Full Judgment Text
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 3053 OF 2008
A. Satyanarayana Reddy and Others …Appellants
Versus
Presiding Officer, Labour Court …Respondents
and others
J U D G M E N T
Dipak Misra, J.
A two-Judge Bench while dealing with the interpretation of
provisions of Sections 33C(2) of the Industrial Disputes Act, 1947 (for
short, “the Act”) vis-à-vis a Voluntary Retirement Scheme framed by
the State of Andhra Pradesh noticed that the conclusion arrived at by
the Division Bench of the High Court of Andhra Pradesh in Writ
Appeal No. 820 of 2005, whereby it had given the stamp of approval to
st
the judgment and order dated 21 March, 2005, passed by the learned
Single Judge of the said Court in Writ Petition No. 4196 of 2005,
holding, inter alia , that once the workmen had availed the Voluntary
Signature Not Verified
Digitally signed by
CHETAN KUMAR
Date: 2016.09.30
16:38:45 IST
Reason:
Retirement Scheme and received the special compensation package,
they could not have put forth a claim for lay-off compensation under
2
Section 33C(2) of the Act and in that context perceived a discordant
note in National Buildings Construction Corporation v. Pritam
1
Singh Gill and others and A.K. Bindal and another v. Union of
2
India and others and thereafter scanning the anatomy of the Act,
referred the matter to a larger Bench in A. Satyanarayana Reddy
3
and others v. Presiding Officer, Labour Court, Guntur and others
by stating thus:-
“The right of the workman to claim payment of lay off
compensation is not denied or disputed. If the said claim
has no nexus with the Voluntary Retirement Scheme, in our
opinion, in a given case, like the present one, it is possible
to hold that a proceeding under Section 33C(2) of the Act
would be maintainable. We are, therefore, of the opinion
that the question being one of some importance should be
considered by the larger Bench as there exists an apparent
conflict in the said decisions in National Buildings
Construction Corporation (supra) and A.K. Bindal (supra).”
Because of the aforesaid order, the matter has been placed before
us.
2. The exposé of facts are that the appellants were employees of
Nagarjuna Cooperative Sugars Limited (for short, “the Company”), a
Government of Andhra Pradesh undertaking. It was declared as a
“relief undertaking” in terms of the A.P. Relief Undertaking (Special
Provisions) Act, 1971 (for brevity, “the 1971 Act”). As is evident, the
1 (1972) 2 SCC 1
2 (2003) 5 SCC 163
3 (2008) 5 SCC 280
3
management of the industrial undertaking declared lay-off wherefor
compensation was to be paid. The employees-union of the Company
preferred a writ petition in the High Court of Andhra Pradesh assailing
th
the Memorandum No. 25027/SUG/A2/97-3 dated 5 January, 1998,
whereunder the workmen were not granted compensation and, in fact,
were deprived of the same. It was urged by the workmen that the
lay-off compensation was paid only for the months of June and July,
1995, though they were entitled to get the said compensation for the
period 01.08.1995 to 06.09.2002.
3. When the matter stood thus, the State of Andhra Pradesh
transferred the Company to one S.C.M. Sugars Limited, which
absorbed some of the workmen, and out of the said absorbed
employees, some of them were paid lay-off compensation and some
were not extended the benefit. Be it stated, at one point of time all the
employees had expressed their willingness to continue to work under
the transferee-management. At a later stage, the Government of
Andhra Pradesh allowed the said transferee-Company to shift the
factory to the State of Karnataka, as a consequence of which, the
workmen lost the opportunity to continue to be employed.
4. As the factual matrix would unfurl, the Government of Andhra
st
Pradesh issued G.O.Ms. No. 25 dated 21 May, 2001, provided for a
4
special compensation package for the employees. The condition that
was incorporated in the package was to the effect that the amount of
compensation was to be paid to the workmen only in the event if they
had not opted for employment with the transferee Company. We shall
refer to the Voluntary Retirement Scheme (VRS) at a later stage.
5. As the factual score would further undrape, the appellants opted
for voluntary retirement and they were paid the amount of special
compensation in terms of the VRS. It is apposite to note here that as
the said scheme did not make any provision for payment of lay-off
compensation, the appellants moved the High Court under Article 226
of the Constitution of India by preferring Writ Petition No.16916 of
1998. The relief sought in the writ petition was resisted by the
transferee Company urging that the workmen having accepted the
benefits under the VRS and there had been cessation of relationship
between the employer and employee, the writ petition was not
maintainable and the relief sought in the writ petition could not be
acceded to. The learned Single Judge upon hearing the learned
counsel for the parties opined that it would be appropriate for the writ
petitioners to approach the Industrial Tribunal and work out their
remedies by way of a claim petition and by leading appropriate
evidence before the said Court. The High Court, be it noted, granted
5
liberty to the workmen to raise all issues which were available
including those which had been raised in the writ petition, and
accordingly disposed of the writ petition.
