LEGAL ISSUE: Whether an employee’s transfer can be considered an unfair labor practice and whether the Industrial Court has jurisdiction over termination disputes arising from such transfers.
CASE TYPE: Labour Law
Case Name: Rajneesh Khajuria vs. M/s. Wockhardt Ltd. & Anr.
Judgment Date: 15 January 2020
Date of the Judgment: 15 January 2020
Citation: (2020) INSC 21
Judges: L. Nageswara Rao, J. and Hemant Gupta, J.
Can an employer transfer an employee as per the terms of employment? The Supreme Court of India addressed this question while examining the scope of unfair labor practices under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971. The court considered whether a transfer order could be deemed an unfair labor practice and whether the Industrial Court had the jurisdiction to adjudicate on the termination of an employee who failed to join the transferred location.
The judgment was delivered by a two-judge bench comprising Justice L. Nageswara Rao and Justice Hemant Gupta, with Justice Hemant Gupta authoring the opinion.
Case Background
Rajneesh Khajuria, the employee, was initially appointed as a Professional Service Representative on June 6, 1985, at Sagar, Madhya Pradesh. He was later promoted to Field Sales Officer Grade FM-One. His appointment letter included a condition that allowed the employer, M/s. Wockhardt Ltd., to transfer him to any of its affiliates or subsidiaries. On March 21, 2005, the employee was transferred to Mumbai with immediate effect. He did not join duty at Mumbai, and despite reminders on April 1 and April 8, his services were terminated on April 15, 2005.
The employee, along with the National Federation of Sales Representatives’ Union, filed a complaint on April 30, 2005, before the Industrial Court, Maharashtra, alleging that the transfer was unjust, unfair, illegal, improper, arbitrary, and mala fide, constituting unfair labor practices under Items 3, 7, 9, and 10 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971. The employee claimed that the transfer was a retaliatory measure for his protest against the company’s actions at a conference in Ahmedabad where a union member, Mr. Ashish Khare, was allegedly mistreated.
Timeline:
| Date | Event |
|---|---|
| June 6, 1985 | Rajneesh Khajuria appointed as Professional Service Representative at Sagar, Madhya Pradesh. |
| January 2005 | Mr. Ashish Khare, an active member of the Union, was allegedly forced to resign. |
| February 2005 | Mr. Ashish Khare paid wages till this month. |
| March 15, 2005 | Alleged mistreatment of Mr. Ashish Khare at a Launching Conference in Ahmedabad. |
| March 21, 2005 | Rajneesh Khajuria transferred to Mumbai with immediate effect. |
| April 1, 2005 | Employer sends reminder to Rajneesh Khajuria to join duties at Mumbai. |
| April 4, 2005 | Rajneesh Khajuria receives the transfer order. |
| April 8, 2005 | Employer sends another reminder to Rajneesh Khajuria to join duties at Mumbai. |
| April 15, 2005 | Services of Rajneesh Khajuria terminated. |
| April 30, 2005 | Complaint filed before the Industrial Court, Maharashtra. |
Course of Proceedings
The Industrial Court examined four main issues: whether the employee was a “workman” under the Industrial Dispute Act, 1947; whether the termination order was valid; whether the employer had engaged in unfair labor practices; and whether the employee was entitled to the reliefs claimed. The Industrial Court ruled in favor of the employee. However, the High Court of Judicature at Bombay overturned the Industrial Court’s order, stating that the transfer was within the terms of employment and that the employee had not challenged the termination order.
Legal Framework
The Supreme Court referred to the following provisions of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971:
- Section 3(8): Defines “Industrial Court” as a court constituted under Section 4 of the Act.
- Section 3(10): Defines “Labour Court” as a court constituted under Section 6 of the Act.
- Section 5(d): Outlines the duties of the Industrial Court, including deciding complaints related to unfair labor practices, except those in Item 1 of Schedule IV.
- Section 7: Specifies that the Labour Court is responsible for deciding complaints related to unfair labor practices described in Item 1 of Schedule IV.
- Section 26: Defines “unfair labor practices” as those listed in Schedules II, III, and IV of the Act.
