Gujarat High Court
Krishnonics Capacity & vs Manjulaben Ambalal Solanki & 8 on 16 December, 2016
Author: A.J. Shastri
Bench: A.J. Shastri
C/SCA/13718/2005 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 13718 of 2005
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE A.J. SHASTRI
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1 Whether Reporters of Local Papers may be allowed to see the judgment
?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the judgment ?
4 Whether this case involves a substantial question of law as to the
interpretation of the Constitution of India or any order made
thereunder ?
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KRISHNONICS CAPACITY & 1....Petitioners
Versus
MANJULABEN AMBALAL SOLANKI & 8....Respondents
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Appearance:
MR PRABHAKAR UPADYAY, ADVOCATE for the Petitioner Nos. 1 2
MR.PRASHANT B SHARMA, ADVOCATE for the Respondent Nos. 1 4, 6 9
NOTICE SERVED for the Respondent No. 5
RULE SERVED for the Respondent No. 5
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CORAM: HONOURABLE MR.JUSTICE A.J. SHASTRI
Date : 16/12/2016
CAV JUDGMENT
1. The present petition is directed against the impugned award dated 8th December 2003 passed by the learned Presiding Officer of the Labour Court, Ahmedabad in Reference Case (LCA) No.2057 of 1987, whereby the reference came to be allowed and the respondents -
Page 1 of 35HC-NIC Page 1 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT workmen are directed to be reinstated with all consequential benefits to their original position with back wages by treating their services as continuous and the cost of Rs.250/ came to be awarded.
2. The case of the petitioners is that the respondentsworkmen were working practically from the year 1982 on the position of KVR and all were discharging their services with utmost sincerity and honesty. It is the case of the respondents - workmen that without any justifiable reasons and without any procedure being followed, oral termination is inflicted upon and their services were put to an end with effect from 17th July 1987. It is this grievance of oral termination is made subject matter of conciliation proceedings and since the conciliation proceedings have failed, the reference was made before the learned Presiding Officer of the labour Court, which was registered as numbered above.
3. Upon service of the notice in the reference, the petitioners establishment has appeared and has submitted written reply vide Exh.8 and oppose the reference by contending that when the respondents workmen were discontinued, all legally payable dues have been paid to them and the last come first go principle has also been clearly observed and there is no violation of any of provisions contained under the Industrial Disputes Act, 1947. The petitioners - establishment has also produced on record the list of cheques, which have been paid to the respondents - workmen vide Exh.20 and vide Exh.30. The various documents also came to be tendered to justify that by properly observing the relevant provisions and procedure established by law, the discontinuance has taken place. During the course of adjudication, various documentary evidence have been adduced from both the sides and witnesses have been examined by the respondents as well and after closing purshis having been given, the reference was takenup for final Page 2 of 35 HC-NIC Page 2 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT adjudication. After considering the deposition given by the respondents, as well as after considering the witness, which has been examined at Exh.36 by the petitioners - establishment, the learned Presiding Officer of the labour Court has passed an award, which is impugned in the petition. The petition, initially came to be entertained by this Court by issuing notice on 8th July 2005 in which a specific set of circumstance taken note of that factory, which was running in shed no.45, is closed since the year 2004, there was no possibility of reinstatement and therefore, even adinterim relief had been granted way back in July 2005. The said petition, thereafter, came for consideration in the month of February - 2013 in which fresh notice of rule has also been issued and in July 2016 upon representation of both the learned advocates for the parties, it was conveyed that factory was closed actually in fact in the year 1990 and that was not in dispute as reflected from the record. It was also conveyed to the Court that since idle wages were not to be paid in view of the Section 17 B of the I. D. Act, the workmen have been accommodated at Gandhingar unit, which is separate and distinct unit then the factory unit in which the respondents - workmen were working and it has also been not disputed by both the sides that even from there also since 2008, the workmen have not been in service and with a view to see that the resolution can take place in this peculiar set of circumstance, the matter was getting adjourned upon their request from time to time. But, it appears that the time which has been taken for resolving the dispute has not attained any fruitful result, which has ultimately resulted into final hearing of the this petition.
4. Learned advocate Mr. Prabhakar Upadyay, appearing on behalf of the petitioners, has contended that the compensation, which was legally payable to the respondents - workmen had already been paid in compliance of Section 25 F of the Industrial Disputes Act. It was Page 3 of 35 HC-NIC Page 3 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT pointedout from the various documents attached to the petition's compilation, more particularly page no.80, 82 and 87 of compilation, which indicates that the cheques have been drawn in favour of the respondent no.1 and there is a certificate of bank at page no.100 that cheques have been realized. This certificate of Manekchowk Co operative Bank Ltd., dated 14th August 1998 is very much part of the record, which indicates that there was some payment made in compliance of discontinuance of the service of the respondents - workmen. Learned advocate Shri Prabhakar Upadyay for the petitioners by referring to various depositions, has drawn the attention of the Court that almost all the workmen have admitted that they have received the payment made by the petitioners - establishment. By drawing the attention of the Court to one of the deposition of witness no.2 at page no.50 of the petition's compilation, deposed by Dinaben Pravinkumar Rathod, in which she admitted in crossexamination that company has paid retrenchment compensation and the same has been sent at house. She has admitted that in the said cover there was a notice pay, the arrears of pay as well as the payment about the retrenchment compensation and therefore, Shri Upadyay, has contended that this is almost in case of all the respondents - workmen and therefore, company has not committed any default in complying the provision of law at the time of service put to an end. Shri Upadyay, learned advocate further contended that in view of this peculiar set of circumstance, when the company itself is closeddown since long, it is highly inequitable and impracticable to implement the award passed by the learned Presiding Officer and this was the position very well brought to the notice of learned Presiding Officer when the award came to be passed in the year 2003. Be that as it may. The fact that the unit in which the respondents are working is closed since when is the question. Shri Upadyay, learned advocate for the petitioners further contended that with a view to see Page 4 of 35 HC-NIC Page 4 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT that they