REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 8415 OF 2009
Asst. Engineer, Rajasthan Dev. Corp. & Anr. ……
Appellants
Vs.
Gitam Singh ……
Respondent
JUDGMENT
R.M. LODHA, J.
The short question that arises for consideration in this
appeal, by special leave, is
where the workman had worked for only eight
months as daily wager and his termination has been held to be in
contravention of Section 25-F of the Industrial Disputes Act, 1947 (for
short, ‘ID Act’), whether the direction to the employer for reinstatement
with continuity of service and 25 per cent back wages is legally
sustainable.
2. We were not disposed to undertake the detailed exercise but the
same has become necessary in view of very vehement contention of Mr. Sushil
Kumar Jain, learned counsel for the respondent (workman), that
reinstatement must follow where termination of a workman has been found to
be in breach of Section 25-F of ID Act. He heavily relied upon three
decisions of this Court in L. Robert D’Souza v. Executive Engineer,
Southern Railway and Another[1], Harjinder Singh v. Punjab State
Warehousing Corporation[2] and Devinder Singh v. Municipal Council,
Sanaur[3] .
3. On behalf of the appellant, Ms. Shobha, learned counsel,
challenged the finding of the Labour Court that the respondent had worked
for 240 days continuously in the year preceding the date of termination.
Alternatively, she submitted that the award of reinstatement with
continuity of service and 25 per cent back wages in the facts of the case
was unjustified as the respondent was only a daily wager; he worked for a
very short period from 01.03.1991 to 31.10.1991 and for last more than 20
years he is not in the service due to interim orders. Relying upon the
decisions of this Court in Haryana State Electronics Development
Corporation Ltd. v. Mamni[4], Mahboob Deepak v. Nagar Panchayat, Gajraula
and Another[5], Jagbir Singh v. Haryana State Agriculture Marketing Board
and Another[6], Senior Superintendent Telegraph (Traffic), Bhopal v.
Santosh Kumar Seal and Others[7] and In-charge Officer and Another v.
Shankar Shetty[8], she submitted that respondent was at best entitled to
some compensation for unlawful termination.
4. It is not in dispute that respondent was engaged as a daily
wager. The Labour Court, Bharatpur, in its award dated 28.06.2001 has
recorded the findings that the respondent had worked as technician (Mistri)
under the appellant for 240 days for the period from 01.03.1991 to
31.10.1991 and the termination of his service by an oral order on
31.10.1991 was violative of Section 25-F of the ID Act. We are not
inclined to disturb the findings recorded by the Labour Court; we take them
to be correct. The question, as noted above, is whether direction for
reinstatement of respondent with continuity in service along with 25 per
cent of back wages in view of the above findings is just and proper.
5. More than five decades back, this Court in Assam Oil Company
Limited, New Delhi v. Its Workmen[9] observed that the normal rule in
cases of wrongful dismissal was reinstatement but there could be cases
where it would not be expedient to follow this normal rule and to direct
reinstatement. Having regard to the facts of that case, this Court set
aside the order of reinstatement although dismissal of the employee was
found to be wrongful and awarded compensation.
6. In M/s. Hindustan Steels Ltd., Rourkela v. A.K. Roy and
Others[10], this Court noted that there have been cases where reinstatement
has not been considered as either desirable or expedient.
7. In M/s. Ruby General Insurance Co. Ltd. v. Shri P.P.
Chopra[11], this Court reiterated what was stated in Assam Oil Company
Limited9. In paragraph 6 (pgs. 655-656) of the Report, this Court said :
“6. The normal rule is that in cases of invalid orders of
dismissal industrial adjudication would direct reinstatement of
a dismissed employee. Nevertheless, there would be cases where
it would not be expedient to adopt such a course. Where, for
instance, the office of the employer was comparatively a small
one and the dismissed employee held the position of the
secretary, a position of confidence and trust, and the employer
had lost confidence in the concerned employee, reinstatement was
held to be not fair to either party……………”
8. This Court in The Management of Panitole Tea Estate v. The
Workmen[12], while dealing with the judicial discretion of the Labour Court
or the Tribunal under ID Act in directing appropriate relief on setting
aside the wrongful dismissal of a workman, stated in paragraph 5 (pgs. 746-
747) as follows:
“…. The question whether on setting aside the wrongful dismissal
of a workman he should be reinstated or directed to be paid
compensation is a matter within the judicial discretion of the
Labour Court or the Tribunal, dealing with the industrial
dispute, the general rule in the absence of any special
circumstances being of reinstatement. In exercising this
discretion, fairplay towards the employee on the one hand and
interest of the employer, including considerations of discipline
in the establishment, on the other, require to be duly
safeguarded. This is necessary in the interest both of security
of tenure of the employee and of smooth and harmonious working
of the establishment. Legitimate interests of both of them have
to be kept in view if the order is expected to promote the
desired objective of industrial peace and maximum possible
production. The past record of the employer, the nature of the
alleged conduct for which action was taken against him, the
grounds on which the order of the employer is set aside, the
nature of the duties performed by the employee concerned and the
nature of the industrial establishment are some of the broad
relevant factors which require to be taken into consideration.
