Rajasthan High Court - Jaipur
Dal Chand And 5 Ors. vs Judge, Labour Court And Ors. on 16 December, 2003
Equivalent citations: (2004)IIILLJ38RAJ, 2004(2)WLC514
Author: N.N. Mathur
Bench: N.N. Mathur
JUDGMENT
N.N. Mathur J.
1. In this group of special appeals the controversy which is often raised is where termination of service is found to be invalid, reinstatement as a matter of course should be awarded or compensation would be an adequate relief. The question is neither new nor raised for the first time. It crops up every time when the order of termination or dismissal of the workman is held to be illegal on account of victimization or on certain technical grounds. It is of course true that ordinarily relief against illegal termination of service is reinstatement but there are exceptions to the general rule, where a Labour Court in exercise of its discretion can award compensation in lieu of reinstatement. No hard and fast rule can be laid down as an exception to general rule of reinstatement. There are catena of decisions of Apex Court and this Court which provide enough guidelines in such matters. It is vehemently argued by Mr. R.S. Saluja learned counsel for the appellant that the learned Judge presiding over the particular Labour Court while exercising its discretion as a practice has been refusing the reinstatement and awarding the compensation in lieu thereof as a practice by providing stereo type reasons. Mr. C.S. Kotwani learned counsel appearing for the respondents has taken a serious objection to the contention. Be that as it may, both the learned counsel in all fairness have placed before us the various decisions of the Apex Court dealing with the controversy. Before proceeding to deal with the case referred to, it would be appropriate to get acquainted with Section 11A of the Industrial Disputes Act which empowers the Industrial Tribunal or Labour Court to award any other relief such as compensation instead of reinstatement.
2. In Indian Iron & Steel Company Ltd. & Anr. v. Their Workmen reported in AIR 1958 SC 130 : 1958-I-LLJ-260, the Supreme Court while considering the power to interfere with the management's decision to dismiss, discharge or terminate the services of a workman, observed that in cases of dismissal on misconduct, the Tribunal does not, however, act as a Court of appeal and substitute its own judgment for that of the management and the Tribunal will interfere only when there is a want of good faith, victimization, unfair labour practice etc. on the part of management. This led to insertion of Section 11A in the Industrial Disputes Act, 1947, It is relevant to mention that the International Labour Organization, in its recommendation concerning "Termination of employment at the initiative of the employer" adopted in June 1963, recommended that a worker aggrieved by the termination of his employment should be entitled to appeal against the termination, among Ors., to a neutral body such as arbitrator, a Court, an arbitration committee or a similar body and that the neutral body concerned should be empowered to examine the reasons given in the termination of employment and the other circumstance relating to the case and to render a decision on the justification of the termination. The International Labour Organization further recommended that a neutral body should be empowered (if it finds that the termination of employment was unjustified) to order that the worker concerned, unless reinstated with unpaid wages should be paid adequate compensation or afforded some other relief. In accordance with these recommendations it was considered that the Tribunal's power in an adjudication proceeding relating to discharge or dismissal of a workman should not be limited and that the Tribunal should have the power, in cases wherever necessary to set aside the order of discharge or dismissal and direct reinstatement of the workman on such terms and conditions, if any as it thinks fit or give such other relief to the workman including the award of compensation or any lesser punishment in lieu of discharge or dismissal as the circumstances of the case may require. Thus, Section 11A was introduced by way of amendment in the Industrial Disputes Act which reads as follows:
"11-A. Power of Labour Courts, Tribunals and National Tribunals to give appropriate relief in case of discharge or dismissal of workmen.- Where an industrial dispute relating to the discharge or dismissal of a workman has been referred to a Labour Court, Tribunal or National Tribunal for adjudication and, in the course of the adjudication proceedings, the Labour Court, Tribunal or National Tribunal, as the case may be, is satisfied that the order of discharge or dismissal was not justified, it may, by its award, set aside the order of discharge or dismissal and direct reinstatement of the workman on such terms and conditions, if any, as it thinks fit, or give such other relief to the workman including the award of any lesser punishment in lieu of discharge or dismissal as the circumstances of the case may require;
Provided that in any proceeding under this Section the Labour Court, Tribunal or National Tribunal, as the case may be, shall rely only on the materials on record and shall not take any fresh evidence in relation to the matter."