may not remain idle and nor they get idle wages and therefore, in the separate unit having a separate legal entity somehow the respondents - workmen accommodated, but there also after receiving the amount, the workmen have chosen to raise a grievance. It was pointedout that the company in fact was closed down actually in the year 1990 and to substantiate this, learned advocate Shri Upadyay has pointedout that after closure of the company, the electricity board was also requested to disconnect the electric supply. Hence, the said communication is also attached to the petition's compilation at page no.102. A letter written by the company dated 29th January 1991. Another communication is also brought to the notice by the learned advocate for the petitioners that upon closure of the factory, even the notice of closure was also given to the then labour Commissioner on 17th October 1990, which is annexed to the petition at page no.104. In addition thereof, the communication, which has been sent to the P. F. Commissioner is also brought to the notice of the Court and various communications whereby the appropriate authorities have been informed by the company that factory has been closed down and these communications, which are visible from page no.108, 110 and 120 of the petition's compilation. Shri Upadyay, learned advocate further drawn the attention of this Court that in actual terms after closure of the unit, the factory has also been sold and even the said document has also placed on record by the company in question. On 20th September 1993, the premises have been sold of on confrontation with a subplot number, a clarification is made by the learned advocate for the petitioners that it is the same factory premises, which is sold and the same is situated at a place shown in which the respondents - workmen were working and therefore in practical terms all the authorities have been informed about the closure of factory premises. Even, the premises have been sold by way of a sale document and therefore, in such a situation, to allow the Page 5 of 35 HC-NIC Page 5 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT impugned award and to sustain that of reinstatement with full back wages would be nothing but inequitable, illogical and impermissible to be implemented and therefore, by referring to this document, learned advocate has contended before the Court that this discontinuance has taken place way back in the year 1987 and during the passage of time by now, 29 years have been passed and therefore, to grant the relief of backwages in the year 2016 is almost impermissible and inequitable in view of the recent pronouncement of the apex Court and therefore, contended that the impugned award is not required to be sustained. It was also contended by the learned advocate for the petitioners that unit at Gandhinagar is not a connecting unit of the petitioners. It is altogether a different and separate entity. But for the fact that respondents may not be paid idle wages, this absorption for time being had taken place. It was pointedout that to show bonafide even an amount of Rs.2,50,000/ is already deposited by the petitioners before this Court and out of that, some amount has been permitted to be withdrawn and therefore, in all bonafide terms, the petitioners have indicated to the Court that entire procedure as envisaged before discontinuance, is observed and further in view of the fact that idle wages may not be paid even they have been absorbed at Gandhinagar unit as well. But, now to insist for the reinstatement and full back wages the interest of justice on the contrary would not be served. It was pointedout by the learned advocate for the petitioners that there are cases in which the Directors have appeared in common, but that fact itself may not infer that establishment is connecting establishment and therefore, to substantiate this contention, learned advocate has drawn the attention of this Court a decision reported in AIR 2009 SC 3155 in case of Haryana State Cooperative Supply Marketing Federation Ltd., V/s. Sanjay, and learned advocate has pointedout that no case is madeout in favour of the respondents.
Page 6 of 35HC-NIC Page 6 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT
5. Learned advocate Shri Prabhakar Upadyay, has further contended that assuming for the sake of arguments that lapse and irregularities of some nature is committed, but then at the most what is permissible is the closure compensation only and nothing beyond. Upon instruction, learned advocate Shri Upadyay has submitted that closure compensation if to be paid, the client is ready and willing to pay, but has insisted that impugned award is not possible to be implemented. To support this contention, learned advocate Shri Upadyay has drawn the attention of this Court to Section 25 FF A of I.D.Act and also to Section 25 FFF and then contended that only the closure compensation is to be paid and nothing beyond. Learned advocate Shri Upadyay has ultimately suggested that after the passage of these many years, an appropriate amount may be determined in lieu of the order of reinstatement and backwages, which would meet the ends of justice and therefore, learned advocate for the petitioners contended that off late there are series of decisions in which such kind of orders, which are practically impossible had been converted into the amount of compensation to be awarded and therefore, the same may be adopted in present proceedings as well and by contending this, learned advocate has also contended that in view of the decision reported in 2016 3 SCC 340, in case of Management of Narendra & Company Private Limited V/s. Workmen of Narendra & Company, the compensation amount may be awarded and the impugned award of reinstatement and backwages is required to be quashed and set aside.
6. To oppose this petition, learned advocate Shri Prashant B. Sharma for the respondents has stated that a written statement has been made before this Court when the initial order came to be passed by this Court. On 8th July 2005 a statement was made that unit has been closed in which the respondents - workmen were working. However, by Page 7 of 35 HC-NIC Page 7 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT referring to a sale document produced at page no.116 of petition's compilation, it was contended by the learned advocate that shed no.45 is not sold, but in fact it is the shed no.40, which is sold and therefore, there is a concealment of fact from the Hon'ble Court while taking the initial order of interim relief. However, on going through the record, it appears that no such grievance is voiced out spontaneously during this much period of time i.e. from the year 2005 to 2016 and therefore, the situation which is emerging from the record to the unit, which is already closed. It is impossible to implement the impugned award and therefore, in view of this peculiar set of circumstance, what relief is to be passed is the question posed before this Court for consideration.
7. To oppose this petition as stated, Shri Sharma, learned advocate for the respondents has further contended in view of the Articles 226 and 227 of the Constitution of India, that the finding arrived at by the learned Presiding Officer is not required to be disturbed rather not possible to be disturbed, looking to the selfimposed restriction of extraordinary jurisdiction and therefore, ultimately requested not to entertain the petition and dismiss the same in limine.
8. Having heard learned advocates for both the sides and having perused the material on record, independent of conclusion arrived at by the learned Presiding Officer, the following position is emerging from the record.
