Summary: The October 2024 Labour & Employment Legal Update outlines recent High Court decisions on significant labour law cases across India. In a Bombay High Court case, IIT Bombay was held responsible for paying gratuity to contract workers engaged through multiple contractors due to the absence of a gratuity clause in their contracts. The Guwahati High Court ruled that contract workers without an employer-employee relationship cannot claim reinstatement, referencing the ONGC case where contract labourers were denied regularisation. The Madras High Court upheld that contractual nurses under the National Rural Health Mission (NRHM) are entitled to maternity benefits as per the Maternity Benefit Act, superseding contractual limitations. In a Karnataka High Court decision, it was determined that parallel prosecutions under the Indian Penal Code (IPC) and Factories Act for the same incident of workplace fatality are impermissible. Finally, the Madhya Pradesh High Court confirmed that a Labour Court can include a party not initially part of a dispute if they are a necessary party for a complete resolution. These rulings clarify employer responsibilities, workers’ rights, and procedural powers under various labour laws in India.
Introduction:
The Legal Update (Labour & Employment) – October 2024 covers latest judicial decisions pronounced by various High Courts under Labour Laws. Judicial decisions are categorised Act wise.
The Contract Labour (Regulation and Abolition) Act, 1970
1. Principle employer is liable to pay gratuity in respect of contract workers, who are engaged through multiple contractors, in absence of specific clause for payment of gratuity in the contract: The Bombay High Court.
Case Title: Indian Institute of Technology, Bombay V. Tanaji Babaji Lad & Ors [W.P No. 12746 of 2024; dt:4 October 2024]
The Indian Institute of Technology, Bombay (“IIT, Bombay”) filed the present writ petition challenging the orders passed by the Controlling Authority under the payment of Gratuity Act, 1972 (in short “Gratuity Act”)
Brief facts:
The petitioner, IIT Bombay, is a premier research education institute in technology and engineering and employed regular staff for conducting study and academic programmes. Petitioner for execution of various projects engaged skilled, semi-skilled and un-skilled workers through contractors. The respondents filed an application before the Controlling Authority (“Authority”) seeking gratuity from the petitioner. The petitioner contended before the Authority that non-existence of employer-employee relationship between the petitioner and the contract workers, further petitioner contended that as per the work order contractor is liable to pay the gratuity. The Authority passed an order holding that petitioner is liable to pay the gratuity to the respondents along with the interest of 10% per annum from the date of retirement to till the date of actual payment, which was upheld by the Appellate Authority, resulting in the present writ petition.
Petitioner relied upon the decision of Bombay High Court in Cummins (I) Ltd, V, Industrial Cleaning services and others[1] wherein it held that in case of workman of a contractor, the responsibility of payment of gratuity is of the contractor and not of the principal employer. The respondents contended that they were not employed through singular contractor. They were employed for considerable period of time through the multiple contractors hence the ratio laid down in Cummins case (Supra) does not applicable to the present facts.
Decision:
The Bombay High Court held that contract workers had been working with the petitioner through various contractors and salaries were routed through them. There is no specific condition for payment of gratuity in the agreement between the petitioner and contractors, however, contractor is liable to discharge provident fund and ESI in respect of the contract workers. For the purpose of payment of gratuity respondents are to be treated as employees of the petitioner and upheld the order passed by the Appellate Authority under Gratuity Act, directed the petitioner to pay the gratuity within a period of two months.
2. In absence of employer-employee relationship contract workers cannot claim reinstatement and regularisation of service: The Guwahati High Court
Case Title: Jatin Rajkonwar and others V. Union of India and others [WP (C ) No. 3871 of 2020; dt. 4 October 2024]
The petitioner has challenged the award passed by the Central Government Industrial Tribunal (in short “CGIT”) wherein CGIT has dismissed the claim of the petitioner for reinstatement and regularisation of service on the ground that there is no employer-employee relationship between the petitioner and respondent.