Thus, in view of Section 11A of the Industrial Disputes Act a discretion is vested with the Labour Court or the Tribunal to grant relief to the workman by way of awarding compensation in lieu of discharge or dismissal. The vesting of such a discretion with the Tribunal or the Labour Court has been felt necessary in the interest of industrial harmony and peace as in some cases imposition of service of a work man on an unwilling employer might not be conducive to harmony and peace of the industries.
3. The first case referred to by the learned counsel is Hindustan Steels Ltd., Rourkela v. A. K. Roy & Ors. reported in AIR 1970 SC 1401 : 1969 (3) SCC 513 : 1970-I-LLJ-228. In the said case a workman A. K. Roy was admitted as a trade apprentice. On completion of his training he was appointed as skilled workman in the year 1958. On December 9, 1960 he was served with an order by which his services were terminated. He was removed from the service because of the adverse police report. The order of termination was found to be illegal by the Tribunal. The said finding was confirmed by the High Court. On appeal by the Company, the special leave was granted only on the limited question as to whether the Tribunal was in the circumstances of the case justified in directing reinstatement. The Apex Court held that the discretion is vested with the Tribunal to award compensation instead of reinstatement if the circumstances of the particular case are unusual or exceptional so as to make reinstatement inexpedient or improper. The Apex Court observed as follows at p. 234 of LLJ:
"14. ....... The Tribunal has therefore, to exercise its discretion judicially and in accordance with well recognised principles in that regard and has to examine carefully the circumstances of each case and decide whether such a case is one of these exceptions to the general rule......" The Court further observed giving caution to the High Court exercising powers under Article 227 of the Constitution of India, thus:
"If the Tribunal were to exercise its discretion in disregard of such circumstances or the principles laid down by this Court it would be a case either of no exercise of discretion or of one not legally exercised. In either case the High Court in exercise of its writ jurisdiction can interfere and cannot be content by simply saying that since the Tribunal has exercised its discretion it will not examine the circumstances of the case to ascertain whether or not such exercise was properly and in accordance with the well settled principles made. If the High Court were to do so, it would be a refusal on its part to exercise jurisdiction."
In Para 17 the Court observed that:
"if a statutory Tribunal exercises its discretion on the basis of irrelevant considerations or without regard to relevant considerations, certiorari may properly issue to quash its order."
The Court further observed, in case of refusal by the High Court to interfere mechanically would amount to refusal to exercise jurisdiction and such order will be liable to interference. Thus, it is evident that a duty is cast on the Tribunal to exercise the discretion on the relevant considerations. A further duty is cast on the High Court not to refuse interference with the order of the Tribunal mechanically or in other words in a case where the reinstatement has been refused by the Tribunal, the High Court must ensure that the discretion has been exercised on relevant considerations depriving a workman relief of reinstatement. The Apex Court as illustrative cases culled out the exceptions to the general rule of reinstatement, as follows: -
(i) strained relations between the employer and the employee;
(ii) the post held by the aggrieved employee has been one of trust and confidence; or
(iii) discharge was unsustainable owing to me infirmity in the impugned order;
(iv) the employee was found to be guilty of such activity subversive or prejudicial to the industries.
In the opinion of the Apex Court, the High Court erred in refusing to interfere with the order of the Tribunal directing reinstatement merely on the ground that it could not do so as it was a case where Tribunal has exercised its discretion. Considering the fact that there was an adverse police report, it was not a case of victimization and the impugned order was set aside on a technical ground and the further fact that the respondent workman had served only for 2 years held that the order of reinstatement was liable to be quashed. The Apex Court while setting aside the order of reinstatement directed for payment of compensation for a period of two years at the rate of Rs. 160/- per month that being the last salary drawn by the concerned workman.
