Bindu O & Ors. vs Dataware Design Labs (P) Limited & Anr.

Both these Writ Petitions are filed challenging the very same Common Order of the Labour Court, Kollam, dated 08.04.2008, disposing 14 Claim Petitions filed under Section 33-C(2) of the Industrial Disputes Act, 1947. W.P.(C) No.17521/2008 is filed by the Management and W.P.(C) No.693/2009 is filed by 11 out of 14 Employees before the Labour Court.

W.P.(C) No.693/2009 is treated as the leading case and the parties and documents are referred to in accordance with the said Writ Petition. Management is the Respondent No.1 in W.P.(C) No.693/2009.

The Respondent No.1 is a Private Limited Company in Techno Park Campus, Thiruvananthapuram, and engaged in the business of production, marketing, dissemination and sale of computer software and other incidental and ancillary activities connected thereto. Two of the Petitioners are Postgraduates in Engineering, two of the Petitioners are Masters of Computer Application, one of the Petitioners is a Bachelor of Computer Science, one of the Petitioners is a Postgraduate in Science and the remaining Petitioners are Engineering Graduates.

^4. The Respondent No.1 appointed the Petitioners as per Ext.P1 dated 19.12.2000 and similar Letters of Employment issued to the Petitioners. The Letters of Employment provided that upon successful completion of training, the Petitioners will be appointed as Programmer Trainee with a gross salary of Rs.8,000/-; that after completion of one year, depending on the performance, the Petitioners will be promoted to the position of Assistant Programmer for a gross salary between Rs.10,000/- and Rs.12,000/- based on the performance; and that after completion of a further period of one year, the Petitioners will be promoted to the position of Programmer for a gross salary between Rs.13,000/- and Rs.15,000/- based on the performance. It is also mentioned that the Petitioners will be eligible for annual bonuses, etc., based on their performance on projects and as per the Company's norms. The Respondent No.1 collected a Security Deposit of Rs.2,00,000/- and a training fee of Rs.62,500/-from each of the Petitioners. On completion of the training, the Petitioners were appointed to the post of Junior Software Engineer. It is the case of the Petitioners that the payments of salary were irregular and in some months there was no payment of salary and they worked up to November 2003, whereas, the case of the Respondent No.1 is that the Respondent No.1 closed the establishment in December 2002, and thereafter the Petitioners were not entitled to get salary. The Petitioners also contended that the Respondent No.1 deducted a sum of Rs.10,000/- from the salary of each of the Petitioners from September 2001 to November 2003. The Respondent No.1 selected the Petitioners as its employees for a minimum period of 36 months after the completion of a training for six months.

^5. The Petitioners filed Claim Petitions before the Labour Court claiming return of Security Deposit of Rs.2,00,000/- with interest after the Guarantee Period of 36 months, salary for the period from December 2002 to December 2003, and the amount deducted from the gross salary towards the Employer's share of Provident Fund Contribution in the Claim Petitions. The Labour Court passed ex parte Orders dated 19.04.2004 allowing the Claim Petitions. The Respondent No.1 filed W.P.(C) No.31438/2006 challenging the ex parte Orders. As per the Interim Order in W.P.(C) No.31438/2006, the Respondent No.1 paid the Security Deposit of Rs.2,00,000/- to the Petitioners in July 2007. This Court disposed of W.P.(C) No.31438/2006 as per Ext.P4 Judgment dated 11.12.2007 setting aside the ex parte Orders subject to the condition that the Respondent No.1 shall deposit a further sum of Rs.14,00,000/-, taking note of the delay of five years in refunding the security deposit. Thereafter, the Labour Court considered the matter on merit and passed Ext.P5 Common Order.

^6. On the side of the Petitioners, four of the Petitioners were examined as PW1 to PW4 and marked Exts.P1 to P27. On the side of the Respondent No.1, no oral evidence was adduced, but the Attendance Registers for the period from January 2002 to December 2002 were marked as Ext.R1.

