Introduction

Date of the Judgment: 26 September 2008

Judges: Altamas Kabir, J., Markandey Katju, J.

The central question in this case revolves around whether a Labour Court can declare seasonal workers as permanent employees, especially when their work’s nature appears continuous. The Supreme Court addressed this issue in an appeal concerning the U.P. State Sugar & Cane Development Corporation Limited and its dispute with Chini Mill Mazdoor Sangh & Others. The core issue is whether the Labour Court overstepped its authority by reclassifying workers, a function typically reserved for management.

The Supreme Court bench, comprising Justice Altamas Kabir and Justice Markandey Katju, examined the Labour Court’s decision to grant permanent status to 14 seasonal workmen. The court considered whether this decision encroached upon the managerial functions of the U.P. State Sugar & Cane Development Corporation Limited.

Case Background

The dispute originated with respondent Nos. 2–15, members of respondent No. 1 Union, who were employed as “seasonal workmen” by the appellant. These workmen claimed that despite their categorization, they were employed throughout the year, performing duties similar to permanent employees but receiving only seasonal wages. This grievance led to a representation to the Conciliation Officer and a subsequent Reference by the State of Uttar Pradesh to the Labour Court on 3 November 1989.

The terms of Reference included determining whether 39 employees listed in Schedule ‘Ka’ could be declared permanent and whether 28 workmen in Schedule ‘Kha’ were entitled to salary/pay scales corresponding to their roles. Ultimately, the Labour Court focused on the claim of 14 workmen from Schedule ‘Ka’ seeking permanent status.

Timeline

Date Event
N/A Respondent Nos. 2–15 employed as “seasonal workmen” by the appellant.
N/A Workmen claimed continuous employment throughout the year.
3 November 1989 State of Uttar Pradesh made a Reference to the Labour Court.
N/A Labour Court adjudicated the claim of 14 workmen seeking permanent status.
N/A Labour Court concluded that the workmen had been engaged for the major part of the year.
N/A Labour Court declared the 14 workmen permanent from the date of the Award.
N/A Appellant challenged the Labour Court’s Award before the High Court.
N/A High Court dismissed the writ petition, upholding the Labour Court’s findings.
26 September 2008 U.P. State Sugarcane Development Corporation Limited appealed before the Supreme Court.

Legal Framework

The case hinges on the interpretation of the Standing Orders governing the conditions of employment in vacuum pan sugar factories in Uttar Pradesh. These standing orders classify workmen into categories such as permanent, seasonal, temporary, probationers, apprentices, and substitutes.

Relevant extracts of the Standing Orders, as revised and published on 27 September 1988, define these classifications:

“A “Permanent Workman” is one who is engaged on the work of a permanent nature or permanent requirement lasting throughout the year and has completed his probationary period, if any.”

“A “Seasonal workmen” is one who is engaged only for the crushing season and has completed his probationary period, if any.”

The Standing Orders also outline special conditions governing the employment of seasonal workmen, including provisions for retaining allowances and re-employment in subsequent seasons.

See also  Supreme Court Dissolves Marriage Citing Irretrievable Breakdown: Subhransu Sarkar vs. Indrani Sarkar (2021)

Arguments

Appellant’s Arguments (U.P. State Sugar & Cane Development Corporation Limited)

  • The appellant argued that the work performed by the respondent Nos. 2-15 was not of a permanent nature. The workmen were engaged only for the crushing season. Although they were provided with work during the off-season, it was not a matter of right but to provide them with a livelihood.

  • The appellant contended that the Labour Court and the High Court misconstrued the intention of the appellant in finding that the 14 workmen were performing the work of a permanent nature, entitling them to the status of permanent workers.

  • The appellant submitted that the policy regarding the promotion of workmen from one category to a higher category depended on the vacancies available in the next higher category. It was a managerial function that could not be usurped by the Labour Court.

  • Reliance was placed on Management of Brooke Bond India (P) Limited v Workmen [(1966) 2 SCR 465] (Supreme Court of India), wherein it was observed that promotion is generally a management function, and a tribunal may interfere only in cases of mala fides or victimization.

