Supreme Court clarifies the application of Section 33 of the Industrial Disputes Act in Sri Dorairaj Spintex vs R Chittibabu (22 September 2021)

Date of the Judgment: 22 September 2021

Citation: (2021) INSC 673

Judges: Dr. Dhananjaya Y. Chandrachud, J, Vikram Nath, J, B.V. Nagarathna, J

Can an employer initiate disciplinary action against employees during conciliation proceedings without prior approval? The Supreme Court of India addressed this question in a recent case, clarifying the scope of Section 33 of the Industrial Disputes Act, 1947. The Court differentiated between actions connected with the dispute and those that are not, setting a precedent for future industrial disputes. The judgment was delivered by a three-judge bench comprising Dr. Dhananjaya Y. Chandrachud, J, Vikram Nath, J, and B.V. Nagarathna, J, with the opinion authored by Dr. Dhananjaya Y. Chandrachud, J.

Case Background

The appellant, Sri Dorairaj Spintex, had an establishment in Dindigul District. On 4 July 2002, the workmen raised an industrial dispute under Section 2(k) of the Industrial Disputes Act, 1947 (ID Act). This dispute was taken into conciliation. While conciliation proceedings were ongoing, the workers commenced a stay-in strike on 31 July 2002. Subsequently, on 1 August 2002, another dispute was raised by the workmen, which was also taken into conciliation. The management initially suspended forty-seven workmen. A charge memo was issued to the workmen on 20 August 2002, followed by a reply on 30 August 2002. A domestic enquiry was conducted, and after its conclusion, a show cause notice was issued to the workmen on 29 October 2002. On 16 November 2002, an order of dismissal was issued. Following the dismissal, the management filed an application for approval before the Assistant Commissioner of Labour under Section 33(2)(b) of the ID Act.

Timeline

Course of Proceedings

The Assistant Commissioner of Labour, Dindigul, rejected the management’s application under Section 33(2)(b) of the ID Act, stating that prior approval was necessary under Section 33(1)(b) because conciliation proceedings were pending. The management challenged this order in writ proceedings before the High Court. A Single Judge of the High Court upheld the Assistant Commissioner’s order, stating that even if the dismissal was for a different reason, prior approval was needed under Section 33(1)(b). The Division Bench of the High Court affirmed this judgment, directing the appellant to pay 50% back wages, closure compensation, and interest. The management then appealed to the Supreme Court.

Legal Framework

The case revolves around Section 33 of the Industrial Disputes Act, 1947, which regulates the conditions of service during the pendency of industrial dispute proceedings. The relevant sections are:

• Section 33(1) of the ID Act:

  “During the pendency of any conciliation proceeding before a conciliation officer or a Board or of any proceeding before an arbitrator or a Labour Court or Tribunal or National Tribunal in respect of an industrial dispute, no employer shall, — (a) in regard to any matter connected with the dispute, alter, to the prejudice of the workmen concerned in such dispute, the conditions of service applicable to them immediately before the commencement of such proceeding; or (b) for any misconduct connected with the dispute, discharge or punish, whether by dismissal or otherwise, any workmen concerned in such dispute, save with the express permission in writing of the authority before which the proceeding is pending.”

  This section mandates that during conciliation or other proceedings, an employer cannot alter service conditions or punish/dismiss a workman for misconduct connected with the dispute without prior written permission from the relevant authority.

• Section 33(2) of the ID Act:

  “During the pendency of any such proceeding in respect of an industrial dispute, the employer may, in accordance with the standing orders applicable to a workman concerned in such dispute or, where there are no such standing orders, in accordance with the terms of the contract, whether express or implied, between him and the workman – (a) alter, in regard to any matter not connected with the dispute, the conditions of service applicable to that workman immediately before the commencement of such proceeding; or (b) for any misconduct not connected with the dispute, discharge or punish, whether by dismissal or otherwise, that workman: Provided that no such workman shall be discharged or dismissed, unless he has been paid wages for one month and an application has been made by the employer to the authority before which the proceeding is pending for approval of the action taken by the employer ….”

  This section allows an employer to alter service conditions or punish/dismiss a workman for misconduct not connected with the dispute. However, the employer must pay one month’s wages and apply to the authority for approval of the action.

Arguments

Appellant’s Arguments:

• The counsel for the appellant argued that the Assistant Commissioner of Labour failed to distinguish between Section 33(1)(b) and Section 33(2)(b) of the ID Act.
• Section 33(1)(b) requires prior approval for actions related to misconduct connected with the dispute, whereas Section 33(2)(b) requires only the payment of one month’s salary and the filing of an application for approval when the misconduct is not connected with the dispute.
• The appellant contended that the dismissal of the workmen was due to acts of vandalism, which were not connected to the industrial disputes raised by the workmen. Therefore, Section 33(2)(b) should apply, not Section 33(1)(b).