In Ext.P5 Common Order, the Labour Court found that the Petitioners are ‘Workman’ as defined under Section 2(s) of the Industrial Disputes Act; that the claim for interest on security deposit is unsustainable in a Claim Petition filed under Section 33-C(2) of the Industrial Disputes Act; that the claims of the Petitioners for arrears prior to November 2002 and salary for the period after December 2002 are sustainable in a Claim Petition under Section 33-C(2) of the Industrial Disputes Act; and that the Petitioners' claim for refund of the excess amount alleged to have been deducted towards Employer's share on the Provident Fund Contribution and the claim of the Petitioner in C.P.No.65/2003 for reimbursement of the expenses incurred are not sustainable. The Labour Court left open the claim for interest on the security deposit for the decision in appropriate proceedings.

Accordingly, the Labour Court passed Ext.P5 Common Order directing the Respondent No.1 to pay the following amounts as arrears of salary with interest at the rate of 9% per annum from 31.12.2003 till realisation as follows:

W.P.(C) No.17521/2008 is filed by the Management challenging Ext.P5 Common Order awarding arrears of salary with interest to the Employees. W.P.(C) No.693/2009 is filed by 11 numbers of Employees challenging Ext.P5 Common Order to the extent that it refused to grant interest for the security deposit.

I heard the learned Counsel for the Petitioners, Sri. Thaliyal R. Gopakumar, and the learned Counsel for the Respondent No.1, Sri. Vinay Kumar Varma.

^11. Learned Counsel for the Petitioners contended that the Labour Court acted illegally in holding that the claim for interest on the Security Deposits made by the Petitioners is not maintainable in a Petition under Section 33-C(2) of the Industrial Disputes Act. Learned Counsel invited my attention to Ext.P7 Security Deposit Agreement which was produced before the Labour Court as Ext.P6 and contended that the Security Deposit was made for a period of 36 months beginning from the date of employment of the Employee. On the completion of 36 months, the Respondent No.1 was bound to return the Security Deposit of Rs.2,00,000/- to the Employee. It does not require any adjudication for granting interest on Security Deposit, and hence, the claim is perfectly maintainable in a Petition under Section 33-C(2) of the Industrial Disputes Act. Learned Counsel further contended that the Labour Court is perfectly justified in granting arrears of salary up to November 2003. The Respondent No.1 claimed that the establishment was closed in December 2002. No evidence whatsoever was adduced to prove the alleged closure. Nobody was examined from the side of the Respondent No.1. Since the claim of salary is for a definite period at a definite rate, it is also maintainable in a Petition under Section 33-C(2) of the Industrial Disputes Act. That apart, the Labour Court can very well consider incidental questions while considering a Petition under Section 33-C(2) of the Industrial Disputes Act. The Labour Court rightly found that the Petitioners are ‘Workman’ within the meaning of Section 2(s) of the Industrial Disputes Act, as the Respondent No.1 did not adduce any evidence to show that the Petitioners were employed in a managerial or administrative or supervisory capacity. Learned Counsel relied on the decision of the Hon'ble Supreme Court in Sharad Kumar v. Government of NCT of Delhi and Others [(2002) 4 SCC 490], the decisions of this Court in G4S Security Services (India) Pvt. Ltd. v. Satheeshkumar K. and Others [2010 (1) KHC 342], Thomas P.K. and Others v. Sahithya Pravarthaka Co-op. Society, Kottayam and Others [2014 (3) KHC 195 (DB)] and CSB Bank Ltd. v. M.A. Rappai [2024 KHC 160], the decision of the Allahabad High Court in Union of India and Another v. S.B. Agnihotri and Another [(1991) II LLJ 603], the decision of the Rajasthan High Court in Sayal Mal Bhansali v. Judge, Labour Courts, Udaipur and Another [(1995) I LLJ 914] and the decision of the Punjab and Haryana High Court in State of Haryana v. Hisam Singh and Another [(1999) II LLJ 335] in support of his contentions.

