Kerala State Backward Classes vs The Industrial Tribunal

A.V. Ramakrishna Pillai, J.—The orders passed by the Industrial Tribunal, Kollam are challenged by the Kerala State Backward Classes Development Corporation represented by the Managing Director in this writ petition.

In WPC No. 8618/2009, the Corporation is challenging Ext. P6 order dated 2nd day of January 2009 by which the learned Tribunal held that the denial of employment to the second respondent is illegal and she is entitled to be reinstated with the benefit of full backwages and continuity of service.

Under challenge in WPC No. 29529 of 2012 is the order of the learned Tribunal dated 8th October 2012 in Industrial Dispute No. 54/2003 by which the learned Tribunal directed the Corporation to reinstate respondents 2 to 16 in service with 50% backwages, continuity of service and all other consequential benefits within a period of three months from the date of the order holding that the termination of those respondents was illegal and unjustifiable.

These writ petitions were reconsidered together as this court is called upon to answer the following questions.

a) Whether the petitioner Corporation comes within the purview of Section 2(j) of the Industrial Dispute Act, 1947, and

b) Whether the respondent Corporation is bound to comply with Section 25F of the Industrial Disputes Act, 1947.

In the writ petitions, the petitioner Corporation would allege that it is a company incorporated under the Companies Act, 1956 and established on 28.2.2005 with the object of promoting the comprehensive development of backward classes of Kerala by rendering assistance to their members.

The grievance projected by the petitioner Corporation is that the first respondent declared that the disengagement of the party respondents was denial of employment and they were directed to be reinstated with all benefits.

What is alleged by the petitioner is that the petitioner Corporation is not an industrial undertaking as defined under the statute and that even though all retrenchments would result in termination of service of a workman by the employer, all terminations of service of a workman by the employer will not fall within the definition of retrenchment.

A counter affidavit has been filed by the party respondents in WPC No. 29529 of 2012 justifying the impugned awards.

I have heard the learned counsel for the petitioner, the learned senior counsel for party respondents in WPC No. 29529 of 2012 and the learned counsel for party respondent in WPC No. 8618 of 2009.

It was argued by the learned counsel for the petitioner that the petitioner, which is a state level agency sponsored by the Government of Kerala for undertaking various welfare and developmental activities exclusively for the backward classes and minority communities, is not an industrial undertaking and therefore, it will not come within the purview of the Act. The petitioner Corporation, being a Government institution, is bound by the mandate of Articles 14 and 16 of the Constitution of India and can make appointments only in accordance with the principles contained therein; so submitted the learned counsel for the petitioner.

It was argued by the learned counsel for the petitioner that none of the party respondents were properly appointed as per rules. It was pointed out that the post to which the workman was engaged was not one sanctioned by the rules governing the employment in the establishment and there cannot be a valid and legal relationship of master and servant between that establishment and the workman and in the absence of such relationship, the termination of the workman will not result in retrenchment.

In support of the argument, the learned counsel for the petitioner would submit that there was no public notice, no written test and no appointment order and the appointment of the party respondents was done not following any due process of selection.

It was also argued that the pronouncements of judgment of this Court would justify sending out of daily rated employees who are in excess on the basis of seniority as provided under the statute.

In support of the argument, the learned counsel for the petitioner invited my attention to the decision of the Apex Court in Himanshu Kumar Vidyarthi and Others Vs. State of Bihar and Others, wherein it was held that every department of the Government cannot be treated as industry when the appointments are governed by statutory rules and the disengagement of those who were not appointed in accordance with the rules cannot be treated as retrenchment.

The learned senior counsel for the party respondents would submit that the party respondents were engaged in various posts such as Junior Assistants, Junior Project Assistants, Clerks and Typists on different dates in early 1995 and 1996. The posts to which these respondents were appointed were sanctioned by the Government. It was pointed out that these appointments were made immediately after the formation of the Corporation on 28.2.1995 and they were having required qualification for being appointed to the respective posts. It was further pointed out that the appointments were made on the basis of the interview done by the competent authority of the Corporation and these respondents continued in the service of the Corporation from the date of their appointment.

The aforesaid submissions are not denied by the learned counsel for the petitioner. When the party respondents were terminated, a dispute arose between the party respondents and the petitioner and the Government referred the industrial dispute for adjudication to the Industrial Tribunal.

It is relevant to note that the learned Tribunal conducted the proceedings after affording equal opportunity to both sides.

The main contention taken by the petitioner before the Tribunal was that the dispute is not maintainable since the petitioner is not an industry.

The Tribunal, after analysing the definition given in Section 2(J) of the Industrial Disputes Act, 1947, declared that the petitioner is an industry. There cannot be any dispute regarding the status of the petitioner as an industry as declared by the Hon''ble Industrial Tribunal.

In the decision referred to by the learned counsel for the petitioner above, what was observed by the Apex Court is that when appointments are regulated by statutory rules, the concept of industry to that extent stands excluded.

Here, admittedly, no Rules were there when the party respondents were appointed. Only long after the appointment of the party respondents, the Rule came into force.

It is an admitted case of the petitioner that the petitioner is a body corporate registered under the Companies Act. All the party respondents got continuous service of more than 3= years to 5 years and they were terminated from the service of the management on different dates. Therefore, the main question before the learned Tribunal was to consider whether the petitioner Corporation would come within the purview of Section 2(j) of the Industrial Disputes Act which reads as follows:

2(j) "industry" means any business, trade undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen".

Referring to the written statement filed by the petitioner before the Tribunal, the Tribunal found that the systematic acts and activities of the petitioner and workers together constitute a service or services to attain the objects embodied in the Memorandum of Association of Corporation which was produced and marked as Ext. W1. For attaining the said achievements, the Management of the petitioner Corporation allows loans to the backward classes and realise the loan amount together with interest. Therefore, the Industrial Tribunal found that the welfare services and systematic organized business activities of the petitioner Corporation attracts Section 2(j) of the Industrial Disputes Act, 1947 and accordingly, it was held that the petitioner concerned would come within the definition of Section 2(j) of the Act.

I see no illegality or infirmity in the said finding.

If the petitioner Corporation is an industrial concern coming within the term of section 2(j) of the Industrial Disputes Act, then, retrenchment of workman, who has worked for a continuous period of 240 days, can be done only in accordance with the provisions of Section 25F of the Industrial Disputes Act.

The learned Industrial Tribunal on evidence found that the petitioner Corporation did not follow the aforesaid elementary principle of law and the workers were terminated illegally.

As the petitioner Corporation has not complied with the provisions of Section 25F, it was found by the Tribunal that the denial of employment amounts to retrenchment and therefore, the Tribunal declared it illegal and unsustainable. It was also found by the Tribunal that the party respondents are entitled to get reinstatement with backwages.

The party respondents in WPC No. 8618/2009 was ordered to be reinstated with full backwages while party respondents in the other case were ordered to be reinstated with 50%.

On an anxious consideration of the entire materials now placed on board, this Court is of the definite view that there is absolutely no scope for interference with the impugned orders and therefore, the petitioner Corporation is bound to fail in these writ petitions.

In the result, both the writ petitions are dismissed.

The petitioner Corporation is directed to comply with the directions in the impugned awards within a period of one month from the date of receipt of a copy of this judgment.