OIL AND NATURAL GAS CORPORATION versus KRISHAN GOPAL & ORS.

OIL AND NATURAL GAS CORPORATION

KRISHAN GOPAL & ORS.

(Civil Appeal No. 1878 of 2016)

FEBRUARY 07, 2020

[DR. DHANANJAYA Y CHANDRACHUD ANDAJAY RASTOGI, JJ.]

Labour Laws:

Regularisation – In terms of clause 2(ii) of ONGC’s CertifiedStanding Orders – Upheld in four impugned orders on the basis ofjudgment in *PCLU case – The plea of regularisation declined inone impugned order distinguishing the decision in *PCLU case –Appeal to Supreme Court – Held: The construction placed on theprovisions of clause 2(ii) of Certified Standing Orders, in the decisionin *PCLU case, does not prima facie appear to be correct – Besidesthe decision is also per in curiam – Therefore, the decision needsreconsideration – Matter to be placed before larger Bench toreconsider *PCLU case – Matters to be placed before Larger Benchalso to consider applicability of principles laid down in #Umadevicase in the context of industrial adjudication – Reference to LargerBench.

Referring the matters to Larger Bench, the Court

HELD: 1. The decision in *PCLU Case holds that theworkmen upon completion of 240 days’ service in period of 12calendar months “are entitled for regularisation of their servicesinto permanent posts of the corporation”. The Court further heldthat under clause 2(ii) of the Certified Standing Orders, upon thecompletion of 240 days of service in calendar year, the workmenhave “acquired valid statutory right” and ought to have been“granted the status of regular employees” of the corporation onthe ground that the corporation which is an instrumentality of theState under Article 12, cannot act arbitrarily or unreasonably. Thedecision of the two judge Bench in *PCLU Case has placed aconstruction on the provisions of clause 2(ii) of the ONGC’sCertified Standing Orders which prima facie does not appear to

CDE

Abe correct. Besides, the fact that the decision in *PCLU Casehas not noticed the earlier judgment in **Engineering MazdoorSangh Case which pertained to ONGC’s Certified Standing Orders,the principles of law which have been expounded in *PCLU Casewould require to be revisited. [Para 17] [673-F-H, 674-A-B]

BOil and Natural Gas Corporation Limited v. PetroleumCoal Labour Union (2015) 6 SCC 494 : [2015] 5 SCR474; State of Haryana v. Piara Singh (1992) 4 SCC118 : [1992] 3 SCR 826; Mahatma Phule AgriculturalUniversity v. Nasik Zilla Sheth Kamgar Union (2001) 7SCC 346 : [2001] 3 SCR 1089; Regional Manager, StateCBank of India v. Raja Ram (2004) 8 SCC 164; RegionalManager, SBI v. Rakesh Kumar Tewari (2006) 1 SCC530; Ajaypal Singh v. Haryana WarehousingCorporation (2015) 6 SCC 321 – referred to.

2. The second aspect on which the present appeals wouldDrequire to be placed before larger Bench for consideration is inregard to the applicability of the principles set out and formulatedby the Constitution Bench in *Umadevi Case in the context ofindustrial adjudication. [Para 18] [674-C-D]

UP Power Corporation Ltd. v. Bijli Mazdoor SanghE(2007) 5 SCC 755 : [2007] 5 SCR 256; MaharashtraState Road Transport Corporation v. Casteribe RajyaParivahan Karmchari Sanghatana (2009) 8 SCC 556;Mahatma Phule Agricultural University v. Nasik ZillaSheth Kamgar Union (2001) 7 SCC 346 : [2001] 3 SCRF1089; State of Maharashtra v. R S Bhonde (2005) 6SCC 751 : [2005] 2 Suppl. SCR 763; Hari NandanPrasad v. Employer I/R to Management of FoodCorporation of India (2014) 7 SCC 190 : [2014] 2 SCR955 – referred to.

3. The decision in *PCLU Case needs to be revisited inGorder to set the position in law which it adopts in conformity withthe principles emerging from the earlier line of precedent. Morespecifically, the areas on which *PCLU Case needsreconsideration are:(i) The interpretation placed on theprovisions of clause 2(ii) of the Certified Standing Orders; (ii)HThe meaning and content of an unfair labour practice under Section

2(ra) read with Item 10 of the Vth Schedule of the ID Act; (iii)The limitations, if any, on the power of the Labour and IndustrialCourts to order regularisation in the absence of sanctioned posts.[Para 24] [679-D-G]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1878of 2016.

