Shivam Mega Structures Pvt. Ltd. vs Vinod Gunag Chougale

The petition is filed by the employer challenging the award dated 30 May 2026 passed by the Presiding Officer, 10^th Labour Court, Mumbai answering Reference (IDA) No. 58-D of 2022 partly in the affirmative and holding that Respondent is entitled for reinstatement with continuity of service and 50% backwages w.e.f. 3 May 2020 till his reinstatement.

Petitioner is engaged in the business of real estate. Respondent was employed with the Petitioner from 22 July 2019 as Manager in the Accounts and Finance department. By letter dated 4 February 2020 he was confirmed in service as Manager Accounts and Finance w.e.f 1 February 2020. By letter dated 3 May 2020, services of the Respondent were terminated by levelling certain allegations of misconduct against him. At the instance of the Respondent, dispute relating to his termination was referred by the appropriate Government to 10^th Labour Court, Mumbai which was registered as Reference (IDA) No. 58-D of 2022. Respondent filed his Statement of Claim demanding reinstatement and full back wages from the date of his termination. Petitioner filed its written statement resisting the claim of the Respondent. The Labour Court framed issues. Respondent examined himself and filed several documents. Petitioner examined Mr. Kirti Sanghavi and Ms. Daksha Popat as its witnesses and relied upon several documents. After considering the pleadings, documentary and oral evidence, the Labour Court proceeded to partly allow the Reference by Award dated 30 May 2026. The Labour Court has held that termination of Respondent was illegal and has directed Petitioner to reinstate him in service without continuity and 50% backwages w.e.f. 3 May 2020 till the date of his actual reinstatement. Aggrieved by the Award dated 30 May 2026, the Petitioner has filed the present petition.

Mr. Vaidya, the learned counsel appearing for the Petitioner submits that Respondent is not a workman within the meaning of Section 2(s) of the Industrial Disputed Act, 1947 (ID Act). That he was appointed on the position of Manager, Accounts and Finance. That in his bio-data, he had described himself as Vice President in the previous employment. That he drew CTC of Rs.12,00,000/-. That he supervised the work of other employees posted under him. That the nature of his work was not clerical. He takes me through the affidavit of evidence of the Respondent to demonstrate that he did not perform clerical work. That he had authority to taken independent decisions. That the Labour Court has erroneously held that the three persons working in Accounts and Finance Department were not reporting to the Respondent. That Respondent therefore cannot be treated as a workman and on that count, the impugned Award deserves to be set aside.

Per contra, Mr. Hemrajani, the learned counsel appearing for the Respondent opposes the petition submitting that the Labour Court has rightly appreciated the evidence on record for arriving at the conclusion that the Respondent is a workman within the meaning of Section 2(s) of the ID Act. He takes me through the evidence on record to demonstrate as to how several admissions are given by Petitioner’s witness about other employees reporting directly to Chief Finance Officer and not to the Respondent. He takes me through the nature of duties and responsibilities performed by the Respondent in support of his contention that the same were merely clerical in nature without involving any decision-making power. He submits that mere quantum of salary paid to the Respondent cannot be determined as a status. That Respondent did not carry designation of Vice President in the previous employment and was merely reporting to the Vice President. That Respondent was unceremoniously thrown out of service during Covid-19 pandemic by levelling false allegation of misconduct. That in such circumstances, no interference is warranted in the impugned Award. He prays for dismissal of the Petition.

Rival contentions urged on behalf of the parties now fall for my consideration.

The Petitioner-employer is aggrieved by the impugned Award of the Labour Court which sets aside the termination of the Respondent and directs its reinstatement with 50% backwages from the date of termination i.e. 3 May 2020. The only point urged before me on behalf of the Petitioner-employer is that Respondent did not carry status as a workman and that therefore the provisions of the ID Act do not apply to him. Therefore, the narrow controversy involved in the petition is about the status of the Respondent.

The Respondent was appointed by the Petitioner vide appointment letter dated 22 July 2019 and was offered the position of Manager, Accounts and Finance. At the time of his appointment, Respondent had submitted his Curriculum Vitae which indicated that he had held various positions such as Assistant Manager-Finance, Accounts Executive, Accountant, Accounts Assistant, etc. The last position held by him was that of Assistant Manager, Finance from July 2009 with HOH Group of Companies. It appears that Respondent was required to fill up employee data form of the Petitioner in which he was required to disclose employment history in which he disclosed that he worked for HOH Hiranandani Realtors Pvt. Ltd. in the areas of Banking, Finance and Accounts. He was also required to disclose the person to whom he was reporting and apparently, he disclosed that he reported to the Vice President. Though Mr. Vaidya has sought to suggest that the position held by the Respondent with the previous employer was that of Vice President, the same does not appear to be factually correct. He was merely reporting to the Vice President but held the position of Assistant Manager, Finance with the previous employer where he apparently worked for a long time i.e. from July 2009 till he was appointed with the Petitioner.

As observed above, the designation offered to the Petitioner was that of Manager, Accounts and Finance. As per the appointment order, he was to be paid CTC salary of Rs.12 lakhs p.a. inclusive of all perks and benefits. He was confirmed in service by letter dated 4 February 2020.

