Lump-sum compensation in lieu of reinstatement awarded where violation of Section 25F exists but continuous service is unproven.

The petitioner was appointed as a Helper by the respondent-company on January 19, 1996.

He alleged that after joining a labor union and raising demands regarding minimum wages, his services were orally terminated on December 6, 2003, without notice or compensation.

The petitioner filed a Reference (LCV) No. 140 of 2005 before the Labour Court, Valsad, which was rejected on April 26, 2022, on the grounds that the petitioner failed to prove an employer-employee relationship or continuous service of 240 days.

The petitioner challenged this award under Articles 226 and 227 of the Constitution.

1. Whether the findings of the Labour Court regarding the absence of an employer-employee relationship and failure to complete 240 days of continuous service were legally sustainable.

2. Whether the petitioner is entitled to reinstatement or lump-sum compensation in lieu of reinstatement given the long passage of time and proximity to superannuation.

Section 25F of the Industrial Disputes Act, 1947, which mandates the payment of retrenchment compensation and notice for workmen in continuous service for one year.

The evidentiary principle that the burden of proof lies on the workman to establish 240 days of continuous service.

The doctrine established by the Hon’ble Supreme Court in Incharge Officer v. Shankar Shetty [2010] 9 SCC 126 and followed by the Division Bench in Dharmsinh Desai University v. Natubhai Kantibhai Raval [2023] 3 GLR 1783, which allows for lump-sum compensation in lieu of reinstatement and back wages in appropriate cases.

The High Court observed that the petitioner admitted in cross-examination that he lacked documentary proof of 240 days of service and that his name was absent from the respondent's official registers.

While the respondent produced registers for the period post-termination (2002-2005), the Court noted these were not decisive for the prior relevant period.

However, since the petitioner failed to meet the statutory burden of proving continuous service, the Labour Court’s rejection was technically sound.

Nevertheless, noting that the petitioner was nearing the age of superannuation and citing a similar precedent involving the same respondent (Babu Raghu Ghatil vs. M/s Add Pen Limited), the Court determined that a strict dismissal of the petition would be inequitable.

It concluded that modifying the award to grant lump-sum compensation was the most just outcome after two decades of litigation.

It held that while reinstatement was not feasible, the petitioner was entitled to a lump-sum compensation of ₹1,00,000/- as a full and final settlement of all dues.

The respondent was directed to pay this amount via RTGS within four weeks. Rule was made absolute to this extent with no order as to costs.