(i) The factory in which the respondents - workmen were working is closed down years back.
(ii) It appears from the record that at the time when the discontinuance taken place way back in the year 1987, the amount Page 8 of 35 HC-NIC Page 8 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT according to the petitioners establishment being retrenchment has been paid to the workmen, which is clearly reflected from the documents attached to the petition's compilation.
(iii) It is also appearing from the record that not only the amount has been paid at the time of discontinuance, but various communications also been sent by the petitioners establishment to indicate closure of the unit. The record reveals that the labour Commissioner, Electricity Board, concerned Inspector, the Excise authority, P.F. Commissioner and various authorities have been specifically informed in writing, indicating the closure of the unit and therefore, it appears that some formality has been undertaken by petitioners establishment while closing the unit and while discontinuing the respondents - workmen on account of it.
(iv) It is also appearing from the record that the amount of compensation, which has been paid by the petitioners to the respondents is admitted fact coming from the crossexamination of respondents -
workmen and therefore, it appears that except this a dispute has been raised.
(v) It is also emerging from the record that the amount of Rs.2,50,000/ in the year 2008 has already been deposited by the petitioners establishment to show the bonafide way back in the year 2008 and out of that the respondents - workmen have also been permitted to withdraw the amount proportionately and rest of the amount was deposited and therefore, it appears that the respondents - workmen have received something in compliance with the statutory provisions.
(vi) A further fact, which is revealed from the record is that the respondents - workmen undisputably were absorbed in another unit at Page 9 of 35 HC-NIC Page 9 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT Gandhinagar, which is a separate unit and there on account of discontinuance, a separate reference appear to have also been filed, which is not disputed by the learned advocate for the respondents - workmen.
9. The evidence as a whole is reflecting such kind of position prevailing on record and therefore, in the context of this, the Court is required to examine the validity and practicability of the impugned award, which is the subject matter of main petition.
10. Now to deal with the contention raised by the respective sides, first of all some of the statutory provisions are required to be taken note of and its effect in the context of present material on record. Section 25 F of the Industrial Disputes Act deals with condition precedent to retrenchment of workman. Section 25 FF A is dealing with a situation where if there is an intention of closing down of any undertaking, 60 days prior notice is required to be given to the concerned person. Section 25 FFF is dealing with the compensation payable to the workman in case of closing down of a undertaking and Section 25 G is dealing with the provision of procedure to be adopted for the retrenchment and therefore, these are the relevant provisions, statutory provisions, which are required to be considered in light of the peculiar set of circumstance as it reflected on record of the present case.
11. As can be seen from the relevant record of the petition, which was also stated to have been a part of the record of learned Presiding Officer, that the petitioners establishment has undisputedly closed since long and further while closure of the said unit, various concerned authorities have been posted with the facts by the petitioners establishment. So much so, that whatever according to petitioners, Page 10 of 35 HC-NIC Page 10 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT payable to the respondents - workmen, appear to have been paid through cheques and record further indicates that those cheques have been realized to which a certificate also came to be issued by the concerned bank and therefore, in view of this situation, it clearly appears that it is not a case of discontinuance without any formality or a closure of factory without intimation. However, the discontinuance has taken place in the year 1987 and right from the year 1990 onwards, the establishment in which respondents were working has remained closed. Even, in the year 2004 also the position was reiterated as it appears from the record. Therefore, the concerned workmen i.e. the respondents herein have not worked, as the unit was closed. It is also transpiring from the record that even the premises have been sold of by way of a sale agreement, which is also made part of the record. The confusion was tried to be generated by the respondents by referring to the indenture of sale in which there was a reference to subplot no.40 and referring to this, a contention is tried to be taken that shed no.45 is not closed or sold, but it is shed no.40, which was sold of, and qua this, learned advocate representing the petitioners has clarified that it is a number of subplot and the shed and furthermore, it has been clarified that the respondents - workmen were accommodated at a place at Gandhinagar whereas this document is related to Odhav area and therefore, numbering of subplot will not create any confusion as it is related to a land bearing subplot number. Learned advocate has further drawn the attention of this Court that even in the year 2005 when the petition came to be entertained by this Court, on 8th July 2005 a specific instruction was received by the learned advocate that shed no.45 is closed since 2004 upon which the interim relief was granted and therefore, this confusion is tried to be created just with a view to divert the attention from the core facts of the petition and therefore, it appears that this change of number or wrong incorporation of a number will not Page 11 of 35 HC-NIC Page 11 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT substantially affect the controversy involved in the petition and therefore, it can safely be said that the unit in which the respondents were working has remained closed since number of years and therefore, there is no question of reinstatement of the respondentsworkmen. On the contrary, an award of backwages to such a unit is also thrusting upon a liability, which is highly inequitable and therefore, the award practically has become impossible to be implemented and therefore, the request made by the learned advocate representing the petitioners that the award be substituted in terms of awarding compensation, sounds reasonable.
