Case Briefs
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General Manager, Electrical Rengali Hydro Electric Project, Orissa and Others V/s Giridhari Sahu and Ors.


Author: Hansie Singh Nagpal, 4th year student at VIPS affiliated to Indraprastha University, Delhi.

Citation: (2019) 10 SCC 695

Date of Decision: 12th September, 2019

Bench: Sanjay Kishan Kaul and K.M. Joseph 

Link: View

Issue in question:

  • What is the scope of Writ jurisdiction of High court and Supreme court under Article 32 and Article 226 respectively?
  • Whether the findings of the labour court indicated manifest error so as to make it amenable under the writ power of the Supreme court?

Background of the case:

  • The employees of the Appellant Company Rengali Hydro Project who had completed 5 years of service were to be regularized; the wages and other allowances were to be revised.
  • They alleged that, in the meantime, the corporation practiced deception and took their signature on blank pieces of paper on the premise that their service will be regularized. However, they turned out to be an agreement for VSS (Voluntary separation scheme).
  • While a matter with respect to regularization was decided by Orissa High court in 1992, the worker’s union filed an application against application of on account of fraud/coercion under section 33 of the Industrial disputes Act, 1955 and obtained an award in their favour with court quashing the scheme on grounds of illegality under section 33 of the Industrial disputes Act, 1955. The labour court also directed their reinstatement with 70% of back wages.
  • A writ petition was filed in High court by the Appellant’s against the award which was dismissed on ground on pendency of proceedings in Labour court. The present judgment was pronounced in the backdrop of writ petition filed in the Supreme court.

Judgment of the Court:

  • The court reiterated the principles laid out in previous judgments based on which the validity of a certiorari writ was to be determined: –
  • Excess jurisdiction exercised by the court;
  • Lack of jurisdiction in the court;
  • Illegal exercise of their jurisdiction, for ex: – utter disregard for principles of natural justice.
  • The court held that, a court exercising supervisory jurisdiction shall not interfere with the findings of the court both in fact and in law unless an apparent error appears on the face of the record. The court in the case herein because of complete disregard to the evidence put forward by the Appellants which resulted in manifest injustice.
  • The crux of Union Applicant’s Argument in their application was that they were defrauded into signing the blank papers. They were led to believe that this was on account of regularization of their services which they alleged qualified under fraud as defined in section 17 of the Contract Act, 1872. The court held that out of 271 employees of different grades, only 90 who belonged to union petitioners had declined from availing the benefits of the scheme. It can be concluded thereby, that the scheme was sufficiently attractive among the employees.
  • The scheme was to be applied only on those members who had completed five years of their service from 1989. The first applicant witness himself fell short of fulfilling such requirement and therefore his plea of his being forced to provide signatures on account of coercion or undue influence by the management, stands on weak legs. Of the 90 applicants pleading as petitioners, only one applicant sought to withdraw the application after allegedly being forced to accept it. On top of that, the application of acceptance of the scheme which was given one day before the letter of withdrawal does not even contain the faintest indication of fraud/coercion.
  • The union and the management held various meetings with respect to the nature of the scheme and the payments thereunder as is evidenced by the minutes of the meeting. This indicated tacit approval of the scheme by the petitioners. It is also to be noted that, the petitioners filed an application under section 33-A of the Industrial disputes Act, 1955 after the date of receiving their ex-gratia payments under the VSS scheme.
  • The applicants made legally inconsistent statements at different times of proceedings saying that the signatures were taken ‘forcibly’ and ‘fraudulently’. Similar statements were made by other three witnesses. There was no undue influence or/and misrepresentation on the applicants as they alleged in the complaint under section 33-A.  Section 33 applies, where the conditions of service are altered at the behest of the employer during pendency of any proceeding before Labour court, industrial Tribunal or Conciliation officer. They knew the scheme too well through their Union leader’s correspondence with the management. There was no question of fraud perpetrated. This prevarication had been overlooked by the labour court resulting in a palpably erroneous decision.
  • The contention of the Applicants being unaware of the VSS for the reason of its non-publication/ alien language/ non-circulation was negative. On the contrary, it was held that a meeting between the union and the management took place where the agenda of the meeting was centered around the conditions with respect to VSS.
  • The court keeping in line with the corporation shelling out large sums of taxpayers’ money in pursuance of trimming its workforce upheld the validity of Voluntary Separation scheme.

Case Analysis: 

  • Worker’s interest can be equally valued by the employer. No demand from the worker’s side with respect to improvement in conditions, does not entail the view that any scheme proposed by the employer will necessarily have anti-employee consequences. The court made an observation in equity, stating that the validity of a scheme must not be determined by its origin.
  • The difference between fraud and misrepresentation is elucidated in the judgment. In fraud, there is an intention to deceive the party in contract. The party committing fraud knows that the suggestion made by him is in fact not true but still makes it as if it is true. In misrepresentation, the maker of the suggestion himself believes it to be true and renders it as such. However, the statement which he believed to be true is not so. Where silence is adopted by the defrauding party, whether fraud is said to be committed is judged from the standpoint of the opposite party. If the opposite party is affected by it in effect, it qualifies for fraud, otherwise not. Fraudulent contracts involve active concealment.

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