Employers cannot terminate workers during industrial disputes without permission, and workers performing equal duties are entitled to equal pay and potential regularization.

2025 INSC 144

SUPREME COURT OF INDIA

DIVISION BENCH

SHRIPAL AND ANOTHER

Vs.

NAGAR NIGAM, GHAZIABAD

( Before : Vikram Nath and Prasanna B. Varale, JJ. )

Civil Appeal No. 8157 of 2024 with Civil Appeal Nos. 8158-8179 of 2024

Decided on : 31-01-2025

Employers cannot terminate workers during industrial disputes without permission, and workers performing equal duties are entitled to equal pay and potential regularization.

A. U.P. Industrial Disputes Act, 1947 — Sections 6E and 6N — Violation of Statutory Provisions i.e Sections 6E and 6N — The termination during the pendency of conciliation proceedings violated Section 6E which prohibits altering service conditions or terminating employees without prior approval from the concerned authority — The termination also violated Section 6N, which mandates proper notice, wages in lieu of notice, and retrenchment compensation — The Respondent Employer failed to comply with these statutory requirements, rendering the termination illegal.

B. U.P. Industrial Disputes Act, 1947 — Sections 6E and 6N —Existence of Direct Employer-Employee Relationship — The court found that the Appellant Workmen were directly engaged by the Respondent Employer (Ghaziabad Nagar Nigam) and not through a contractor — The absence of any contract documentation, tender notices, or evidence of a third-party contractor negated the Employer’s claim of an outsourced arrangement — The Workmen performed essential, perennial duties (horticultural and maintenance work) under the direct supervision and control of the Respondent Employer, further establishing a direct employer-employee relationship.

C. U.P. Industrial Disputes Act, 1947 — Sections 6E and 6N — Entitlement to Reinstatement, Back Wages, and Regularization —Given the illegal termination and the Workmen’s long-standing service, the court held that they were entitled to reinstatement with continuity of service and 50% back wages — The court also directed the Respondent Employer to initiate a fair and transparent process for regularization of the Workmen within six months of reinstatement, considering their perennial duties and the essential nature of their work.

D. U.P. Industrial Disputes Act, 1947 — Sections 6E and 6N — Rejection of the Employer’s Defense — The court rejected the Respondent Employer’s reliance on Secretary, State of Karnataka vs. Umadevi (2006) to deny regularization, distinguishing between “illegal” and “irregular” appointments — The court held that the Workmen’s long-term engagement in essential roles justified their regularization, especially in the absence of a genuine contractor-based arrangement —The court also dismissed the Employer’s argument regarding a ban on fresh recruitment, stating that such a ban cannot be used to justify indefinite daily-wage employment or deny labor protections to long-serving employees.

E. U.P. Industrial Disputes Act, 1947 — Sections 6E and 6N — Setting Aside the High Court’s Order — The court set aside the High Court’s order, which had confined the Workmen to daily-wage re-engagement, and instead granted full reinstatement, back wages, and a pathway to regularization — The High Court’s partial relief was deemed insufficient to address the statutory violations and the Workmen’s equitable entitlements.

F. Service Law — Principle of “Equal Pay for Equal Work” — The court emphasized the principle of “equal pay for equal work” holding that the Appellant Workmen, who had performed duties identical to those of regular employees for over a decade, were entitled to fair wages and regularization — The Respondent Employer’s practice of paying inadequate wages and denying statutory benefits constituted an unfair labor practice.

Umadevi (2006) 4 SCC 1 and aggo v. Union of India (2024 SCC OnLine SC 3826), Relied Upon.

JUDGMENT

Vikram Nath, J. – These appeals, one filed by certain workmen (hereinafter, the workmen in all the appeals are referred to as the Appellant Workmen) and the other by the employer department i.e., Ghaziabad Nagar Nigam (hereinafter referred to as the Respondent Employer as the employer in all the appeals), arise out of a common final judgment and order dated 01.03.2019, passed by the High Court of Judicature at Allahabad in Writ Petition No. 13381 of 2012 and connected matters.

2. By the impugned judgment, the High Court considered the legality of two conflicting sets of awards passed by the Labour Court, Ghaziabad-one set allowing reinstatement of some workmen with partial back wages, and another set denying relief altogether to other similarly placed workmen.

3. The factual matrix leading up to the appeal before us is as follows:

3.1. The Appellant Workmen claim to have been engaged as Gardeners (Malis) in the Horticulture Department of the Respondent Employer, Ghaziabad Nagar Nigam, since the year 1998 (in some instances, since 1999). According to them, they continuously discharged horticultural and maintenance duties- such as planting trees, maintaining parks, and beautifying public spaces-under the direct supervision of the Respondent Employer. They further allege that no formal appointment letters were ever issued to them, and that they were persistently denied minimum wages, weekly offs, national holidays, and other statutory benefits.