12. While referring to the affidavitinreply filed by the respondents - workmen, it has been contended that there is a constant tendency shown by the petitioners not to comply the orders by the Courts and petitioners - company is habituated to suppress the fact and not to disclose the material facts. A grievance is raised in the affidavit inreply that the permission for closure of the factory was by virtue of letter dated 17th October 1990, but to substantiate that nothing is put forth by the petitioners and therefore, in view of the conduct, no leniency be shown in favour of the petitioners. It was also contended by the learned advocate for the respondents - workmen that civil application for vacating interim relief and to grant the benefit of Section 17 B has already been filed, as after accommodating to Gandhinagar unit, the respondent workmen again have become unemployed w.e.f. March 2006 and therefore, the Court was constrained to pass the order in Civil Application No.7424 of 2006. It was also pointedout by the learned advocate that even the direction which has been issued by the Division Bench of this Court in L.P.A. No.1515 of 2006, the same is also not complied with and therefore, looking to the conduct of the petitioners, no equitable jurisdiction be exercised. A tendency to commit Page 12 of 35 HC-NIC Page 12 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT a breach of orders of the Court may not be viewed leniently. On account of this conduct, learned advocate for the respondents submitted that even the labour Commissioner was also directed to join as a party and necessary direction has also been given on 12th August 2008 in M.C.A. No.1233 of 2007 the order was passed by the Division Bench of this Court and therefore, an audacity has been shown by the petitioners to just seat tight over the order of the Court and not pass on the benefit of the respondents - workmen. Section 17 B benefit was to be given on the basis of last drawn wages, but surprisingly after 1 st May 2006 no wages have been paid under Section 17 B till date and there was a grievance voicedout that at Gandhinagar unit, they were not paid last drawn wages, but only salary under minimum wages has been paid and therefore, in true sense the compliance of Section 17 B of the I.D. Act is not observed by the petitioners. On the contrary, at Gandhinagar also a termination has taken place, which has generated another reference in the year 2009 and the workers were compel to raise such industrial dispute and the same is pending. The details of those references filed by the respondents - workmen, after they were discontinued from Gandhinagar unit, has been made in paragraph no.14 of their reply. Therefore, considering this set of circumstance, learned advocate for the respondents - workmen has suggested that the petitioners establishment has misused their position and have not complied with the orders of the Court and rather frustrated the very object for which the Court may not entertained this petition and therefore, even if the reinstatement is not possible, the learned advocate for the respondents - workmen urges the Court to dismiss the present petition.
13. Several documents have been made part of the proceedings from which request of the respondents - workmen is reflected. However, be that as it may. Here is a case where the impugned award Page 13 of 35 HC-NIC Page 13 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT in its present form is not possible to be implemented. The lapse of more than 29 years' period would clearly indicate that the interference is required to be made, more particularly in view of the fact that a request has been made by the learned advocate for the petitioners that his client is ready and willing to pay the compensation in lieu of such award so as to see that controversy can be finalised. Learned advocate for the petitioners has drawn the attention of the Court to the statutory provisions contained under Section 25 FFF of I.D. Act and then contended that only his client is subjected to at the best payment of closure compensation and nothing else. To this proposition and the submission, looking to the record of the present petition, the same is not possible to be accepted as the condition pursuant to the statutory provision appears to have not complied with in its true spirit. From the aforesaid position, to some extent, it appears that the impugned award deserves to be modified as the same is highly inequitable and rather impossible to be implemented and therefore, taking clue from the recent decisions of apex Court, reported in AIR 2016 SC 4441 in case of General Secretary, Coal Washeries Workers Union, Dhanbad V/s. Employers in relation to the Managerment of Dugda Washery of M/s. BCCL, the Court is of the opinion that the interest of justice will be maintained if the impugned award is to be substituted by awarding reasonable compensation. The relevant extract of the said decision is reproduced hereinafter for immediate perusal.
"5. Considering the arguments of both sides, in our opinion, the Division Bench was right in observing that, in the facts of the present case, an order of reinstatement must be eschewed, being inequitable. The workmen, however, must be compensated in lieu of reinstatement. Applying the Page 14 of 35 HC-NIC Page 14 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT principle underlying the decisions of this Court in Ruby General Insurance Co. Ltd., V/s. P.P. Chopra and the recent case of Delhi International Airport (P) Ltd. V/s. Union of India, in our considered opinion, interest of justice would be met by enhancing the amount of compensation in lieu of reinstatement/absorption and regularisation quantified at Rs.1,50,000/ (Rupees One Lakh Fifty Thousand) to each workmen. For, the workmen have already received wages from October 2004 to January 2012 in terms of the order under Section 17(B) of the Industrial Disputes Act, 1947 without any work assigned to them. The respondent paid minimum wages to the concerned workmen during the relevant period as the workmen were not able to produce any document in support of their last drawn wages.
6. This lump sum compensation amount of Rs.1,50,000/ to each workmen would be in full and final settlement of all the claims of the concerned workmen and substitute the order passed by the Tribunal to that extent, without any further enquiry as to whether the concerned workmen was gainfully employed during the relevant period or not.
14. Yet in another decision reported in 2016 3 SCC 340, in case of Management of Narendra & Company Private Limited V/s. Workmen of Narendra & Company, in which also by taking note of the fact that company has become defunct and nonfunctioning, the appropriate order of granting benefit in monetary terms be awarded and therefore, the learned advocate has pressed reliance upon it and the relevant Page 15 of 35 HC-NIC Page 15 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT extract is contained in paragraph nos.4 and 6, which are reproduced hereinafter.
"4. Once the learned Single Judge having seen the records and come to the conclusion that the industry was not functioning after January, 1995, there is no justification in entering a different finding without any further material before the Division Bench. The appellate bench ought to have noticed that the statement of MW3 is itself part of the evidence before the Labour Court. Be that as it may, in an inter court appeal, on a finding of fact, unless the appellate Bench reaches a conclusion that the finding of the Single Bench is perverse, it shall not disturb the same. Merely because another view or a better view is possible, there should be no interference with or disturbance of the order passed by the Single Judge, unless both sides agree for a fairer approach on relief.
6. Hence, the order for payment of back wages beyond January 1995 is vacated, and in all the other aspects, the order passed by the Division Benches is retained. In case, the workmen have not been paid the benefits which they are entitled to, the same shall be paid within a period of three months from today, failing which, the respondent - workmen shall be entitled to interest at the rate of 10 per cent per annum.
