Holding

The Labour Court exceeded its jurisdiction by adjudicating matters outside the terms of reference, and its orders are hereby quashed.

Summary

Mother Dairy Fruit and Vegetable Pvt Ltd, a company engaged in dairy and food processing, terminated the services of several long‑serving employees after closing its Anand plant and transferring them to distant locations, which the employees refused to join. The employees accepted terminal dues but later filed industrial disputes seeking reinstatement and back wages before the Labour Court, which partially allowed the claims and ordered reinstatement. The company challenged the Labour Court’s award under Articles 226 and 227, arguing that the Court had exceeded its jurisdiction by addressing matters beyond the terms of reference, particularly the legality of the plant closure under Section 25(o) of the Industrial Disputes Act. The High Court examined whether the Labour Court was bound to confine its adjudication to the specific questions referred under Section 10(1) of the Act. Relying on precedents that a tribunal cannot go beyond the reference, the Court held that the Labour Court indeed overstepped its jurisdiction. Consequently, the High Court quashed the Labour Court’s orders and allowed the petitions, vacating the interim relief conditions.

Issues considered

Did the Labour Court exceed its jurisdiction and go beyond the scope of the terms of reference under Section 10(1) of the Industrial Disputes Act, 1947?
Are the impugned orders of the Labour Court sustainable in law, particularly concerning the legality of the termination and the applicability of Section 25(o) of the Industrial Disputes Act?

Legislation cited

Companies Act, 1956
Industrial Disputes Act, 1947s. 10(1), s. 17B, s. 25(o), s. 2A, s. 2(k)

Subjects

Industrial disputeLabour Court jurisdictionSection 10 ID ActReinstatementTerminationTransfer of employeesRetrenchmentScope of referenceArticle 226Article 227

Judgment

C/SCA/7736/2020 JUDGMENT DATED: 18/02/2026

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 7736 of 2020
With
R/SPECIAL CIVIL APPLICATION NO. 7863 of 2020
With
R/SPECIAL CIVIL APPLICATION NO. 7864 of 2020
With
R/SPECIAL CIVIL APPLICATION NO. 7865 of 2020
With
R/SPECIAL CIVIL APPLICATION NO. 7866 of 2020

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK Sd/-

==========================================================

Approved for Reporting Yes No
✓
==========================================================
MOTHER DAIRY FRUIT AND VEGETABLE PVT LTD
Versus
DILIPBHAI BHAGVANSINH PADHIYAR
================================================================
Appearance:
MR DC DAVE SENIOR COUNSEL WITH MR JIGAR M PATEL(3841) for the
Petitioner(s) No. 1
MR GIRISH M DAS(2323) for the Respondent(s) No. 1
==========================================================

CORAM:HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK

Date : 18/02/2026

COMMON ORAL JUDGMENT

1. Since similar and identical issues arise for consideration
in all the above petitions, with consent of the learned counsels
appearing for both the sides, the petitions are heard together
and are being decided by this common judgment.

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CHALLENGE:

2. The petitioner has filed present petitions under Articles
226 and 227 of the Constitution of India r/w the provisions of
Industrial Disputes Act, 1947 (hereinafter referred to as the
"I.D. Act") challenging the impugned orders dated 27.12.2019
passed by the Presiding Officer, Labour Court, Anand
(hereinafter referred to as the "Labour Court") in Reference
(L.C.A) Nos.103 of 2015, 104 of 2015, 105 of 2015, 106 of
2015 and 107 of 2015, whereby the said references came to
be partly allowed by the Labour Court and granted
reinstatement in favour of the respondents herein on their
original posts with continuity of service.

PRAYER:

3. The petitioner has sought substantially identical reliefs in
all the captioned petitions, the only variation being the
respective reference numbers. In order to avoid repetition and
for the sake of convenience, the reliefs prayed for in Special
Civil Application No. 7736 of 2020 are reproduced herein. In
the said petition, i.e. Special Civil Application No. 7736 of
2020, the petitioner has, inter alia, prayed as under:

"6(A) This Hon'ble Court may be pleased to issue a writ of or
in the nature of, Certiorari or any other appropriate writ,
order or direction quashing and setting aside the Award
dated 27-12-2019 passed by the Presiding Officer, Labour
Court, ANAND in Reference (L.C.A.) No.104 of 2015-
Annexure"A" and be further pleased to dismiss the aforesaid
Reference (L.C.A.) No.104 of 2015 of the Respondent;

(B) Pending admission, disposal and final hearing of the
present petition, this Hon'ble Court may be pleased to stay

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the operation, implementation, effect and execution of Award
dated 27-12-2019 passed by Presiding Officer, Labour Court,
ANAND in Reference (L.C.A.) No.104 of 2015-Annexure"A"

(C) Such other(s) and further relief(s) which this Hon'ble
Court may deem fit to be granted in the interest of justice."

FACTS OF THE CASE:

4. The facts giving rise to the present petitions are that the
petitioner is a company incorporated under the provisions of
the Companies Act, 1956. It manufactures, markets, and sells
milk and milk products, including cultured products, ice
cream, paneer, and ghee, under the brand name “Mother
Dairy”. The petitioner company also has a diversified product
portfolio comprising edible oils, fruits and vegetables, frozen
vegetables, pulses, and processed foods such as fruit juices
and jams, catering to the daily requirements of households.

