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  • S. 33C(2) of the Industrial Disputes Act (hereinafter referred to as the Act)
  • Indian Partnership Act, 1932.
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  • S. 33C(2) of the Industrial Disputes Act (hereinafter referred to as the Act)
  • Indian Partnership Act, 1932.
Smart Summary

Judgment Summary — Sachidanand Acharya, J.

Factual and Procedural Background

The petitioner is a partnership firm (registered under the Indian Partnership Act, 1932) which employed Sridhar Sahu (opposite party 2) as a salesman since 1956. The petitioner alleges that opposite party 2 had a pattern of unauthorized absences: 152 working days in 1972 and 141 working days in 1973; he was absent for most of October and November 1973 and all of December 1973. Despite warnings and requests, the absences continued. In January 1974 opposite party 2 informed the petitioner that he did not wish to continue employment and claimed dues plus ex gratia payments. Offers made by the petitioner (including full pay for November 1973 and a month's pay as ex gratia, and later a month's pay plus Rs. 500) were refused; opposite party 2 demanded larger sums and ultimately petitioned the Assistant Labour Commissioner, Cuttack, claiming Rs. 5,000. The Assistant Labour Commissioner dismissed that petition. On 19 October 1974 opposite party 2 filed an application before the Labour Court purportedly under S. 33C(2) of the Industrial Disputes Act alleging termination of service by the petitioner on 5 February 1974 and claiming retrenchment benefits, gratuity, pay in lieu of notice, leave salary and other dues. The Labour Court, after hearing, by order dated 11 March 1975 partly allowed the claim and held that opposite party 2 was entitled to Rs. 1,330 as retrenchment allowance under S. 25F of the Act. The petitioner challenged that Labour Court order by this writ petition, asserting that the Labour Court lacked jurisdiction to decide the contested question of termination/retrenchment and that the claim was fictitious and not maintainable.

Legal Issues Presented

  1. Whether a Labour Court adjudicating an application under S. 33C(2) of the Industrial Disputes Act has jurisdiction to decide contested and disputed facts as to whether an employee's services were terminated or whether he was retrenched, when those matters are, according to the petitioner, within the exclusive competence of an Industrial Tribunal on a reference.
  2. Whether opposite party 2's services were terminated (and, if so, whether such termination was justified), matters which the Labour Court treated as necessary to decide in order to compute retrenchment benefits under S. 33C(2).
  3. The narrower procedural issue formulated by the Labour Court for evidence: (1) If the services of the petitioner were terminated by the opposite party? and (2) If he is entitled to retrenchment benefits and any other legal dues, and if so, to what extent? (These are recorded as the issues framed by the Presiding Officer of the Labour Court.)

Arguments of the Parties

Petitioner's (Appellant's) Arguments — as represented by Sri Nanda

  • The Labour Court, in proceedings under S. 33C(2), did not have jurisdiction to decide the disputed factual question whether the services of opposite party 2 were terminated or whether he was retrenched; such matters fall exclusively within the competence of the Industrial Tribunal on a reference under the Act.
  • The petition before the Labour Court was not maintainable because the petitioner maintained that opposite party 2's service was never terminated and that his claim to retrenchment benefits was absurd and frivolous.

