A worker who was removed from service illegally is entitled to 100% of the back wages: High Court of Orissa
In cases where a workman is suspended from service illegally, he is entitled to gain 100% of the back wages he was owed for the time period he was kept out of service by his employer. The issue of back wages was addressed in the judgement passed by a bench of the High Court of Orissa consisting of Justice S.K Panigrahi and Justice Sanju Panda in the case of Sun Pharmaceutical Industries Ltd. v State of Odisha and another [W.P.(C) No. 6156 of 2017] on 11th June 2021. Sun Pharmaceutical Industries Ltd., the petitioner terminated the services of former employee Niranjan Sahoo, who is opposite party no: 2 on 18th February 2014. Sahoo was the district manager at Ranbaxy Laboratories, Bhubaneshwar since 3rd May 2010 which is owned by the petitioners.  He was suspended from his job on account of poor attitude and team management skills which lead to members of the Orissa Union detaining the regional manager of the concerned unit to demand the revocation of Sahoo’s suspension. Instead it resulted in Niranjan Sahoo being terminated from services permanently. The matter was taken to Labour Court where the Presiding Officer held that the petitioners had not followed the principles of natural justice while conducting the domestic inquiry against opposite party no: 2 and as opposite party no: 2 was a workman under Section 2(s) of the ID Act 1947, the petitioner was liable for the offence of illegal termination of workman. The Presiding Officer also directed the petitioner to reinstate opposite party no: 2 as well as pay him 50% of the back-wages for his time out of service. The petitioners filed a writ petition in the High Court of Orissa against the Presiding Officer’s judgement on the grounds that opposite party no: 2 should not be considered as a workman. The High Court stated that designation or name of a post is irrelevant in ascertaining whether a person is a workman or not and therefore the opposite party 2 would be considered as a workman despite holding the post of district manager as he did not possess the authority to take disciplinary action against the other workers or to grant them leave. It was also added that considering that the termination was found to be illegal, opposite party no: 2 should be entitled to 100% of the back wages as opposed to the 50% granted by the Labour Court. The case of Bhuvesh Kumar Dwivedi v M/s Hindalco Industries Ltd. [11 SCC 85 of 2014] was cited, where the Supreme Court of India held that if a workman is kept out of work due to the mistake of the establishment, he is entitled to full back wages for the time he was kept out of service.
ORISSA HIGH COURT CUTTACK W.P.(C) No.61517 In the matter of an application under Articles 226 and 227 of Constitution of India) Sun Pharmaceutical Industries Ltd. … Petitioner Versus … Opposite Parties Shri Sourya Sundar Das Senior Advocate along with M s. S.K. Mohanty J. Mohanty S.K. Mohanty and S. Modi Shri Jagannath Patnaik Senior Advocate along with M s. P.K. Das 1 and S. Das Advocates For opposite party No.2) State of Odisha and another For Petitioner For Opp. Parties : P R E S E N T: THE HONOURABLE KUMARI JUSTICE S. PANDA THE HONOURABLE MR. JUSTICE S.K. PANIGRAHI Date of hearing: 22.02.2021Date of Judgment: 11.06.2021 S.K. Panigrahi J. The petitioner by way of this writ petition assails the award dated 31.12.2016 in I.D. case No. 32 of 2015 passed by the learned Presiding Officer Labour Court Bhubaneswar holding that the present petitioner was bound by the reference by Government and directing reinstatement of the Opposite Party No.2 with further direction to pay 50% back wages. The factual conspectus of the present petition hovers around the order of termination of the opposite party No.2 w.e.f. 18.02.2014 and the alleged dispute was set into motion based upon a reference vide letter No.4643 IR(ID) 16 2015 LESI dated 22.05.2015 by Government of Odisha in the Labour and E.S.I. Department which runs as follows: “Whether the termination of the services of Shri Niranjan Sahoo Ex District Manager Maxxim by the management of M s. Ranbaxy Laboratories Ltd. Maxxim Division Western EdgeI Unit No.201 204 2nd Floor Western Express Highway Borivali Mumbai having their Regional Office at OLISA House 2nd Floor 4 Govt. Place North) Kolkata 1 with effect from the 18th February 2014 is legal and or justified If not to what relief the workman is entitled ” The Opposite Party No.2 was employed with the erstwhile M s. Ranbaxy Laboratories Ltd. as District Manager and was posted at Bhubaneshwar Headquarters w.e.f. 03.05.2010 in Maxxim Strategic Business Unit. During the short period of his joining in duty his superiors identified issues of poor attitude performance and team management by the Opposite Party No.2 and based on the same the Regional Manager started conducting monthly reviews to guide and monitor him. On