From the Judgment and Order dated 12.10.2015 of the High Courtof Delhi at New Delhi in L.P.A. No. 654 of 2010.

With

Civil Appeal Nos. 935-937, 938-939, 934, 669-696 of 2020.

P.S. Narasimha, ASG, J.P. Cama, S. Guru Krishna Kumar, AjitKumar Sinha, P.S. Patwalia, Lalit Bhasin, Ms. Nina Gupta, Ms. PalakChadha, Ms. Ruchika Joshi, Ms. Suruchi Kumar, Mudit Sharma, V.N.Subramaniam, Ms. Anzu K. Varkey, Rajesh B., Ms. Shruta Gopalan,Arindam, Ms. Madhusmita Bora, V.N. Koura, Ms. Aruna Mathur, ShirishKumar, Ms. Paramjeet Benipal, Anupam Roy, Ms. Anuradha Arputham

A(for M/S. Arputham Aruna and Co), Abhishek Puri, V. Siddharth, MananGambhir, P. N. Puri, Ms. Asha Jain Madan, Mukesh Jain, Ms. MadhuTalwar, Pranay Ranjan, Ms. Alka Aggarwal, Rajan Kumar Chaurasia,R.R. Rajesh, Raj Bahadur, Lalit Sankhla, D. Mahesh Babu, Ms. SuchitraHrangkhawl, Ganesan Subbian, Katubadi Ismail, P. Prabhakar,D. Srinivas, Venkateswara Rao Anumolu, Santosh Krishnan, AnkurBYadav, P. Venkat Reddy, Prashant Tyagi, P. Srinivas Reddy, Advs. forthe appearing parties.

The Judgment of the Court was delivered by

DR. DHANANJAYA Y CHANDRACHUD, J.

C1. This batch of appeals arises from the judgments of the HighCourts of Andhra Pradesh, Delhi, Madras and Uttarakhand. judgmentof two judge Bench of this Court in Oil and Natural Gas CorporationLimited v Petroleum Coal Labour Union[1] (“PCLU”) has assumedfocus since the decisions of the High Courts in four of the present appealshave relied on the judgment of this Court in coming to the conclusionDthat the workmen were entitled to regularisation in service. In one of thefive appeals, however where the prayer for regularisation was rejected,the decision in PCLU has been distinguished. Hence on either end ofthe spectrum, the judgment in PCLU has significant bearing on theoutcome of the appeals.

E2. The manner in which the present appeals arise is indicated, forconvenience of reference, in the following tabulation:

Sl. Nos.ParticularsRemarks1.Civil Appeals @ SLP (C)The appeals arise out of judgment dated 5Nos. 15971-15998/2018January 2018 of the Andhra Pradesh HighFONGC & Ors. v. ONGCCourt in 24 Writ Appeals and 4 WritField Operators Union&Petitions. The High Court directedOrs.regularisation of 450 workmen who movedthe High Court under Article 226 of theConstitution without seeking referencebefore the Industrial Tribunal under theIndustrial Disputes Act 1947[2]. TheGjudgment of the High Court has relied uponthe decision of this Court in PCLU (supra).

1 (2015) 6 SCC 494H2 “ID Act”

OIL AND NATURAL GAS CORPORATION v. KRISHAN GOPAL665[DR. DHANANJAYA Y CHANDRACHUD, J.]2.Civil Appeal @ SLP (C) No.The appeal arises out of judgment datedA4/2016 Renumbered as12 December 2015 of the High Court ofC.A.1878/2016 ONGC v.Delhi. Allowing Letters Patent Appeal,Krishan Gopal & Ors.the High Court directed regularisation of 24workmen who had instituted proceedingsunder Article 226 without seeking referenceto the Industrial Tribunal under theBIndustrial Disputes Act 1947. The HighCourt relied upon the decision of this Courtin PCLU (supra).3.Civil Appeal @ SLP (C) No.The appeal arises from judgment of the10478/2016 M Rajan & Ors.Madras High Court dated 20 Novemberv. ONGC & Ors.2015 in Writ Appeals. The High CourtCrejected the prayer for regularisation madeby the workmen who had institutedproceedings under Article 226. The HighCourt held that the remedy under theIndustrial Disputes Act 1947 could not bebypassed. The High Court distinguished thedecision of this Court in PCLU (supra).D4.Civil Appeal @ SLP (C) No.The appeal arises from decision of the30854/2017 ONGC v. TelHigh Court of Uttarakhand dated 3 AugustAVM Prakartik Gas2017 in writ proceedings under Article 226,Karmchari Sanghas consequence of which, nine workmenhave been directed to be regularised. TheHigh Court set aside the award of theEIndustrial Tribunal which had held in favourof ONGC, the employer. The High Courtrelied on the decisions of this Court in PCLUand in State of Haryana v Piara Singh[3](“Piara Singh”). (The decision in PiaraSingh has been overruled by theConstitution Bench of this Court inFSecretary, State of Karnataka vUmadevi[4]).5.Civil Appeal @ SLP (C) No.The appeal arises from the judgment of the16455/2018 TheMadras High Court dated 29 January 2018Management of ONGC v.by which the services of fourteen messengersPetroleum Employeesand three sanitary cleaners have beenGUnionregularised by the High Court. The awardof the Industrial Tribunal has been set aside.The High Court has relied on the judgmentof this Court in PCLU (supra).3 (1992) 4 SCC 1184 (2006) 4 SCC 1H