Opposite Party 2's (Respondent's) Arguments — as represented by Sri Misra

  • The Labour Court's jurisdiction under S. 33C(2) to compute benefits is not ousted merely because the employer disputes the underlying facts; if factual questions are incidental to the computation the Labour Court may decide them.
  • Counsel relied on authorities (including Central Bank of India v. P.S. Rajagopalan and Payment of Wages Inspector, Ujjain v. Barnagar Electric Supply) to submit that the Labour Court could inquire into whether the workman had a right to receive the benefit even when the employer denied liability.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Central Bank of India Ltd. v. P.S. Rajagopalan, A.I.R. 1964 S.C. 743 Workman dismissed cannot obtain relief under S. 33C(2) by simply alleging wrongful dismissal and asking computation on the footing that he continued in service; S. 33C(2) is not a forum to treat a wrongful dismissal as if it had not occurred. The Court cited this authority to support the proposition that a Labour Court cannot effectively override or disregard a dismissal by treating the workman as continuing in employment when that principal matter should be adjudicated by an Industrial Tribunal.
Central Inland Water Transport Corporation Ltd. v. Its Workmen, 1974 — II L.L.N. 78 Proceedings under S. 33C(2) are generally execution-like: the Labour Court computes money due or benefits capable of monetary computation following on an existing right which is previously adjudged or otherwise duly provided for. The Court relied on this to stress that the Labour Court's role is limited to computation of an existing right and that it must be circumspect before investigating disputes about dismissal or retrenchment that are in substance principal matters for the Industrial Tribunal.
East India Coal Company Ltd. v. Rameshwar, A.I.R. 1968 S.C. 218 Reiterated that S. 33C(2) proceedings are analogous to execution proceedings and that the right sought to be computed must be an existing one, already adjudicated or provided for. Used by the Court to reinforce that computation under S. 33C(2) presupposes an existing right and cannot serve as a forum for primary adjudication of whether that right ever arose.
Uttar Pradesh Electric Supply Co. Ltd. v. R.K. Sukla, (1969) 2 SCC 400 : A.I.R. 1970 S.C. 237 Where the question whether retrenchment occurred is exclusively for the Industrial Tribunal, S. 33C(2) cannot be read to allow a Labour Court to decide whether there has been retrenchment; the Labour Court's power is to compute compensation only on the footing that retrenchment is conceded or where only computation questions arise. The Court followed this decision as establishing the limit of Labour Court jurisdiction and used it to conclude that the Labour Court in the present case had no authority to decide whether retrenchment or termination occurred when that was the principal contested matter.
Payment of Wages Inspector, Ujjain v. Barnagar Electric Supply & Industrial Co. Ltd., A.I.R. 1969 S.C. 590 Authority relied on by respondent counsel to suggest that the Labour Court may inquire into whether a workman had a right to a benefit even when the employer disputes liability. The Court noted this decision had followed Central Bank of India but, after comparing authorities, preferred the rulings in Uttar Pradesh Electric Supply Co. and Central Inland Water Transport Corporation as determinative of the legal position in the present case.

Court's Reasoning and Analysis

The Court proceeded in the following analytical steps (as recorded in the opinion):

  1. Identification of the central factual and procedural posture: opposite party 2 claimed termination and statutory benefits; the petitioner persistently denied termination and contended the claim was fictitious. The Labour Court framed two issues and took evidence on whether (a) the services were terminated and (b) if retrenchment benefits were due and in what amount.
  2. Explanation of the nature of proceedings under S. 33C(2): relying on precedent, the Court emphasized that proceedings under S. 33C(2) are generally execution-like — the Labour Court's function is to calculate or compute money due on the basis of an existing right which must already have been adjudicated or otherwise provided for (for example under an award, settlement, or a statutory scheme).
  3. Distinction between principal adjudication and incidental computation: the Court noted that where the existence of the right itself (for example, whether there was a retrenchment or termination) is the principal matter in dispute, that principal question must be adjudicated by the Industrial Tribunal on a reference. The Labour Court's role is limited to computation when the underlying right is conceded or clearly established, or where denial can be resolved by a brief preliminary inquiry without elaborate investigation.
  4. Application to the facts: in this case the computation of benefits depended upon resolution of the principal questions whether opposite party 2's services were terminated and whether any retrenchment/termination was justified. Those questions were seriously contested, required elaborate inquiry, and constituted the foundation of the claim rather than a mere incidental matter.
  5. Conclusion as to jurisdiction: because the Labour Court had conducted an elaborate inquiry into the basic issues and assessed retrenchment compensation after adjudicating those fundamental matters, it had exceeded its jurisdiction and trespassed upon the powers of the Industrial Tribunal. Consequently, the Labour Court's order was non est and without jurisdiction.
  6. Relief: the Court held that a writ of certiorari should issue to quash the Labour Court's impugned order. The writ petition was allowed and, because opposite party 2 was a low paid employee, the petitioner was not awarded costs against him.

