Full Judgment Text
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.4334 OF 2009
(Arising out of SLP© No. 987/2009)
Jagbir Singh …Appellant
Versus
Haryana State Agriculture Marketing Board
& Anr. …Respondents
JUDGEMENT
R.M. Lodha, J.
Leave granted.
2. The appellant was engaged as a daily wager by the
Respondent No. 1, Haryana State Agriculture Marketing Board
on September 1, 1995. He worked with the Respondent No. 1
upto July 18, 1996. Thereafter, his services came to an end.
During his employment, the appellant was paid consolidated
wages @ Rs. 1,498/- per month. The appellant raised the
industrial dispute contending that his services were retrenched
illegally in violation of Section 25F of Industrial Disputes Act,
1947 (for short, ‘the Act, 1947’). He claimed reinstatement with
continuity of service and full back wages.
3. The Presiding Officer, Industrial Tribunal-cum-Labour
Court, Panipat, after recording evidence and hearing the parties
held that the appellant had worked for more than 240 days in
the year preceding the date of termination and that the
Respondent No. 1 violated the provisions of Section 25F of the
Act 1947 by not giving him notice, pay in lieu of notice and
retrenchment compensation before his termination. The Labour
Court, accordingly, vide its award dated September 16, 2005
declared that the appellant was entitled to reinstatement with
continuity of service and full back wages from the date of
demand notice, i.e., January 27, 1997.
4. The present Respondent Nos. 1 and 2 challenged the
award before the High Court for Punjab and Haryana. The High
Court held that even if the appellant had completed 240 days of
service in a calendar year, he was neither entitled to be
reinstated nor could be granted back wages. The High Court
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set aside the award holding that it was not sustainable in law. It
is this order of the High Court that has been challenged by the
appellant in this appeal by special leave.
5. The question that falls for our consideration is 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.
6. The learned counsel for the appellant strenuously urged
that once the termination of service of the appellant was held to
be in violation of Section 25F of the Act 1947, the Labour Court
rightly ordered reinstatement with continuity of service and full
back wages and the High Court was not justified in interfering
with the just award passed by the Labour Court. On the other
hand, the learned counsel for the respondents supported the
order of the High Court.
7. It is true that earlier view of this Court articulated in many
decisions reflected the legal position that if the termination of an
employee was found to be illegal, the relief of reinstatement
with full back wages would ordinarily follow. However, in recent
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past, there has been a shift in the legal position and in long line
of cases, this Court has consistently taken the view that relief
by way of reinstatement with back wages is not automatic and
may be wholly inappropriate in a given fact situation even
though the termination of an employee is in contravention to the
prescribed procedure. Compensation instead of reinstatement
has been held to meet the ends of justice.
8. In U.P. State Brassware Corpn. Ltd. v. Uday Narain
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Pandey , the question for consideration before this Court was
whether direction to pay back wages consequent upon a
declaration that a workman has been retrenched in violation of
the provisions of the Section 6-N of the U.P. Industrial Disputes
Act, 1947 (equivalent to Section 25F of ‘the Act, 1947’) as a
rule was proper exercise of discretion. This Court considered a
large number of cases and observed thus :
“ 41. The Industrial Courts while adjudicating on disputes
between the management and the workmen, therefore, must
take such decisions which would be in consonance with the
purpose the law seeks to achieve. When justice is the
buzzword in the matter of adjudication under the Industrial
Disputes Act, it would be wholly improper on the part of the
superior courts to make them apply the cold letter of the
statutes to act mechanically. Rendition of justice would bring
within its purview giving a person what is due to him and not
what can be given to him in law.
42. A person is not entitled to get something only because it
would be lawful to do so. If that principle is applied, the
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(2006) 1 SCC 479
4
functions of an Industrial Court shall lose much of their
significance.
43. The changes brought about by the subsequent decisions
of this Court, probably having regard to the changes in the
policy decisions of the Government in the wake of prevailing
market economy, globalisation, privatisation and
outsourcing, is evident.
44. ………………………………………………………….
45. The Court, therefore, emphasised that while granting
relief, application of mind on the part of the Industrial Court is
imperative. Payment of full back wages, therefore, cannot be
the natural consequence.”
