Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.1349 OF 2009
(Arising out of SLP(C) No. 595 of 2008)
M/s P.V.K. Distillery Ltd.
……….Appellant
Versus
Mahendra Ram ……..Respondent
ORDER
Leave granted in the special leave petition.
1)This appeal is directed against the judgment and order passed by the
High Court of Judicature at Allahabad in Civil Miscellaneous Writ
Petition No. 32250 of 1990 dated 21.5.2007.
2)The facts in nutshell are as follows: the respondent, Mahendra Ram,
was recruited on casual basis some time in the year 1981 in M/s P.V.K.
Distillery Ltd. (now rechristened as Lords Distillery Ltd.). On 14.8.1982
he was shifted to bottling section as a permanent workman by the orders
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of the General Manager. On 19.1.1985 services of the respondent were
terminated by an oral order from the employer. Aggrieved by the said
order, respondent went before the Labour Court inter-alia alleging that
he was employed in the establishment of the employer and that his
services were terminated orally in an unjustifiable and illegal manner.
Appellants on the other hand contended, that, respondent was engaged
by Gaya Singh Yadav, contractor and therefore respondent was never in
their employment and thus master-servant relationship never existed
between them.
3)Labour Court after considering and appreciating the oral and
documentary evidence on record, has come to the conclusion, that, the
respondent, Mahendra Ram, was in the continuous employment of the
establishment since 1980 and the employer unjustifiably and illegally
terminated workman’s services from 19.1.1985. The labour court has
also come to the conclusion that the respondent–workman has worked
for more than 240 days in a calendar year, as required by section 25B(2)
(a) of Industrial Disputes Act, 1947, and therefore he is entitled for
reinstatement with continuity of service and full employment benefits
and back wages.
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4)In the interregnum, the appellant’s factory remained closed for years
together and ultimately it was declared as a sick unit. Management of the
company was substituted with the present management for its
rehabilitation/reconstruction.
5)Appellant then went before the High Court challenging the validity and
legality of the award by which the workman has been reinstated with
continuity of service and full employment benefits and back wages. By
the impugned order, the High Court has stated that there is no reason to
doubt the findings given by the Labour Court and declined to interfere
with the award passed by the Labour Court in Adj. Case N0. 32/87.
Aggrieved by the said order, appellant is before us by this special leave
petition.
6)Notice was ordered to be issued to the respondent on 25.1.2008. The
order reads :
“Issue notice to the limited to the question of 50% back wages”.
7)Pursuant to the order passed by this Court, notice was issued to the
respondent to the address furnished in his claim statement filed before
the Labour Court. Since the same was returned unserved, the Registrar of
this Court on 7.8.2008 ordered that two weeks time is granted to the
appellant to file application for substituted service. Learned counsel for
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the appellant on 20.8.08 filed an application for substituted service by
way of publication in the newspaper. In spite of such publication, the
respondent has not appeared before this court either in person or through
his learned counsel. Therefore we are deciding this appeal after hearing
the learned counsel for the appellant.
8)In the instant appeal, the Labourt Court on appreciation of evidence on
record has rendered a finding that there exists a master-servant
relationship between the employer i.e. appellant and Mahendra Ram.
9)
Section 11A of Industrial Disputes Act gives power to the Labour
Courts to give appropriate relief in case of discharge and dismissal of a
workman in exceptional circumstances. Labour Court after appreciating
the facts and evidence on record has rightly held that services of
respondent have been unjustifiably and illegally terminated by the
appellant without complying with the procedure prescribed in Section 6-
N of the U.P. Industrial Disputes Act, and accordingly has directed
reinstatement of respondent in service with all other service and
monetary benefits.
10)The only question which requires to be considered by us in this appeal
is, whether the Labour Court was justified in awarding full back wages,
while directing the employer to re-instate the workman in service.
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Learned counsel for the appellant in this regard contends that the High
Court has acted erroneously by declining to interfere with the award of
the Labour Court. He would urge that the grant of relief of reinstatement
and back wages is not automatic in all matters arising under the
provisions of Industrial Disputes Act. He would also urge that the
appellant will suffer irreparable loss and injury, if it has to employ a
contractor workman on its rolls with full back wages even for the period
when the establishment was closed. In support of his arguments, reliance
is placed on the observations made by this court.