6. In pursuance of the aforesaid order, the workmen filed a petition
under Section 33C(2) of the Act claiming lay-off compensation before
the Presiding Officer, Labour Court, Guntur that formed the subject
matter of C.F.R. No. 4319/2004 III Un-No. M.P. /2004. The Labour
Court dismissed the application as not maintainable on the
foundation that the claimants were not workmen under Section 2(s) of
the Act having received all the benefits under VRS. Aggrieved by the
aforesaid order of the Labour Court, the appellants herein preferred
W.P. No. 4196 of 2005. The learned Single Judge referred to the
authority in A.K. Bindal (supra), adverted to the decision of the
Bombay High Court in Pal v. Pal VRS Employees Welfare
4
Association , that dealt with “existing individual rights” in the context
of Section 33C(2) of the Act, distinguished the decision rendered in
5
Government Soap Factory, Bangalore v. Labour Court and
eventually held that the Labour Court had correctly exercised the
jurisdiction by coming to hold that the writ petitioners were no more
workmen within the meaning of Section 2(s) of the Act and hence,
4 2002 - 1 LLJ Bombay 527
5 AIR 1970 Mysore 225
6
there was no warrant for any interference in exercise of jurisdiction
under Article 226 of the Constitution. Dissatisfaction of non-success
compelled the writ petitioners to prefer Writ Appeal No. 820 of 2005
and the Division Bench concurred with the view expressed by the
learned Single Judge in view of the dictum of this Court in A.K.
Bindal (supra). Hence, the present appeal by special leave. We have
already noted how the matter has been placed before the three-Judge
Bench.
7. Section 2(s) of the Act defines the workman as follows:-
““workman” means any person (including an apprentice)
employed in any industry to do any manual, unskilled,
skilled, technical, operational, clerical or supervisory
work for hire or reward, whether the terms of
employment be express or implied, and for the purposes
of any proceeding under this Act in relation to an
industrial dispute, includes any such person who has
been dismissed, discharged or retrenched in connection
with, or as a consequence of, that dispute, or whose
dismissal, discharge or retrenchment has led to that
dispute, but does not include any such person –
(i) who is subject to the Air Force Act, 1950 (45 of 1950),
or the Army Act,1950 (46 of 1950), or the Navy Act,
1957 (62 of 1957); or
(ii) who is employed in the police service or as an officer
or other employee of a prison; or
(iii)who is employed mainly in a managerial or
administrative capacity; or
(iv) who, being employed in a supervisory capacity,
draws wages exceeding [ten thousand rupees] per
mensem or exercises, either by the nature of the duties
attached to the office or by reason of the powers vested
in him, functions mainly of a managerial nature.”
8. Section 33C(2) of the Act reads as follows:-
7
“Where any workman is entitled to receive from the
employer any money or any benefit which is capable of
being computed in terms of money and if any question
arises as to the amount of money due or as to the
amount at which such benefit should be computed, then
the question may, subject to any rules that may be made
under this Act, be decided by such Labour Court as may
be specified in this behalf by the appropriate Government
[within a period not exceeding three months]:
Provided that where the presiding officer of a Labour
Court considers it necessary or expedient so to do, he
may, for reasons to be recorded in writing, extend such
period by such further period as he may think fit.”
9. In A.K. Bindal (supra) a two-Judge Bench was considering the
grant of pay revision in respect of companies which came under the
Board for Industrial and Financial Reconstruction (for short, “BIFR”).
In the said case an issue also arose with regard to the framing of
voluntary retirement scheme pertaining to the grievance of
non-revision of the pay scale of the workmen. It was contended by the
respondents therein that the employees having taken VRS and having
taken the amount without any demur, the relationship of employee
and employer had ceased to exist and, therefore, they cannot raise any
grievance regarding the non-revision of pay scale. The said
submission was opposed on the ground that employees had no option
in the matter and accepted VRS under compulsion and further under
the VRS, the total compensation amounts have to be calculated as
8
there was revision of pay scale since 1992 as claimed by the workmen
and in that context opined thus:-
“34. This shows that a considerable amount is to be paid
to an employee ex gratia besides the terminal benefits in
case he opts for voluntary retirement under the Scheme
and his option is accepted. The amount is paid not for
doing any work or rendering any service. It is paid in lieu
of the employee himself leaving the services of the
company or the industrial establishment and foregoing
all his claims or rights in the same. It is a package deal of
give and take. That is why in the business world it is
known as “golden handshake”. The main purpose of
paying this amount is to bring about a complete
cessation of the jural relationship between the employer
and the employee. After the amount is paid and the
employee ceases to be under the employment of the
company or the undertaking, he leaves with all his rights
and there is no question of his again agitating for any
kind of his past rights with his erstwhile employer
including making any claim with regard to enhancement
of pay scale for an earlier period. If the employee is still
permitted to raise a grievance regarding enhancement of
pay scale from a retrospective date, even after he has
opted for Voluntary Retirement Scheme and has accepted
the amount paid to him, the whole purpose of
introducing the Scheme would be totally frustrated.