9. This Court in the case of Uttaranchal Forest Development
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Corpn. V. M.C. Joshi held that relief of reinstatement with full
back wages were not being granted automatically only because
it would be lawful to do so and several factors have to be
considered, few of them being as to whether appointment of the
workman had been made in terms of statute/rules and the delay
in raising the industrial dispute. This Court granted
compensation instead of reinstatement although there was
violation of Section 6-N of the U.P. Industrial Disputes Act,
1947 (equivalent to Section 25F) of the Act, 1947. This is what
this Court said :
“9. Although according to the learned counsel
appearing on behalf of the appellant the Labour
Court and the High Court committed an error in
arriving at a finding that in terminating the services
of the respondent, the provisions of Section 6-N of
the U.P. Industrial Disputes Act were contravened,
we will proceed on the basis that the said finding is
correct. The question, however, would be as to
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(2007) 9 SCC 353
5
whether in a situation of this nature, relief of
reinstatement in services should have been granted.
It is now well settled by reason of a catena of
decisions of this Court that the relief of
reinstatement with full back wages would not be
granted automatically only because it would be
lawful to do so. For the said purpose, several factors
are required to be taken into consideration, one of
them being as to whether such an appointment had
been made in terms of the statutory rules. Delay in
raising an industrial dispute is also a relevant fact.”
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10. In the case of State of M.P. & Ors. v. Lalit Kumar Verma ,
this Court substituted the award of reinstatement by
compensation.
11. In yet another decision in the case of M.P. Administration
4
v. Tribhuwan , this Court reversed the High Court’s order
directing reinstatement with full back wages and instead
awarded compensation. It was opined :
“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.
13. We, therefore, are of the opinion that keeping in view the
peculiar facts and circumstances of this case and particularly
3
(2007) 1 SCC 575
4
(2207) 9 SCC 748
6
in view of the fact that the High Court had directed
reinstatement with full back wages, we are of the opinion
that interest of justice would be subserved if the appellant
herein be directed to pay a sum of Rs. 75,000 by way of
compensation to the respondent. This appeal is allowed to
the aforementioned extent.”
12. In the case of Sita Ram v. Moti Lal Nehru Farmers
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Training Institute , this Court considered the question as to
whether the Labour Court was justified in awarding
reinstatement of the appellants therein:
“ 21. The question, which, however, falls for our consideration
is as to whether the Labour Court was justified in awarding
reinstatement of the appellants in service.
22. Keeping in view the period during which the services
were rendered by the respondent ( sic appellants); the fact
that the respondent had stopped its operation of bee
farming, and the services of the appellants were terminated
in December 1996, we are of the opinion that it is not a fit
case where the appellants could have been directed to be
reinstated in service.
23. Indisputably, the Industrial Court, exercises a
discretionary jurisdiction, but such discretion is required to
be exercised judiciously. Relevant factors therefor were
required to be taken into consideration; the nature of
appointment, the period of appointment, the availability of
the job, etc. should weigh with the court for determination of
such an issue.
24. This Court in a large number of decisions opined that
payment of adequate amount of compensation in place of a
direction to be reinstated in service in cases of this nature
would subserve the ends of justice. (See Jaipur
Development Authority v. Ramsahai [(2006) 11 SCC 684],
M.P. Admn. v. Tribhuban [(2007) 9 SCC 748] and
Uttaranchal Forest Development Corpn. v. M.C. Joshi
[(2007) 9 SCC 353] )
25. Having regard to the facts and circumstances of this
case, we are of the opinion that payment of a sum of Rs.
1,00,000 to each of the appellants, would meet the ends of
justice. This appeal is allowed to the aforementioned extent.
In the facts and circumstances of this case, there shall be no
order as to costs.”
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(2008) 5 SCC 75
7
13. In Ghaziabad Development Authority & Anr. v. Ashok
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Kumar & Anr. , this Court again considered the question
whether the Labour Court was justified in awarding the relief of
reinstatement with full back wages in favour of the workman
and held :
“ 18. The first respondent was admittedly appointed on a
daily wage of Rs. 17 per day. He worked for a bit more than
two years. It has not been disputed before us that sanction
of the State of U.P. was necessary for creation of posts. The
contention of the appellant before the Labour Court that the
post was not sanctioned after 31-3-1990 by the State was
not denied or disputed. If there did not exist any post, in our
opinion, the Labour Court should not have directed
reinstatement of the first respondent in service.
