Holding

The Supreme Court held that the award of the Labour Court and the High Court judgment are set aside as the classification and promotion of workmen is a managerial function dependent on vacancies, not a matter for the labour court to dictate.

Summary

The appellant, a sugar mill, employed certain workers as "seasonal workmen" but they performed duties throughout the year and were paid seasonal wages. The workers claimed they should be declared permanent and receive permanent workmen benefits. The State of Uttar Pradesh referred the dispute to the Labour Court, which held that the workers fell within the definition of permanent workmen and directed the employer to declare them permanent. The High Court upheld the Labour Court's award, but the Supreme Court set aside both the award and the High Court judgment, holding that promotion and classification of workers is a managerial function dependent on vacancies, not solely on the nature of work performed. Consequently, the Labour Court had exceeded its jurisdiction by directing the employer to declare the workers permanent.

Issues considered

Whether a sugar mill may employ seasonal workmen throughout the year without declaring them permanent.
Whether the Labour Court can direct an employer to declare such workmen permanent and grant them permanent workmen benefits.
Whether the classification and promotion of workmen is a managerial function beyond the jurisdiction of a labour tribunal.

Legislation cited

Industrial Disputes Act, 1947

Subjects

industrial disputesseasonal workmenpermanent workmenpromotionmanagerial functionlabour court jurisdictionsugar industryemployment classification

Judgment

[2008] 13 S.C.R. 1038
_,__

A U.P. STATE SUGAR & CANE DEVELOPMENT
CORPORATION LIMITED
v.
CHIN! MILL MAZDOOR SANGH & OTHERS
(Civil Appeal No.5858 of 2008)
B ).. .
SEPTEMBER 26, 2008
[ALTAMAS KABIR AND MARKANDEY KATJU, JJ.]

Industrial Disputes Act, 1947:
c Seasonal Workmen engaged in sugar mills during crush-
ing season - Allegedly their services utilized during off-sea-
son as well - Employer not declaring them permanent - Ref-
erence by State to Labour Court- Labour Court held that work-
men in question entitled to be declared as permanent - Chai-
D lenge to - Dismissed by High Court - Correctness of - Held: .\< -
In terms of promotion policy being followed by the employers,
promotion from one category to next higher category is sub-
ject to availability of vacancies - In terms of the policy, even
seasonal workmen have been considered for promotion and
E declared permanent - Moreover, such function is clearly a
managerial function, which could not have been discharged
by the Labour Court- Both the Courts below erred in not con-
sidering the relevant aspect of the matter and proceeded on
the basis that workmen in question were denied their right to
F be categorized as permanent workmen because their services "" -
have been utilized throughout the year - Hence, award of
Labour Court and judgment of High Court set aside.
Respondent Nos.2-15 had been employed by the ap-
pellant-Sugar Mill as seasonal workmen. They raised a
G dispute that their services had been utilized by the appel-
lant throughout the year but they were not declared per-
manent and they have been paid salary as being given to
seasonal workmen. The State Government made a Ref-
erence to the Labour Court to the effect that as to whether
H 1038
U.P. STATE SUGAR & CANE DEV. CORP. LTD v. 1039
-),
CHINI MILL MAZDOOR SANGH & ORS ..

