Long-Standing Discretionary Benefits Can Crystallise Into Service Conditions; Employer Cannot Withdraw Without Notice: Bombay High Court
The Bombay High Court has held that when a discretionary concession is granted repeatedly over decades through formal administrative approvals and published circulars, it may crystallise into a customary concession or service condition, and the employer cannot withdraw it without complying with Section 9-A of the Industrial Disputes Act, 1947. The Court observed that prospective discontinuance of such a long-standing benefit amounts to a change in service conditions within the meaning of Item 8 of the Fourth Schedule, attracting the mandatory requirement of notice.
Justice Amit Borkar was hearing writ petitions filed by the Brihanmumbai Municipal Corporation challenging an interlocutory order vide which the Industrial Court had stayed the operation of the circular dated 05th September 2025 and directed the Corporation to continue the prevailing practice of granting one or two additional wage increments to employees who had acquired Diplomas in Local Self Government (LSGD) and LGS even after 29th August 2000, pending adjudication of the complaint alleging unfair labour practice. The Corporation contended that the grant of additional increments was a voluntary policy decision, purely discretionary in nature, and that discontinuance did not result in reduction of wages already drawn.
The Court noted that Section 9-A prohibits an employer from effecting any change in conditions of service in respect of matters specified in the Fourth Schedule without issuing notice and observing the statutory waiting period. Item 8 of the Fourth Schedule expressly covers “withdrawal of any customary concession or privilege or change in usage.” The Court observed that a benefit extended consistently over a long period, sanctioned by formal resolutions, published through circulars and uniformly implemented, may acquire the character of a customary concession forming part of the service pattern.
“An employer may at any time grant a discretionary benefit. However, where a discretionary concession is granted repeatedly, approved by administrative authorities, published by circular and acted upon for decades, it may acquire the character of a customary concession or service condition,” the Court observed.
The Court remarked that prospective discontinuance of such a concession alters the framework governing entitlement to increments and constitutes a change in service conditions, even if increments already granted are protected.
On the contention that the Industrial Court had granted final relief, the High Court observed that the impugned order merely preserved the status quo by staying the circular and directing continuation of the prior practice pending final adjudication; it did not declare the circular invalid nor finally determine the rights of the parties.
Holding that no jurisdictional error or perversity was demonstrated, the Court upheld the interim order of the Industrial Court and dismissed the writ petition, clarifying that the Industrial Court would decide the complaint on the merits independently.
Case Title: Brihanmumbai Municipal Corporation & Ors. v. Mumbai Mahanagarpalika Karyalayeen Karmachari Sanghatana & Anr. [Writ Petition No.12 of 2026]