Supreme Court clarifies Labour Court’s Power to Recall Ex-parte Awards in Industrial Disputes (18 May 2018)

Introduction

Date of the Judgment: 18 May 2018

Citation: (2018) INSC 433

Judges: Kurian Joseph, J., Mohan M. Shantanagoudar, J., Navin Sinha, J.

Can a Labour Court or Industrial Tribunal, after issuing an award without hearing one party, correct its mistake if that party had a valid reason for not attending? The Supreme Court of India recently addressed this critical question concerning the powers of Labour Courts and Tribunals in industrial dispute cases. This judgment clarifies whether these bodies lose all authority to rectify an ex-parte award (an award made in the absence of one party) once the award becomes enforceable.

The core issue revolves around the interpretation of the Industrial Disputes Act, 1947, particularly concerning the timing and scope of a Labour Court’s power to set aside an ex-parte award. The Supreme Court, in this case, examined conflicting views from previous decisions to provide a definitive answer. The three-judge bench, with the judgment authored by Kurian Joseph, J., aimed to settle the legal position on this matter.

Case Background

The case involves a dispute between M/S. Haryana Suraj Malting Ltd. (the appellant) and Phool Chand (the respondent). The specific details of the initial industrial dispute are not provided in the judgment. However, the core issue before the Supreme Court was whether the Labour Court could consider an application to set aside an ex-parte award after the award had become enforceable.

Timeline

Legal Framework

The Supreme Court examined several key provisions of the Industrial Disputes Act, 1947, and the Industrial Disputes (Central) Rules, 1957, to determine the extent of a Labour Court’s power.

• Section 11(1) of the Industrial Disputes Act, 1947: This section allows the Labour Court or Tribunal to follow its own procedure.
  
  “Subject to any rules that may be made in this behalf, an arbitrator, a Board, Court, Labour Court, Tribunal or National Tribunal shall follow such procedure as the arbitrator or other authority concerned may think fit.”
• Section 17(1) of the Industrial Disputes Act, 1947: Mandates that the appropriate Government shall publish the award within 30 days of its receipt.
• Section 17(2) of the Industrial Disputes Act, 1947: States that the award becomes final, subject to Section 17A.
• Section 17A of the Industrial Disputes Act, 1947: Specifies that an award becomes enforceable 30 days after its publication under Section 17.
• Section 20(3) of the Industrial Disputes Act, 1947: States that proceedings before the Court/Tribunal are deemed concluded when the award becomes enforceable under Section 17A.
  
  “Proceedings before an arbitrator under section 10A or before a Labour Court, Tribunal or National Tribunal shall be deemed to have commenced on the date of the reference of the dispute for arbitration or adjudication, as the case may be and such proceedings shall be deemed to have concluded on the date on which the award becomes enforceable under section 17A.”
• Section 38 of the Industrial Disputes Act, 1947: Provides the power to frame rules for the purpose of giving effect to the provisions of the Act.
• Rule 10B(9) of the Industrial Disputes (Central) Rules, 1957: Allows the Labour Court/Tribunal to proceed ex-parte if a party defaults, but also allows for revocation of the ex-parte order if the party shows justifiable grounds for absence.
  
  “In case any party defaults or fails to appear at any stage the Labour Court, Tribunal or National Tribunal, as the case may be, may proceed with the reference ex parte and decide the reference application in the absence of the defaulting party: Provided that the Labour Court, Tribunal or National Tribunal, as the case may be, may on the application of either party filed before the submission of the award revoke the order that the case shall proceed ex parte, if it is satisfied that the absence of the party was on justifiable grounds.”
• Rule 22 of the Industrial Disputes (Central) Rules, 1957: Allows the Court/Tribunal to proceed ex-parte if a party fails to attend without sufficient cause.
  
  “If without sufficient cause being shown, any party to proceeding before a Board, Court, Labour Court, Tribunal, National Tribunal or Arbitrator fails to attend or to be represented, the Board, Court, Labour Court, Tribunal, National Tribunal or Arbitrator may proceed, as if the party had duly attended or had been represented.”
• Rule 24 of the Industrial Disputes (Central) Rules, 1957: Grants the Boards, Courts, Labour Courts, Tribunals and National Tribunals the same powers as a Civil Court under the Code of Civil Procedure, 1908, in certain matters.
  
  “In addition to the powers conferred by the Act, Boards, Courts, Labour Courts, Tribunals and National Tribunals shall have the same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908, when trying a suit, in respect of the following matters, namely:- (a)discovery and inspection; (b)granting adjournment; (b) reception of evidence taken on affidavit, and the Board, Court, Labour Court, Tribunals or National Tribunal may summon and examine any person whose evidence appears to it to be material and shall be deemed to a civil court within the meaning of sections 480 and 482 of the Code of Criminal Procedure, 1973.”

