'For Award To Become Binding, It Should Be Passed In Compliance With Principles Of Natural Justice': Madhya Pradesh High Court

Setting aside an ex-parte award, the Madhya Pradesh High Court, Indore Bench recently held that an award by labour court becomes binding only when it is passed in compliance with the principles of natural justice. Relying on the decision of the Apex Court in Haryana Suraj Malting Limited vs. Phoolchand, Justice Anil Verma observed- Merely because an award had become enforceable, it does not mean that it had become binding. For an award to become binding, it should be passed in compliance with the principles of natural justice. An award passed denying an opportunity of hearing when there was a sufficient cause for non-appearance could be challenged on the ground of it being nullity. An award which is a nullity could not be and should not be a binding award. The facts of the case were that the Petitioner/Municipal Corporation had filed a petition challenging the award passed by the labour court, wherein the presiding officer had proceeded an ex-parte award against the Petitioner, directing reinstatement of the Respondent, without backwages. Thereafter the Petitioner filed an application under OIX R13 CPC for setting aside the ex-parte award but the court dismissed it. The Petitioner again moved an application under OIX R13 CPC before the court, which was also dismissed. The Petitioner argued that the court below had erred in law in dismissing their applications for conducting bi-parte hearing in the case, on the ground that permission to publish award was already granted to it. The Petitioner gave an explanation to the Court that it could not remain present before the court due to clerical error and therefore, they could not appear during the hearing when the award was passed. The Petitioner asserted that since the impugned orders were bad in law, the same were liable to be set aside. Per contra, the Respondent submitted that the Petitioner had filed the application under OIX R13 after a lapse of three months which was time barred and all the orders passed by the court below were just and proper and in accordance with law. It was further submitted that the notice was duly served to the Petitioner and despite the same, they failed to appear before the court. Therefore the labour court had rightly proceeded ex- parte award against the Petitioner. Examining the submissions of the parties and the documents on record, the Court noted after the labour court passed the impugned award, the copy of the respective award was sent to Deputy Commissioner, Labour Court for acknowledgement. But before such acknowledgement, the Corporation had again filed an application under OIX R13 CPC, which was dismissed on the ground that permission for publication of award had already been granted. Referring to the decision in Haryana Suraj Malting case, the Court reiterated that Labour Court/Tribunal is not functus officio after the award has become enforceable as far as setting aside an ex-parte award is concerned- In case, if a party was able to show sufficient cause within a reasonable time for its non-appearance in the Labour Court/Tribunal, when it was set ex-parte, the Labour Court was bound to consider such an application and the application cannot be dismissed on the ground that it was filed after the award had become enforceable. Considering the facts of the case, the Court observed that labour court had committed an error while rejecting the applications of the Petitioners under OIX R13 CPC without considering the relevant legal provisions- The learned Court below has not considered all these legal aspects of the matter while passing the impugned orders and the petitioner/Municipal Corporation has shown sufficient reason of his non-appearance before the Labour Court. The petitioner is a local autonomous body and due to a fault of erring Clerk, the whole Department cannot be punished. The senior officials of the Department have been informed regarding service of notice and due action has been taken against the erring Clerk, therefore, the Petitioner/Corporation have a sufficient ground for non- appearance before the Court below. In the aforesaid facts and circumstances of the case, the learned Labour Court ought to have allowed the application filed by the petitioner. Thus, the Court below has committed an error while rejecting both the applications filed by the petitioner under Order 9 Rule 13 of CPC. With the aforesaid observations the Court set aside the impugned award and orders passed by the court below. It further remitted the matter to the labour court, with the direction that the same be heard afresh by giving sufficient opportunity to the Petitioner.Case Title: MUNICIPAL CORPORATION, DHAR v. NASREEM Click Here To Read/Download Order

'For Award To Become Binding, It Should Be Passed In Compliance With Principles Of Natural Justice': Madhya Pradesh High Court

Zeeshan Thomas

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