Supreme Court Overturns Labour Court Award on Voluntary Separation Scheme: General Manager, Electrical Rengali Hydro Electric Project vs. Sri Giridhari Sahu (2019)

Date of the Judgment: 12 September 2019

Citation: Not Available

Judges: Justice Sanjay Kishan Kaul and Justice K.M. Joseph

Can a Labour Court reinstate employees who voluntarily accepted a Voluntary Separation Scheme (VSS)? This was the central question before the Supreme Court of India. The case arose from a dispute between the General Manager, Electrical Rengali Hydro Electric Project, Orissa, and its employees, who were initially employed as NMR (Nominal Muster Roll) workers. The Supreme Court, in this judgment, examined the legality of the Labour Court’s order to reinstate the employees, setting aside the High Court’s decision. The judgment was authored by Justice K.M. Joseph, with Justice Sanjay Kishan Kaul concurring.

Case Background

The case originated from a dispute involving NMR workers at the Rengali Hydro Electric Project (RHEP) in Orissa. These workers had sought regularization of their services and equal pay to regular employees. On 28 October 1992, the High Court of Orissa ruled that NMR workers who had worked continuously for five years were entitled to regularization and equal pay. This order was challenged by the appellants in the Supreme Court.

In 1999, a reference was made to the Labour Court regarding the payment of Hydro Allowance and Medical Allowance to NMR workers. Subsequently, the appellants introduced a Voluntary Separation Scheme (VSS). The respondent-employees claimed that they were misled into signing VSS applications under the guise of regularization and were later prevented from working. They filed an application under Section 33A of the Industrial Disputes Act, 1947, alleging that the VSS was forced upon them.

The Labour Court ruled in favor of the workers, stating that the VSS was not properly publicized and was thrust upon the workers. It ordered reinstatement with 70% back wages. The High Court dismissed the appellant’s writ application, upholding the Labour Court’s award. The appellants then appealed to the Supreme Court.

Timeline:

Course of Proceedings

The Labour Court found that the VSS was thrust upon the applicants and that there was no proper publicity of the scheme. It directed reinstatement of the workers with 70% back wages, adjusting for payments already made. The High Court, exercising its supervisory jurisdiction, upheld the Labour Court’s award, finding no jurisdictional error or error apparent on the face of the record. This led to the appeal before the Supreme Court.

Legal Framework

The case primarily revolves around Sections 33 and 33A of the Industrial Disputes Act, 1947.

Section 33(1) of the Industrial Disputes Act, 1947 states that during the pendency of any conciliation or adjudication proceeding, an employer cannot alter the conditions of service of the workmen or discharge or punish them without the express permission of the authority before which the proceeding is pending.

“33(1) During the pendency of any conciliation proceeding before a conciliation officer or a Board or of any proceeding before 2 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.”

Section 33A of the Industrial Disputes Act, 1947 provides a special provision for adjudication if an employer contravenes the provisions of Section 33. It allows an aggrieved employee to file a complaint, which is then adjudicated as if it were a dispute referred to the authority.

“33A. Special provision for adjudication as to whether conditions of service, etc., changed during pendency of proceeding.- Where an employer contravenes the provisions of section 33 during the pendency of proceedings before a conciliation officer, Board, an arbitrator, Labour Court, Tribunal or National Tribunal any employee aggrieved by such contravention, may make a complaint in writing, in the prescribed manner,-
(a) to such conciliation officer or Board, and the conciliation officer or Board shall take such complaint into account in mediating in, and promoting the settlement of, such industrial dispute; and
(b) to such arbitrator, Labour Court, Tribunal or National Tribunal and on receipt of such complaint, the arbitrator, Labour Court, Tribunal or National Tribunal, as the case may be, shall adjudicate upon the complaint as if it were a dispute referred to or pending before it, in accordance with the provisions of this Act and shall submit his or its award to the appropriate Government and the provisions of this Act shall apply accordingly.”

The Court also considered the principles of fraud, misrepresentation, and undue influence as defined in the Indian Contract Act, 1872, in relation to the VSS applications.

