Retrenchment compensation under Section 25F was limited to continuous service from 1990 to 1993, not 18 years.

A group of 254 workmen associated with the Food Corporation of India (“FCI”) was retrenched without notice or retrenchment compensation.

By award dated 6 April 2006, the Central Government Industrial Tribunal held the demand for reinstatement justified and directed their employment with effect from 1 July 1993, while denying back wages for the period from 1 July 1993 until the date of the award.

FCI challenged the award in WPA No. 16535 of 2006.

By order dated 23 August 2023, the High Court modified the relief of reinstatement and directed payment of retrenchment compensation under Section 25F of the Industrial Disputes Act, 1947, upon formal claims being made within two months and verification of the identity of the workmen or their legal representatives.

The workmen thereafter initiated contempt proceedings alleging non-compliance with the order dated 23 August 2023 and claiming retrenchment compensation for 18 years.

FCI submitted that 210 of the 254 workmen, or their eligible representatives, had been paid compensation after producing proper identification documents, and stated that the remaining 44 persons could receive payment upon producing such documents.

Whether the workmen were entitled to retrenchment compensation calculated for 18 years, or only for the period of their admitted continuous service from 1990 to 1993.

Whether FCI had wilfully or deliberately violated the order dated 23 August 2023 by failing to comply with its directions concerning payment of retrenchment compensation.

The Court applied Section 25F(b) of the Industrial Disputes Act, 1947, under which retrenchment compensation is equivalent to 15 days’ average pay for every completed year of continuous service, or part thereof exceeding six months.

The Court treated the Tribunal’s finding that the workmen were not entitled to back wages for the period from 1 July 1993 to 6 April 2006, and had not established continuous service during that period, as final because it had not been challenged by the workmen.

It further applied the contempt-law principle that contempt requires a wilful and deliberate breach of the court’s order, not merely a bona fide dispute regarding its interpretation or computation.

The Court held that the direction to pay retrenchment compensation under Section 25F had to be read with the Tribunal’s unchallenged finding regarding the period of service.

Since the workmen had not established continuous service from July 1993 to April 2006 and were denied back wages for that period, compensation could not be calculated for 18 years.

The relevant period of continuous service was therefore treated as 1990 to 1993, rather than extending beyond July 1993.

The Court also noted that FCI had paid compensation to 210 claimants after identity verification and had undertaken to pay the remaining 44 persons upon production of proper identification documents.

On that basis, the Court found no wilful or deliberate non-compliance with the order dated 23 August 2023.

Finding no wilful or deliberate violation by FCI, the Court dismissed CPAN No. 1439 of 2024 without costs.

FCI’s undertaking to pay the remaining eligible claimants upon production of proper identification documents was recorded and expected to be honoured.

Any interim order was vacated and the pending application was disposed of.