Supreme Court Orders Regularization of Daily Wage Workers: Pandurang Sitaram Jadhav vs. State of Maharashtra (25 September 2019)

Date of the Judgment: 25 September 2019

Citation: 2019 INSC 959

Judges: Sanjay Kishan Kaul, J., M.R. Shah, J.

Can daily wage workers be denied permanent status after years of continuous service? The Supreme Court of India addressed this crucial question in a case involving eleven daily wage workers from a regional dairy in Maharashtra. The court examined whether the absence of sanctioned posts and a formal appointment process could justify denying these workers the benefits of regularization. The judgment, delivered by a bench comprising Justices Sanjay Kishan Kaul and M.R. Shah, favored the workers, ordering their regularization.

Case Background

Eleven daily wage workers at the Regional Dairy in Konkan, Maharashtra, filed complaints with the Industrial Court, Kolhapur, seeking permanent status. These workers had been employed for periods exceeding 240 days, some for as long as 12 to 20 years. They were denied benefits such as yearly increments, bonuses, provident funds, and retirement benefits, which were available to regular employees. The State of Maharashtra cited the absence of sanctioned posts and a ban on recruitment as reasons for not regularizing them. The Industrial Court initially ruled in favor of the workers, but the Bombay High Court later overturned this decision.

Timeline

Course of Proceedings

The Industrial Court, Kolhapur, allowed the workers’ complaints on 28 April 2004, noting that they had been denied benefits of permanency despite working for many years. The court directed the State to send a proposal for sanctioning permanent posts. The Regional Dairy Development Officer challenged this order in the Bombay High Court, which was initially dismissed by a Single Judge on 10 July 2007. However, a Division Bench of the Bombay High Court overturned this decision on 31 July 2008, citing the lack of a regular appointment process and sanctioned posts.

Legal Framework

The case was primarily considered under the Maharashtra Recognition of Trade Unions & Prevention of Unfair Labour Practices Act, 1971 (the said Act). Specifically, Section 28 of the said Act, read with Items 5, 6, and 9 of Schedule IV, was invoked by the workers. Section 30(1)(b) of the said Act empowers Industrial and Labour Courts to take affirmative action against unfair labor practices. The Industrial Employment (Standing Orders) Act, 1946, and the Bombay Industrial Employment (Standing Orders) Rules, 1959, were also relevant, as they prescribe model standing orders for industrial employment.

Section 30(1)(b) of the Maharashtra Recognition of Trade Unions & Prevention of Unfair Labour Practices Act, 1971 states:

“Section 30. Powers of Industrial and Labour Courts
(1) Where a Court decides that any person named in the
complaint has engaged in, or is engaging in, any unfair labour
practice, it may in its order-
(a) xxx xxx
(b) direct all such person to cease and desist from
such unfair labour practice, and take such affirmative
action (including payment of reasonable compensation to
the employee or employees affected by the unfair labour
practice, or reinstatement of the employee or employees
with or without back wages, or the payment of
reasonable compensation), as may in the opinion of the
Court be necessary to effectuate the policy of the
Act;”

Arguments

Workers’ Arguments:

• The workers argued that they had been working continuously for many years, some for almost two decades, performing the same duties as regular employees.
• They contended that denying them permanent status and benefits amounted to an unfair labor practice under the Maharashtra Recognition of Trade Unions & Prevention of Unfair Labour Practices Act, 1971.
• They highlighted that other employees in similar situations at different units of the same establishment had been granted permanency by the Industrial Tribunal, with the High Court and Supreme Court refusing to interfere.

State’s Arguments:

• The State argued that the workers were not appointed through a regular process and that there were no sanctioned posts for them.
• They cited the ban on recruitment by the State Government as another reason for not granting permanency.
• The State relied on the Supreme Court’s judgment in Secretary, State of Karnataka & Ors. v. Umadevi & ors. [(2006) 4 SCC 15], which cautioned against regularization in the absence of proper recruitment procedures.

The workers argued that the judgment in Secretary, State of Karnataka & Ors. v. Umadevi & ors. [(2006) 4 SCC 15] was not applicable to their case as the Industrial Court had the power to take affirmative action to prevent unfair labour practices. The workers also relied on the judgment in Maharashtra State Road Transport Corporation and Anr. v. Casteribe Rajya Parivahan Karmchari Sanghtana [(2009) 8 SCC 556], which clarified that the powers of the Industrial and Labour Court to grant permanent employment were not affected by the Umadevi judgment.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section but addressed the core issue of whether the daily wage workers were entitled to regularization given their long service and the circumstances of their employment.

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:

• Secretary, State of Karnataka & Ors. v. Umadevi & ors. [(2006) 4 SCC 15]: This case was initially cited by the State to argue against regularization, but the Supreme Court clarified that its ratio was limited to the scope of powers under Articles 32 and 226 of the Constitution and did not restrict the powers of the Industrial and Labour Courts under the Maharashtra Recognition of Trade Unions & Prevention of Unfair Labour Practices Act, 1971.
• Maharashtra State Road Transport Corporation and Anr. v. Casteribe Rajya Parivahan Karmchari Sanghtana [(2009) 8 SCC 556]: This judgment clarified that the powers of the Industrial and Labour Courts to grant permanent employment were not affected by the Umadevi judgment. It affirmed the wide powers of these courts to address unfair labor practices.
• U.P. State Electricity Board v. Pooran Chandra Pandey & Ors. [(2007) 11 SCC 927]: This case supported the proposition that long-term engagement of workers on a contract basis could be considered an unfair labor practice.

