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Case Number
Disposition

allowed

Attorney(S)
  • P. Mahale, Advocate, for the Appellant;
  • Ms T. Kanaka Durga, Advocate, for the Respondents.
Judges
  • Justice K. Ramaswamy
Acts
  • Directive Principles under the Constitution
  • Section 10 of the Industrial Disputes Act
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Disposition

allowed

Attorney(S)
  • P. Mahale, Advocate, for the Appellant;
  • Ms T. Kanaka Durga, Advocate, for the Respondents.
Judges
  • Justice K. Ramaswamy
Acts
  • Directive Principles under the Constitution
  • Section 10 of the Industrial Disputes Act
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Smart Summary

Factual and Procedural Background

The respondent was appointed on daily wages in a project undertaken by the appellant on 25-07-1986. Upon closure of the project on 15-01-1989, the respondent was discharged from service. He then invoked Section 10 of the Industrial Disputes Act, leading to a reference before the Labour Court. The Labour Court held that the respondent was entitled to continuity of service with back wages, treating the termination as a dismissal. A learned Single Judge of the High Court confirmed the award but limited back wages to 50%. The Division Bench dismissed Writ Appeal No. 878 of 1996. The appellant then approached the Supreme Court by special leave.

It was brought to the Supreme Court’s notice that, pending the appeal, the respondent had been reinstated under threat of contempt, with the reinstatement expressly made subject to the Supreme Court’s final order in the appeal.

Legal Issues Presented

  1. Whether the appellant’s activities fell within the definition of “industry” under the Industrial Disputes Act, in light of precedent holding that departments such as Irrigation and Telecommunication are not “industry.”
  2. Whether a daily-wage worker, discharged upon closure of a project, could claim a right to reinstatement, continuity of service, and back wages.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Union of India v. Jai Narain Singh, 1995 Supp (4) SCC 672 Departments such as the Irrigation and Telecommunication Departments are not “industry” within the meaning of the Industrial Disputes Act; functions of public welfare are sovereign in nature. Relied on to affirm that the State, when performing sovereign public welfare functions, is not an “industry,” undermining the respondent’s claim to relief under the Industrial Disputes Act.
State of H.P. v. Suresh Kumar Verma, (1996) 7 SCC 562; (1996) 33 ATC 336; JT (1996) 2 SC 455 Reinforces that certain governmental departments performing public welfare/sovereign functions are not “industry” under the Industrial Disputes Act. Applied to reach the conclusion that the Industrial Disputes Act framework did not support the respondent’s reinstatement and back-wages relief.

Court's Reasoning and Analysis

The Court noted the settled legal position, as per binding precedent, that departments such as the Irrigation and Telecommunication Departments are not “industry” under the Industrial Disputes Act because they perform sovereign functions of the State aimed at public welfare. On that basis, the Court reasoned that the State, acting through such departments in furtherance of constitutional directives to establish a welfare state, is not an “industry.”

Proceeding from that principle, the Court held that the Labour Court’s award granting continuity of service and back wages to the respondent could not be sustained. The Court further observed, “even otherwise,” that because the project had been closed and the respondent was a daily-wage appointee, he had no right to the post after closure of the project. The Court also recorded that the respondent’s reinstatement had been implemented under threat of contempt, expressly subject to the Supreme Court’s final order, which the Court then delivered.

Holding and Implications

Appeal Allowed; Labour Court, Single Judge, and Division Bench orders set aside.

Implications: The respondent’s entitlement to reinstatement, continuity of service, and back wages is negated. Any reinstatement undertaken pending appeal, having been expressly subject to the Supreme Court’s final order, does not survive this outcome. The decision applies existing precedent regarding the non-industrial character of certain governmental departments performing sovereign functions and does not purport to establish a new rule of law.

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    Executive Engineer (State Of Karnataka) v. K. Somasetty And Others

    Order

    1. Leave granted.

    2. The respondent was appointed on daily wages in a project taken up by the appellant on 25-7-1986. The respondent was discharged from the work on its closure on 15-1-1989. Thereafter, he approached the Labour Court under Section 10 of the Industrial Disputes Act. On a reference, the Labour Court held that the respondent is entitled to continuity of service with back wages since it amounts to dismissal. The order was confirmed by the learned Single Judge of the High Court subject to payment of 50% of the back wages. Writ Appeal No. 878 of 1996 was dismissed by the Division Bench. Thus, this appeal by special leave.

    3. It is now well-settled legal position that the Irrigation Department and Telecommunication Department are not an “industry” within the meaning of definition under the Industrial Disputes Act as held in Union of India v. Jai Narain Singh 1995 Supp (4) SCC 672 (1) and in State of H.P v. Suresh Kumar Verma (1996) 7 SCC 562, (1996) 33 ATC 336, JT (1996) 2 SC 455. The function of public welfare of the State is a sovereign function. It is the constitutional mandate under the Directive Principles, that the Government should bring about welfare State by executive and legislative actions. Under these circumstances, the State is not an “industry” under the Industrial Disputes Act. Even otherwise, since the Project has been closed, the respondent has no right to the post since he had been appointed on daily wages. It is brought to our notice that the respondent has been reinstated. The order of the reinstatement has been placed before us which indicates that at the threat of contempt of court, the order has been enforced. It is stated therein that it is subject to the final order of this Court in this appeal.

    4. Under these circumstances, the appeal is accordingly allowed. The order of the Labour Court stands set aside. The order and judgment too stand set aside.

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    Comments

    Executive Engineer (State Of Karnataka) v. K. Somasetty And Others
    (May 2, 1997)