^12. On the other hand, the learned Counsel for the Respondent No.1 contended that the Petitioners will not come under the definition of ‘Workman’ defined under Section 2(s) of the Industrial Disputes Act. It is well settled that persons employed in creative works cannot be treated as workmen. The Petitioners were Engineers. The Respondent No.1 was engaged in the development of software. The Petitioners were employed for creating software. They were employed for a salary of Rs.8,000/-, which is above the ceiling limit of Rs.1,600/- mentioned in Section 2(s) during the relevant time. The claim for salary for the period from December 2002 to November 2003 was disputed by the Respondent No.1 before the Labour Court and it requires adjudication by the Labour Court, and hence, such a claim cannot be entertained in a Petition under Section 33-C(2) of the Industrial Disputes Act. It is well settled that the nature of proceedings under Section 33-C(2) of the Industrial Disputes Act is similar to execution proceedings. The Labour Court acted illegally in adjudicating the said amount. Learned Counsel relied on the decisions of the Hon'ble Supreme Court in Central Inland Water Transport Corporation Limited v. Workmen and Another [(1974) 4 SCC 696], State of U.P. and Another v. Brijpal Singh [(2005) 8 SCC 58], Sonepat Cooperative Sugar Mills Ltd. v. Ajit Singh [(2005) 3 SCC 232] and Lenin Kumar Ray v. Express Publications (Madurai) Ltd. [AIR 2024 SC 5409], the decision of this Court in D+H Solutions India Private Limited v. Jayakrishnan Ramachandran Nair [2026 Supreme(Online)(Ker) 4710] and the decision of the Allahabad High Court in Executive Engineer, Electricity Transmission Division v. Mahesh Chandra and Another [2024 Supreme(All) 634] in support of his contentions.

I have considered the rival contentions perusing the records of the cases.

In the light of the arguments addressed before me, the following three questions arise for consideration in these Writ Petitions:

^15. The contention of the learned Counsel for the Respondent No.1 is that all the Petitioners are software engineers. They were appointed as Junior Software Engineers. The nature of the business of Respondent No.1 is the development of software. In such case, they are doing creative work. In the decision in Sonepat Cooperative Sugar Mills Ltd. (supra), the Hon'ble Supreme Court held that if the job involved creativity, the person doing such job will not come under the definition of ‘workman’ defined under Section 2(s) of the Industrial Disputes Act. In Sharad Kumar (supra), the Hon'ble Supreme Court held that the question whether a particular person is a workman or not is to be determined on the basis of the types of his duties and not merely on the basis of the designation of his post; and that the question requires examination of factual matters for which materials including oral evidence have to be considered. It is true that the Petitioners were appointed as Junior Software Engineers. The Respondent No.1 has not adduced any evidence before the Labour Court with respect to the nature of work undertaken by the Petitioners. Admittedly, the Petitioners were given training for a period of six months. The nature of the training is also not available in evidence. There is nothing on record to prove that the Petitioners were engaged in creative works. In such case, there is nothing to disturb the finding of the Labour Court that the Petitioners are ‘workman’ as defined under Section 2(s) of the Industrial Disputes Act. This question is answered in the affirmative and in favour of the Petitioners.

