appeal) Rules, 1966, to engage a Defence Assistant for which the Disciplinary Authority/Inquiry Officer ought to assist the delinquent employee so that the requirement of reasonable opportunity of being heard is satisfied.

The Court accepted that “To take assistance of defence assistant, is a statutory right of delinquent employee, as per the provisions of Rule 14 of M.P. Civil C.C.A. Rules” and asked the Inquiry Officer to “ request in writing to the Controlling Officer of the proposed defence assistance to act as defence assistant provided there is no other legal impediment.

The Court also agreed that the executive instructions issued by GAD, Govt. of M.P. appeared to be in consonance with the principles of natural justice. The order passed by the Inquiry Officer was quashed.

 

February

The Supreme Court ruled that an employee is not exempt from liability just because he has retired or superannuated.[5]

The Supreme Court on February 11, 2022 observed that merely because an employee stood superannuated, will not by itself absolve him from the misconduct committed at the time of discharge of his duties when he was in service.

The observation was made by a Division Bench of Justices Ajay Rastogi and Abhay S Oka in the case of United Bank of India v. Bachan Prasad Lal[6] while dealing with an Appeal filed by United Bank of India against a 2010 Order of the Patna High Court upholding the decision of the Industrial Tribunal to reduce the punishment handed down to the Respondent-employee.

The facts of the Case were that the Respondent employee joined service as a Clerk­ cum Typist in the year 1973 and while in service committed serious irregularities in the discharge of his duties, was placed under suspension by an Order dated 7th August 1995[7].

He was later served with the Charge­sheet. After the disciplinary inquiry, the charges were proved. As a consequence, the Respondent was dismissed from service by an order dated December 06, 2000, and the Appellate Authority also rejected the Appeal preferred by the Respondent employee.

Subsequently, a Reference was made to the Industrial Tribunal for Adjudication by the appropriate government. The learned Tribunal held that the inquiry was fair and proper and the charges stood proved but while exercising power under Section 11A of the Industrial Disputes Act, 1947, the Tribunal substituted the punishment of dismissal with an order of reinstatement after lowering down of two stages in the basic salary that he was getting at the time of his dismissal. It was also held that there will be no payment of salary and allowances for the period of his suspension save and except payment of subsistence allowance.

In a Writ Petition before the Patna High Court, the Single Judge dismissed the Petition holding that the Tribunal has discretion under Section 11A of the Act of 1947 and held that it was rightly exercised. The Division Bench of the High Court also upheld the finding returned by the Tribunal.

The Supreme Court observed that as per the seriousness of the nature of allegations leveled against the Respondent employee, the punishment of dismissal inflicted upon him in no manner could be said to be shockingly disproportionate which would have been required to be interfered with by the Industrial Tribunal.

A Short business visit without any written agreement detailing terms of deputation will not qualify as deputation: SC[8]  

In the case of Ms. Sarita Singh vs. M/s Shree Infosoft Private Limited,[9] the Supreme Court dismissed the suit for recovery instituted by the respondent. Sarita Singh (Appellant) worked for the M/s Shree Infosoft Private Limited (Respondent) as a software developer. The appellant was sent to the US for a meeting and after coming back to India she went on to work until December 12, 2013 and then quit. After the appellant left the company,  she got a notice from an advocate asking for payment of "overseas deputation and salary for the notice period."

 

The Apex court held that the appellant was entitled to litigation on the basis that a deputation is an agreement between the lending employer, the borrowing employer, and the employee. The parties would be bound by and have to follow certain rights and obligations. A short business trip that doesn't have a written agreement outlining the terms of deputation won't count as deputation unless the respondent can show that the appellant was sent to work overseas on deputation. All three Courts below have completely ignored this part of the case. The same were not seen in the employment contract drafted by the respondent.   

 

Deputation, essentially, at a minimum requires the following:

  • The deputer’s consent to depute, the borrower’s consent to borrow
  • Consent by the employee to be deputed, and
  • Written agreement between the deputing employer, the borrowing employer, and the employee as to the terms of deputation.

