Monetary compensation in lieu of reinstatement is appropriate for illegal termination of a daily-wage workman.

The petitioner was appointed as a daily-wage laborer in the Municipal Corporation, Gwalior

He worked from September 1, 2015, to October 20, 2015, totaling approximately one year and two months of service before being terminated on July 13, 2015

The Labour Court No.1, Gwalior, in its award dated September 12, 2019, found the termination to be illegal as the petitioner had completed 240 days of service and the respondent failed to produce contrary evidence

However, the Labour Court awarded a meager compensation of Rs. 50,000/- in lieu of reinstatement and back wages

The petitioner challenged this award before the High Court seeking either reinstatement or higher compensation

1. Whether the Labour Court was correct in drawing an adverse inference against the employer regarding the completion of 240 days of service when the employer failed to produce relevant records

2. Whether a daily-wage employee, upon a finding of illegal retrenchment, is automatically entitled to reinstatement with back wages or if monetary compensation is the appropriate relief

3. Whether the compensation of Rs. 50,000/- awarded by the Labour Court was adequate given the facts and precedents

The court applied the "best evidence" principle, holding that if a party in possession of evidence fails to produce it, an adverse inference is drawn

Regarding relief, the court relied on Bharat Sanchar Nigam Limited v. Bhurumal (2014) 7 SCC 177, which establishes that for daily wagers whose termination is illegal due to procedural defects under Section 25-F of the Industrial Disputes Act, reinstatement is not automatic; rather, monetary compensation is preferred

It further cited Hari Nandan Prasad v. Food Corporation of India (2014) 7 SCC 190 and Jagbir Singh v. Haryana State Agriculture Mktg. Board, confirming the shift in legal position toward granting compensation instead of reinstatement for short-term daily-wage workers

The High Court upheld the Labour Court’s finding of illegal termination, noting that since the Municipal Corporation possessed the service records but failed to produce them, the adverse inference that the petitioner worked for 240 days was legally sound

Applying the principles from BSNL v. Bhurumal, the court reasoned that because the petitioner was a daily wager with a relatively short tenure (approx. 14 months) and the termination occurred several years prior (2015), reinstatement was inappropriate

However, the court found the quantum of compensation (Rs. 50,000/-) to be insufficient and not in conformity with Supreme Court guidelines for such cases

The court modified the Labour Court’s award, enhancing the lump-sum monetary compensation from Rs. 50,000/- to Rs. 1,25,000/- in lieu of reinstatement and back wages. The respondent/Corporation was directed to pay the amount within three months