TN Industrial Establishments Act | Permanent Status Can't Be Denied To Workmen Who Worked Uninterruptedly For 480 Days In 24 Months : Supreme Court

In a recent decision relating to the grant of permanent status to the workmen employed in the industrial establishments in the State of Tamil Nadu, the Supreme Court held that the TN Medical Services Corporation could not deny the permanent status to the workmen if they have worked consecutively for more than 480 days in a period of twenty-four calendar months in the commercial establishment engaged in other activities apart from the construction activities being undertaken for making some monetary gain.

The case relates to the denial of the permanent status to the workmen by the Corporation despite fulfilling the requirement of the law prevailing in the State of Tamil Nadu. Section 3 of the Tamil Nadu Industrial Establishments (Conferment of Permanent Workmen) Act, 1981 (“1981 Act”) confers permanent status to the workmen who are in continuous service for a period of four hundred and eighty days in a period of twenty-four calendar months in an industrial establishment.

The corporation denied the conferment of the permanent status on the ground that the activities undertaken by the corporation were not commercial in nature to attract the provision of the 1981 Act. It argued that Section 7 of the Tamil Nadu Shops and Establishments Act, 1947 (“1947 Act”) bars the conferment of permanent status upon the workmen (as prescribed under the 1981 Act) employed in an industrial establishment engaged in the construction of buildings, bridges, roads, canals, dams or other construction work whether structural, mechanical or electrical.

Since the corporation is involved in the construction activities for designing and constructing hospital buildings for the Government and private persons, therefore, it claimed exemption from conferring the permanent status to the workmen.

Rejecting such contentions, the bench comprising Justices Sanjay Karol and PB Varale observed that the workmen couldn't be denied the benefit of the permanent status on the mere ground that it was engaged in construction activities.

After perusing the memorandum of Article of Association of the Corporation, the Judgment authored by Justice Sanjay Karol stated that apart from engaging in the construction activities, the Corporation was engaged in other activities for commercial gains, and the construction activities were one amongst other activities carried on by the corporation.

“This, however, in our view would not allow the Corporation to wash its hands off the responsibilities or obligations under the Act, since the construction to be undertaken by the Corporation, is only one of the many activities to be undertaken by it. To take all the workers out of the purview of the Act, especially, when the said workers, like the members of the respondent union, were not the ones undertaking construction is unwarranted.”, the court said.

“As such, both requirements, of the establishment being covered under the definition of industrial establishment as provided and that of the employee having uninterruptedly continued in service for 480 days or more for 24 months, having been met we have no hesitation in holding that the Act would apply to the parties to the present dispute.”, the court concluded.

Counsels For Petitioner(s) Mr. S. Nandakumar, Sr. Adv. Ms. Deepika Nandakumar, Adv. Mr. Naresh Kumar, AOR Mr. Basant R, Sr. Adv. Mr. K. K. Mani, AOR Mr. V.M. Shivakumar, Adv. Ms. T.Archana, Adv. Mr. Raunak Arora, Adv. Mr. Rajeev Gupta, Adv. Mr. S. Janardanan, Adv. Mr. Rajeev Gupta, Adv.

Counsels For Respondent(s) Mr. S. Nandakumar, Sr. Adv. Ms. Deepika Nandakumar, Adv. Mr. Naresh Kumar, AOR Mr. K. K. Mani, AOR Ms. T.Archana, Adv. Mr. Rajeev Gupta, Adv. Mr. D.Kumanan, AOR Ms. G. Indira, AOR Mr. Ashwini Kumar, Adv. Mr. P Gandepan, Adv. Ms. D Poornima, Adv.

Case Title: TAMIL NADU MEDICAL SERVICES CORPORATION LIMITED Versus TAMIL NADU MEDICAL SERVICES CORPORATION EMPLOYEES WELFARE UNION & ANR.

Citation : 2024 LiveLaw (SC) 402

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