35. The contention that the employees opted for VRS
under any kind of compulsion is not worthy of
acceptance. The petitioners are officers of the two
Companies and are mature enough to weigh the pros and
cons of the options which were available to them. They
could have waited and pursued their claim for revision of
pay scale without opting for VRS. However, they in their
wisdom thought that in the fact situation VRS was a
better option available and chose the same. After having
applied for VRS and taken the money it is not open to
them to contend that they exercised the option under any
kind of compulsion. In view of the fact that nearly
9
ninety-nine per cent of employees have availed of the VRS
Scheme and have left the Companies (FCI and HFC), the
writ petition no longer survives and has become
infructuous.”
10. In Pritam Singh Gill (supra), this Court was dealing with a case
wherein the respondent was dismissed from service w.e.f. September
19, 1967. He was suspended on October 5, 1964 and the order of
suspension remained in force till September 18, 1967. During the
period of suspension, on October 7, 1965, he was transferred to Delhi.
After dismissal the respondent applied to the Labour Court at Delhi
under Section 33C(2) of the Act for computing the benefits and
amounts he was entitled to receive alleging that he had not been paid
such amounts and benefits. The Labour Court framed certain issues
and decided the claim in favour of the employee. The only question
that arose before this Court pertained to jurisdiction of the Labour
Court to entertain the employees’ application under Section 33C(2) of
the Act. According to the appellants, the respondent-employee having
already been dismissed had ceased to be the workman from the date
of application and, therefore, he had no locus standi to approach the
Labour Court under Section 33C(2) of the Act. On behalf of the
respondent, it was argued that if the period in respect of which
benefits and amounts are claimed under Section 33C(2) of the Act was
during the course of his employment prior to dismissal, then mere fact
10
that he was dismissed by the employer before he could apply to the
Labour Court under Section 33C(2) would not deprive him of his right
to claim relief under that Section. The Court posed the question
whether Section 33C(2) of the Act can be invoked by dismissed
workman in respect of benefits and salary due to him for the period
prior to the date of his dismissal. The Court referred to the authorities
6
in Central Bank of India v. P.S. Rajagopalan and M/s Kesoram
7
Cotton Mills Ltd. v. Gangadhar & others and distinguished the
said cases as the factual background was different. However, it
reproduced certain passages from P.S. Rajagopalan (supra) because
the Court in the said decision has discussed the legislative history of
Chapter V-A and Section 33C of the Act and observed that:-
“In our opinion, on a fair and reasonable construction of
sub-section (2) it is clear that if a workman’s right to
receive the benefit is dispute, that may have to be
determined by the Labour Court. Before proceeding to
compute the benefit in terms of money the Labour Court
inevitably has to deal with the question as to whether the
workman has a right to receive that benefit. If the said
right is not disputed, nothing more needs to be done and
the Labour Court can proceed to compute the value of
the benefit in terms of money; but if the said right is
disputed, the Labour Court must deal with that question
and decide whether the workman has the right to receive
the benefit as alleged by him and it is only if the Labour
Court answers this point in favour of title workman that
the next question of making necessary computation can
arise.”
6 (1964) 3 SCR 140
7 (1964) 2 SCR 809
11
And again,
“Besides, it seems to us that if the appellant’s
construction is accepted, it would necessarily mean that
it would be at the option of the employer to allow the
workman to avail himself of the remedy provided by
sub-section (2) because he has merely to raise an
objection on the ground that the right claimed by the
workman is not admitted to oust the jurisdiction of the
Labour Court to entertain the workman’s application.
The claim under Section 33-C(2) clearly postulates that
the determination of the question about computing the
benefit in terms of money may, in some cases, have to be
preceded by an enquiry into the existence of the right and
such an enquiry must be held to be incidental to the
main determination which has been assigned to the
Labour Court by sub-section (2).”