The Court also considered Section 30(1)(b) of the Maharashtra Recognition of Trade Unions & Prevention of Unfair Labour Practices Act, 1971, which empowers Industrial and Labour Courts to direct affirmative action against unfair labor practices.

Judgment

The Supreme Court allowed the appeals of the workers. The Court held that the workers were entitled to regularization from the date they filed their complaints. The Court directed the respondents to regularize the appellants within three months and remit all benefits from the date of the complaints. The Court clarified that the period before the complaints would be considered for calculating benefits but without monetary entitlement for that period.

How each authority was viewed by the Court?

• Secretary, State of Karnataka & Ors. v. Umadevi & ors. [(2006) 4 SCC 15]: The Court distinguished this case, stating that it did not apply to the powers of Industrial and Labour Courts under the Maharashtra Recognition of Trade Unions & Prevention of Unfair Labour Practices Act, 1971.
• Maharashtra State Road Transport Corporation and Anr. v. Casteribe Rajya Parivahan Karmchari Sanghtana [(2009) 8 SCC 556]: The Court relied on this case, which affirmed the power of Industrial and Labour Courts to take affirmative action against unfair labor practices.
• U.P. State Electricity Board v. Pooran Chandra Pandey & Ors. [(2007) 11 SCC 927]: The Court noted this case, which supported the idea that long-term engagement of workers on a contract basis could be an unfair labor practice.

What weighed in the mind of the Court?

The Supreme Court was primarily influenced by the long and continuous service of the daily wage workers, the unfair labor practice of denying them permanent status, and the need to uphold the powers of the Industrial and Labour Courts to address such practices. The Court emphasized that the lack of a regular appointment process and sanctioned posts could not justify denying regularization to workers who had served for many years. The court also considered that the workers were performing the same job as the regular employees. The court also noted that the findings of unfair labour practice by the Tribunal had been confirmed by the Single Judge.

Logical Reasoning:

The Court considered the alternative argument that the absence of a regular appointment process and sanctioned posts should prevent regularization. However, the Court rejected this argument, stating that it would perpetuate an unfair labor practice. The Court reasoned that the long service of the workers and the nature of their work warranted regularization. The Court also considered the previous judgments of the Supreme Court and the powers of the Industrial and Labour Courts to address unfair labour practices.

The decision was reached by a unanimous bench of two judges. There were no minority opinions.

“The factual matrix shows that for decades together these appellants have been performing the job of the regular employees and this is not a seasonal requirement or a temporary requirement.”

“Thus the finding of unfair labour practice of engaging persons on contract basis over a long period of time was held to be an aspect which could be enquired into by the Labour Court.”

“In view of the aforesaid facts as also the legal pronouncements made subsequently, we have no doubt that these appellants before us would be entitled to the benefit of regularization and mere delay in preferring the claim would not come in their way except that the benefit of regularization would arise from the date the complaints were filed.”

Key Takeaways

• Daily wage workers who have worked for many years, performing the same duties as regular employees, are entitled to regularization.
• The absence of a regular appointment process and sanctioned posts cannot be used to deny regularization to long-serving daily wage workers.
• Industrial and Labour Courts have the power to take affirmative action against unfair labor practices, including ordering regularization.
• The judgment clarifies that the ruling in Secretary, State of Karnataka & Ors. v. Umadevi & ors. [(2006) 4 SCC 15] does not restrict the powers of Industrial and Labour Courts in cases of unfair labor practices.

Directions

The Supreme Court directed the respondents to regularize the appellants within three months from the date of the order. The benefits to which the appellants were entitled were to be remitted within the same period from the date of the complaints. The period before the complaints would be counted for calculating benefits but without monetary entitlement.

Development of Law

The ratio decidendi of this case is that daily wage workers who have worked for a long period, performing the same duties as regular employees, are entitled to regularization, and the absence of a regular appointment process and sanctioned posts cannot be a bar to regularization. This judgment clarifies and reinforces the powers of Industrial and Labour Courts to address unfair labor practices. It also reinforces the principle that the ruling in Secretary, State of Karnataka & Ors. v. Umadevi & ors. [(2006) 4 SCC 15] does not restrict the powers of Industrial and Labour Courts in cases of unfair labor practices, and such powers remain intact as clarified in Maharashtra State Road Transport Corporation and Anr. v. Casteribe Rajya Parivahan Karmchari Sanghtana [(2009) 8 SCC 556]. This case reinforces the position of law that unfair labour practices cannot be perpetuated by the State.

Conclusion

The Supreme Court’s judgment in Pandurang Sitaram Jadhav vs. State of Maharashtra is a significant victory for daily wage workers. It establishes that long-term service and the performance of regular duties entitle workers to regularization, even in the absence of a formal appointment process and sanctioned posts. The judgment reinforces the powers of Industrial and Labour Courts to address unfair labor practices and ensures that workers are not exploited through prolonged engagement as daily wagers.