- Section 27: Prohibits employers, unions, and employees from engaging in any unfair labor practice.
- Section 32: Grants the Court the power to decide all matters arising out of any complaint referred to it under the Act.
- Schedule IV, Item 1: Lists unfair labor practices related to discharging or dismissing employees, including victimization, bad faith, false implications, and disregard of natural justice.
- Schedule IV, Item 3: Defines transferring an employee mala fide from one place to another under the guise of management policy as an unfair labor practice.
Arguments
Employee’s Arguments:
- The employee argued that his transfer was mala fide, stemming from his protest against the mistreatment of Mr. Ashish Khare at the Ahmedabad conference. He contended that the transfer was a retaliatory action and thus constituted an unfair labor practice under Item 3 of Schedule IV of the Act.
- The employee claimed that the termination order was not real or bona fide because he never received it. He stated that the termination was a consequence of his refusal to join the transferred location, making it ancillary to the transfer order.
- He asserted that the Industrial Court had jurisdiction to address the termination under Section 32 of the Act, as it was connected to the unfair labor practice of mala fide transfer.
- The employee also argued that the transfer order did not mention any business exigency or administrative reason, and that there were sufficient medical representatives in Mumbai, making the transfer unnecessary.
Employer’s Arguments:
- The employer argued that the transfer was in accordance with the terms of employment and that there was no mala fide intention behind it.
- The employer contended that the employee was not a “workman” but was working in a supervisory, managerial, or administrative capacity.
- The employer asserted that the employee’s services were terminated on April 15, 2005, and that he was not an employee at the time of filing the complaint, thus the complaint was not maintainable.
- The employer argued that the Industrial Court lacked jurisdiction to rule on the termination issue, as it falls under Item 1 of Schedule IV, which is within the purview of the Labour Court.
- The employer stated that Mr. Ashish Khare’s resignation was voluntary and accepted, and that he attended the conference without an invitation.
- The employer also mentioned that the employee had failed to submit his expense statements for February and March 2005, making it impossible to pay his salary.
Submissions
| Employee’s Submissions | Employer’s Submissions |
|---|---|
| Transfer was mala fide due to protest at Ahmedabad conference. | Transfer was as per terms of employment, no mala fide intent. |
| Termination order not real as it was not received. | Employee was not a “workman” but in a managerial capacity. |
| Termination ancillary to transfer, thus under Industrial Court’s jurisdiction. | Services terminated before complaint, thus complaint not maintainable. |
| No business exigency for transfer. | Industrial Court lacks jurisdiction over termination disputes. |
| Mr. Ashish Khare’s resignation was voluntary. | |
| Employee failed to submit expense statements. |
Issues Framed by the Supreme Court
The Supreme Court framed the following issues for consideration:
- Whether the employee is entitled to dispute the termination order dated April 15, 2005, as not real or bona fide because it was not received by him?
- Whether the employee is entitled to dispute his transfer as an unfair labor practice under Item 3 of Schedule IV of the Act without impleading the person who is said to have acted in a mala fide manner?
- Whether the question of malice in law can be inferred in the matter of transfer of an employee as an unfair labor practice?
- Whether the order of termination is ancillary to the order of transfer, thus conferring jurisdiction on the Industrial Court to exercise jurisdiction in the matter arising out of the allegation of unfair labor practice?