11. After reproducing the said passages, the Court referred to the
authority in U.P. Electric Supply Co. Ltd. v. R.K. Shukla and
8
another wherein the Court after review of various decisions had
upheld the jurisdiction of the Labour Court to entertain application for
lay off-compensation under Section 33C(2) observing that such
jurisdiction could not be ousted by a mere plea denying the workman’s
claim for computation of the benefit in terms of money, adding that
the Labour Court had to go into the question and determine whether
on the facts it had jurisdiction to make the computation.
12. Thereafter, the Court in Pritam Singh Gill (supra) referred to
number of decisions and posed the question thus:-
8 AIR 1970 SC 237; 1969 (2) SCC 400
12
“The crucial point which requires consideration on the
appellant’s argument is thus confined to the precise
scope and meaning of the word “workman” used in
Section 33-C(2) in the background of the definition of this
word as contained in Section 2(s).”
13. Thereafter, it was held:-
“This section was enacted for the purpose of enabling
individual workman to implement, enforce or execute
their existing individual rights against their employers
without being compelled to have recourse to Section 10
by raising disputes and securing a reference which is
obviously a lengthy process. Section 33-C of the Act has
accordingly been described as a provision which clothes
the Labour Court with the powers similar to those of an
executing court so that the workman concerned receives
speedy relief in respect of his existing individual rights.
The primary purpose of the section being to provide the
aggrieved workman with a forum similar to the executing
courts, it calls for a broad and beneficial construction
consistently with other provisions of the Act, which
should serve to advance the remedy and to suppress the
mischief. It may appropriately be pointed out that the
mischief which Section 33-C was designed to suppress
was the difficulties faced by individual workmen in
getting relief in respect of their existing rights without
having resort to Section 10 of the Act. To accept the
argument of the appellant, it would always be open to an
unfair, unsympathetic and unscrupulous employer to
terminate the services of his employee in order to deprive
him of the benefit conferred by Section 33-C and compel
him to have resort to the lengthy procedure by way of
reference under Section 10 of the Act thereby defeating
the very purpose and object of enacting this provision.
This, in our view, quite clearly brings out the repugnancy
visualised in the opening part of Section 2 of the Act and
such a position could hardly have been contemplated by
the Legislature. In order to remove this repugnancy
Section 33-C(2) must be so construed as to take within
its fold a workman, who was employed during the period
in respect of which he claims relief, even though he is no
13
longer employed at the time of the application. In other
words the term “workman” as used in Section 33-C(2)
includes all persons whose claim, requiring computation
under this sub-section, is in respect of an existing right
arising from his relationship as an industrial workman
with his employer. By adopting this construction alone
can we advance the remedy and suppress the mischief in
accordance with the purpose and object of inserting
Section 33-C in the Act. We are, therefore, inclined to
agree with the view taken by the Madras decisions and
we approve of their approach. According to Shri
Malhotra, in cases where there is no dispute about the
employee’s right which is not denied, he will be entitled
to file a suit. Whether or not the right of suit can be
claimed by the employee, we are not persuaded on the
basis of this argument to accept the construction
canvassed on behalf of the appellant and deny to a
dismissed employee the benefit of speedy remedy under
Section 33-C(2) of the Act.”
[emphasis supplied]
14. It needs to be noted that after so stating, the three-Judge Bench
clarified that its pronouncement was strictly in the context of the Act.
The Court opined that in the case at hand they were only concerned
with the Act and it should not be treated as expression of an opinion
as regards the provisions of the Minimum Wages Act.
15. Be it stated immediately, in the case at hand to appreciate the
applicability of the provisions contained in Section 33C(2) of the Act, it
is necessary to appreciate the benefits available to the employees
under the VRS. The benefits which are available are reproduced
below:-
14
“BENEFITS:
The following benefits are payable to the employees
covered under the scheme.
Terminal benefits:
The following benefits as statutorily due will be paid as
per eligibility.
i. The balance in the P.F. Account payable as per the CPF
regulation.
ii. Cash equivalent of accumulated earned leave as per the
rules of the enterprise.
iii. Gratuity as per the provisions of the Payment of Gratuity
Act or other applicable Rules of the Organisation.
Exgratia Benefits:
i) An employee who is regular or permanent, whose request
for VRS is accepted would be entitled to an Ex-gratia
payment equivalent to One and Half months emoluments
(Pay + DA) last drawn, for each completed year of service
or the monthly emoluments at the time of retirement
multiplied by the balance months of service left before
normal date of retirement whichever is less, subject to a
minimum of Rs.30,000/- (Rupees Thirty Thousand only).
One month/three months notice pay, as per the service
conditions applicable.
