Illegal termination after five years’ service warranted ₹3 lakh compensation in lieu of reinstatement.

The petitioner-workman claimed that he was employed as a Machine Operator with the respondent from 22 August 2013 and that his services were orally terminated on 26 September 2018.

Following an unsuccessful conciliation proceeding before the Assistant Labour Commissioner, the dispute was referred to the Labour Court, Vadodara.

The Labour Court held the termination to be illegal and awarded lump-sum compensation of ₹1,00,000 in lieu of reinstatement and other service benefits by Award dated 21 June 2023.

The workman challenged the Award under Articles 226 and 227 of the Constitution, principally seeking enhancement of compensation; during the hearing, he indicated that he would be satisfied with reasonable compensation instead of reinstatement.

Whether the lump-sum compensation of ₹1,00,000 awarded by the Labour Court in lieu of reinstatement and other service benefits was reasonable in the circumstances of the case.

Whether the High Court should enhance the compensation payable to the workman, having regard to his asserted five years of service and the illegality of the termination.

The petition was considered under Articles 226 and 227 of the Constitution, which empower the High Court to exercise judicial review and supervisory jurisdiction over the Labour Court’s Award.

The Court noted the employer’s reliance on Section 25B of the Industrial Disputes Act, 1947, concerning the requirement of continuous service and completion of 240 days, although the judgment did not independently determine that issue.

The Court applied the settled principle that, in appropriate cases, lump-sum compensation may be granted in lieu of reinstatement, continuity of service, back wages, and other ancillary service benefits.

It relied particularly on Bhikhabhai Fatabhai Solanki v. Executive Engineer, Narmada Project Canal System & Anr. , decided by the Gujarat High Court in Letters Patent Appeal No. 908 of 2023 and allied matters, for determining reasonable compensation in such circumstances.

The Labour Court had found the termination dated 26 September 2018 to be bad and illegal, but had awarded only ₹1,00,000 as compensation.

The High Court noted that the workman claimed approximately five years of uninterrupted service and had confined his challenge substantially to the inadequacy of compensation.

Applying the principle that reasonable lump-sum compensation may substitute reinstatement and related benefits, and relying on Bhikhabhai Fatabhai Solanki , the Court considered the original award insufficient in light of the duration of service and the illegal termination.

It therefore enhanced the compensation to ₹3,00,000 rather than granting reinstatement or back wages.

The Labour Court’s Award dated 21 June 2023 was modified, and the respondent-employer was directed to pay the workman ₹3,00,000 as lump-sum compensation in lieu of reinstatement and other ancillary service benefits within four weeks from 25 August 2026.

No order granting reinstatement, continuity of service, or full back wages was made.