the workmen in question could be d_eclared as permanent A
by their employer, what salary/pay scales are to be 'given
to them and from which date. The Labour Court held that
the workmeri in question came within the definition of
permanent workmen, and were, therefore, entitled to be
• .J
declared as permanent. The Award of the Labour Court 8
was challenged by the appellant before the High Court
by filing a writ petition, which was dismissed by the High
Court. Hence the present appeal.
The questions which arose for determination in this
appeal were as to whether the appellant, sugar mill, was c
right in utilizing services of the seasonal workmen
throughout the year but not declaring them permanent
an~ as to whether the Labour Court is ernpo"'!ered to di-
rect the employer to declare such workmen as permanent.
---J D
Allowing the appeal, the Court
HELD: 1.1 In terms. of Standing Order, a muster-roll
of all employees, who are not permanent, is maintained
by, the different sugar mills and at the beginning of the
crushing season the seasonal labour who had worked. E
during the previous crushing season are asked to join
their duties for the crushing season in their old jobs. It is
not denied that the pay scales of the different categories
of workmen are different. (Para - 21) [1049,G-H]
-..- 1.2 Even when the seasonal workmen are employed F
during the off season they are admittedly paid the same
wages as are paid to them during the crushing season,
which is one of the basic distinctions between them and
permanent workmen who are on the rolls of the sugar
mills. It is also an admitted position that, in terms of the· G
policy followed by the sugar ·mills, promotions are given
from one category to the next higher category depend-
4
ing on the number of vacancies as are available at a given
point of time. Even in the instant case, of the 39 workmen
- referred to in the terms of the Reference, 13 had been H
1040 SUPREME COURT REPORTS [2008] 13 S.C.R.

A made permanent by the appellant which supports the
case of the appellant that promotion is given from one
category to the higher categories as and when vacancies
are available and that such function was clearly a mana-
gerial function which could not have been discharged by
B the Labour Court. (Para - 22) [1050,A-C]
2. This Court is in agreement with the views ex-
pressed by the Constitution Bench of this Court in the
Brooke Bond case as also those of the three.Judge Bench
in the Hindustan Lever case. This is not a case of fitment
C depem:ling as and when vacancies are available. Both the
Labour Court as well as the High Court do not appear to
have considered this aspect of the matter with the atten-
tion it deserved and proceeded on the basis that this was
a case where the respondent Nos. 2-15 had been denied
D their right to be categorised as permanent workmen on
account of the nature of the work performed by them
throughout the year. The High Court has, in fact, merely
relied on the findings of the Labour Court without inde-
pendently applying its mind to the said aspect of the mat-
E ter. Hence, the Award of the Labour Court and the Judg-
ment of the High Court impugned in this appeal, are set
aside. (Paras - 23 & 24) [1050,D·G]
Management of Brooke Bond India (P) Limited v. Work-
men (1966) 2 SCR 465 - followed.
F
The Hindustan Lever Limited v. The Workmen (1974) 3
sec 51 o - relied on.
Case Law Reference
(1966) 2 SCR 465 followed Para -11
G
(19'74) 3 sec 510 relied on Para· 12
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 5858 ~-
of 2008

H
U.P. STATE SUGAR & CANE DEV. CORP. LTD. v. 1041
- ,1,
CHINI MILL MAZDOOR SANGH & ORS.

From the final Judgment and Order dated 6.10.2005 of A
the High Court of Judicature at Allahabad in Civil Misc. Writ
Petition No. 1263 of 2004
Rakesh Uttamchandra Upadhyay for the Appellant.
' ..J
Pradip Ku. De., Yatendra Sirohi and Abha R. Sharma for B
the Respondents.
The Judgment of the Court was delivered by
ALTAMAS KABIR, J. 1. Leave granted.
2. The respondent Nos.2-15, who are members of the c
respondent No.1 Union, and had admittedly been employed un-
der the appellant as "seasonal workmen" as defined in the
Standing Orders governing the conditions of employment of
workmen in vacuum pan sugar factories of the State; raised a
--... claim that although they had been categorized as "seasonal D
workmen" they had been employed by the appellant not only
during the crushing season but throughout the year. It is their
grievance that although their services were utilized as perma-
nent workmen they were paid the salary given to seasonal work-·
men. They, therefore, made a representation to the Concilia- E
tion Officer which ultimately resulted in a Reference made by
the State of Uttar Pradesh to the Labour Court on 3.11.1989.
The terms of Reference are as follows:

