Oil And Natural Gas Corporation vs Krishan Gopal on 7 February, 2020


Supreme Court of India

Oil And Natural Gas Corporation vs Krishan Gopal on 7 February, 2020

Author: Hon’Ble Dr. Chandrachud

                                                                     REPORTABLE
                           IN THE SUPREME COURT OF INDIA
                            CIVIL APPELLATE JURISDICTION

                                 Civil Appeal No. 1878 of 2016




          Oil and Natural Gas Corporation                        …Appellant


                                            Versus

          Krishan Gopal & Ors.                                   …Respondents




                                            With

                            Civil Appeal Nos 935-937 of 2020
                             SLP(C) Nos. 10478-10480/2016


                                            With

                            Civil Appeal Nos 938-939 of 2020
                             SLP(C) Nos. 30854-30855/2017


                                            With

                                 Civil Appeal No 934 of 2020
                                   SLP(C) No. 16455/2018

                                          And With

                            Civil Appeal Nos 669-696 of 2020
Signature Not Verified

Digitally signed by
                             SLP(C) Nos. 15971-15998/2018
SANJAY KUMAR
Date: 2020.02.07
15:22:29 IST
Reason:




                                               1
                                  JUDGMENT


Dr Dhananjaya Y Chandrachud, J.

1 This batch of appeals arises from the judgments of the High Courts of

Andhra Pradesh, Delhi, Madras and Uttarakhand. A judgment of a two judge

Bench of this Court in Oil and Natural Gas Corporation Limited v Petroleum

Coal Labour Union1 (“PCLU”) has assumed focus since the decisions of the

High Courts in four of the present appeals have relied on the judgment of this

Court in coming to the conclusion that the workmen were entitled to regularisation

in service. In one of the five appeals, however where the prayer for regularisation

was rejected, the decision in PCLU has been distinguished. Hence on either end

of the spectrum, the judgment in PCLU has a significant bearing on the outcome

of the appeals.

2 The manner in which the present appeals arise is indicated, for

convenience of reference, in the following tabulation:

Sl. Nos. Particulars                   Remarks

1             Civil Appeals @ SLP (C) The appeals arise out of a judgment dated 5
              Nos. 15971-15998/2018
                                       January 2018 of the Andhra Pradesh High
              ONGC & Ors. v ONGC
                                       Court in 24 Writ Appeals and 4 Writ
              Field Operators Union
              & Ors.                   Petitions.   The   High   Court    directed

                                       regularisation of 450 workmen who moved

                                       the High Court under Article 226 of the



1
    (2015) 6 SCC 494

                                          2
                                            Constitution without seeking a reference

                                            before the Industrial Tribunal under the

Industrial Disputes Act 19472. The judgment

of the High Court has relied upon the

decision of this Court in PCLU (supra).


2              Civil Appeal @ SLP (C) The appeal arises out of a judgment dated
               No. 4/2016
                                            12 December 2015 of the High Court of
               Renumbered       as   C.A.

Delhi. Allowing a Letters Patent Appeal, the
1878/2016
ONGC v Krishan Gopal High Court directed regularisation of 24
& Ors.

workmen who had instituted proceedings

under Article 226 without seeking a

reference to the Industrial Tribunal under the

Industrial Disputes Act 1947. The High Court

relied upon the decision of this Court in

PCLU (supra).


3              Civil Appeal @ SLP (C) The appeal arises from a judgment of the

               No. 10478/2016               Madras High Court dated 20 November

               M   Rajan    &    Ors.   v 2015 in Writ Appeals. The High Court

               ONGC & Ors.                  rejected the prayer for regularisation made

                                            by       the     workmen       who   had     instituted

                                            proceedings under Article 226. The High

                                            Court held that the remedy under the

                                            Industrial Disputes Act 1947 could not be


2
    “ID Act”

                                                 3
                                           bypassed. The High Court distinguished the

                                           decision of this Court in PCLU (supra).

