Kerala HC Verdict in Favour of HDFC Bank Staff Union Marks a Milestone for Employees’ Rights

The Kerala High Court has ruled in favour of the HDFC Bank Staff Union (HBSU) in a landmark judgment that safeguards the rights of employees to form and operate trade unions without facing barriers from employers. The court directed HDFC Bank to process the union's application to open a bank account, marking a victory for collective bargaining and organisational autonomy.

HDFC Bank Staff Union’s Legal Battle

The dispute originated when HBSU, a registered trade union representing HDFC Bank employees, attempted to open an account in its name at the Vazhakkala branch of HDFC Bank. The bank denied this request, citing concerns about trademark infringement under the Trade Marks Act, 1999. 

The union filed a complaint with the Banking Ombudsman, which was dismissed. Subsequently, the union escalated the matter to the Reserve Bank of India, which also declined to entertain the appeal. Left with no other recourse, HBSU approached the Kerala High Court through Writ Petition (C) No. 40192 of 2018.

Bank’s Stance on Trademark Infringement

Representing HDFC Bank, Adv. Saji Varghese argued that allowing the union to use the name "HDFC Bank Staff Union" would infringe upon the bank's registered trademark. The bank invoked Sections 28 and 29 of the Trade Marks Act, asserting its exclusive rights over the trademark for goods and services associated with its name.

(Highlighted text from the copy of the verdict indicates the observation made by the bench.)

Court’s Analysis and Verdict
Justice Harishankar V. Menon of the Kerala High Court dismissed the bank's arguments, stating that the union's activities do not constitute trade or commercial services. The judgment noted:

1. Non-Commercial Nature of Trade Unions:

The court clarified that HBSU, as a trade union registered under the Trade Unions Act, 1926, is not engaged in commercial or trading activities. Thus, its use of the bank’s name in its title does not breach the provisions of the Trade Marks Act.

2. Scope of Section 28, Trade Marks Act 1999:

The court explained that Section 28 provides exclusive rights to use a trademark for the specific goods or services for which it is registered. Since the union is not involved in such activities, these provisions do not apply.

(Highlighted text from the copy of the verdict indicates the observation made by the bench.)

3. Relevance of Section 29, Trade Marks Act 1999:

The provisions of Section 29, which deal with trademark infringement in the course of trade, were also deemed irrelevant. Justice Menon emphasised that the union's purpose is employee welfare and not trading, further solidifying the union’s stance.

The court directed HDFC Bank to process HBSU’s application to open a bank account, setting aside earlier decisions by the Banking Ombudsman and RBI appellate authority.

(Highlighted text from the copy of the verdict indicates the direction of the court allowing the writ petition setting aside the order of the banking ombudsman.)

Implications of the Verdict

Speaking to Kanal, Adv. V. K. Prasad, who represented the HDFC Bank Staff Union, described the verdict as a crucial step towards recognising employees' rights in the workplace. He stated, “The verdict is a stern blow to the HDFC Bank management’s reluctance to acknowledge the functioning of the trade union in their institution. This attitude stems from the belief that the employer has no commitment to its employees apart from the ‘hire and fire’ mode of contract labour. Moreover, it is a blow to their reluctance to acknowledge collective bargaining and employees’ right to organise.”

Adv. Prasad highlighted the broader implications of the judgment, particularly for industries where unions face similar challenges. “In recent times, there is a tendency to turn a blind eye to employees’ right to organise, especially in the banking and IT sectors,” he said. Citing a recent case, he added, “During the Samsung employees’ strike in Chennai, the electronics giant used the same argument that the trade union cannot use their registered trademark name. This verdict applies to all such instances and can be quoted in hearings of similar cases.”

The Kerala High Court’s decision reaffirms the fundamental rights of employees to unionise using the employer’s name for registration without undue interference. By drawing a clear distinction between commercial trademarks and trade union activities, the judgment upholds the spirit of the Trade Unions Act, 1926. This landmark ruling could serve as a precedent in similar cases, strengthening the collective voice of workers across industries.