Supreme Court Quashes Jharkhand High Court Order, Upholds Workmen's Right to Reinstatement and Regularisation

Supreme Court Quashes Jharkhand High Court Order, Upholds Workmen's Right to Reinstatement and Regularisation

The Supreme Court has granted an appeal presented by the Executive Union of Workers of the Food Corporation of India (FCI) in response to a judgment by a division bench of the Jharkhand High Court. The High Court ruling had denied the workers' request for regularization of their services, while simultaneously instructing FCI to pay them 75 per cent of the back wages.

The division bench, consisting of Justices Krishna Murari and Sanjay Kumar, emphasized that since the management had permitted the workers to serve in regular positions for more than two decades, it could no longer assert an unquestionable right to challenge the Award or maintain its objections based on prior conditions for compliance with the Award.

The Court observed that considering the absorption of these workers into regular service, they had made a conscious decision to forgo potential employment opportunities elsewhere and instead chose to remain employed with the FCI.

“Having placed them in that position, it was no longer open to the management of FCI to seek to turn back the clock. Unfortunately, these crucial aspects were lost sight of by the Division Bench, while dealing with the management’s appeal,” the Bench observed.

The Bench expressed its agreement with the decision of the Jharkhand High Court in dismissing the writ petition. It referred to the case of Union of India v. N. Murugesan, which highlighted the concept of "approbate" and "reprobate." The Court explained that this principle prevented a party from accepting and rejecting the same thing simultaneously, as it was based on the principle of election. The Court noted that the principle of "approbate" and "reprobate" encompassed an element of fair play and constituted a form of estoppel related to the conduct of a party.

The Bench concurred with the ruling of the single bench of the High Court, which had upheld the Award in favour of the workers of FCI. Accordingly, the bench allowed the appeal, affirming the decision in favour of the FCI workers.

In the present case, an order was issued under Section 10(1)(d) of the Industrial Disputes Act, 1947 (Act of 1947). This order was issued by the Ministry of Labour, Government of India, referring to the industrial dispute raised by the Executive Staff Union of FCI on behalf of 21 casual workers, for adjudication. The dispute was subsequently transferred to the Central Government Industrial Tribunal No. 2, located in Dhanbad (referred to as the Tribunal).

The Tribunal conducted an examination and concluded that the 21 workers in question were engaged as casual workers by FCI in Patna, and their retrenchment was deemed invalid as they were not provided with prior notice or compensation. Additionally, considering that an earlier Award, which upheld the reinstatement and regularisation of casual workers, had been upheld by the High Court, the Tribunal expressed the view that these 21 workers should also be regularised in service, as there were available vacancies in Class IV positions.

However, acknowledging that the workers had not rendered services for a significant period, the Tribunal limited their entitlement to back wages. Consequently, the Tribunal issued an Award on March 18, 1997, stating that the management's action in retrenching the services of these workers was unjustified. The Award directed the management to reinstate the workers and regularise their services in Class IV posts, effective from May 10, 1990, the date of their retrenchment. Furthermore, the management was ordered to pay the workers 75 per cent of their back wages within a specified time frame.

Challenging the mentioned Award, FCI's management filed a Civil Writ before the Jharkhand High Court, resulting in the granting of an interim stay on the Award. However, the stay was conditional upon FCI continuing to pay the workmen their full wages. In response, the management began paying each worker a monthly amount of ₹507, asserting that they were only entitled to minimum wages.

Disputing this interpretation, the workmen initiated contempt proceedings, which were resolved on May 12, 2000. The resolution stated that if the management failed to comply with the condition specified in the stay order dated August 5, 1999, within two weeks, the stay order would automatically be vacated. Subsequently, the workmen would be entitled to take the necessary steps for the implementation of the Award.

In light of this, the management issued orders to implement the Award. The workmen were absorbed into regular service and received 75 per cent of their back wages from May 10, 1990, until March 18, 1997. Thereafter, they were paid full wages applicable to Class IV employees. However, this compliance was subject to the final outcome of the writ petition that was still pending.

Subsequently, the Jharkhand High Court, in its order dated November 1, 2018, dismissed the Civil Writ. The Court affirmed the Tribunal's finding that the workmen in question, who had worked in FCI at Patna for 240 days in the preceding 12 months, were unlawfully terminated without complying with the mandatory provisions of Section 25F of the Industrial Disputes Act, 1947.

The Judge further noted that the management did not contest the claim made by the workmen that similarly situated individuals had been regularised in service following an earlier order issued by the High Court. Additionally, the management failed to present any distinguishing factors between the cases of the concerned workmen and those who had already been regularised. In light of this, the Judge concluded that a casual employee who had worked for 240 days in the preceding calendar year would be entitled to reinstatement in service if their termination was without proper notice or compensation, as mandated by Section 25F of the Act.

However, due to the management's decision to comply with the contested Award without adhering to the condition imposed in the interim order of the writ petition, and considering that the workmen had been benefiting from the Award for over 18 years, the Judge determined that it would cause significant hardship to change the situation at that stage. Consequently, the Judge dismissed the writ petition, upholding the Award in its entirety.

