Gujarat High Court
Sharadkumar L Pandya vs O.N.G.C.Ltd on 13 July, 2021
Author: J. B. Pardiwala
Bench: J.B.Pardiwala, Vaibhavi D. Nanavati
C/LPA/930/2017 JUDGMENT DATED: 13/07/2021
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/LETTERS PATENT APPEAL NO. 930 of 2017
In R/SPECIAL CIVIL APPLICATION NO. 13744 of 2004
With
R/LETTERS PATENT APPEAL NO. 1899 of 2017
In
SPECIAL CIVIL APPLICATION NO. 13744 of 2004
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
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1 Whether Reporters of Local Papers may be allowed to YES
see the judgment ?
2 To be referred to the Reporter or not ? YES
3 Whether their Lordships wish to see the fair copy of NO
the judgment ?
4 Whether this case involves a substantial question of NO
law as to the interpretation of the Constitution of India
or any order made thereunder ?
==========================================================
SHARADKUMAR L PANDYA & 3 other(s)
Versus
O.N.G.C.LTD. & 3 other(s)
==========================================================
Appearance:
MR DWIJEN JOSHI(8518) for the Appellant(s) No. 1,2,3,4
MR DHOTRE ADVOCATE FOR M/S TRIVEDI AND GUPTA(949) for the
Respondent(s) No. 1
RULE SERVED(64) for the Respondent(s) No. 3,4
==========================================================
CORAM:HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
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C/LPA/930/2017 JUDGMENT DATED: 13/07/2021
Date : 13/07/2021
COMMON ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1 As both the captioned appeals arise from a common judgement and order passed by a learned Single Judge of this Court, those were taken up for hearing analogously and are being disposed of by this common judgement and order.
2 For the sake of convenience, the Letters Patent Appeal No.930 of 2017 is treated as the lead matter.
3 This appeal under clause 15 of the Letters Patent is at the instance of the original respondents Nos.1 to 4 (workmen) of a writ application filed by the Oil and Natural Gas Corporation Limited (original writ applicant) and is directed against the judgement and order passed by a learned Single Judge of this Court dated 24 th April 2017 in the Special Civil Application No.13744 of 2004.
4 The facts giving rise to this appeal may be summarized as under:
5 The appellants herein were engaged by a contractor appointed by the ONGC to undertake the work of contract at the Cambay Project. It appears that the Corporation had awarded a contract for getting certain specified jobs executed through the contractor. In pursuance thereof, the contractor to whom the contract was awarded thought fit to get the works executed through the members of a cooperative society. The appellants herein are the members of the said cooperative society. The appellants were deployed in the Cambay Project being members of the society.
Page 2 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 6 It appears that the appellants herein raised a dispute through the
respondent - society on the issue of improper and unjustified construction and the same was treated by the appropriate government as an industrial dispute. The said dispute was ordered to be referred for adjudication to the Industrial Tribunal (Central) by the appropriate Government. Upon making the order of reference dated 6 th September 2001 by the appropriate government, the same culminated into the Reference (ITC) No.77 of 2001. The Tribunal adjudicated the reference and partly allowed the same. The operative part of the order passed by the Industrial Tribunal reads thus:
"ORDER (1) This reference is partly allowed.
(2) Within 30 days of declaration of this Award, the first party institute O.N.G.C. Cambay Project is ordered to reinstate the concerned employees of the reference (1) Sharadkumar L. Pandya, (2) Shri Rajubhai G. Rathod, (3) Shri Kanubhai N. Dafda and (4) Kamleshbhai M. Parmar in the First Party no.l O.N.G.C. Cambay Project by considering them as the Regular Employees with consequential benefit.
(3) The First party No.l ONGC is also directed to fix the Notional pay of the concerned employees by Considering them to be the regular employees and within 30 days of declaration of the Award they shall be given the said pay and the consequential benefit available to the regular employee from the date of reinstatement.
(4) By reinstating the concerned employees they shall be given the benefits of the regular employees and any orders for payment arrears for the period prior to that or for the intervening period is not passed.