-~
i) Whether 39 employees mentioned in the Schedule
'Ka' can be declared permanent by their employer. F
If yes, from which date and with other details ?;
ii) Whether the 28 workmen mentioned in the Schedule
'Kha' are to be given salary/pay scales on the posts
mentioned against their names by their employer. If G
yes, from which date and with other details ?"
3. At the very outset it may be recorded that out of 39 em-
ployees, referred to in the terms of reference,. 8 have died or
have retired from service; 13 have been made permanent; 4
workmen have not pressed their claim before the Labour Court H
1042 SUPREME COURT REPORTS [2008] 13 S.C.R.
.. -
A and only 14 workmen, mentioned in Schedule 'Ka', had contin-
ued with their claim before the Labour Court.
4. It may also be noted that the second term of reference
was not ultimately pressed before the Labour Court, which was,
therefore, required to adjudicate only on the claim of the 14
8 workmen, who remained out of the 39 workmen, that they were
entitled to be declared permanent by the appellant herein.
5. In order to appreciate the claim of the said 14 workmen
it is necessary to look into the circumstances and the system of
c employment which prevail in the sugar industry in Uttar Pradesh
on account of the fact that sugarcane is a seasonal crop and
large numbers of workers are required by the sugar mills dur-
ing the crushing season which is between the month of October
in a given year to the month of April of the following year, i.e.
roughly for a period of 7 months in a year. During the remaining _,. -
0
part of the year only such employees as are required for main-
tenance of the mill are employed as permanent workmen as
defined in the above-mentioned Standing Orders, but there is
no bar to the sugar mills employing even seasonal workmen
during the off-season in the mill.
E
6. The other practice which is followed is that workmen
from different categories, as defined in the Standing Orders,
are promoted to the next higher category as and when vacan-
cies occur and that merely because the workmen may be re-
F quired to perform other functions during the off-season, a claim -,.. -
could not be raised that such workmen would be entitled to be
categorised in the said higher post in the hierarchy. In order to
appreciate the matter with greater clarity the Standing Orders
dated 3.12.1958, as revised and published on 27.9.1988, are
G reproduced hereinbelow:
"Relevant extracts of Standing Orders
Uttar Pradesh Extraordinary Gazette,
2l1h September, 1988
H
U.P. STATE SUGAR & CANE DEV. CORP. LTD. v. 1043
-:i. CHIN! MILL MAZDOOR SANGH & ORS. [ALTAMAS KABIR, J.]

In pursuance of the provision of clause (3) of Article 348 A
of the Constitution the Governor is pleased to order the
publication of the following English translation of notification
No.5692 (Hl)/XXXVl-2-110(Hl)-77, da~ed September 27,
1988:
No.5692(HI) XXXVl-2-110(HI) - 77, B

Dated September 27, 1988
Whereas, the Standing Orders governing the conditions
of the employment of workmen in vacuum pan sugar
factories of the State were enforced· under Government C
notification No.5436-ST/XXXVl-A/208-ST-58, dated
October 3, 1958;
And whereas, there was persistent demand for revision of
the aforesaid Standing Orders which had become
0
~ necessary in view of passage of time;
Xxxx )()()()( )()()()( )()()()(

B. Classification of workmen
1. Workmen shall be classified as E
(i) Permanent,
(ii) · Seasonal,
(iii) Temporary,
F
(iv) Probationers,
(v) Apprentices, and
(vi) Substitutes.
(i) A "Permanent Workman" is one who is engaged on G
the work of a permanent nature or permanent
requirement lasting throughout the year and has
completed his probationary period, if any,
(ii) A "Seasonal workmen" is one who is engaged only H
1044 SUPREME COURT REPORTS [2008] 13 S.C.R.

A for the crushing season and has completed his
probationary period, if any,
(iii) A "Temporary Workman" is one who is engaged for
meeting a temporary or casual requirement.