A3. In the appeals which are listed out at serial Nos 1, 2, 4 and 5 ofthe table, ONGC, as the appellant seeks to challenge the judgments ofthe High Courts directing or, as the case may be, upholding the plea forregularisation on the basis of the decision in PCLU. In the appeal atserial No 3, the workmen are before this Court against the judgment ofthe High Court declining to grant the relief which was granted to theBworkmen in PCLU on the ground that they had initiated proceedingsunder Article 226 without availing of the remedy under the ID Act.

4. Appearing on behalf of the appellant, ONGC, in four appeals inthe above batch of appeals[5], Mr P S Narasimha and Mr J P Cama,learned Senior Counsel have formulated the following points forCdetermination:

(i)Whether the decision of the two judge Bench of this Court inPCLU is per incuriam on the ground that it did not considerthe binding precedents on the interpretation of Item 10 ofSchedule V of the ID Act, particularly those in :

•Mahatma Phule Agricultural University v. NasikZilla Sheth Kamgar Union[6];

•Regional Manager, State Bank of India v. RajaRam[7];

•Regional Manager, SBI v. Rakesh Kumar Tewari[8];and

•Oil & Natural Gas Corpn. Ltd v. Engg. MazdoorSangh[9].

(ii) Whether the interpretation which has been placed in PCLUFon clause 2(ii) of the Certified Standing Orders for contingentemployees of ONGC to the effect that temporary workmanwho has put in 240 days of attendance in any period of twelveconsecutive months and possesses the minimum qualificationsis entitled to regularisation, is correct in view of the fact thatGthe standing order only provides that the ‘workman’ “may beconsidered for conversion as regular employee”;

5 Serial Nos 1, 2, 4 and 56 (2001) 7 SCC 3467 (2004) 8 SCC 1648 (2006) 1 SCC 530H9 (2007) 1 SCC 250

(iii) Whether the view of the High Court of Andhra Pradesh thatthe principles enunciated in the judgment of the ConstitutionBench in Secretary, State of Karnataka v. Umadevi[10](“Umadevi”) are not applicable to labour law, is correct;

(iv) What are the ingredients of an unfair labour practice underItem 10 of Schedule V of the ID Act; and

(v) Whether finding of an unfair labour practice can be renderedin proceeding under Article 226 of the Constitution withoutthe workmen leading evidence in reference under the IDAct.

5. Section 25(T) of the ID Act contains prohibition againstemployers, workmen and trade unions resorting to unfair labour practices.It provides:

“25 (T). Prohibition of unfair labour practice – No employer orworkman or trade union, whether registered under the TradeUnions Act, 1926 (16 of 1926) or not, shall commit any unfairlabour practice.”

The expression “unfair labour practice has been defined in Section

“2(ra) “unfair labour practice” means any of the practices specifiedin the Fifth Schedule.”

Among the unfair labour practices set out in the Vth Schedule,Item 10 provides as follows:

“10. To employ workmen as “badlis”, casuals or temporaries andto continue them as such for years, with the object of deprivingthem of the status and privileges of permanent workmen.”

