Supreme Court Clarifies Labour Court’s Jurisdiction Under Section 33(C)(2) of the Industrial Disputes Act in Wage Dispute: M/s Bombay Chemical Industries vs. Deputy Labour Commissioner & Anr. (04 February 2022)

Date of the Judgment: 04 February 2022
Citation: M/s Bombay Chemical Industries vs. Deputy Labour Commissioner & Anr. (2022) INSC 117
Judges: M. R. Shah, J., B.V. Nagarathna, J.
Can a Labour Court decide on a wage dispute under Section 33(C)(2) of the Industrial Disputes Act, 1947, when the employer-employee relationship itself is under serious dispute? The Supreme Court of India addressed this critical question in a recent judgment, clarifying the scope and limitations of the Labour Court’s jurisdiction. This case involved a claim for unpaid wages, where the employer denied any employment relationship with the claimant. The Supreme Court, in a two-judge bench comprising Justice M. R. Shah and Justice B.V. Nagarathna, held that the Labour Court cannot adjudicate such disputes under Section 33(C)(2) of the Industrial Disputes Act.

Case Background

The case originated from an application filed by Respondent No. 2 before the Labour Court under Section 33(C)(2) of the Industrial Disputes Act, 1947. Respondent No. 2 claimed a difference in wages from April 1, 2006, to March 31, 2012, asserting that he worked as a salesman for the Appellant, M/s Bombay Chemical Industries. The Appellant contested this claim, denying any employer-employee relationship with Respondent No. 2. The Appellant argued that Respondent No. 2 was never employed by them. Respondent No. 2 presented documents (exhibits W-1 to W-6) to support his claim of employment. The Labour Court ruled in favor of Respondent No. 2, directing the Appellant to pay the claimed wage difference. The Appellant then challenged this order in the High Court of Judicature at Allahabad, which upheld the Labour Court’s decision. This led to the present appeal before the Supreme Court.

Timeline

Course of Proceedings

The Labour Court initially allowed the application filed by Respondent No. 2 under Section 33(C)(2) of the Industrial Disputes Act, directing the Appellant to pay the difference in wages claimed by Respondent No. 2. The Appellant challenged this order by filing a writ petition before the High Court of Judicature at Allahabad. The High Court dismissed the writ petition, upholding the Labour Court’s order. This led to the Appellant filing the present appeal before the Supreme Court.

Legal Framework

The core legal provision in this case is Section 33(C)(2) of the Industrial Disputes Act, 1947. This section allows a workman to recover money due from an employer. It states:

“Where any workman is entitled to receive from the employer any money or any benefit which is capable of being computed in terms of money and if any question arises as to the amount of money due or as to the amount at which such benefit should be computed, then the question may, subject to any rules that may be made under this Act, be decided by such Labour Court as may be specified in this behalf by the appropriate Government.”

The Supreme Court also considered the scope of Section 10 of the Industrial Disputes Act, which deals with the reference of disputes to a Labour Court or Tribunal for adjudication.

Arguments

Appellant’s Arguments:

• The Appellant argued that the High Court erred in dismissing their writ petition and upholding the Labour Court’s order.
• The Appellant contended that a serious dispute existed regarding the employer-employee relationship between the Appellant and Respondent No. 2. They argued that Respondent No. 2 was never employed as a salesman.
• The Appellant submitted that the Labour Court lacked jurisdiction under Section 33(C)(2) of the Industrial Disputes Act to adjudicate the disputed employer-employee relationship.
• The Appellant argued that such disputes could only be decided through a reference under Section 10 of the Industrial Disputes Act.
• The Appellant relied on the Supreme Court’s decisions in Municipal Corporation of Delhi Vs. Ganesh Razak and Anr., (1995) 1 SCC 235 and Union of India and another Vs. Kankuben (Dead) By Lrs. and Others, (2006) 9 SCC 292, to argue that the Labour Court’s jurisdiction under Section 33(C)(2) is limited to interpreting awards or settlements and does not extend to adjudicating disputes of entitlement or the basis of a claim.

Respondent’s Arguments:

• The Respondent contended that Respondent No. 2 had presented substantial evidence (exhibits W-1 to W-6) to prove his employment as a salesman with the Appellant.
• The Respondent argued that the Appellant’s denial of the employer-employee relationship was a false claim to avoid paying the wage difference.
• The Respondent submitted that the Labour Court, after evaluating the evidence, correctly concluded that Respondent No. 2 was an employee and rightly directed the payment of the wage difference.
• The Respondent argued that the Labour Court did not exceed its jurisdiction.

Issues Framed by the Supreme Court

The main issue before the Supreme Court was:

1. Whether the Labour Court had the jurisdiction under Section 33(C)(2) of the Industrial Disputes Act to entertain and adjudicate the claim of Respondent No. 2, given the serious dispute regarding the employer-employee relationship between the Appellant and Respondent No. 2.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Cases:

• Municipal Corporation of Delhi Vs. Ganesh Razak and Anr., (1995) 1 SCC 235 – Supreme Court of India

  The court held that the Labour Court’s jurisdiction under Section 33(C)(2) of the Industrial Disputes Act is similar to that of an executing court, limited to interpreting awards or settlements and not adjudicating disputes of entitlement or the basis of a claim.