Arguments

Appellants’ Arguments:

• The appellants argued that the employees voluntarily applied for the VSS with full knowledge of its implications. They submitted that the VSS was introduced to rationalize manpower and reduce redundant employees.
• They emphasized that the VSS offered a lumpsum ex gratia payment of Rs. 1.25 lakhs, along with other benefits, and that the employees had received these payments.
• The appellants relied on the applications filed by the employees, which were duly witnessed, and argued that the employees could not resile from their position after receiving benefits under the VSS.
• They contended that the Labour Court had failed to appreciate the evidence and had acted illegally in passing the award.
• The appellants argued that Section 33 of the Industrial Disputes Act, 1947 is not attracted as the employees voluntarily applied for VSS.

Respondents’ Arguments:

• The respondents contended that they were misled into signing the VSS applications under the pretext of regularization. They claimed that they were not aware of the contents and consequences of the VSS.
• They argued that the VSS was thrust upon them without proper publicity and that the Labour Court’s findings of fact should not be disturbed.
• The respondents highlighted a letter from one of the applicants stating that he was forced to sign the VSS application against his will.
• They argued that as NMR workers, they could not be attributed with the knowledge of the contents of the Scheme.

Issues Framed by the Supreme Court

The Supreme Court framed the following key issues for consideration:

1. Whether the applications for VSS were indeed filed by the applicants cognizant of its contents and aware of its consequences?
2. Whether Section 33 of the Industrial Disputes Act, 1947 is attracted in this case?

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:

The Court also considered the following legal provisions:

• Section 33 of the Industrial Disputes Act, 1947: Restrictions on employers during pendency of proceedings.
• Section 33A of the Industrial Disputes Act, 1947: Special provision for adjudication of contraventions of Section 33.
• Section 11 of the Industrial Disputes Act, 1947: Procedure and powers of conciliation officers, Boards, Courts and Tribunals.
• Sections 15, 16, 17, 18, and 19 of the Indian Contract Act, 1872: Definitions and implications of coercion, undue influence, fraud, and misrepresentation.
• Order VI Rule 4 of the Code of Civil Procedure, 1908: Requirement for particulars in pleadings involving fraud, misrepresentation, or undue influence.

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

The Supreme Court relied on several authorities to establish the scope of certiorari jurisdiction and the importance of specific pleadings in industrial disputes. The Court emphasized that a writ of certiorari is supervisory and not appellate, and that findings of fact by a lower court can be interfered with only if they are perverse or not supported by evidence. The Court also highlighted that allegations of fraud, misrepresentation, and undue influence must be specifically pleaded and proven.

• The Court followed Parry & Co. Ltd. vs. Commercial Employees Association [AIR 1952 SC 179]* to clarify that a writ of certiorari would lie if a decision relates to anything collateral to the merit, affecting its jurisdiction.
• The Court relied on T.C. Basappa v. T. Nagappa [AIR 1954 SC 440]* to emphasize that a writ of certiorari is supervisory, not appellate, and does not reweigh evidence.
• The Court cited Hari Vishnu Kamath v. Ahmed Ishaque & Ors. [AIR 1955 SC 233]* to state that certiorari corrects errors of jurisdiction and illegal actions but does not review findings of fact.
• The Court referred to Dharangadhara Chemical Works Ltd. v. State of Saurashtra and others [AIR 1957 SC 264]* to show that a Tribunal’s finding of fact cannot be questioned unless unsupported by evidence.
• The Court followed Syed Yakoob v. K.S. Radhakrishnan and another [AIR 1964 SC 477]* to explain that certiorari corrects errors of law apparent on the record but not errors of fact.
• The Court relied on M/s. Perry and Co. Ltd. v. P.C. Pal, Judge of the Second Industrial Tribunal, Calcutta and others [AIR 1970 SC 1334]* to reiterate that a writ of certiorari can correct manifest errors based on clear ignorance of law.
• The Court cited Mukand Ltd. v. Mukand Staff & Officers’ Association [(2004) 10 SCC 460]* to state that the Court will not interfere with the conclusions arrived at by the Tribunal except on grounds on which the High Court could have done.
• The Court also relied on Management of Madurantakam Coop. Sugar Mills Limited v. S. Viswanathan [(2005) 3 SCC 193]* to hold that a writ court can review a finding of fact if it is perverse or not based on legal evidence.
• The Court followed Management of Hindustan Steel Limited v. Workmen and others [AIR 1973 SC 878]* to clarify that pleas should be specific and precise to enable the other party to meet it.
• The Court cited Bharat Iron Works v. Bhagubhai Balubhai Patel [AIR 1976 SC 98]* to state that a charge of victimization must be properly and adequately pleaded.
• The Court relied on Bank of India and others v. O.P. Swarnakar and others [(2003) 2 SCC 721]* to hold that a voluntary retirement scheme is an invitation to treat, and a contract is formed when the application is accepted.
• The Court referred to State of Orissa and others v. Balaram Sahu and others [(2003) 1 SCC 250]* to uphold the High Court’s direction for regularization of NMR workers with five years of service but modified the pay scale.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the lack of evidence supporting the employees’ claim that they were defrauded or coerced into accepting the VSS. The Court emphasized the following points:

