OBSERVATIONS of the court, which are not necessary to reach a decision in the case before it, are called obiter dicta. They are non-binding elements of the judgment or order of the court even though they may be of persuasive value.
In a recent case, a two-judge Bench of the Supreme Court made stringent observations against the courts two-decade-old tendency to compromise the interests of workers in order to facilitate economic reforms and globalisation. Although the Bench comprising Justices G.S. Singhvi and Asok Kumar Ganguly couched its observations in general terms, it was obvious that they were expressing their extreme displeasure over the number of judgments rendered by the Supreme Courts bigger Benches, including Constitution Benches comprising five judges, against labour.
In their two separate but concurring orders in Harjinder Singh vs Punjab State Warehousing Corporation, pronounced on January 5, Justices Singhvi and Ganguly articulated the pro-labour philosophy of the Constitution in refreshingly lucid terms, even while deciding the case before them in accordance with facts, law and precedents.
Harjinder Singh was employed with the Punjab State Warehousing Corporation (PSWC) as work charge motor mate from March 5, 1986. On October 3 that year, he was appointed work munshi in the pay scale of Rs.350-525 for a period of three months. On February 5, 1987, his pay scale was upgraded to Rs.400-600 for a period of three months. Though his specified tenure ended on May 4, 1987, he was continued in service until July 5, 1988, when the Managing Director of the PSWC issued one months notice seeking to terminate his service by way of retrenchment.
Harjinder Singh moved the Punjab and Haryana High Court and obtained a stay on the notice. The High Court vacated the stay when Harjinder Singh wanted to avail himself of remedy under the Industrial Disputes Act (IDA), 1947, and withdraw his petition with the High Court.
Meanwhile, on November 26, 1992, the Managing Director of the PSWC retrenched Harjinder Singh and 21 other workmen by giving them one months pay and allowances in lieu of notice under the IDA.
The Government of Punjab referred Harjinder Singhs industrial dispute to the labour court. Harjinder Singh challenged his retrenchment on the grounds that persons junior to him were retained in service, thus violating the mandate of the IDA. The PSWC, in its reply, contended that he was retrenched because the projects on which he was employed had been completed. On December 15, 1999, the labour court ordered Harjinder Singhs reinstatement with 50 per cent back wages because the PSWC had violated the principle of equality enshrined in Section 25G of the IDA by allowing persons junior to him to continue in service.
The PSWC challenged the labour courts award in the Punjab and Haryana High Court on the grounds that Harjinder Singh was not a regular employee and that there was no post against which he could be reinstated. The High Court disapproved the award of reinstatement on the premise that his initial appointment was against the law. The High Court, therefore, substituted the award of reinstatement and 50 per cent back wages with an order to pay Rs.87,582 by way of compensation.
The Supreme Court, in its order, held that the High Court had unjustifiably overturned an otherwise well-reasoned award passed by the labour court, thus depriving Harjinder Singh of what might be the only source of his own sustenance and that of his family. The Supreme Court also found that the High Court had erroneously assumed that he was a daily wage employee.
It would have been sufficient for the Supreme Court Bench to dispose of the case before it by restoring the award of the labour court in favour of Harjinder Singh and ordering the PSWC to pay him legal costs of Rs.25,000, as it did in its order. But, interestingly, the Bench found it necessary to introspect and make several observations that went against the general trend of many anti-labour judgments of the Supreme Court in recent years.
The two-judge Bench might have been constrained to avoid in view of judicial discipline mentioning judgments delivered by previous Benches that went against the interests of labour. But the message was unmistakable and amounted to a forceful indictment of the previous Benches.
Justice Singhvi thus observed: In matters like the present one, the High Courts are duty bound to keep in mind that the IDA and other similar legislative instruments are social welfare legislations and the same are required to be interpreted keeping in view the goals set out in the preamble of the Constitution and the provisions contained in Part IV (Directive Principles) thereof in general and Articles 38, 39(a) to (e), 43 and 43A in particular, which mandate that the state should secure a social order for the promotion of welfare of the people...and also ensure that the workers get their dues.
The above observations were contrary to what the Supreme Courts five-judge Constitution Bench held in State of Uttar Pradesh vs Jai Bir Singh (delivered on May 5, 2005). The Bench in this case disagreed with Justice V.R. Krishna Iyers pro-labour judgment in the Bangalore Water Supply and Sewerage Board case (delivered by a Bench of seven judges in 1978), and referred it for reconsideration by a larger Bench.
