SUPREME COURT UPHOLDS EMPLOYMENT EQUITY AND MANDATES LABOR REGULARIZATION FOR PERENNIAL WORKERS

Introduction:

An industrial dispute involves disagreements between an employer and workers concerning the terms and conditions of employment, including issues related to contract labour. The Industrial Disputes Act 1947 specifies procedures for referring disputes to appropriate authorities and also resolving disputes through methods such as conciliation. In the present case, the matter pertains to the regularization of certain workmen, considering the perennial and permanent nature of their work, similar to other workmen undertaking the such kind of work.

A Two Judge Bench of the Supreme Court comprising of Justice Pamidighantam Sri Narasimha and Justice Sandeep Mehta passed a judgment dated 12.03.2024 in a case of Mahanadi Coal Fields Ltd. Vs. Brajrajnagar Coal Mines Workers’ Union in Civil Appeal No(s).4092-4093 of 2024, arising out of SLP(C) No(s). 6370-6371 of 2024, where the Bench concluded that considering the nature of work and continuous working, the workmen should be regularized and made permanent, entitling them to receive back wages.

Facts of the case:

i) In the present case, the Appellant-Company, Mahanadi Coalfields Ltd., a subsidiary of Coal India Ltd., released a tender for the transportation of crushed coal and a contractor was selected for the performance of the agreement from 1984 to 1994. Accordingly, 32 workmen were employed by the contractor for execution of those works. The Respondent- Union represented the workmen who were employed by the contractor and pursued their request for permanent status. The Respondent-Union relied on the clauses of National Coal Wage Agreement-IV dated 27.07.1989. The Clause mentioned that the employer shall not engage contract labour with respect to jobs which are perennial and permanent in nature and also defined that such jobs shall be executed through regular employees.

ii) The Ld. Assistant Labour Commissioner issued a Notice to the Appellant for conciliation proceedings. The dispute got settled under Rule 58 of the Industrial Disputes (Central) Rules, 1957 (Memorandum of settlement) on 05.04.1997. During the settlement, the Respondent-Union presented a list of 32 workmen employed by contractors, demanding their regularization. It was observed that 19 of these workers were engaged in operating chutes within the bunker and were considered as permanent workmen under the General Mazdoor Category-I due to the continuous nature of their work. However, the Management argued that the remaining 13 workers were engaged in casual nature of jobs, which are not prohibited under the Contract Labour Act 1970 and not eligible for regularization. The settlement was concluded only in respect of 19 workmen.

iii) As the settlement exclusively addressed the regularization of only 19 workmen and did not consider the remaining 13, the Central Government referred the matter to the Industrial Tribunal in Rourkela, Odisha, under Section 10(2A)(1)(d) of the Industrial Disputes Act, 1947 (Reference of disputes to Boards, Courts or Tribunals) on 20.05.1997.

iv) The Ld. Industrial Tribunal, vide Order dated 23.05.2002, observed that the jobs involving removing spillages in the railway siding and operating chutes in the bunker, were of a regular and perennial in nature. It determined that if the nature of the work was similar to that of the 19 regularized workmen, then the remaining 13 workmen should also be considered for regularization. The Ld. Tribunal also emphasized that the existence of a settlement between the Parties should not disregard the rights of the other 13 workmen. Based on the submissions made by both Parties, the Ld. Tribunal observed that all 32 workers were involved in the work of removing spillages for the railway siding below the bunker. Therefore, the Ld. Tribunal observed that it would be incorrect to assert that only 19 workers were attending to the work, while the rest were not. Consequently, the Tribunal concluded that the Management’s failure to regularize the 13 workers was deemed illegal and unjustified. The Ld. Tribunal also directed the Appellant to disburse back wages.

v) Aggrieved by the Order dated 23.05.2002 of the Ld. Tribunal, the Appellant-Company filed a Writ Petition bearing WP (C) / 2002 / 2002 before the High Court of Orissa. The Division Bench, vide Order dated 11.01.2017, upheld the Judgement of the Ld. Tribunal and held that the work was perennial in nature.

vi) Later the Appellant filed a Review Petition bearing PET / 77 / 2017 before High Court, which was also dismissed, vide Order dated 11.11.2021.

vii) Thus, aggrieved by the High Court Orders dated 11.01.2017 and 11.11.2021, the Appellant-Company filed SLP(C) No. 006370 – 006371 / 2024 that was registered as Civil Appeal No. 004092 – 004093 / 2024.

Issues raised before the Supreme Court:

I) Whether the settlement governed by Section 18(1) of Industrial Disputes Act (Persons on whom settlements and awards are binding) and Section 36 of the Industrial Disputes Act (Representation of parties) remains binding on the Parties, as it was never terminated?

II) Whether the works performed by the 13 workers considered to be of a continuous nature similar to those of the regularized workers?

III) Whether the workmen were entitled to back wages?

Supreme Court Observations:

1) While considering the first issue, the Supreme Court viewed that the Appellant raised an objection to the Ld. Tribunal, contending that the settlement governed by Sections 18(1) and 36 of the Industrial Disputes Act is legally binding on all parties. However, the Apex Court held that all 32 workers commenced their employment through a contract from 1984 and continued till 1994. It stated that the Respondent-Union represented on behalf of all 32 workmen. Furthermore, it emphasized that the settlement specifically addressed the claims of all 32 workers, while the issue concerning the casual nature of works for the 13 workers arose at a later stage. As per the Apex Court, such a view strongly suggests that all workmen should be considered permanent and perennial in nature. The Supreme Court also observed that the Government referred the matter for adjudication and settlement while considering the claims of all 32 workers equally. Consequently, the Apex Court held that the settlement in respect of only 19 workers, lacked valid justification, leading to its reference to the Tribunal and the conclusion that the settlement in respect of only 19 workers cannot be taken into consideration.

2) The Supreme Court, while addressing the second issue, observed that “the present case is not one where this court would exercise its discretion. What appeals to us is that the 32 workers who entered the service of the Appellant in 1984, continued uninterruptedly till 1994, when the Respondent-Union sought their permanence.” Referring to the settlement, the Apex Court concluded that the remaining workers should have been treated similarly to the regularized employees, and the exclusion of 13 workmen from the settlement was unjustified. It emphasized that if the settlement had been conducted fairly, there would have been no necessity for the Ld. Tribunal to scrutinize the similarity between the works performed by the 13 workmen and the 19 workmen who were also engaged in similar perennial works. The Supreme Court stated that the Appellant failed to establish a distinction between the two sets of workmen, as they performed identical works.

Conclusion

Thus, based on the aforesaid observations, the Apex Court held that there was wrongful denial of employment and regularization, without any fault on the part of the workmen. Hence, the Bench held that the workmen would be entitled to back wages from the date of decision of Ld. Industrial Tribunal dated 23.05.2002. As a result, the Appeal filed by the Appellant-Company was dismissed and the High Court Orders dated 11.01.2017 and 11.11.2021 that upheld the Order dated 23.05.2002 of the Ld. Industrial Tribunal was upheld.

 

Srilekha

Associate

The Indian Lawyer