Therefore the Institute will not be required to make any payment to them.
(5) But if the Award is not implemented within 30 days of being declared under such circumstances after completion of the said period they will be entitled to get benefit as per the Award and the Institute will accordingly be required to pay the said benefits."
Page 3 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 7 The Corporation being dissatisfied with the aforesaid award
passed by the Tribunal, thought fit to challenge the same before this Court by filing the Special Civil Application No.13744 of 2004. The learned Single Judge thought fit to modify the award passed by the Tribunal by awarding lumpsum compensation in terms of money to the four appellants herein.
8 We take notice of the following findings recorded by the learned Single Judge in its impugned judgement and order:
[1] The Corporation is merely a principal employer registered under Section 7 of the Contract Act. The contractor holds a valid licence under Section 12 of the Contract Labour (Regulation and Abolition) Act, 1970. When the contractor is in-charge of workmen whom the society is representing, there is no master and servant relationship subsisting between the Corporation and the workers. In the absence of such relationship, it is not open to the workers to raise any grievance against the Corporation.
[2] None of the appellants herein were regularly appointed by the Corporation nor they were employed in service after following any recruitment procedure.
[3] In context with the aforesaid two findings, we quote para 14.13 of the impugned judgement passed by the learned Single Judge as under:
"From the aforesaid record, the main grievance which has been raised by the petitioner Corporation is that none of the employees were regularly appointed by the petitioner Corporation nor they were kept in employment after following any recruitment procedure as required under the rules and none Page 4 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 of the employees were represented by the respondent Society where there is direct control of the petitioner Corporation. A specific plea has been raised by the petitioner Corporation that they are essentially the employees and members of the society whose contract has already come to an end and therefore, by efflux of time, upon that eventuality of lapse of contract, their services were put an end to. The main further grievance was also raised that looking to the order of reference, the scope of inquiry before the learned Tribunal was within the periphery of the reference issue. Whereas though there was no challenge referred to of questioning validity of contract, the learned Tribunal has transgressed its jurisdiction and over-stepped by adjudicating an issue which was not the subject matter of reference and therefore, the petitioner has raised a serious grievance that there is a material error in exercising jurisdiction. Now in the context of this, the petitioner has also pointed out that discontinuance of workmen represented by respondent Society was done way back in June, 2001 and therefore, now after a lapse of almost 15 years, it is not only impracticable but impossible to implement the award in its literal form and therefore also, serious issues have been raised before the Court vehemently by learned advocate for the petitioner Corporation and thereby requested the Court to set aside the impugned award which is ex-facie unsustainable in the eye of law."
[4] The learned Single Judge has recorded a finding that all that was within the jurisdiction of the Tribunal to adjudicate was whether the claim of the society for reinstatement in service was legal, proper and justified or not. However, the Tribunal travelled beyond the scope of the reference and recorded a finding that the contract itself was faulty. In other words, the Tribunal observed something with regard to the contract system under which the employees were directed to work.
9 In the aforesaid context, we may refer to the observations made in paras 14.14 and 15 respectively as under:
"14.14 In the aforesaid factual matrix, now if the record as stated above is analysed, it would make it clear that what has been referred to for adjudication before the learned Tribunal is merely to examine whether Page 5 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 the demand of the respondent Society for reinstatement of services is legal, proper and justified and if yes, then from what date and with what direction and therefore, in the absence of any alteration of this order of reference, prima facie, it appears that what has been decided by the Member of the learned Tribunal is something which can be said to be travelling beyond the scope of reference and this ultimate conclusion appears to be substantially influenced and overlapped by the contract system which has been agitated by respondent Society. Therefore, it appears to this Court that no doubt the reference issue has been dealt with but it has been dealt with in the context of questioning of a contract system in which the employees were directed to work.