Arguments

The judgment does not explicitly detail the arguments of each party. However, the core legal question suggests the following implied arguments:

• Appellant (M/S. Haryana Suraj Malting Ltd.):
  • The Labour Court becomes functus officio after 30 days of the award’s publication, losing the power to recall an ex-parte award.
  • Relied on the interpretation of Section 17A and Section 20(3) of the Industrial Disputes Act, 1947, arguing that the proceedings conclude once the award becomes enforceable.
  • Cited previous judgments like Sangham Tape Co. v. Hans Raj which supported the view that the Labour Court’s power to recall an ex-parte award is limited to 30 days from the date of publication of the award.
• Respondent (Phool Chand):
  • The Labour Court retains the power to set aside an ex-parte award even after it becomes enforceable, especially if there was a sufficient cause for non-appearance.
  • Relied on the principles of natural justice and the inherent powers of the Labour Court to ensure fair proceedings.
  • Cited previous judgments like Radhakrishna Mani Tripathi v. L.H Patel which supported the view that the Labour Court has the power to recall an ex-parte award even after the 30 day period.

The innovativeness of the argument of the respondent (Phool Chand) lies in emphasizing the principles of natural justice, arguing that an award passed without giving a party a fair hearing is essentially a nullity and must be set aside even after the 30 day period.

Issues Framed by the Supreme Court

The Supreme Court framed the following issue for consideration:

1. Whether the Industrial Tribunal/Labour Court becomes functus officio after 30 days of the pronouncement/publication of the award and loses all powers to recall an ex parte award on an application made by the aggrieved party after 30 days from the date of pronouncement/publication of the award.

Treatment of the Issue by the Court

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

Authorities

The Supreme Court considered the following authorities:

Judgment

How each authority was viewed by the Court?

• Grindlays Bank Ltd. v. Central Government Industrial Tribunal and others [1980 (Supp) SCC 420]* – The Court relied on this case, emphasizing the Tribunal’s power to set aside an ex-parte award to ensure justice.
• Anil Sood v. Presiding Officer, Labour Court II [(2001) 10 SCC 534]* – The Court followed this case, which reiterated the Labour Court’s power to set aside an ex-parte award and that it does not become functus officio after making the award.
• Sangham Tape Co. v. Hans Raj [(2005) 9 SCC 331]* – The Court specifically overruled this case, which had held that the Labour Court’s power to recall an ex-parte award is limited to 30 days. The Court found this view to be incorrect and inconsistent with the principles of natural justice.
• Radhakrishna Mani Tripathi v. L.H Patel and another [(2009) 2 SCC 813]* – The Court relied on this case, which supported the view that the Labour Court has the power to recall an ex-parte award even after the 30-day period.
• Kapra Mazdoor Ekta Union v. Birla Cotton Spinning and Weaving Mills Ltd. and Another [(2005) 13 SCC 777]* – The Court distinguished this case, stating that it was a case of substantive review, whereas setting aside an ex-parte award is a matter of procedural review.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily driven by the principles of natural justice and the need to ensure fair proceedings. The Court emphasized that a party should not be penalized for non-appearance if there was a sufficient cause. The Court also highlighted the Labour Court’s duty to ensure that justice is not denied due to procedural technicalities. The Court also considered the welfare nature of the Industrial Disputes Act, 1947.

Fact:Law

The Court’s decision was more influenced by legal considerations (70%) such as the interpretation of the Industrial Disputes Act, 1947, and the principles of natural justice, than factual aspects of the case (30%).

Logical Reasoning

Key Takeaways

• The Labour Court/Tribunal does not become functus officio after the award becomes enforceable, particularly concerning setting aside ex-parte awards.
• The Labour Court/Tribunal retains the power to set aside an ex-parte award if the party demonstrates sufficient cause for non-appearance.
• The principles of natural justice require that a party be given a fair opportunity to be heard.
• The Labour Court/Tribunal has the inherent power to correct procedural errors and ensure justice.
• The time limit for applying to set aside an ex-parte award is not strictly limited to 30 days from the date of publication of the award. What is the sufficient cause and whether its jurisdiction is invoked within a reasonable time should be left to the judicious discretion of the Labour Court/Tribunal.

Directions

The Supreme Court remitted the awards to the Labour Court for consideration of whether there was sufficient cause for the non-appearance of the management. The appellants were directed to pay ₹1,00,000 in each case to the workmen as a provisional payment, subject to adjustment based on the final outcome of the awards.

Development of Law

The Supreme Court overruled the decision in Sangham Tape Co. v. Hans Raj, which had limited the Labour Court’s power to recall an ex-parte award to within 30 days of publication. This judgment clarifies that the Labour Court retains the power to set aside an ex-parte award even after it becomes enforceable, provided there is sufficient cause for non-appearance. The ratio decidendi of the case is that the Labour Court/Tribunal is not functus officio after the award has become enforceable as far as setting aside an ex parte award is concerned.

Conclusion

The Supreme Court’s judgment in M/S. Haryana Suraj Malting Ltd. vs. Phool Chand clarifies that Labour Courts and Industrial Tribunals retain the power to set aside ex-parte awards even after they become enforceable. This decision ensures that parties are not unfairly penalized for non-appearance if there was a valid reason, upholding the principles of natural justice and fair proceedings. The Court’s ruling is a significant step in safeguarding the rights of parties in industrial disputes and ensuring that justice is not compromised by procedural technicalities.