3.2. In 2004, the Appellant Workmen, along with many other similarly situated employees, raised an industrial dispute (C.B. Case No. 6 of 2004) before the Conciliation Officer at Ghaziabad, seeking regularization of their services and the requisite statutory benefits. They contend that, upon learning of this demand, the Respondent Employer began delaying their salaries and subjected them to adverse working conditions. Eventually, around mid-July 2005, the services of numerous workmen were allegedly terminated orally, without any notice, written orders, or retrenchment compensation.

3.3. Since the above termination took place during the pendency of the conciliation proceedings, the Appellant Workmen argue it violated Section 6E of the U.P. Industrial Disputes Act, 1947. Consequently, the State Government referred the disputes concerning both (i) regularization and (ii) legality of the alleged termination, to the Labour Court, Ghaziabad for adjudication.

3.4. The Labour Court proceeded to decide the references vide two orders:

3.5. Aggrieved by the adverse portion of the awards (i.e., those granting reinstatement), the Respondent Employer, Ghaziabad Nagar Nigam, filed several writ petitions before the High Court of Judicature at Allahabad, challenging the Labour Court’s findings. On the other hand, the workmen whose claims were dismissed by the other set of awards also approached the High Court by filing their own writ petitions. All these writ petitions were heard together, culminating in the common judgment dated 01.03.2019, which partly modified the Labour Court’s conclusions.

3.6. Through the impugned judgment, the High Court held that while the Labour Court was correct in exercising jurisdiction under the U.P. Industrial Disputes Act (since municipalities could be treated as “industry”), there remained factual complexities as to whether the workmen were genuinely on the rolls of the Nagar Nigam or were provided by contractors. The High Court also noted that the State Government had, by notifications/orders, placed a ban on fresh recruitments in Municipal Corporations, thereby restricting direct appointments to any post. Ultimately, the High Court partially modified the relief granted, directing re-engagement of the workmen on daily wages, with pay equivalent to the minimum in the regular pay scale of Gardeners, while allowing future consideration of their regularization if permissible by law.

4. Both the Appellant Workmen and the Respondent Employer have now approached this Court by way of Special Leave Petitions. The workmen primarily seek full reinstatement with back wages and a direction to secure their regularization, whereas the Respondent Employer seeks to quash the modifications ordered by the High Court on the ground that the High Court exceeded its jurisdiction by granting partial relief akin to regular employees, contrary to constitutional provisions and the State’s ban on recruitment.

5. Learned counsel for the Appellant Workmen made the following submissions:

6. On the other, the learned counsel for the Respondent Employer, Ghaziabad Nagar Nigam made the following submissions:

7. Having heard the arguments and submissions of the learned counsel for the parties and having perused the record, this Court is of the considered opinion that the nature of engagement of the Appellant Workmen, the admitted shortage of Gardeners, and the circumstances under which their services were brought to an end, merit closer scrutiny.

8. It is undisputed that, while the Appellant Workmen were pressing for regularization and proper wages through pending conciliation proceedings, the Respondent Employer proceeded to discontinue their services, without issuing prior notice or granting retrenchment compensation. At this juncture, it is to have a look at the requirements of Section 6E of the U.P. Industrial Disputes Act, 1947 which has been reproduced hereunder:-

9. On a plain reading of this section, we can deduce that any unilateral alteration in service conditions, including termination, is impermissible during the pendency of such proceedings unless prior approval is obtained from the appropriate authority. The record in the present case does not indicate that the Respondent Employer ever sought or was granted the requisite approval. Prima facie, therefore, this conduct reflects a deliberate attempt to circumvent the lawful claims of the workmen, particularly when their dispute over regularization and wages remained sub judice.

10. The Respondent Employer consistently labelled the Appellant Workmen as casual employees (or workers engaged through an unnamed contractor), yet there is no material proof of adherence to Section 6N of the U.P. Industrial Disputes Act, 1947, which mandates a proper notice or wages in lieu thereof as well as retrenchment compensation. In this context, whether an individual is classified as regular or temporary is irrelevant as retrenchment obligations under the Act must be met in all cases attracting Section 6N. Any termination thus effected without statutory safeguards cannot be undertaken lightly.

