High Court of Bombay Determines Territorial Jurisdiction of Labour Courts Under MRTU Act for Employees Outside Maharashtra. The Court considers whether the principle that situs of employee determines jurisdiction (GlaxoSmithKline) is overruled by subsequent Supreme Court rulings.

Determination of territorial jurisdiction of Labour/Industrial Courts in Maharashtra to entertain complaints of unfair labour practices under the MRTU Act when employees are posted and transferred/terminated outside Maharashtra.

The employees/unions seek to have their complaints of unfair labour practices heard by Labour/Industrial Courts in Maharashtra, asserting that a substantial part of the cause of action arose there because the employer's head office and decision-making authority are located in Maharashtra.

Employees alleged unfair labour practices by their employers (such as transfers and terminations) and filed complaints before Labour/Industrial Courts in Maharashtra; the employers objected to territorial jurisdiction, leading to the present litigation to settle the jurisdictional question.

The Division Bench in GlaxoSmithKline Pharmaceuticals Ltd. v. Abhay Raj Jain and Ors. (2008 SCC OnLine Bom 756) had held that the situs of the employee is the sole governing factor for territorial jurisdiction under the MRTU Act. This decision was subsequently called into question by the employees based on later Supreme Court decisions.

Whether the Labour/Industrial Courts in Maharashtra have territorial jurisdiction to entertain complaints of unfair labour practices under the MRTU Act when the employees are posted outside Maharashtra but the employer's head office and decision-making authority are within Maharashtra. Whether the Division Bench decision in GlaxoSmithKline stands impliedly or expressly overruled by the Supreme Court decisions in Nandram and Rakesh Kumar Verma.

Employees/Unions: Employment was controlled from the employer's head office in Maharashtra; decisions on transfer/termination were made there and letters issued from there, so a substantial part of the cause of action arose in Maharashtra, giving Labour/Industrial Courts territorial jurisdiction. The Division Bench in GlaxoSmithKline is overruled by Nandram and Rakesh Kumar Verma. Employers: The cause of action arises exclusively at the employee's situs where the effect of transfer/termination is felt; since the MRTU Act applies only in Maharashtra, it has no extra-territorial application. GlaxoSmithKline remains good law; Nandram is distinguishable and did not refer to GlaxoSmithKline, so there is no overruling.

These matters concern the determination of territorial jurisdiction of Labour/Industrial Courts in Maharashtra to entertain complaints of unfair labour practices alleged to be perpetrated by employers who have their registered/ head / administrative offices within the State of Maharashtra upon the employees posted at and transferred to place/s outside the State of Maharashtra in the context of the provisions of the Maharashtra Recognition of Trade Unions & Prevention of Unfair Labour Practices Act, 1971 [“MRTU Act”]. The employees/Unions contend that their employment was controlled from their registered/head/administrative offices within the State of Maharashtra [mainly Mumbai], where decisions regarding their transfer and/or termination, which constitute unfair labour practices, were made. Even their appointment, transfer, or termination letters were issued/dispatched from the offices within the State of Maharashtra. Therefore, a substantial part of the cause of action arose in Maharashtra, and the Labour/Industrial Courts in Maharashtra had the territorial jurisdiction to entertain the complaints. The employees/Unions contend that the contrary view of the Division Bench of this Court in GlaxoSmithKline Pharmaceuticals Ltd. Vs. Abhay Raj Jain and Ors., that the situs of the employee is the sole governing factor to determine territorial jurisdiction in such matters under the MRTU Act, stands expressly, or in any event impliedly overruled by at least two subsequent decisions of the Hon’ble Supreme Court, in the cases of Nandram Vs. Garware Polyester Limited, and Rakesh Kumar Verma Vs. HDFC Bank Ltd. The employers maintain that the cause of action in such matters arises exclusively at the employee's situs because the effect of the transfer or termination befalls the employee there. Therefore, if the place where the employee was posted and the place to which he/she was transferred, or received the termination letter, are both outside Maharashtra, no part of the cause of action arises in Maharashtra, thereby excluding any territorial jurisdiction of the Labour/industrial Courts within Maharashtra. The employers maintain that the Division Bench’s view in GlaxoSmithKline, emphasizing the situs of the employee, continues to represent the correct legal position, and the Hon’ble Supreme Court’s decision in Nandram was distinguishable on facts. They also contended that since GlaxoSmithKline was not specifically referred to in Nandram, there was no question of any express or implied overruling.

Appeal No.585 of 2009 was admitted, and a Rule was issued in the connected writ petitions. By administrative order, all writ petitions were directed to be placed before the Division Bench hearing the appeal. With the agreement of learned counsel for all parties, the matters were taken up for final hearing together.

• Maharashtra Recognition of Trade Unions & Prevention of Unfair Labour Practices Act, 1971: