Prospective Withdrawal of a Long-Standing Increment Benefit Is a “Change in Service Conditions” Requiring Section 9-A Notice

Case: Brihanmumbai Municipal Corporation v. The Municipal Union (with Writ Petition (ST.) No.41402 of 2025)
Court: Bombay High Court (Civil Appellate Jurisdiction)
Coram: Amit Borkar, J.
Date: 12-02-2026

1. Introduction

These connected writ petitions arose from an interlocutory order of the Industrial Court in Complaint (ULP) No. 282 of 2025, where the employees’ unions challenged the Brihanmumbai Municipal Corporation’s circular dated 05 September 2025 discontinuing (prospectively) the practice of granting one or two additional wage increments to employees who secured Diplomas in LSG/LSGD and LGS.

The Corporation contended that the increment benefit was a purely voluntary policy incentive, capable of unilateral withdrawal, and that the Industrial Court had effectively granted final relief at an interim stage. The unions argued that the benefit had been uniformly granted for decades under resolutions/circulars, had crystallized into a “customary concession” and service condition, and therefore could not be withdrawn without a statutory notice of change under Section 9-A of the Industrial Disputes Act, 1947 read with the Fourth Schedule.

2. Summary of the Judgment

The Bombay High Court dismissed the Corporation’s writ petition and upheld the Industrial Court’s interim order dated 11 December 2025 that: (i) stayed operation of the circular dated 05 September 2025; and (ii) directed continuance of the prevailing practice of granting additional increments to eligible employees (including those acquiring diplomas even after 29 August 2000), pending final adjudication.

The Court held, on a prima facie assessment, that:

• The increment benefit, consistently granted through formal resolutions/circulars over decades, was capable of acquiring the character of a “customary concession” and thus a service condition.
• Even if the circular operated prospectively and protected already-granted increments, discontinuing the benefit for future diploma-holders still altered the service regime, attracting Section 9-A.
• Staying the circular and preserving status quo was an appropriate interim measure; it did not amount to granting final relief.

The High Court expressly clarified that its observations were confined to a prima facie review of the interim order and were not final findings on merits; the Industrial Court must decide the complaint independently.

3. Analysis

3.1 Precedents Cited

S.G. Chemicals and Dyes Trading Employees' Union v. S.G. Chemicals and Dyes Trading Ltd.

The unions relied on this decision for the proposition that statutory obligations in industrial law operate independently of their express incorporation into individual employment contracts. The High Court’s approach aligns with that principle: once the field is governed by a mandatory statutory procedure (here, Section 9-A), an employer cannot justify non-compliance by labeling a benefit as “policy” or “voluntary.” The practical influence of this authority in the present case is the Court’s emphasis on the statutory character of the restraint—if the change falls within the Fourth Schedule, notice is a condition precedent.

Paradeep Phosphates Ltd. v. State of Orissa and Others

This precedent was cited to underline that issuance of notice of change under Section 9-A is mandatory and cannot be diluted where the proposed action affects matters specified in the Fourth Schedule. The High Court’s reasoning reflects this “mandatory compliance” frame: it treats Section 9-A not as a procedural technicality but as a substantive safeguard ensuring time and opportunity for workmen to respond (including through conciliation) before implementation.

Annamalai University case

Though not elaborated in detail in the judgment text, it was invoked for a general administrative-law proposition: when a statute prescribes a particular procedure, it must be strictly followed. The High Court’s analysis of Section 9-A is consistent with this principle—where the legislature has required notice and a 21-day waiting period for enumerated changes, unilateral implementation is prima facie invalid.

3.2 Legal Reasoning

(A) The statutory “notice of change” architecture

The judgment carefully grounds the controversy in Section 9-A of the Industrial Disputes Act, 1947 and the Fourth Schedule. The Court highlights the design of Section 9-A:

• Trigger: an employer “proposes to effect any change” in service conditions in respect of any matter in the Fourth Schedule.
• Precondition: notice in the prescribed manner to workmen likely to be affected.
• Cooling-off period: change cannot be effected within 21 days of the notice.
• Purpose: to allow consideration, objections, and conciliation before implementation.