B )()()()( )()()()( )()()()(

K. Special Conditions Governing Employment of Seasonal
Workmen
1. A seasonal workman who has worked or, but for illness
c or any other unavoidable cause, would have worked under
a factory during the whole of the second half of the last
preceding season shall be employed by the factory in the
current season and shall be entitled to get retaining
allowance provided he joins the current season and works
for at least one month. The payment of retaining allowance
D
shall be made within two months of the date of the .t- -
commencement of the season.
Explanation - Unauthorised absence during the second
of the last preceding season of a workman who has not
E been validly dismissed under these Standing Orders and
of a workman who has been re-employed by the
Management in the current season, shall be deemed to
have been condoned by the Management.
2. Every seasonal workmen who worked during the last
F season shall be put up on his old job whether he was in the
'R' shift or in any of the usual shifts.
However, ·if the exigencies of works so require the
management may transfer a workman from one job to
another job or from one shift to another including the 'R'
G
shift, so however, that the number of workman so
transferred does not exceed five per cent of total number
of the employees of the factory and that the wages and
status of such workman is not affected in any way.
H 3. A seasonal workman, who is a retainer shall be liable
_,

U.P. STATE SUGAR & CANE DEV. CORP. LTD. v. 1045
-~ CHIN! MILL MAZDOOR SANGH & ORS. [ALTAMAS KABIR, J.]

to be called on duty at any time in the off season and if he A
does not report for duty within 10 days he shall lose his
retaining allowance for the period for which he was called
for duty.

-... 4. Where owing to trade reasons or other reasons
necessary for a bona fide Law Off, as given in Standing B
Order, 'J', it becomes necessary for a factory so to do, it
may discharge the seasonal workman before the close of
the season with the previous permission of the State
Labour Commissioner if he so directs Additional Labour
Commission or Regional Additional/ Deputy Labour c
Commissioner of the area after paying such compensation
to the discharged workman, as may be determined by the
authority granting the permission.
True Copy"
~ D
7. Accepting the case made out by the 14 employees, the
Labour Court came to the conclusion that the said workmen
had been engaged during the off season neither for additional
work nor for temporary work, but for the work for which they had
been employed during the crushing season and that the nature E
of their work was, therefore, continuous despite the fact that
there have been a few breaks in their work during the off sea-
son. The Labour Court came to the conclusion that the 14 work-
men had really been engaged for the major part of the year and
-~
that the breaks in service were resorted to only to prevent them F
from getting the benefits enjoyed by a permanent workman. The
Labour Court held that the said workmen came within the defi-
nition of permanent workmen, and were, therefore, entitled to
be declared as permanent. The concerned 14 workmen were,
therefore, declared to be permanent from the date of the Award
G
and the appellant was directed to give them all the benefits that
a permanent workman was entitled to from the same date. The
Award of the Labour Court was challenged by the appellant
before the High Court in Writ Petition CMWP No.1263 of 2004.
Accepting the findings of the Labour Court that the 14 workmen
H
1046 SUPREME COURT REPORTS [2008] 13 S.C.R.

A had really been performing their duties on a permanent basis,
the High Court chose not to interfere with the Award of the
Labour Court and dismissed the writ petition.
8. The U.P. State Sugarcane Development Corporation
Limited is now in appeal before us questioning both the Award
B of the Labour Court as also the decision of the High Court in
respect thereof.
9. Mr.Upadhyay, learned Advocate who appeared for the
appellant -Corporation, reiterated the stand taken by the ap-
e pellant before the Labour Court and the High Court that the work
performed by the respondent Nos.2-15 had been wrongly de-
termined to be of a permanent nature. It was submitted that the
said workmen had been engaged only for the crushing season,
but since they were not workmen who were involved in handling
of the sugarcane during the crushing season but were technical
0
hands, they were also provided with work in the mill during the
off season, not as a matter of right but to provide them with a
livelihood during the off season. It was urged that both the Labour
Court, as well as the High Court, misconstrued the intention of
the appellant in coming to a finding that 14 workmen were, in
E fact, performing the work of a permanent nature which entitled
them to the status of permanent worker.
10. Mr. Upadhyay also submitted that since the policy with
regard to promotion of workmen from one category to a higher
F category depended on the vacancies available in the next higher
category, it was a managerial function, which could not be
usurped by the Labour Court and, in any event, the concept of
redetermining the status of the workmen, on account of the du-
ties performed by them, did not arise in the present case.
G 11. In support of his submission Mr. Upadhyay firstly re-
ferred to a Constitution Bench decision of this Court in Man-
agement of Brooke Bond India (P) Limited v Workmen [(1966)
2 SCR 465], wherein while considering the power of the Labour
Tribunals and the management to grant promotions, it was ob-
H served:
\