4. In the State Bank of India v. N. Sundara Money reported in AIR 1976 SC 1111 : 1976 (1) SCC 822: 1976-I-LLJ-478, the Apex Court found that order of removal was liable to be set aside on the technical ground. Considering the peculiar facts and circumstances of the case, the workman was directed to be put back in service as de novo. The Court made it clear that it was not laying down any general proposition of law but making the direction in the special circumstances of the case. As such this case cannot be taken as a precedent.
5. The next case referred to by the learned -counsel is Hindustan Tin Works Pvt. Ltd. v. Employees of Hindustan Tin Works Pvt. Ltd. & Ors. reported in AIR 1979 SC 75 : 1979 (2) SCC 80 : 1978-II-LLJ-474. It is not a case on the controversy involved in the instant case as is evident from the judgment itself. The case relates to award of back wages and not the compensation in lieu of reinstatement.
6. In Surendra Kumar Verma & Ors. v. Central Government Industrial Tribunal-Cum-Labour Court, New Delhi & Anr. reported in AIR 1981 SC 422 : 1980 (4) SCC 443 : 1981-I-LLJ-386, the Court held that ordinarily the relief of reinstatement must be awarded where no special impediment in the way of awarding the relief is clearly shown. The Court culled out the exceptions as follows at p. 389 of LLJ:
"6. But there may be exceptional circumstances which make it impossible or wholly inequitable vis-a-vis the employer and workmen to direct 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 a 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. In such and other exceptional cases the Court may mould the relief, but, ordinarily the relief to be awarded must be reinstatement with full back wages........"
7. In Mohan Lal v. Management of Bharat Electronics Ltd. reported in AIR 1981 SC 1253 : 1981 (3) SCC 225 : 1981-II-LLJ-70 the Apex Court after having noticed its earlier decision in Hindustan Steels Ltd. case (supra) wherein it was held that the Court before granting reinstatement must weigh all the facts and exercise discretion properly whether to grant reinstatement or to award compensation observed that there are catena of decisions which ruled that where termination is illegal specially where there is an ineffective order of retrenchment, there is neither termination nor cessation of service and a declaration follows that the workman concerned continues to be in service with all consequential benefits. For the convenience Para 17 of the judgment is extracted as follows at p. 78 of LLJ:
"17. The last submission was that looking to the record of the appellant this Court should not grant reinstatement but award compensation. If the termination of service is ab initio void and inoperative, there is no question of granting reinstatement because there is no cessation of service and a mere declaration follows that he continues to be in service with all consequential benefits. Undoubtedly, in some decisions of this Court such as Ruby General Insurance Co. Ltd. v. P.P. Chopra 1970-I-LLJ-63 and Hindustan Steel Ltd., Rourkela v. A.K. Roy AIR 1970 SC 1401 : 1970-I-LLJ-228, it was held that the Court before granting reinstatement must weigh all the facts and exercise discretion properly whether to grant reinstatement or to award compensation. But there is a catena of. decisions which rule that where the termination is illegal especially where there is an ineffective order of retrenchment, there is neither termination nor cessation of service and a declaration follows that the workman concerned continues to be in service with all consequential benefits. No case is made out for departure from this normally accepted approach of the Courts in the field of social justice and we do not propose to depart in this case."
8. Another case referred to by the learned counsel is Gammon India Ltd. v. Niranjan Dass reported in AIR 1984 SC 500 : 1984 (1) SCC 509 : 1984-I-LLJ-233. This case is also not an authority on the controversy involved in the instant case. In the said case as the respondent workman had reached the age of superannuation a direction was given for payment of back wages.