seeing no significant improvement in the performance of the Opposite Party No.2 and the issues continued as such it was recommended by the Strategic Business Unit to have his performance reviewed at Head Office Mumbai. Accordingly he was called to Head Office on 27.05.2012 and his performance was reviewed in the presence of HR and National Sales Manager. During the review process it was observed that he was defiant on most of the points even to the extent that he refused to sign the minutes of the meeting so held. Subsequent to the same there was no improvement seen in the working of the opposite party No.2 and when questioned he projected indifferent attitude. Based on the same the erstwhile Company decided to conduct a domestic enquiry against him through an independent Enquiry Officer and accordingly the services of Opposite Party No.2 were suspended vide letter dated 19.07.2013 pending enquiry. Thereafter the concerned Regional Manager of the Maxxim Business Unit while conducting a meeting of his District Managers at Cuttack was illegally detained by the members of the Orissa Union with a demand of revoking the suspension of the Opposite Party No.2 for which the Company filed an FIR at the local Police Station. The Enquiry Officer submitted his report having afforded the opportunity of hearing to the Opposite Party No.2. Based on the findings thereof the service of Opposite Party No.2 was terminated w.e.f. 18.02.2014 by erstwhile Ranbaxy Laboratories Ltd. Being aggrieved by the punitive culture of the management of the said Company the Odisha Sales Executives’ Association raised an industrial dispute before the DLO Cuttack for conciliation against the termination order and the same having failed was referred by Appropriate Government to Presiding Officer Labour Court Bhubaneswar. The Presiding Officer during pendency of the proceeding without any further reference impleaded the petitioner as a party and issued summons to the petitioner. Prior to the date of reference the said M s. Ranbaxy Laboratories Ltd. had been amalgamated with M s. Sun Pharmaceuticals Industries Ltd. and there was no existence of the said management as M s. Ranbaxy Laboratories Ltd. on the date of reference. Therefore it was contended that without the rectification of the reference by the appropriate Authority of State Government the present proceeding against M s. Sun Pharmaceuticals Industries Ltd. was not maintainable. The learned Presiding Officer has also held that i) the Petitioner management has not followed the principle of natural justice while conducting the domestic inquiry against the Opposite Party No.2. The Opposite Party No.2 is a workman under Section 2(s) of the ID Act 1947 Since the petitioner Management has merged with the organisation of the second party management so the petitioner management is liable for the illegal termination of the Opposite Party No.2 workman The workman is not entitled to get full back wages however he is entitled to reinstatement of service by the petitioner management with back wages of 50%. Aggrieved by the order of the learned Labour Court the petitioner has approached this Learned Counsel for the petitioner submits that the order is perverse to the materials available on record. The learned Presiding Officer Labour Court Bhubaneswar has failed to take note of the earlier judgments and orders passed by the Hon ble Apex Court and Hon ble High Court which formed part of records and further failed to take note of the judgments and citations submitted during hearing. The learned Labour Court has erred in assuming jurisdiction which is not vested with it as the Opposite Party No.2 was not a workman as per the provision of Section 2 of the I.D. Act 1947 and the territorial jurisdiction of Court was limited to Court at Delhi in view of the submission of jurisdiction to Delhi in the appointment letter. He has further submitted that the learned Presiding Officer Labour Court has committed error in appreciating the requirement of burden of proof which rested on the Opposite Party No.2 as he claimed himself as workman and which could not have been shifted to petitioner. Neither the Opposite Party No.2 nor the Territory Executives reporting to the Opposite Party No.2 were discharging job of the nature of any manual unskilled skilled technical operational clerical or supervisory work. As such the opposite party No.2 cannot be termed as a ‘workman’. Further the domestic enquiry then was conducted by a neutral person in a fair and transparent manner by giving sufficient opportunity of hearing. Hence the entire proceedings and the findings therein is valid in the eye of law but the learned Presiding Officer Labour Court has erroneously returned a finding that the same is illegal and in violation of natural justice and accordingly passed an order of reinstatement. He has further submitted that the Labour Court erred in the process while fixing burden of proof on