The judgment makes it clear that mere provisioning for deputation by way of incorporation of a standalone clause in the Employment Agreement might not be sufficient to evidence deputation, in all cases. Therefore, as a matter of best practice, it is ideal that an employer appropriately factors in the above aspects, in order to mitigate risk in such matters.

[Section 33C ID Act] Labour Court “cannot adjudicate disputes” related to employer-employee matters: Supreme Court

The Supreme Court of India in the case of M/s Bombay Chemical Industries v. Deputy Labour Commissioner and Anr.[10] held that the Labour Court is merely an executing court having no authority to entertain employer-employee matters.

Facts of the case[11]

The Allahabad High Court dismissed the petition of the appellant M/s Bombay Chemical Industries, and confirmed the order passed by the Labour Court pursuant to Section 33(C)(2) of the Industrial Disputes Act 1947. Essentially, the present defendant chose to file an application with the Labor Court pursuant to Section 33(C)(2) of the Industrial Disputes Act 1947, demanding difference in wages against the appellant. He denied that there was an employer-employee relationship and argued that the defendant had not engaged in it in any way. On 28 November 2017, the Labor Court ruled in favor of the defendant and awarded compensation to the appellant. The aggrieved appellant preferred to file a written petition before the Supreme Court. The Supreme Court rejected the defense and upheld the Labor Court’s decision. The appellant took it to the Supreme Court for appeal.

The appellants contended that When a serious problem with the employer-employee relationship arose and the defendant’s employment as a salesman at any time was seriously challenged, the Labor Court should not have considered the defendant’s application under Section. 33(C)(2) of IDA 1947. Instead of being decided by the Labor Court, this dispute should have been decided in reference to Section 10 of the IDA 1947.

The respondents argued that it is a false case with the object to be freed from the obligation to pay the difference in wages, as claimed by the defendant. He further stated that the existence of documentary evidence proved that the defendant was working as a dealer in the appellant’s establishment. However, after an assessment of the evidence and consideration of the material available in the records, the Employment Tribunal allowed the application.

Decision:

The apex court held that pursuant to Section 33(C)(2), the jurisdiction of the Labor Court is that of an executing court and can only interpret the decision or settlement on which the claim is based.The order by the Labor Court therefore goes beyond the jurisdiction granted under Section 33(C)(2) of the Industrial Disputes Act.The  High Court did not appreciate the facts cited and affirmed the same without specifying the extent and scope of the Labor Court’s jurisdiction under Section 33(C)(2) of the Industrial Disputes Act. The court set aside the order passed by the High Court and the Labor Court and relegated the Respondent No. 2 to avail any other remedy which may be available under the Industrial Disputes Act.

 

March

Remittance of EPF dues in installments may be permitted subject to sufficient cause : High Court of Kerala [12]    

The bench led by Honourable Mr.justice Murali Purushothaman in the case of M/s. Forest Industries (Travancore) Ltd. Vs The Assistant Provident Fund Commissioner[13] on 15th March, 2022 allowed the petitioner to remit the total amount towards the EPF in ten equal monthly installments commencing from 10.04.2022 as his company is facing financial crisis and he cannot make the total payment at once.

 

The petitioner (M/s Forest Industries) is a public undertaking under the Government of Kerala. The first respondent (Assistant Provident Fund Commissioner) had issued Ext.P1 notice under section 7A of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 directing the petitioner to remit some amount towards EPF contribution. The petitioner defaulted in the payment of the said amount  and proceedings under sections 8B to 8G of the EPF Act, 1952 were initiated. 

Learned counsel for petitioner prayed for a direction for payment of the amount covered in installments.

In the view of facts and circumstances the court decided that interest of justice will be met if the petitioner is permitted to pay the balance amount due under Ext.P1 in ten equal monthly installments commencing from 10.04.2022.

The Court further observed that since the petitioner has already paid the amount directed to be paid by the Court as per order dated 28.02.2022, the petitioner shall be permitted to operate the bank account referred to in Ext.P2. In case the petitioner defaults payment of any of the installments as aforesaid, the first respondent will be entitled to recover the entire amount due from the petitioner.  