4             Civil Appeal @ SLP (C) The appeal arises from a decision of the
              No. 30854/2017
                                           High Court of Uttarakhand dated 3 August

              ONGC        v   Tel   AVM 2017 in writ proceedings under Article 226,
              Prakartik             Gas
                                           as a consequence of which, nine workmen
              Karmchari Sangh
                                           have been directed to be regularised. The

                                           High Court set aside the award of the

Industrial Tribunal which had held in favour

of ONGC, the employer. The High Court

relied on the decisions of this Court in PCLU

and in State of Haryana v Piara Singh3

(“Piara Singh”). (The decision in Piara

Singh has been overruled by the

Constitution Bench of this Court in

Secretary, State of Karnataka v

Umadevi4).


5             Civil Appeal @ SLP (C) The appeal arises from the judgment of the
              No. 16455/2018
                                           Madras High Court dated 29 January 2018
              The      Management     of
                                           by       which    the     services    of    fourteen
              ONGC        v   Petroleum
              Employees Union              messengers and three sanitary cleaners

                                           have been regularised by the High Court.

                                           The award of the Industrial Tribunal has

3
    (1992) 4 SCC 118
4
    (2006) 4 SCC 1

                                                4
                                          been set aside. The High Court has relied

                                          on the judgment of this Court in PCLU

                                          (supra).




3          In the appeals which are listed out at serial Nos 1, 2, 4 and 5 of the table,

ONGC, as the appellant seeks to challenge the judgments of the High Courts

directing or, as the case may be, upholding the plea for regularisation on the

basis of the decision in PCLU. In the appeal at serial No 3, the workmen are

before this Court against the judgment of the High Court declining to grant the

relief which was granted to the workmen in PCLU on the ground that they had

initiated proceedings under Article 226 without availing of the remedy under the

ID Act.

4 Appearing on behalf of the appellant, ONGC, in four appeals in the above

batch of appeals5, Mr P S Narasimha and Mr J P Cama, learned Senior Counsel

have formulated the following points for determination:

(i) Whether the decision of the two judge Bench of this Court in PCLU is per

incuriam on the ground that it did not consider the binding precedents on the

interpretation of Item 10 of Schedule V of the ID Act, particularly those in :

 Mahatma Phule Agricultural University v Nasik Zilla Sheth

Kamgar Union6;

5
Serial Nos 1, 2, 4 and 5
6
(2001) 7 SCC 346

5
 Regional Manager, State Bank of India v Raja Ram7;

 Regional Manager, SBI v Rakesh Kumar Tewari8; and

 Oil & Natural Gas Corpn. Ltd v Engg. Mazdoor Sangh9.

(ii) Whether the interpretation which has been placed in PCLU on clause 2(ii) of

the Certified Standing Orders for contingent employees of ONGC to the

effect that a temporary workman who has put in 240 days of attendance in

any period of twelve consecutive months and possesses the minimum

qualifications is entitled to regularisation, is correct in view of the fact that

the standing order only provides that the „workman‟ “may be considered for

conversion as regular employee”;

(iii) Whether the view of the High Court of Andhra Pradesh that the principles

enunciated in the judgment of the Constitution Bench in Secretary, State of

Karnataka v Umadevi10 (“Umadevi”) are not applicable to labour law, is

correct;

(iv) What are the ingredients of an unfair labour practice under Item 10 of

Schedule V of the ID Act; and

(v) Whether a finding of an unfair labour practice can be rendered in a

proceeding under Article 226 of the Constitution without the workmen

leading evidence in a reference under the ID Act.

7
(2004) 8 SCC 164
8
(2006) 1 SCC 530
9
(2007) 1 SCC 250
10
(2006) 4 SCC 1

6
5 Section 25(T) of the ID Act contains a prohibition against employers,

workmen and trade unions resorting to unfair labour practices. It provides:

“25 (T). Prohibition of unfair labour practice – No employer or
workman or a trade union, whether registered under the
Trade Unions Act, 1926 (16 of 1926) or not, shall commit any
unfair labour practice.”