The decision in PCLU

6. ONGC was in appeal against an award of the Industrial Tribunaldirecting it to regularise the services of security guards and supervisorswith effect from the date on which they had completed 480 days. ONGChad project in Cauvery Basin, Karaikal in the Union Territory ofPuducherry. It employed contract workmen as security guards andsupervisors. On 8 December 1976, contract labour was abolished for

Awatch and ward, dusting and cleaning jobs by the Government of Indiaunder Section 10(1) of the Contract Labour (Regulation and Abolition)Act 1970. Under an agreement with the trade unions, the managementof ONGC utilized the services of the erstwhile contract workmen througha labour cooperative society which was formed for the welfare of thecontract workmen. Subsequently, security work was entrusted to theBCentral Industrial Security Force to protect the installations. The workmenwere later on appointed as part of watch and ward security on termbasis subject to the condition that the Certified Standing Orders wouldnot apply to them. On demand by the workmen, reference wasmade to the Industrial Tribunal to adjudicate on whether the managementCwas justified in not regularising the workmen and in failing to pay equalwages to the workmen, at par with the regular workmen. The disputeabout the payment of equal wages was resolved by settlement. TheIndustrial Tribunal made an award directing ONGC to regularise theservices of the workmen. This was challenged by ONGC before theHigh Court in writ proceedings on the ground that the workmen hadDbeen originally selected without following any selection procedure, inviolation of the decision in Umadevi (supra). The workmen claimedthat ONGC was guilty of an unfair labour practice in continuing them ona temporary basis since 1988. The Writ Petition was dismissed by alearned Single Judge. The Division Bench of the High Court havingEdismissed Writ Appeal, ONGC moved this Court in order to challengethe judgment of the High Court.

7. In appeal, one of the issues was:

“Whether jurisdiction of the Tribunal to direct the Corporation toregularise the services of the workmen concerned in the posts isFvalid and legal?”.

Answering the above issue, this Court held that

(i) All the workmen (except for one) possessed the qualificationsrequired for regularisation; andG(ii) The workmen had been employed prior to 1985 in posts throughirregular means.

8. The Court held that the Industrial Tribunal had the jurisdictionto adjudicate upon the dispute and had rightly passed an award directingregularisation of the services of the workmen.H

9. The second issue which was dealt with in the judgment in PCLUwas:

“Whether the appointment of the workmen concerned in theservices of the Corporation is irregular or illegal?”

10. On behalf of the Management, it was urged that the initialselection of the workmen was not in accordance with the recruitmentrules and was illegal in view of the judgment of the Constitution Benchin Umadevi. This plea was rejected, following the decision in AjaypalSingh v. Haryana Warehousing Corporation[11 ]and it was held thatthe management could not deny the rights of the workmen by contendingthat their initial employment was contrary to Articles 14 and 16 of theConstitution. The provisions contained in clause 2(ii) of the CertifiedStanding Orders for contingent employees of ONGC were in issue, themanagement contending that there was no right of regularisation merelyon the completion of 240 days in twelve consecutive months.

11. Clause 2 of the Certified Standing Orders provides thus :

“2. (i) Classification of workmen

The contingent employees of the Commission shall hereafter beclassified as:

(a) Temporary, and

(b) Casual

(ii) workman who has been on the rolls of the Commission andhas put in not less than 180 days of attendance in any period of 12consecutive months shall be temporary workman, provided thata temporary workman who has put in not less than 240 days ofattendance in any period of 12 consecutive months and whopossesses the minimum qualifications prescribed by Commissionmay be considered for conversion as regular employee.

(iii) workman who is neither temporary nor regular shall beconsidered as casual workman.”

12. Justice V Gopala Gowda, speaking for the two judge Benchof this Court rejected the submission that clause 2(ii) of the CertifiedStanding Orders does not confer right to regularisation since it employsthe words “may be considered for conversion as regular employee”.

11 (2015) 6 SCC 321

AThis submission which was based on the language of clause 2(ii) wasrejected with the following observations:

“In any case, it is clear that the workmen concerned haveclearly completed more than 240 days of services subsequentto the memorandum of appointment issued by the Corporation inBthe year 1988 in period of twelve calendar months, therefore,they are entitled for regularisation of their services intopermanent posts of the Corporation as per the Act as well asthe Certified Standing Orders of the Corporation.”

(Emphasis supplied)

CThe Court further held:

“45. The legal contention urged on behalf of the Corporation thatthe statutory right claimed by the workmen concerned underClause 2(ii) of the Certified Standing Orders of the Corporationfor regularising them in their posts as regular employees afterDrendering 240 days of service in calendar is not an absoluteright conferred upon them and their right is only to consider theirclaim. This plea of the learned Senior Counsel cannot again beaccepted by us for the reason that the Corporation is bound bylaw to take its decision to regularise the services of the workmenEconcerned as regular employees as provided under Clause 2(ii)of the Certified Standing Orders after their completion of 240days of service in calendar year as they have acquired validstatutory right. This should have been positively considered bythe Corporation and granted the status of regular employees ofthe Corporation for the reason that it cannot act arbitrarily andFunreasonably deny the same especially it being corporate bodyowned by the Central Government and an instrumentality of theState in terms of Article 12 of the Constitution and therefore, it isgoverned by Part III of the Constitution.”

