Channakeshavamurthy vs Shimoga Co-Operative Milk Union Ltd.

L. Narayana Swamy, J.—The petitioners in these writ petitions have challenged the common judgment dated 28.02.2011 in Appeal Nos. 354/2007, 492 to 494/2007 passed by the Karnataka Appellate Tribunal, Bangalore, hereinafter referred to as ''the Appellate Tribunal'' for short. The appellate Tribunal by the impugned judgment has set aside the order dated 9.3.2007 passed by the Joint Registrar of Cooperative Societies, Bangalore by which order the JRCS had allowed the dispute applications and ordered reinstatement of the petitioners in their respective posts with 50% back wages from 5.4.1995 till the date of reinstatement.

The brief facts of the case are as under:

The petitioners claimed that they were the employees of the respondent society namely, Shimoga Co-operative Milk Union Limited, Manchenahalli-Nidige Post, Shimoga and they were taken on daily wages by the society on different dates and in different years from 1986 and in between 1987 and 1991. The petitioners were working in different posts and initially they were paid salary of Rs. 270/- per month and the same was being increased from time to time. In the year 1995, the petitioners were getting a salary of Rs. 900/- per month. Certain amount was being deducted compulsorily from the salary of the petitioners towards Provident Fund etc., Even the respondent society was paying a sum of Rs. 200/- as bonus amount and also half kg. ghee on the eve of Ugadi festival to each of the petitioners. The signatures of the petitioners were obtained to vouchers while paying salary to them.

It is the case of the petitioners that without any complaint the petitioners were discharging their duty from 1986 to 1995. However, on 05.04.1995 without any prior notice all the petitioners have been removed from the service without any reason or rhyme. The removal of the petitioners is in violation of principles of natural justice and it is also in violation of Rule 10 of Contract Labour (Regulation and Abolition) Act of 1970.

The petitioners submitted applications within six months to the concerned authority requesting to take them back to duty and regularize their services but no action was taken.

The petitioners had initially approached the Labour Court, Mangalore which by the order dated 3.8.2000 held that Labour Court had no jurisdiction. Therefore, the petitioners approached the JRCS under Section 70 of the Karnataka Cooperative Societies Act, seeking relief for issue of direction to the respondent society to take them back into service and regularize their services and to pay back wages from 5.4.1995 till reinstatement.

The respondent society filed objections to the dispute and contended that the petitioners have worked as contract labourers through contractors as per the Contract Labour Act and as such the disputes were not maintainable for want of jurisdiction. It is further contended that petitioners wrongly claimed that they were employees of the respondent society. The respondent union started its operations only on 15.03.1988. The main object of the respondent union was to give assistance to farmers for starting primary milk cooperative societies and for giving the technical assistance with regard to Animal Husbandry and dairying in order to take up dairying as a subsidiary occupation. The Shimoga Diary and other Chilling Centers came under the administrative control of the respondent, only on 01.08.1991. The respondent has denied the claim of the petitioners that they were working in the respondent union since 1986. After handing over all the concerned dairy activities and chilling centers to the Shimoga Milk Union only for the purpose of executing the temporary work, the petitioners were engaged through contractor as contract labourers, as such there is no direct relationship between the respondent and the petitioners. The claim of the petitioners that they were doing similar job of regular employees is false and denied. The respondent has not engaged the petitioners directly at any point of time nor paid any salary or bonus to them. The respondent never assured the petitioners that their services will be regularized in the respondent co-operative milk union. It is the case of the respondent that there was no necessity to issue notice to the petitioners as there was no any relationship whatsoever between the petitioners and respondent. The respondent has initiated action as per the Contract Labour Act and has not violated any of the provisions of law. Therefore, question of reinstating the petitioners and regularization does not arise and thus prayed for dismissal of the disputes.

The respondent No. 2 filed statement of objections supporting the order passed in the dispute. It is stated that the dispute is purely between the petitioners and the first respondent - Union. The second respondent has passed the order exercising his power under the provisions of Karnataka Cooperative Societies Act, 1959 and therefore no relief can be claimed as against 2nd respondent.

I have heard the learned counsel for the parties and perused the impugned orders.

The learned counsel for the petitioners submits that the petitioners were directly engaged by the respondent society, they were paid salary by the society, compulsory deductions were made from out of their salary, petitioners have put their attendance in the office of the respondent society, they were paid bonus and 1 kg. ghee at the time of Ugadi festival, they were discharging the duties on par with the regular employees and they have put in their services for 240 days or more in a year and all of a sudden they were removed from service without notice amounting to retrenchment. It is further submitted that for no fault of the petitioners they are rendered without work and denied their livelihood. In support of claim of the petitioners they have relied upon oral evidence and documentary evidence, Ex. P1 to P36, which consists of attendance register for different periods from 29.7.1990 to February, 1993. The action of the respondent society is in violation of principles of natural justice. The learned counsel for the petitioners prays for allowing the writ petition directing the respondent society to reinstate the petitioners with full back wages.

