Lump-sum compensation in lieu of reinstatement is justified for long-term employees terminated without following due process.

The respondent-employee worked as a petrol vendor for the petitioner from December 26, 1996, until his termination on April 11, 2018.

The employee raised a dispute via Reference (LCV) Case No. 100 of 2020. During the pendency of the reference, the employee reached the age of superannuation.

On July 1, 2023, the Labour Court No. 3, Vadodara, passed an ex-parte award granting a lump-sum compensation of ₹1,50,000/- in lieu of reinstatement.

The petitioner challenged this award under Articles 226 and 227 of the Constitution, alleging improper service of notice, non-compliance with Order XVIII Rule 4 of the CPC, and lack of evidence regarding appointment or salary.

1. Whether the ex-parte award passed by the Labour Court was legally sustainable despite the petitioner’s claim of non-service of notice.

2. Whether the lump-sum compensation of ₹1,50,000/- in lieu of reinstatement was just and reasonable given the length of service.

The court's reasoning was guided by the principles of natural justice regarding the service of summons, specifically the presumption of service upon refusal of notice.

It applied the legal doctrine that where reinstatement is not feasible due to the superannuation of the workman during the pendency of litigation, lump-sum compensation serves as an appropriate substitute for reinstatement.

The court also indirectly considered the provisions of the Code of Civil Procedure, 1908, regarding procedural compliance, and the discretionary powers of the High Court under Articles 226 and 227 of the Constitution of India.

The High Court found that the Petitioner’s claim of non-service was contradicted by the record, which showed the Petitioner refused to accept the notice of Reference; thus, the Labour Court rightly drew a presumption of service.

The Court noted that the employee’s affidavit remained uncontroverted as the Petitioner failed to appear.

On the merits of the compensation, the Court observed that the employee had completed over 22 years of service. It reasoned that while reinstatement was impossible due to the employee reaching retirement age, the compensation of ₹1,50,000/- was actually "too meagre" and "just and reasonable" only because the workman had not challenged it for an enhancement.

The Court found no gross delay in filing the reference and no merit in the petitioner's procedural objections.

The High Court dismissed the petition and upheld the Labour Court's award. The interim relief was vacated, and the notice was discharged.