Supreme Court clarifies definition of “Workman” under Industrial Disputes Act: Bharti Airtel vs. A.S. Raghavendra (2024)

Introduction

Date of the Judgment: April 02, 2024

Citation: 2024 INSC 265

Judges: Hima Kohli, J. and Ahsanuddin Amanullah, J.

Can an employee who holds a managerial position, but does not have the power to hire or fire other employees, be considered a “workman” under the Industrial Disputes Act, 1947? The Supreme Court of India recently addressed this question in a dispute between Bharti Airtel Limited and one of its former employees, A.S. Raghavendra. The core issue revolved around whether Mr. Raghavendra, a former Regional Business Head, qualified as a “workman” under the Act, which would entitle him to certain protections and remedies under labour law. The Supreme Court, in this case, clarified the scope of the term “workman” and emphasized that managerial roles, even without the power to appoint or dismiss, do not fall under this definition. The judgment was delivered by a two-judge bench comprising Justice Hima Kohli and Justice Ahsanuddin Amanullah, with the majority opinion authored by Justice Ahsanuddin Amanullah.

Case Background

A.S. Raghavendra was appointed as Regional Business Head (South) – Government Enterprise Services at Bharti Airtel on June 22, 2009. His role was at the Senior Manager (B2) level, with an annual package of Rs. 22,00,000, including a fixed pay of Rs. 13,20,000 and a variable pay of Rs. 8,80,000 under the Sales Incentive Plan (SIP). Mr. Raghavendra supervised four Account Managers, each responsible for Karnataka, Tamil Nadu, Andhra Pradesh, and Kerala. On March 24, 2011, he initially requested resignation on the internal system, which was accepted by the company on May 9, 2011. He received Rs. 5,92,538 as full and final settlement. After about 19 months, Mr. Raghavendra claimed his resignation was forceful, leading to failed conciliation proceedings. On June 27, 2013, the Government of Karnataka referred the dispute to the Labour Court, rejecting Bharti Airtel’s argument that Mr. Raghavendra was not a “workman” under Section 2(s) of the Industrial Disputes Act, 1947, due to his managerial role and high annual package.

Timeline

Course of Proceedings

The Labour Court, on September 5, 2017, ruled against Mr. Raghavendra, stating he failed to prove he was a “workman” under Section 2(s) of the ID Act, and that his role was managerial. Mr. Raghavendra then filed a writ petition before the High Court of Karnataka, challenging the Labour Court’s award. The Single Judge of the High Court partly allowed the writ petition on November 29, 2019, relying on the Supreme Court’s judgment in Ved Prakash Gupta v Delton Cable India (P.) Ltd., (1984) 2 SCC 569. The Single Judge held that the absence of power to appoint, dismiss, or conduct disciplinary inquiries indicated that Mr. Raghavendra was not in a managerial position and was therefore a “workman.” Consequently, the matter was remanded to the Labour Court for adjudication on merits. Aggrieved by this decision, Bharti Airtel appealed to the Division Bench of the High Court, which dismissed the appeal on March 31, 2022, upholding the Single Judge’s decision.

Legal Framework

The core of this case revolves around the definition of “workman” as provided in Section 2(s) of the Industrial Disputes Act, 1947. This section defines a “workman” as:

“2(s) “workman” means any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied, and for the purposes of any proceeding under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person — (i) who is subject to the Air Force Act, 1950 (45 of 1950), or the Army Act, 1950 (46 of 1950), or the Navy Act, 1957 (62 of 1957); or (ii) who is employed in the police service or as an officer or other employee of a prison; or (iii) who is employed mainly in a managerial or administrative capacity; or (iv) who, being employed in a supervisory capacity, draws wages exceeding ten thousand rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.”

The definition explicitly excludes individuals employed mainly in a managerial or administrative capacity, as well as those in a supervisory capacity earning above a certain wage threshold or performing managerial functions. The interpretation of this section is crucial in determining whether an employee can seek remedies under the ID Act.