the petitioner though it was Opposite Party No.1 who was to discharge the same and prove the irregularity and prejudice caused to him if any in the domestic enquiry. The learned Court further proceeded as if acting as an Appellate Authority over domestic enquiry and passed an order on erroneous appreciation of materials and evidence on record. Therefore the Labour Court has acted mechanically sans application of its judicial mind while entertaining the claim and passing the impugned order. The said impugned order is prejudicially affect the petitioner hence warrants interference of this Court. He contended that learned Labour Court Bhubaneswar has failed to appreciate the fact that the Opposite Party No.2 nor the Territory Executive reporting to the Opposite Party No.2 were not discharging the job of any manual nature unskilled skilled technical operational clerical or supervisory work as such Opposite Party No. 2 can’t be termed as “workman” as held by the apex Court in plethora of judgments. 10. Learned Counsel for the Opposite Party No.2 contended that most of the charges levelled against the workman is non specific and vague in nature. He further submitted that none of the allegations levelled against the petitioner was of serious nature the suspension of service was wholly unwarranted. The inquiry was conducted at the company’s office at Kolkata without conceding to any of the request of the workman and by violating the principles of natural justice. It is submitted that so many extraneous factors have been brought in during the course of inquiry with so many vague allegations just to throw the workman out of the Company. The management arbitrarily terminated his service with immediate effect since 18th Feb 2014 which is illegal hence he is entitled to get the back wages. 11. Heard the parties at length. The issue pertains to the reference of Sun Pharmaceuticals as a party to the suit when it was not present in the reference by the appropriate authority of State Government. It has been brought into notice that pursuant to a scheme of arrangement effective on 24.05.2015 M s Ranbaxy Laboratories Ltd. was merged with Sun Pharmaceuticals which was also cleared during the investigation. Further it was clarified that there is no existence of the M s Ranbaxy Laboratories Ltd. The learned Counsel for the petitioner has strenuously contended that without the rectification of the reference by the appropriate authority of State Government the said proceeding against Sun Pharmaceuticals was beyond the scope and purview of reference. However it may be out of place to mention that the employees of M s. Ranbaxy Laboratories Ltd. continued in their service under Sun Pharmaceuticals and the management of the erstwhile M s. Ranbaxy Laboratories Ltd. even after the takeover. This in turn indicates the obligation of the Sun Pharmaceuticals towards the management of the M s. Ranbaxy Laboratories Ltd. in so far as the issue of employee’s welfare after the said takeover. Further in the case of M s Ranbaxy Laboratories Ltd. vs M s Sun Pharmaceuticals Industries Ltd.1 the Court has extracted the relevant clauses of the Scheme of Arrangement wherein it has been clearly provided that the Sun Pharmaceuticals is bound by the legal proceeding pending against 1 CA Nos.64 and 73 of 2015 and CA No.963 964 of 2014 in and CP No.165 of 2014 pronounced on 9 March 2015. M s. Ranbaxy Laboratories Ltd. Therefore the reference by the appropriate authority of State Government against M s. Ranbaxy Laboratories Ltd. is binding on the Sun Pharmaceuticals. 12. Secondly the issue pertaining to jurisdiction of this Court to decide the reference. The learned Counsel for the petitioner has contended that in the appointment letter Ext.CatClause 18 it has been clearly mentioned that any dispute arising between the company and the petitioner with regard to interpretation of the letter or in the matter with regard to any claim or payment or damages etc. shall only be dealt with and adjudicated upon by the Courts functioning in Delhi. However as rightly pointed out by the learned Presiding Officer of the Labour Court it is a settled principle of law that the parties cannot exclude the jurisdiction of a Court by an agreement when a Court has got jurisdiction under an Act. The Government of Odisha in the Labour and E.S.I. Department in exercise of powers conferred upon it by Section 12(5) r w Section 10(1)(c) of the Industrial Disputes Act 1947 referred the following dispute for adjudication by the Labour Court Bhubaneshwar vide letter No.IR(ID) 16 2015 4643 LESI dated writing Section 10. Reference of disputes to Boards Courts or Tribunals. 1) Where the appropriate Government is of opinion that any industrial dispute exists or is apprehended it may at any time by order in c) refer the dispute or any matter appearing to be connected with or relevant to the dispute if it relates to any matter specified in the Second Schedule to a Labour Court for adjudication. Section12. Duties of conciliation officers. 