Reinstatement award modified to lump sum compensation for legal heirs of deceased workman with short service tenure.

The deceased respondent-workman was appointed as a watchman/mali by the petitioner-Panchayat in 1988.

Following an initial termination in 1994, he was reinstated via a labor court award in 1999.

He was terminated again in 2011 following allegations of misconduct, including breaking office locks and misbehavior.

The workman filed Reference (LCV) No. 437 of 2011, which resulted in an ex-parte award on 18.07.2017 directing reinstatement with 35% back wages.

The workman died on 08.02.2020, leading his legal heirs to file Recovery Application No. 186 of 2020, which was allowed on 05.07.2023, directing payment of Rs. 3,50,806/- with 6% interest.

The Panchayat challenged both the 2017 award and the 2023 recovery order under Articles 226 and 227 of the Constitution.

1. Whether the Labor Court's award of reinstatement and back wages was sustainable given the workman's nature of appointment and subsequent death.

2. Whether the award should be modified to grant lump-sum compensation in lieu of reinstatement and back wages to subserve the interests of justice.

The Court primarily applied the provisions of the Industrial Disputes Act, 1947 regarding wrongful termination and reinstatement.

It relied on the Supreme Court precedent in Maharashtra State Cooperative Marketing Federation Limited v. Suresh S/o Dadarao Gadge (2015) 4 SCC 542, which establishes that lump-sum compensation can be an appropriate alternative to reinstatement.

It further adhered to the compensation brackets established by the Division Bench of the Gujarat High Court in LPA No. 908 of 2023, which standardized compensation based on the tenure of service (e.g., Rs. 3.00 lacs for 5-10 years).

The Court observed that while the Labor Court's findings on the illegality of the termination were based on un-rebutted evidence, the relief granted required modification due to the workman's death and the nature of his initial appointment.

The Court noted that since the workman had put in approximately 6 years of service (referring to the second stint/disputed period) and had since passed away, reinstatement was impossible.

Following the logic of the Division Bench in identical matters, the Court determined that balancing the equities required replacing the direction for back wages and the recovery certificate with a one-time financial settlement.

The Court calculated that for a tenure of approximately 6 years, a lump-sum payment of Rs. 3,00,000/- was just and consistent with recent judicial trends in the State.

The Court held that the legal heirs are entitled to a lump-sum compensation of Rs. 3,00,000/- as full and final settlement of all dues.

The Petitioner-Panchayat was directed to disburse this amount in equal proportion to the legal heirs via RTGS/NEFT within eight weeks.

Consequently, the recovery application order was superseded by this modified amount, and the Registry was directed to refund the security deposit of Rs. 10,000/- to the Panchayat.