Municipal Corporation Of Greater Mumbai And Anr vs. The Municipal Union

Held

The High Court held that the Industrial Court's order was untenable and deserved to be quashed and set aside. The Court found no breach of the 2011 settlement that would invite action under Item 9 of Schedule IV of the MRTU & PULP Act. The group medical insurance scheme was inextricably linked to a contract with an insurance company, and its operation was impossible without such a contract. The reasons for non-renewal of the contract were not within the Industrial Court's purview. The Court noted that the Petitioner-Corporation had proposed a new arrangement with ad-hoc benefits pending finalization of a fresh group medical insurance scheme, based on a joint meeting with recognized unions. The Court reasoned that the Industrial Court could not have directed the implementation of the original scheme without an insurer. Instead, it would have been more prudent to clarify the ad-hoc benefits. The Court decided to quash the impugned order and substitute it with a direction to the Industrial Court to expeditiously dispose of the original complaint. In the interim, the Municipal Corporation was directed to extend the ad-hoc benefits of reimbursement up to Rs. 2 lakhs to its employees pending the hearing and final disposal of the complaint or the finalization of a group insurance contract, whichever is earlier.

Facts

The Municipal Corporation of Greater Mumbai (MCGM) challenged an interim order of the Industrial Court. The Respondent-Union filed a complaint of unfair labour practice concerning medical benefits for employees. MCGM had a medical support scheme, revised over time, culminating in a group insurance scheme with a Rs. 5 lakh cover introduced in 2015. This scheme involved an agreement with an insurance company. Due to escalating claims and disagreements on premium for the third year (August 1, 2017 - July 31, 2018), MCGM blacklisted the insurer. Subsequent tenders failed. A joint meeting decided to involve private insurers and an insurance broker, and to offer an ad-hoc compensation limit of Rs. 2 lakhs by way of reimbursement pending finalization of a new group insurance contract, effective from August 1, 2017. The Respondent-Union challenged this ad-hoc circular before the Industrial Court, alleging withdrawal of benefits.

Key Issues

1. Whether the Industrial Court erred in passing an interim order staying the circular dated September 18, 2019, and directing the Petitioner-Corporation to continue granting benefits based on earlier circulars, under Item 9 of Schedule IV of the MRTU & PULP Act, 1971, read with Section 9(a) of the Industrial Disputes Act, 1947? Petitioner's Arguments: The Petitioner contended that the Industrial Court's order lacked application of mind. They argued that the original settlement of 2011 was for constituting a committee to examine medical assistance, not a direct award of benefits. The subsequent group insurance scheme was premised on a contract with an insurer, which could not be operated if the contract was not renewed. The reasons for non-renewal were not subject to the Industrial Court's scrutiny. The Petitioner also argued that the ad-hoc benefits were intended to be extended until a new scheme was finalized, and any lack of clarity should have led to clarification, not an order to implement the original scheme without an insurer. Respondent's Arguments: The Respondent-Union argued that withdrawal of any benefit, especially a customary concession or privilege, constituted a change in service conditions, attracting Section 9(a) of the Industrial Disputes Act, 1947, and Item 9 of Schedule IV of the MRTU & PULP Act. They submitted that the interim order of the Industrial Court, staying the circular and directing continuation of benefits under earlier circulars, was justified under Section 30(2) of the MRTU & PULP Act.