9. Another case referred to by the learned counsel is Jai Bhagwan v. Management of Ambala Central Co-operative Bank Ltd. & Anr. reported in AIR 1984 SC 286 : 1983 (4) SCC 611 : 1984-1- LLJ-52. This case has no bearing on the controversy involved as it was a case of awarding of back wages and not payment of compensation in lieu of reinstatement. The Court instead of granting full back wages directed to award half of the back wages from the date of termination till the date of reinstatement.
10. In Chandu Lal v. Management of Pan American World Airways Inc., reported in AIR 1985 SC 1128 : 1985 (2) SCC 727 : 1985-II-LLJ-181 the Court considering the fact that the employer had lost confidence in the workman directed for payment of compensation in lieu of discharge.
11. Another case referred to by the learned counsel is Rolston John v. Central Government Industrial Tribunal-Cum-Labour Court & Ors. reported in AIR 1994 SC 131 : 1995 Supp (4) SCC 549 : 1999-III-LLJ (Suppl)-86. In this case considering the fact that the order of termination was set aside on a technical ground the Court directed for payment of compensation in lieu of dismissal.
12. In Rattan Singh v. Union of India & Anr. reported in 1997 (11) SCC 396 : 1998 -III-LLJ (Suppl)-714 the Apex Court considering the fact that 20 years had elapsed since the date of termination directed for payment of a consolidated sum of Rs. 25,000/- in lieu of compensation for back wages as well as reinstatement.
13. Another case referred to by the learned counsel is Sain Steel Products v. Naipal Singh & Ors. reported in 2001-I-LLJ-1345 (SC). In the said case the Apex Court considering the fact that the workman was not in employment since 1975, directed for grant of compensation in the sum of Rs. 50,000/- in lieu of discharge.
14. In Vikramaditya Pandey v. Industrial Tribunal, Lucknow & Anr. reported in 2001 SCC (L&S) 4 : 2002-1-LLJ-701 the Court held that ordinarily, once termination of service of an employee is held to be wrongful or illegal the normal relief of reinstatement with full back wages shall be available to an employee. The Court further held that it is open to the employer to specifically plead and establish that there were special circumstances which warranted either non-reinstatement or non-payment of back wages. On the facts of the case, the Court did not find any special circumstances refusing the reinstatement. However, the Court instead of full back wages awarded only to the extent of 50%.
15. In Pyare Jan and Anr. v. Karnataka Electricity Board & Anr. reported in 2003 SCC (L&S) 776 : 2003-III-LLJ-561, the Court held that usually lumpsum payment is awarded where it appears that employer had lost trust and confidence in employee on account of some misconduct. However, the Court directed reinstatement keeping in view the young age of the workman.
16. A learned single Judge (MATHUR, J.) of this Court in Babu Lal v. Labour Court, Jodhpur & Ors. (S.B. Civil Writ Petition No. 3987/1998) decided on March 28, 2003 held that the power of Tribunal to grant relief in industrial adjudication in case of wrongful termination, dismissal or removal of the concerned employee either by way of reinstatement or compensation is discretionary. The learned single Judge while observing that no hard and fast rule can be laid down as exception to general rule still provided the following guide lines:
(1) The Tribunal in each case keeping in mind the objectives of the industrial adjudication in the spirit of fairness and justice confront with the question whether the circumstances of the case require that an exception should be made and compensation will meet the ends of justice.
(2) Efforts should be made to reconcile conflicting interests of the employer and the employee. The employee is entitled to protection against victimisation or unfair labour practice and as such the protection of service. On the other hand an employer cannot be insisted upon to keep a workman in employment whose presence shall be prejudicial to the industrial peace and growth of the industry.
(3) A distinction must be made between termination, dismissal or removal held to be wrongful as a result of mala fide or colourable exercise of powers amounting to victimisation or unfair labour practice and wrongful termination or dismissal on account of technical approach of law or violation of principle of natural justice or any other just ground. In case of former, ordinarily relief should be granted of reinstatement with full back wages. Even if compensation has to be awarded, it must be heavy so as to protect the workman from victimisation by the employer. In the later case a just compensation may be awarded to meet the ends of justice.