4.1 The respondents were initially appointed purely on a
contractual basis pursuant to orders dated 28.12.2002 for a
fixed term of three months, commencing from 01.01.2003 and
concluding on 31.03.2003, which appointments were duly
accepted by them. Thereafter, their contractual tenure was
extended from time to time during the years 2003–2004.
Subsequently, by communication dated 29.07.2004, the
petitioner offered them permanent appointments to the posts
of Operator-cum-Technician Grade-III / Executive Grade-III at
its Neem Biocide Plant, Anand, which offers were duly
accepted by the respondents. In terms of Condition No. 6 of
the appointment order, their services were liable to transfer,
thereby reserving to the petitioner the right to transfer the

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respondents to any of its plants in accordance with
administrative exigencies and organizational requirements.

4.2 As the operations carried on by the petitioner at its
Neem Biocide Plant at Anand, Gujarat, had become
commercially unviable, the petitioner took a conscious
decision to close down the said plant and accordingly effected
its closure. Such closure would ordinarily have entailed
termination of the services of the employees working therein,
including the respondents. However, with a view to
safeguarding their employment and avoiding termination, the
petitioner, instead of dispensing with their services,
transferred the respondents to its other plants situated at
Budge-Budge, West Bengal/Kolkata and Etawah, Uttar
Pradesh vide communications dated 25.09.2014, and to
Guwahati/Srinagar vide communications dated 11.09.2014.
The respondents were directed to report for duty at their
respective transferred locations within a period of six days
from the date of communication.

4.3 Thereafter, the petitioner addressed further
communications dated 07.10.2014 and 16.10.2014 to the
respondents, reiterating its direction and calling upon them to
report for duty at their respective transferred locations.
Despite such communications, the respondents failed and
neglected to comply. Upon it becoming evident that the
respondents were not willing to join duties at the transferred
places, the petitioner was constrained to issue orders dated
19.12.2014 terminating their services. At the time of issuance
of the termination orders, all admissible terminal dues were

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duly calculated and paid to the respondents and the
respondents were accepted the same.

4.4 After accepting the terminal dues, the respondents raised
industrial disputes seeking reinstatement with full back wages
before the Assistant Labour Commissioner, Anand, who
referred the disputes for adjudication to the Labour Court,
Anand. The references were registered as Reference (L.C.A.)
Nos. 103 of 2015, 104 of 2015, 105 of 2015, 106 of 2015, and
107 of 2015.

4.5 Before the learned Labour Court, the respondents filed
their statement of claim at Exh. 5, contending that their
termination was illegal and unjustified. The petitioner, in
response, filed its written statement at Exh. 12, specifically
denying the allegations and averments made in the statement
of claim. Upon hearing the parties and after due appreciation
of the oral and documentary evidence on record, the Labour
Court partly allowed the references and directed
reinstatement of the respondents with continuity of service.

4.6 Being aggrieved and dissatisfied with the impugned
orders dated 27.12.2019, passed by the Labour Court, Anand
in Reference (L.C.A.) Nos. 103 of 2015, 104 of 2015, 105 of
2015, 106 of 2015, and 107 of 2015, the petitioner has
preferred the present petitions.

5. Heard Mr. Dhaval C. Dave, learned Senior Counsel assisted
by Mr. Jigar M. Patel, learned counsel for the petitioner
company and Mr. Girish M. Das, learned counsel for the

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respondents in all the petitions.

SUBMISSIONS ON BEHALF OF PETITIONER:

6. Mr. D.C. Dave, learned Senior Counsel appearing for the
petitioner, has submitted that the impugned orders passed by
the Labour Court are wholly erroneous, illegal, arbitrary and
contrary to the facts and evidence on record. It is contended
that the Labour Court has travelled beyond the jurisdiction
vested in it while passing the impugned orders in favour of the
respondents. According to Mr. Dave, learned Senior Counsel,
the terms of reference were limited to the question as to
whether the respondents were entitled to reinstatement with
consequential benefits or not. However, the Labour Court
went beyond the scope of the reference and proceeded to
examine the issue of non-compliance with the provisions of
the I.D. Act in relation to the closure of the unit. It is therefore
submitted that, while rendering the impugned orders on such
grounds, the Labour Court exceeded its jurisdiction and acted
beyond the scope of the reference.

6.1 Mr. Dave, learned Senior Counsel has further submitted
that it is well settled by a catena of decisions that the Labour
Court cannot travel beyond the scope and ambit of the terms
of reference. It is contended that, in the present case, the
impugned orders clearly demonstrate that the Labour Court
has exceeded the scope of the reference and adjudicated
issues not referred to it. It is therefore submitted that, the
impugned orders are erroneous, illegal, unjust, arbitrary and
capricious, and therefore deserve to be quashed and set aside.

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6.2 Mr. Dave, learned Senior Counsel for the petitioner, has
submitted that the respondents were initially appointed on a
contractual basis sometime in 1997 and were subsequently
regularised and appointed to regular posts in or around the
year 2004. It is further submitted that owing to financial
constraints and the declining operational capacity of the
plant, the petitioner company took a decision to close down
the said unit. Consequently, orders were issued transferring
the concerned workmen to other units of the company which
were functional and operational. Learned Senior Counsel has
further contended that, since the respondents failed to report
for duty at their respective transferred places, the petitioner
company was left with no alternative but to issue orders of
retrenchment dated 19.12.2014. It is further submitted that
the petitioner company duly paid all statutory and retiral
dues, including retrenchment compensation, gratuity and
other admissible benefits payable to the respondents, and that
the said amounts were deposited in their respective accounts
and accepted by them without any protest or objection.

