Worker Barred From Returning After Medical Leave Gets Reinstatement And Back-Wage Award Restored; Liquidation Proposal Alone Couldn’t Justify Cut: Madras HC

The employee, R. Maheswari, was engaged as a Saleswoman in 1997, made permanent in 2008 and later promoted as a Clerk. After medical leave from 3 June to 3 October 2013, she was not permitted to resume duty.

The Labour Court found that the Society had orally terminated her services without an enquiry and ordered reinstatement with backwages. The Society challenged that award in a writ petition. The Single Judge modified the relief to compensation equal to 50% of the amount deposited before the Labour Court, citing the Society’s financial constraints and a proposal for liquidation. Maheswari appealed against that modification.

An employer’s financial difficulties, by themselves, do not justify depriving an employee of benefits under a competent Labour Court’s award. A proposal for liquidation, without more, is likewise insufficient to replace reinstatement with backwages by compensation.

Even where a company or society is under liquidation or winding up, employees’ claims are to be settled from its assets in accordance with law.

The Labour Court had found that Maheswari’s services were orally terminated without an enquiry and had ordered reinstatement with backwages. The Single Judge substituted compensation based primarily on the Society’s financial condition and proposed liquidation.

The Division Bench held that those circumstances alone did not justify curtailing the rights arising from the Labour Court’s award; accordingly, the modification could not be sustained.

It left the parties to pursue, in accordance with law, remedies concerning enforcement of the award and settlement of amounts due. There was no order as to costs.