Brief facts:
The factual matrix of this case is petitioners were engaged directly as a contract labour by the respondent 2&3, i.e ONGC during 1985-1986 and later through a contractor, the petitioners were disengaged by ONGC in the year 1995/1996. The contention of the petitioner is that they were engaged directly by the respondent in the year 1985 till their disengagement, their services should be reinstated and regularised with the respondent. The respondent did not consider regularisation of service, petitioner approached the Guwahati High Court (“Guwahati HC”), which directed the Assistance Labour Commissioner to submit status report. Accordingly, the report was submitted to the Guwahati HC. The High Court vide its order dated August 24 1998 directed the petitioners to approach the respondents to examine the matter on correct factual position made in the official records. The respondent, ONGC denied the contention of the petitioners that they were directly appointed as contract labour by ONGC. The Guwahati HC further held that in case the petitioners still felt aggrieved may approach the Labour Court for appropriate relief. The petitioners approached the Central Labour Commissioner and raised an industrial dispute, which was refereed to State Industrial Tribunal, wherein the reference was partly allowed in favour of 3 out of 22 workmen. Aggrieved by the order, both the parties filed a writ petition before Guwahati HC, since the relevant evidence was ignored and inference was drawn on the basis of inconclusive and inadequate material. The case was remanded back to the Tribunal for fresh consideration. The case was thereafter remanded to CGIT, Guwahati, wherein CGIT dismissed the petitioners claim. Aggrieved petitioners filed the present writ petition before the Guwahati HC.
Decision:
The Guwahati HC observed that no appointment letters or pay slips were issued by the respondents. Further, Guwahati HC relied on test laid down in Balwant Rai Saluja and Another V. AIR India Limited and others[2] by the Supreme Court, wherein it has indicated six relevant factors to be taken into consideration to establish employer-employee relation, Viz:
1. who appoint the workers;
2. who pays the salary/remuneration;
3. who has authority to dismiss;
4. who can take disciplinary action;
5. whether there is continuity of service; and
6. extent of control and supervision
The Guwahati HC held that petitioners unable to establishment that there is an employer-employee relationship between the petitioners and respondent, ONGC in terms of Balwant Rai Saluja (Supra) and dismissed the petition.
The Maternity Benefit Act, 1961
3. Nurses employed on contractual basis by the state are entitled to Maternity benefit and is not coterminous with employment tenure: The Madras High Court.
Case Title: MRB Nurses Empowerment Association V. Principal Secretary & Ors [W.P No. 27556 of 2018, dt. 18th October 2024]
The Petitioner filed the present petition under Article 226 of the Constitution of India seeking issuance of a writ of mandamus directing the respondents to extend maternity benefits including 270[3] days of paid maternity leave in accordance with the provisions of Maternity Benefit Act, 1961 to all staff nurses working under the National Rural Health Mission (in short “NHRM”) scheme in the State of Tamil Nadu with immediate effect.
Brief facts:
Under the NRHM scheme, the Central Government provides funds to the State Government for the appointment of Doctors, Nurses, Pharmacists and other health care professionals. The State Government recruits the health care professionals on its rolls and utilises the funds allocated by the Central Govt. to pay them salary. The State of Tamil Nadu had recruited more than 11,000 staff nurses.
Petitioners contended that they have been working for more than two years and therefore eligible for maternity leave of 270 days as per the Maternity Benefit Act, 1961 (in Short “MB Act”). However, Sate Government denied the maternity benefit to nurses contending that they are contractual employees.
Decision:
The Madras High Court relied upon the latest Supreme Court decision in Dr. Kavita Yadav V. Secretary, Ministry of Health and Family Welfare Department and others[4] wherein it held that women employees who fulfilled the criteria laid down u/s 5(2) of the MB Act would be eligible to maternity benefits even if such benefits extend the duration of contract. Further, the Madras High Court held that by virtue of sec 27, the provisions of the MB Act will prevail over contractual conditions and denying maternity benefit to contractual employees is untenable.