11. Furthermore, the Employer’s stance that there was never a direct employer-employee relationship is wholly unsubstantiated. If, in fact, the Appellant Workmen had been engaged solely through a contractor, the Employer would have necessarily maintained some form of contract documentation, license copies, or invoices substantiating the contractor’s role in hiring, paying, and supervising these workers. However, no such documents have been placed on record. Additionally, the Employer has failed to establish that wages were ever paid by any entity other than its own Horticulture Department, which strongly indicates direct control and supervision over the Workmen’s day-to-day tasks is a hallmark of an employer-employee relationship. Had there been a legitimate third-party contractor, one would expect to see details such as tender notices, contract agreements, attendance records maintained by the contractor, or testimony from the contractor’s representatives. The absence of these crucial elements undermines the Employer’s claim of outsourced engagement. In fact, it appears that the Workmen were reporting directly to the Horticulture Department officials, receiving instructions on their duties, and drawing wages issued under the Municipality’s authority. This pattern of direct oversight and wage disbursement substantially negates the narrative that they were “contractor’s personnel.” Consequently, the discontinuation of their services carried out without compliance with statutory obligations pertaining to notice, retrenchment compensation, or approval under Section 6E of the U.P. Industrial Disputes Act, stands on precarious ground. The very foundation of the Employer’s defence (i.e., lack of an employer-employee relationship) is not supported by any credible or contemporaneous evidence.

12. The evidence, including documentary material and undisputed facts, reveals that the Appellant Workmen performed duties integral to the Respondent Employer’s municipal functions specifically the upkeep of parks, horticultural tasks, and city beautification efforts. Such work is evidently perennial rather than sporadic or project-based. Reliance on a general “ban on fresh recruitment” cannot be used to deny labor protections to long-serving workmen. On the contrary, the acknowledged shortage of Gardeners in the Ghaziabad Nagar Nigam reinforces the notion that these positions are essential and ongoing, not intermittent.

13. By requiring the same tasks (planting, pruning, general upkeep) from the Appellant Workmen as from regular Gardeners but still compensating them inadequately and inconsistently the Respondent Employer has effectively engaged in an unfair labour practice. The principle of “equal pay for equal work,” repeatedly emphasized by this Court, cannot be casually disregarded when workers have served for extended periods in roles resembling those of permanent employees. Long-standing assignments under the Employer’s direct supervision belie any notion that these were mere short-term casual engagements.

14. The Respondent Employer places reliance on Umadevi (supra), (2006) 4 SCC 1. to contend that daily-wage or temporary employees cannot claim permanent absorption in the absence of statutory rules providing such absorption. However, as frequently reiterated, Uma Devi itself distinguishes between appointments that are “illegal” and those that are “irregular,” the latter being eligible for regularization if they meet certain conditions. More importantly, Uma Devi cannot serve as a shield to justify exploitative engagements persisting for years without the Employer undertaking legitimate recruitment. Given the record which shows no true contractor based arrangement and a consistent need for permanent horticultural staff the alleged asserted ban on fresh recruitment, though real, cannot justify indefinite daily-wage status or continued unfair practices.

15. It is manifest that the Appellant Workmen continuously rendered their services over several years, sometimes spanning more than a decade. Even if certain muster rolls were not produced in full, the Employer’s failure to furnish such records-despite directions to do so-allows an adverse inference under well-established labour jurisprudence. Indian labour law strongly disfavors perpetual daily-wage or contractual engagements in circumstances where the work is permanent in nature. Morally and legally, workers who fulfil ongoing municipal requirements year after year cannot be dismissed summarily as dispensable, particularly in the absence of a genuine contractor agreement. At this juncture, it would be appropriate to recall the broader critique of indefinite “temporary” employment practices as done by a recent judgement of this court in Jaggo vs. Union of India, 2024 SCC OnLine SC 3826 in the following paragraphs:

16. The High Court did acknowledge the Employer’s inability to justify these abrupt terminations. Consequently, it ordered re-engagement on daily wages with some measure of parity in minimum pay. Regrettably, this only perpetuated precariousness: the Appellant Workmen were left in a marginally improved yet still uncertain status. While the High Court recognized the importance of their work and hinted at eventual regularization, it failed to afford them continuity of service or meaningful back wages commensurate with the degree of statutory violation evident on record.

17. In light of these considerations, the Employer’s discontinuation of the Appellant Workmen stands in violation of the most basic labour law principles. Once it is established that their services were terminated without adhering to Sections 6E and 6N of the U.P. Industrial Disputes Act, 1947, and that they were engaged in essential, perennial duties, these workers cannot be relegated to perpetual uncertainty. While concerns of municipal budget and compliance with recruitment rules merit consideration, such concerns do not absolve the Employer of statutory obligations or negate equitable entitlements. Indeed, bureaucratic limitations cannot trump the legitimate rights of workmen who have served continuously in de facto regular roles for an extended period.

18. The impugned order of the High Court, to the extent they confine the Appellant Workmen to future daily-wage engagement without continuity or meaningful back wages, is hereby set aside with the following directions:

19. In view of the above, the appeal(s) filed by the workmen are allowed, whereas the appeal(s) filed by the Nagar Nigam Ghaziabad are dismissed.

20. All pending applications stand disposed of. No orders as to costs.