Holding and Implications

Core Ruling: The writ application was allowed and the Labour Court's order of 11 March 1975 (which had partly allowed opposite party 2's claim and awarded Rs. 1,330 as retrenchment allowance) was quashed because the Labour Court lacked jurisdiction to decide the principal contested questions of termination/retrenchment in proceedings under S. 33C(2).

Consequences and immediate effects:

  • The impugned Labour Court order is treated as without jurisdiction and is quashed by certiorari.
  • The Labour Court's exercise of adjudicatory power over whether termination/retrenchment occurred — matters which the Court held are to be first adjudicated by an Industrial Tribunal on reference — was disapproved.
  • The petitioner was not awarded costs against opposite party 2 because opposite party 2 was a low-paid employee.

The opinion does not purport to lay down a novel principle beyond applying and following earlier Supreme Court authority; it confines itself to affirming the limits of a Labour Court's jurisdiction under S. 33C(2) and the proper role of the Industrial Tribunal in adjudicating principal disputes about termination/retrenchment.

    Shyamsundar Sahu And Company v. Labour Court, Orissa, And Another

    Sachidanand Acharya, J.:— This petition is directed against the order of the Labour Court, dated 31 March, 1975, passed on an application under S. 33C(2) of the Industrial Disputes Act (hereinafter referred to as the Act) filed by Sridhar Sahu, opposite party 2 (hereinafter referred to as opposite party 2) in that Court. The petitioner is a partnership firm registered under the Indian Partnership Act, 1932. The opposite party 2 was appointed in the petitioner's firm as a salesman since the year 1956.

    2. According to the petitioner, opposite party 2 was in the habit of remaining absent unauthorizedly. In the years 1972 and 1973 the opposite party 2 remained absent respectively for 152 and 141 working days. All warnings and requests to opposite party 2 for rectifying himself in that direction proved futile. Opposite party 2 unauthorizedly remained absent for most parts of the months of October and November, and for whole of December 1973. In January 1974 he came to the petitioner's establishment and expressed his desire not to continue in the employment of the petitioner and wanted his dues with some ex gratia payment. He was offered his full pay for the month of November 1973, even though he was absent for twenty days in that month, and was also offered a month's pay as ex gratia. Opposite party 2 refused to accept the same and demanded Rs. 3,000 to which the petitioner's management did not agree. Opposite party 2 on various dates and occasions appeared before the petitioner and demanded fantastically heavy amounts on the threat that if such amounts were not paid he would carry the matter to Court. The petitioner at one stage agreed to pay him a month's pay and Rs. 500 as ex gratia payment, but opposite party 2 did not agree to accept that amount. Thereafter opposite party 2 made a petition before the Assistant Labour Commissioner, Cuttack, demanding Rs. 5,000 as his dues from the petitioner. The petitioner refuted the claims of opposite party 2 before the Assistant Labour Commissioner as illegal, fictitious and not maintainable in law, and asserted that the petitioner never removed opposite party 2 from service, and maintained that it was opposite party 2 who himself remained unauthorizedly absent from his duties and requested the Assistant Commissioner to direct opposite party 2 to report to his duties within a reasonable time, failing which he would be deemed to have lost his lien in service under the petitioner. A copy of the petitioner's statement filed before the Assistant Labour Commissioner was sent to opposite party 2 but he never chose to join his employment in the petitioner's firm. The application of opposite party 2 before the Assistant Labour Commissioner was dismissed, and thereafter he on 19 October, 1974, made an application before the Labour Court purporting it to be under S. 33C(2) of the Act alleging therein termination of his service by the petitioner and on that basis claiming benefits as mentioned in the statement attached thereto. The said application of opposite party 2 was registered as Industrial Dispute Miscellaneous Case No. 109 of 1974, before the Labour Court. The petitioner opposed that petition, inter alia, on the ground that it was not maintainable in law and the amount claimed was fictitious. It was also asserted that opposite party 2's service was never terminated and so his claim to retrenchment benefits was absurd and frivolous. The Labour Court proceeded to decide the dispute and contested fact about the termination of service of opposite party 2, and by its order, dated 11 March, 1975, it partly allowed opposite party 2's claim holding that he is entitled to get Rs. 1,330 from the petitioner as retrenchment allowance under S. 25F of the Act. The petitioner by this writ application has challenged the abovementioned order of the Labour Court as illegal and without jurisdiction.