• The employees had signed the VSS applications, which were duly witnessed.
• They had received the monetary benefits under the VSS.
• The VSS was discussed with the Union, of which the employees were members.
• The employees failed to provide specific details of the alleged fraud or coercion.
• The Labour Court’s findings were not supported by the evidence and were therefore perverse.

The Court found that the employees had failed to establish a case for invoking Section 33A read with Section 33 of the Industrial Disputes Act, 1947. The Court also noted that the Labour Court had ignored the documentary evidence produced by the appellants.

Sentiment Analysis of Reasons Given by the Supreme Court:

Fact:Law Ratio:

The Supreme Court’s decision was influenced more by the factual aspects of the case, specifically the lack of evidence supporting the employees’ claims, than by legal considerations. The analysis is as follows:

The Court’s reasoning was based on the following logical steps:

The Court considered alternative interpretations, such as the possibility that the employees were genuinely misled or coerced, but rejected these interpretations due to the lack of evidence. The Court concluded that the Labour Court’s decision was based on a misappreciation of facts and law.

The Supreme Court’s decision was based on the following reasons:

• The Labour Court’s finding that the VSS was thrust upon the employees was not supported by evidence.
• The employees had failed to establish that they were defrauded or coerced into accepting the VSS.
• The employees had received the benefits under the VSS.
• The Labour Court had ignored the documentary evidence produced by the appellants.
• The Labour Court had not properly analyzed the pleadings and the evidence.

The Court also noted that the Labour Court had relied on a single letter from one applicant to conclude that the VSS was not voluntary, ignoring the fact that the other 89 applicants had not made similar claims.

The Court did not find any minority opinions in the source.

Key Takeaways

• Employees cannot resile from a Voluntary Separation Scheme (VSS) after voluntarily applying for it and accepting the benefits.
• Labour Courts must base their decisions on evidence and proper analysis of pleadings.
• Allegations of fraud, misrepresentation, and undue influence must be specifically pleaded and proven.
• Courts will not interfere with findings of fact unless they are perverse or not supported by evidence.
• Proper documentation and adherence to procedures are essential in implementing VSS.

The judgment has significant implications for future cases involving VSS and other separation schemes. It emphasizes the importance of clear and transparent procedures and the need for employees to be fully aware of the implications of their decisions. It also highlights the limits of judicial interference in factual matters and the importance of proper pleadings and evidence.

Directions

The Supreme Court directed the appellants to return the amounts deposited by 28 applicants during the pendency of the writ petition in the High Court, along with interest at the rate of 8% per annum from the date of deposit until the date of payment. The amount had to be returned within two months from the date of receipt of the judgment.

Specific Amendments Analysis

Not Applicable in this case

Development of Law

The ratio decidendi of this case is that employees who voluntarily apply for and accept benefits under a Voluntary Separation Scheme (VSS) cannot later claim that they were misled or coerced into accepting the scheme. The judgment also reinforces the principle that Labour Courts must base their decisions on evidence and proper analysis of pleadings. This case also clarifies the scope of writ of certiorari and the limits of judicial interference in factual matters. It also establishes that a scheme cannot be challenged on thebasis that it was not properly publicized if the employees had the knowledge of the same.