The factors just stated are merely illustrative and it is not
possible to exhaustively enumerate them. Each case has to be
decided on its own facts and no hard and fast rule can be laid
down to cover generally all conceivable contingencies……”
9. In M/s. Tulsidas Paul v.The Second Labour Court, W.B. and
Others[13], this Court relied upon M/s. Hindustan Steels Ltd.10 and held as
under:
“9. In Hindustan Steels Ltd. v. Roy [(1969) 3 SCC 513] we
recently held, after considering the previous case-law, that
though the normal rule, in cases where dismissal or removal from
service is found to be unjustified, is reinstatement, Industrial
Tribunals have the discretion to award compensation in unusual
or exceptional circumstances where the tribunal considers, on
consideration of the conflicting claims of the employer on the
one hand and of the workmen on the other, reinstatement
inexpedient or not desirable. We also held that no hard and fast
rule as to which circumstances would constitute an exception to
the general rule can be laid down as the tribunal in each case
must, in a spirit of fairness and justice and in keeping with
the objectives of industrial adjudication, decide whether it
should, in the interest of justice, depart from the general
rule.”
10. In L. Robert D’Souza1, this Court in paragraph 27 (pg. 664)
held as under :
“27. ……….Therefore, assuming that he was a daily-rated worker,
once he has rendered continuous uninterrupted service for a
period of one year or more, within the meaning of Section 25-F
of the Act and his service is terminated for any reason
whatsoever and the case does not fall in any of the excepted
categories, notwithstanding the fact that Rule 2505 would be
attracted, it would have to be read subject to the provisions of
the Act. Accordingly the termination of service in this case
would constitute retrenchment and for not complying with pre-
conditions to valid retrenchment, the order of termination would
be illegal and invalid.”
11. What has been held by this Court in L. Robert
D’Souza1 is that Section 25-F of the ID Act is applicable to a daily-rated
worker. We do not think that there is any dispute on this proposition.
12. In Manager, Reserve Bank of India, Bangalore v. S. Mani and
Others[14], this Court in paragraph 54 (pg. 120) of the Report held as
under:
“54. Mr. Phadke, as noticed hereinbefore, has referred to a
large number of decisions for demonstrating that this Court had
directed reinstatement even if the workmen concerned were daily-
wagers or were employed intermittently. No proposition of law
was laid down in the aforementioned judgments. The said
judgments of this Court, moreover, do not lay down any principle
having universal application so that the Tribunals, or for that
matter the High Court, or this Court, may feel compelled to
direct reinstatement with continuity of service and back wages.
The Tribunal has some discretion in this matter. Grant of relief
must depend on the fact situation obtaining in a particular
case. The industrial adjudicator cannot be held to be bound to
grant some relief only because it will be lawful to do so.”
13. In Nagar Mahapalika (Now Municipal Corpn.) v. State of U.P. and
Others[15], this Court, while dealing with the non-compliance with the
provisions of Section 6-N (which is pari materia to Section 25-F) of U.P.
Industrial Disputes Act held that the grant of relief of reinstatement with
full back wages and continuity of service in favour of retrenched workmen
would not automatically follow or as a matter of course. Instead, this
Court modified the award of reinstatement with compensation of Rs. 30,000/-
per workman.
14. In Municipal Council, Sujanpur v. Surinder Kumar[16], this
Court after having accepted the finding that there was violation of Section
25-F of the ID Act, set aside the award of reinstatement with back wages
and directed the workman to be paid monetary compensation in the sum of
Rs. 50,000/-.
15. In Mamni4 , this Court modified the award of reinstatement
passed by the Labour Court, though the termination of the workman was in
violation of Section 25-F of the ID Act, by directing that the workman
should be compensated by payment of a sum of Rs. 25,000/-.
16. In Regional Manager, SBI v. Mahatma Mishra[17], this Court
observed that it was one thing to say that services of a workman were
terminated in violation of mandatory provisions of law but it was another
thing to say that relief of reinstatement in service with full back wages
would be granted automatically.