^16. The Security Deposits made by the Petitioners are admitted by the Respondent No.1. As per Ext.P7 Security Deposit Agreement dated 08.06.2000, it is clear that the said amount is deposited for a period of 36 months. Clause 5(a) of Ext.P7 Agreement provides that the Security Deposit Agreement becomes effective immediately upon signing of the same and will remain in force for a period of 36 months beginning from the date of the employment of the Employee as per the Letter of Appointment. Ext.P1 Letter of Appointment is dated 19.12.2000. The Guarantee period of 36 months period has to be counted from 19.12.2000. Clause 5(b) of Ext.P7 Agreement provides that if the Respondent No.1 does not make any written demand on the Employee within 36 months or initiate legal proceedings within the said period, the Guarantee shall ipso facto and automatically become null and void and the Security Deposit amount becomes due to the Employee from the Respondent No.1. Clause 5(c) of Ext.P7 Agreement provides that upon occurrence of 5(b), the Respondent No.1 shall repay the Security Deposit to the Employee within 30 days of such occurrence and that no interest of any kind whatsoever will be due or payable any time by the Respondent No.1 to the Employee for the ‘Security Deposit’ amount. Learned Counsel for the Respondent No.1 relies on Clause 5(c) to contend that no interest is payable on the Security Deposit from the date of deposit to the date of payment. The Respondent No.1 does not have any case that it issued a written demand or initiated legal proceedings against the Employees within the Guarantee period of 36 months from the date of the employment of the Petitioners. In such case, the Respondent No.1 is liable to repay the amount within 30 days after the completion of 36 months from the date of Ext.P1. Ext.P7 Agreement does not say anything with respect to the interest after the said period of 36 months and 30 days. In such case, when the Respondent No.1 is unlawfully withholding the amount due to the Petitioners and making undue enrichment to itself, the Petitioners are entitled to get interest on the said Security Deposit in equity. At the time when the Claim Petitions were filed by the Petitioners, the Respondent No.1 had not repaid the Security Deposit amount. The Petitioners got the Security Deposit in July 2007 as per the Interim Order in W.P.(C) No.31438/2006 which led to the passing of Ext.P4 Judgment. In the decisions cited by the learned Counsel for the Petitioners in S.B. Agnihotri (supra), Sayal Mal Bhansali (supra) and Hisam Singh (supra), the Allahabad High Court, the Rajasthan High Court and the Punjab and Haryana High Court held that the Labour Court while exercising its powers under Section 33-C(2) is having the equitable jurisdiction to award interest when employer is withholding undisputed amount. Learned Counsel for the Respondent No.1 cited the decision of Allahabad High Court in Mahesh Chandra (supra) holding that the proceedings under Section 33-C(2) are execution proceedings and do not permit awarding of interest. In Joseph M.M. v. Labour Court and Another [2015 (3) KHC 36], this Court held that the Labour Court is empowered to award interest, which has not been specifically granted in an award passed, under Section 33-C(2) of the Industrial Disputes Act and that even in the absence of specific provision to grant interest, principles of equity could be invoked to grant interest. This decision of this Court is in line with the decisions of the Allahabad High Court, the Rajasthan High Court and the Punjab and Haryana High Court in S.B. Agnihotri (supra), Sayal Mal Bhansali (supra) and Hisam Singh (supra). When the amount claimed by the Employee is admitted by the Employer and the same is unlawfully withheld by the Employer to make undue enrichment out of it, equity demands payment of interest for the delayed period and it does not require any adjudication. Grant of interest is essential to equalise the money value of the benefits payable to the Employees, when it is paid after delay. On the admitted facts and on the settled legal principles, the Employees are entitled to claim interest on the Security Deposits. In such case, there is no need to adjudicate the question of entitlement of interest to the Employee and the question of liability of the Employer to pay interest. The Petitioners claimed return of the Security Deposits illegally retained by the Respondent No.1 with interest thereon. Such a claim is perfectly maintainable under Section 33-C(2). Labour Court did not order the return of Security Deposits, since the same was paid as per the Interim Order of this Court in Ext.P4 Writ Petition before passing Ext.P5 Order by the Labour Court. The fixation of the rate of interest to be awarded on the money found due to the Employee under Section 33-C(2) of the Industrial Disputes Act is an incidental question to be considered in the proceedings under the said provision. The rate of interest awarded by the Labour Court for arrears of salary is 9% per annum. The same rate can be applied in this case of Security Deposits also. I hold that the Petitioners are to get interest @ 9% per annum on their Security Deposit of Rs.2,00,000/- each for the period from 19.01.2004 (the date of completion of 30 days after the Guarantee Period of 36 months from the date of Ext.P1) to 01.07.2007 (since the records show the date of payments as July 2007). W.P.(C) No.693/2009 is filed by 11 Petitioners out of 14 Petitioners before the Labour Court. There is no challenge against Ext.P5 Order by the Petitioners in C.P. Nos.66 of 2003, 71 of 2003 and 8 of 2004. Hence, the Petitioners in Ext.P5 Order, except the Petitioners in C.P. Nos.66 of 2003, 71 of 2003 and 8 of 2004, are entitled to get interest on the Security Deposit for the above period. This question is answered in the affirmative and in favour of the Petitioners.