While doing so, the five-judge Bench said: ...The statute under consideration [IDA] cannot be looked at only as a worker-oriented statute. The main aim of the statute as is evident from its preamble and various provisions contained therein is to regulate and harmonise relationships between employers and employees for maintaining industrial peace and social harmony.
The issue before the Bench was the definition of the word industry. In the Bangalore Water Supply case, the Supreme Court suggested an expansive definition. Nearly three decades later, the court appeared to be in favour of a restrictive definition in order to exempt many areas of industrial activity from the purview of the IDA and its worker-protective umbrella.
In the Jai Bir Singh case, the Bench further observed:
It is experienced by all dealing in industrial law that overemphasis on the rights of the workers and undue curtailment of the rights of the employers to organise their business, through employment and non-employment, have given rise to a large number of industrial and labour claims resulting in awards granting huge amounts of back wages for past years, allegedly as legitimate dues of the workers, who are found to have been illegally terminated or retrenched. An over expansive interpretation of the definition of industry might be a deterrent to private enterprise in India where public employment opportunities are scarce.
The observations of the Singhvi-Ganguly Bench assume significance because the nine-judge Bench to reconsider the Supreme Courts judgment in the Bangalore Water Supply case has not yet been constituted by the Chief Justice of India (CJI). The current CJI, Justice K.G. Balakrishnan, was part of the five-judge Constitution Bench in the Jai Bir Singh case which referred the Bangalore Water Supply judgment for reconsideration by a nine-judge Bench, despite opposition from counsel representing the interests of labour.
Justice Singhvi recalled that in the 1970s, 1980s and 1990s, the courts repeatedly negated the doctrine of laissez-faire and the theory of hire and fire. But, he deplored, that of late there had been a visible shift in the courts approach in dealing with cases involving the interpretation of social welfare legislation. The mantras of globalisation and liberalisation were fast becoming the raison detre of the judicial process and an impression had been created that the constitutional courts were no longer sympathetic to the plight of industrial and unorganised workers, he pointed out.
Observers point out that Justice Singhvi perhaps had in mind the five-judge Constitution Benchs decision in the Uma Devi case in 2006. In this case, the court held that a person who had temporarily or casually got employed could not be directed to be continued permanently. Although he did not specifically refer to this case, his disagreement with the courts judgment in Uma Devi was apparent in this sentence in his order:
In large number of cases like the present one, relief has been denied to the employees falling in the category of workmen, who are illegally retrenched from service by creating bylanes and sidelanes in the jurisprudence developed by this court [emphasis added] in three decades.
He continued: The stock plea raised by the public employer in such cases is that the initial employment/engagement of the workman-employee was contrary to some or the other statute or that reinstatement of the workman will put unbearable burden on the financial health of the establishment. The courts have readily accepted such plea...ignoring the fact that he may have continued in the employment for years together and that micro wages earned by him may be the only source of his livelihood.
Justice Singhvi reminded the Supreme Court and the High Courts that if a man was deprived of his livelihood, he was deprived of all his fundamental and constitutional rights, and for him the goal of social and economic justice, equality of status and of opportunity, and the freedoms enshrined in the Constitution remained illusory.
Justice Gangulys observations were no less forceful than Justice Singhvis. He said: If the judges fail to discharge their duty in making an effort to make the preambular promise a reality, they fail to uphold and abide by the Constitution, which is their oath of office. In my humble opinion, this has to be put as high as that and should be equated with the conscience of this court.
He emphasised that the court had a duty to interpret statutes with social welfare benefits in such a way as to further the statutory goal and not to frustrate it. In doing so, this court (emphasis added) should make an effort to protect the rights of the weaker sections of society in view of the clear constitutional mandate, he said.
Justice Ganguly warned: Any attempt to dilute the constitutional imperatives in order to promote the so-called trends of globalisation may result in precarious consequences. Reports of suicidal deaths of farmers in thousands from all over the country along with escalation of terrorism throw dangerous signal.
He recalled Rabindranath Tagores reference to eventualities that might visit us in our mad rush to ape Western ways of life. He concluded that at this critical juncture, the judges duty was to uphold the constitutional focus on social justice without being in any way misled by the glitz and glare of globalisation.
Observers wonder whether the remarks of the Singhvi-Ganguly Bench will mark a real shift in the courts attitude to labour issues or should be just seen as a flash in the pan.