Arguments

Appellant (Bharti Airtel)’s Arguments:

• The Labour Court’s order was thorough and based on evidence, requiring no interference.
• The High Court erred in re-appreciating evidence under Articles 226 and 227 of the Constitution.
• Mr. Raghavendra was a senior manager with an annual package of Rs. 22,00,000, not a “workman” under Section 2(s) of the ID Act.
• Mr. Raghavendra’s duties as Regional Business Head were managerial, supervising Account Managers in four states.
• Mr. Raghavendra was responsible for performance assessments of his team.
• Mr. Raghavendra did not prove he was a “workman” by demonstrating the nature of his duties.
• Mr. Raghavendra’s resignation and acceptance of full and final settlement indicated his acceptance of the terms of his separation.
• The High Court exceeded its jurisdiction by acting as a court of appeal rather than correcting jurisdictional errors.
• The High Court misapplied the ratio of Ved Prakash Gupta v Delton Cable India (P.) Ltd., (1984) 2 SCC 569 by focusing on the absence of power to hire and fire.
• Cited cases like Indian Overseas Bank v IOB Staff Canteen Workers Union, (2000) 4 SCC 245, Anoop Sharma v Public Health Division, Haryana, (2010) 5 SCC 497, and Pepsico India Holding (P) Ltd. v Krishna Kant Pandey, (2015) 4 SCC 270 to argue that the High Court cannot re-appreciate evidence unless the Labour Court’s findings are perverse or based on no evidence.

Respondent (A.S. Raghavendra)’s Arguments:

• He succeeded in proving he was a “workman” based on the nature of his duties before the High Court.
• The Labour Court ignored evidence of his clerical duties and focused on his designation and salary.
• Proceedings before the Labour Court do not require strict compliance with rules of evidence.
• The term “workman” was not expressly used due to inadvertence, but his duties were described in detail.
• His resignation was obtained under coercion and was not out of his free will.
• He had no decision-making powers and nobody reported to him, despite his designation.
• He was not an “Assessing Manager” and did not write appraisals for other employees.
• The company tactfully gave impressive designations without real power.
• Cited cases like Devinder Singh v Municipal Counicl, Sanaur, (2011) 6 SCC 584, Suo-Motu Contempt Petition (Civil) No.3 of 2021 [2022 SCC OnLine SC 858], and Ananda Bazar Patrika (P) Ltd. v The Workmen, (1970) 3 SCC 248 to support his claim.

Issues Framed by the Supreme Court

The Supreme Court framed the following key issue for consideration:

1. Whether the respondent, A.S. Raghavendra, qualifies as a “workman” under Section 2(s) of the Industrial Disputes Act, 1947.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered several authorities to arrive at its decision. These have been categorized below for clarity:

The Court also referred to Section 2(s) of the Industrial Disputes Act, 1947, to define the term “workman”.

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

✓ The Supreme Court distinguished Ved Prakash Gupta v Delton Cable India (P.) Ltd., (1984) 2 SCC 569, clarifying that the absence of power to hire and fire is not the sole determinant of “workman” status.

✓ The Supreme Court followed S K Maini v M/s Carona Sahu Company Limited, (1994) 3 SCC 510, noting that managerial employees may not always have the power to hire and fire.

✓ The Supreme Court cited Indian Overseas Bank v IOB Staff Canteen Workers Union, (2000) 4 SCC 245, Anoop Sharma v Public Health Division, Haryana, (2010) 5 SCC 497, and Pepsico India Holding (P) Ltd. v Krishna Kant Pandey, (2015) 4 SCC 270, to reiterate that the High Court cannot re-appreciate evidence unless the Labour Court’s findings are perverse or based on no evidence.

✓ The Supreme Court cited Shivashakti Sugars Limited v Shree Renuka Sugar Limited, (2017) 7 SCC 729, to emphasize the need for economic analysis of law and the impact of judicial decisions on the economy.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the nature of duties performed by Mr. Raghavendra, the documentary evidence, and the legal definition of “workman” under Section 2(s) of the Industrial Disputes Act, 1947. The Court emphasized that the absence of power to appoint, dismiss, or conduct disciplinary inquiries is not the sole criterion for determining “workman” status. The Court also considered the economic implications of its decision, ensuring that the interpretation of “workman” does not lead to incongruous results that could affect the economy. The Court was also not persuaded by the claim that the resignation was forced, finding that it was more a result of dissatisfaction with the appraisal process.