ONGC was accordingly directed to regularise the services of theGworkmen on their completing 240 days of service in calendar yearunder clause 2(ii) of the Certified Standing Orders, to grant regular payscale and absorption against regular posts. PCLU arose from anadjudication in an industrial reference whereas the present proceedingsarise from writ petition under Article 226.

13. From the above extract of the decision of this Court in PCLU,it is evident that clause 2(ii) of the Certified Standing Orders has beenconstrued to confer right to regularisation on the completion of 240days of service in calendar year. While construing the provisions ofclause 2(ii), an earlier decision of two judge Bench of this Court in Oiland Natural Gas Corporation Limited v Engineering MazdoorSangh[12] (“Engineering Mazdoor Sangh”) was evidently not broughtto the notice of the Court. The decision in Engineering Mazdoor Sanghconstrued clause 2 of the Certified Standing Orders specifically in thecontext of ONGC itself. The decision related to the engagement ofseasonal workmen who were employed between November and Mayof the following year for carrying out surveys for the exploration ofpetroleum. The demand of the workmen for regularisation on thecompletion of 240 days was referred to Central Government IndustrialTribunal. While the reference was pending, the Union filed complaintunder Section 33-A alleging that ONGC was allotting work to contractorsin preference to the casual/contingent/temporary workmen resulting inthe alteration of the terms of service. The complaint was adjudicatedupon by the Tribunal upon which ONGC filed an application seekingpermission to terminate the service of the workmen. The Tribunal allowedONGC to terminate some of the workmen. The order of the Tribunaldirected ONGC to regularise the workmen as an when any vacancyarose in regular post, subject to their completing 240 days’ work andpossessing the minimum qualifications. The High Court modified theaward of the Industrial Tribunal by directing that all employees whocompleted 240 days and possessed the minimum qualifications would beconsidered at par with regular employees. They would be given thestatus of regular appointees without requiring them to compete with otheremployees drawn from the employment exchange. In appeal, this Courtobserved that regularising the services of all the seasonal workmen wouldcreate various difficulties and hence the Tribunal had found via mediain directing that 153 workmen who had admittedly completed 240 daysand had acquired temporary status be regularised against vacanciesas and when such vacancies became available. Thus, this Court foundthat the directions of the Tribunal were reasonable and should prevailinstead of the directions issued by the High Court. The judgment of theHigh Court was set aside and that of the Tribunal was restored.

DEF

14. Apart from the above decision which arose specifically in thecontext of ONGC, it has been submitted that the decision in PCLUwould require reconsideration in view of earlier decisions of this Courtwhich have not been noticed.

15. In Mahatma Phule Agricultural University v. Nasik ZillaBSheth Kamgar Union[13] (“Mahatma Phule AgriculturalUniversity”), Bench of two learned judges of this Court construedthe provisions of Item 6 of Schedule IV of the Maharashtra Recognitionof Trade Unions and Prevention of Unfair Labour Practices Act 1971[14],which is in the following terms :

6. To employ employees as ‘badlis’, casuals or temporaries andto continue them as such for years, with the object of deprivingthem of the status and privileges of permanent employees.”

Construing the above provisions, this Court held :D

“14…The complaint was against the Universities. The High Courtnotes that as there were no posts the employees could not bemade permanent. Once it comes to the conclusion that for lack ofposts the employees could not be made permanent, how could itthen go on to hold that they were continued as “badlis”, casuals orEtemporaries with the object of depriving them of the status andprivileges of permanent employees? To be noted that the complaintwas not against the State Government. The complaint was againstthe Universities. The inaction on the part of the State Governmentto create posts would not mean that an unfair labour practice hadFbeen committed by the Universities. The reasoning given by theHigh Court to conclude that the case was squarely covered byItem 6 of Schedule IV of the MRTU & PULP Act cannot besustained at all and the impugned judgment has to be and is setaside. It is however clarified that the High Court was right inconcluding that, as per the law laid down by this Court, status ofGpermanency could not be granted. Thus all orders whereinpermanency has been granted (except award dated 1-4-1985 inIT No. 27 of 1984) also stand set aside.”