15. In the aforesaid facts situation prevailing on record, what has been emerging is that prior to the contract which came into force, the respondent employees were very much discharging their duties, of course, intermittently but appears to be not on a regular set up. It is also an undisputed position that after coming into force and the existence of the Society, these respondent employees were part of the set said set up and they appeared to have worked through the contract system. It is also undisputed that after efflux of time, when their tenure came to be over way back in June, 2001, none of the respondent employees were discharging their function on their respective position and therefore, since the validity of the contract system was never a specific reference, the same could not have been questioned in the manner in which it has been tried to be projected. On going through the record, it appears that substantial control of these respondent employees were with the Society which entered into a contract with the petitioner Corporation, so much so that payment of their salary was also made by the Society and therefore, in the substantive form, the respondent employees, who were the employees belonging to the Society, could not have been said to be a part of regular set up of the petitioner Corporation. Therefore, whatever is to be agitated was related to a contract system which was prevailing and therefore, when the initial stage itself is not reflecting such a challenge nor being a part of reference order, that validity could not have been gone into by the learned Tribunal as it tantamounts to be beyond the scope of jurisdiction. If the record is seen, the sum and substance apart from this technicality is that, at the best, the respondent employees had worked in the petitioner Corporation but undisputedly from June, 2001, they do not appear to have been in the services. Under the circumstances, after almost a period of 15 years, granting the relief as prayed for in the literal form cannot be considered at this stage particularly when over the period of time, in the substantive form, the structure of employment appears to have been changed. In addition thereto, when a specific stand has been taken by the petitioner Corporation that there were no set up posts available to undertake such kind of work, reinstatement would not be practicable and almost after a long lapse of time of 15 years, to grant such a relief would not only put the petitioner Page 6 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 Corporation to severe difficult situation but at the same time, in view of settled position of law, would not be germane and impracticable. In light of this situation which is prevailing, the Court is mindful of the fact that belatedly, relief of reinstatement normally cannot be granted and for that purpose, the Court has an assistance of catena of decisions which are delivered by the Hon'ble Apex Court."
10 Ultimately, the learned Single Judge concluded from para 16 onwards as under:
"16. Considering the aforesaid position prevailing on record, in view of the proposition of law laid down hereinbefore, the Court is of the considered opinion that the relief which has been prayed for is not possible to be granted nor it is proper to grant at this stage of proceeding and therefore, at the best, some lump-sum amount of compensation be made available to the respondent employees. For this purpose, during the course of hearing, with a view to find an ultimate resolution, even the deliberations took place between the learned advocates in respect of such kind of lump-sum amount. However, figures which are projected by the respondent Society are not possible to be accepted by the petitioner Corporation as has been conveyed and therefore, in the light of this, in order to strike a balance between the two parties to the proceeding, some amount of compensation is to be determined by the Court as has been contended by learned advocate for the petitioner and therefore, in such a situation, the Court has made an attempt to undertake such an exercise in the light of following propositions of the Hon'ble Apex Court that if the interest of justice demands, the Court has the power to mould the relief and therefore, the factual scenario is such in which a reasonable amount of lump-sum compensation is to be awarded in substantiation of the award which has been granted.
17. From the record, it has been found that one of the respondents - Shri Sharadkumar L. Pandya, who appears to have worked with the organization as Telephone / Radio Operator from 1.5.1989 till the contract assigned to respondent No.5 i.e. 1.8.1998 and therefore, it appears that approximately about 109 months at monthly salary of Rs.2100/- he has worked with the organization. Now, this period if to be considered, approximately he must have earned Rs.2,28,900/-, whereas undisputedly he also merged himself in the contract employment w.e.f. 1.7.1998 which contract came to be ended on 30.6.2001 and therefore, in actual terms he is entitled for a less amount even to be awarded for that period in which he has worked with the petitioner organization. But in view of the fact that both the sides at one point of time were in broad agreement to resolve the dispute and in Page 7 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 which the figures have also been given, it appears that if this employee is given a lumpsum compensation of Rs.2,28,900/- + cost of Rs.50,000/-, in all Rs.2,78,900/-, the same would meet ends of justice.
