Lump sum compensation awarded in lieu of reinstatement for termination in violation of industrial laws.

The respondent was employed as a Watchman by the petitioner for four years, earning a monthly salary of Rs. 5,897/-

On July 1, 2015, the petitioner orally terminated the respondent’s services without following the prescribed legal procedure

The respondent challenged this termination before the Labour Court, Valsad, in Reference (LCV) No. 38 of 2016.

On October 7, 2023, the Labour Court passed an award directing the petitioner to reinstate the respondent with continuity of service and 50% backwages

The State of Gujarat filed the present petition under Articles 226 and 227 of the Constitution of India challenging this award, contending that the respondent had not completed 240 days of continuous service and thus no statutory violation occurred

1. Whether the Labour Court's award of reinstatement with 50% backwages was legally sustainable given the nature and length of the respondent's service

2. Whether the interest of justice would be better served by awarding lump sum compensation in lieu of reinstatement and backwages

The court primarily applied the provisions of the Industrial Disputes Act regarding termination procedures

It placed heavy reliance on the precedent set by the Hon’ble Supreme Court in *Maharashtra State Cooperative Marketing Federation Limited v. Suresh S/o Dadarao Gadge* (2015) 4 SCC 542, which addresses the appropriateness of compensation over reinstatement

The court followed the formula for quantum of compensation established by the Division Bench of the Gujarat High Court in *Letters Patent Appeal No. 908 of 2023* and *Letters Patent Appeal No. 1091 of 2023*, which dictates specific lump sum amounts based on the total years of service (e.g., Rs. 2 to 3 lacs for shorter tenures)

The Court observed that while the Labour Court found a procedural violation in the respondent's termination, the remedy of reinstatement and backwages was disproportionate considering the facts

Following the judicial trend established by the Division Bench in similar labor matters, the Court noted that a significant period had passed since the 2015 termination and the 2023 award

Applying the "balancing equation," the Court reasoned that for a workman with approximately four years of service, granting a one-time financial settlement is more equitable than forcing reinstatement after a long hiatus

The Court calculated that a sum of Rs. 2,00,000/- would be just compensation, effectively modifying the Labour Court's approach to align with contemporary high court directives on similar industrial disputes

The Court held that the respondent is entitled to a lump sum compensation of Rs. 2,00,000/- in lieu of all other reliefs

The petitioner was directed to pay this amount via RTGS within eight weeks, subject to identity and bank detail verification

Rule made absolute to this extent