13 (2001) 7 SCC 346H14 “MRTU and PULP Act”

There could, in other words, be no regularisation in the absenceof posts. Hence, there was no unfair labour practice.

16. In Regional Manager, State Bank of India v Raja Ram[15](“Raja Ram”), another two judge Bench of this Court construed theprovisions of Item 10 of Schedule V to the ID Act and observed:

“9…In other words, before an action can be termed as anunfair labour practice it would be necessary for the LabourCourt to come to conclusion that the badlis, casuals andtemporary workmen had been continued for years as badlis,casuals or temporary workmen, with the object of deprivingthem of the status and privileges of permanent workmen.To this has been added the judicial gloss that artificial breaks inthe service of such workmen would not allow the employer toavoid charge of unfair labour practice. However, it is thecontinuity of service of workmen over period of years which isfrowned upon. Besides, it needs to be emphasised that for thepractice to amount to unfair labour practice it must be foundthat the workman had been retained on casual ortemporary basis with the object of depriving the workmanof the status and privileges of permanent workman. Thereis no such finding in this case. Therefore, Item 10 in List I ofthe Fifth Schedule to the Act cannot be said to apply at all to therespondent’s case and the Labour Court erred in coming to theconclusion that the respondent was, in the circumstances, likelyto acquire the status of permanent employee.”

(Emphasis supplied)

The above decision was followed in Regional Manager, SBI vRakesh Kumar Tewari[16].

17. The decision of the two judge Bench in PCLU has placed aconstruction on the provisions of clause 2(ii) of the Certified StandingOrders which prima facie does not appear to be correct. Besides, thefact that the decision in PCLU has not noticed the earlier judgment inEngineering Mazdoor Sangh (supra) which pertained to ONGC’sCertified Standing Orders, we are of the considered view that theprinciples of law which have been expounded in PCLU would requireto be revisited. The decision in PCLU holds that the workmen upon

15 (2004) 8 SCC 164

16 (2006) 1 SCC 530: at paragraph 25, page 538

Acompletion of 240 days’ service in period of 12 calendar months “areentitled for regularisation of their services into permanent postsof the corporation”. The Court further held that under clause 2(ii), uponthe completion of 240 days of service in calendar year, the workmenhave “acquired valid statutory right” and ought to have been “grantedthe status of regular employees” of the corporation on the groundBthat the corporation which is an instrumentality of the State under Article12 cannot act arbitrarily or unreasonably. Whether the provisions of clause2(ii) confer an absolute right to regularisation merely on the completionof 240 days of service in calendar year is point which needs to bereconsidered both having regard to the express language of the provisionCas well as the earlier decisions of this Court including that in the case ofEngineering Mazdoor Sangh.

18. The second aspect on which we are of the view that thepresent appeals would require to be placed before larger Bench forconsideration is in regard to the applicability of the principles set out andDformulated by the Constitution Bench in Umadevi in the context ofindustrial adjudication. In Umadevi, the Constitution Bench made adistinction between appointments or selections which are merely irregularand those which are illegal. The Court observed:

“16…We have, therefore, to keep this distinction in mind andEproceed on the basis that only something that is irregular for wantof compliance with one of the elements in the process of selectionwhich does not go to the root of the process, can be regularisedand that it alone can be regularised and granting permanence ofemployment is totally different concept and cannot be equatedwith regularisation.”F

In this context, the Court held :

“43…It has also to be clarified that merely because temporaryemployee or casual wage worker is continued for time beyondthe term of his appointment, he would not be entitled to be absorbedGin regular service or made permanent, merely on the strength ofsuch continuance, if the original appointment was not made byfollowing due process of selection as envisaged by the relevantrules. It is not open to the court to prevent regular recruitment atthe instance of temporary employees whose period of employmenthas come to an end or of ad hoc employees who by the veryHnature of their appointment, do not acquire any right. The High

Courts acting under Article 226 of the Constitution, should notordinarily issue directions for absorption, regularisation, orpermanent continuance unless the recruitment itself was maderegularly and in terms of the constitutional scheme.”

