Territorial jurisdiction under the Shops Act lies at the employee’s situs of employment.

Sukesh Kumar was appointed by Panasonic India Pvt. Ltd. as an Area Sales Manager–CED, in the grade of Assistant Manager, with effect from 03.07.2012 and was posted at Jamshedpur under the employer’s Ranchi establishment.

His stated duties included procuring purchase orders, raising bills, collecting payments and forwarding the relevant material to the Ranchi branch.

After allegations of unauthorised absence and failure to resume duty despite show-cause notices, his services were terminated on 18.03.2014.

No disciplinary enquiry was conducted, and the employer did not adduce oral or documentary evidence before the Labour Court.

The employee filed a complaint under Section 26(2) of the Bihar Shops and Establishments Act, 1953, as applicable in Jharkhand.

The Labour Court, Jamshedpur rejected the employer’s objection regarding territorial jurisdiction on 23.11.2016 and, by order dated 20.04.2019, set aside the termination and directed reinstatement with continuity of service and 25% back wages, with 6% interest if payment was delayed beyond two months.

Whether the complaint under Section 26(2) of the Bihar/Jharkhand Shops and Establishments Act was not maintainable because the employee was a “sales promotion employee” under Section 2(d) of the Sales Promotion Employees (Conditions of Service) Act, 1976.

Whether the Labour Court at Jamshedpur possessed territorial jurisdiction when the employer’s registered establishment was situated at Ranchi and there was no separate office at Jamshedpur.

Whether the employee’s designation as “Area Sales Manager” placed him within the managerial or supervisory exclusion under Section 4(2), read with Schedule I, of the Bihar Shops and Establishments Act.

Whether the termination could be sustained on the ground of loss of confidence or unauthorised absence without a disciplinary enquiry, and whether the employee was entitled to full or only partial back wages.

The Court applied Section 26(2) of the Bihar Shops and Establishments Act, 1953, which provides a remedy against termination for employees covered by the Act, subject to the statutory exclusions under Section 4(2) and Schedule I.

The nature of an employee’s work, rather than the designation assigned by the employer, determines whether the employee occupies a managerial, supervisory or sales-promotion role.

Section 2(d) of the Sales Promotion Employees (Conditions of Service) Act, 1976 and Section 6(2) thereof govern employees who factually fall within the statutory definition of sales promotion employees; that status is a question of fact.

Territorial jurisdiction is determined by Section 20 of the Code of Civil Procedure where the special statute contains no specific provision, and the situs of employment or place where part of the cause of action arose may confer jurisdiction.

A termination founded on misconduct or unauthorised absence ordinarily requires a disciplinary enquiry; where no enquiry is held, the employer may prove the misconduct before the adjudicating court, but failure to lead evidence leaves the termination unsupported.

The doctrine of bona fide loss of confidence may justify denial of reinstatement in appropriate cases, but it must be established on the facts and cannot be invoked merely as an afterthought.

Back wages are discretionary; gainful employment includes self-employment or income from a partnership, and the employee’s entitlement depends on the evidence regarding employment and income.

The employer had not pleaded before the Labour Court that Sukesh was governed by the Sales Promotion Employees Act or that he was excluded from the Shops and Establishments Act.

Since that contention involved factual determination of his actual duties, it could not be raised for the first time in writ jurisdiction.

His duties of procuring orders, billing and collecting payments did not, by themselves, establish that he was a statutory sales promotion employee.

Similarly, the designation “Area Sales Manager” was not conclusive of managerial status.

The employer neither pleaded nor proved that Sukesh exercised managerial or supervisory authority, and the registration record showed that the Ranchi establishment employed four persons.

On territorial jurisdiction, although the establishment was registered at Ranchi, Sukesh had been posted and worked at Jamshedpur, and the show-cause and termination communications were served there.

Applying Section 20(c) CPC and the situs-of-employment principle, the Court held that a part of the cause of action arose at Jamshedpur.

The loss-of-confidence argument was rejected because the termination letter relied on absence and failure to join duty, not loss of confidence, and the employer neither conducted an enquiry nor led evidence to prove the alleged misconduct.

However, full back wages were declined because Sukesh admitted that he was a partner in his brother’s firm and had filed income-tax returns, without disclosing the income derived therefrom.

In these circumstances, the Labour Court’s award of 25% back wages was considered a reasonable exercise of discretion.

It held that the complaint under Section 26(2) of the Bihar/Jharkhand Shops and Establishments Act was maintainable; the Jamshedpur Labour Court had territorial jurisdiction; and the employee’s designation and unproved managerial or sales-promotion status did not exclude him from the Act.

The termination was held illegal because it was imposed for alleged unauthorised absence without a disciplinary enquiry and without the employer proving the charge before the Labour Court.

The direction for reinstatement with continuity of service and 25% back wages, subject to 6% interest for delayed payment, was upheld.

The employee’s claim for 100% back wages was rejected.