15. In other recent pronouncement also whenever such kind of situation has erected wherein, the award of reinstatement and back Page 16 of 35 HC-NIC Page 16 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT wages is not possible to be implemented and found to be highly inequitable on account of lapse of time, the Courts have modulated the award and substituted award in terms of compensation of a reasonable amount. The extract of the said decision are reproduced as under : 15.1 The Division Bench of this Court in case of Abad Dairy V/s. Manjibhai Dhanjibhai reported in 2000 (3) GLH 409 while dealing with almost similar situation, has considered the situation and observed that the Court has to consider the relevant circumstance which might ultimately justify the denial of relief. In the facts of the aforesaid case, the Abad Dairy was a sick unit was in financial crunch and almost on the verge of closure and in the context of that situation, the Division Bench has considered the decision of the Supreme Court and held like this. Relevant extract of the said decision which is contained in Para.30 and 31, same are reproduced hereinafter :
"30. Considering the claim of regularisation or reinstatement and backwages to the workmen, the financial condition of the Industry and its requirement for the jobs or posts cannot be overlooked. As a matter of fact, these are very relevant circumstances and might justify denial in a given case. In the instant case, admittedly Abad Dairy is now a sick unit. Due to competitive market in Gujarat its business has gone down so much that it is under tremendous financial strain. There are few job opportunities available with it. As has been pointed out in the reply affidavit the sale of milk in the year 199495 was 3 lacs litres per day which at the time of filing reply in the petition in the month of February 1995 had gone down to hardly 45000 litres Page 17 of 35 HC-NIC Page 17 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT per day. The statement on affidavit reads:
"With the sale of milk taking nosedive as aforesaid, it was no longer possible for the respondent Dairy to provide work to even its permanent workmen. Since large number of permanent workmen were surplus in the Dairy there is a burden of idle wages. The employer had to introduce voluntary retirement schemes resulting in 671 workmen availing the benefit of retirement. The adverse market conditions has financially crippled the dairy. It showed accumulated losses at the end of financial year 31st March, 1994 to the tune of Rs.27,75,03,767/. As a result it was declared sick unit by the Board of Industrial and Financial Construction by order passed on 26.10.1994."
Without going into the legal question whether the provisions of Section 22(3) of the Sick Industrial Undertakings Act would bare any such proceedings at the instance of the workmen for regularisation and back wages, we are clearly of the opinion that it would be highly unjust to grant workmen the relief of regularisation and back wages as prayed by them which the sick unit is unable to provide.
31. In rejecting the claim of the workmen, we are supported by the following observations of the Supreme Court in the case of Surendra Kumar Verma Vs. The Central Government Indsutrail Tribunalcum Labour Court, New Delhi and Another reported in 1981 SC 422. The relevant portion reads as under:
Page 18 of 35HC-NIC Page 18 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT "6. ........ But there may be exceptional circumstances which make it impossible or wholly inequitable to grant reinstatement with full back wages. For instance, the industry might have closed down or might be in severe financial doldrums; the workmen concerned might have secured better or other employment elsewhere and so on. In such situations, there is vestige of discretion left in the Court to make appropriate consequential orders.
The Court may deny the relief of reinstatement where reinstatement is impossible because the industry has closed down. The Court may deny the relief of award of full back wages where that would place an impossible burden on the employer. ....."
15.2 Just recent decision delivered by the Supreme Court in case of General Secretary, Coal Washeries Workers Union,Dhanbad V/s. Employers in relation to the Management of Dugda Washery of M/s. BCCL.
, reported in AIR 2016 SC 4441, while dealing with such a situation, the Supreme Court has considered an issue as to what is the relief to be couched in a situation like this and the relevant extract of the said decision based upon earlier decision of the Supreme Court is reproduced hereinafter :
"3. .... The Division Bench, therefore, modified the award in the following terms:
"We considered the submission of the learned counsel for the parties and we are of the view that even the Labour court was of the view that these workmen are Page 19 of 35 HC-NIC Page 19 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT not entitled to full back wages in view of the fact that they did not work and the back wages were also awarded w.e.f. 1st July 1990. The workmen worked from 19861990 for which they got their salary/wages and this fact is not in dispute. Thereafter the workmen are getting the benefit of the payment of wages in view of Section 17(b) of the Industrial Disputes Act, 1947 in view of the award dated 19th July 2007. In view of the above fact that these workmen are not working since 1990, we do not find it equitable to maintain the order to reinstate the employees after 20 years. So far as the compensation in lieu of the reinstatement is concerned, we deem it proper to award Rs.50,000/ (fifty thousand) to each of the workmen in addition to whatever amount has been paid to these workmen under Section 17(b) of the said Act by the appellant.
With this modification, this LPA is partly allowed to the extent as indicated above."
5. Considering the arguments of both sides, in our opinion, the Division Bench was right in observing that, in the facts of the present case, an order of reinstatement must be eschewed, being inequitable. The workmen, however, must be compensated in lieu of reinstatement. Applying the principle underlying the decisions of this Court in Ruby General Insurance Co. Ltd. vs. P.P. Chopra[1] and the recent case of Delhi International Airport (P) Ltd. vs. Union of India[2], in our considered opinion, interest of justice would be met by enhancing the Page 20 of 35 HC-NIC Page 20 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT amount of compensation in lieu of reinstatement/absorption and regularisation quantified at Rs.1,50,000/(Rupees One Lakh Fifty Thousand) to each workmen. For, the workmen have already received wages from October 2004 to January 2012 in terms of the order under Section 17(B) of the Industrial Disputes Act, 1947 without any work assigned to them. The respondent paid minimum wages to the concerned workmen during the relevant period as the workmen were not able to produce any document in support of their last drawn wages.
6. This lump sum compensation amount of Rs.1,50,000/ to each workmen would be in full and final settlement of all the claims of the concerned workmen and substitute the order passed by the Tribunal to that extent, without any further enquiry as to whether the concerned workmen was gainfully employed during the relevant period or not."
15.3 In a further decision, the apex Court in case of Assistant Engineer, Rajasthan Development Corporation and Another V/s. Gitam Singh, reported in 2013 (5) SCC 136 wherein, upon examination of the record, the reinstatement with continuity in service and 25% back wages award came to be converted into a compensation of Rs.50,000/. After considering several decisions in the aforesaid decision, the Hon'ble Apex Court found that the judicial discretion exercised by the Labour Court in granting award of reinstatement found to be erroneous and a lumpsum amount of Rs.50,000/ came to be awarded, the relevant paragraph of this direction is reproduced hereinafter.
