Can Labour/Industrial Courts Order Regularization In Absence Of Sanctioned Posts? SC Refers To Larger Bench [Read Order]

The Supreme Court has referred to a larger bench the issue regarding the power of the Labour and Industrial Courts to order regularisation in the absence of sanctioned posts.

The bench comprising Justice Dhananjaya Y. Chandrachud and Ajay Rastogi observed that the judgment in Oil and Natural Gas Corporation Limited v Petroleum Coal Labour Union, requires reconsideration. The issue regarding the meaning and content of an unfair labour practice under Section 2(ra) read with Item 10 of the Vth Schedule of the Industrial Disputes Act has also been referred.

In PCLU, the Court held that the Industrial Tribunal had the jurisdiction to adjudicate upon the dispute.

The issue raised in these batch of appeals was whether the decision in PCLU is per incuriam on the grounds that it did not consider the binding precedents on the interpretation of Item 10 of Schedule V of the ID Act.

Taking note of the dictums laid down in the judgments in Mahatma Phule Agricultural University v Nasik Zilla Sheth Kamgar Union, Regional Manager, State Bank of India v Raja Ram; Regional Manager, SBI v Rakesh Kumar Tewari ; and Oil & Natural Gas Corpn. Ltd v Engg. Mazdoor Sangh, the bench observed thus:

• 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
• The statutory power of the Labour Court or Industrial Court to grant 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;
• 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;
• here 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;
• 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.

Case name: Oil and Natural Gas Corporation vs. Krishan Gopal
 Case no.: Civil Appeal No. 1878 of 2016
Coram: Justice DY Chandrachud and Ajay Rastogi 
Counsel:  Senior Advocates P S Narasimha and J P Cama

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