17. In Haryana Urban Development Authority v. Om Pal[18], this
Court in paragraphs 7 and 8 (pg. 745) of the Report held as under :
“7. Moreover, it is also now well settled that despite a wide
discretionary power conferred upon the Industrial Courts under
Section 11-A of the 1947 Act, the relief of reinstatement with
full back wages should not be granted automatically only because
it would be lawful to do so. Grant of relief would depend on the
fact situation obtaining in each case. It will depend upon
several factors, one of which would be as to whether the
recruitment was effected in terms of the statutory provisions
operating in the field, if any.
8. The respondent worked for a very short period. He only
worked, as noticed hereinbefore, in 1994-95. The Industrial
Tribunal-cum-Labour Court, therefore, in our opinion committed
an illegality, while passing an award in the year 2003,
directing the reinstatement of the respondent with full back
wages. Although we are of the opinion that the respondent was
not entitled to any relief, whatsoever, we direct the appellant
to pay him a sum of Rs. 25,000.”
18. In Uttaranchal Forest Development Corporation v. M.C.Joshi[19],
the Court was concerned with a daily wager who had worked with Uttaranchal
Forest Development Corporation from 01.08.1989 to 24.11.1991 and whose
services were held to be terminated in violation of Section 6-N of the U.P.
Industrial Disputes Act. The Labour Court had directed the reinstatement of
the workman with 50 per cent back wages from the date the industrial
dispute was raised. Setting aside the order of reinstatement and back
wages, this Court awarded compensation in a sum of Rs. 75,000/- in favour
of the workman keeping in view the nature and period of service rendered by
the workman and the fact that industrial dispute was raised after six
years.
19. In Madhya Pradesh Administration v. Tribhuban [20] , this Court
upheld the order of the Industrial Court passed in its jurisdiction under
Section 11A of the ID Act awarding compensation and set aside the judgment
of the Single Judge and the Division Bench that ordered the reinstatement
of the workman with full back wages. The Court in paragraph 12 (pg. 755) of
the Report held as under:
“12. In this case, the Industrial Court exercised its
discretionary jurisdiction under Section 11-A of the Industrial
Disputes Act. It merely directed the amount of compensation to
which the respondent was entitled had the provisions of Section
25-F been complied with should be sufficient to meet the ends of
justice. We are not suggesting that the High Court could not
interfere with the said order, but the discretionary
jurisdiction exercised by the Industrial Court, in our opinion,
should have been taken into consideration for determination of
the question as to what relief should be granted in the peculiar
facts and circumstances of this case. Each case is required to
be dealt with in the fact situation obtaining therein.”
20. In Mahboob Deepak5 , this Court stated that an order of
retrenchment passed in violation of Section 6-N of the U.P. Industrial
Disputes Act may be set aside but an order of reinstatement should not
however be automatically passed. The Court observed in paragraphs 11 and
12 (pg. 578) of the Report as follows:-
“11. The High Court, on the other hand, did not consider the
effect of non-compliance with the provisions of Section 6-N of
the U.P. Industrial Disputes Act, 1947. The appellant was
entitled to compensation, notice and notice pay.
12. It is now well settled by a catena of decisions of this
Court that in a situation of this nature instead and in place of
directing reinstatement with full back wages, the workmen should
be granted adequate monetary compensation. (See M.P. Admn. v.
Tribhuban20).”
21. In Telecom District Manager and others v. Keshab Deb[21], this
Court said that even if the provisions of Section 25-F of the I.D. Act had
not been complied with, the workman was only entitled to just
compensation.
22. In Talwara Co-operative Credit and Service Society Limited v.
Sushil Kumar[22], this Court in paragraph 8 (pg. 489) of the Report held as
under :
“8. Grant of a relief of reinstatement, it is trite, is not
automatic. Grant of back wages is also not automatic. The
Industrial Courts while exercising their power under Section 11-
A of the Industrial Disputes Act, 1947 are required to strike a
balance in a situation of this nature. For the said purpose,
certain relevant factors, as for example, nature of service, the
mode and manner of recruitment viz. whether the appointment had
been made in accordance with the statutory rules so far as a
public sector undertaking is concerned, etc., should be taken
into consideration.”
23. In Jagbir Singh6 , this Court, speaking through one of us
(R.M. Lodha, J.) while dealing with the question of consequential relief
arising from the facts quite similar to the present case, ordered
compensation of Rs. 50,000/- to be paid by the employer to the workman
instead of reinstatement. In paragraph 14 (pg.335) of the Report, this
Court held as under :
“14. It would be, thus, seen that by a catena of decisions in
recent time, this Court has clearly laid down that an order of
retrenchment passed in violation of Section 25-F although may be
set aside but an award of reinstatement should not, however, be
automatically passed. The award of reinstatement with full back
wages in a case where the workman has completed 240 days of work
in a year preceding the date of termination, particularly, daily
wagers has not been found to be proper by this Court and instead
compensation has been awarded. This Court has distinguished
between a daily wager who does not hold a post and a permanent
employee.”