  • Reference was made to The Hindustan Lever Limited v The Workmen [(1974) 3 SCC 510] (Supreme Court of India), where it was held that promotion is a management function, and the Labour Court could not arrogate such function in the absence of findings of mala fides or victimization.

  • The appellant argued that by declaring the concerned workmen permanent from the date of the Award, the Labour Court had arrogated the functions of the management, which was beyond its powers.

Respondents’ Arguments (Chini Mill Mazdoor Sangh & Others)

  • The respondents supported the findings and observations of the Labour Court and the High Court. They argued that it had been correctly found that the respondent Nos. 2-15 had been performing work of a permanent nature, required to be performed throughout the year and not only during the crushing season.

  • The respondents submitted that all the said workmen were technical hands and not labor engaged to perform manual work during the crushing season. Even during the crushing season, the said workmen were engaged in the maintenance of the machinery in the mill, which was not a seasonal work but entailed maintenance of the mill machinery throughout the year.

  • The respondents argued that the definition of the expression “permanent” as used in the Standing Orders referred not to the employee but to the nature of work being performed. Since the work performed was of a permanent nature, which required the services of the respondent Nos. 2-15 throughout the year, they had been rightly declared by the Labour Court as permanent workmen on account of the nature of work performed by them throughout the year.

  • Reliance was placed on Jardine Henderson Ltd. v Their Employees [AIR 1967 SC 515] (Supreme Court of India), a case involving the payment of gratuity and provident fund by way of retiring benefits.

  • Reference was made to Workmen employed by Hindustan Lever Limited v. Hindustan Lever Limited, [(1984) 4 SCC 392] (Supreme Court of India), where reference had been made to the earlier decisions in the Brooke Bond case (supra) and the Hindustan Lever Limited case (supra), and an observation had been made that the view taken in the said cases that promotion is a managerial function may have to be re-examined in an appropriate case.

  • The respondents contended that the Award of the Labour Court was fully justified in the facts and circumstances of the case, and the High Court had rightly upheld the same.

See also  Supreme Court overturns High Court order on contractual appointments: Rajasthan State Road Development vs. Piyush Kant Sharma (2020)

Summary of Submissions

Main Submission Sub-Submissions (Appellant) Sub-Submissions (Respondents)
Nature of Employment ✓ Workmen engaged only for the crushing season.
✓ Work provided during off-season was not a matter of right. 		✓ Workmen performed work of a permanent nature.
✓ Work required to be performed throughout the year.
Role of Labour Court ✓ Labour Court misconstrued the intention of the appellant.
✓ Labour Court arrogated managerial functions. 		✓ Labour Court’s Award was justified.
✓ High Court rightly upheld the Award.
Interpretation of Standing Orders N/A ✓ Definition of “permanent” refers to the nature of work, not the employee.
Authorities Relied Upon ✓ Management of Brooke Bond India (P) Limited v Workmen [(1966) 2 SCR 465] (Supreme Court of India)
✓ The Hindustan Lever Limited v The Workmen [(1974) 3 SCC 510] (Supreme Court of India) 		✓ Jardine Henderson Ltd. v Their Employees [AIR 1967 SC 515] (Supreme Court of India)
✓ Workmen employed by Hindustan Lever Limited v. Hindustan Lever Limited, [(1984) 4 SCC 392] (Supreme Court of India)

Issues Framed by the Supreme Court

  1. Whether the Labour Court, based on its finding that the work performed by the respondent Nos. 2-15 was of a permanent nature and required throughout the year, could declare the said workmen to be permanent.
  2. Whether such declaration amounted to usurpation of the management’s functions, which were beyond its powers.

Treatment of the Issue by the Court

Issue How the Court Dealt With It
Whether the Labour Court could declare the workmen permanent The Court held that the Labour Court’s declaration amounted to an overreach of managerial functions.
Whether the declaration was a usurpation of management’s functions The Court found that the declaration was indeed a usurpation of the management’s powers, which were beyond the Labour Court’s jurisdiction.

