Industrial Court Lacks Jurisdiction In Absence Of Clear Employer-Employee Relationship: Bombay HC

Background

Tata Steel Ltd., petitioner, runs its statutory canteen at Wire Division in Tarapur Industrial Area, Palghar, pursuant to Section 46 of the Factories Act, 1948. It had appointed the second respondent, Sonali Caterers, to run such a statutory canteen at the above-said address through various contracts entered in the course of time, as the last agreement was operative up to December 2020. The conflict arose when the Maharashtra Shramjivi General Kamgar Union, representing 26 canteen employees, filed a complaint before the Industrial Court in Thane to obtain an official declaration of these individuals as permanent staff of Tata Steel. The labor union maintained that workers were working continuously at the canteen of Tata Steel since 2010. This made them permanent employees and entitled to benefits similar to other permanent workers in Tata Steel. However, Tata Steel approached the Industrial Court and argued that they were employees of the contractor. Further, that the Court had no jurisdiction over the issue due to the disputed nature of the employer-employee relationship. However, the Court dismissed Tata Steel's objection, and the company filed the present petition at the Bombay High Court, contesting the Industrial Court's ruling.

Arguments

Tata Steel, through its Senior Counsel Mr. Sudhir K. Talsania, contended that the workers in the canteen were engaged by the contractor, Sonali Caterers. Since they were not engaged by Tata Steel itself, the Industrial Court did not have the any jurisdiction under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (MRTU & PULP Act). Thus, the court could not designate these workers as permanent employees of Tata Steel. Referring to Cipla Ltd. v. Maharashtra General Kamgar Union, (2001) 3 SCC 101 and Vividh Kamgar Sabha v. Kalyani Steels Ltd., (2001) 2 SCC 381, Tata Steel argued that since the issue involved a decision on the existence of an employment relationship itself, it must be decided by a competent authority under the Industrial Disputes Act, 1947, before any claim can be made under the MRTU & PULP Act.

The Union, represented by Mr. Yogendra Pendse, contended that the Industrial Court had jurisdiction over the matter since workers were employed in a statutory canteen operated by Tata Steel. According to prevailing legal principles, employees working in statutory canteens are considered company employees rather than the contractor. The Union further maintained that the workers had continuously been employed at Tata Steel's canteen. It would be unjust to deny them permanent employee benefits for the simple reason that such benefits were denied to these workers. It argued that Tata Steel did exercise control and supervision over the canteen workers, provided facilities and reimbursed wages; thus, establishing the employer-employee relationship.

Court's Reasoning

Firstly, the general principle stating that in cases where the employer-employee relationship is disputed, the Industrial Court does not have jurisdiction to adjudicate such issues was confirmed by the court. The court referenced decisions supporting this view, including Cipla Ltd. v. Maharashtra General Kamgar Union (2001) 3 SCC 101, which held that existence of an undisputed employer-employee relationship is a prerequisite for the Industrial Court's jurisdiction.

However, the court also considered exceptions in cases involving statutory canteens, such as Indian Petrochemicals Corporation Ltd. v. Shramik Sena (1999) 6 SCC 439 and Hindalco Industries Ltd. v. Association of Engineering Workers (2008) 13 SCC 441. In these rulings, the Supreme Court acknowledged that employees of statutory canteens, even when hired through contractors, could be considered employees of the principal employer under specific circumstances, such as continuous supervision and control by the principal employer. The court examined these precedents but ultimately found them distinguishable; because, in Tata Steel's case, there was significant involvement of Sonali Caterers as an intermediary employer. The arrangement with the contractor and the absence of direct employment contracts between Tata Steel and the workers weakened the union's assertion of a direct employment relationship.

Secondly, the court dismissed the union's reliance on the principal employer doctrine applied to statutory canteen employees, noting that Tata Steel's contractual agreement with Sonali Caterers indicated that the workers were intended to be contractor employees, not direct employees of Tata Steel. Unlike in Indian Petrochemicals, where the workers had long, uninterrupted service under the primary employer's supervision, the arrangement with Sonali Caterers in Tata Steel's case involved a direct and ongoing contractor-employee relationship. This arrangement, coupled with Tata Steel's lack of direct oversight over employment conditions, rendered the union's assertion insufficient to establish a clear employer-employee relationship with Tata Steel.

Lastly, for the same argument of want of jurisdiction, the court held that Industrial Court's grant of interim relief was improperly issued. Since the employment status of Tata Steel workers was unverified, the Industrial Court could not grant an order preserving the workers' status quo. Thus, the Bombay High Court concluded that the Industrial Court did not have jurisdiction to entertain the complaint of unfair labor practices under the MRTU & PULP Act. The court allowed Tata Steel's petition and set aside the Industrial Court's interim relief order.

Decided On: 22 October 2024

Citation: 2024:BHC-AS:42004

Counsel for the Petitioner: Mr. Sudhir K. Talsania, Senior Advocate with Mr. R.V. Paranjape and Mr. T.R. Yadav.

Counsel for the Respondent: Mr. Yogendra Pendse with Ms. Priyanka Patkar, Ms. Shamika Dabke, and Ms. Vaibhavi Zaaude.

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