Read Time: 11 minutes

Synopsis

The Supreme Court recently observed that proper impleadment of parties in any proceedings is sine qua non in any matter coming before the court since any order or decree or award, in case proper parties are not impleaded, becomes inexecutable.

A bench of Justices J K Maheshwari and Rajesh Bindal emphasised that a corporate has a separate legal entity as compared to an individual or an officer of the company and there can be privity of contract between the corporate and any other individual and that contract or communication may have been signed by any officer on its behalf as an authorised signatory but it does not mean that the officer signing the communication or the agreement or the executive head of the company becomes individually liable for any claim against the company except the cases where any specific claim is made in that regard.

The court allowed an appeal filed by Tarun Chugh, CEO and Managing Director, Bajaj Allianz Life Insurance Company Ltd against the Orissa High Court's March 1, 2021 order which upheld an ex parte award by Central Government Industrial Tribunal, Bhubaneswar in an Industrial Dispute case.

As per facts of the matter, respondent no 1, Saroj Kumar Panda was appointed as Branch Accountant on May 09, 2006. Thereafter, he was promoted as Senior Divisional Accountant in Grade L(IA) on April 01, 2009. He was redesignated as Business Support Officer (Managerial Post) w.e.f. August 01, 2014. Further, he was transferred from Finance Department to Sales Administration w.e.f. January 01, 2015 and again from Agency Sales Administration to Agency Sales w.e.f. May 15, 2017. 

It was claimed that on account of Departmental restructuring resulting in changes in duties and responsibilities of different officers, the Respondent no 1 became surplus and there being no alternative job available for his adjustment, his services were dispensed with, as per the terms of appointment. 

The respondent no 1 challenged his termination before the Regional Labour Commissioner (Central), which led to conciliation proceedings. However, no settlement could be arrived at. The respondent no 1 was issued a Certificate on October 25, 2017 to approach the Tribunal directly.

The respondent no 1 filed a claim petition before the Tribunal. Three officers of the company were impleaded and not the company, which was the employer of the respondent no 1. 

The Tribunal mentioned that in spite of notice, neither the management company nor the officers who were impleaded as party appeared. Hence, they were proceeded against ex parte.

"However, the fact remains that the management was not a party before the Tribunal. Finally, while granting the relief also it was directed that the first party management-Bajaj Allianz Life Insurance Co Ltd is directed to reinstate the applicant workman whereas the first party impleaded before the Tribunal was not Bajaj Allianz Life Insurance Co Ltd but Tarun Chugh, CEO and Managing Director of the company," the bench said.

On this, the bench said, "It is to observe that proper impleadment of parties in any proceedings is sine qua non in any matter coming before the court. However, what is noticed is that it has become a casualty in the process. Due care is not taken at the time of initiation of any proceedings before any forum to ensure that proper parties are impleaded."

Before the High Court, while challenging the Award of the Tribunal, the plea taken was that the then Human Resource Manager and the Legal Manager were dealing with the matter and had engaged a counsel to represent the company before the Tribunal. 

However, the Legal Manager had left the management company on September 26, 2018, while the Human Resource Manager had left the management of the company on May 24, 2019, i.e., during the pendency of the matter before the Tribunal. The counsel engaged by the management company did not take proper care of matter, hence, was removed from the panel of the advocates conducting cases on behalf of the company.

However, the High Court did not accept this plea and rejected the writ petition.

On the facts at hand and the material available on record, the bench, however, said, "We find that there was a technical defect in the claim petition filed by the respondent no 1 as the management who was his employer was not even impleaded as party before the Tribunal, still a direction was issued to the management to reinstate him."

The court also noted that the designation and job profile of the respondent no 1 and even the material placed on record by the respondent no 1 were required to be considered by the Tribunal to come to the conclusion whether he was a workman or not. 

It is only then jurisdiction is vested in the Tribunal to deal with the subject, the court added.

"The reason assigned by the appellant explaining the non-appearance of the counsel before the Tribunal seems plausible and acceptable. As the two officers, who were dealing with the matter and engaged the then counsel, had also left the organisation," the bench said.

The court thus set aside the orders of the High Court and the Tribunal. It remitted the matter back to the Tribunal for fresh consideration on merits after proper parties are impleaded, giving due opportunity to both the parties.

Case Title: Tarun Chugh, CEO and Managing Director, Bajaj Allianz Life Insurance Company Ltd Vs Saroj Kumar Panda