11)In the case of P.G.I. of M.E. and Research, Chandigarh v. Raj Kumar,
(2001) 2 SCC 54, this court has held that the payment of back wages
having a discretionary element involved in it, has to be dealt with, in the
facts and circumstances of each case and no straight-jacket formula can
be evolved, though, however, there is statutory sanction to direct
payment of back wages in its entirety. The issue as raised in the matter of
back wages has been dealt with by the Labour Court in the manner as
above having regard to the facts and circumstances of the matter in the
issue, upon exercise of its discretion and obviously in a manner which
cannot but be judicious in nature. There exists an obligation on the part
of the High Court to record in the judgment, the reasoning before
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however denouncing a judgment of an inferior Tribunal, in the absence
of which, the judgment in our view cannot stand the scrutiny of
otherwise being reasonable.
12)In the case of Hindustan Motors v. T. K. Bhattacharya, (2002) 6 SCC
41, this court has stated that section 11-A as amended in 1971, is
couched in wide and comprehensive terms. It vests a wide discretion in
the Tribunal in the matter of awarding proper punishment and also in the
matter of the terms and conditions on which reinstatement of the
workman should be ordered. It necessarily follows, that, the Tribunal is
duty-bound to consider whether in the circumstances of the case, back
wages have to be awarded and if so, to what extent. Court then held that
Industrial Tribunal and Division Bench of High Court erred in
proceeding on the assumption that quashment of dismissal order should
be followed by reinstatement with full back wages as a matter of course.
On consideration of the entire matter in the light of the observations
referred to supra in the matter of awarding back wages, we are of the
view that in the context of the facts of this particular case including the
vicissitudes of long-drawn litigation, it will serve the ends of justice if
the respondent is paid 50% of the back wages till the date of
reinstatement.
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13)In U.P. State Brassware Corp. Ltd. v. Uday Narain Pandey,
(2006) 1 SCC 479, it is observed that the person is not entitled to get
something only because it would be lawful to do so. If that principle is
applied, the functions of an Industrial Court shall lose much of their
significance. Although direction to pay full back wages on a declaration
that the order of termination was invalid used to be the usual result but
now, with the passage of time, a pragmatic view of the matter is being
taken by the court realizing that an industry may not be compelled to pay
to the workman for the period during which he apparently contributed
little or nothing at all to it and/or for a period that was spent
unproductively as a result whereof the employer would be compelled to
go back to a situation which prevailed many years ago, namely, when the
workman was retrenched.
14) In the case of Haryana Urban Development Authority v. Om Pal,
(2007) 5 SCC 742, it is stated that, it is now also well-settled that despite
a wide discretionary power conferred upon the Industrial Courts under
Section 11A 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
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would be as to whether the recruitment was effected in terms of the
statutory provisions operating in the field, if any.
15)In deciding the question, as to whether the employee should be
recompensed with full back wages and other benefits until the date of
reinstatement, the tribunals and the courts have to be realistic albeit the
ordinary rule of full back wages on reinstatement. [Western India Match
Co. Ltd. v. Third Industrial Tribunal, West Bengal, 1978 Lab IC 179
(SC).]
16)In Hindustan Tin Works (P) Ltd. v. Employees, (1979) 2 SCC 80, this
Court has held that the relief of reinstatement with continuity of service
can be granted where termination of service is found to be invalid. It,
therefore, does not lay down a law in absolute terms to the effect that the
right to claim back wages must necessarily follow an order declaring that
the termination of service is invalid in law.
17)In the case of Surendra Kumar Verma v. Central Govt. Industrial
Tribunal-cum-Labour Court, (1980) 4 SCC 443, this Court has observed
that the plain common sense dictates that the removal of an order
terminating the services of workmen must ordinarily lead to the
reinstatement of the services of the workmen. It is as if the order has
never been, and so it must ordinarily lead to back wages too. But there
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may be exceptional circumstances which make it impossible or wholly
inequitable vis-à-vis the employer and workmen to direct reinstatement
with full back wages. For instance, the industry might have closed down
or might be in severe financial doldrums; the workmen concerned might
have secured better or other employment elsewhere and so on. In such
situations, there is a vestige of discretion left in the court to make
appropriate consequential orders. The court may deny the relief of
reinstatement where reinstatement is impossible because the industry has
closed down. The court may deny the relief of award of full back wages
where that would place an impossible burden on the employer. In such
and other exceptional cases the court may mould the relief.