The expression “unfair labour practice has been defined in Section 2(ra):

“2(ra) “unfair labour practice” means any of the practices
specified in the Fifth Schedule.”

Among the unfair labour practices set out in the Vth Schedule, Item 10 provides

as follows:

“10. To employ workmen as “badlis”, casuals or temporaries
and to continue them as such for years, with the object of
depriving them of the status and privileges of permanent
workmen.”

The decision in PCLU

6 ONGC was in appeal against an award of the Industrial Tribunal directing it

to regularise the services of security guards and supervisors with effect from the

date on which they had completed 480 days. ONGC had a project in Cauvery

Basin, Karaikal in the Union Territory of Puducherry. It employed contract

workmen as security guards and supervisors. On 8 December 1976, contract

labour was abolished for watch and ward, dusting and cleaning jobs by the

Government of India under Section 10(1) of the Contract Labour (Regulation and

Abolition) Act 1970. Under an agreement with the trade unions, the management

of ONGC utilized the services of the erstwhile contract workmen through a labour

7
cooperative society which was formed for the welfare of the contract workmen.

Subsequently, security work was entrusted to the Central Industrial Security

Force to protect the installations. The workmen were later on appointed as part of

watch and ward security on a term basis subject to the condition that the Certified

Standing Orders would not apply to them. On a demand by the workmen, a

reference was made to the Industrial Tribunal to adjudicate on whether the

management was justified in not regularising the workmen and in failing to pay

equal wages to the workmen, at par with the regular workmen. The dispute about

the payment of equal wages was resolved by a settlement. The Industrial

Tribunal made an award directing ONGC to regularise the services of the

workmen. This was challenged by ONGC before the High Court in writ

proceedings on the ground that the workmen had been originally selected without

following any selection procedure, in violation of the decision in Umadevi (supra).

The workmen claimed that ONGC was guilty of an unfair labour practice in

continuing them on a temporary basis since 1988. The Writ Petition was

dismissed by a learned Single Judge. The Division Bench of the High Court

having dismissed a Writ Appeal, ONGC moved this Court in order to challenge

the judgment of the High Court.

7 In appeal, one of the issues was:

“Whether jurisdiction of the Tribunal to direct the Corporation to regularise

the services of the workmen concerned in the posts is valid and legal?”.

Answering the above issue, this Court held that

(i) All the workmen (except for one) possessed the qualifications

8
required for regularisation; and

(ii) The workmen had been employed prior to 1985 in posts through

irregular means.

8 The Court held that the Industrial Tribunal had the jurisdiction to adjudicate

upon the dispute and had rightly passed an award directing regularisation of the

services of the workmen.

9 The second issue which was dealt with in the judgment in PCLU was:

“Whether the appointment of the workmen concerned in the services of the

Corporation is irregular or illegal?”

10 On behalf of the Management, it was urged that the initial selection of the

workmen was not in accordance with the recruitment rules and was illegal in view

of the judgment of the Constitution Bench in Umadevi. This plea was rejected,

following the decision in Ajaypal Singh v Haryana Warehousing Corporation11

and it was held that the management could not deny the rights of the workmen by

contending that their initial employment was contrary to Articles 14 and 16 of the

Constitution. The provisions contained in clause 2(ii) of the Certified Standing

Orders for contingent employees of ONGC were in issue, the management

contending that there was no right of regularisation merely on the completion of

240 days in twelve consecutive months.

11

(2015) 6 SCC 321

9
11 Clause 2 of the Certified Standing Orders provides thus :

“2. (i) Classification of workmen
The contingent employees of the Commission shall
hereafter be classified as:

(a) Temporary, and

(b) Casual

(ii) A workman who has been on the rolls of the
Commission and has put in not less than 180 days of
attendance in any period of 12 consecutive months
shall be a temporary workman, provided that a
temporary workman who has put in not less than 240
days of attendance in any period of 12 consecutive
months and who possesses the minimum
qualifications prescribed by Commission may be
considered for conversion as regular employee.