Respondent’s Arguments:

• The counsel for the respondent argued that the termination of the workmen for misconduct should be considered connected with the industrial dispute.
• They argued that a holistic view of Section 33(1)(b) should be taken, and that the termination was unlawful due to the lack of prior approval.
• The counsel for the respondent also submitted that the appeal stands dismissed as against Respondent Nos 10, 22, 26 and 31, who had died during the pendency of the proceedings before the High Court for failure to bring the legal representatives on the record.

Issues Framed by the Supreme Court

The core issue before the Supreme Court was whether the dismissal of the workmen by the management required prior approval under Section 33(1)(b) of the ID Act, or if it fell under the purview of Section 33(2)(b) of the ID Act, which only requires post-action approval. In other words, whether the misconduct was connected with the industrial dispute.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

The Court also discussed the legislative history of Section 33, noting that the provision was amended in 1956 to allow employers to take disciplinary action for misconduct not connected with the dispute, while providing safeguards for workmen.

Judgment

The Supreme Court held that the dismissal of the workmen was not connected to the industrial disputes raised by them. The misconduct was related to acts of vandalism, which were separate from the demands for promotional avenues, timely payment of salary, drinking water, and protective clothing raised in the conciliation proceedings. Therefore, the provisions of Section 33(2)(b) of the ID Act were applicable.

The Court emphasized that the key factor is whether the action taken by the employer is connected to the industrial dispute. In this case, the acts of vandalism were not related to the demands raised by the workmen. Therefore, the management was required to follow the procedure under Section 33(2)(b) of the ID Act, which they had done. The court observed that, “The disciplinary enquiry was held in respect of the acts of misconduct alleged to have been committed by the workmen involving the property of the employer. These dismissal for misconduct cannot be regarded as being connected to the dispute which was raised in conciliation, as noted above.” The court also noted that, “The Single Judge noticed that the dismissal was for some other reason, yet held that Section 33 (1)(b) was attracted. There has been no independent application of mind by the Division Bench at all.” The Court also observed that, “Once we have come to the conclusion that the action of dismissal for misconduct was not connected with the dispute which was pending in conciliation, the provisions of Section 33(2)(b) of the ID Act would stand attracted.”

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the distinction between actions connected with an industrial dispute and those that are not, as outlined in Section 33 of the ID Act. The Court emphasized that the purpose of Section 33 is to maintain a peaceful environment during conciliation proceedings, but it also recognizes the employer’s right to take disciplinary action for misconduct unrelated to the dispute. The Court’s reasoning focused on the specific facts of the case, where the misconduct (vandalism) was clearly separate from the demands raised by the workmen in the conciliation proceedings.

Logical Reasoning:

Key Takeaways

• Distinction between Section 33(1)(b) and 33(2)(b): Employers must understand the difference between actions connected with an industrial dispute (requiring prior approval) and those not connected (requiring post-action approval).
• Connection with the Dispute: The key factor is whether the misconduct is directly related to the demands raised in the industrial dispute. If not, Section 33(2)(b) applies.
• Procedural Compliance: Employers must comply with the procedural requirements of Section 33(2)(b), including payment of one month’s wages and application for approval.
• Impact on Future Cases: This judgment clarifies the application of Section 33 of the ID Act, providing a clear guideline for future industrial disputes.

Directions

The Supreme Court set aside the impugned judgment of the High Court and approved the application for approval filed by the appellant under Section 33(2)(b) of the ID Act. The Court also clarified that the order shall not affect the entitlement of the legal representatives of the deceased workmen to the benefits which flow in accordance with law.

Development of Law

The ratio decidendi of this case is that Section 33(2)(b) of the Industrial Disputes Act, 1947 applies when the misconduct for which a workman is dismissed is not connected to the industrial dispute that is pending in conciliation. This judgment reinforces the distinction between actions connected with and not connected with industrial disputes, as laid out in Section 33 of the ID Act. It clarifies that if the misconduct is not related to the demands raised in the industrial dispute, the employer can proceed with disciplinary action by complying with Section 33(2)(b), without the need for prior approval. This clarifies the law and provides employers with a clear understanding of their rights and obligations during conciliation proceedings.

Conclusion

The Supreme Court’s judgment in Sri Dorairaj Spintex vs R Chittibabu & Ors clarifies the application of Section 33 of the Industrial Disputes Act, 1947, emphasizing the distinction between actions connected with and not connected with an industrial dispute. The Court held that the dismissal of the workmen for acts of vandalism was not connected to the demands raised in the conciliation proceedings and, therefore, the management was required to follow the procedure under Section 33(2)(b) of the ID Act, which they had done. This ruling provides clarity for employers and employees regarding disciplinary actions during conciliation proceedings.