Treatment of the Issue by the Court
| Issue | Court’s Decision | Reasoning |
|---|---|---|
| Whether the employee could dispute the termination order for not receiving it. | No. | The Court cited State of Punjab v. Khemi Ram [(1969) 3 SCC 28], stating that once an order is issued and sent out, it is considered communicated, regardless of when it is received. |
| Whether the employee could dispute the transfer as an unfair labor practice without impleading the person who acted mala fide. | No. | The Court held that allegations of mala fide require impleading the individuals accused of acting with ill intent, which was not done in this case. |
| Whether malice in law could be inferred in the transfer. | No. | The Court found no evidence of malice in law, as the employer had the power to transfer per the employment contract, and the transfer was not without lawful excuse. |
| Whether the termination order was ancillary to the transfer, giving jurisdiction to the Industrial Court. | No. | The Court stated that termination disputes fall under Item 1 of Schedule IV, which is within the Labour Court’s jurisdiction, not the Industrial Court’s. |
Authorities
The Supreme Court considered the following authorities:
| Authority | Court | Legal Point | How Considered |
|---|---|---|---|
| State of Punjab v. Khemi Ram [(1969) 3 SCC 28] | Supreme Court of India | Communication of an order | The Court relied on this case to hold that an order is communicated once it is sent out, regardless of when it is received. |
| State of Bihar & Anr. v. P.P. Sharma, IAS & Anr. [1992 Supp (1) SCC 222] | Supreme Court of India | Meaning of mala fide | The Court used this case to define mala fide as want of good faith, personal bias, or improper motive. |
| Prabodh Sagar v. Punjab State Electricity Board & Ors. [(2000) 5 SCC 630] | Supreme Court of India | Proof of mala fide | The Court cited this case to emphasize that mere use of the term “mala fide” does not make a petition entertainable; factual support is required. |
| HMT Ltd. & Anr. v. Mudappa & Ors. [(2007) 9 SCC 768] | Supreme Court of India | Meaning of legal malice | The Court referred to this case to define legal malice as something done without lawful excuse. |
| State of A.P. & Ors. v. Goverdhanlal Pitti [(2003) 4 SCC 739] | Supreme Court of India | Meaning of legal malice | The Court referred to this case to define legal malice as something done without lawful excuse. |
| Union of India & Ors. v. Ashok Kumar & Ors. [(2005) 8 SCC 760] | Supreme Court of India | Burden of proving mala fide | The Court cited this case to state that allegations of mala fide require a high order of credibility and proof. |
| Ratnagiri Gas and Power Private Limited v. RDS Projects Limited & Ors. [(2013) 1 SCC 524] | Supreme Court of India | Impleading parties in mala fide allegations | The Court relied on this case to emphasize that individuals accused of mala fide actions must be impleaded as parties. |
The Supreme Court also considered the following legal provisions from the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971:
- Section 3(8)
- Section 3(10)
- Section 5(d)
- Section 7
- Section 26
- Section 27
- Section 32
- Schedule IV, Item 1
- Schedule IV, Item 3
Judgment
How each submission made by the Parties was treated by the Court?
| Party | Submission | Court’s Treatment |
|---|---|---|
| Employee | Transfer was mala fide. | Rejected. The Court held that the employee failed to implead the persons against whom mala fides were alleged. |
| Employee | Termination order not real because it was not received. | Rejected. The Court held that the order was communicated when it was sent out, regardless of receipt. |
| Employee | Termination is ancillary to transfer, thus within Industrial Court’s jurisdiction. | Rejected. The Court held that termination disputes fall under the Labour Court’s jurisdiction. |
| Employer | Transfer was as per terms of employment. | Accepted. The Court agreed that the employer had the power to transfer the employee. |
| Employer | Industrial Court lacks jurisdiction over termination disputes. | Accepted. The Court held that the Labour Court has jurisdiction over termination disputes under Item 1 of Schedule IV of the Act. |
How each authority was viewed by the Court?
The Court relied on the following authorities:
- State of Punjab v. Khemi Ram [(1969) 3 SCC 28]*: The Court used this case to support its finding that the termination order was effective when sent, not when received.
- State of Bihar & Anr. v. P.P. Sharma, IAS & Anr. [1992 Supp (1) SCC 222]*: The Court used this case to define mala fide as want of good faith, personal bias, or improper motive.
- Prabodh Sagar v. Punjab State Electricity Board & Ors. [(2000) 5 SCC 630]*: The Court used this case to emphasize that allegations of mala fide must be supported by factual evidence.
- HMT Ltd. & Anr. v. Mudappa & Ors. [(2007) 9 SCC 768]* and State of A.P. & Ors. v. Goverdhanlal Pitti [(2003) 4 SCC 739]*: The Court used these cases to define legal malice as something done without lawful excuse.
- Union of India & Ors. v. Ashok Kumar & Ors. [(2005) 8 SCC 760]*: The Court used this case to highlight that the burden of proving mala fide is heavy.