6.3 Mr. Dave, learned Senior Counsel for the petitioner, has
submitted that, after having received all statutory and retiral
benefits, the respondents, with mala fide intent, raised
industrial disputes and filed reference cases before the
Labour Court. It is contended that the terms of reference did
not pertain to the legality of the closure of the unit or to any
alleged breach of the provisions of Section 25(o) of the I.D.
Act. However, the Labour Court, according to the learned
Senior Counsel, travelled beyond the scope of the reference

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and took into consideration aspects which were neither
relevant nor within the ambit of the issues referred for
adjudication while passing the impugned awards. It is further
submitted that the material facts and legal position were not
properly appreciated by the Labour Court, and therefore the
impugned orders passed by the Labour Court are contrary to
the settled principles of law and are liable to be quashed and
set aside.

6.4 Mr. Dave, learned Senior Counsel for the petitioner, has
further submitted that the respondent in Special Civil
Application No. 7736 of 2020 has been receiving idle wages
without rendering any work pursuant to the interim order
passed by this Court dated 24.06.2020. It is further submitted
that the other respondents are likewise receiving idle wages
in terms of the interim orders passed by this Court dated
03.07.2020, and that such payment of wages has continued till
date without any services being rendered by them.

6.5 At this stage, Mr. Dave, learned Senior Counsel, has
pointed out before this Court to the fact that, after filing of the
present petitions, another reference came to be filed by the
Union challenging the closure of the unit. It is submitted that
the Union did not follow the statutory provisions of Section
25(o) of the I.D. Act and, without seeking prior permission,
raised the dispute, which was thereafter referred to the
Labour Court, Nadiad and registered as Reference (I.T.) No.
74 of 2018. It is further submitted that the said reference
came to be disposed of vide order dated 26.06.2022, as the
Union did not press the issue before the Labour Court.

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6.6 Mr. Dave, learned Senior Counsel has placed on record a
copy of the said order dated 26.6.2022 passed by the Labour
Court in Reference (IT) No. 74 of 2018 which is taken on
record.

6.7 Mr. Dave, learned Senior Counsel for the petitioner, in
support of his submissions, referred and relied upon the
following decisions of the Hon'ble Apex Court and this Court:-
(1) Bhogpur Cooperative Sugar Mills Ltd. vs.
Harmesh Kumar, reported in (2006) 13 SCC 28.

(2) Oshiar Prasad and Others vs. Employers in
Relation to Management of Sudamdih Coal Washery of
M/s. Bharat Coking Coal Limited, Dhanbad, Jharkhand
reported in (2015) 4 SCC 71,

(3) Tata Chemicals Limited vs. Okha Mandal
Majoor Sangh reported in 2017 (0) GUJHC 13394.

6.8 Over and above the contentions raised in the present
petitions, the Learned Senior Council urges before the Court
that present petitions may be allowed and the impugned
orders passed by the Labour Court may be quashed and set
aside.

SUBMISSIONS ON BEHALF OF RESPONDENTS:

7. On the other hand, Mr. Girish Das, learned counsel
appearing for the respondents, has opposed the petitions and
submitted that there has been a serious breach of the
provisions of Section 25(o) of the I.D. Act. It is contended that,
upon due consideration of all relevant facts and evidence, the
Labour Court has rightly passed the impugned orders

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directing reinstatement of the respondents. According to the
learned counsel, there is no illegality, infirmity or
jurisdictional error in the findings recorded by the Labour
Court, and therefore this Court, while exercising its
supervisory jurisdiction under Articles 226 and 227 of the
Constitution of India, ought not to interfere with the same. It
is accordingly prayed that the petitions deserve to be
dismissed.

7.1 Mr. Girish Das, learned counsel for the respondents, has
further submitted that the respondents are not gainfully
employed in any establishment, nor are they receiving
adequate remuneration from any alternative employment. It is
contended that the petitioner dairy is statutorily bound to pay
to the respondents full wages last drawn, inclusive of any
maintenance allowance admissible to them, in view of the
provisions of Section 17-B of the I.D. Act. Learned counsel has
submitted that Section 17-B of the I.D. Act clearly provides
that where a Labour Court, Tribunal or National Tribunal, by
its award, directs reinstatement of any workman and the
employer prefers proceedings against such award before the
High Court or the Supreme Court, the employer shall be liable
to pay such workman, during the pendency of such
proceedings, full wages last drawn inclusive of any
maintenance allowance admissible under any rule, provided
that the workman has not been employed in any establishment
during such period.

7.2 Mr. Girish Das, learned counsel for the respondents, has

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submitted that Section 2(k) of the Industrial Disputes Act
defines an “industrial dispute” to mean any dispute connected
with employment or non-employment, or with the terms of
employment. It is contended that, in the present case, the
Labour Court has examined the terms of employment,
particularly Clause 6 of the appointment letter, while
adjudicating the reference. According to the learned counsel
for the respondents, the contention of the management that
the Labour Court has exceeded its jurisdiction is wholly
misconceived and contrary to the mandatory provisions of
law, and therefore cannot be sustained even for a moment.