(iii) A workman who is neither temporary nor regular
shall be considered as casual workman.”

12 Justice V Gopala Gowda, speaking for the two judge Bench of this Court

rejected the submission that clause 2(ii) of the Certified Standing Orders does not

confer a right to regularisation since it employs the words “may be considered for

conversion as regular employee”. This submission which was based on the

language of clause 2(ii) was rejected with the following observations:

“In any case, it is clear that the workmen concerned have
clearly completed more than 240 days of services
subsequent to the memorandum of appointment issued by
the Corporation in the year 1988 in a period of twelve
calendar months, therefore, they are entitled for
regularisation of their services into permanent posts of
the Corporation as per the Act as well as the Certified
Standing Orders of the Corporation.”
(Emphasis supplied)

The Court further held:

“45. The legal contention urged on behalf of the Corporation
that the statutory right claimed by the workmen concerned
under Clause 2(ii) of the Certified Standing Orders of the
Corporation for regularising them in their posts as regular
employees after rendering 240 days of service in a calendar

10
is not an absolute right conferred upon them and their right is
only to consider their claim. This plea of the learned Senior
Counsel cannot again be accepted by us for the reason that
the Corporation is bound by law to take its decision to
regularise the services of the workmen concerned as regular
employees as provided under Clause 2(ii) of the Certified
Standing Orders after their completion of 240 days of service
in a calendar year as they have acquired valid statutory right.

This should have been positively considered by the
Corporation and granted the status of regular employees of
the Corporation for the reason that it cannot act arbitrarily and
unreasonably deny the same especially it being a corporate
body owned by the Central Government and an
instrumentality of the State in terms of Article 12 of the
Constitution and therefore, it is governed by Part III of the
Constitution.”

ONGC was accordingly directed to regularise the services of the workmen on

their completing 240 days of service in a calendar year under clause 2(ii) of the

Certified Standing Orders, to grant regular pay scale and absorption against

regular posts. PCLU arose from an adjudication in an industrial reference

whereas the present proceedings arise from a writ petition under Article 226.

13 From the above extract of the decision of this Court in PCLU, it is evident

that clause 2(ii) of the Certified Standing Orders has been construed to confer a

right to regularisation on the completion of 240 days of service in a calendar year.

While construing the provisions of clause 2(ii), an earlier decision of a two judge

Bench of this Court in Oil and Natural Gas Corporation Limited v Engineering

Mazdoor Sangh12 (“Engineering Mazdoor Sangh”) was evidently not brought

to the notice of the Court. The decision in Engineering Mazdoor Sangh

construed clause 2 of the Certified Standing Orders specifically in the context of

12
(2007) 1 SCC 250

11
ONGC itself. The decision related to the engagement of seasonal workmen who

were employed between November and May of the following year for carrying out

surveys for the exploration of petroleum. The demand of the workmen for

regularisation on the completion of 240 days was referred to Central Government

Industrial Tribunal. While the reference was pending, the Union filed a complaint

under Section 33-A alleging that ONGC was allotting work to contractors in

preference to the casual/contingent/temporary workmen resulting in the alteration

of the terms of service. The complaint was adjudicated upon by the Tribunal upon

which ONGC filed an application seeking permission to terminate the service of

the workmen. The Tribunal allowed ONGC to terminate some of the workmen.

The order of the Tribunal directed ONGC to regularise the workmen as an when

any vacancy arose in a regular post, subject to their completing 240 days‟ work

and possessing the minimum qualifications. The High Court modified the award

of the Industrial Tribunal by directing that all employees who completed 240 days

and possessed the minimum qualifications would be considered at par with

regular employees. They would be given the status of regular appointees without

requiring them to compete with other employees drawn from the employment

exchange. In appeal, this Court observed that regularising the services of all the

seasonal workmen would create various difficulties and hence the Tribunal had

found a via media in directing that 153 workmen who had admittedly completed

240 days and had acquired a temporary status be regularised against vacancies

as and when such vacancies became available. Thus, this Court found that the

directions of the Tribunal were reasonable and should prevail instead of the

directions issued by the High Court. The judgment of the High Court was set

12
aside and that of the Tribunal was restored.