The learned counsel for the respondent No. 1 supports the order passed by the Karnataka Appellate Tribunal and seeks dismissal of the writ petition on the ground that there is no relationship of employer and employee between the petitioners and respondent society. The society has taken action in terms of Contract Labour Act and there is no violation of any provisions of law.

The learned High Court Government Pleader submits that the JRCS has passed the order exercising powers under the provisions of Karnataka Cooperative Societies Act based on the materials and therefore no relief can be granted as against the respondent No. 2 - JRCS.

Based on the rival contentions of the parties, the points that arise for my consideration in the present writ petitions are:

Whether the impugned order passed by the Appellate Tribunal setting aside the order of reinstatement of the petitioners with 50% back wages is sustainable in the eye of law?

Whether the petitioners are entitled for full back wages?

My answer to the above points is in the negative in respect of Point No. 1 and in favour of petitioners respect of Point No. 2 for the following reasons:

The admitted fact is that the petitioners were serving for the first respondent society in different posts held by them. The controversy between the parties is that according to the petitioners they were directly engaged by the respondent society but according to the respondent society they were contract labourers engaged through contractors.

The petitioners have examined one Sri Renukappa S/o. Durgappa on their behalf. He has deposed that the petitioners were engaged by the respondent society and they were working in different posts, they were being paid by the society after obtaining signatures on the vouchers, compulsory deductions were made from out of their salary, they were being paid one kg. ghee and also Rs. 200/- as bonus on the occasion of Ugadi festival. Ex. P1 to Ex. P36 were marked which are the attendance extracts. He has deposed that the petitioners have worked in their respective posts in respondent society for more than 240 days in a year. The said witness has been cross-examined by the learned counsel for the respondent society. He has denied the" suggestion that the petitioners were engaged through contractors. He has also denied the suggestion that no notice is required to be issued to them as they were engaged through contractors. Therefore, it is clear that nothing worth is elicited from the mouth of this witness who is examined on behalf of the petitioners.

On behalf of the respondent society, Sri Nimbegowda, Manager of the Establishment Branch was examined as MW-1. In the cross-examination he has stated that he has to see the records as to which contractor was paid how much amount. He has admitted that attendance extracts Ex. P1 to P36 could be issued by Sri Singapur of Security Department and Sri Kareem Sab and Sri Mallegowda of Establishment Department. He has further stated in the cross-examination that he does not know that the petitioners were working in the respondent society between 1985-86 to 1990-95 on daily wages.

One more witness Sri H.H. Paramesh, Assistant in the Establishment Branch of the first respondent was examined as MW-2. He has also deposed on the lines of MW-1 in his chief examination. In his cross-examination he has stated that the petitioners were working on daily wages in the first respondent society from 1986 in different posts. They were being paid salary up to the date of termination. He has also admitted that the petitioners were discharging the duty for a minimum period of 8 hours. He has also admitted about the payment of bonus of Rs. 200/- and 1 kg. ghee. He has deposed that the petitioners were discharging their duties except holidays. MW-2 has also admitted that Ex. P1 to P36 are issued by the respective heads of different branches where the petitioners were working. This witness has further stated that services of the petitioners in their respective posts, is still required by the respondent society.

The respondent society has failed to produce any documents in support of their case relating to payment of money to contractors and as to whether the petitioners have worked for 240 days in a year or not. Considering the claim of the petitioners, oral evidence led in by them and the documentary evidence made available on record, which are mentioned above, it is clear that the services of the petitioners were engaged by the respondent society and they have discharged their duty for more than 240 days in a year. The fact that they were discharging their duties except on holidays would prove the said aspect of the matter. Nothing prevented the respondent society to place on record the documents to prove the nature of appointment of the petitioners, amount paid to the contractors if really they were engaged through the contractors and the amounts were being paid to them through the contractors. Though the burden of proof is primarily on the petitioners who have approached for the relief, in a case of this nature, when certain materials are made available by the claimants, the burden shifts on the Management to rebut the materials placed on record. With the available materials, the probable inference is that the petitioners were engaged by the respondent society, they have put in 240 days or more in a year and without issuing any notice to them, their services are terminated, which amounts to retrenchment. In the circumstances, the JRCS has assigned valid reasons and is justified in allowing the dispute applications directing reinstatement of the petitioners.