Page 21 of 35HC-NIC Page 21 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT "28. We may also refer to a recent decision of this Court in Bharat Sanchar Nigam Limited v. Man Singh [24]. That was a case where the workmen, who were daily wagers during the year 198485, were terminated without following Section 25F. The industrial dispute was raised after five years and although the Labour Court had awarded reinstatement of the workmen which was not interfered by the High Court, this Court set aside the award of reinstatement and ordered payment of compensation. In paragraphs 4 and 5 (pg.559) of the Report this Court held as under:
"4. This Court in a catena of decisions has clearly laid downthat although an order of retrenchment passed in violation of Section 25F of the Industrial Disputes Act may be set aside but an award of reinstatement should not be passed. This Court has distinguished between a daily wager who does not hold a post and a permanent employee.
5. In view of the aforementioned legal position and the fact that the respondent workmen were engaged as "daily wagers" and they had merely worked for more than 240 days, in our considered view, relief of reinstatement cannot be said to be justified and instead, monetary compensation would meet the Page 22 of 35 HC-NIC Page 22 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT ends of justice."
29. In light of the above legal position and having regard to the facts of the present case, namely, the workman was engaged as daily wager on 131991 and he worked hardly for eight months from 13 1991 to 31101991, in our view, the Labour Court failed to exercise its judicial discretion appropriately. The judicial discretion exercised by the Labour Court suffers from serious infirmity. The Single Judge as well as the Division Bench of the High court also erred in not considering the above aspect at all. The award dated 2862001 directing reinstatement of the respondent with continuity of service and 25% back wages in the facts and circumstances of the case cannot be sustained and has to be set aside and is set aside. In our view, compensation of Rs.50,000 by the appellant to the respondent shall meet the ends of justice. We order accordingly. Such payment shall be made to the respondent within six weeks from today failing which the same will carry interest @9% per annum."
15.4 In another decision of the Apex Court in case of Bharat Sanchar Nigam Limited and Ors. V/s. Kailash Narayan Sharma , reported in (2014) 16 SCC 440 also, similar proposition is reiterated. Relevant observations are as under :
"9. In last few years it has been consistently held by this Court that relief by way of reinstatement with back wages is not automatic even if termination of an employee is found to be illegal or is in contravention Page 23 of 35 HC-NIC Page 23 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT of the prescribed procedure and that monetary compensation in lieu of reinstatement and back wages in cases of such nature maybe appropriate. (See U.P. State Brassware Corpn. Ltd. v. Uday Narain Pandey, (2006) 1 SCC 479; Uttaranchal Forest Development Corpn. v.M.C. Joshi, (2007) 9 SCC 353; State of M.P. v. Lalit Kumar Verma, (2007) 1 SCC 575; M.P. Admn. v. Tribhuban, (2007) 9 SCC 748; Sita Ram v. Moti Lal Nehru Farmers Training Institute, (2008) 5 SCC 75; Jaipur Development Authority v. Ramsahai, (2006) 11 SCC 684; GDA v. Ashok Kumar, (2008) 4 SCC 261 and Mahboob Deepak v. Nagar Panchayat, Gajraula, (2008) 1 SCC
575).
x x x
11. In view of the aforesaid legal position and the fact that the workmen were engaged as daily wagers about 25 years back and they worked hardly for 2 or 3 years, relief of reinstatement and back wages to them cannot be said to be justified and instead monetary compensation would sub serve the ends of justice. In our considered view, the compensation of L 40,000/ to each of the workmen (respondent nos. 1 to 14) shall meet the ends of justice. We order accordingly. Such payment shall be made within 6 weeks from today, failing which the same shall carry interest at the rate of 9 per cent per annum."
15.5 In another decision in the case of Senior Superintendent Telegraph (Traffic), Bhopal V/s Santosh Kumar Seal and others , reported in ( 2010) 6 SCC 773 , the Hon'ble Apex Court has dealt with a case of daily Page 24 of 35 HC-NIC Page 24 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT wager having been retrenched while applying Section 25F of the Act has held that relief by way of reinstatement with back wages not automatic even if termination of the employee is found to be illegal or in contravention of the procedure. In that case also, a situation was erupted that after almost a period of more than 25 years, a situation had arisen to reinstate the workman with back wages who has hardly worked for 2 3 years and therefore in such a situation when even if there was violation of Section 25F, a monetary compensation came to be awarded. The relevant paragraphs are as under:
"7. The learned Senior Counsel for the appellant then submitted that vide order dated 1021987, the services of the workmen were not terminated but they were redeployed in the office of AE (Cables) CTX, Bhopal; the workmen, however, did not join their duty there and they abandoned their service. The Tribunal referred to the crossexamination of the appellant's witness Shri A.K.Saxena in this regard and did not find any merit in this submission. The High Court found no justification to interfere with the said finding of the Tribunal. We have no justifiable reason to take a different view on facts found by the Tribunal.
9. In the last few years it has been consistently held by this Court that relief by way of reinstatement with back wages is not automatic even if termination of an employee is found to be illegal or is in contravention of the prescribed procedure and that monetary compensation in lieu of reinstatement and back wages in cases of such nature may be appropriate.Page 25 of 35
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10. In a recent judgment authored by one of us (R.M.Lodha,J) in Jagbir Singh v.Haryana State Agriculture Mktg.Board, the aforesaid decisions were noticed and it was stated:
"7. It is true that the earlier view of this Court articulated in many decisions reflected the legal position that if the termination of an employee was found to be illegal, the relief of reinstatement with full back wages would ordinarily follow. However, in recent past, there has been a shift in the legal position and in a long line of cases, this Court has consistently taken the view that relief by way of reinstatement with back wages is not automatic and may be wholly inappropriate in a given fact situation even though the termination of an employee is in contravention of the prescribed procedure. Compensation instead of reinstatement has been held to meet the ends of justice.
