REINSTATEMENT WITH BACK WAGES UNDER INDUSTRIAL DISPUTES ACT, 1947

[Mr. M. GOVINDARAJAN]

Retrenchment

Section 25F of the Industrial Disputes Act, 1947 provides that no workman employed in any industry that has been in continuous service for not less than one year under an employer shall be retrenched by that employer until--

• the workman has been given one months notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice;
• the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days' average pay ³[for every completed year of continuous service] or any part thereof in excess of six months; and
• notice in the prescribed manner is served on the appropriate Government or such authority as may be specified by the appropriate Government by notification in the Official Gazette.

The affected workers may raise an industrial dispute in this regard.  Where the case is decided in favor of the workers, then the question arises as to whether they are eligible for the back wages from the date of retrenchment and date of joining on the judgment of the Court.  In many cases back wages were given to the workers; in some cases it has been rejected; in some cases partially allowed; all depends upon the facts and circumstances of the case.

In ‘THEIR WORKMEN THROUGH THE JOINT SECRETARY (WELFARE) , FOOD CORPORATION OF INDIA EXECUTIVE STAFF UNION VERSUS EMPLOYER IN RELATION TO THE MANAGEMENT OF THE FOOD CORPORATION OF INDIA & ANR. - 2023 (8) TMI 984 - SUPREME COURT, 21 workmen were engaged as casual workers in Food Corporation of India.  They were terminated by the corporation without giving notice to them and even not paying compensation to them.  The workers raised an industrial dispute.  The same was referred to the Tribunal.  The reference to the dispute was as to whether the action of management of Food Corporation of India, Patna, retrenching the services of 21 workers is justified and legal.  If not what relief the concerned workmen are entitled to?

The Tribunal, upon considering the pleadings and evidence, held that the retrenchment is void since they were never given notice as well as compensation.  Since the workers have not rendered services for a long term, the Tribunal restricted their rights to back wages.  The Tribunal vide their order dated 18.03.1997 held that the action of the management of Food Corporation of India retrenching the services of the workers was not justified.  The Tribunal further directed Food Corporation of India to regularize their services in Class IV posts with effect from 10.05.1990, the date of retrenchment and also directed the company to pay 75% of back wages to the workers.

Food Corporation of India, being aggrieved against the above said order filed a writ petition before the Jharkhand High Court.  The High Court gave interim stay order subject to the condition that the company should pay the last pay drawn in full.  But the company paid only Rs.507/- as the minimum eligible amount.  Against this the workers filed contempt petition.  The contempt petition was disposed on the condition that if the company failed to comply with the condition in the stay order the workers would be eligible to take steps for implementation of the award.  The company then implemented the award in full subject to the outcome of the writ petition of the High Court.  The workmen were absorbed in regular service and they were granted 75% back wages from 10.05.1990 to 18.03.1997.

However the High Court dismissed the writ petition confirming the award passed by the Tribunal on 01.11.2018.  The management filed appeal against the order of Single Judge before the Division Bench of the High Court.  The Division Bench modified the order of the Single Judge.  It quashed the award to the extent that it directed regularization of the services of the workmen.  This modification was made on the ground that such relief could not be sustained when there was no term of regularization in the reference of the industrial dispute.  But the Division Bench left untouched the direction to pay 75% of back wages.

The management and the union filed appeals against the judgment of Division Bench before the Supreme Court.  The union filed the appeal against the denial of regularization of workers.  The management filed the appeal against the direction of reinstatement and payment of 75% of back wages to the suspended workers. 

At first the Supreme Court has taken the appeal filed by the Union.  The only issue raised therein is as to the regularization in service of those workmen and the legality of the Award to the extent of granting such relief.  The Single Judge himself concluded that there should not have been an order of regularization in service by the Tribunal, he chose not to interfere therewith as the workmen, in the meanwhile, had rendered regular service for about 18 years and interference at that stage would be harsh upon them.  The Supreme Court observed that the Division Bench held that once the Court comes to the conclusion that a wrong order was passed, it would be its sovereign duty to rectify such mistake rather than perpetuate the same. The Division Bench, however, did not consider the decisive features that had weighed with the learned Judge while upholding the Award of the Tribunal, viz., the fact that the management of Food Corporation of India chose to fully implement the Award during the pendency of the writ petition and the fact that the workmen availed the benefit thereof for 18 years.

The final order of Single Judge only put the management on notice that if it failed to comply with the conditional stay order within two weeks, the said order would stand vacated and the workmen would be at liberty to seek implementation of the Award.  The management of Food Corporation of India could have paid the wages last drawn to the workmen concerned after ascertaining the same. That would have sufficed for continued subsistence of its interim protection during the pendency of the writ petition. However, the management of Food Corporation of India did not choose to adopt this course of action.   The management of Food Corporation of India voluntarily chose to implement the Award in its totality, despite the conditional interim protection afforded to it in the writ petition.  The Supreme Court did not accept the contention of the management of Food Corporation India that it was compelled to comply with the Award, under the threat of contempt.  The management merrily allowed the situation to continue for 18 long years, till the dismissal of the writ petition in November, 2018.  Therefore the Supreme Court was of the opinion that the Jharkhand High Court was perfectly justified in dismissing the writ petition on the grounds that he did, thereby upholding the Award.

Then the Supreme Court has taken the appeal filed by the management of Food Corporation of India.  The Supreme Court observed that the absorption in service was not at all required under the interim order dated 05.08.1999 and was, therefore, squarely attributable to the will and volition of the management of Food Corporation of India itself.  A party to a proceeding cannot be permitted to challenge the same but thereafter abide by it out of its own free will; garner benefit from it; get the opposite party to effectively alter its position; and then press its challenge after the passage of a considerable length of time.  The management can no longer claim an indefeasible right to continue with and canvass its challenge to the Award, merely because it made its compliance with the Award conditional long ago.  The absorption of workers in regular service, these workmen, who may have otherwise opted for employment opportunities elsewhere, altered their position and remained with the Food Corporation of India. Having placed them in that position, it is no longer open to the management of Food Corporation of India to seek to turn back the clock.  Unfortunately, these crucial aspects were lost sight of by the Division Bench, while dealing with the management’s appeal. The Supreme Court was not willing to alter the position obtaining for over two decades, by accepting the legally weighty but essentially pedantic view taken by the Division Bench, ignoring the factual position.

The Supreme Court allowed the appeal filed by the union and dismissed the appeal filed by the management of Food Corporation of India.