i' U.P. STATE SUGAR & CANE DEV. CORP. LTD. v. 1047
:_-.)· C~INI MILL MAZDOOR SANGH & ORS. [ALTAMAS KABIR, J.]
-
"Generally speaking, promotion is a management function; 'A
but it may be recognized that there may be occasions
when a tribunal may have to interfere with promotions
made by the management where it is felt that persons
superseded have been so superseded on account of ma/a
I ~ ... tides or victimization. Even so after a finding of ma/a tides B
1
' or victimization, it is not the function of a tribunal to consider
the merits of various employees itself and then decide
--<
-"' whom to promote or whom not to promote. If any industrial
""\ tribunal finds that promotions have been made which are
unjustified on the ground of ma/a tides or of victimization, c
the proper course for it to take is to set· aside the
promotions and ask the management to consider the
cases of superseded employees -and decide for itself
whom to promote, except of course the person whose
promotion has been set aside by the tribunal."
---r D
12. The other decision· relied upon by Mr. Upadhyay is that
of this Court in the case of The Hindustan Lever Limited v The
Workmen [(1974) 3 SCC 510], whereinwhile considering the
question of an employer's right to transfer a workman in the
absence of victimization, unfair labour practice or violation of E
any condition of service, this Court reiterated its earlier views
and held promotion to be a management function and the Labour
1 Court could not arrogate to itself such management funtion in
<' the absence of findings of ma/a tides or victimization or any
-! 'unfair labour practice. F
j -"i
~
13. Mr. Upadhyay submitted that in declaring the concerned
J
-1
workman to be J')ermanent from-the date of the Award the Labour
Cou.rt had arrogated to itself the functions of the management
-l which had been held to be beyond the powers of the Labour
'"I
Court and the Award was, therefore, liable to be set aside along G
withJhe judgment of the High Court.
·t
~
14. Mr. P.K. De, learned Advocate who appeared for the
respondents, supported the findings and observations of the
1. Labour Court and the High Court and urged that it had been
H

. :
1048 SUPREME COURT REPORTS [2008] 13 S. C.R.

A correctly found that the respondent Nos.2-15 had been perform-
ing work of a permanent nature which is required to be per-
formed throughout the year and not only during the crushing
season.

15. Mr.De submitted that all the said workmen were tech-
B nical hands and not labour engaged to perform manual work
during the crushing season. Even during the crushing season
the said workmen were engaged in maintenance of the ma-
chinery in the mill, which was not a seasonal work, but entailed
maintenance of the mill machinery throughout the year. Although,
C it had been urged on behalf of the appellant that they were sea-
sonal workmen who had been provided work during the off sea-
son, their work was of a continuous nature which required the
appellant to engage them not only during the crushing season
but also during the whole year.
D
16. According to Mr. De, the definition of the expression
"pQrmanent" as used in the Standing Orders referred not to the
employee but to the nature of work being performed. Since in
the instant case the work performed was of a permanent na-
ture, which required the services of the respondent Nos. 2-15
E throughout the year, they had been rightly declared by the Labour
Court as permanent workmen on account of the nature of work
performed by them throughout the year.