The Court then emphasizes Item 8 of the Fourth Schedule—“withdrawal of any customary concession or privilege or change in usage”—as the most directly relevant head. It also notes Items 5 and 9 as part of the broader legislative intent to curb unilateral alteration of workplace norms (subject to standing orders).

(B) “Customary concession” and crystallization of a policy into a service condition

A key doctrinal move is the Court’s treatment of long-standing employer practices. The Corporation argued the benefit was voluntary and discretionary; employees/union were not consulted in its formulation; therefore withdrawal should be permissible without Section 9-A.

The Court does not accept that “policy origin” is dispositive. Instead, it assesses:

• the benefit’s traceable origins (1967 onwards),
• repeated reaffirmation and modification through formal resolutions/circulars (1968, 1975, 1984, 2009), and
• uniform and consistent implementation over a long duration.

On this footing, the Court holds that a repeatedly sanctioned, formally communicated, consistently implemented benefit can acquire “sanctity” within the establishment and become a “customary concession” (Item 8), i.e., a recognized service condition for Section 9-A purposes.

(C) Prospective withdrawal still “changes” service conditions

The Corporation’s principal defence was that the 05 September 2025 circular was prospective and protected increments already granted, hence it did not reduce existing wages and did not create an impermissible wage structure.

The Court’s answer is significant: Section 9-A is not confined to immediate wage cuts. The phrase “change in conditions of service” is treated as broad. If employees had, by consistent practice, an entitlement-like expectation that acquiring specified diplomas would yield additional increments, then closing that channel prospectively:

• alters the “service regime” governing advancement in pay upon qualification, and
• places similarly situated employees (future diploma-holders) in a materially different position solely due to the unilateral change.

Therefore, the prospective character does not take the circular outside Section 9-A; the relevant question is the nature of the alteration and whether it concerns a Fourth Schedule matter (here, Item 8).

(D) Interim relief: status quo is not “final relief”

The High Court rejects the argument that the Industrial Court granted final relief at the interim stage. The judgment distinguishes between:

• final relief (a definitive adjudication declaring rights/invalidating the circular), and
• protective interim relief (keeping the circular in abeyance and preserving the pre-existing arrangement pending adjudication).

The Court reasons that, if the circular operated during pendency, employees acquiring diplomas in that period would be deprived; later restoration may be complex. Interim protection prevents the complaint from becoming practically infructuous.

3.3 Impact

The judgment reinforces three practical propositions likely to influence future industrial disputes, particularly in public/municipal employment:

• Long-standing benefits can become “customary concessions”: even if a benefit began as a policy incentive, decades of uniform, formalized implementation can elevate it into a service condition protected by Section 9-A.
• Prospective discontinuance can still trigger Section 9-A: employers cannot avoid notice obligations by “grandfathering” existing recipients while withdrawing the benefit for future earners; the statutory focus is on alteration of the service regime for affected workmen.
• Interim orders preserving status quo are more defensible where a statutory precondition is prima facie breached: courts may more readily stay unilateral changes when the alleged defect is non-compliance with a mandatory procedure (notice + waiting period).

4. Complex Concepts Simplified

5. Conclusion

The Bombay High Court’s decision is an important reaffirmation of Section 9-A’s protective function. It holds that an employer’s long-standing, formally implemented increment-linked qualification benefit can prima facie crystallize into a “customary concession” under Item 8 of the Fourth Schedule. Consequently, even a prospective withdrawal—despite protecting already-earned increments—amounts to a “change in conditions of service” requiring a statutory notice of change and observance of the waiting period.

Equally, the judgment clarifies the interim-remedy boundary: staying such a circular and directing continuance of the prior practice pending adjudication is preservation of status quo, not impermissible final relief. The case therefore strengthens procedural discipline in industrial relations and signals that unilateral restructuring of entrenched benefits—particularly in large public establishments—will be closely tested against Section 9-A compliance.