- Ratnagiri Gas and Power Private Limited v. RDS Projects Limited & Ors. [(2013) 1 SCC 524]*: The Court used this case to emphasize that individuals accused of mala fide actions must be impleaded as parties.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the following factors:
- Adherence to Legal Precedent: The Court emphasized the importance of following established legal precedents, such as in State of Punjab v. Khemi Ram [(1969) 3 SCC 28], which states that an order is communicated when sent, not when received.
- Requirement of Proof for Mala Fide Allegations: The Court stressed that allegations of mala fide must be supported by concrete evidence and that the individuals accused must be impleaded in the proceedings.
- Jurisdictional Boundaries: The Court clarified the jurisdictional boundaries between the Industrial Court and the Labour Court, emphasizing that termination disputes fall under the Labour Court’s purview.
- Contractual Terms of Employment: The Court acknowledged the employer’s right to transfer employees as per the terms of their employment contracts.
| Sentiment | Percentage |
|---|---|
| Adherence to Legal Precedent | 30% |
| Requirement of Proof for Mala Fide Allegations | 30% |
| Jurisdictional Boundaries | 25% |
| Contractual Terms of Employment | 15% |
Fact:Law
| Category | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
The Court’s reasoning was heavily based on legal principles and precedents (70%), with a lesser focus on the specific factual circumstances of the case (30%).
Logical Reasoning
The Court considered alternative interpretations but rejected them, finding that the employee failed to meet the burden of proof for mala fide transfer and that the Industrial Court lacked jurisdiction over the termination dispute. The final decision was reached by applying established legal principles and precedents.
The Court’s decision was based on the following reasons:
- The termination order was validly communicated when it was sent out, regardless of when it was received.
- The employee failed to prove mala fide in the transfer, as he did not implead the individuals accused of acting with ill intent.
- The Industrial Court lacked jurisdiction to decide on the termination issue, as it falls under the Labour Court’s purview.
“In our view, once an order is issued and it is sent out to the concerned government servant, it must be held to have been communicated to him, no matter when he actually received it.”
“Mala fides means want of good faith, personal bias, grudge, oblique or improper motive or ulterior purpose.”
“The jurisdiction of the Industrial Court is, inter alia, to decide complaints relating to unfair labour practices except unfair labour practices falling under Item 1 of Schedule IV.”
There was no dissenting opinion in this case, as the judgment was delivered by a bench of two judges.
Key Takeaways
- An employer’s transfer order is valid if it aligns with the terms of employment, and it is not considered an unfair labor practice unless proven to be mala fide.
- Allegations of mala fide must be supported by concrete evidence, and the individuals accused of acting with ill intent must be impleaded in the proceedings.
- The Industrial Court does not have jurisdiction to adjudicate on termination disputes that fall under Item 1 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971. Such disputes are within the purview of the Labour Court.
- An order is considered communicated when it is sent out, not when it is received.
This judgment reinforces the employer’s right to transfer employees as per the terms of employment and clarifies the jurisdictional boundaries between the Industrial Court and the Labour Court. It also emphasizes the need for concrete evidence when alleging mala fide actions.
Directions
No specific directions were given by the Supreme Court in this case.
Specific Amendments Analysis
Not Applicable as the judgment does not discuss any specific amendment.
Development of Law
The ratio decidendi of this case is that an employer’s transfer order is valid if it aligns with the terms of employment, and it is not considered an unfair labor practice unless proven to be mala fide with concrete evidence and impleading the concerned persons. Furthermore, the Industrial Court does not have jurisdiction to adjudicate on termination disputes that fall under Item 1 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971. Such disputes are within the purview of the Labour Court. This judgment reinforces the established legal position on employer’s rights and jurisdictional boundaries.
Conclusion
In conclusion, the Supreme Court dismissed the appeal, upholding the High Court’s decision. The Court reaffirmed the employer’s right to transfer employees as per the terms of employment, emphasized the need for concrete evidence when alleging mala fide actions, and clarified the jurisdictional boundaries between the Industrial Court and the Labour Court. The Court held that the termination order was validly communicated when it was sent out and that the Industrial Court lacked jurisdiction to decide on the termination issue.