17. Reliance was placed on the decision of this Court in
F Jardine Henderson Ltd. v Their Employees [AIR 1967 SC 515) r- -
which was a case involving the payment of gratuity and provi-
dent fund by way of retiring benefits and is of little relevance to
the facts of this case. He also relied on the decision in the Brooke
Bond Limited case (supra) where in the opening paragraphs of
G the judgment the Tribunal had expressed the view that although
promotion was a management function and had to be left mainly
to the discretion of management, in an appropriate case the t
worl<man had a right to demand relief when the just claim of the 1.-
senior employees were overlooked.
H 18. Reference was lastly made to the decision of this Court
U.P STATE SUGAR & CANE DEV CORP. LTD. v. 1049
. ;~ CHINI MILL MAZDOOR SANGH & ORS. [ALTAMAS KABIR, J.]

in Workmen employed by Hindustan Lever Limited v. Hindustan A
Lever Limited, [(1984) 4 SCC 392], where reference had been
made to the earlier decisions in the Brooke Bond case (supra)
and the Hindustan Lever Limited case (supra) and an observa-
tion had been made that the view taken in the said cases that
....... promotion is a managerial function may have to be re-exam- B
ined in an appropriate case.
19. Mr. De contended that the Award of the Labour Court
was fully justified in the facts and circumstances of the case
and the High Court had rightly upheld the same.
c
20. From the facts as set out hereinabove and the sub-
missions made by.the respective parties, we are left to decide
the question as to whether even in the light of the Tribunal's
finding that the work performed by the respondent Nos. 2-15
was of a permanent nature on account whereof their services
, -I D
were required throughout the year, it could have declared the
said workmen to be permanent or whether such declaration
amounted to usurpation of the management's functions which
were beyond its powers.
21. That there are different categories of workers employed E
in.the sugar industries, and, in particular, during the crushing
season, is not disputed by any of the parties. It is not denied
that apart from the permanent workmen, the other categories of
workmen are employed during the crushing season which be-
---(,
gins in the month of Octob.er in a given year and continues till the F
month of April of the following year. It is the period during which
the sugarcane crop is harvested, and, thereafter, transported to
different mills where they are crushed for production of sugar.
Admittedly, as will appear from Standing Order No.2, a muster-
roll of all employees, who are not permanent, is maintained by
G
the different sugar miliS and at the beginning of the crushing sea-
son the seasonal labour who had worked during the previous
4 crushing season are asked to join their duties for the crushing
season in their old jobs. It is also not denied that the pay scales
of the different categories of workmen are different.
H
1050 SUPREME COURT REPORTS [2008] 13 S.C.R.

A 22. It has been submitted on behalf of the appellant that
even when the seasonal workmen are employed during the off
season they are paid the same wages as are paid to them dur-
ing the crushing season, which is one of the basic distinctions
between them and permanent workmen who are on the rolls of
B the sugar mills. It is also an admitted position that, in terms of the
policy followed by the sugar mills, promotions are given from one
category to the next higher category depending on the number of
vacancies as are available at a given point of time. Even in the
instant case, of the 39 workmen referred to in the terms of refer-
C ence, 13 had been made permanent by the appellant which sup-
ports the case of the appellant that promotion is given from one
category to the higher categories as and when vacancies are
available and that such function was clearly a managerial func-
tion which could not have been discharged by the Labour Court.
D 23. We are in agreement with the views expressed by the
Constitution Bench of this Court in the Brooke Bond case (su-
pra) as also those of the three-Judge Bench in the Hindustan
Lever case (supra). In our view, this is not a case of fitment de-
pending on the nature of the work performed, but a case of pro-
E motion as and when vacancies are available. Both the Labour
Court as well as the High Court do not appear to have consid-
ered this aspect of the matter with the attention it deserved and
proceeded on the basis that this was a case where the respon-
dent Nos. 2-15 had been denied their right to be categorised as
F permanent workmen on account of the nature of the work per-
formed by them throughout the year. The High Court has, in fact,
merely relied on the findings of the Labour Court without inde-
pendently applying its mind to the said aspect of the matter.
24. We, therefore, accept the submissions advanced by
G Mr. Upadhyay and allow the appeal. The Award of the Labour
Court and the Judgment of the High Court impugned in this
appeal, are set aside.
25. There will be no order as to costs.
H S.K.S. Appeal allowed.