    3. Sri Nanda, the learned counsel for the petitioner, contends that in the proceeding initiated on the petition under S. 33C(2) of the Act filed by opposite party 2 the Labour Court did not have the jurisdiction to decide the disputed and contested fact as to whether the services of opposite party 2 were terminated or if he was retrenched from service by the petitioner, as such matters are to be adjudicated exclusively by the Industrial Tribunal on a reference as contemplated under the Act.

    On the other hand, Sri Misra, the learned counsel for opposite party 2, contends that the Labour Court's jurisdiction under S. 33C(2) to compute the benefits of opposite party 2 is not ousted merely because his employer disputed the above facts. According to Sri Misra the said facts being incidental to the claim in question the Labour Court in order to ascertain the claim made under S. 33C(2) has to decide the said facts even though disputed by the employer.

    4. In Central Bank of India, Ltd. v. P.S Rajagopalan [A.I.R 1964 S.C 743], it has been pointed out that a workman who is dismissed by his employer would not be entitled to seek relief under S. 33C(2) by merely alleging that his dismissal being wrongful, benefits should be computed on the basis that he had continued in service. In that case it was observed that:

    “His … dismissal may give rise to an industrial dispute which may be appropriately tried, but once it is shown that the employer has dismissed … him, a claim that the dismissal … is unlawful and, therefore, the employee continues to be the workman of the employer and is entitled to the benefits due to him under a pre-existing contract cannot be made under S. 33C(2).”

    In Central Inland Water Transport Corporation, Ltd. v. Its workmen [1974 — II L.L.N 78], their Lordships have observed that (at page 83):

    “12. It is now well-settled that a proceeding under S. 33C(2) is a proceeding, generally, in the nature of an execution proceeding wherein the Labour Court calculates the amount of money due to a workman from his employer, or if the workman is entitled to any benefit which is capable of being computed in terms of money, the Labour Court proceeds to compute the benefit in terms of money. This calculation or computation follows upon an existing right to the money or benefit, in view of its being previously adjudged, or otherwise, duly provided for. In East India Coal Company, Ltd. (by Chief Mining Engineer) v. Rameshwar [A.I.R 1968 S.C 218], it was reiterated that proceedings under S. 33C(2) are analogous to execution proceedings and the Labour Court called upon to compute in terms of money the benefit claimed by workmen is in such cases in the position of an executing Court. It was also reiterated that the right to the benefit which is sought to be computed must be an existing one, that is to say, already adjudicated upon or proof provided for and must arise in the course of and in relation to the relationship between an industrial workman and his employer.

    (Emphasis is ours.)

    By merely making a claim in a loaded form the workman cannot give the Labour Court jurisdiction under S. 33C(2). The workman who has been dismissed would no longer be in the employment of the employer. It may be that an Industrial Tribunal may find on an investigation into the circumstances of the dismissal that the dismissal was unjustified. But when he comes before the Labour Court with his claim for computation of his wages under S. 33C(2) he cannot ask the Labour Court to disregard his dismissal as wrongful and on that basis compute his wages. [Page 85 of 1974 — II L.L.N]

    16. In such cases, a determination as to whether the dismissal was unjustified would be the principal matter for adjudication and computation of wages just consequential upon such adjudication. It would be wrong to consider the principal adjudication as ‘incidental’ to the computation. Moreover, if we assume that the Labour Court had jurisdiction to make the investigation into the circumstances of the dismissal, a very anomalous situation would arise. The Labour Court after holding that the dismissal was wrongful would have no jurisdiction to direct reinstatement under S. 33C(2). And yet if its jurisdiction to compute the benefit is conceded it will be like conceding its authority to pass orders awarding wages as many times as the workman comes before it without being reinstated. Therefore, the Labour Court exercising jurisdiction under S. 33C(2) has got to be circumspect before it undertakes an investigation, reminding itself that any investigation it undertakes is in a real sense incidental to its computation of a benefit under an existing right, which is its principal concern.” [Page 85 of 1974 — II L.L.N]