7.3 Mr. Girish Das, learned counsel for the respondents, has
further submitted that when the respondents did not report
for duty at the transferred places, no departmental inquiry
was conducted prior to terminating their services. According
to him, the record does not disclose that any inquiry was held,
and therefore the action of the petitioner in terminating the
services of the workmen cannot be said to be legal or justified.
It is further submitted that Exh. 6/5, i.e. the transfer order,
indicates that the transfers were effected on account of
business exigencies and with a view to providing alternative
employment. However, the sworn depositions at Exh. 19 and
Exh. 25 disclose reasons for transfer which are materially
different from those stated in the transfer order.

7.4 Mr. Girish Das, learned counsel for the respondents has
also relied upon Section 2A of the Industrial Disputes Act to
submit that where an employer discharges, dismisses,

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retrenches or otherwise terminates the services of an
individual workman, any dispute arising between such
workman and the employer in connection with such
termination shall be deemed to be an industrial dispute.

7.5 Mr. Girish Das, learned counsel for the respondents, has
referred to and relied upon the decision of the Hon’ble Apex
Court in Babhutmal Raichand Oswal vs. Laxmibai R.
Tarta, reported in (1975) 1 SCC 858. He has contended
that even if the Labour Court has committed an error of fact,
however apparent it may be on the face of the record, the
same cannot be interfered with by the High Court in exercise
of its supervisory jurisdiction under Article 227 of the
Constitution of India by converting itself into a Court of
Appeal, particularly when the legislature has not conferred a
right of appeal and has made the decision of the subordinate
court or tribunal final.

7.6 Lastly, Mr. Girish Das, learned counsel for the
respondents urges before the Court that present petitions may
not be entertained and the same may be dismissed and the
impugned orders passed by the Labour Court, may be
confirmed.

ANALYSIS:

8. I have perused the relevant material and documents placed
on record. I have also gone through the impugned orders
passed by the Labour Court as well as the decisions cited by
both the sides.

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9. Considering the facts and circumstances of the case and
after hearing both the sides, the issues arise for consideration
before this Court are as under:-

1. Whether the Labour Court exceeded the jurisdiction
which is not vested in it and go beyond the scope of the
terms of reference, as provided under the provision of
Section 10(1) of the I.D. Act?

2. Whether the impugned order passed by the Labour
Court is sustainable in the eyes of law?

10. It prima facie appears from the record that the Labour
Court has travelled beyond the scope of the reference and has
committed errors both on facts and in law while appreciating
the evidence adduced before it. The findings recorded by the
Labour Court thus suffer from serious factual and legal
infirmities. The aforesaid decisions of the Hon’ble Apex Court
as well as this Court cited by learned Senior Counsel for the
petitioner clearly enunciate the ratio with regard to the scope
and ambit of Section 10(1)(c) of the I.D. Act. The said Section
10(1)(c) of the I.D. Act reads as under:–

"10. Reference of disputes to Boards, Courts or
Tribunals.—

(1) Where the appropriate Government is of opinion that any
industrial dispute exists or is apprehended, it may at any
time], by order in writing,

(c) refer the dispute or any matter appearing to be connected
with, or relevant to, the dispute, if it relates to any matter
specified in the Second Schedule, to a Labour Court for
adjudication;"

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11. At this stage, it is appropriate to refer the relevant
assertions of examination in chief of the respondents:-

12. So far as the respondent of Special Civil Application No.
7736 of 2020 is concerned, the said respondent has stated in
his examination in chief that he joined the company on
21.07.1997 as a Fitter and was later re-designated as
Attendant Operator. He rendered continuous service until his
termination and worked for more than 240 days in every year,
including the 12 months preceding termination. His service
record was clean and his last drawn salary was Rs. 28,452/-
per month. The company was engaged in manufacturing
neem-based pesticides and fertilizers at its Anand plant,
employing about 80 workers in three shifts. The respondent
was performing duties of machinery maintenance and plant
operations. The company, registered under the Companies
Act, 1956, has its head office at Delhi and several
establishments across India employing thousands of workers.
From December 2013, the company initiated steps for
permanent closure of the Anand plant by stopping budgeting
and procurement of raw materials. Production was completely
stopped from 01.03.2014 and the plant was locked. Instead of
paying retrenchment compensation upon closure, the
employees were transferred to different states. The
respondent was transferred to Etawah (U.P.) by order dated
25.09.2014. As the respondent did not report at the
transferred place, the company terminated his services on
19.12.2014 without conducting any departmental inquiry and
without paying retrenchment compensation. After

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termination, the respondent made sincere efforts to secure
employment at various places but remained unemployed.

13. So far as the respondent of Special Civil Application No.
7863 of 2020 is concerned, the said respondent has stated in
his examination in chief that he joined the petitoner company
on 06.03.1997 and remained in continuous service despite
change in the name of the company. Though his last
designation was Assistant Manager (Sales and Marketing), he
did not perform supervisory or managerial functions. His
duties were limited to promoting products, coordinating with
farmers and dealers, collecting payments, and submitting
required forms, without any authority to fix prices, grant
facilities, or make policy decisions. He had worked for more
than 240 days in every year, including the 12 months
preceding his termination. The Anand plant was permanently
closed from early 2014 after stoppage of budgeting and
procurement of raw materials. He was transferred to Srinagar
by order dated 11.09.2014, and thereafter his services were
terminated on 19.12.2014 without conducting any
departmental inquiry and without following the procedure
under Section 25(o) of the I.D. Act.

