Supreme Court Sets Regularization Date for ONGC Employees: ONGC Employees Mazdoor Sabha vs. ONGC (2020)

Introduction

Date of the Judgment: 13 February 2020
Citation: 2020 INSC 144
Judges: R.F. Nariman, J., S. Ravindra Bhat, J., V. Ramasubramanian, J.

When should term-based employees be considered as regular employees? The Supreme Court of India recently addressed this question in a case involving Oil and Natural Gas Corporation (ONGC) employees. The core issue revolved around the date from which these employees should be granted regular employment status and the associated benefits. The judgment was delivered by a three-judge bench comprising Justices R.F. Nariman, S. Ravindra Bhat, and V. Ramasubramanian, with Justice R.F. Nariman authoring the opinion.

Case Background

Between 1999 and 2001, ONGC hired approximately 800 individuals for Class III and IV positions on a term basis, with each appointment lasting four years. These appointments were made after calling for names from the Employment Exchange and conducting interviews, but without a public advertisement in newspapers. The ONGC Employees Mazdoor Sabha, a labor union, later demanded that 577 of these term-based employees be given regular appointments. This demand led to a conciliation process in 2003, which failed, resulting in an industrial dispute being referred to the Industrial Tribunal at Ahmedabad. The central question before the tribunal was whether the demand for regularizing these 577 employees was valid.

Timeline

Course of Proceedings

The Industrial Tribunal at Ahmedabad partly allowed the reference in its award dated 08.11.2011. It directed the regularization of some of the 577 term-based employees, excluding those who had resigned, expired, or were already regularized. The Tribunal also specified that those continuing on their posts should be considered for regularization and that ONGC should not recruit from the open market until these term employees were regularized.

Aggrieved by the Tribunal’s decision, the Employees Union approached the High Court of Gujarat, seeking regularization from the initial date of appointment or the date of probation completion. The High Court partly allowed the writ petition on 26.04.2013, directing ONGC to treat the concerned workmen as regular employees from 24.01.2005 or the date of first reissuance of the appointment order, granting notional benefits from that date until 31.03.2013 and regular pay and allowances from 01.04.2013. The High Court also quashed the Tribunal’s direction restricting open market recruitment.

Both the Employees Union and ONGC filed Letters Patent Appeals, which were dismissed by the Division Bench of the Gujarat High Court on 29.04.2015. The High Court held that the initial appointments were irregular but not illegal. ONGC’s appeal to the Supreme Court was also dismissed on 17.08.2015, with the Supreme Court stating it was not inclined to interfere with the High Court’s judgment, considering the peculiar facts of the case.

Legal Framework

The primary legal framework relevant to this case is the Industrial Disputes Act, 1947, which governs the investigation and settlement of industrial disputes. The case also references Section 25-B of the Industrial Disputes Act, 1947, which defines continuous service for the purpose of calculating benefits. However, the Supreme Court noted that the High Court had misapplied this section in other cases.

The Industrial Disputes Act, 1947, provides the mechanism for referring disputes to Industrial Tribunals for adjudication. In this case, the dispute was referred to the Industrial Tribunal at Ahmedabad, which passed an award directing regularization for some of the employees.

Arguments

The appellant-Union argued that its members should be regularized from the date of their initial appointment or the completion of their probation period. They contended that the High Court’s decision to grant relief only from 24.01.2005, with notional benefits until 31.03.2013, was incorrect. The Union relied on the Supreme Court’s judgment in Oil and Natural Gas Corporation Limited vs. Petroleum Coal Labour Union and Others, (2015) 6 SCC 494, where regularization was granted from the date of entitlement after completing 240 days of service.

The respondent-ONGC argued that the High Court’s decision was correct in law. They contended that regularization had been granted, but could not be given retrospectively with actual benefits. They argued that the date of 24.01.2005, the end of the four-year term, was a just date for regularization. They also argued that the grant of regular pay and allowances from 01.04.2013 was within the High Court’s jurisdiction under Articles 226 and 227 of the Constitution of India.

ONGC distinguished the case of Oil and Natural Gas Corporation Limited vs. Petroleum Coal Labour Union and Others, (2015) 6 SCC 494, stating that it was based on the specific facts of that case and the Certified Standing Orders of the Corporation, which provided for regularization after 480 days of service. They also cited Surendra Kumar and Others vs. Greater Noida Industrial Development Authority and Others, (2015) 14 SCC 382, to argue that retrospective regularization was not permissible when the regularization policy was not in place at the time of initial appointment. Additionally, ONGC relied on Divisional Manager, A.P. SRTC and Others vs. P. Lakshmoji Rao and Others, (2004) 2 SC 433, to argue against granting regularization from an anterior date.