18. Similar is the case with respect to another employee -Rajubhai G. Rathod, who also worked at a monthly salary of Rs.2100/- as Telephone Operator and was engaged in operating telephones wireless data operating from August,1998 and this employee as such appears to have joined when the contract system was prevailing from 1.7.1998 and therefore, it appears that he does not deserve to be awarded any amount of lumpsum compensation. The lumpsum compensation is being awarded on account of the fact that earlier some of the employees did serve the petitioner organization before the contract but, not as a confirmed employee. This employee is not entitled to any amount of compensation from the petitioner organization.
19. So far as another employee - Kanubhai N. Dafda is concerned, the said employee was working as telephone instrument repairer and was also looking after telephone maintenance and wireless maintenance work, had joined the petitioner organization w.e.f. 1.5.1989 and after introduction of contract system on 1.7.1998, he was being taken care of by respondent contractor and therefore, it appears that this employee has worked for a period of approximately 109 months at a monthly salary of Rs.1900/- and therefore, he must have earned approximately Rs.2,07,100/- and hence, in a similar way to that of other employees, he is entitled to Rs.2,07,100/- + Rs.50,000/- as total emoluments plus some litigation cost to arrive at this figure and therefore, this lumpsum compensation of Rs.2,57,100/- is found to be proper for this employee.
20. With respect to another employee - Shri Kamleshbhai M. Parmar, who was working as a technician from December,1996 at a monthly salary of Rs.1900/- and was looking after maintenance works of electronics and had merely worked for 19 months before introduction of contract system and therefore, he must have earned an amount of Rs.36,100/-. Therefore, this employee is entitled to Rs.36,100/- + Rs.50,000/- as total emoluments plus some litigation cost to arrive at this figure and therefore, this lumpsum compensation of Rs.86,100/- is found to be proper for this employee.
21. The aforesaid amount which is determined is independent of the amount receivable by the respective employees under Section 17-B of the I. D. Act,1947 as per the earlier orders passed in the proceedings. The aforesaid amount of lumpsum compensation appears to be proper to be awarded for respondents - workmen. The claim which has been Page 8 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 tried to be made by the respondents workmen through the counsel is possibly on the pretext that they are the regular employees of petitioner organization and working on the sanctioned post and lawfully employed till the age of retirement and even post retirement benefits are also sought to be projected which is found to be thoroughly unreasonable and hence keeping in view of aforesaid circumstance, the same not fit to be granted. On the contrary, this amount appears to be based upon a voluntary gesture made by the petitioner organization so as to see that some final resolution of this litigation to come to an end and therefore, background of this peculiar set of circumstance turns out to be just to award a lumpsum amount of compensation.
22. The aforesaid measure is adopted in view of recent development in proposition of awarding lumpsum compensation and therefore, the petition is being disposed of in following terms.
"The petitioners are directed to pay the aforesaid amount which has been determined as a part of lumpsum compensation and the same shall be paid to each of the workman through account payee cheque in their name within a period of 8 weeks hereof with interest at the rate of 9% till realization.
This disposal of the petition in the aforesaid terms is in a peculiar set of circumstance and will have not bearing upon any of the legal right if available to the respondents, if exists."
23. The award under challenge is hereby quashed and set aside and is modified in the aforesaid terms. Rule is made absolute to the aforesaid extent."
11 Being dissatisfied with the above referred order passed by the learned Single Judge, the appellants (original workmen) are here before this Court with the present appeal.
12 Mr. Joshi, the learned counsel appearing for the appellants vehemently submitted that the learned Single Judge committed a serious error in disturbing the award passed by the Tribunal. Mr. Joshi would submit that the learned Single Judge ought not to have awarded lumpsum compensation to the appellants in lieu of reinstatement in Page 9 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 service. He would submit that his clients were directly employed by the Corporation prior to 1998. The contractual arrangement came into force only after 1st July 1998. In such circumstances, it is not correct to say that the appellants did not work with the company directly and were only within the command and control of the contractor. It is argued that the appellants were removed from the purview of the employment of the company and were transferred under the domain of the society after 1 st July 1998. It is argued that the entire arrangement by the Corporation was sham and was nothing short of unfair labour practice.