14. So far as the respondent of Special Civil Application No.
7864 of 2020 is concerned the said respondent has stated in
his examination in chief that he joined the petitioner company
on 01.08.1997 and continued in uninterrupted service despite
change in the name of the company. At the time of
termination, he was designated as Executive Grade-3;

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however, he was never assigned any managerial,
administrative, or supervisory powers. His duties were limited
to procurement and market support activities relating to
neem-based raw materials, collecting market data, preparing
prescribed forms, coordinating inward entries, sampling, and
documentation of finished goods. All decisions regarding
purchase, pricing, payment terms, or sales were taken by
superior officers. No employee worked under him and he had
no authority to place orders or take independent decisions.
His service record was clean and he worked for more than
240 days in every year, including the 12 months preceding
termination. The Anand plant was permanently closed in early
2014 after stoppage of budgeting and procurement of raw
materials. The company did not follow the procedure under
Section 25(o) of the I.D. Act. He was transferred to Kolkata by
order dated 25.09.2014 and thereafter terminated on
19.12.2014 without any departmental inquiry.

15. So far as respondent of Special Civil Applicaiton No. 7865
of 2020 is concerned the said respondent has stated in his
examination in chief that he joined the petitioner company on
15.07.1997 as an Operator and continued in uninterrupted
service despite change in the name of the company. Though
later designated as Marketing Executive and Assistant
Manager, he did not exercise any managerial, administrative,
or supervisory powers and no such authority was ever
conferred upon him. His duties were limited to field work,
promoting neem-based fertilizers and pesticides, coordinating
with farmers and dealers, forwarding dealership forms, and

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collecting payments. He had no authority to appoint dealers,
fix prices, grant discounts, or decide payment terms. No
employee worked under him. His last drawn salary was Rs.
52,000/- per month. His service record was clean and he had
worked for more than 240 days in every year, including the 12
months preceding termination. The Anand plant was
permanently closed in early 2014 after stoppage of budgeting
and procurement of raw materials. Instead of following the
procedure under Section 25(o) of the I.D. Act, employees were
transferred. The respondent was transferred to Guwahati by
order dated 11.09.2014 and subsequently terminated on
19.12.2014 without any departmental inquiry.

16. So far as respondent of Special Civil Applicaiton No. 7866
of 2020 is concerned the said respondent has stated in his
examination in chief that he was appointed on 21.03.1997 as
an Attendant Operator and continued in uninterrupted service
despite change in the name of the company. His designation
and duties remained the same throughout, and his service
record was satisfactory. He had worked for more than 240
days in every year of service, including the 12 months
preceding his termination on 19.12.2014. At the Anand Unit,
neem-based fertilizers and pesticides were manufactured, and
he was working as a Plant Operator. The company, registered
under the Companies Act, operates several dairies and
processing plants across India employing thousands of
workers. The Anand plant was permanently closed in early
2014 after stoppage of budgeting and procurement of raw
materials, and production was completely halted. Instead of

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obtaining prior permission and properly retrenching
employees, all employees were transferred to distant states.
The respondent was transferred to Baj Baj, West Bengal by
order dated 25.09.2014. As the transfer was illegal and no
equivalent work was available, he did not report there.
Consequently, his services were terminated on 19.12.2014
without conducting any departmental inquiry. Though
retrenchment compensation was paid, one month’s notice pay
was not paid and prior permission of the State Government
was not obtained.

17. So far as the cross examinations of the all the
respondents are concerned, they have admitted that despite
receiving letters dated 07.10.2014 and 16.10.2014 directing
them to report for duty at the transferred place, they neither
reported for duty nor gave any written reply, and had not
raised any written objections to the transfer (though they
claim to have raised an oral objection). They have also
admitted that due to their failure to report, the company had
to make alternative arrangements and by letter dated
19.12.2014 their services were terminated and that all service
benefits, including notice pay, gratuity, leave encashment and
other dues, were calculated and deposited in their bank
accounts, and that they have not returned the said amounts.
The have also admitted that they have not made any written
application for alternative employment.

18. So as to deal with the issues arise for consideration, it
would be appropriate to briefly refer to the facts of the case in

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order to determine whether the Labour Court has properly
appreciated the same or not.

19. That all the respondents herein were appointed purely
on contractual basis somewhere in 1997. In continuation of
that, order dated 28.12.2002 came to be issued by the
petitioner for a period of three months commencing from
1.1.2003 and ending on 31.3.2003 and the said order of
appointment was duly accepted by the respondents.
Thereafter, the petitioner extended the services of the
respondents till 2003-2004 and then, their services were
regularized and they have been appointed on regular different
posts vide appointment orders dated 29.7.2004. The
appointment orders dated 29.4.2004 are placed on record and
clause No. (6) of the said appointment orders read as under:-

"(6) As an employee of the Neem Biocide Plant, you can be
posted at Anand or transferred to any other place in India
from time to time at the sole discretion of the management."