4) If no such settlement is arrived at the conciliation officer shall as soon as practicable after the close of the investigation send to the appropriate Government a full report setting forth the steps taken by him for ascertaining the facts and circumstances relating to the dispute and for bringing about a settlement thereof together with a full statement of such facts and circumstances and the reasons on account of which in his opinion a settlement could not be arrived at. 5) If on a consideration of the report referred to in sub sectionthe appropriate Government is satisfied that there is a case for reference to a Board Labour Court Tribunal or National Tribunal it may make such reference. Where the appropriate Government does not make such a reference it shall record and communicate to the parties concerned its reasons therefor. Therefore this Court has ample jurisdiction to decide the dispute raised by the Opposite Party No.2 in the present reference. 13. The issue pertaining to the question as to whether the petitioner falls under the provision of workman u s 2(s) of the Industrial Disputes Act 1947. The learned Counsel for the petitioner has contended that the Opposite Party No.2 was entitled to the benefits and allowances and his responsibility was in lines with that of a ‘Manager’ and as such cannot be termed as a workman. He also argued that Opposite Party No.2 was supervising the works of the Territory Executives working under him and he was performing his duty in managerial and administrative cadre. It is well settled principle of law that designation or name of the post is not material while dealing with the question of person being workman. The main duties the employee is performing is the criteria to determine whether he falls within the category of workman in the I.D.Act. In S.K. Maini vs Carona Sahu Co. Ltd2 the Supreme Court has held as under: “9. After giving our careful consideration to the facts and circumstances of the case and the submissions made by the learned counsel for the parties it appears to us that whether or not an employee is a workman under Section 2(s) of the Industrial Disputes Act is required to be determined with reference to his principal nature of duties and functions. Such question is required to be determined with reference to the facts and circumstances of the case and materials on record and it is not possible to lay down any strait jacket formula which can decide the dispute as to the real nature of duties and functions being performed by an employee in all cases. When an employee is employed to do the types of work enumerated in the definition of workman under Section 2(s) there is hardly any difficulty in treating him as a workman under the appropriate classification but in the complexity of industrial or commercial organisations quite a large number of employees are often required to do more than one kind of work. In such cases it becomes necessary to determine under which classification the employee will fall for the purpose of deciding whether he comes within the definition of workman or goes out of Additionally the Labour Court has rightly relied on the case of Hussan Mithu Mhasvadkar vs Bombay Iron & Steel Labour Board3 wherein the Supreme Court held that: “10. No doubt in deciding about the status of an employee his designation alone cannot be said to be decisive and what really should go into consideration is the nature of his duties and the powers conferred upon as well as the functions assigned to him. 21994 AIR 182. 11. Even if the whole Undertaking be an Industry those who are not workmen by definition may not be benefited by the said status. It is the predominant nature of the services that will be the true and proper test.” In the present case during witness hearing and cross examination it was admitted that the Opposite Party No.2 was engaged in tasks which do not fall under personnel in managerial cadre and further was abstained from certain powers reserved for personnel in managerial or administrative position. Firstly there are no documents before the Court to indicate that the territory executives were reporting to the petitioner and the latter was supervising their works. Moreover the target for sale was fixed for the Opposite Party No.2 by the management from time to time. Further the Opposite Party No.2 did not have any authority to sanction leave of the territory executives nor take any disciplinary action against them. In addition to that the Opposite Party No.2 had no role to play in formulating sales strategy but he had the duty to execute through his team. Therefore it can be established that the Opposite Party No.2 is a ‘workman’ as defined u s. 2(s) of the Industrial Disputes Act 1947. 12. The next issue pertains to the compliance to the principle of natural justice and the legality of the domestic enquiry. In the case of Laxmi Shankar Pandey vs Union of India AndOrs4 the Supreme Court held that: “6.