13 In such circumstances referred to above, Mr. Joshi prays that there being merit in his appeal, the same be allowed and the impugned judgement and order passed by the learned Single Judge be set aside and the main matter i.e. the Special Civil Application No.13744 of 2004 be rejected.
14 On the other hand, this appeal has been vehemently opposed by Mr. Dhotre, the learned counsel for M/s. Trivedi and Gupta appearing for the O.N.G.C. Mr. Dhotre would submit that no error, not to speak of any error of law could be said to have been committed by the learned Single Judge in passing the impugned judgement and order. Mr. Dhotre would submit that the learned Single Judge is right in recording a finding that what has been decided by the Tribunal is something which could be said to be travelling beyond the scope of the reference.
15 In such circumstances referred to above, Mr. Dhotre prays that there being no merit in this appeal, the same may be dismissed.
ANALYSIS: 16 Having heard the learned counsel appearing for the parties and
having gone through the materials on record, the only question that falls Page 10 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 for our consideration is whether the learned Single Judge committed any error in passing the impugned judgement and order.
17 We should first look into the order of reference dated 6 th September 2001. The same reads thus:
"No.L-30015/9/2001-IR(M) Government of India / Bharat Sarkar Ministry of Labour / Shram Mantralaya.
New Delhi, Dt. 6.9.2001 ORDER No.L-30015/9/2001-IR(M) : Whereas the Central Government is of the opinion that an industrial dispute exists between the employers in relation to the management of the Group General Manager (P), ONGC Ltd., Ahmedabad Project, Chandkheda, and their workmen in respect of the matters specified in the Schedule hereto annexed;
And whereas the Central Government considers it desirable to refer the said dispute for adjudication.
Now, therefore, in exercise of the powers conferred by clause (d) of sub section (1) and sub section (2A) of Section 10 of the Industrial Disputes, Act, 1947 (14 of 1947) the Central Government he may refers the said dispute for adjudication to the industrial Tribunal, Ahmedabad (Gujarat). The said Tribunal shall give its award a period of three months.
THE SCHEDULE "Whether the demand of the Union for reinstatement of the services of S/Shri Sharad Kumar L. Pandya, Rajubhai G. Rathod, Kanubhai N. Dafda and Kamleshbhai M. Parmar and absorption of these employees directed employees of ONGC Ltd. is legal, proper and justified? If so, to what relief the concerned workmen are entitled to and from which date and what other directions are necessary in the matter?
Sd/-
B. M. David Under Secretary"Page 11 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022
C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 18 Thus, the terms of the reference were two fold:
[1] Whether the demand of the Union for reinstatement of the services of the appellants herein was just, legal and proper, and [2] What reliefs the workmen were entitled to and from which particular date.
19 In the context of the above referred terms of reference, the Tribunal, while passing the award, not only reinstated the appellants herein, but also directed that they be reinstated as the regular employees. In such circumstances referred to above, the finding recorded by the learned Single Judge to the effect that the Tribunal travelled beyond the scope of the reference cannot be faulted in any manner.
20 It is now well settled as held by the Supreme Court in a catena of decisions that the relief by way of reinstatement with back wages is not automatic even if the termination of an employee is found to be illegal or is in contravention of the prescribed procedure and that the monetary compensation in lieu of reinstatement and back wages in case of the present type may be more appropriate. We are saying so keeping in mind that the appellants herein are no longer in the services of the Corporation since June 2001. The appellants were not regular employees. Almost two decades have elapsed. As rightly observed by the learned Single Judge that granting the relief as prayed for in the literal form is even otherwise not permissible in law, more particularly, when the structure of employment also appears to have been changed.