14 Apart from the above decision which arose specifically in the context of

ONGC, it has been submitted that the decision in PCLU would require

reconsideration in view of earlier decisions of this Court which have not been

noticed.

15 In Mahatma Phule Agricultural University v Nasik Zilla Sheth Kamgar

Union13 (“Mahatma Phule Agricultural University”), a Bench of two learned

judges of this Court construed the provisions of Item 6 of Schedule IV of the

Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour

Practices Act 197114, which is in the following terms :

“14…

6. To employ employees as „badlis‟, casuals or temporaries
and to continue them as such for years, with the object of
depriving them of the status and privileges of permanent
employees.”

Construing the above provisions, this Court held :

“14…The complaint was against the Universities. The High
Court notes that as there were no posts the employees could
not be made permanent. Once it comes to the conclusion that
for lack of posts the employees could not be made
permanent, how could it then go on to hold that they were
continued as “badlis”, casuals or temporaries with the object
of depriving them of the status and privileges of permanent
employees? To be noted that the complaint was not against
the State Government. The complaint was against the
Universities. The inaction on the part of the State Government
to create posts would not mean that an unfair labour practice
had been committed by the Universities. The reasoning given
by the High Court to conclude that the case was squarely
covered by Item 6 of Schedule IV of the MRTU & PULP Act
cannot be sustained at all and the impugned judgment has to
13
(2001) 7 SCC 346
14
“MRTU and PULP Act”

13
be and is set aside. It is however clarified that the High Court
was right in concluding that, as per the law laid down by this
Court, status of permanency could not be granted. Thus all
orders wherein permanency has been granted (except award
dated 1-4-1985 in IT No. 27 of 1984) also stand set aside.”

There could, in other words, be no regularisation in the absence of posts. Hence,

there was no unfair labour practice.

16 In Regional Manager, State Bank of India v Raja Ram15 (“Raja Ram”),

another two judge Bench of this Court construed the provisions of Item 10 of

Schedule V to the ID Act and observed:

“9…In other words, before an action can be termed as an
unfair labour practice it would be necessary for the
Labour Court to come to a conclusion that the badlis,
casuals and temporary workmen had been continued for
years as badlis, casuals or temporary workmen, with the
object of depriving them of the status and privileges of
permanent workmen. To this has been added the judicial
gloss that artificial breaks in the service of such workmen
would not allow the employer to avoid a charge of unfair
labour practice. However, it is the continuity of service of
workmen over a period of years which is frowned upon.

Besides, it needs to be emphasised that for the practice to
amount to unfair labour practice it must be found that the
workman had been retained on a casual or temporary
basis with the object of depriving the workman of the
status and privileges of a permanent workman. There is
no such finding in this case. Therefore, Item 10 in List I of
the Fifth Schedule to the Act cannot be said to apply at all to
the respondent’s case and the Labour Court erred in coming
to the conclusion that the respondent was, in the
circumstances, likely to acquire the status of a permanent
employee.”
(Emphasis supplied)

The above decision was followed in Regional Manager, SBI v Rakesh Kumar

15
(2004) 8 SCC 164

14
Tewari16.

17 The decision of the two judge Bench in PCLU has placed a construction on

the provisions of clause 2(ii) of the Certified Standing Orders which prima facie

does not appear to be correct. Besides, the fact that the decision in PCLU has

not noticed the earlier judgment in Engineering Mazdoor Sangh (supra) which

pertained to ONGC‟s Certified Standing Orders, we are of the considered view

that the principles of law which have been expounded in PCLU would require to

be revisited. The decision in PCLU holds that the workmen upon completion of

240 days‟ service in a period of 12 calendar months “are entitled for

regularisation of their services into permanent posts of the corporation”. The

Court further held that under clause 2(ii), upon the completion of 240 days of

service in a calendar year, the workmen have “acquired valid statutory right”

and ought to have been “granted the status of regular employees” of the

corporation on the ground that the corporation which is an instrumentality of the