    In Uttar Pradesh Electric Supply Company. Ltd. v. R.K Sukla [(1969) 2 SCC 400 : A.I.R 1970 S.C 237], it has been held that:

    “Where, however, the right to retrenchment compensation which is the foundation of the claim itself a matter which is exclusively within the competence of the Industrial Tribunal to be adjudicated upon on a reference, it would be straining the language of S. 33C(2) to hold that the question whether there has been retrenchment may be decided by the Labour Court. The power of the Labour Court is to compute the compensation claimed to be payable to the workmen on the footing that there has been retrenchment may be decided by the Labour Court. The power of the Labour Court is to compute the compensation claimed to be payable to the workmen on the footing that there has been retrenchment of the workmen. Where retrenchment is conceded, and the only matter in dispute is that by virtue of S. 25FF no liability to pay compensation has arisen the Labour Court will be competent to decide the question. In such a case the question is one of computation and not of determination, of the conditions precedent to the accrual of liability. Where, however, the dispute is whether workmen have been retrenched and computation of the amount is subsidiary or incidental, in our judgment, the Labour Court will have no authority to trespass upon the powers of the Tribunal with which it is statutorily invested.”

    5. In this case opposite party 2 at first approached the Assistant Labour Commissioner with similar allegations and claim. The petitioner there disputed the claim and also the alleged basis for the claim. The said petition was dismissed. Thereafter opposite party 2 filed the petition in question before the Labour Court again alleging that his services were illegally terminated by the petitioner on 5 February, 1974, without any notice and without payment of his arrear salary and other legal dues, such as retrenchment benefits, gratuity, pay in lieu of notice and leave salary. The said benefits were claimed on the basis of illegal termination of service as alleged by opposite party 2. The petitioner disputed and challenged not only the claim but also the very basis on which the claim was founded. On behalf of the petitioner it was, inter alia, asserted that the services of opposite party 2 were never terminated nor was he ever retrenched from service and that his claim was entirely fictitious and frivolous. The maintainability of that petition before the Labour Court and consequentially the jurisdiction of that Court to adjudicate the matters alleged in that petition were challenged. On such conflicting and contradictory stand taken by the parties to that proceeding the Presiding Officer of the Labour Court formulated the following two issues for adjudication and directed the parties to lead evidence on those issues:

    (1) If the services of the petitioner were terminated by the opposite party?

    (2) If he is entitled to retrenchment benefits and any other legal dues, and it so, to what extent?

    In this case, the computation of the benefits claimed by opposite party 2 would very much depend on the adjudication of the principal questions as to whether the services of opposite party 2 were terminated by the petitioner or whether he (opposite party 2) was retrenched from service. If any of the two questions is found in the affirmative, then it is also to be decided whether the said termination or retrenchment was justified or not. Only on the adjudication of those principal matters in favour of opposite party 2, one can proceed to compute the benefits which may arise therefrom. So, the determination of the above-mentioned contested questions of fact is the condition precedent to the accrual of the liability and computation of the amount is subsidiary thereto. So, the basis on which computation of benefits was sought for before the Labour Court was not an existing one nor had the same been adjudicated before. As the employer has been persistently disputing the basis of the claim, and different aspect relating to this would require an elaborate enquiry, that becomes the principal matter for adjudication, and in this case computation of the benefits prayed for is just a subsidiary matter for adjudication. The basis and foundation of the claim in this case is a matter which is exclusively within the competence of the Industrial Tribunal to be adjudicated upon on a reference. However, a proceeding under S. 33C(2) being in the nature of an execution proceeding the Labour Court in a proceeding under this section has only to calculate the amount of the benefits as provided under the said section, and this Court should not decide matters which are not for the executing Court to decide. As adjudication of the basis and foundation of the claim is the principal function and concern of the Industrial Tribunal, the Labour Court should not trespass upon the powers of the Tribunal and arrogate to itself the jurisdiction of the Tribunal to decide such matters. It is of course true that in a proceeding under S. 33C(2) the mere denial of the right of the workman by the employer would not take away the jurisdiction of the Labour Court. If the denial of the workman's right by his employer appears to the Labour Court to be frivolous and or incorrect on the facts of the records, or assessment of that question does not engage the Court in an elaborate enquiry and can be ascertained easily on a preliminary enquiry, then a determination of that question can be done only as incidental to the computation of the benefits. But where the basis and foundation of the claim is seriously contested and determination of that basic factor of the case will involve an elaborate process, such a matter being the principal function and concern of the Industrial Tribunal, the Labour Court can not proceed to decide that matter by dubbing the same as incidental to the computation of the benefits under S. 33C(2).