20. Due to financial constraints, the manufacturing activities
of the plant were closed, and consequently, the company
decided to shift all its workers to different places where its
other units were functioning. Accordingly, transfer orders
were issued in favour of all the respondents. However, the
respondents chose not to join at their respective transferred
places and neither responded to the transfer orders nor
furnished any explanation. Ultimately, the petitioner company
passed orders of retrenchment after paying retrenchment
compensation and all other legal dues payable to the
respondents.

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21. It is an admitted position that the respondents accepted
the amounts towards retrenchment compensation and other
legal dues, and in their oral evidence it has been admitted
that, till the date of their deposition, they had not returned the
said amounts which were deposited in their respective
accounts by the company. Thereafter, they raised an
industrial dispute contending that their services had been
terminated and that they were entitled to reinstatement with
all consequential benefits. The terms of reference to that
effect were forwarded by the Assistant Labour Commissioner,
as reflected in the impugned award.

22. However, the Labour Court travelled beyond the scope of
the terms of reference, which is wholly illegal and contrary to
the settled principles of law laid down by the Hon’ble Apex
Court. Therefore, in my opinion, the Labour Court exceeded
its jurisdiction and enlarged the scope of the reference while
deciding the same and passing the impugned orders. All these
facts have been admitted by the concerned respondents in
their affidavits in lieu of examination-in-chief and have been
further confirmed in their cross-examinations.

23. At this stage, it is appropriate to refer the decision of the
Hon'ble Apex Court in the case of Bhogpur Cooperative
Sugar Mills (supra) wherein, the Hon'ble Apex Court has
held as under:-

"D. Labour Law-Industrial Disputes Act, 1947-Ss. 10 and 25-
G-Terms of reference under S.10-Binding nature of-
Consideration of question of compliance with S.25-G, when
reference was only as to whether termination of services was

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justified-Impermissibility.

7. The Labour Court derived its jurisdiction from the terms in
reference. It ought to have exercised its jurisdiction within
the four corners thereof.

8. The principal question which was referred by the State
Government was as to whether the termination of services of
the respondent was justified. The Labour Court was,
therefore, not required to go into the question as to whether
the appellant was bound to take the services of the
respondent in all subsequent seasons or not."

24. Yet, in another decision of the Hon'ble Apex Court in the
case of Oshiar Prasad (supra), the Hon'ble Apex Court has
held as under:-

"B. Labour Law - Industrial Disputes Act, 1947 - S. 10 -
Powers of appropriate Government to make reference -
Jurisdiction of Tribunal while answering reference - Scope -
Reference pertaining to absorption/regularisation of
appellants and others whose services were terminated long
back - Validity - Held, appropriate Government is empowered
to make reference only when "industrial dispute exists" or "is
apprehended between the parties" - Further held, Tribunal
while answering reference has to confine its enquiry to
question(s) referred and has no jurisdiction to travel beyond
or/and terms of reference
- In instant case, services of appellants and those at whose
instance reference was made were terminated long back
prior to making reference - Thus, they were not in service
either of contractor or/and respondent BCCL - Consequently,
question of their absorption or regularisation did not arise
nor could have been gone into on merits since it is not
possible to direct absorption/regularisation employees not in
service - Absorption/Regularisation can be claimed and/or
granted only when contract of employment subsists- Hence,
only dispute which existed for being referred to Tribunal was
in relation to appellants' employment and its legality/validity -
Reference made to examine issue of absorption, was thus,
misconceived and was incapable of being answered in favour
of appellants.

18. One of the questions which fell for consideration by this

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Court in Delhi Cloth and General Mills Co. Ltd. v. Workmen
was that what are the powers of the appropriate Government
while making a reference and the scope and jurisdiction of
Industrial Tribunal under Section 10 of the Act.

19. Mitter, J., speaking for the Bench, held as under: (Delhi
Cloth and General Mills case, AIR p.472, paras 8-9)

“(8) ……Under Section 10(1)(d) of the Act, it is open to
the appropriate Government when it is of opinion that
any industrial dispute exists to make an order in writing
referring

'the dispute or any matter appearing to be connected
with, or relevant to the dispute…..to a Tribunal for
adjudication” Under Section. 10(4)

“10.(4) Where in an order referring an industrial
dispute to a Labour Court, Tribunal or National
Tribunal under this section or in a subsequent order,
the appropriate Government has specified the points of
dispute for adjudication, the Labour Court or the
Tribunal or the National Tribunal, as the case may be,
shall confine its adjudication to those points and
matters incidental thereto.'

(9) From the above it therefore appears that while it is
open to the appropriate Government to refer the
dispute or any matter appearing to be connected
therewith for adjudication, the Tribunal must confine its
adjudication to those points of dispute referred and
matters incidental thereto. In other words, the Tribunal
is not free to enlarge the scope of the dispute referred
to it but must confine its attention to the points
specifically mentioned and anything which is incidental
thereto. The word ‘incidental’ means according to
Webster’s New World Dictionary:

“happening or likely to happen as a result of or in
connection with something more important; being
an incident; casual; hence, secondary or minor,
but usually associated:”

“Something incidental to a dispute” must therefore
mean something happening as a result of or in
connection with the dispute or associated with the
dispute. The dispute is the fundamental thing while

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something incidental thereto is an adjunct to it.
Something incidental, therefore, cannot cut at the root
of the main thing to which it is an adjunct to it…..”