^17. Learned Counsel for the Respondent No.1 cited the decisions of the Hon'ble Supreme Court in Lenin Kumar Ray (supra), Central Inland Water Transport Corporation Limited (supra) and Brijpal Singh (supra) to substantiate the limited jurisdiction under Section 33-C(2). It is held in the decision in Central Inland Water Transport Corporation Limited (supra) that the proceedings under Section 33-C(2) is a proceeding, generally, in the nature of an execution proceeding wherein the Labour Court calculates the amount of money due to a workman from his employer, or if the workman is entitled to any benefit which is capable of being computed in terms of money, the Labour Court proceeds to compute the benefit in terms of money; that this calculation or computation follows upon an existing right to the money or benefit, in view of its being previously adjudged, or, otherwise, duly provided for. The same view is taken in the subsequent decisions cited by the learned Counsel for the Respondent No.1. It is true that the Labour Court cannot award money without prior recognition of entitlement and it can only enforce the existing rights as held by this Court in D+H Solutions India Private Limited (supra). Here is a case where the employment of the Petitioners as Junior Software Engineers is admitted by the Respondent No.1. According to the Respondent No.1, the establishment closed its operations in December 2002. This is a fact which is to be substantiated by the Respondent No.1 before the Labour Court. The Respondent No.1 did not adduce any evidence before the Labour Court. Considering the documents produced by the Petitioners, the Labour Court found that the contention of the Respondent No.1 that the establishment closed in December 2002 is not correct. It is a matter of calculation of the salary of the Petitioners during the period of their employment with the Respondent No.1 at the admitted rate. It does not require any adjudication. In such case, I am of the view that the Labour Court is perfectly justified in computing the amount of money due to the Petitioners. It is well settled that while computing money or benefit which is capable of being computed in terms of money under Section 33-C(2) of the Industrial Disputes Act, the Labour Court can conduct incidental enquiry. It does not involve much adjudication. I lend support from the decisions of this Court in CSB Bank Ltd. (supra) and G4S Security Services (India) Pvt. Ltd. (supra) cited by the learned Counsel for the Petitioners. Hence, I affirm the decision of the Labour Court directing payment of salary arrears with interest to the Petitioners. This question is answered in the affirmative and in favour of the Petitioners.

In view of the answers to the aforesaid questions, I dismiss W.P.(C) No.17521/2008 filed by the Management and allow W.P.(C) No.693/2009 filed by the Employees, setting aside the impugned Order of the Labour Court to the extent to which it refused to consider the question of payment of interest on the Security Deposits made by the Petitioners and modify the said Order by including an additional direction to the Respondent No.1 to pay interest at the rate of 9% per annum on the Security Deposit of Rs.2,00,000/- from 19.01.2004 to 01.07.2007, to the Petitioners except the Petitioners in C.P. Nos.66 of 2003, 71 of 2003 and 8 of 2004.

Exhibit P1 TRUE COPY OF THE EMPLOYMENT LETTER ISSUED TO THE 3RD PETITIONER DATED 19.12.2000.

Exhibit P2 TRUE COPY OF THE INTERIM ORDER PASSED BY THIS HONOURABLE COURT IN WPC NO.25600/2006 DATED 4.10.2006.

Exhibit P3 TRUE COPY OF THE JUDGMENT PASSED BY THIS HONOURABLE COURT IN WPC 18541/2006 DATED 30.11.2006.

Exhibit P4 TRUE COPY OF THE JUDGMENT IN WPC NO.31438/2006 DATED 11.12.2007.

Exhibit P5 TRUE COPY OF THE COMMON ORDER PASSED BY THE 2ND RESPONDENT DATED 8.4.2008.

Exhibit P6 TRUE COPY OF THE RECEIPT ISSUED TO THE 10TH PETITIONER DATED 9.10.2000.

Exhibit P7 TRUE COPY OF THE SECURITY DEPOSIT AGREEMENT EXECUTED IN THE CASE OF THE 3RD PETITIONER

Exhibit P1 TRUE COPY OF THE COMMON ORDER PASSED BY THE LABOUR COURT QUILON DATED 8.4.2008 IN C P 62/03 AND OTHER CONNECTED CASES.

Exhibit P2 TRUE COPY OF THE CLAIM PETITION IN CP. 62/2003 OF THE LABOUR COURT, QUILON DATED 17.12.2003.

Exhibit P3 TRUE COPY OF THE WRITTEN STATEMENT SUBMITTED BY THE PETITIONER IN EXT.P2 CASE DT.21.2.2008.