In paragraph 53 of the judgment, the Court made one-timeexception, for the regularisation of the irregularly appointed persons,who had worked for ten years or more in duly sanctioned posts:

“53. One aspect needs to be clarified. There may be cases whereirregular appointments (not illegal appointments) as explainedin S.V. Narayanappa [(1967) 1 SCR 128 : AIR 1967 SC1071], R.N. Nanjundappa [(1972) 1 SCC 409 : (1972) 2 SCR799] and B.N. Nagarajan [(1979) 4 SCC 507 : 1980 SCC (L&S)4 : (1979) 3 SCR 937] and referred to in para 15 above, of dulyqualified persons in duly sanctioned vacant posts might have beenmade and the employees have continued to work for ten years ormore but without the intervention of orders of the courts or oftribunals. The question of regularisation of the services of suchemployees may have to be considered on merits in the light of theprinciples settled by this Court in the cases abovereferred to andin the light of this judgment. In that context, the Union of India,the State Governments and their instrumentalities should take stepsto regularise as one-time measure, the services ofsuch irregularly appointed, who have worked for ten years ormore in duly sanctioned posts but not under cover of orders of thecourts or of tribunals and should further ensure that regularrecruitments are undertaken to fill those vacant sanctioned poststhat require to be filled up, in cases where temporary employeesor daily wagers are being now employed.”

19. The applicability of the decision in Umadevi in the context oflabour adjudication was considered in UP Power Corporation Ltd. vBijli Mazdoor Sangh[17] (“Bijli Mazdoor Sangh”). This Court heldthat the law propounded in Umadevi was applicable also to IndustrialTribunals and Labour Courts. The Court held:

“6. It is true as contended by learned counsel for the respondentthat the question as regards the effect of the industrial adjudicators’powers was not directly in issue in Umadevi (3) case [(2006) 4SCC 1 : 2006 SCC (L&S) 753]. But the foundational logic

17 (2007) 5 SCC 755

Ain Umadevi (3) case [(2006) 4 SCC 1 : 2006 SCC (L&S) 753] isbased on Article 14 of the Constitution of India. Though theindustrial adjudicator can vary the terms of the contract of theemployment, it cannot do something which is violative of Article14. If the case is one which is covered by the concept ofregularisation, the same cannot be viewed differently.B

7. The plea of learned counsel for the respondent that at the timethe High Court decided the matter, decision in Umadevi (3)case [(2006) 4 SCC 1 : 2006 SCC (L&S) 753] was not renderedis really of no consequence. There cannot be case forregularisation without there being employee-employer relationship.CAs noted above the concept of regularisation is clearly linked withArticle 14 of the Constitution. However, if in case the factsituation is covered by what is stated in para 45 of Umadevi (3)case [(2006) 4 SCC 1 : 2006 SCC (L&S) 753] the industrialadjudicator can modify the relief, but that does not dilute theDobservations made by this Court in Umadevi (3) case [(2006) 4SCC 1 : 2006 SCC (L&S) 753] about the regularisation.”20. Subsequently, in Maharashtra State Road TransportCorporation v Casteribe Rajya Parivahan Karmchari Sanghatana[18](“Maharashtra SRTC”), it was held that the Industrial and LabourECourts under Section 30(1)(b) of the MRTU and PULP Act have widepowers to direct the employer to take affirmative action in case ofunfair labour practice including the power to order regularisation orpermanency. The decision in Umadevi was held to limit the scope ofthe powers under Articles 32 and 226 to issue directions for regularisationin matter of public employment. However, the power to take affirmativeFaction under Section 30(1)(b) was held to be intact even after the judgmentof the Constitution Bench. This Court held :

“35. Umadevi (3) [(2006) 4 SCC 1 : 2006 SCC (L&S) 753] is anauthoritative pronouncement for the proposition that the SupremeCourt (Article 32) and the High Courts (Article 226) should notGissue directions of absorption, regularisation or permanentcontinuance of temporary, contractual, casual, daily wage or adhoc employees unless the recruitment itself was made regularlyin terms of the constitutional scheme.

36. Umadevi (3) [(2006) 4 SCC 1 : 2006 SCC (L&S) 753] doesnot denude the Industrial and Labour Courts of their statutorypower under Section 30 read with Section 32 of the MRTU andPULP Act to order permanency of the workers who have beenvictims of unfair labour practice on the part of the employer underItem 6 of Schedule IV where the posts on which they have beenworking exist. Umadevi (3) [(2006) 4 SCC 1 : 2006 SCC (L&S)753] cannot be held to have overridden the powers of the Industrialand Labour Courts in passing appropriate order under Section 30of the MRTU and PULP Act, once unfair labour practice on thepart of the employer under Item 6 of Schedule IV is established.”

The Court however clarified that there is no doubt that the creationof posts does not lie within the domain of judicial functions “whichobviously pertains to the executive” and the status of permanency cannotbe granted by the Court where no posts exist. In Maharashtra SRTC,the two judge Bench was construing the provisions of the MRTU andPULP Act 1971. In holding that the creation of posts could not be directedby courts, the judgment in Maharashtra SRTC relied upon the decisionsin Mahatma Phule Agricultural University (supra) and State ofMaharashtra v R S Bhonde[19].

