2009 (7) TMI 1145 - SC - Indian Laws

Whether the High Court, in a case such as this where termination of appellant was in contravention of Section 25F, was justified in upsetting the award of the Labour Court whereby the first respondent was directed to reinstate the appellant with continuity of service and full back wages? Held that - The view of the High Court that the Labour Court erred in granting reinstatement and back wages in the facts and circumstances of the present case cannot be said to suffer from any legal flaw. However, in our view, the High Court erred in not awarding compensation to the appellant while upsetting the award of reinstatement and back wages. As a matter of fact, in all the judgments of this Court referred to and relied upon by the High Court while upsetting the award of reinstatement and back wages, this Court has awarded compensation. In a case such as this where the total length of service rendered by the appellant was short and intermittent from September 1, 1995 to July 18, 1996 and that he was engaged as a daily wager, in our considered view, a compensation of Rs. 50,000/- to the Appellant by Respondent No. 1 shall meet the ends of justice. Appeal pertly allowed.

Summary

Issues Involved:
1. Legality of retrenchment under Section 25F of the Industrial Disputes Act, 1947.
2. Entitlement to reinstatement with continuity of service and full back wages.
3. Appropriateness of awarding compensation instead of reinstatement.

Detailed Analysis:

1. Legality of Retrenchment under Section 25F of the Industrial Disputes Act, 1947:

The appellant, employed as a daily wager by the Haryana State Agriculture Marketing Board from September 1, 1995, to July 18, 1996, claimed his services were retrenched illegally in violation of Section 25F of the Industrial Disputes Act, 1947. The Industrial Tribunal-cum-Labour Court, Panipat, found that the appellant had worked for more than 240 days in the year preceding his termination and that the Respondent No. 1 had violated Section 25F by not providing notice, pay in lieu of notice, and retrenchment compensation. Consequently, the Labour Court awarded reinstatement with continuity of service and full back wages from the date of the demand notice, i.e., January 27, 1997.

2. Entitlement to Reinstatement with Continuity of Service and Full Back Wages:

The High Court for Punjab and Haryana set aside the Labour Court's award, holding that even if the appellant had completed 240 days of service, he was neither entitled to reinstatement nor back wages. The High Court's decision was challenged, raising the question of whether it was justified in upsetting the Labour Court's award.

3. Appropriateness of Awarding Compensation Instead of Reinstatement:

The Supreme Court noted a shift in legal precedent where reinstatement with full back wages is not automatic even if termination is found to be illegal. Recent judgments emphasize that compensation may be more appropriate, considering various factors such as the nature of employment, length of service, and the manner of appointment.

In *U.P. State Brassware Corpn. Ltd. v. Uday Narain Pandey* (2006), the Court highlighted that justice should not be mechanical and that compensation instead of reinstatement may meet the ends of justice. Similarly, in *Uttaranchal Forest Development Corpn. v. M.C. Joshi* (2007), the Court granted compensation despite the violation of Section 6-N of the U.P. Industrial Disputes Act, equivalent to Section 25F of the Act, 1947.

In *State of M.P. & Ors. v. Lalit Kumar Verma* (2007) and *M.P. Administration v. Tribhuwan* (2007), the Court substituted reinstatement with compensation, considering the discretionary jurisdiction of the Industrial Court and the specific facts of each case. The Court reiterated this approach in *Sita Ram v. Moti Lal Nehru Farmers Training Institute* (2008), where it awarded compensation instead of reinstatement due to the nature and period of employment.

In *Ghaziabad Development Authority & Anr. v. Ashok Kumar & Anr.* (2008), the Court emphasized that public interest and the statutory requirement for sanctioned posts should be considered before ordering reinstatement. Compensation was deemed more appropriate.

In *Mahboob Deepak v. Nagar Panchayat, Gajraula* (2008), the Court outlined factors such as compliance with statutory rules, the period of work, and the existence of vacancies when determining the appropriateness of reinstatement versus compensation.

Conclusion:

The Supreme Court concluded that the High Court was correct in finding that the Labour Court erred in granting reinstatement and back wages but erred in not awarding compensation. Given the appellant's short and intermittent service as a daily wager, a compensation of Rs. 50,000/- was deemed just. The payment was ordered to be made within six weeks, failing which it would carry interest at 9% per annum.

Final Order:

The appeal was partly allowed, modifying the High Court's order to include compensation of Rs. 50,000/- to the appellant, with no order as to costs.