If the application of an employee opting for VRS is
accepted instantaneously and payment is arranged by
the management on the same day, the concerned
individual would be entitled for payment of ex-gratia
along with pay for notice-period.
Payment of ex-gratia for services rendered or left over
service(whichever is less), as well as the amount payable
for the Notice period should, however, not exceed the
basic pay + DA that would have been paid to the
employee who has opted for VRS till the date of his
superannuation.
Where the management takes times to take a decision on
the acceptance of an application submitted by the
15
employees for VRS and allows the notice period to lapse
or the employee concerned has drawn full salary during
the notice period served by him, the pay for notice period
would not be admissible as the employee has already
drawn the salary for the notice period.
In addition the Employee and his family would also be
entitled to travel fare of the admissible class to his native
place within the State of Andhra Pradesh, which will be
verified with reference to his L.T.C. file.
ii) For calculation of ex-gratia under the Scheme the
fraction of service viz., 6 months and above will be
treated as one year and service of less than 6 months will
be ignored.
iii) EOL upto a period of one year will be considered for
calculation of ex-gratia benefits, provided the Service
Regulations of the concerned Organizations permit
sanction of such EOL.”
16. We need not refer to the other clauses as they do not really
provide for any kind of benefit but stipulate the various aspects for
implementation of the VRS and the procedure to be adopted. On a
perusal of the VRS, it is clear as day that it did not deal with the
lay-off compensation. As has been laid down in Pritam Singh Gill
(supra), a claim pertaining to non-payment of suspension allowance
could be agitated under the said provision in spite of the employee
being dismissed from service. In A.K. Bindal (supra) the two-Judge
Bench has held that after acceptance of the scheme and availing of
benefits under VRS an employee could not claim higher wages. The
controversy was different. If the VRS had mentioned about the lay-off
16
compensation, needless to say, the claim would have been covered and
the amount received by the workmen would have been deemed to have
been covered the quantum of lay-off compensation. That is not the
factual position. Therefore, the controversy that arose in Pritam
Singh Gill (supra) and the dispute that emanated in A.K. Bindal
(supra) are quite different. Hence, we are disposed to think that there
exists no conflict between Pritam Singh Gill (supra) and A.K. Bindal
(supra). We think it appropriate to say that though there is cessation
of relationship between the employee and the employer in VRS but if it
does not cover the past dues like lay-off compensation, subsistence
allowance, etc., the workman would be entitled to approach the
Labour Court under Section 33C(2) of the Act. If it is specifically
covered, or the language of VRS would show that it covers the claim
under the scheme, no forum will have any jurisdiction.
17. With the aforesaid clarification, we would have directed to list the
matter before the two-Judge Bench. It is not so required. It is
noticeable that the claim relating to lay-off compensation is not
covered in the VRS. The Labour Court, learned single Judge and the
Division Bench have declined to entertain the claim on the ground
that they had no jurisdiction to adjudicate the controversy. We have
already held that claim pertaining to lay-off compensation having not
17
been part of the VRS, the Labour Court has jurisdiction to adjudicate
under Section 33C(2) of the Act. Therefore, we set aside the judgment
and order of the High Court and that of the Labour Court.
18. Resultantly, the appeal is allowed, the impugned judgments and
orders are set aside and the matter is remitted to the Labour Court for
adjudication in accordance with law. The Labour Court shall finalise
the claim preferred under Section 33C(2) of the Act on its own merits
within three months hence. The parties are directed to appear before
th
the Labour Court on 17 October, 2016. There shall be no order as to
costs.
……………………….............J.
(DIPAK MISRA)
………………………………..J.
(V. GOPALA GOWDA)
…………………………………J.
(KURIAN JOSEPH)
New Delhi,
September 30, 2016
18
ITEM NO.1A COURT NO.4 SECTION XV
(For Judgment)
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Civil Appeal No.3053/2008
A.SATYANARAYANA REDDY AND ORS. Appellant(s)
VERSUS
PRESIDING OFFICER, LABOUR COURT & ORS. Respondent(s)
Date : 30/09/2016 This appeal was called on for pronouncement of
Judgment today.
For Appellant(s)
Mr. A. Subba Rao, AOR
For Respondent(s)
Mr. Mohanprasad Meharia, AOR
Mr. G. N. Reddy, AOR
Hon'ble Mr. Justice Dipak Misra pronounced the
judgment of the Bench comprising His Lordship, Hon'ble Mr.
Justice V. Gopala Gowda and Hon'ble Mr. Justice Kurian
Joseph.
The appeal is allowed in terms of the signed
reportable judgment.
(Chetan Kumar)
(H.S. Parasher)
Court Master
Court Master
(Signed reportable judgment is placed on the file)