Illegal termination after seven years’ service warranted enhanced lump-sum compensation of ₹3 lakh.

The petitioner had worked as a Watchman with the respondent-employer for approximately seven years. His services were orally terminated on 16 June 2015.

He raised an industrial dispute, which was referred to the Labour Court, Valsad, as Reference (LCV) No. 102 of 2016.

The Labour Court held the termination illegal for non-compliance with Section 25F of the Industrial Disputes Act, 1947, but awarded lump-sum compensation of ₹70,000 in lieu of reinstatement, continuity of service and full back wages.

The petitioner challenged the award seeking reinstatement and back wages or, alternatively, enhancement of compensation to ₹3,00,000. During the writ proceedings, he attained the age of superannuation and therefore did not press the relief of reinstatement.

Whether the petitioner’s termination was illegal for failure to comply with the mandatory requirements of Section 25F of the Industrial Disputes Act, 1947.

Whether the lump-sum compensation of ₹70,000 awarded by the Labour Court was adequate, just and reasonable in view of the petitioner’s approximately seven years of service and the circumstances of the case.

Whether the petitioner was entitled to enhanced compensation of ₹3,00,000 in lieu of reinstatement, continuity of service and back wages.

The Court applied Section 25F of the Industrial Disputes Act, 1947, which requires compliance with prescribed conditions, including notice or notice pay, before retrenchment of a qualifying workman; non-compliance renders the termination illegal.

In determining appropriate monetary relief instead of reinstatement, the Court relied on Bhikhabhai Fatabhai Solanki v. Executive Engineer, Narmada Project Canal System, decided in Letters Patent Appeal No. 908 of 2023 on 9 May 2024.

That decision provides a proportional compensation framework based on the length of service: ₹3 lakh for 5–10 years, ₹5 lakh for 10–15 years and ₹7.5 lakh for 15–20 years, subject to consideration of delay in raising the dispute.

The Court found that the petitioner’s termination was undisputedly effected without the notice or one month’s notice pay required under Section 25F, and no material was shown to establish that the termination was legally sustainable.

Since the petitioner had superannuated, reinstatement was no longer a practical relief.

The Court therefore assessed whether the compensation awarded by the Labour Court adequately reflected the petitioner’s approximately seven years of service and the prolonged litigation.

Applying the compensation guidelines in Bhikhabhai Fatabhai Solanki, the petitioner fell within the 5–10 years’ service category, for which ₹3 lakh was considered appropriate. The Court consequently held that the original award of ₹70,000 was inadequate.

The respondent-employer was directed to pay the petitioner lump-sum compensation of ₹3,00,000 within 30 days of receiving the order.

If the earlier amount of ₹70,000 had already been paid, it was to be deducted from the enhanced compensation; if unpaid, the full ₹3,00,000 was payable.

The judgment records an interest direction of 6% per annum from the date of the impugned award in the event of default in paragraph 10, while paragraph 11 refers to 5% interest from 26 August 2022; the text thus contains an apparent inconsistency on the applicable rate of interest.

Rule was made absolute and the petition was disposed of as allowed.