Supreme Court of India: Whether the Industrial Tribunal/Labour Court is functus officio after the award has become enforceable, and is thus, prevented from considering setting aside application

Supreme-Court-of-India-1_85138_730x419

In M/s. Haryana Suraj Malting Ltd. vs. Phool Chand, Civil Appeal No. 5650 of 2018, the Supreme Court addressed the issue of whether the Industrial Tribunal/Labour Court is functus officio after the award has become enforceable, and is thus, prevented from considering an application for setting aside an ex parte award. The issue was referred to a larger bench because of the two conflicting judgments of the Supreme Court i.e. Sangham Tape Co. vs. Hans Raj (2005) 9 SCC 331 and Radhakrishna Mani Tripathi vs. L.H Patel and another (2009) 2 SCC 81 in this regard. The Court inter alia remarked that merely because an award has become enforceable, does not necessarily mean that it has become binding and held that the Labour Court/Tribunal is not functus officio after the award has become enforceable as far as setting aside an ex parte award is concerned. Detailed analysis follows:

Scheme of Arbitration under the Indian Industrial Disputes Act, 1947

Under the statutory scheme of the Indian Industrial Disputes Act, 1947 (the Act), the Labour Court/Tribunal is empowered to follow its own procedure (including for arbitration) as it thinks fit, meaning thereby, a procedure which is fit and proper for the settlement of the industrial dispute and for maintaining industrial peace. If a party fails to attend the Court/Tribunal without showing sufficient cause, the Court/Tribunal can proceed ex parte and pass an ex parte award. The award, ex parte or otherwise, has to be sent to the appropriate Government as soon as it is made and the appropriate Government has to publish it within 30 days of its receipt. The award thus published becomes enforceable after a period of 30 days of its publication.

The question before the bench was in case of an ex parte award, whether the Court/Tribunal can set aside the same after 30 days of its publication.

Earlier Cases on the Issue

The Court cited and discussed in great length its earlier dictum of Grindlays Bank Ltd. v. Central Government Industrial Tribunal and others 1980 (Supp) SCC 420 wherein it was held as under

  • That an ex parte award can be set aside in case the Court/Tribunal is approached within 30 days of its publication under Section 17 of the Act.
  • That the Tribunal is endowed with such incidental or ancillary powers as are necessary to discharge its functions effectively for the purpose of doing justice between the parties, unless there is any express indication in the statute to the contrary.
  • That although the Tribunal or other authorities specified in Section 11 of the Act are not Courts, they have the trappings of a Court and they exercise quasi-judicial functions.
  • That an award passed without participation on sufficient causes is a nullity, and hence, the Court/Tribunal has the power and duty to set aside an ex parte award.
  • That going by Rule 24 of the Industrial Disputes (Central) Rules, 1957 (the Central Rules) regarding grant of adjournment being governed by the Indian Code of Civil Procedure, 1908 (CPC), the provisions of Order IX Rule 13 of the CPC would apply in case of an ex parte
  • That setting aside an ex parte award is a matter of procedural review exercised ex debitoi justitiae (as of right) to prevent abuse of its process and such powers are inherent in every Court or Tribunal.

The Court also discussed the case of Anil Sood v. Presiding Officer, Labour Court II (2001) 10 SCC 534 for the purpose of calculating the 30 days period. In this case, a reference was made to the Labour Court and the award was made on 11-09-1995. An application was filed by the appellant therein on 06-11-1995 contending that he had no notice of the proceedings. That application was dismissed by High Court and Labour Tribunal on the ground that the Labour Court had become functus officio. The Supreme Court held that the High Court and the Labour Court fell into an error in stating that the Labour Court had become functus officio after making the award though ex parte stating the power to proceed ex parte is available under Rule 22 of the Central Rules which also includes the power to inquire whether or not there was sufficient cause for the absence of a party at the hearing, and if there is sufficient cause shown which prevented a party from appearing, then if the party is visited with an award without a notice which is a nullity and therefore the Tribunal will have no jurisdiction to proceed and consequently, it must necessarily have power to set aside the ex parte award.

In Sangham Tape (Supra), the Court took the view that the Labour Court/Tribunal retains jurisdiction over disputes referred to it for adjudication only up to the expiry of 30 days of the publication of the award, and thereafter, the Court/Tribunal becomes functus officio referring to Grindlays (Supra) and Anil Sood (Supra).

In Radhakrishna Mani (Supra), it was contended that under Section 17-A of the Act an award becomes enforceable on expiry of 30 days from the date of its publication whereupon the Labour Court is rendered functus officio and that the provision of Rule 26(2) of the Bombay Rules was in derogation of Section 17-A of the Act.  It is important to mention herein that Under Section 17A, an award becomes enforceable on the expiry of 30 days from the date of its publication under Section 17 whereas under Rule 26(2) of the Bombay Rules an application to set aside an ex parte award can be made “within thirty days of the receipt” of a copy of award. In this case it was held that the Industrial Court’s jurisdiction and power to recall an ex parte award on Rules 22 and 24(b) of the Central Rules. The Court further held that in Grindlays Bank what this Court held to be implicit in Rule 22 of the Central Rules is made explicit and clear in the Bombay Rules in the form of sub-rule (2) of Rule 26. The Court further noted that in case of Grindlays Bank the Court did not say that the Industrial Courts would have no jurisdiction to entertain an application for setting aside an award made after thirty days of its publication.

Analysis and Conclusion

After analyzing he dictum in all of the above cases and rules in the statue the Court observed that merely because an award has become enforceable, does not necessarily mean that it has become binding. For an award to become binding, it should be passed in compliance with the principles of natural justice. An award passed denying an opportunity of hearing when there was a sufficient cause for non-appearance can be challenged on the ground of it being nullity. An award which is a nullity cannot be and shall not be a binding award. In case a party is able to show sufficient cause within a reasonable time for its non-appearance in the Labour Court/Tribunal when it was set ex parte, the Labour Court/Tribunal is bound to consider such an application and the application cannot be rejected on the ground that it was filed after the award had become enforceable. The Labour Court/Tribunal is not functus officio after the award has become enforceable as far as setting aside an ex parte award is concerned. It is within its powers to entertain an application as per the scheme of the Act and in terms of the rules of natural justice.

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