Labour law litigation logjam

Even before the pandemic, we used to hear about patients dying in the verandas of government hospitals, failing to get medical attention. Similarly, many old case files are lying in the almirahs lining the corridors of the Supreme Court, crying for attention. After a few decades, they become “infructuous” or are inherited by legal representatives or meet an unnatural death. This is very much true about labour law litigation. In the last two months, the Supreme Court disposed of only one labour case appeal out of 80 judgments delivered. Meanwhile, the governments have been hastily passing legislation undermining well-established labour laws.

Matters pending since 1997 waiting for the Chief Justice to set up appropriate benches involve a range of issues — 15 of them are classified by the SC itself. They refer to trade unions, dismissals, retrenchment, contract labour, provident fund, gratuity, the Factories Act and Employees’ Compensation Act. There are about 180 appeals dealing with dismissal of employees, the earliest one belonging to the 2001 vintage. The disputes might have started climbing the judicial ladder years ago before reaching the apex court. Many appeals have been referred to larger benches, which rarely gather. Add to this the smaller benches in high courts referring questions to their larger benches.

When the SC fails to clear doubts for a long time, the judges are in a quandary. In 1978, the Supreme Court had given a liberal interpretation for the term “industry” in the Industrial Disputes Act (“Bangalore Water Supply case”). Later generations of judges felt that reading of the definition of industry was too wide and referred the subject in 2005 to a nine-judge bench for revision. That has not been heard till now. 

Recently, the Delhi High Court made some caustic remarks about this situation. The occasion arose when the patent office terminated some employees invoking the Act. The Delhi High Court judgment remarked that “as on date, the Bangalore Water Supply case remains pristinely undisturbed. Having weathered the storms of judicial scrutiny thus far, that judgment necessarily continues to bind this high court.” Following the 1978 SC decision, the high court ruled that the patent office is an industry. Charitable institutions, NGOs and other entities have to wait for the last word from the SC to find out whether they are also industries, according to the 1978 interpretation. If the SC reinterprets the definition, many of its judgments and those of courts below might have been rendered wrongly. Bad luck for litigants who lost their case due to judicial inaction.

Such conundrums exist in several other labour cases. Earlier this year, the court referred to larger benches some labour law questions. One bench of the SC decided to revisit its 2015 decision on regularisation of temporary and daily workers as it felt that its earlier judgments are not harmonious on the power of the labour courts. The order was passed in appeals against judgments delivered by four high courts. Regularisation has been a staple of appeals to the SC, which passed varying orders in the past decades. This was because of the haziness in the interpretation of provisions in the Industrial Disputes Act. 

When the new labour codes are enforced, scores of questions raised in these petitions would become irrelevant or academic. However, irrepressible litigants would argue that their petitions should be decided according to the law as it existed at the time of the event. That would lead to another range of jaw-breaking arguments over the retrospective effect of legislation. The court will have to reconcile the old and new labour codes.

The new laws, amalgamating 44 legislation and notifications under them, will further bog down constitutional courts. The central government passed three codes in a hurry last month, the opposition abstaining and the provisions escaping adequate scrutiny. On their part, some state governments, such as those of Gujarat and Uttar Pradesh, issued notifications relaxing the rigour of the existing labour laws in favour of the employers. The SC quashed the Gujarat notification observing that it was “an affront to the workers’ right to life and right against forced labour”.

The SC is seen to have lost much of its stature while dealing with political and human rights issues in recent times. In that context, its decisions on labour laws will be analysed threadbare. It will prove to be the court’s third major test.