* * * * * * * * * *
14. It would be, thus, seen that by a catena of decisions in recent time, this Court has clearly laid down that an order of retrenchment passed in violation of Section 25F although may be set aside but an award of reinstatement should not, however, be automatically Page 26 of 35 HC-NIC Page 26 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT passed. The award of reinstatement with full back wages in a case where the workman has completed 240 7 (2008) 4 SCC 261 8 (2008) 1 SCC 575 9 (2009) 15 SCC 327 6 days of work in a year preceding the date of termination, particularly, daily wagers has not been found to be proper by this Court and instead compensation has been awarded. This Court has distinguished between a daily wager who does not hold a post and a permanent employee".
11. In view of the aforesaid legal position and the fact that the workmen were engaged as daily wagers about 25 years back and they worked hardly for 2 or 3 years, relief of reinstatement and back wages to them cannot be said to be justified and instead monetary compensation would subserve the ends of justice. In our considered view, the compensation of Rs. 40,000/ to each of the workmen (respondent nos. 1 to 14) shall meet the ends of justice. We order accordingly. Such payment shall be made within 6 weeks from today failing which the same shall carry interest at the rate of 9 per cent per annum."
15.6 In recent decision delivered by the Apex Court in case of Raj Kumar V/s. Assistant General Manager, State Bank of India , reported in (2016) 7 SCC 582 in which also the Apex Court was of the view that in lieu of reinstatement and back wages, the relief can be moulded. Para.2 of the said decision since relevant is quoted hereinafter:
"2. Having regard to the period of work starting Page 27 of 35 HC-NIC Page 27 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT from 1984 though intermittently upto the year 1993, we are of the view that the interest of justice should be advanced in case the compensation is slightly enhanced and fixed at Rs.2,00,000/. Therefore, it is ordered that the appellant shall be entitled to compensation of Rs.2,00,000/ and there shall be no further claim with respect to the appellant's engagement with the respondent. We make it clear that this is in addition to whatever has already been paid to the appellant. The amount shall be paid within six weeks from today."
15.7 Credit In another decision in the case of Talwara Cooperative and Service Society Limited V/s. Sushil Kumar, reported in (2008) 9 SCC 486, the Supreme Court has held as under :
"15. We have noticed hereinbefore that the respondent was employed for a short period and that too in two different spells, viz., from 1987 to 1990 and from 1995 to 1997. Having regard to the fact that the respondent has not worked for a long period and the appellant does not have any capacity to pay as it is a sick unit, interest of justice would be subserved if in stead and place of an award of reinstatement with full back wages, a compensation for a sum of Rs. 2,00,000/ (Rupees two lakhs only) is directed to be paid. The said sum would be over and above the amount which the appellant has deposited in terms of the order of the High Court under Section17B of the Industrial Disputes Act."
15.8 Others V/s.
In another decision in the case of State of M.P. & Arjunlal Rajak, reported in (2006) 2 SCC 711, the Supreme Court has Page 28 of 35 HC-NIC Page 28 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT held as under :
"8. It is also trite that even for grant of back wages, application of mind on the part of the Industrial Court is imperative, as a relief of full back wages may not be granted automatically. In U.P. State Brassware Corpon. Ltd. & anr. Vs. Uday Narain Pandey [(2006) 1 SCC 479] this Court opined:
"22. No precise formula can be laid down as to under what circumstances payment of entire back wages should be allowed. Indisputably, it depends upon the facts and circumstances of each case.
It would, however, not be correct to contend that it is automatic. It should not be granted mechanically only because on technical grounds or otherwise an order of termination is found to be in contravention of the provisions of Section 6N of the U.P. Industrial Disputes Act."
9. It was further held that while a decision to close down the establishment has been taken, ordinarily, back wages to a limited extent should be granted.
10. The onus to prove that he had completed 240 days of work or he had not been gainfully employed within the said period was on the workman.
11. Keeping in view the fact that the services of the respondent were terminated on the ground that the Page 29 of 35 HC-NIC Page 29 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT production unit in which he was working itself had been closed, we are of the opinion that interest of justice would be subserved if a monetary compensation of Rs.10,000/ is granted to him. It, however, goes without saying that he would be entitled to the wages for the period he had actually worked pursuant to or in furtherance of the order of the Labour Court and as also of the High Court upon his reinstatement. The award of the Labour Court as also the judgment of the High Court are set aside."
And therefore, on overall situation prevailing on record, the Court is of the considered opinion that impugned award deserves to be modified and in lieu thereof, an amount of compensation deserves to be awarded to the respondents - workmen.
16. With respect to the another aspect of the matter, that a contention raised by the respondents - workmen that with a view to avoid the benefit of Section 17 B of the I.D. Act, the respondents - workmen has been absorbed at a different place from their closed unit at Gandhinagar and there, after some period of time created a situation discontinuance has taken place, which has generated the rise of another reference, which is referred to above and therefore, it is contended by the learned advocate for the respondents that it is nothing but a same unit rather a sister concerned, as the management appear to have been common in both the companies and to this effect the learned advocate for the petitioners has relied upon the decision of apex Court in case of Haryana State Cooperative Supply Marketing Federation Ltd., V/s. Sanjay, reported in 2009 SC 3155. By referring to this judgment, it is contended that simply because if the management persons are common, the separate unit cannot loses its independent status of entity. The relevant Page 30 of 35 HC-NIC Page 30 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT paragraph no.12, which require to be considered is reproduced hereinafter.