21. The divergence between the decisions in Bijli Mazdoor Sanghand Maharashtra SRTC was sought to be reconciled in two judgeBench decision of this Court in Hari Nandan Prasad v Employer I/Rto Management of Food Corporation of India[20] (“FCI”). Justice AK Sikri, speaking for the two judge Bench held:

“39. On harmonious reading of the two judgments discussed indetail above, we are of the opinion that when there are postsavailable, in the absence of any unfair labour practice the LabourCourt would not give direction for regularisation only because aworker has continued as daily-wage worker/ad hoc/temporaryworker for number of years. Further, if there are no posts available,such direction for regularisation would be impermissible. In theaforesaid circumstances giving of direction to regularise such aperson, only on the basis of number of years put in by such aworker as daily-wager, etc. may amount to back door entry intothe service which is an anathema to Article 14 of the Constitution.

19 (2005) 6 SCC 751

20 (2014) 7 SCC 190

AFurther, such direction would not be given when the workerconcerned does not meet the eligibility requirement of the post inquestion as per the recruitment rules. However, wherever it isfound that similarly situated workmen are regularised by theemployer itself under some scheme or otherwise and the workmenin question who have approached the Industrial/Labour Court areBon par with them, direction of regularisation in such cases maybe legally justified, otherwise, non-regularisation of the left-overworkers itself would amount to invidious discrimination qua themin such cases and would be violative of Article 14 of theConstitution. Thus, the industrial adjudicator would be achievingCthe equality by upholding Article 14, rather than violating thisconstitutional provision.”

22. In FCI, the grievance of the appellants was that in terms of ascheme contained in circular, similarly placed workmen had beenregularised on the completion of 240 days’ service. While dealing withDthe case of two workmen, it was found that one of them had beendispensed with four years prior to the date of the circular as result ofwhich the workman would only be entitled to monetary compensation.On the other hand, the second workman was in service on the date ofthe circular and completed 240 days of service within few months.The Court held that the failure to regularise his services wasEdiscriminatory.23. The following propositions would emerge upon analyzing theabove decisions:

(i)Wide as they are, the powers of the Labour Court and theIndustrial Court cannot extend to direction to orderFregularisation, where such direction would in the contextof public employment offend the provisions contained inArticle 14 of the Constitution;

(ii)The statutory power of the Labour Court or Industrial CourtGto grant relief to workmen including the status of permanencycontinues to exist in circumstances where the employer hasindulged in an unfair labour practice by not filling up permanentposts even though such posts are available and by continuingto employ workmen as temporary or daily wage employeesdespite their performing the same work as regular workmenHon lower wages;

(iii) The power to create permanent or sanctioned posts liesoutside the judicial domain and where no posts are available,a direction to grant regularisation would be impermissiblemerely on the basis of the number of years of service;

(iv) Where an employer has regularised similarly situatedworkmen either in scheme or otherwise, it would be opento workmen who have been deprived of the same benefit atpar with the workmen who have been regularised to make acomplaint before the Labour or Industrial Court, since thedeprivation of the benefit would amount to violation ofArticle 14; and

(v) In order to constitute an unfair labour practice under Section2(ra) read with Item 10 of the Vth Schedule of the ID Act,the employer should be engaging workmen as badlis,temporaries or casuals, and continuing them for years, withthe object of depriving them of the benefits payable topermanent workmen.

24. The decision in PCLU needs to be revisited in order to set theposition in law which it adopts in conformity with the principles emergingfrom the earlier line of precedent. More specifically, the areas on whichPCLU needs reconsideration are:

(i)The interpretation placed on the provisions of clause 2(ii) ofthe Certified Standing Orders;

(ii)The meaning and content of an unfair labour practice underSection 2(ra) read with Item 10 of the Vth Schedule of theID Act; and

(iii) The limitations, if any, on the power of the Labour andIndustrial Courts to order regularisation in the absence ofsanctioned posts. The decision in PCLU would, in our view,require reconsideration in view of the above decisions of thisCourt and for the reasons which we have noted above.

25. We accordingly request the Registry to place the proceedingsbefore the Hon’ble Chief Justice of India so as to enable His Lordship toconsider placing this batch of appeals before an appropriate Bench.

Kalpana K. Tripathy

Referred to Larger Bench.