State under Article 12 cannot act arbitrarily or unreasonably. Whether the

provisions of clause 2(ii) confer an absolute right to regularisation merely on the

completion of 240 days of service in a calendar year is a point which needs to be

reconsidered both having regard to the express language of the provision as well

as the earlier decisions of this Court including that in the case of Engineering

Mazdoor Sangh.

18 The second aspect on which we are of the view that the present appeals

would require to be placed before a larger Bench for consideration is in regard to
16
(2006) 1 SCC 530: at paragraph 25, page 538

15
the applicability of the principles set out and formulated by the Constitution Bench

in Umadevi in the context of industrial adjudication. In Umadevi, the Constitution

Bench made a distinction between appointments or selections which are merely

irregular and those which are illegal. The Court observed:

“16…We have, therefore, to keep this distinction in mind and
proceed on the basis that only something that is irregular for
want of compliance with one of the elements in the process of
selection which does not go to the root of the process, can be
regularised and that it alone can be regularised and granting
permanence of employment is a totally different concept and
cannot be equated with regularisation.”

In this context, the Court held :

“43…It has also to be clarified that merely because a
temporary employee or a casual wage worker is continued for
a time beyond the term of his appointment, he would not be
entitled to be absorbed in regular service or made permanent,
merely on the strength of such continuance, if the original
appointment was not made by following a due process of
selection as envisaged by the relevant rules. It is not open to
the court to prevent regular recruitment at the instance of
temporary employees whose period of employment has come
to an end or of ad hoc employees who by the very nature of
their appointment, do not acquire any right. The High Courts
acting under Article 226 of the Constitution, should not
ordinarily issue directions for absorption, regularisation, or
permanent continuance unless the recruitment itself was
made regularly and in terms of the constitutional scheme.”

In paragraph 53 of the judgment, the Court made a one-time exception, for the

regularisation of the irregularly appointed persons, who had worked for ten years

or more in duly sanctioned posts:

“53. One aspect needs to be clarified. There may be cases
where irregular appointments (not illegal appointments) as
explained in S.V. Narayanappa [(1967) 1 SCR 128 : AIR 1967
SC 1071] , R.N. Nanjundappa [(1972) 1 SCC 409 : (1972) 2
SCR 799] and B.N. Nagarajan [(1979) 4 SCC 507 : 1980
SCC (L&S) 4 : (1979) 3 SCR 937] and referred to in para 15

16
above, of duly qualified persons in duly sanctioned vacant
posts might have been made and the employees have
continued to work for ten years or more but without the
intervention of orders of the courts or of tribunals. The
question of regularisation of the services of such employees
may have to be considered on merits in the light of the
principles settled by this Court in the cases abovereferred to
and in the light of this judgment. In that context, the Union of
India, the State Governments and their instrumentalities
should take steps to regularise as a one-time measure, the
services of such irregularly appointed, who have worked for
ten years or more in duly sanctioned posts but not under
cover of orders of the courts or of tribunals and should further
ensure that regular recruitments are undertaken to fill those
vacant sanctioned posts that require to be filled up, in cases
where temporary employees or daily wagers are being now
employed.”

19 The applicability of the decision in Umadevi in the context of labour

adjudication was considered in UP Power Corporation Ltd. v Bijli Mazdoor

Sangh17 (“Bijli Mazdoor Sangh”). This Court held that the law propounded in

Umadevi was applicable also to Industrial Tribunals and Labour Courts. The

Court held:

“6. It is true as contended by learned counsel for the
respondent that the question as regards the effect of the
industrial adjudicators’ powers was not directly in issue
in Umadevi (3) case [(2006) 4 SCC 1 : 2006 SCC (L&S)
753] . But the foundational logic in Umadevi (3) case [(2006)
4 SCC 1 : 2006 SCC (L&S) 753] is based on Article 14 of the
Constitution of India. Though the industrial adjudicator can
vary the terms of the contract of the employment, it cannot do
something which is violative of Article 14. If the case is one
which is covered by the concept of regularisation, the same
cannot be viewed differently.