24. In Uttar Pradesh State Electricity Board v. Laxmi Kant
Gupta[23], this Court stated, “…. now there is no such principle that for
an illegal termination of service the normal rule is reinstatement with
back wages, and instead the Labour Court can award compensation”.
25. In Santosh Kumar Seal7, while dealing with a case of workmen
who were engaged as daily wagers about 25 years back and had hardly worked
for two or three years, this Court speaking through one of us (R.M. Lodha,
J.) held that reinstatement with back wages could not be said to be
justified and instead monetary compensation would subserve the ends of
justice. It was held that compensation of Rs. 40,000/- to each of the
workmen would meet the ends of justice.
26. From the long line of cases indicated above, it can be said
without any fear of contradiction that this Court has not held as an
absolute proposition that in cases of wrongful dismissal, the dismissed
employee is entitled to reinstatement in all situations. It has always been
the view of this Court that there could be circumstance(s) in a case which
may make it inexpedient to order reinstatement. Therefore, the normal rule
that dismissed employee is entitled to reinstatement in cases of wrongful
dismissal has been held to be not without exception. Insofar as wrongful
termination of daily-rated workers is concerned, this Court has laid down
that consequential relief would depend on host of factors, namely, manner
and method of appointment, nature of employment and length of service.
Where the length of engagement as daily wager has not been long, award of
reinstatement should not follow and rather compensation should be directed
to be paid. A distinction has been drawn between a daily wager and an
employee holding the regular post for the purposes of consequential relief.
27. We shall now consider two decisions of this Court in Harjinder
Singh2 and Devinder Singh3 upon which heavy reliance has been placed by the
learned counsel for the respondent. In Harjinder Singh2 , this Court did
interfere with the order of the High Court which awarded compensation to
the workman by modifying the award of reinstatement passed by the Labour
Court. However, on close scrutiny of facts it transpires that that was a
case where a workman was initially employed by Punjab State Warehousing
Corporation as work-charge motor mate but after few months he was appointed
as work munshi in the regular pay-scale for three months. His service was
extended from time to time and later on by one month’s notice given by the
Managing Director of the Corporation his service was brought to end on
05.07.1988. The workman challenged the implementation of the
notice in a writ petition and by an interim order the High Court stayed the
implementation of that notice but later on the writ petition was withdrawn
with liberty to the workman to avail his remedy under the ID Act. After two
months, the Managing Director of the Corporation issued notice dated
26.11.1992 for retrenchment of the workman along with few others by giving
them one month’s pay and allowances in lieu of notice as per the
requirement of Section 25-F(a) of the ID Act. On industrial dispute being
raised, the Labour Court found that there was compliance of Section 25-F
but it was found that the termination was violative of Section 25-G of the
ID Act and, accordingly, Labour Court passed an award for reinstatement of
the workman with 50 per cent back wages. The Single Judge of that High
Court did not approve the award of reinstatement on the premise that the
initial appointment of the workman was not in consonance with the statutory
regulations and Articles 14 and 16 of the Constitution and accordingly,
substituted the award of reinstatement with 50 per cent back wages by
directing that the workman shall be paid a sum of Rs. 87,582/- by way of
compensation. It is this order of the Single Judge that was set aside by
this Court and order of the Labour Court restored. We are afraid the facts
in Harjinder Singh2 are quite distinct. That was not a case of a daily-
rated worker. It was held that Single Judge was wrong in entertaining an
unfounded plea that workman was employed in violation of Articles 14 and
16. Harjinder Singh2 turned on its own facts and is not applicable to the
facts of the present case at all.
28. In Devinder Singh3 , the workman was engaged by Municipal
Council, Sanaur on 01.08.1994 for doing the work of clerical nature. He
continued in service till 29.09.1996. His service was discontinued with
effect from 30.09.1996 in violation of Section 25-F of ID Act. On
industrial dispute being referred for adjudication, the Labour Court held
that the workman had worked for more than 240 days in a calendar year
preceding the termination of his service and his service was terminated
without complying with the provisions of Section 25-F. Accordingly, Labour
Court passed an award for reinstatement of the workman but without back
wages. Upon challenge being laid to the award of the Labour Court, the
Division Bench set aside the order of the Labour Court by holding that
Labour Court should not have ordered reinstatement of the workman because
his appointment was contrary to the Recruitment Rules and Articles 14 and
16 of the Constitution. In the appeal before this Court from the order
of the Division Bench, this Court held that the High Court had neither
found any jurisdictional infirmity in the award of the Labour Court nor it
came to the conclusion that the award was vitiated by an error of law
apparent on the face of the record and notwithstanding these the High
Court set aside the direction given by the Labour Court for reinstatement
of the workman by assuming that his initial appointment was contrary to
law. The approach of the High Court was found to be erroneous by this
Court. This Court, accordingly, set aside the order of the High Court and
restored the award of the Labour Court. In Devinder Singh3 , the Court had
not dealt with the question about the consequential relief to be granted to
the workman whose termination was held to be illegal being in violation of
Section 25-F.
