IN CA. 4404 OF 2023- SC-Bombay Industrial Employment (Standing Orders) Rules -- Supreme Court rules against Jet airways, holds that settlement between Employee Union and Employer cannot override Model Standing Order unless it’s more beneficialto Employee
Justice Abhay S. Oka and Justice Sanjay Karol[25.07.2023]

Read Order:BharatiyaKamgarKarmachariMahasanghv v. M/s. Jet Airways Ltd

Simran Singh

New Delhi, July 26, 2023: The Supreme Court, while allowing the appeal and setting aside a judgement passed by the Bombay High Court, observed that any settlement between an Employee Union and the Employer would not override the Model Standing Order provided under the Bombay Industrial Employment (Standing Orders) Rules, 1959 (Bombay Model Standing Order ), unless it was more beneficial to the employees.

The Division Bench comprising of Justice Abhay S. Oka and Justice Sanjay Karol stated that the employer and workman could not enter into a contract overriding the statutory contract embodied in the certified Standing Orders. The Bench noted that the High Court had held that the Model Standing Order was not a statutory provision but, at best, a statutorily imposed condition of service that a settlement or award could alter, however the Bench referred to the relevant Clauses of the Bombay Model Standing Order, and observed that  "A cumulative reading of aforesaid clauses reveals that a workman who has worked for 240 days in an establishment would be entitled to be made permanent, and no contract/settlement which abridges such a right can be agreed upon, let alone be binding. The Act being the beneficial legislation provides that any agreement/contract/settlement wherein the rights of the employees are waived off would not override the Standing Orders."

In the matter at hand, the Bombay High Court affirmed the award passed by the Central Government Industrial Tribunal (‘CGIT’) which had rejected the demand of the appellant Union for reinstatement with full back wages.

The respondent company operates a commercial airline, flying aircraft for transporting passengers and cargo. The Appellant represented around 169 workmen temporarily engaged on a fixed-term contract by the Respondent in various cadres like loader-cum-cleaners, drivers and operators. The appellantcontended that the workmen were treated as temporary despite completing 240 days in service in terms of the Model Standing Order despite the nature of the work being permanent and regular. The Trade Union had raised a charter of demands which, after negotiations, resulted in a settlement dated 02.05.2002.

In the said charter of demands, Bhartiya KamgarSena gave up the demand for the grant of permanency and a comprehensive settlement dated 02.05.2002 was signed as a package deal that conferred many benefits on the workmen who gave up the said demand. The Respondent Company claimed that the workers were not entitled to permanency as per the settlement dated 02.05.2002 entered between the Union and Company. The workmen raised disputes and the matter landed up for adjudication. However, the CGIT, in its award dated 30.03.2017, while answering a reference framed the issue, whether the Union's demand for re-employment/reinstatement with full back wages of these 169 workmen in service of that first party was just and proper and answered it in the negative.

Relying upon Section 25-H of the Industrial Disputes Act, 1947 it was held that there was no retrenchment since the non-renewal of fixed term contract did not amount it to be so as provided under Section 2(oo)(bb) of the said Act. Thus, there was no question of re-employment of the workmen concerned.

The issue for consideration before the Supreme Court were:

1. Which was the Appropriate Authority empowered to issue the Standing Order(s) under the Industrial Employment (Standing Orders) Act, 1946 ?
2.  Whether private agreement/settlement between the parties would override the Standing Order?

While navigating through the first issue, the Court stated that the appropriate government meant the state government and found that the Bombay Model Standing Order would be applicable to the parties and in regards to the secondissue at hand, the Court, referred to its earlier decision and observed that  "On various occasions, this Court has observed that the certified standing orders have a statutory force. The Standing Order implies a contract between the employer and the workman. Therefore, the employer and workman cannot enter into a contract overriding the statutory contract embodied in the certified Standing Orders”