7. The plea of learned counsel for the respondent that at
the time the High Court decided the matter, decision
in Umadevi (3) case [(2006) 4 SCC 1 : 2006 SCC (L&S) 753]
was not rendered is really of no consequence. There cannot
be a case for regularisation without there being employee-

employer relationship. As noted above the concept of
regularisation is clearly linked with Article 14 of the

17
(2007) 5 SCC 755

17
Constitution. However, if in a case the fact situation is
covered by what is stated in para 45 of Umadevi (3)
case [(2006) 4 SCC 1 : 2006 SCC (L&S) 753] the industrial
adjudicator can modify the relief, but that does not dilute the
observations made by this Court in Umadevi (3) case [(2006)
4 SCC 1 : 2006 SCC (L&S) 753] about the regularisation.”

20 Subsequently, in Maharashtra State Road Transport Corporation v

Casteribe Rajya Parivahan Karmchari Sanghatana18 (“Maharashtra SRTC”),

it was held that the Industrial and Labour Courts under Section 30(1)(b) of the

MRTU and PULP Act have wide powers to direct the employer to take affirmative

action in a case of unfair labour practice including the power to order

regularisation or permanency. The decision in Umadevi was held to limit the

scope of the powers under Articles 32 and 226 to issue directions for

regularisation in a matter of public employment. However, the power to take

affirmative action under Section 30(1)(b) was held to be intact even after the

judgment of the Constitution Bench. This Court held :

“35. Umadevi (3) [(2006) 4 SCC 1 : 2006 SCC (L&S) 753]
is an authoritative pronouncement for the proposition that the
Supreme Court (Article 32) and the High Courts (Article 226)
should not issue directions of absorption, regularisation or
permanent continuance of temporary, contractual, casual,
daily wage or ad hoc employees unless the recruitment itself
was made regularly in terms of the constitutional scheme.

36. Umadevi (3) [(2006) 4 SCC 1 : 2006 SCC (L&S) 753]
does not denude the Industrial and Labour Courts of their
statutory power under Section 30 read with Section 32 of the
MRTU and PULP Act to order permanency of the workers
who have been victims of unfair labour practice on the part of
the employer under Item 6 of Schedule IV where the posts on
which they have been working exist. Umadevi (3) [(2006) 4
SCC 1 : 2006 SCC (L&S) 753] cannot be held to have
overridden the powers of the Industrial and Labour Courts in
passing appropriate order under Section 30 of the MRTU and

18
(2009) 8 SCC 556

18
PULP Act, once unfair labour practice on the part of the
employer under Item 6 of Schedule IV is established.”

The Court however clarified that there is no doubt that the creation of posts does

not lie within the domain of judicial functions “which obviously pertains to the

executive” and the status of permanency cannot be granted by the Court where

no posts exist. In Maharashtra SRTC, the two judge Bench was construing the

provisions of the MRTU and PULP Act 1971. In holding that the creation of posts

could not be directed by courts, the judgment in Maharashtra SRTC relied upon

the decisions in Mahatma Phule Agricultural University (supra) and State of

Maharashtra v R S Bhonde19.

21 The divergence between the decisions in Bijli Mazdoor Sangh and

Maharashtra SRTC was sought to be reconciled in a two judge Bench decision

of this Court in Hari Nandan Prasad v Employer I/R to Management of Food

Corporation of India20 (“FCI”). Justice A K Sikri, speaking for the two judge

Bench held:

“39. On a harmonious reading of the two judgments
discussed in detail above, we are of the opinion that when
there are posts available, in the absence of any unfair labour
practice the Labour Court would not give direction for
regularisation only because a worker has continued as daily-
wage worker/ad hoc/temporary worker for number of years.
Further, if there are no posts available, such a direction for
regularisation would be impermissible. In the aforesaid
circumstances giving of direction to regularise such a person,
only on the basis of number of years put in by such a worker
as daily-wager, etc. may amount to back door entry into the
service which is an anathema to Article 14 of the Constitution.

