'Employment' U/S 17B Industrial Disputes Act Includes Self-Employment Where Workman Earns Adequately: Kerala High Court

The Kerala High Court has recently ruled that the term “employment” under Section 17 B of the Industrial Disputes Act, 1947, includes self-employment where the workmen earns adequate income.Justice S Manu, while deciding on an interim application in a writ petition, held that a workman cannot claim benefits under Section 17 B merely in the absence of formal employment, if he or she is engaged in a profit-generating business or self employment. The petitioner who was terminated by respondent Shwas Homes Private Limited in 2011, was awarded reinstatement with continuity of service and 50% back wages with 7% interest by the Labour Court in March 2022. However, the management failed to implement the award, prompting the petitioner to file execution petitions and later approach the High Court under Section 17 B. It was alleged that she remained unemployed and without any source of livelihood since her termination in 2011 and sought ₹4,14,000 in wages under Section 17B.However, the employer produced documentary evidence showing the petitioner was actively involved in two business ventures–'Marlin's Wardrobe' a designer boutique, and 'Saga, the Craft People', a craft establishment allegedly earning monthly profits. The petitioner contended that though two business establishments were started, the petitioner is not earning sufficient income and hence the same cannot be considered as a reason for denying the relief under Section 17 B of the Industrial Dispute Act. It was further contended that the relief under section 17 B can only be denied if the workman was gainfully employed elsewhere. Rejecting the contention that Section 17 B applies only when a workman is employed by another establishment, the Court referred to Supreme Court's decision in North-East Karnataka Road Transport Corporation v M Nagangouda (2010) and held:“The Hon'ble Apex Court was considering the issue of back wages and not payment of last drawn wages under S.17B in the said case. Nonetheless, the Apex Court considered self employment also as employment for the purpose of deciding back wages liable to be granted. In view of the categorical supposition of the Hon'ble Supreme Court as above, in an analogous context, I am of the considered view that the expression 'employment' in Section 17 B must be held to include self-employment also. However, without doubt the self employment should be adequately remunerating. If not, the employer shall be liable to pay last drawn wages under Section 17B. If the workman is proved to have been earning sufficient income through self employment, a direction under S.17B may not be required to ensure sufficient pecuniary resource for his living”.The Supreme Court had held that “gainful employment” includes self employment generating sufficient income.The High Court criticised the petitioner for not disclosing her involvement in the business concerns. In her affidavit supporting the interim application, the petitioner denied having any income or business engagement. Only when confronted with evidence did she admit involvement in the business, characterising them as family run and financially non-viable.The Court observed “Even if her case that the involvement in business does not provide her sufficient income is assumed as correct, the said contention ought to have been raised in the affidavit filed in support of the I.A. and not after the writ petitioner management refuted her averments by filing counter affidavit. This conduct of the petitioner cannot be ignored...Being selective in disclosing the facts cannot be approved even in an application under Section 17 B of the I D Act.”The court dismissed the interim application under Section 17 B and has posted the main writ petition for hearing. Case Title - Smitha Francis Alias Smitha Ajay v Shwas Homes Pvt Ltd and AnrCase No - WP(C) 10576/ 2024Counsel for Petitioner - M M Fathima Jaleena, K A Hazan, V J James, K P Wilson, Ramesh Kumar KCounsel for Respondents - B Ashok Shenoy, P S Gireesh, Salith P A, Arjun R Naik, Thejalakshmi R S, Umasanker U UClick Here To Read/ Download Order

'Employment' U/S 17B Industrial Disputes Act Includes Self-Employment Where Workman Earns Adequately: Kerala High Court

Anamika MJ

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