 

Liability to pay compensation on death of worker arises immediately after demise: SC [14]

In the case of Shobha vs Chairman, Vithalrao Shinde Sahakari Sakhar Karkhana Ltd[15]. The Supreme Court observed that the liability to pay the interest on the amount of arrears/compensation under Employee's Compensation Act, 1923, shall be from the date of accident and not from the date of the order.

Fact of the case:

The deceased employee was a sugarcane cutting labourer. While cutting the sugarcane, he died of a snake bite. His heirs “Shobha( Appellants) filed a claim petition before the Commissioner Workmen's Compensation, Beed and claimed Rs. 5 lakhs. The Commissioner directed the employers to pay the compensation amount.

In appeal, the Apex Court bench observed that the High Court has not noted and/or considered Section 4A(3)(a) of the Act, 1923, which deals with award of interest when the employer is in default. The Court observed that the provision for levy of interest would be under Section 4A(3)(a) and the provision for levy of penalty would be under Section 4A(3)(b).

Decision:

Allowing the appeal, the Court held that the claimants shall be entitled to the interest @ 12% p.a. on the amount of compensation as awarded by the Commissioner from the date of the incident.

 

April

Oral Termination Of Workman Violates S.25F Of Industrial Disputes Act: Gujarat High Court Orders Lumpsum Compensation[16]

In the case of Botad Taluka sahkari kharid vechan sangh limited vs. Bhagirathbhai Kanubhai Khachar & 1 other(s)[17] the Gujarat High Court has granted relief to a workman who was terminated from his services via an oral communication, in violation of mandatory provisions pertaining to retrenchment under Sections 25F and 25G of the Industrial Disputes Act, 1947.

 

Fact of the Case:

The Respondent-workman herein was appointed as a clerk in the Petitioner-Cooperative Society in 1999 and was earning a salary of INR 2,300 per month. Subsequently, he was terminated orally by the society without following the provisions of Sections 25F and 25G of the Industrial Disputes Act,1947. Thereafter, the workman had raised an industrial dispute before the competent authority. The same was granted by the Labour Court vide an order of January 2018.

 

Petitioner Contention:

They contested that Respondent No.1-workman was not appointed after following the due procedure and the recruitment procedure, instead, it was nothing but a back-door entry. Further, they had endured huge financial loss and due to heavy expenditure, the Respondent -Workman was asked not to attend work. Therefore, the mandatory provisions of Sections 25F and 25G of the Industrial Disputes Act were not breached.

 

Observation and Decision:

It referred to the case of Divisional Controller, Maharashtra State Road Transport Corporation Vs. Kalawati Pandurang Fulzele[18] where the appointment order of the workman itself stated that the work was a contractual basis at an honorarium of INR 500 per month, the concerned person had worked for four years as a sweeper with no specific averments against any unfair labour practice, and yet the Supreme Court had granted lumpsum compensation.

Therefore, keeping in view this precedent, Justice Vipul Pancholi ordered that Rs.2,50,000/- be paid towards lump-sum compensation to Respondent No.1-Workman, in lieu of reinstatement with continuity of service and 20% back-wages.

Settlement Between Workman & Management Not Binding u/s 18 of Industrial Disputes Act, 1947 If Not Sent To Prescribed Authorities: Rajasthan High Court

In the case of Laxman v. State Of Rajasthan & Ors.[19] the Rajasthan High Court has held that given the "unequal bargaining power" between an employer and its workmen under Industrial Disputes Act, 1947, the settlement arrived at between them must be sent to the State Government, Labour Commissioner and the Conciliation Officer concerned for scrutiny.

It went on to say that until this criterion is met, the settlement cannot be considered binding on the parties under Section 18(1) of the Industrial Disputes Act, 1947.

Justice Arun Bhansali, while allowing the petition, observed,

"The provisions are not without reason, in as much as on account of unequal bargaining power between the workmen and the management, in case a mutual settlement is arrived at the same becomes binding under the provisions of Section 18 (1) of the Act and, therefore, to ensure that the agreement arrived at is examined by the authority i.e. the Labour Commissioner and the conciliation officer, the same is required to be sent to them and entered in the register of settlement maintained by the conciliation officer."