18)In Allahabad Jal Sansthan v. Daya Shankar Rai, (2005) 5 SCC 124,
this Court has observed: A law in absolute terms cannot be laid down as
to in which cases, and under what circumstances, full back wages can be
granted or denied. The Labour Court and/or Industrial Tribunal before
which industrial dispute has been raised, would be entitled to grant the
relief having regard to the facts and circumstances of each case. For the
said purpose, several factors are required to be taken into consideration.
19) In Madurantakam Coop. Sugar Mills Ltd. v. S. Viswanathan, (2005)
3 SCC 193, the quantum of back wages was confined to 50%, stating: It
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is an undisputed fact that the workman had since attained the age of
superannuation and the question of reinstatement does not arise. Because
of the award, the respondent workman will be entitled to his retiral
benefits like gratuity, etc. and accepting the statement of the learned
Senior Counsel for the appellant Mills that it is undergoing a financial
crisis, on the facts of this case we think it appropriate that the full back
wages granted by the Labour Court be reduced to 50% of the back
wages.”
20) In the instant case, the notice had been issued limiting the question to
the payment of 50% of the total back wages. This does not mean that the
respondent is not entitled to further relief. The point that his services
were terminated in the year 1985 and since then the case is pending for
the last two decades in different courts also has no relevance, since he
had approached the court within a reasonable time. It is not his fault that
the case is still pending before the court. These grounds could not be
held against him for denying the relief of back wages otherwise he would
suffer double jeopardy of losing back wages and delay in getting the
reinstatement for no fault of his. Therefore, it would have been more
enlightening, had the High Court reasoned out as to why the appellant
should reinstate the respondent with full employment benefits and should
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pay full back wages to him for nothing in return from him in terms of
work, production etc.
21)Giving a realistic approach to the matter and in spite of all these
circumstances we are restricting ourselves to the question of 50% of the
total back wages. Although services of the respondent have been
terminated unjustifiably and illegally, it itself does not create a right of
reinstatement with full employment benefits and full back wages. The
notice was issued with a view that the appellant’s factory has been taken
over by a new management altogether and by asking the appellant to pay
full back wages for the long interregnum would be unfair and unjust. The
workman has not entered appearance to justify the award passed by the
Labour Court. Therefore, in our view, it would be unreasonable to put a
huge burden on the appellant by directing them to reinstate respondent
with continuity of service and with full back wages, because the
appellant’s factory had been declared sick and remained closed for many
years and has been assigned to a new management led by its Chief
Executive Director, Sri M.K. Pilania in order to rehabilitate/reconstruct
it.
22)In view of the above discussion, we are of the opinion that it would be
fair and reasonable to direct the employer to deposit 50% of back wages
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by way of arrears of back wages, instead of full wages awarded by the
Labour Court.
23)Accordingly, the judgment and order of the Labour Court and the
High Court are set aside and it is declared that the respondent herein
shall be entitled to 50% of the total back wages payable during the
aforesaid period in terms of Section 6-N of the U.P. Industrial Disputes
Act.
24)The appellant is directed to calculate 50% of the total back wages
payable during the aforesaid period and to deposit the same in the
Labour Court, Nati Imli, Varanasi, U.P. within 6 weeks from the date of
the order. Labour Court, Nati Imli, Varanasi, U.P. is further directed to
deposit the said amount in a fixed deposit in a nationalized bank within
two weeks thereafter. If for any reason, the respondent claims the said
amount within two years from the date of deposit of the said amount in
the Labour Court, the Labour Court is directed to take effective steps to
ascertain the identity of the respondent and on determining the same; the
said amount shall be disbursed to the respondent with interest. If for any
reason, respondent does not claim the said amount within two years from
the date of deposit of the said amount in the Labour Court, the same
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should be handed over to the District Legal Service Authority with
interest.
25)For the reasons aforementioned, the appeal is allowed in part and to
the extent mentioned hereinbefore. However, there shall be no order as
to costs.
…………………………………J.
[ TARUN CHATTERJEE ]
…………………………………J.
[ H.L. DATTU ]
New Delhi,
March 02, 2009.
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