ID Act |Right To Claim Interest Is Pre-Existing Right Only If Explicitly Provided In Contract Of Employment Or Service Conditions: Karnataka High Court

The Karnataka High Court single bench of Justice Shivashankar Amarannavar held that the right to claim interest could be considered a pre-existing right or benefit only if explicitly determined in the contract of employment or in the resolutions governing service conditions. However, it held that neither the contract of employment nor the service conditions of the Workman outlined the payment of interest on delayed service benefits. Furthermore, the bench held that an application under Section 33C(2) of the Industrial Disputes Act, 1947 in the Labour Court would require a prior adjudication or recognition by an employer of the claim of the Workman to be paid wages at the rate which they claim.Section 33C(2) of the Industrial Disputes Act, 1947 deals with the recovery of money due from an employer to a workman. “33C. Recovery of money due from an employer.— (1) X X X (2) Where any workman is entitled to receive from the employer any money or any benefit which is capable of being computed in terms of money and if any question arises as to the amount of money due or as to the amount at which such benefit should be computed, then the question may, subject to any rules that may be made under this Act, be decided by such Labour Court as may be specified in this behalf by the appropriate Government within a period not exceeding three months: Provided that where the presiding officer of a Labour Court considers it necessary or expedient so to do, he may, for reasons to be recorded in writing, extend such period by such further period as he may think fit.” Brief Facts: The Respondent (“Workman”) was employed as a driver under the Petitioner (“Corporation”) and was dismissed from service on 20.11.2006 due to proven misconduct. Subsequently, six years after the dismissal, the Workman filed an application under Section 33C(2) of the Industrial Disputes Act, 1947 (“ID Act”) requesting the Corporation to pay an amount of Rs.6,11,103/- with interest at 18% per annum from the date of dismissal to 31.08.2012, based on his last drawn salary. The Labor Court, through the order, granted the application and directed the Corporation to pay the sum as wages from 20.11.2006 to 31.08.2012, with interest at 6% per annum from the date of the order until payment. Feeling aggrieved, the Corporation approached the Karnataka High Court (“High Court”) and filed a writ petition to challenge the Labour Court's order. The Corporation argued that the application under Section 33C(2) of the ID Act by the Workman, seeking wages from the date of dismissal with an interest rate of 18% per annum, was not maintainable. It argued that Section 33C(2) proceedings entail prior adjudication or acknowledgment of the Workman's claim by the employer, and payment must align with the claimed computation. If the basis of the claim is disputed, it argued, Section 33C(2) remedy is not available. Observations by the High Court: The High Court held that for an application under Section 33C(2) to be maintainable, a vital prerequisite is the existence of an employer-employee relationship between the parties at the time of filing. It highlighted that in the absence of a challenge to the dismissal order before the appropriate forum, such an application would lack validity. The High Court held that Section 33C(2) proceedings are essentially execution proceedings which requires prior acknowledgment or adjudication by the employer of the Workman's claim for wages. Furthermore, the High Court held that. a workman could only proceed under Section 33C(2) subsequent to adjudication by the Tribunal through Section 33A or Section 10 proceedings. It reiterated that in the absence of adjudication regarding the validity of the claim, the labor court could not have passed the order. Moreover, the High Court noted that mere non-approval under Section 33(2)(b) did not grant the Workman the right to file an application under Section 33C(2). “A perusal of Section 33C(2)of ID makes it evident that, there should be a relationship of employee and employer and in the absence of challenge to the order of dismissal dated 20.11.2006 before appropriate forum, the application filed under Section 33C(2) of ID Act would not be maintainable. The ingredients of Section 33C(2) of ID Act clearly envisages that, it is in the nature of execution proceeding and the same envisages a prior adjudication or recognition by an employer of the claim of the workman to be paid wages at the rate which they claim.”Further, the High Court held that the claim for interest couldn't be considered a pre-existing right or benefit under Section 33C(2) unless explicitly provided in the employment contract or regulations. Since there was no adjudication on the entitlement to interest or its rate, the application for interest under Section 33C(2) was unsustainable. Therefore, the High Court allowed the writ...

ID Act |Right To Claim Interest Is Pre-Existing Right Only If Explicitly Provided In Contract Of Employment Or Service Conditions: Karnataka High Court

Rajesh Kumar

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