Authorities

The court considered several authorities to arrive at its decision. These authorities are categorized by the legal point they address.

Authority Court How Considered
Management of Brooke Bond India (P) Limited v Workmen [(1966) 2 SCR 465] Supreme Court of India The court agreed with the views expressed in this case, which stated that promotion is generally a management function and a tribunal may interfere only in cases of mala fides or victimization.
The Hindustan Lever Limited v The Workmen [(1974) 3 SCC 510] Supreme Court of India The court agreed with the views expressed in this case, which reiterated that promotion is a management function and the Labour Court could not arrogate such function in the absence of findings of mala fides or victimization.
Jardine Henderson Ltd. v Their Employees [AIR 1967 SC 515] Supreme Court of India The court found this case to be of little relevance to the facts of the present case.
Workmen employed by Hindustan Lever Limited v. Hindustan Lever Limited, [(1984) 4 SCC 392] Supreme Court of India The court noted that this case had referenced earlier decisions and suggested that the view of promotion as a managerial function may need re-examination in an appropriate case.

Judgment

Treatment of Submissions

Submission How Treated by the Court
Workmen performed work of a permanent nature The Court disagreed, stating that the Labour Court and High Court did not adequately consider that this was a case of promotion as and when vacancies are available, not a denial of the right to be categorized as permanent workmen.
Labour Court could declare workmen permanent The Court disagreed, stating that the Labour Court’s declaration amounted to an overreach of managerial functions.
Promotion is a managerial function The Court agreed with the appellant’s submission, citing Management of Brooke Bond India (P) Limited v Workmen [(1966) 2 SCR 465] (Supreme Court of India) and The Hindustan Lever Limited v The Workmen [(1974) 3 SCC 510] (Supreme Court of India).
See also  Supreme Court Allows Video Conferencing in Matrimonial Cases Due to Pandemic: Anjali Brahmawar Chauhan vs. Navin Chauhan (22 January 2021)

View of Authorities

✓ Management of Brooke Bond India (P) Limited v Workmen [(1966) 2 SCR 465] (Supreme Court of India): The Court agreed with the views expressed in this case, which stated that promotion is generally a management function and a tribunal may interfere only in cases of mala fides or victimization.

✓ The Hindustan Lever Limited v The Workmen [(1974) 3 SCC 510] (Supreme Court of India): The Court agreed with the views expressed in this case, which reiterated that promotion is a management function and the Labour Court could not arrogate such function in the absence of findings of mala fides or victimization.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the principle that promotion and categorization of employees are managerial functions. The Court emphasized that the Labour Court and the High Court had not given due consideration to the aspect of promotion being dependent on the availability of vacancies. The Court’s reasoning was also influenced by the existing Standing Orders and the established practices in the sugar industry regarding the employment of seasonal workmen.

Reason Percentage
Managerial Function 60%
Existing Standing Orders 25%
Established Practices 15%
Category Percentage
Fact 30%
Law 70%

Key Takeaways

  • Labour Courts should be cautious in interfering with managerial functions related to promotions and categorization of employees.

  • The nature of work performed by seasonal workmen does not automatically entitle them to permanent status.

  • The availability of vacancies and the employer’s policies play a crucial role in determining promotions.

Development of Law

The ratio decidendi of the case is that Labour Courts should not interfere with managerial functions related to promotions and categorization of employees unless there is evidence of mala fides or victimization. This reinforces the principle that employers have the right to manage their workforce efficiently and make decisions regarding promotions based on their policies and the availability of vacancies.

Conclusion

In summary, the Supreme Court allowed the appeal, setting aside the Award of the Labour Court and the judgment of the High Court. The Court clarified that the Labour Court had overstepped its authority by declaring seasonal workmen as permanent employees, as such decisions fall within the realm of managerial functions. The judgment reinforces the importance of adhering to established practices and policies in the sugar industry regarding the employment and promotion of workmen.

Source: U.P. State Sugar & Cane Development Corporation Ltd. vs. Chini Mill Mazdoor Sangh & Ors.