21 We refer to one judgment rendered in the sixties by a three Judge Bench of the Apex Court. In "Swadesamitran Limited, Madras Vs. Their Page 12 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 Workmen"; AIR 1960 SC 762 it was held as under:-
"13. That leaves two minor questions which were formulated for our decision by the learned Attorney-General. He contended that, even if the impugned retrenchment of the 15 workmen in question was not justified, reinstatement should not have been directed; some compensation instead should have been ordered; and in the alternative he argued that the order directing compensation to the remaining 24 retrenched workmen was also not justified. We do not see any substance in either of these two contentions. Once it is found that retrenchment is unjustified and improper it is for the tribunals below to consider to what relief the retrenchment workmen are entitled. Ordinarily, if a workman has been improperly and illegally retrenched he is entitled to claim reinstatement. The fact that in the meanwhile the employer has engaged other workmen would not necessarily defeat the claim for reinstatement of the retrenched workmen; nor can the fact that protracted litigation in regard to the dispute has inevitably meant delay, defeat such a claim for reinstatement. This court has consistently held that in the case of wrongful dismissal, discharge or retrenchment, a claim for reinstatement cannot be defeated merely because time has lapsed..." (emphasis laid) 22 Almost sixteen years thereafter, in the "Hindustan Steel Ltd. vs. The Presiding Officer, Labour Court, Orissa & Ors.", (1976) 4 Supreme Court Cases 222, also the question of grant of back wages to an industrial workman after the termination of his services was found to be illegal and invalid had come up for consideration and was dealt with and decided by another three Judge Bench of the Apex Court in the following para of its judgment:
"8. Another point made on behalf of the appellant was that the Presiding Officer of the Labour Court was wrong in awarding full back wages to the respondents without satisfying himself that they had been unemployed after they were released from service by the appellant and, further, that they had taken all reasonable steps to mitigate their losses consequent on their retrenchment. The Labour Court has found that it had not been proved that the respondents had any alternative employment. In the writ petition filed by the appellant in the High Court, the finding that the respondents had no alternative employment was not challenged. From the judgment of the High Court it appears that the submission on the propriety of awarding full back wages to the respondents was confined to the ground that the respondents had not Page 13 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 proved that they had tried to mitigate their losses during the period of unemployment. In the special leave petition also what has been urged is that the High Court should have held that the respondents were not entitled to full back wages unless they succeeded in proving that they tried to secure alternative employment but failed. The Labour Court awarded full back wages to the respondents on the finding that they had been illegally retrenched. It does not appear that the question of mitigation of loss for deprivation of employment had at all been raised before the Labour Court. The High Court therefore refrained from exercising its "discretionary jurisdiction in favour of the employer" and proposed not to "deprive the workmen of the benefit they had been found entitled to by the Presiding Officer". That the respondents were unemployed cannot now be disputed. In these circumstances the High Court was justified, in our opinion, in refusing to interfere on this point."
23 Three years later the same question again came up before the Apex Court in the case of "Hindustan Tin Works Pvt. Ltd. Vs. Employees", 1979(2) Supreme Court Cases 80 (which was again a three Judge Bench judgment). The relevant portions from this decision are also re-produced below:-
"3. The Labour Court, after examining the evidence led on both sides and considering various relevant circumstances, held that....... the real reason was the annoyance felt by the management consequent upon the refusal of the workmen to agree to the terms of settlement contained in the draft dated 5th April, 1974 and, therefore, the retrenchment was illegal. The Labour Court by its award directed that all the workmen shall be reinstated in service from 1st August, 1974 with full back wages, permitting the appellant to deduct any amount paid as retrenchment compensation from the amount payable to the workmen as back wages. The appellant challenged the Award in this appeal. When the special leave petition came up for admission, this Court rejected the special leave petition with regard to the relief of reinstatement but limited the leave to the grant of full back wages.
4. The question whether the workmen who were retrenched were entitled to the relief of reinstatement is no more open to challenge. In other words, it would mean that the retrenchment of workmen was invalid for the reasons found by the Labour Court and the workmen were entitled to the relief of reinstatement effective from the day on which they were sought to be retrenched. The workmen were sought to be retrenched from 1st August, 1974 and the Labour Court has directed their reinstatement effective from that date. The Labour Court has also Page 14 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 awarded full back wages to the workmen on its finding that the retrenchment was not bona fide...........................