"12. Learned counsel for the respondent, however, strenuously urged that the Managing Director, HAFAED has control over the office of District Manager, Jind as well as District Manager, Hissar and, therefore, workman can be said to have worked under the same employer. We are unable to accept the contention of the learned counsel. Merely, because the District Manager, Jind and the District Manager, Hissar are the subordinate officers under the control of Managinig Director. HAFED, the two offices at Jind and Hissar do not cease to be separate establishment for the purpose of Section 25F of the ID Act. As held by this Court in Jammasha Diwan, with which we respectfully agree, that when a casual employee is employed in different establishments, may be under the same employer, the concept of continuous service cannot be applied. There is also no merit in the submission of the learned counsel for the respondent that the workman was transferred from office of the District Manager, Jind to the Office of District Manager, Hissar. No transfer order was placed by the workman before the Labour Court. As a matter of fact, by a separate and fresh contract, the workman was engaged by the District Manager, Hissar from January 15, 1999. The employment of the workman at Hissar was not an employment in continuity but a fresh employment."
17. In aforesaid situation, no doubt, Gandhinagar unit is separate entity altogether and the workmen have been absorbed during Page 31 of 35 HC-NIC Page 31 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT the pendency of proceedings, but then, that discontinuance has generated and a separate reference altogether right from the year 2009. The same is pending, the Court is not require to deal with such a situation which has erected at Gandhinagar unit and therefore, to this aspect without entering into the merit of that discontinuance, the Court is leaving the issue as it is without commenting much upon it.
18. Mr.Upadyay, learned advocate then, has taken the Court to yet another decision reported in 2007 (0) GLHEL - SC 39927 in case of Managing Director, Karnataka Forest Development Corporation Ltd., V/s. Workmen of Karnataka Pulpwood Ltd., and by referring to that decision, learned advocate for the petitioners has contended that only remedy available to the respondents - workmen is just to claim compensation and not absorption at all and to this paragraph no.17 and 18 are relied upon, which are required to be reproduced hereunder.
"17. Before the Division Bench of the High Court, as we have noticed hereinbefore, the order of the State Government directing prior permission for effecting closure of the industrial undertaking has not been questioned. In fact, even the learned Single Judge had made observations to the effect that the closure may be affected. Having regard to the fact that rights of the workmen flow from the provisions of the Industrial Disputes Act, a writ court could not have issued any other direction. One of the questions which had arisen for consideration before the Division Bench was as to whether the order of the State Government dated 24.10.1991 subsists. For considering the said question, it was not necessary for the High Court to ascertain the view point of the Page 32 of 35 HC-NIC Page 32 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT State. In the year 1991, a decision was taken not to close down the undertaking of the company. The 1991 decision was modified by a subsequent order that the undertakings also as that of the company are merging with each other. No order of merger has been passed. No decision by a competent authority under the Companies Act had been taken. Indisputably, the appellant and the company have not merged. In absence of any valid order of merger of two different entities, evidently the relationship of employer and employee between the respondents and the said company, as had been obtaining, continued. Furthermore, as soon as the closure of an undertaking became effective, it is true that the said relationship ceased to exist.
18. The right of the workmen, therefore, was only to receive the amount of compensation. If the State is not in a position to take upon itself the financial burden of the appellant - Corporation for appointing the concerned workmen; direction to continue their services could not be issued. There cannot be any doubt whatsovever that the said order dated 24.10.1991 has been superseded by necessary implication. Both merger of two undertakings and the closure of one undertaking do not stand together. If the workmen, therefore, think that any other or further right has accrued to them in terms of the purported assurance given by the State, it may take recourse thereto before an appropriate forum but a writ petition was not maintainable."Page 33 of 35
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19. Considering this set of circumstance, the Court is of the opinion that it is not possible to consider the case of respondents for absorption, as the unit is closed and Gandhinagar unit is facing reference, which has been raised by the respondents - workmen and therefore, qua this, present impugned award in its literal form, except awarding reasonable amount for compensation nothing more is possible to be granted and therefore, the Court is of the opinion that the impugned award is required to be substituted by awarding an amount of reasonable compensation for which the following propositions are taken note of to arrive at a just figure, which would be equitable and strike balance between both the sides.
20. It is also to be taken note of that there is a persistent grievance raised by the respondents - employees about conduct of the petitioners establishment that a systematic design is adopted to discontinue the respondents workmen and therefore, this conduct is also relevant which is clearly visible from the several orders passed by this Court. However, since the circumstances are such where the establishment is already closed, business is no longer surviving and therefore, Court is constrained to adopt this view of awarding lumpsum compensation.
21. Considering the aforesaid proposition of law and the recent trend adopted by the Court, it is desirable in the interest of justice to mould the relief and the impugned award in the present form is required to be substituted by awarding reasonable amount of compensation.
22. The amount of compensation, which is required to be fixed by considering the fact that discontinuance has taken place on 17th July 1987 and an amount of Rs.2,50,000/ has also been deposited by the Page 34 of 35 HC-NIC Page 34 of 35 Created On Sat Dec 17 00:54:22 IST 2016 C/SCA/13718/2005 CAV JUDGMENT petitioners establishment to show the bonafide, it is also required to be noticed while determining an amount that for some interregnum period, the respondents were absorbed in another unit at Gandhinagar upto the period of 2008 and the grievance of the respondents at that unit is very much pending before the appropriate authority in the form of reference as stated by the respondents themselves. The fact is also required to be noticed that the unit is already no longer in existence since number of years and substantial formalities about closure of that unit has also been observed and undertaken by petitioners. It is under this set of circumstance, it is desirable in the interest of justice to fix a lumpsum compensation, which is determined by this Court on the basis of aforesaid factors, which would meet ends of justice. The said amount of compensation payable to each of the respondent workmen is fixed at Rs.2,50,000/ and the same shall be paid by the petitioners establishment within a period of 8 weeks from today and the impugned award of reinstatement and backwages is accordingly substituted by awarding this lumpsum compensation indicated above and petition is disposed of.
23. In the result, the petition is partly allowed. Rule made absolute to the aforesaid extent. Interim relief, granted earlier stands vacated.
(A.J. SHASTRI, J.) Rathod...
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