20. The same issue came up for consideration before three
Judge Bench in a case reported in Pottery Mazdoor Panchayat
v. Perfect Pottery Co. Ltd., Justice Y.V. Chandrachud, the
learned Chief Justice speaking for the Court laid down the
following proposition of law: ( (SCC pp. 764-65, paras 10-11) )

“10. Two questions were argued before the High Court:
Firstly, whether the tribunals had jurisdiction to
question the propriety or justification of the closure and
secondly, whether they had jurisdiction to go into the
question of retrenchment compensation. The High
Court has held on the first question that the jurisdiction
of the Tribunal in industrial disputes is limited to the
points specifically referred for its adjudication and to
matters incidental thereto and that the Tribunal cannot
go beyond the terms of the reference made to it. On the
second question the High Court has accepted the
respondent’s contention that the question of
retrenchment compensation has to be decided under
Section 33-C(2) of the Central Act.

11. Having heard a closely thought out argument made
by Mr. Gupta on behalf of the appellant, we are of the
opinion that the High Court is right in its view on the
first question. The very terms of the references show
that the point of dispute between the parties was not
the fact of the closure of its business by the respondent
but the propriety and justification of the respondent’s
decision to close down the business. That is why the
references were expressed to say whether the proposed
closure of the business was proper and justified. In
other words, by the references, the Tribunals were not
called upon by the Government to adjudicate upon the
question as to whether there was in fact a closure of
business or whether under the pretence of closing the
business the workers were locked out by the
management. The references [pic]being limited to the
narrow question as to whether the closure was proper
and justified, the Tribunals by the very terms of the
references, had no jurisdiction to go behind the fact of
closure and inquire into the question whether the
business was in fact closed down by the management.”

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21. The abovesaid principle of law has been consistently
reiterated in Firestone Tyre & Rubber Co. of India (P) Ltd. v.
Workmen, National Engg. Industries Ltd. v. State of
Rajasthan, Mukand Ltd. v. Mukand Staff & Officers’ Assn,
and State Bank of Bikaner & Jaipur v. Om Prakash Sharma.

22. It is thus clear that the appropriate Government is
empowered to make a reference under Section 10 of the Act
only when “Industrial dispute exists” or “is apprehended
between the parties”. Similarly, it is also clear that the
Tribunal while answering the reference has to confine its
inquiry to the question(s) referred and has no jurisdiction to
travel beyond the question(s) or/and the terms of the
reference while answering the reference. A fortiori, no
inquiry can be made on those questions, which are not
specifically referred to the Tribunal while answering the
reference.

23. Coming now to the facts of this case, it is an admitted
case that the services of the appellants and those at whose
instance the reference was made were terminated long back
prior to making of the reference. These workers were,
therefore, not in the services of either Contractor or/and
BCCL on the date of making the reference in question.
Therefore, there was no industrial dispute that “existed” or
“apprehended” in relation to appellants’ absorption in the
services of the BCCL on the date of making the reference.

24. Indeed a dispute regarding the appellants’ absorption was
capable of being referred to in reference for adjudication, had
the appellants been in the services of Contractor or/and
BCCL. But as said above, since the appellants’ services were
discontinued or/and retrenched (whether rightly or wrongly)
long back, the question of their absorption or regularization
in the services of BCCL, as claimed by them, did not arise and
nor this issue could have been gone into on its merits for the
reason that it was not legally possible to give any direction to
absorb/regularize the appellants so long as they were not in
the employment.

25. It is a settled principle of law that absorption and
regularization in the service can be claimed or/and granted
only when the contract of employment subsists and is in force
inter se employee and employer. Once it comes to an end
either by efflux of time or as per the terms of the Contract of
employment or by its termination by the employer, then in
such event, the relationship of employee and employer comes

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to an end and no longer subsists except for the limited
purpose to examine the legality and correctness of its
termination.

26. In our considered opinion, the only industrial dispute,
which existed for being referred to the Industrial Tribunal for
adjudication was in relation to termination of appellants’
employment and – whether it was legal or not? It is an
admitted fact that it was not referred to the Tribunal and,
therefore, it attained finality against the appellants.

27. In our considered opinion, therefore, the reference, even
if made to examine the issue of absorption of the appellants
in the services of BCCL, the same was misconceived."

25. In the decision of this Court in case of Tata Chemicals
Limited (supra) this Court has held as under:-

"Head Note:- Service and Labour - Constitution of India - Art.
226, 227-Industrial Disputes Act, 1947-S. 2(rr), 10(1) -
Contract Labour (Regulation and Abolition) Act, 1970-
Contract Labour (Regulation and Abolition) Rules, 1972-
R.25-46 workmen employed by respondent No. 2 Contractor,
charter of demand was raised for paying them the pay-scales
of unskilled workmen - respondent No. 2 Contractor
contended that Tribunal had no jurisdiction to entertain the
subject matter of reference - held, Deputy Labour
Commissioner has referred the dispute to the Industrial
Tribunal wherein five demands raised by the Union are
mentioned in the schedule and the said order of Reference
was not challenged by the Company or the workmen - if
schedule referred to Industrial Tribunal is carefully
examined, there is no reference in the said schedule that the
Union has demanded a particular amount on the basis of
amount paid to workmen of Company -there is only reference
with regard to payment of Rs. 12.10 daily with amount of DA
of Rs. 39.80 as revised from time to time to the skilled
workmen (pumpmen) other demands were also made by the
Union which has been referred to the Tribunal under the
Schedule there is no reference with regard to the allegation
that the contract entered into between the Company and the
Contractor is sham and bogus - further, from Schedule
referred to Tribunal, it cannot be said that there is any
reference with regard to similar type of work performed by
the workmen of the Contractor and principal employer and