(4) An elapse of long period since termination may be good ground for awarding compensation in lieu of reinstatement and back wages.
(5) Feasibility of reinstatement in the changed circumstances of the industry.
(6) Comparative hardship of the employer and the employee particularly with reference to financial implications.
(7) After a finding is recorded with respect to the legality of the order of termination, dismissal or removal, if the parties or either of the parties so wish should be given an opportunity to address including leading the evidence oral or documentary on the question of grant of relief by way of reinstatement or compensation in lieu of reinstatement."
17. We are in agreement with the broad guidelines provided by the learned single Judge. A discretion is vested with the Tribunal or the Court to grant relief to the workman by way of awarding compensation in lieu of reinstatement. The vesting of such discretion with the Court or the Tribunal has been felt necessary in the interest of industrial harmony and peace. While in case of victimisation the workman must be restored to his original position by way of reinstatement. However, in case the order of termination being found illegal on a technical ground or in case where the post is of trust and confidence and the employer has not entrusted him on the said post or in case where the employee is found guilty of such activity subversive to the industry or the office or the organization or where in a case the industry is in severe doldrums or where the Industry or the Project has been closed down or in a case where there is a long gap from the date of termination, the discretion should normally be exercised not to compel the employer to take him in job by way of reinstatement. Bearing this in mind we proceed to deal with each case:
D. B. Civil Special Appeal No. 75/2003 (Dal Chand v. Judge, Labour Court & Ors.):
18. In the instant case the appellant was engaged as a casual labour by the Department of P.H.E.D. He worked for the period October 1, 1991 to August 31, 1992. The removal was found to be in violation of the provisions of Section 25F of the Industrial Disputes Act. The Tribunal following the decision of the Apex Court in Delhi Development Horticulture Employees' Union v. Delhi Administration reported in AIR 1992 SC 789 : 1992 (4) SCC 99 : 1992-II-LLJ-452 directed to pay compensation in the sum of Rs. 23,000/- in lieu of dismissal. He has recorded the following reasons for granting compensation in lieu of reinstatement:
(i) The workman had worked only for a brief period of 11 months.
(ii) No junior to the workman was allowed to continue in service.
(iii) The workman was engaged as a casual labour for a brief period on daily wages.
(iv) There was a gap of 8 years computing from the date of removal.
(v) At the time of removal the workman was only 18-19 years of age and even after 8 years he would be reinstated only as a casual labour on daily wages.
The learned single Judge considered the reasons given by the Labour Court just and appropriate for refusing reinstatement and awarding compensation in lieu thereof. We are of the view that the case of the appellant falls in the exceptional category referred to above. No interference is warranted with the order of the learned single Judge confirming the order of the Labour Court.
D. B. Civil Special Appeal No. 919/2002 (Bhanwar Singh v. Judge, Labour Court & Ors.):
19. In this case the appellant workman worked as a casual labour on daily wage basis with the Department of P.H.E.D. for the period May 1, 1992 to May 31, 1993. The Tribunal found violation of the provisions of Section 25F but in lieu of dismissal a compensation was awarded in the sum of Rs. 25,000/-. The Tribunal found that the project in which the appellant was engaged no more exists. There was a gap of 7-9 years. Even if he is reinstated after 8 years, he will be only engaged as a casual labour on daily rate basis. He was engaged only for a brief period of one year. The learned single Judge found that there existed good reasons for refusing the reinstatement and granting compensation in lieu thereof. No interference is warranted with the order of the learned single Judge confirming the order of the Labour Court.