By now it is well settled position that mere designation of the employee cannot decide his/her status as workman within the meaning of Section 2(s) of the ID Act. Therefore, one cannot go merely by designation of Manager, Accounts and Finance for holding that the Respondent was not a workman. So far as salary paid to the Respondent is concerned, the same assumes relevance only if it is proved that the employee was employed in a supervisory capacity and draws wages in excess of Rs.10,000/- per month. If employment in supervisory capacity is not established, the quantum of salary paid to a person becomes irrelevant for the purpose of determining his status. It would be apt to reproduce definition of the term ‘workman’ under Section 2(s) of the ID Act which is as under:

Thus, every person who is employed to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward becomes a workman within the meaning of Section 2(s) of the ID Act unless it is proved that he falls in one of the four enumerated exceptions. Respondent filed pleadings and led evidence to demonstrate that he was merely doing routine accounting work and that he was obeying the instructions given to him by his superiors. He led evidence to prove that he had no power to appoint, remove or give instructions to other employees. The relevant part of his examination reads thus:

Respondent filed additional Affidavit of Evidence, in which he has stated in paragraph 2 as under:

The Respondent has discharged the burden of providing that he was doing routine accounting work. The onus therefore shifted on the Petitioner to prove that Respondent was employed in managerial, administrative or supervisory capacity. Respondent was subjected to extensive cross examination in which he admitted that three more persons were working with him in the Accounts Department. However, in the cross-examination, Petitioner was unable to establish that any employee was posted under the Respondent or that he had any authority to take any decision qua them. On the other hand, Mr. Kirti Sanghavi, Chief Finance Officer of the Petitioner gave emphatic admission that the three persons working in the Accounts Department reported to him. No evidence was led to establish that any of the said three persons reported to the Respondent. That Petitioner's witness stated that he was ready to produce documents to indicate that Ms. Priyanka Poojari reported to the Respondent, no such evidence was produced. Even the evidence of Ms. Daksha Popat does not assist the case of the Petitioner as there is nothing in her evidence which can establish performance of managerial, administrative or supervisory functions by the Respondent.

Thus, perusal of the entire evidence on record would indicate that Petitioner was unable to establish that Respondent had authority to assign work to any person in the organisation or that any person worked under him or that he could take any service-related decisions by himself. He had no authority to sanction leave to any person. He did not have any authority to take disciplinary action against any other employee of the Petitioner. Apart from absence of authority to decide service-related matters of other employees, Respondent also did not have any independent authority to take any decisions qua the operations of the organisation. He could not take any decision which would bind the Petitioner. He did not have any independent authority even in relation to finalizing the Accounts as he was reporting to other higher officers. He did not have any authority to make the purchases. He also did not have any authority to give directions to any other employees in relation to the accounting work. In my view therefore, there is no evidence on record from which the Labour Court could have drawn an inference of Respondent’s employment in managerial, administrative or supervisory capacity. I therefore find no valid reason to interfere with the findings recorded by the Labour Court, which has concluded that the Respondent answered the description of a ‘workman’ under Section 2(s) of the ID Act.

Coming to the merits of the case, Mr. Vaidya has fairly not canvassed any submissions with regard to validity of termination order. Respondent has been terminated without following due process of law. He was terminated right in the middle of Covid-19 pandemic on 3 May 2020. In the termination letter, various allegations were levelled against the Respondent about rough/unprofessional behaviour, rude tone and arrogance with the directors. Apart from the fact that no enquiry was held to prove the alleged misconduct, Petitioner itself had confirmed the services of Respondent by letter dated 4 February 2020. Covid-19 lockdown restrictions were imposed from 15 March 2020. Thus, the Respondent worked with the Petitioner barely for a month after his confirmation. However, termination email dated 3 May 2020 talks of rude behaviors ‘for the last few months'. If he was fit to be confirmed in service on 4 February 2020, it is difficult to believe that he would have behaved in rude manner with the directors while working in the office till 15 March 2020. The allegations in the termination letter therefore are clearly unbelievable. It appears that the Petitioner got rid of the Respondent on account of Covid-19 pandemic slowdown. Instated of holding hands of its employees in difficult times, the Petitioner terminated his serves by levelling false allegations. On account of stigmatic termination, Respondent must have found it difficult to scout for another job. I am therefore in agreement with the view taken by the Labour Court that Respondent’s termination is clearly illegal and unsustainable.

The Labour Court has directed reinstatement of Respondent with 50% backwages from the date of his termination. Respondent was terminated on 3 May 2020. Even if the last drawn monthly salary of Rs. 1,00,000/- is taken into account for computing the backwages (without yearly increments), the burden of backwages would be to the tune of approximately Rs. 40 lakhs in addition to liability to reinstate him in service. If increments and wage rise during last 6 years is considered, the amount would go higher.

The Respondent was appointed in the service of the Petitioner vide appointment letter dated 22 July 2019. Thus, he worked for less than one year with the Petitioner and out of that period, period of about 2 months was covered by Covid-19 pandemic restrictions. Thus, effectively, Respondent worked with the Petitioner for just about 10 months. From the affidavit of evidence of the Respondent dated 25 June 2024, it appears that he disclosed his age as 52 years. This would mean that Respondent is now at an advanced age of 56 years and can otherwise work with the Petitioner only for couple of more years from now. Considering the fact that Respondent worked with the Petitioner for less than a year and is left with only few years of service, in my view, it would not be appropriate to uphold the directions of his reinstatement. Also, the relationship between the parties has soured due to the litigation. Therefore, it would not be in the interest of either of the parties that Respondent rejoins the office of the Petitioner. Instead, a lump-sum compensation can be directed to be paid to him in lieu of reinstatement and backwages. Considering the factors of monthly salary of Rs. 1,00,000/- drawn by Respondent at the time of his termination, length of service rendered by him and also the length of left over service, in my view, ends of justice would meet if a lump-sum compensation of Rs. 25 lakhs is awarded to the Respondent in lieu of reinstatement and backwages.

I accordingly proceed to pass the following order:

With the above directions, the petition is partly allowed and disposed of. There shall be no order as to cost.