The Appellate Tribunal has committed an error in differing with the view taken by the JRCS based on the available materials. The Appellate Tribunal has not assigned any reasons to make observation that there is no evidence to observe that petitioners have worked for more than 240 days in a year and that the salary was being paid to them by the society. Ex. P37 is copy of the letter addressed to the Managing Director of the society by the advocate on behalf of the petitioners seeking details of P.F. amount in respect of Account Nos. 286 to 338 & Ex. P38 is the letter by the Assistant P.F. Commissioner making available Form No. 23 in respect of the aforesaid accounts. The statement of the petitioners coupled with these two documents would establish that P.F. amount was being deducted from out of their salary. It is error on the part of the Appellate Tribunal to hold that these documents are not sufficient to prove deduction of P.F. amount.

Except stating that Ex. P1 to P36 are not the authenticated documents, the respondent Management has not produced any documents to show that Ex. P1 to P36 are not genuine documents. The appellate Tribunal has observed that the wages have to be paid by the society to the concerned agency on the basis of taking into consideration for how many days the labourers worked in the said society and it may be reason for maintaining such register in the society, which is not the case of the respondent society at all. MW-2 has admitted in his evidence that the persons who have signed Ex. P1 to P36 are the authorized signatories. Therefore, there is no reason to disbelieve Ex. P1 to P36, which is also erroneous on the part of the Appellate Tribunal. Even the Appellate Tribunal had no material to say that the petitioners were not even temporary employees of the respondent society.

The petitioners were removed from service in 1995 without following the due process of law and at this distance of time and when all throughout the petitioners are agitating their grievance before the law courts, it is not proper to deny relief to the petitioners applying the principles laid down in 2006 (4) KLJ 1, which cannot be pressed into service to the facts of the present case for the aforesaid reasons.

In the circumstances, I am of the view that the impugned order is not sustainable in the eye of law and the point No. 1 raised for consideration is answered accordingly.

The learned counsel for the petitioners submits that the petitioners are entitled to full back wages as they are terminated from service without following the due procedure and since from the date of termination they are without employment and they along with their dependents have suffered for no fault of theirs and incurred heavy debts. In this regard, the learned counsel for the petitioners has placed reliance on unreported order in WP Nos. 8905-06/1999 (L) c/w WP No. 32620/1999(L) disposed of on 2.01.2002 (GNAGARAJAPPA & ANOTHER vs. THEGENERAL MANAGER, K.M.F. & ANOTHER), wherein in Para-5 of the order it is held that "when once the order of refusal of employment is held to be not justified particularly after having answered the issue No. 1 regarding the relationship between the workmen and the petitioner/management, in the connected writ petition as servant and master the denial of backwages and continuity of service to them for the period mentioned in the prayer column of the writ petition is not tenable".

The learned counsel for the petitioner has relied upon decision in Kolar District Cooperative Central Bank Ltd. Vs. Rama Rao and another, . In Para-12 of the judgment, it is observed that "Not allowing backwages to the workman, merely on the ground of delay, would in effect and essence amount to double jeopardy to him. The employer on terminating the services of the workman can successfully prolong the litigation with the object of frustrating the object of the social welfare legislation primarily made for the benefit of the workman. Under normal circumstances no workman can be presumed to be interested in prolonging the disposal of the industrial dispute. If, however, on facts it is found that the workman himself has been guilty of protracting the litigation for extraneous reasons, the Labour Court can in that event appropriately mould the relief. Similarly, failure on the part of workman to sleep-over his rights and approach the Court at a belated stage can be a consideration in moulding the relief of backwages."

The learned counsel also placed reliance on judgment in Sudarshan Rajpoot vs., U.P. State Road Transport Corporation (Civil Appeal Nos. 10353-10354/2014) in which the Hon''ble Supreme Court in Maharashtra State Road Transport Corporation and Another Vs. Casteribe Rajya P. Karmchari Sanghatana, wherein after adverting to Uma Devi''s case that the said case does not denude the Industrial and Labour Courts of their statutory power to order permanency of the workers who have been victims of unfair labour practice on the part of the employer. Further Uma Devi''s case cannot be held to have overridden the powers of Industrial and Labour Courts in passing appropriate order once unfair labour practice on the part of the employer is established.

Further on the question of reinstatement and payment of backwages and other consequential benefits to be awarded in favour of the workman, in Deepali Gundu Surwase Vs. Kranti Junior Adhyapak Mahavidyalaya (D. Ed.) and Others, , law has been laid down by the Hon''ble Supreme Court as under:

"17. The very idea of restoring an employee to the position which he held before dismissal or removal or termination of service implies that the employee will be put in the same position in which he would have been but for the illegal action taken by the employer. The injury suffered by a person, who is dismissed or removed or is otherwise terminated from service cannot easily be measured in terms of money. With the passing of an order which has the effect of severing the employer employee relationship, the latter''s source of income gets dried up. Not only the concerned employee, but his entire family suffers grave adversities. They are deprived of the source of sustenance. The children are deprived of nutritious food and all opportunities of education and advancement in life. At times the family has to borrow from the relatives and other acquaintance to avoid starvation. These sufferings continue till the competent adjudicatory forum decides on the legality of the action taken by the employer. The reinstatement of such an employee, which is preceded by a finding of the competent judicial/quasi judicial body or Court that the action taken by the employer is ultra vires the relevant statutory provisions or the principles of natural justice, entitles the employee to claim full back wages. If the employer wants to deny back wages to the employee or contest his entitlement to get consequential benefits, then it is for him/her to specifically plead and prove that during the intervening period the employee was gainfully employed and was getting the same emoluments. Denial of back wages to an employee, who has suffered due to an illegal act of the employer would amount to indirectly punishing the concerned employee and rewarding the employer by relieving him of the obligation to pay back wages including the emoluments."

In this regard, the learned counsel for the respondent society has placed reliance on the decision in Haryana State Coop. Land Development Bank vs. Neelam, (2005 SCC (L & S) 601 in which in para-12 of the judgment, it is observed as follows:

"12. The Industrial Courts like any other court must be held to have some discretion in the matter of grant of relief. There is no proposition of law that once an order of termination is held to be bad in law, irrespective of any other consideration the Labour Court would be bound to grant relief to the workman. The Industrial Disputes Act does not contain any provision which mandates the Industrial Court to grant relief in every case to the workman. The extent to which a relief can be moulded will inevitably depend upon the facts and circumstances obtaining in each case. In the absence of any express provision contained in the statute in this behalf, it is not for the court to lay down a law which will have a universal application".

By reading the aforesaid decisions on the point, it is clear that as a general rule, once the removal is held to be bad in law, it follows that the workmen cannot be denied backwages. Such a discretion vests with the court dealing with such matters. In the case on hand, the removal of the petitioners from service amounts to retrenchment. On finding that the termination was invalid, the relief of reinstatement with continuity of service is required to be granted which would mean declaring that the employee had taken away illegally the right to work of the workman contrary to the relevant law or in breach of the contract and simultaneously deprived him of his earnings. If the employer is found to be in the wrong and the workman is directed to be reinstated the employer cannot be permitted to shirk his responsibility of paying the wages of which the workman was deprived of by the illegal and invalid action of the employer. If on account of the illegal action of the employer, a workman is subjected to harassment of litigation and deprivation of his earnings, he cannot be denied his backwages upon his reinstatement. Protracted and energy consuming litigation to which workman is subjected to cannot confer a right upon the employer to pray for non payment of backwages on account of the delay in disposal of the case. In the circumstances, I am of the considered view that the JRCS ought to have granted full backwages to the petitioners. Without assigning any reasons, valuable right of the petitioners cannot be denied to the extent of 50% back wages. The JRCS has committed an error in exercising the discretion vested in him in this regard. Therefore, the petitioners are entitled to reinstatement with full backwages from the date of removal till the date of reinstatement. Accordingly, Point No. 2 is answered.

The learned counsel for the petitioners submits that the petitioners be reserved liberty to prosecute the Management for illegal retrenchment. If law provides, they are at liberty to avail of such remedy.

The learned counsel for the respondent society has relied upon decision in Nedungadi Bank Ltd., vs. KP Madhavankutty & others, (2000) SCC (L & S) 283 to contend that in spite of absence of a statutory limitation period, such power cannot be exercised to revive settled matters or to refer stale disputes. Further the decision in Asst. Engineer, CAD, Kota vs. Dhan Kunwar, (2006 SCC (L & S) 1142 was relied upon to contend that reference as to the justifiability of retrenchment of the workman was sought and made after the delay of eight long years. Such delay, in the absence of justifiable reasons, held, disentitled the workman to relief. As to needs for raising industrial dispute within reasonable time, the learned counsel placed reliance on the decision in UP State Road Transport Corporation vs. Babu Ram, (2006 SCC (L & S) 1113. I have considered the ratio laid down in the aforesaid decisions. The petitioners initially approached the Labour Court which by the order dated 3.8.2000 held it had no jurisdiction and thereafter availed the remedy u/s. 70 of the Karnataka Cooperative Societies Act. It is not one of the contentions of the respondent society that the claim of the petitioners is stale and they are not entitled to reliefs because of the delay in availing the remedy. Therefore, I am of the view that the ratios laid down in the aforesaid decisions relied upon by the learned counsel for the respondent society cannot be applied to the facts of the present case.

In the result, these writ petitions are allowed. The impugned judgment passed by the Karnataka Appellate Tribunal is hereby quashed. The respondent society is directed to reinstate the petitioners with full back wages from the date of removal till their reinstatement within a period of one month from the date of receipt of copy of this order. It is needless to state that calculation of back wages shall be as per the provisions of pay scales revised to the employees from time to time. The order passed by the JRCS shall stand modified to that extent. Rule issued and made absolute accordingly.