29. In our view, Harjinder Singh2 and Devinder Singh3 do not lay
down the proposition that in all cases of wrongful termination,
reinstatement must follow. This Court found in those cases that judicial
discretion exercised by the Labour Court was disturbed by the High Court on
wrong assumption that the initial employment of the employee was illegal.
As noted above, with regard to the wrongful termination of a daily wager,
who had worked for a short period, this Court in long line of cases has
held that the award of reinstatement cannot be said to be proper relief and
rather award of compensation in such cases would be in consonance with the
demand of justice. Before exercising its judicial discretion, the Labour
Court has to keep in view all relevant factors, including the mode and
manner of appointment, nature of employment, length of service, the ground
on which the termination has been set aside and the delay in raising the
industrial dispute before grant of relief in an industrial dispute. 30.
We may also refer to a recent decision of this Court in Bharat Sanchar
Nigam Limited v. Man Singh[24]. That was a case where the workmen, who were
daily wagers during the year 1984-85, were terminated without following
Section 25-F. The industrial dispute was raised after five years and
although the Labour Court had awarded reinstatement of the workmen which
was not interfered by the High Court, this Court set aside the award of
reinstatement and ordered payment of compensation. In paragraphs 4 and 5
(pg.559) of the Report this Court held as under:
“4. This Court in a catena of decisions has clearly laid down
that although an order of retrenchment passed in violation of
Section 25-F of the Industrial Disputes Act may be set aside but
an award of reinstatement should not be passed. This Court has
distinguished between a daily wager who does not hold a post and
a permanent employee.
5. In view of the aforementioned legal position and the fact
that the respondent workmen were engaged as “daily wagers” and
they had merely worked for more than 240 days, in our considered
view, relief of reinstatement cannot be said to be justified and
instead, monetary compensation would meet the ends of justice.”
31. In light of the above legal position and having regard to the
facts of the present case, namely, the workman was engaged as daily wager
on 01.03.1991 and he worked hardly for eight months from 01.03.1991 to
31.10.1991, in our view, the Labour Court failed to exercise its judicial
discretion appropriately. The judicial discretion exercised by the Labour
Court suffers from serious infirmity. The Single Judge as well as the
Division Bench of the High Court also erred in not considering the above
aspect at all. The award dated 28.06.2001 directing reinstatement of the
respondent with continuity of service and 25% back wages in the facts and
circumstances of the case cannot be sustained and has to be set aside and
is set aside. In our view, compensation of Rs. 50,000/- by the appellant
to the respondent shall meet the ends of justice. We order accordingly.
Such payment shall be made to the respondent within six weeks from today
failing which the same will carry interest @ 9 per cent per annum.
32. The appeal is partly allowed to the above extent with no order
as to costs.
…………………….J.
(R.M. Lodha)
…………….…………………….J.
(Sudhansu Jyoti Mukhopadhaya)
NEW DELHI
JANUARY 31, 2013.
-----------------------
[1] (1982) 1 SCC 645
[2] (2010) 3 SCC 192
[3] (2011) 6 SCC 584
[4] (2006) 9 SCC 434
[5] (2008) 1 SCC 575
[6] (2009) 15 SCC 327
[7] (2010) 6 SCC 773
[8] (2010) 9 SCC 126
[9] AIR 1960 SC 1264
[10] (1969) 3 SCC 513
[11] (1969) 3 SCC 653
[12] (1971) 1 SCC 742
[13] (1972) 4 SCC 205
[14] (2005) 5 SCC 100
[15] (2006) 5 SCC 127
[16] (2006) 5 SCC 173
[17] (2006) 13 SCC 727
[18] (2007) 5 SCC 742
[19] (2007) 9 SCC 353
[20] (2007) 9 SCC 748
[21] (2008) 8 SCC 402
[22] (2008) 9 SCC 486
[23] (2009) 16 SCC 562
[24] (2012) 1 SCC 558
-----------------------
17