19. A statutory authority is obligated to make recruitments
only upon compliance with the equality clause contained in
Articles 14 and 16 of the Constitution of India. Any
appointment in violation of the said constitutional scheme as
also the statutory recruitment rules, if any, would be void.
These facts were required to be kept in mind by the Labour
Court before passing an award of reinstatement.
20. Furthermore, public interest would not be subserved if
after such a long lapse of time, the first respondent is
directed to be reinstated in service.
21. We are, therefore, of the opinion that the appellant
should be directed to pay compensation to the first
respondent in stead and in place of the relief of
reinstatement in service.
22. Keeping in view the fact that the respondent worked for
about six years as also the amount of daily wages which he
had been getting, we are of the opinion that the interest of
justice would be subserved if the appellant is directed to pay
a sum of Rs 50,000 to the first respondent. The said sum
should be paid to the respondent within eight weeks from
date, failing which the same shall carry interest at the rate of
12% per annum. The appeal is allowed to the aforesaid
6
(2008) 4 SCC 261
8
extent. However, in the facts and circumstances of this case,
there shall be no order as to costs.”
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14. In Mahboob Deepak v. Nagar Panchayat, Gajraula , it
was observed :
“ 6. Such termination of service, having regard to the fact that
he had completed 240 days of work during a period of 12
months preceding the said date, required compliance with
the provisions of Section 6-N of the U.P. Industrial Disputes
Act. An order of retrenchment passed in violation of the said
provision although can be set aside but as has been noticed
by this Court in a large number of decisions, an award of
reinstatement should not, however, be automatically passed.
7. The factors which are relevant for determining the same,
inter alia, are:
( i ) whether in making the appointment, the statutory rules, if
any, had been complied with;
( ii ) the period he had worked;
( iii ) whether there existed any vacancy; and
( iv ) whether he obtained some other employment on the
date of termination or passing of the award.
8. The respondent is a local authority. The terms and
conditions of employment of the employees are governed by
a statute and statutory rules. No appointment can be made
by a local authority without following the provisions of the
recruitment rules. Any appointment made in violation of the
said rules as also the constitutional scheme of equality as
contained in Articles 14 and 16 of the Constitution of India
would be a nullity.
9. Due to some exigency of work, although recruitment on
daily wages or on an ad hoc basis was permissible, but by
reason thereof an employee cannot claim any right to be
permanently absorbed in service or made permanent in
absence of any statute or statutory rules. Merely because an
employee has completed 240 days of work in a year
preceding the date of retrenchment, the same would not
mean that his services were liable to be regularised.
10. Applying the legal principles, as noticed hereinbefore,
the relief granted in favour of the appellant by the Labour
Court is wholly unsustainable. The same also appears to be
somewhat unintelligible.
11. The High Court, on the other hand, did not consider the
effect of non-compliance with the provisions of Section 6-N
7
(2008) 1 SCC 575
9
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. Tribhuban [(2007) 9 SCC 748] .)
13. In this view of the matter, we are of the opinion that as
the appellant had worked only for a short period, the interest
of justice will be subserved if the High Court’s judgment is
modified by directing payment of a sum of Rs 50,000
(Rupees fifty thousand only) by way of damages to the
appellant by the respondent. Such payment should be made
within eight weeks from this date, failing which the same will
carry interest at the rate of 9% per annum.”
15. It would be, thus, seen that by catena of decisions in
recent time, this Court has clearly laid down that an order of
retrenchment passed in violation of Section 25F 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.
Therefore, 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
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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.
16. While awarding compensation, the host of factors, inter-
alia, manner and method of appointment, nature of employment
and length of service are relevant. Of course, each case will
depend upon its own facts and circumstances. 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.
We order accordingly. Such payment should be made within six
weeks from today failing which the same will carry interest @
9% per annum.
17. Appeal is partly allowed to the aforementioned extent with
no order as costs.
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……………………J
(Tarun Chatterjee)
…….……………..J
(R. M. Lodha)
New Delhi
July 14, 2009.
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