Logical Reasoning:

The Court considered alternative interpretations of the term “workman” but rejected them, emphasizing that the nature of duties and the managerial role played by Mr. Raghavendra were the determining factors. The Court also rejected the argument that the resignation was forced, stating that it was a result of his dissatisfaction with his appraisal.

The Court’s reasoning was based on a careful analysis of the facts, the law, and the relevant precedents. The Court emphasized that the definition of “workman” under Section 2(s) of the ID Act excludes those in managerial roles. The Court also noted that the absence of power to hire or fire is not the sole determinant of whether an employee is a “workman.”

The majority opinion was delivered by Justice Ahsanuddin Amanullah, with Justice Hima Kohli concurring.

“Being a managerial cadre employee you will be responsible for the overall smooth and effective functioning of the department/ establishment/ office/ staff/ employees under your charge and will be directly responsible for the successful and timely completion of any job / work assigned to you or any person working under your control and supervision and/ or within the department/ establishment/ office of which you are for the tire being holding the charge You would adhere to the norms of office discipline.”

“It must also be remembered that the evidence of both WW1 and MW1 shows that the appellant could never appoint or dismiss any workman or order any enquiry against any workman. In these circumstances we hold that the substantial duty of the appellant was only that of a Security Inspector at the gate of the factory premises and that it was neither managerial nor supervisory in nature in the sense in which those terms are understood in industrial law.”

“It should be borne in mind that an employee discharging managerial duties and functions may not, as a matter of course, be invested with the power of appointment and discharge of other employees. It is not unlikely that in a big set -up such power is not invested to a local manager but such power is given to some superior officers also in the management cadre at divisional or regional level.”

Key Takeaways

✓ The definition of “workman” under Section 2(s) of the Industrial Disputes Act, 1947, excludes employees in managerial roles, even if they do not have the power to hire or fire.

✓ The absence of power to appoint, dismiss, or conduct disciplinary inquiries is not the sole criterion for determining “workman” status.

✓ High Courts should not re-appreciate evidence unless the Labour Court’s findings are perverse or based on no evidence.

✓ The economic implications of judicial decisions should be considered.

✓ Employees cannot dictate the terms of their employment to their employer.

This judgment clarifies the scope of the term “workman” and emphasizes that managerial roles, even without the power to appoint or dismiss, do not fall under this definition. This could impact future cases involving similar disputes.

Directions

The Supreme Court set aside the judgments of the High Court and restored the Labour Court’s order, declaring that Mr. Raghavendra is not a “workman” and that the reference to the Labour Court under the ID Act was not maintainable.

Specific Amendments Analysis

There is no specific amendment discussed in the judgment.

Development of Law

The ratio decidendi of the case is that an employee holding a managerial position, even without the power to hire or fire, does not qualify as a “workman” under Section 2(s) of the Industrial Disputes Act, 1947. This judgment clarifies that the absence of power to appoint, dismiss, or conduct disciplinary inquiries is not the sole criterion for determining “workman” status, thus, changing the previous position of law.

Conclusion

The Supreme Court’s judgment in M/s Bharti Airtel Limited vs. A.S. Raghavendra clarifies the definition of “workman” under the Industrial Disputes Act, 1947. The Court held that A.S. Raghavendra, despite not having the power to hire or fire, was not a “workman” due to his managerial role. The judgment emphasizes that the nature of duties, rather than the designation or absence of certain powers, is crucial in determining “workman” status. The Supreme Court’s decision sets a precedent for future labour disputes involving managerial employees and serves as a reminder that the High Court should not re-appreciate evidence unless the Labour Court’s findings are perverse or based on no evidence. The Supreme Court also highlighted the economic implications of its decisions, ensuring that the interpretation of “workman” does not lead to incongruous results that could affect the economy.