Further, such a direction would not be given when the worker

19
(2005) 6 SCC 751
20
(2014) 7 SCC 190

19
concerned does not meet the eligibility requirement of the
post in question as per the recruitment rules. However,
wherever it is found that similarly situated workmen are
regularised by the employer itself under some scheme or
otherwise and the workmen in question who have
approached the Industrial/Labour Court are on a par with
them, direction of regularisation in such cases may be legally
justified, otherwise, non-regularisation of the left-over workers
itself would amount to invidious discrimination qua them in
such cases and would be violative of Article 14 of the
Constitution. Thus, the industrial adjudicator would be
achieving the equality by upholding Article 14, rather than
violating this constitutional provision.”

22 In FCI, the grievance of the appellants was that in terms of a scheme

contained in a circular, similarly placed workmen had been regularised on the

completion of 240 days‟ service. While dealing with the case of two workmen, it

was found that one of them had been dispensed with four years prior to the date

of the circular as a result of which the workman would only be entitled to

monetary compensation. On the other hand, the second workman was in service

on the date of the circular and completed 240 days of service within a few

months. The Court held that the failure to regularise his services was

discriminatory.

23 The following propositions would emerge upon analyzing the above

decisions:

(i) Wide as they are, the powers of the Labour Court and the Industrial

Court cannot extend to a direction to order regularisation, where such a

direction would in the context of public employment offend the

provisions contained in Article 14 of the Constitution;

(ii) The statutory power of the Labour Court or Industrial Court to grant

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relief to workmen including the status of permanency continues to exist

in circumstances where the employer has indulged in an unfair labour

practice by not filling up permanent posts even though such posts are

available and by continuing to employ workmen as temporary or daily

wage employees despite their performing the same work as regular

workmen on lower wages;

(iii) The power to create permanent or sanctioned posts lies outside the

judicial domain and where no posts are available, a direction to grant

regularisation would be impermissible merely on the basis of the

number of years of service;

(iv) Where an employer has regularised similarly situated workmen either in

a scheme or otherwise, it would be open to workmen who have been

deprived of the same benefit at par with the workmen who have been

regularised to make a complaint before the Labour or Industrial Court,

since the deprivation of the benefit would amount to a violation of

Article 14; and

(v) In order to constitute an unfair labour practice under Section 2(ra) read

with Item 10 of the Vth Schedule of the ID Act, the employer should be

engaging workmen as badlis, temporaries or casuals, and continuing

them for years, with the object of depriving them of the benefits

payable to permanent workmen.

24 The decision in PCLU needs to be revisited in order to set the position in

law which it adopts in conformity with the principles emerging from the earlier line

of precedent. More specifically, the areas on which PCLU needs reconsideration

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are:

(i) The interpretation placed on the provisions of clause 2(ii) of the

Certified Standing Orders;

(ii) The meaning and content of an unfair labour practice under Section

2(ra) read with Item 10 of the Vth Schedule of the ID Act; and

(iii) The limitations, if any, on the power of the Labour and Industrial Courts

to order regularisation in the absence of sanctioned posts. The decision

in PCLU would, in our view, require reconsideration in view of the

above decisions of this Court and for the reasons which we have noted

above.

25 We accordingly request the Registry to place the proceedings before the

Hon‟ble Chief Justice of India so as to enable His Lordship to consider placing

this batch of appeals before an appropriate Bench.

…….………….…………………………………………J.
[DR DHANANJAYA Y CHANDRACHUD]

…….…………………………………………………….J.
[AJAY RASTOGI]

New Delhi;

February 07, 2020.

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