Insurance employees must take termination disputes to a Central tribunal, not a State Labour Court, Madras High Court rules

Arun Kumar, a Channel Sales Manager employed by Tata AIG, was terminated on 6 November 2019 following allegations of misconduct, including failing to remit customer payments.

He challenged the termination under Section 2-A(1) of the Industrial Disputes Act, 1947, before the Labour Court, Hosur, which upheld the termination.

In his writ petition, the High Court found that no domestic inquiry had been held and awarded him compensation instead of reinstatement.

Arun Kumar and the company both appealed.

1. Whether the Labour Court, Hosur, was competent to entertain an individual industrial dispute arising from employment with an insurance company under Section 2-A(1) of the Industrial Disputes Act, 1947.

2. Whether the orders of the Labour Court and the Single Judge should stand in light of the jurisdictional bar under Section 4 of the Industrial Disputes (Banking and Insurance Companies) Act, 1949.

The Court considered Section 2-A(1) of the Industrial Disputes Act, 1947, under which an individual workman may raise an industrial dispute concerning specified employment matters, and Section 4 of the Industrial Disputes (Banking and Insurance Companies) Act, 1949, which the Court treated as barring State Government references of industrial disputes arising in the banking and insurance sectors.

It held that this bar also applied to the individual dispute in this case and that the employee’s proper forum was the Central Government Industrial Tribunal.

Although the Labour Court had considered whether Arun Kumar was a workman and had ruled on the termination dispute, the Division Bench held that the threshold issue was the Labour Court’s competence to hear an insurance-sector dispute.

Applying Section 4 of the 1949 Act, the Court found that the jurisdictional bar applied to this individual dispute as well.

It therefore did not decide the appeals on the merits of the termination or the compensation award.

It set aside both the Single Judge’s order and the Labour Court’s award, leaving Arun Kumar free to approach the appropriate forum, identified as the Central Government Industrial Tribunal.

Any delay attributable to the proceedings before the Labour Court and the High Court was not to prejudice either party.

The writ appeals were disposed of without costs.