HC quashes labour court order directing CITCO to pay parity salaries

The Punjab and Haryana High Court has set aside the Labour Court's decision directing the Chandigarh Industrial and Tourism Development Corporation Limited (CITCO) to pay its workmen salaries equivalent to those of contractual employees of the UT Administration.

The High Court ruled that the Labour Court exceeded its jurisdiction under Section 33C (2) of the Industrial Disputes Act governing the computation of benefits under existing conditions of service.

The ruling by Justice Jagmohan Bansal came on a petition filed by CITCO, challenging the Labour Court’s order holding the workmen entitled to salary in terms of letter dated June 30, 2009, and subsequent letters issued by the Department of Personnel, Chandigarh Administration.

The Bench, during the course of hearing observed, took note of the workmen’s contention that he was entitled to a salary equal to that of contractual employees working with the UT Administration. The contention was based on the letter dated July 30, 2009, issued by the Department of Personnel, Chandigarh Administration.

He, subsequently, filed an application under Section 33C(2) before the Labour Court, which held that CITCO formed a part of the UT Administration, being directly or indirectly controlled by it. Consequently, its workmen were entitled to a salary equivalent to that of contractual employees of the Chandigarh Administration.

Appearing for CITCO, senior advocate Amit Jhanji argued that the letter was inapplicable to the organization as it was an autonomous body. Its chairman was the home secretary and the managing director an IAS officer. Their appointments, along with those of other directors, were made by the Administrator, with their tenure subject to his discretion. CITCO was managed by a Board of Directors and governed by a separate set of rules and regulations concerning its employees' terms and conditions.

Jhanji further submitted that the petitioner had neither adopted the letter dated July 30, 2009, nor subsequent letters issued by the Chandigarh Administration. He added proceedings under Section 33C(2) were akin to execution proceedings, where the Labour Court could interpret the terms of an award or settlement but not adjudicate or establish new rights.

Justice Bansal observed that the Labour Court acted beyond its statutory jurisdiction. Section 33C(2) was not an adjudicatory provision but a mechanism for executing benefits or entitlements already determined by competent authorities.

“The Labour Court, in the exercise of power under Section 33C(2), cannot determine entitlement to salary. It can only order the employer to pay an already determined salary,” Justice Bansal asserted in his detailed judgment.