1978 (9) TMI 194 - SC - Indian Laws

Summary

Issues Involved:
1. Validity of retrenchment.
2. Entitlement to reinstatement.
3. Criteria for awarding full back wages.

Summary:

1. Validity of Retrenchment:
The Labour Court found that the reasons stated in the notice of retrenchment, such as heavy loss, non-availability of tin plates, and power curbs, were not genuine. Instead, the real reason was the management's annoyance due to the workmen's refusal to agree to a proposed settlement. Consequently, the retrenchment was deemed illegal.

2. Entitlement to Reinstatement:
The Labour Court directed reinstatement of the retrenched workmen with full back wages from the date of retrenchment. The Supreme Court, while granting special leave, limited the appeal to the question of back wages, thereby affirming the reinstatement.

3. Criteria for Awarding Full Back Wages:
The Supreme Court emphasized that ordinarily, a workman whose service has been illegally terminated is entitled to full back wages unless the employer can establish circumstances necessitating a departure from this rule. The Court noted that the employer must bear the responsibility for the wages lost due to illegal termination. The appellant's argument of financial loss was considered, but the Court found that the company had started making profits since 1976-77. Given these circumstances, the Court modified the Labour Court's award to grant 75% of the back wages to the workmen, to be paid in two equal installments, after deducting any wages already paid and retrenchment compensation.

Conclusion:
The Supreme Court upheld the Labour Court's decision on reinstatement but modified the award of back wages to 75%, considering the financial condition of the appellant company and the principle of shared sacrifice between management and labor.