Lump sum compensation may be awarded in lieu of reinstatement and back wages for unjustified termination.

The Petitioner was appointed as a "Sweeper-cum-Water Boy cum Farash" by the Parishad Co-operative Bank Ltd. (Respondent No. 2) on March 1, 1988, and his services were regularized effective January 17, 1988

Following various administrative changes, including the appointment of a Liquidator in 2003, the Petitioner’s services were terminated on April 1, 2010, after 22 years of service

An Arbitrator quashed the termination in 2016, awarding reinstatement, back wages, and compensation

While the Delhi Co-operative Tribunal (DCT) initially dismissed the Bank's appeal on limitation grounds, it later allowed a second appeal (Appeal No. 211/2016), setting aside the Award on the grounds that the appointment was temporary since the Bank’s service rules were never implemented

The Petitioner challenged this DCT order before the High Court

1. Whether the termination of a regularized employee after 22 years of service without compensation is legally sustainable in the absence of implemented service rules

2. Whether the Court may award lump-sum compensation in lieu of reinstatement and back wages

The Court relied on Article 226 of the Constitution of India regarding its writ jurisdiction

It applied the principle that courts may grant lump-sum compensation instead of reinstatement with back wages where termination is found to be unjust or technically unlawful, as established by the Supreme Court in Maharashtra State Road Transport Corporation v. Mahadeo Krishna Naik (2025 INSC 218)

It further reinforced this approach using Allahabad Bank v. Krishan Pal Singh (SLP(C) No. 19648/2019), which held that reinstatement is not automatic and monetary compensation can serve the ends of justice, especially in cases involving long litigation or superannuation

The Court observed that the Petitioner had rendered long and continuous service for 22 years, making sudden termination without compensation "unjust and unfair"

While the Respondent Bank argued that the appointment was temporary due to the non-implementation of service rules, the Court noted that the 1988 appointment letter explicitly used the term "regularised"

The Court found the DCT's reversal—which stripped the Petitioner of all relief—to be inequitable given the unique facts. Rather than ordering reinstatement (noting the Bank's liquidation status and the passage of time), the Court applied the "lump-sum compensation" doctrine to balance the interests of the employee and the employer

The Court directed the Respondent Bank to pay a lump-sum amount of ₹5 lakhs to the Petitioner within three months. The petition was disposed of with the clarification that the order was passed based on unique facts and would not serve as a precedent