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there is no reference with regard to disagreement with type
of work performed by the workmen employed by the
contractor as well as principal employer - Tribunal is having
jurisdiction to entertain the dispute referred to it by the
Deputy Labour Commissioner - Tribunal has not committed
any error Tribunal has also not considered the paying
capacity of the Contractor to pay the wages similar to the
wages paid by the Company to its workmen there is no
finding recorded by Tribunal that Contractor is having the
paying capacity to pay the wages equivalent to the wages
paid to the workmen of Company Contractor is making
payment of minimum wages to his workmen scope of
interference while exercising powers under Article 227 of the
Constitution of India is limited - however, in present case,
when the Tribunal has travelled beyond the terms of the
reference and not considered the relevant aspects of the
matter, this is a fit case where such powers are required to
be exercised Tribunal has committed an error to the aforesaid
extent by travelling beyond the terms of the reference and
not considering the paying capacity. Wait for my instruction
of the Contractor to pay the wages similar to the wages paid
to the workmen of the Company-therefore, matter remanded
back to the Tribunal for considering the issue afresh-petitions
partly allowed.

7. Though five demands were referred in the Schedule, in the
Statement of Claim, the Union raised 14 demands. The
Company as well as the Contractor submitted the written
statement and the Tribunal, after considering the oral as well
as documentary evidence produced before it, partly allowed
the Reference, whereby all the demands except demand no.3
as per the Schedule are allowed and the Contractor is
ordered to make the payment as per the said demand within
stipulated time limit from the date of Reference. The Tribunal
also ordered to pay the revision of such demands from time to
time while ensuring that the same shall not be less than the
respective benefits which are being paid to the employees of
the Company.

8. On behalf of the petitioners, mainly it has been contended
that the Tribunal has no jurisdiction to decide the dispute
because if the claim of the contractor's workmen is for grant
of same wages as paid to the workers of the Company, the
jurisdiction is with the Commissioner of Labour as per
condition no.5 of Licence Agreement. The contention of the
petitioners is that the Tribunal has gone beyond the terms of
the Reference by making an observation that the contract

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entered into between the Company and the Contractor is
sham and bogus. The third contention of the petitioners is
that the Tribunal has not considered the financial capacity of
the employer while giving direction to pay the same wages as
is being paid to the workmen of the Company. The Tribunal
ought to have considered the paying capacity of the
Contractor."

26. The aforesaid observations clearly indicate that the
jurisdiction of the Labour Court is limited to the scope of the
reference and cannot be expanded beyond the terms framed
by the appropriate Government.

27. It is evident that prior to terminating the services of the
respondents, the company had paid all statutory and retiral
dues, including retrenchment compensation, gratuity and
other admissible benefits payable to the respondents. The said
amounts were duly deposited in their respective accounts and
were accepted by them without any protest or objection.
Thereafter, the respondents raised an industrial dispute
seeking reinstatement with full back wages.

28. Therefore, in the present case, the Labour Court ought
to have decided only the issues that were specifically referred
to it. It was not open for the Labour Court to go beyond the
terms of reference and examine matters which were not part
of the dispute referred for adjudication.

29. By doing so, the Labour Court exceeded its jurisdiction
and committed errors in appreciating the facts and the law.
The impugned orders are therefore against the settled legal
position laid down by the Hon'ble Apex Court and this Court

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regarding the limited scope of powers under Section 10 of the
I.D. Act. The settled law, as laid down by Hon'ble Apex Court
and this Court clearly states that under Section 10 of the I.D.
Act, the labour Court must confine itself strictly to the terms
of the reference. Since the Labour Court ignored this
limitation, the impugned orders are contrary to law and
therefore, cannot be sustained.

30. In the facts of the present case, the Labour Court was
required to decide only the specific issues referred to it by the
appropriate Government. However, instead of confining itself
to the terms of the reference, the Labour Court examined
questions which were not part of the reference and granted
relief beyond what was sought. Thus, the Labour Court
travelled outside the scope of its jurisdiction.

31. For the foregoing reasons, the impugned orders cannot be
sustained and the present petitions deserve to be allowed.
Accordingly present petitions are allowed. The impugned
orders dated 27.12.2019 passed by the Labour Court in
Reference (L.C.A) Nos.103 of 2015, 104 of 2015, 105 of 2015,
106 of 2015 and 107 of 2015 are hereby quashed and set
aside. Rule is made absolute in each of the petition. The
condition imposed while granting interim relief qua
compliance of Section 17B of the I.D. Act vide orders dated
24.06.2020 and 03.07.2020 stands vacated forthwith. No
order as to costs.
Sd/-
(HEMANT M. PRACHCHHAK,J)
SURESH SOLANKI
Original copy of this order has been signed by the Hon'ble Judge.
Digitally signed by: SURESHKUMAR MOTIBHAI SOLANKI(HC00208), PRINCIPAL PRIVATE SECRETARY, at High Court of Gujarat on 18/02/2026 15:59:03

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