Lump sum compensation awarded in lieu of reinstatement for termination violating Section 25F of Industrial Disputes Act.

The respondent-workman, employed in the petitioner’s furnace department for over six years,

alleged that his services were orally terminated on October 3, 2017, without notice or compensation.

The petitioner-employer contended the workman had abandoned his service following warnings regarding unauthorized absence and co-worker complaints.

The workman initiated an industrial dispute (Reference T(LC) No. 24 of 2018), wherein the Labour Court, Kalol, found the termination violated mandatory statutory procedures and awarded reinstatement with 50% backwages via an award dated May 6, 2023.

The employer challenged this award before the High Court under Articles 226 and 227 of the Constitution.

1. Whether the Labour Court erred in finding that the workman was terminated in violation of Section 25F of the Industrial Disputes Act rather than voluntarily abandoning service.

2. Whether the relief of reinstatement with backwages was appropriate given the passage of time and the nature of the dispute.

The court applied Section 25F of the Industrial Disputes Act, 1947, which mandates conditions precedent (notice and compensation) for the valid retrenchment of a workman.

It relied 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, and subsequent Division Bench rulings of the Gujarat High Court in LPA No. 908 of 2023 and LPA No. 1091 of 2023.

These precedents establish that where reinstatement is deemed impractical or inequitable due to the lapse of time or nature of employment, lump-sum compensation in lieu of reinstatement and backwages is an appropriate remedy.

The High Court observed that the petitioner failed to prove abandonment; evidence showed the workman had sought reinstatement through a Union notice and approached the Labour Commissioner, while the petitioner failed to participate in conciliation.

The court upheld the Labour Court’s finding that the termination was illegal due to non-compliance with Section 25F.

However, citing the Division Bench’s structured formula for compensation based on the length of service (e.g., ₹3.00 lacs for 5-10 years), the court determined that the interests of justice would be better served by awarding a lump-sum amount instead of reinstatement.

This modification accounts for the "peculiar facts" of the case and the "gap which intervened between the date of termination and the date of granting reinstatement".

It held that the respondent-workman is entitled to a lump-sum compensation of ₹3,00,000/- in lieu of all other reliefs.

The petitioner was directed to pay this amount via RTGS within eight weeks, subject to verification of the workman's identity and bank details.

No order as to costs was made.