Labour Court Has Jurisdiction Over Disputes Regarding Workmen Of Vacuum Pan Sugar Factories: Allahabad High Court

The Allahabad High Court has upheld the jurisdiction of the Labour Court under the U.P. Industrial Disputes Act, 1947 regarding disputes of the workman of Vacuum Pan Sugar Factories whose working conditions are governed by the Standing Orders issued by the State Government from time to time.

The bench comprising of Chief Justice Arun Bhansali and Justice Vikas Budhwar held that

“Industrial Dispute under the provisions of U.P. Industrial Disputes Act, 1947 can be raised by workmen of the Kisan Sahkari Chini Mills Ltd., whose service conditions are governed by Standing Orders covering the condition of employment of workmen in Vacuum Pan Sugar Factories in Uttar Pradesh.”

Case Background

Petitioner-Kisan Sahkari Chini Mills Ltd. ('Sugar Mill') being engaged in manufacturing of sugar by vacuum pan process claimed to have obtained a license under the U.P. Vacuum Pan Sugar Factories Licensing Order, 1969. In 1988, the State Government of Uttar Pradesh framed Standing Orders regulating the Condition of Employment of Workmen in Vacuum Pan and Sugar Factories of Uttar Pradesh. Subsequently, in 2022 Standing Orders were revised to now govern the conditions of such employees.

When disputes between employees and Sugar Mill were referred to the Labour Court under the UP Industrial Disputes Act, the Sugar Mills raised an objection stating that since it was governed by the U.P. Cooperative Societies Act, 1965 and U.P. Cooperative Societies Employees Service Regulations, 1975, industrial dispute against them was not maintainable.

Since the objections filed by Sugar Mill were rejected, the approached the High court under Article 226 of the Constitution of India. Challenge was also raised to the reference order and to the order of the Labour Court in cases where the objection to jurisdiction was entertained.

Senior Advocate Samir Sharma assisted by Advocate Diptiman Singh, acting as amicus curiae, submitted that petitioner-sugar mill was different from regular private sugar mills as it had obtained special license under the Licensing Order, 1969 for manufacturing sugar by vacuum pan process. It was submitted that both workmen and employees are involved in the running of the Sugar Mill.

While the service conditions of the workmen were being regulated by specific Standing Orders, the service conditions of employees were governed by U.P. Cooperative Sugar Mills and Distilleries Employees Service Regulation, 2015. Accordingly, it was stated that the reference of dispute regarding employment/ termination of workmen to the Labour Court was valid under the Industrial Disputes Act.

High Court Verdict

The Court observed that while the Regulations of 1975 and 2015 only define 'employee', the Standing Orders only define the term 'workmen'. It was observed that the U.P. Sugar Wage Board, 1991 was formed while exercising powers under the Industrial Disputes Act to cover all employees working at the Vacuum Pan Sugar Industries in the State of Uttar Pradesh who fell within the definition of 'workmen'.

Section 70 of the Uttar Pradesh Co-operatives Societies Act, 1965 enlists the disputes which can be referred to arbitration. It includes any dispute relating to the constitution, management of the business of a co-operative society other than a dispute regarding disciplinary action taken against a paid servant of a society.

The Court held that disputes relating to the business of the society were different from the disputes which arose as a result of disciplinary action against the employees of the society. In such circumstance, it was held that since the service conditions are governed by the Standing Orders, the workmen could approach the Labour Court regarding disputes.

“The rule making authorities were conscious about the inter-play between the different statutory enactments and that is why a boundary was carved providing for different adjudicatory forums for the different classes of employees. The purport in the different statutory enactments itself is self indicative of the fact that the service conditions are to be governed differently under the different enactments.”

Accordingly, it was held that Labour Court has jurisdiction over the disputes of employees of Vacum Pan Sugar Industries whose service conditions are covered by the Standing Orders.

Case Title: Kisan Sahkari Chini Mills Ltd. vs. Presiding Officer Labour Court And 2 Others 2024 LiveLaw (AB) 532 [WRIT - C No. - 5577 of 2015]

Citation: 2024 LiveLaw (AB) 532

Appearances: Sri Samir Sharma, learned Senior Counsel assisted by Sri Diptiman Singh, Amicus Curiae, Sri Satyam Singh, learned counsel for Kisan Sahkari Chini Mills, Sri Gopal Narayan, learned counsel for the workmen and Ms. Akanksha Sharma, learned Standnig Counsel for the State-Respondents.

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