In this regard, the court opined that there is no indication in the agreement and in respondents' reply that the agreement in question was ever sent to the Labour Commissioner, Rajasthan and/or to the conciliation officer and that the same is entered in the register maintained under Rule 75 of the Rajasthan Industrial Disputes Rules, 1958.

May

Labour Court Has No Jurisdiction To Adjudicate Workman's Claim U/S 33C(2) ID Act In An Undetermined Claim: Karnataka High Court[20]

In the case of Management of KSRTC Vs Sri K. Shivaram,[21] The Karnataka High Court has said that a workman who claims compensation due to injuries suffered during the course of employment, his claims under the Employees Compensation Act 1923, would lie before the Employees Compensation Commissioner and not before the Labour Court.

 

A single judge bench of Justice K S Mudagal said,

"In view of the specific forum provided under the Act, 1923, the Labour Court had no jurisdiction to entertain the claim petition. Though the Workman suffered a certain disability, the question was, due to such disability, whether there was loss of earnings.The respondent claimed that he was entitled to claim the amount due to the injuries suffered by him during the course of employment. Therefore his claim was under the Act, 1923. In such event the claim lies before the Employee's Compensation Commissioner and not before the Labour Court."

The court relied on Supreme Court judgments in the case of State of U.P. and Another Vs Brijpal Singh's,[22] and Municipal Corporation of Delhi V.s Ganesh Razak and Another[23] and said "Admittedly after the accident, the respondent received remuneration in the pay scale of drivers. Therefore, whether he was entitled to claim compensation under the head of loss of earning or earning capacity was a matter of adjudication. Similarly, in view of him not performing the work as a driver and assignment of lighter work to him, whether he was entitled to a silver medal allowance was a matter of adjudication."

It held, "Therefore that could have been the subject matter of a dispute under the I.D Act. Without such adjudication, in the light of the judgment of Hon'ble Supreme Court referred to supra, the respondent could not have maintained the petition under Section 33C(2) of the I.D. Act. The Labour Court committed an error in assuming jurisdiction under Section 33C(2) of the ID Act. The award is liable to be set aside."

 

Conclusion:

The new Labour code includes a number of rules and special provisions aimed at providing better regulations for businesses and establishments, allowing for greater flexibility in the industry. Additionally, the codification and consolidation of such laws has resulted in an increased  scope and applicability of the laws, as well as ease of compliance, the elimination of several definitions, and the overlapping of authorities. The new rules will strengthen the relationship between the employer, employee, and government, have a long-term good influence on the industry, and contribute to the ideal of ease of doing business.

 

[2] MANU/SC/0002/2022 DECIDED on  (03.01.2022 )

 

[4] MANU/MP/1691/2021 DECIDED ON 14.12.2021

[6] 2022 LiveLaw (SC) 164

[7] https://www.lawinsider.in/news/supreme-court-employee-not-absolved-merely-because-he-superannuated

[9] Ms. Sarita Singh vs. M/s Shree Infosoft Private Limited, CA 346/2022 DECIDED ON 12TH JANUARY,2022.

[10] M/S Bombay Chemical Industries vs Deputy Labour Commissioner 2022 CA 813/2022 DECIDED ON 4 February, 2022

[11]https://primelegal.in/2022/02/06/labour-court-cannot-adjudicate-disputes-related-to-employer-employee-matters-supreme-court/

[13] M/S. FOREST INDUSTRIES (TRAVANCORE) LTD. vs THE ASSISTANT PROVIDENT FUND COMMISSIONER WP(C) 6574/2022 DECIDED ON 15TH MARCH 2022

[15] 2022 LiveLaw (SC) 271 DECIDED ON MARCH 11, 2022

[17] BOTAD TALUKA SAHKARI KHARID VECHAN SANGH LIMITED Versus BHAGIRATHBHAI KANUBHAI KHACHAR & 1 other C/SCA/6120/2018, DECIDED ON 05/04/2022

[18] 2022 LATEST CASELAW 103 SC

[19] 2022 LiveLaw (Raj) 117

 

[21]  2022 LiveLaw (Kar) 153

[22] (2005) 8 SCC 58

[23] (1995) 1 SCC 235

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