The Bombay High Court has clarified that prospective withdrawal of a long-standing concession constitutes a change attracting the mandate of Section 9-A, and the statutory protection under the Industrial Disputes Act, 1947, is not confined to retrospective protection of sums already paid. It extends to preventing unilateral alteration of entitlements that form part of the service regime going forward.
The Court therefore held that the withdrawal of a concession that has been habitually extended to a defined class of employees alters the terms on which employees will be engaged in future. That alteration lies within the statutory mischief Section 9-A of 1947 Act, seeks to remedy.
Explaining that an employer may at any time grant a discretionary benefit, the Court cautioned that where a discretionary concession is granted repeatedly, approved by administrative authorities, published by circular and acted upon for decades, it may acquire the character of a customary concession or service condition.
Since the facts here show repeated administrative approvals and incorporation in published circulars and resolutions, the Court pointed out that pattern removes the concession from the realm of purely isolated discretion. Where the concession so crystallises, the employer cannot withdraw it without compliance with Section 9-A of the 1947 Act.
A Single Judge Bench of Justice Amit Borkar observed that the expression “change in conditions of service” is of wider amplitude. Where a category of employees, upon fulfilling defined conditions, was entitled as a matter of consistent practice to receive additional increments, the removal of that entitlement alters the service regime governing that category.
The fact that the change operates prospectively does not dilute its character as a change. The statute is concerned with the nature of the alteration, not merely with its temporal reach. By withdrawing the concession for the future, the Corporation has altered the framework within which employees may seek advancement in pay upon acquisition of qualifications, added the Bench.
The Bench pointed out that the “structure of entitlement has been modified. Employees who acquire diplomas after the effective date stand in a materially different position from those who did so earlier. That differentiation flows directly from the impugned circular. Such alteration squarely falls within the field contemplated by Item 8 of the Fourth Schedule”.
The legislative intent underlying Section 9-A is to ensure that workmen are not confronted with unilateral changes affecting established service conditions without prior notice and opportunity to respond. The requirement of notice is not limited to cases where accrued wages are withdrawn. It extends to situations where a customary benefit forming part of the service pattern is sought to be discontinued, added the Bench.
Briefly, the Petitioners had resolved to grant one additional increment to employees serving as clerks upon acquisition of a Diploma in Local-Self Government (LSGD). A similar benefit of one additional increment was extended to those employees whose pay scales did not exceed the maximum of the clerical grade, upon their acquiring the said diploma. Subsequently, the Standing Committee sanctioned the grant of two increments to Municipal employees acquiring an LGS Diploma, provided their pay scale did not exceed Rs. 660. The aforesaid policy underwent further modification in the backdrop of a general revision of pay scales of Municipal employees with retrospective effect.
Under the revised scheme, two additional increments were made admissible to Municipal employees who passed or acquired an LGS Diploma, provided that the maximum of their pay scale did not exceed the maximum prescribed for the cadre of Office Superintendent or AAII. According to the Petitioners, these decisions were matters of policy determined by the Standing Committee in exercise of its administrative authority, and neither the employees nor their Union were consulted or involved in the formulation or modification of the policy relating to grant of additional increments.
Later, the Petitioner–Corporation placed a proposal before the Standing Committee seeking discontinuation of the additional increment. Since the Standing Committee stood dissolved at the relevant time, the proposal was placed before the Administrator, who approved it, resulting in the cancellation of the earlier circulars. Subsequently, a resolution was passed clarifying that additional increments for LSGD and LGS would be governed by specified conditions.
When the Respondent instituted complaint alleging commission of unfair labour practice. It was contended that the Corporation could not unilaterally alter service conditions relating to qualifications and monetary benefits without issuing a notice of change as mandated under Section 9A of the Industrial Disputes Act. The Petitioners opposed the complaint, but, the Industrial Court granted interim relief, stayed the operation of the circular dated 05th September, 2025 pending final adjudication of the complaint, and directed the Petitioner–Corporation to continue the earlier practice of granting one or two additional increments.
Appearances:
Senior Advocate N.V. Bandiwadekar, along with Advocates Santosh Parad and Santosh Parad, for the Petitioners
Advocates Prakash Devdas, Vidula Patil, Satyanarayan Hegde, and V. Khemka, for the Respondents