• Union of India and another Vs. Kankuben (Dead) By Lrs. and Others, (2006) 9 SCC 292 – Supreme Court of India

  The court clarified that the benefit sought to be enforced under Section 33(C)(2) of the Industrial Disputes Act must be a pre-existing benefit or one flowing from a pre-existing right. It distinguished between a pre-existing right and a right considered just and fair, stating that only the former falls within the Labour Court’s jurisdiction under Section 33(C)(2).

Legal Provisions:

• Section 33(C)(2) of the Industrial Disputes Act, 1947: This section allows a workman to recover money due from an employer.
• Section 10 of the Industrial Disputes Act, 1947: This section deals with the reference of disputes to a Labour Court or Tribunal for adjudication.

Judgment

How each authority was viewed by the Court?

• The Supreme Court followed Municipal Corporation of Delhi Vs. Ganesh Razak and Anr., (1995) 1 SCC 235*, reiterating that the Labour Court’s jurisdiction under Section 33(C)(2) is akin to that of an executing court, limited to interpreting awards or settlements and not adjudicating disputes regarding the basis of a claim.
• The Supreme Court also followed Union of India and another Vs. Kankuben (Dead) By Lrs. and Others, (2006) 9 SCC 292*, emphasizing that the benefit sought under Section 33(C)(2) must be a pre-existing right.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the principle that the Labour Court’s jurisdiction under Section 33(C)(2) of the Industrial Disputes Act is limited. The Court emphasized that this section is intended for the computation of pre-existing benefits or rights, not for adjudicating disputed claims of employment. The Court was also concerned that allowing the Labour Court to decide on the employer-employee relationship would undermine the established process of dispute resolution under the Industrial Disputes Act, which requires a reference under Section 10 for such matters.

Logical Reasoning:

The Supreme Court rejected the interpretation that the Labour Court could decide on the employer-employee relationship under Section 33(C)(2). The Court reasoned that this would exceed the Labour Court’s limited jurisdiction. The Court also stated that such a decision would undermine the statutory mechanism for resolving industrial disputes, which requires a reference under Section 10 for adjudicating such disputes.

The Court held that the Labour Court had exceeded its jurisdiction by adjudicating the disputed employer-employee relationship. The Court stated that the Labour Court’s role under Section 33(C)(2) is to compute pre-existing benefits or rights, not to determine the very basis of the claim. The Court also emphasized that the Labour Court’s jurisdiction is similar to that of an executing court, which cannot go behind the decree.

The Supreme Court quoted the following from the judgment:

“As per the settled proposition of law, in an application under Section 33(C)(2) of the Industrial Disputes Act, the Labour Court has no jurisdiction and cannot adjudicate dispute of entitlement or the basis of the claim of workmen. It can only interpret the award or settlement on which the claim is based.”

“The benefit sought to be enforced under Section 33-C (2) of the ID Act is necessarily a pre-existing benefit or one flowing from a pre-existing right. The difference between a pre-existing right or benefit on one hand and the right or benefit, which is considered just and fair on the other hand is vital.”

“Therefore, the order passed by the Labour Court was beyond the jurisdiction conferred under Section 33(C)(2) of the Industrial Disputes Act.”

There was no minority opinion in this case. Both judges agreed on the judgment.

Key Takeaways

• A Labour Court cannot decide on a disputed employer-employee relationship under Section 33(C)(2) of the Industrial Disputes Act.
• The Labour Court’s jurisdiction under Section 33(C)(2) is limited to computing pre-existing benefits or rights.
• Disputes regarding employer-employee relationships must be resolved through a reference under Section 10 of the Industrial Disputes Act.
• This judgment clarifies the scope and limitations of the Labour Court’s jurisdiction under Section 33(C)(2) and reinforces the importance of adhering to the established dispute resolution mechanisms under the Industrial Disputes Act.

Directions

The Supreme Court quashed the orders of the High Court and the Labour Court. Respondent No. 2 was directed to pursue other remedies available under the Industrial Disputes Act, including seeking a reference to adjudicate his claim of being an employee of the Appellant. The Court clarified that it had not expressed any opinion on the merits of the employer-employee relationship, and any future proceedings should be decided on their own merits without being influenced by the present order.

Development of Law

The ratio decidendi of this case is that the Labour Court’s jurisdiction under Section 33(C)(2) of the Industrial Disputes Act does not extend to adjudicating disputed employer-employee relationships. This judgment reinforces the existing legal position as established in Municipal Corporation of Delhi Vs. Ganesh Razak and Anr., (1995) 1 SCC 235 and Union of India and another Vs. Kankuben (Dead) By Lrs. and Others, (2006) 9 SCC 292. There is no change in the previous position of law, but this judgment clarifies the application of the existing law in cases where the employer-employee relationship is disputed.

Conclusion

The Supreme Court’s judgment in M/s Bombay Chemical Industries vs. Deputy Labour Commissioner & Anr. clarifies that a Labour Court cannot decide on a disputed employer-employee relationship under Section 33(C)(2) of the Industrial Disputes Act. The Court emphasized that this section is for computing pre-existing benefits, not for determining the basis of a claim. This ruling ensures that disputes about employment are resolved through the proper channels under the Industrial Disputes Act, specifically through a reference under Section 10. The judgment reinforces the limited nature of the Labour Court’s jurisdiction under Section 33(C)(2) and upholds the established process of dispute resolution in industrial matters.