Bombay High Court Upholds Industrial Tribunal's Interim Order Directing Global Pharma Leader Sandoz To Re-Employ/ Pay Security To Retrenched Workers

The Bombay High Court has upheld an interim order against Sandoz Private Limited, a global leader in generic pharmaceuticals and biosimilars, directing it to re-employ workers it retrenched or provide security over applicable wages till pendency of the industrial complaint.

Justice NJ Jamadar took strong exception to the manner in which Sandoz retrenched its employees a night before their matter was heard by the Industrial Court for interim reliefs. 

“While granting an equitable relief, the conduct of the parties also assumes material significance. The learned Member, Industrial Court, was within his rights in critically examining the conduct of the Sandoz in passing the retrenchment order after a copy of the ULP complaint and notice,” the court observed.

Sandoz is a sister concern of Novartis AG, a multinational company incorporated and based in Basel, Switzerland. It had employed 179 Professional Service Representatives (PSR) to market certain brands in India.

The High Court was hearing a writ petition filed by Sandoz assailing an order of the Industrial Court at Thane passed on June 16, 2020.

The complaint was filed by the worker’s Union – Bhartiya Kamgar Karamchari – on July 15, 2017 alleging unfair labour practices. The union contended that Sandoz was reorganising its business and somehow wanted to get rid of its workmen.

The Union through Senior Advocate Sanjay Singhvi and Advocate Bennet D’Costa submitted that in March 2017 workers had approached the Deputy Commissioner of Labour to conciliate the demand.

Months later in June 2017 Sandoz announced discontinuation of its commercial activities in India and introduced a Voluntary Retirement Scheme. Around the same time Sandoz informed the workers about their employment being terminated.

Retrenchment compensation was deposited in their accounts and the employees (known as Professional Service Representatives – PSRs) were forced to take the scheme, the Union claimed. With most employees taking the scheme only 36 PSRs were remaining.

In their plea before the Industrial court, the Union cited the company's failure to give 'notice' under Section 9A of the Act amounted to illegal change of service conditions and since the said change occurred during the pendency of the conciliation proceeding, it was in teeth of the provisions contained in Section 33(1)(a) of the Act, 1947.

The Union alleged that the company couldn’t have retrenched employees without seeking permission of the competent authority as conciliation proceedings were ongoing. It was a violation of Section 33(1)(a) of the Act, 1947 and an unfair labour practice under Item 9 of Schedule IV of the Act, 1971, it said.

“According to the complainant the termination in the circumstances of the case constituted a change in the service conditions of the workmen in violation of Section 9A of the Act, 1947,” the court noted regarding their argument.

Sandoz on the other hand claimed the retrenchment was beyond its control as no major brands were left to market. They further argued that with retrenchment, there was cessation of service environment and thus there could be no change in condition of service.

The Industrial Court accepted the labour Union’s argument and said that Sandoz circumvented the established legal process and went on to terminate the PSRs during the pendency of the complaint, despite having been served with a copy of the complaint and the notice of the matter being moved for interim relief on the next date. Since the act of the Sandoz was in clear breach of Section 33 of the Act 1947 as no permission was obtained from the concerned authority a prima facie case of unfair labour practice of illegal retrenchment amounting to termination of the services of PSRs was made out.

Sandoz challenged the order before the HC, where Justice Jamadar observed that whether retrenchment would amount to a change in condition of service, and make the employer liable, would depend upon the nature of the industrial dispute pending before the Court, Tribunal or Authority.

The prohibition is against altering conditions of service in regard to any matter connected with the dispute, the court observed.

“This essential nature of the dispute deserves to be kept in view…The dispute which was thus under conciliation before the conciliation officer was the impending threat of being rendered without work…It is the nexus between the matter in dispute and the action complained of, that determines the applicability of Section 33(1) (a) of the Act, 1947.”

“..retrenchment, in the circumstances of the case, squarely altered the condition of service as the PSRs were demanding work and they were eventually terminated,” the court held.

Case Title: Sandoz Private Limited v. Bhartiya Kamgar Karmachari

Click Here To Read/Download Judgment