….It is laid down that such enquiries must be conducted in accordance with the principles of natural justice and that a 4AIR 1991 SC 1070 reasonable opportunity to deny the guilt and to cross examine the witnesses produced and examined should be given and that the enquiry should be consistent with the rules of natural justice and in conformity with the statutory rules prescribing the mode of From the witness examination cross examinations and the adduced evidence it has been admitted that there were several flaws in the process of domestic enquiry followed by the M s. Ranbaxy Laboratories Ltd. M s. Ranbaxy Laboratories Ltd. has failed to produce the depositions of the witnesses recorded by the Enquiry Officer during the enquiry before the Court. It has been further admitted that the Enquiry Officer had not sent any notice to the Opposite Party No.2 for the domestic enquiry conducted against him. Therefore there is a clear violation of the principle of natural justice. It is a settled law that in case the violation of principle of natural justice leads to hampering the domestic enquiry where the delinquent is not provided with a reasonable opportunity to defend himself such a proceeding shall be held as null and void. In the present case M s. Ranbaxy Laboratories Ltd. has violated the principle of natural justice and the domestic enquiry is thereby held as null and void. 14. The next issue pertains to the legality of termination of Opposite Party No.2. From the issues discussed above it is clear that the Opposite Party No.2 is a ‘workman’ u s 2(s) of the Industrial Disputes Act 1947 and therefore has the right to challenge his termination. Further it has been proven that the 1st party managements have violated the principle of natural justice and the domestic enquiry has been thereby held as null and void. Hence the termination of Opposite Party No.2 by M s. Ranbaxy Laboratories Ltd. is illegal and not justified. Further considering that the management of M s. Ranbaxy Laboratories Ltd. is binding on the Sun Pharmaceuticals the latter shall be liable for the illegal termination of Opposite Party No.2. 15. The seventh issue framed by the learned Labour Court pertains to the benefits the Opposite Party No.2 is entitled to considering that the termination was illegal. The learned Labour Court has decided all the issues in favour of the workman. However while replying to Issue No.7 the Labour Court held that there is no evidence that after termination of the opposite party No.2 he tried for his engagement under any other Company. Additionally he has not contributed anything to the 1st party management after his termination and hence he is only entitled to 50% back wages. However it is a settled principle of law that in case a workman was terminated illegally he is entitled to the full back wages irrespective of whether he was engaged elsewhere during that particular time or not. In the case of Bhuvnesh Kumar Dwivedi vs M s. Hindalco Industries Ltd.5 the Supreme Court held that: “30. On the issue of back wages to be awarded in favour of the appellant it has been held by this Court in the case of Shiv Nandan Mahto v. State of Bihar Ors.6 that if a workman is kept out of service due to the fault or mistake of the establishment company he was working in then the workman is entitled to full back wages for the period he was illegally kept out of 5(2014) 11 SCC 85. 14 service. The relevant paragraph of the judgment reads as under: 5. …. In fact a perusal of the aforesaid short order passed by the Division Bench would clearly show that the High Court had not even acquainted itself with the fact that the Appellant was kept out of service due to a mistake. He was not kept out of service on account of suspension as wrongly recorded by the High Court. The conclusion is therefore obvious that the Appellant could not have been denied the benefit of back wages on the ground that he had not worked for the period when he was illegally kept out of service. In our opinion the Appellant was entitled to be paid full back wages for the period he was kept out of service.” Therefore the Opposite Party No.2 should be granted 100% full back wages in the interest of justice. In our considered opinion the act of suspension and subsequent termination of Opposite Party No.2 without due compliance of the principle of natural justice vitiates the proceedings dehors sufficient reasons smacks arbitrariness and malafide. Hence the order dated 31.12.2016 passed in I.D. Case No.315 by the learned Presiding Officer Labour Court Bhubaneswar is affirmed but the direction of 50% back wages granted to the opposite party No.2 is modified and made 100%. The Writ Petition is accordingly disposed of. No order as to cost. S. K. Panigrahi J.] 15 Sanju Panda J.] Sanju Panda J. I agree. Orissa High Court Cuttack The11thJune 2021 AKK LNB AKP 