D.B. Civil Special Appeal No. 920/2002 (Ram Lal v. Judge, Labour Court & Ors. ):
20. In the instant appeal the appellant was engaged as a casual labour on daily wages basis with the Department of P.H.E.D. He worked for the period October 14, 1992 to July 31, 1993. The Tribunal found the order of termination in violation of the provisions of Section 25F, however, instead of reinstatement directed payment of compensation in the sum of Rs. 23,000/-. The learned Labour Court keeping in view the short duration of service, the technical ground on which the termination was set aside and the long gap from the date of order of removal considered it appropriate to award compensation in lieu of dismissal. The learned Judge has also given a calculation for awarding the amount of compensation. In the opinion of the learned single Judge the Labour Court for good reasons has refused reinstatement and granted compensation in lieu thereof. No interference is warranted with the order of the learned single Judge confirming the order of the Labour Court.
D.B. Civil Special Appeal No. DR(J) 1087/2002 (Pushkar Lal v. Judge, Labour Court & Ors. ):
21. The appellant was engaged as a casual labour on daily wages with the Department of P.H.E.D. He worked during the period July 1, 1992 to July 1, 1993. The Tribunal found the order of termination in violation of the provisions of Section 25F, however, instead of reinstatement directed payment of compensation in the sum of Rs. 20,000/- in lieu of it. The learned Labour Court keeping in view the short duration of service, the technical ground on which the termination was set aside and the long gap from the date of order of removal considered it appropriate to award compensation in lieu of reinstatement. The learned Judge has also given a calculation for awarding the amount of compensation. In the Opinion of the learned single Judge the Labour Court for good reasons has refused reinstatement and granted compensation in lieu thereof. No interference is warranted with the order of the learned single Judge confirming the order of the Labour Court.
D.B. Civil Special Appeal No. 550/2003 (Ishataq Ahmed v. Judge, labour Court & Ors. ):
22. In this case the appellant was engaged as Helper II w.e.f. January 31, 1977. He proceeded on the sanctioned leave on August 1, 1980. Thereafter he fell sick and did not join the duties. He was removed from service vide order dated August 5, 1981. An industrial dispute was raised after 16 years. The Tribunal found the order in violation of the provisions of the I.D. Act and as such directed reinstatement by award dated March 30, 2003. The learned single Judge after considering the number of decisions of the Apex Court and this Court and critically examining the facts of the case modified the order of the Labour Court by directing payment of compensation in sum of Rs. 30,000/- in lieu of reinstatement. The learned single Judge found that the appellant had worked for a brief period. He raised the dispute after 16 years and long time had elapsed from the date of removal. In our view the case of the appellant falls in the exceptional category as pointed out by us in the preceding paras. No interference is warranted with the judgment of the learned single Judge.
D.B. Civil Special Appeal No. 121/2003 (Shyam Sunder v. Judge Labour Court & Ors. ):
23. The appellant was engaged as a daily rated workman by the UCO Bank on November 20, 1992. He worked with the City Branch of the Bank during the period November 20, 1992 to November 30, 1993. Thereafter he worked from November 30, 1993 to December 16, 1993. Again after a gap of about 7 months he worked during the period August 31, 1994 to March 4, 1996. He was removed from service by oral order dated March 4, 1996. The Tribunal found the order of removal in violation of the provisions of Section 25F. The Tribunal found the order of removal in violation of the provisions of Section 25H of the I.D. Act as after his removal one Narendra Kumar was engaged. Considering the fact that Narendra Kumar was also immediately removed, the Labour Court held that the appellant was entitled to wages only for the period for which Narendra Kumar was engaged. It clearly appears that there is no job available for the appellant with the Bank. Only for a brief period Narendra Kumar was engaged after the removal of the appellant. Thus, the order of removal was found to be illegal on a technical ground. The order of the Labour Court was confirmed by the learned single Judge by an elaborate and well reasoned order. No interference is warranted with the order of the learned single Judge confirming the order of the Labour Court.
24. In view of aforesaid discussions all the special appeals stand dismissed. No order as to cost.