Issues Framed by the Supreme Court

The Supreme Court framed the following issue for consideration:

• On what date should the concerned workmen be treated as being in regular employment?

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

The Supreme Court held that the concerned workmen, including 111 employees who had been regularized earlier, should be treated as being in regular employment from 21.12.2004, the date on which the industrial dispute was referred. The Court directed that all actual benefits should be granted from this date until 01.04.2013. The other directions given by the High Court were upheld.

The Court distinguished the case of Oil and Natural Gas Corporation Limited vs. Petroleum Coal Labour Union and Others, (2015) 6 SCC 494, stating that it was based on its own facts and the Certified Standing Orders of the Corporation. The Court also distinguished the cases of Surendra Kumar and Others vs. Greater Noida Industrial Development Authority and Others, (2015) 14 SCC 382 and Divisional Manager, A.P. SRTC and Others vs. P. Lakshmoji Rao and Others, (2004) 2 SC 433, noting that those cases were factually different and did not apply to the present case.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the fact that the employees had approached the Central Government for an industrial dispute immediately after their four-year term ended. The Court noted that the industrial dispute was referred on 21.12.2004, and therefore, it was appropriate to grant regularization from that date. The court emphasized that the delay in resolving the dispute should not prejudice the employees.

The Court’s reasoning was based on the specific facts of the case, particularly the immediate initiation of the industrial dispute. The Court emphasized that the employees had been working for the Corporation for an extended period and that the only irregularity in their appointment was the lack of a public advertisement. The Court also noted that the delay in the resolution of the dispute should not be held against the employees.

The Court rejected the arguments for regularization from the initial appointment or the end of the four-year term, as these dates did not align with the initiation of the formal dispute resolution process. The Court also rejected the argument that regularization could not be given retrospectively, stating that the unique facts of the case warranted granting benefits from the date of the industrial dispute referral.

The Supreme Court quoted from the judgment:

“On facts in the present case, what is clear is that as soon as the four year period got over, the employees collectively through their Union approached the Central Government and the Central Government in exercise of its powers under the Industrial Disputes Act referred an industrial dispute immediately on 21.12.2004.”

“On the facts of this case, therefore, we are of the view that the Corporation must treat the concerned workmen which includes 111 out of these 577 employees who have been regularized earlier to be in regular employment on and from the date on which the industrial dispute was referred i.e. 21.12.2004 and accordingly grant all actual benefits from the said date till 01.04.2013.”

“The other directions that have been given by the learned Single Judge will remain intact.”

Key Takeaways

• The Supreme Court has set a precedent that the date of referral of an industrial dispute can be considered as the date for regularization of employees.
• The Court emphasized that the delay in resolving industrial disputes should not prejudice the rights of the employees.
• The judgment highlights that the lack of a public advertisement, while an irregularity, does not invalidate the entire appointment process if other conditions for employment are met.
• This decision may impact similar cases involving the regularization of term-based employees in other organizations.

Directions

The Supreme Court directed that the concerned workmen be treated as regular employees from 21.12.2004 and that all actual benefits be granted from that date until 01.04.2013. The other directions given by the High Court were upheld.

Development of Law

The ratio decidendi of this case is that the date of reference of an industrial dispute can be a valid date for regularization of employees, especially when the employees have approached the authorities promptly after the end of their term. This decision clarifies that while irregularities in the appointment process may exist, the intent to regularize employees and the prompt pursuit of dispute resolution can be valid grounds for granting regularization from the date of dispute referral. This is a change from the previous position of law where the date of regularization was often tied to the date of completion of the term or the date of the order.

Conclusion

The Supreme Court’s judgment in ONGC Employees Mazdoor Sabha vs. The Executive Director Basin Manager, Oil & Natural Gas Corporation (India) Ltd., has clarified the date from which term-based employees should be considered regular employees. The Court held that the date of the industrial dispute referral, 21.12.2004, should be the date for regularization, granting all actual benefits from that date. This decision provides a significant precedent for similar cases, emphasizing the importance of prompt dispute resolution and the need to avoid prejudice to employees due to delays in the process.