Absence of profit is not a sole factor for deciding the status of the employer as ‘industry: High Court of Bombay

In a significant ruling, the Bombay High Court, presided by Justice Amit Borkar, upheld the Labour Court Satara's decision regarding the reinstatement of employees with full backwages. The court dismissed writ petitions filed by Daulat Panipurvatha Sahakari Sanstha, challenging the Labour Court's order which favored the employees, citing their unlawful termination without proper inquiry.

The case revolved around the interpretation of Sections 25(F) and 2(J) of the Industrial Disputes Act, 1947. The petitioners argued that they did not qualify as an 'industry' under the Act and contended the financial incapacity to pay full back-wages. The employees, in response, claimed unjust termination without due process.

The Labour Court identified the petitioners as an industry, referring to the landmark judgment in the Bangalore Water Supply case. Justice Borkar observed, "Absence of profit is not a sole factor for deciding the status of the employer as ‘industry’.” He further noted that the cooperative society, registered under the Maharashtra Co-operative Societies Act, 1960, still qualifies as an industry under Section 2(J) of the Industrial Disputes Act, 1947, due to the nature of services it provides.

The court scrutinized the petitioner's claim of financial distress and found it unsubstantiated. Justice Borkar remarked, "No evidence was laid down before the Labour Court to justify the termination." He emphasized the importance of the employer providing substantial evidence to support their claims, which was lacking in this case.

The High Court found no compelling reason to interfere with the Labour Court's order under writ jurisdiction, leading to the dismissal of both writ petitions without costs. This decision underscores the judiciary's commitment to upholding employees' rights and the obligations of employers under the Industrial Disputes Act.

Date of Decision: 08 February 2024

Daulat Panipurvatha Sahakari Sanstha Maryadit Malhar Peth Through Its Chairman and Anr. vs. Hanmant Ramchandra Gaikwad & Anr.