    6. Sri Misra, the learned counsel for opposite party 2, cited the decisions in Central Bank of India v. P.S Rajagopalan [A.I.R 1964 S.C 743] (vide supra) and Payment of Wages Inspector, Ujjain v. Barnagar Electric Supply and Industrial Company, Ltd. [A.I.R 1969 S.C 590], and submitted that as per the said decisions even in the cases where the right of a workman is disputed and the employer denies his liability to pay any compensation, the Labour Court could go into the question as to whether the workman had a right to receive such a benefit. The decision on the above point in the case in Central Bank of India (vide supra), has only been followed in the case in Payment of Wages Inspector (vide supra). Their Lordships while deciding the point in question in the case in Uttar Pradesh Electric Supply Company [(1969) 2 SCC 400 : A.I.R 1970 S.C 237], referred to the decision on the point in Central Bank of India (vide supra), and stated that the latter decision makes it clear that all disputes arising out of claims which may be computed in terms of money are not necessarily within the terms of S. 33C(2). Again while laying down the law on the point in question in the case in Central Inland Water Transport Corporation [1974 — II L.L.N 78], their Lordships also referred to the decides in Central Bank of India (vide supra). Their Lordships in the case in Uttar Pradesh Electric Supply Company (vide supra), have approved of the view takes in East India Coal Company [A.I.R 1968 S.C 218] (vide supra), to the effect that in order that a claim may be adjudicated upon under S. 33C(2) there must be an existing right, and the right must arise under an award, settlement or under the provisions of Chap. V-A, or it must be a benefit provided by a statute or a scheme made thereunder, and there must be nothing contrary under such statute or S. 33C(2). But the possibility of a mere claim arising under Chap. V-A cannot confer jurisdiction upon the Labour Court to decide matters which are essentially within the jurisdiction of the Industrial Tribunal. As the law on the point has been laid down in the aforesaid two latter cases on a consideration of the view taken by that Court in the two earlier cases cited by Sri Misra, we prefer to follow the ultimate decision of that Court in the latter two cases in Uttar Pradesh Electric Supply Company (vide supra) and Central Inland Water Corporation (vide supra).

    7. The main question for determination in the instant case are whether the services of opposite party 2 were terminated, and if so whether the said termination was justified or not. The said questions for reasons stated above, are to be adjudicated at first by the Industrial Tribunal in accordance with the provisions in the Act, and the Labour Court did not have the jurisdiction to decide these matters on the petition under S. 33C(2) of the Act filed before it. As the Labour Court has assessed the retrenchment compensation after an elaborate enquiry and adjudication of the above basic issues involved in this case, and in so doing it trespassed upon the jurisdiction of the Industrial Tribunal, the impugned order has to be treated as without jurisdiction and as non est, and has to be quashed on that account. A writ of certiorari be issued to the above effect.

    8. In the result, the writ application is allowed. As opposite party 2 was a low paid employee under the petitioner, we do not like to saddle him (opposite party 2) with costs of this writ petition.

    9. B.K Ray, J.:— I agree.

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    Shyamsundar Sahu And Company v. Labour Court, Orissa, And Another
    (Sep 17, 1976)