The Factories Act, 1948
4. Parallel or simultaneous prosecution u/s. 304A IPC alongside section 92 of the Factories Act, 1948 for same incident not permissible: The Karnataka High Court (Kalaburagi Bench)
Case Title: G.V. Prasad & Anr. v. The State & Anr. [Crl. P. No. 2006 62 of 2024; dt. 22 October 2024]
The substantial question of law before the Karnataka High Court in this case is “whether the initiation of prosecution under Section 304-A of IPC is legally permissible, while prosecution for the same offence punishable under Section 92 of the Factories Act, 1948, is launched and as to whether parallel or simultaneous prosecution is legally impermissible”.
Brief Facts:
The above case came to be registered against petitioners, who are occupier and the manager of one ‘Krishnaprasad Rice Mill Industries’ (“Rice Mill”). One of the employee of the said Rice Mill died due to electrocution while pumping water using a ½ H.P. electric motor. It is alleged that the electric motor was old and the manager of the Rice Mill without taking any precaution and providing safety measures, instructed the deceased to lift water from the tank by using the said electric motor. The police on completion of investigation filed charge-sheet against petitioners for the offence punishable under Section 304-A read with Section 34 of the Indian penal Code (“IPC”).
A separate complaint under Section 200 of Cr.P.C. is filed by the State represented by the Assistant Director of Factories, Raichur against both the petitioners, alleging violation of the provisions of the Factories Act, 1948 and Karnataka Factories Rules, 1969, (Collectively referred as “Factories Act”) wherein the said violations are made punishable under Section 92 of the Factories Act.
Decision:
The Karnataka High Court held that Section 304-A of IPC against the petitioners while prosecution for the same offence punishable u/s 92 of the Factories Act is not permissible, as there cannot be a parallel or simultaneous prosecution in respect of the very same incident, in view of the punishment provided u/s 92 of the Factories Act.
The Industrial Disputes Act, 1947
5. Labour Court can issue notice to a party which may not party to reference held by the Madhya Pradesh High Court
Case Title: Manjeet Global Private Limited V. State of Madhya Pradesh [W.P No. 2138 of 2024; dt. 25 Oct 2024]
The appellants filed the present writ petition challenging the orders passed by the single judge where the single judge upheld the order of the Labour Court in impleading the appellants as a party to the adjudication.
Brief Facts:
Appellant contending that impleding them also part of the reference is not permissible since the appellants were not party to the earlier proceedings and as the petitioners/appellants purchased the respondent No.2 unit and the appellant came into picture. Since the labours of respondent No.3 unit were never employees of the appellants/industry, therefore, no liability can be fastened regarding payment of compensation to them. Labour Court passed the orders relying on the decision of Supreme Court in Globe Ground India Employees Union V. Lufthansa German Airlines[5] wherein it held that in the adjudication proceedings for impleadment of a party who is not a party to the proceedings, what is required to be considered is whether such party which is sought to be impleaded is either necessary or proper party to decide the lis. It is fairly well settled that necessary party, is one without whom no order can be made effectively. Similarly, a proper party is the one in whose absence an effective order can be made but whose presence is necessary for complete and final decision on the question involved in the proceedings.
Decision:
The Madhya Pradesh High Court held that it is always appropriate to implead the subsequent purchaser as party since he had already taken over the assets and liabilities of the company, therefore, the appellants cannot raise a plea that since they came subsequently into picture, no relief can be claimed against them. Learned Single Judge has rightly come to the conclusion that the Labour Court is possessed with the power to issue notice to a party which may not be a party to the reference. In any case the right of the parties would be decided in reference on merits after recording the evidence and taking into consideration the material available on record. With the above observations petition is dismissed,
[1] 2017(3) Mh.L.J. 294
[2] (2014) 9 SCC 407
[3] Government of Tamil Nadu by GO (Ms)No. 154 dt. 05 December 2017 enhanced the Maternity leave for Govt. employees and teachers from 180 days to 270 days.
[4] (2024) 1 SCC 421
[5] (2019) 15 SCC 273
Author Bio