Subsequently, the management appealed the matter before a Division Bench of the Jharkhand High Court. The Division Bench modified the order under appeal by quashing the Award's direction to regularise the services of the workmen. The modification was based on the grounds that such relief could not be sustained when there was no provision for regularisation in reference to the industrial dispute.

However, the Division Bench upheld the direction to pay 75 per cent of the back wages and set aside the order of the Judge, which declined to interfere with the Award's direction regarding regularisation of services.

Both parties appealed to the Supreme Court against the judgment of the Division Bench. The Executive Staff Union of FCI filed an appeal on behalf of the workmen, challenging the denial of regularisation of their services. On the other hand, the management of FCI appealed against the direction of reinstatement and payment of 75 per cent of the back wages to the workmen. The Supreme Court issued a notice on March 8, 2021, in response to the appeal filed by the workmen and directed a stay on the operation of the Division Bench judgment. A Contempt Petition was subsequently filed, alleging disobedience of the stay order, and it was disposed of with certain observations on July 26, 2022.

The Apex Court noted that the management had not challenged the Award regarding reinstatement in service and payment of back wages before the Division Bench of the High Court. Therefore, those issues could not be raised before the Supreme Court. The Court underlined that the management had voluntarily implemented the Award in its entirety during the pendency of the writ petition, and the workmen had benefited from it for 18 years. The management had chosen to implement the award without complying with the conditions of the interim protection granted to them.

The Top Court observed that there was no evidence to suggest that the management had actively sought an expeditious disposal of the writ petition after complying with the award. The condition imposed in the interim order by the single bench was for the management to pay the last drawn wages to the employees. However, the management proceeded to absorb the workers instead of abiding by the condition.

The Supreme Court clarified that as per the interim order dated August 5, 1999, in the Civil Writ petition, the management of FCI was required to pay the full wages last drawn by the concerned workmen in compliance with Section 17B of the Act of 1947, pending the final disposal of the writ petition.

The subsequent final order dated May 12, 2000, in the miscellaneous case, put the management on notice that if it failed to comply with the conditional stay order within two weeks, the order would stand vacated and the workmen would be entitled to seek implementation of the Award.

The management had the option to simply pay the wages last drawn by the workmen to ensure the continuation of the interim protection during the pendency of the writ petition. However, instead of following this course of action, the management of FCI chose to reinstate the workmen through office orders and further "absorbed" them into regular service through a corrigendum. Essentially, the management voluntarily implemented the Award in its entirety, disregarding the conditional interim protection provided in the writ petition.

The Supreme Court dismissed the management's argument that it was compelled to comply with the award due to the threat of contempt. The Court noted that the contempt proceedings had already been closed on May 12, 2000, well before the orders of "reinstatement" and "absorption" were issued in November 2000. Therefore, the Court did not accept the management's claim of being coerced into implementing the award.

“Having committed itself to this course of action on its own, albeit by making it subject to the result of the pending writ petition, the question that arises is whether the management of FCI can be permitted a volte-face at this late stage. Pertinently, there is no evidence of the management at least seeking expeditious disposal of the writ petition after complying with the Award, making it subject to the result thereof. In fact, the management merrily allowed the situation to continue for 18 long years, till the dismissal of the writ petition in November 2018,” the Court stated.

The Supreme Court Bench noted that the management of FCI had initially filed a writ petition challenging the Award passed by the Tribunal. However, despite obtaining conditional interim relief in the petition, the management voluntarily chose to implement the Award. Not only did they reinstate the workmen in service, but they also went a step further and absorbed them into regular service.

“Such absorption in service was not at all required under the interim order dated 05.08.1999 and was, therefore, squarely attributable to the will and volition of the management of FCI itself. In effect, the management of FCI, be it for whatever reason, chose to acquiesce with and accept the Award in its entirety, though it made such compliance subject to the result of the writ petition. Its somnolence, thereafter, in taking timely measures for expeditious disposal of the writ petition compounded the matter further, leading to the passing of 18 long years, which conclusively weighed with the learned Judge and, in our considered opinion, rightly so. A party to a proceeding cannot be permitted to challenge the same but thereafter abide by it out of its own free will; garner benefit from it; get the opposite party to effectively alter its position; and then press its challenge after the passage of a considerable length of time,” the Bench observed.

In light of the circumstances and the factual position that had persisted for over two decades, the Supreme Court Bench was not inclined to accept the technically sound but essentially narrow view taken by the Division Bench of the Jharkhand High Court. Therefore, the appeal filed by the Executive Staff Union of FCI on behalf of the workmen was allowed, and the judgment of the Division Bench passed on December 17, 2020, was set aside.

As a result, the Supreme Court restored the order dated November 1, 2018, passed by the Judge in the Civil Writ and the Award dated March 18, 1997, passed by the Tribunal. However, this restoration was subject to the observations made in the order dated July 26, 2022, passed by the Court in the Contempt Petition related to the Special Leave Petition (SLP). Consequently, the appeal filed by the management of FCI was dismissed.