7. The question in controversy which fairly often is raised in this Court is whether even where reinstatement is found to be an appropriate relief, what should be the guiding considerations for awarding full or partial back wages. This question is neither new nor raised for the first time. It crops up every time when the workman questions the validity and legality of termination of his service howsoever brought about, to wit, by dismissal, removal, discharge or retrenchment, and the relief of reinstatement is granted. As a necessary corollary the question immediately is raised as to whether the workman should be awarded full back wages or some sacrifice is expected of him.
8. Let us steer clear of one controversy whether 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....
9. It is no more open to debate that in the field of industrial jurisprudence a declaration can be given that the termination of service is bad and the workman continues to be in service......The relief of reinstatement with continuity of service can be granted where termination of service is found to be invalid. It would mean that the employer has taken away illegally the right to work of the workman contrary to the relevant law or in breach of contract and simultaneously deprived the workman of his earnings. If thus the employer is found to be in the wrong as a result of "which the workman is directed to be reinstated, the employer could not shirk his responsibility of paying the wages which the workman has been deprived of by the illegal or invalid action of the employer. Speaking realistically, where termination of service is questioned as invalid or illegal and the workman has to go through the gamut of litigation, his capacity to sustain himself throughout the protracted litigation is itself such an awesome factor that he may not survive to see the day when relief is granted. More so in our system where the law's proverbial delay has become stupefying. If after such a protracted time and energy consuming litigation during which period the workman just sustains himself, ultimately he is to be told that though he will be reinstated, he will be denied the back wages which would be due to him, the workman would be subjected to a sort of penalty for no fault of his and it is wholly undeserved. Ordinarily, therefore, a workman whose service has been illegally terminated would be entitled to full back wages except to the extent he was gainfully employed during the enforced idleness. That is the normal rule. Any other view would be a premium on the unwarranted litigating activity of the employer. If the employer terminates the service illegally and the termination is motivated as in this case, viz., to resist the workman's demand for revision of wages the termination may well amount to unfair labour practice. In such circumstances reinstatement Page 15 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 being the normal rule, it should be followed with full back wages.................. If the services were not terminated the workmen ordinarily would have continued to work and would have earned their wages. When it was held that the termination of services was neither proper nor justified, it would not only show that the workmen were always willing to serve but if they rendered service they would legitimately be entitled to the wages for the same. If the workmen were always ready to work but they were kept away therefrom on account of invalid act of the employer, there is no justification for not awarding them full back wages which were very legitimately due to them...............................................
11. In the very nature of things there cannot be a straight jacket formula for awarding relief of back wages. All relevant considerations will enter the verdict. More or less, it would be a motion addressed to the discretion of the Tribunal. Full back wages would be the normal rule and the party objecting to it must establish the circumstances necessitating departure. At that stage the Tribunal will exercise its discretion keeping in view all the relevant circumstance............................................................................
12.....If the normal rule in a case like this is to award full back wages, the burden will be on the appellant employer to establish circumstances which would permit a departure from the normal rule........" (emphasis laid)
24 Now we come to the views of the Supreme Court in the eighties. In the case of "Surendra Kumar Verma & Others Vs. Central Government Industrial Tribunal- Cum-Labour Court, New Delhi & Another", (1980) 4 Supreme Court Cases 443 wherein it was held by the three Judge Bench as follows:-
"5. In State Bank of India v. Shri N. Sundara Money : (1976) ILLJ 478SC, a Division Bench of this Court consisting of Chandrachud, Krishna Iyer and Gupta JJ held that a certain order of retrenchment was in violation of the provisions of Section 25F and was, therefore, invalid and inoperative. After so holding, they proceeded to consider the question of the relief to be awarded. They observed:
What follows? Had the State Bank known the law and acted on it, half- a-month's pay would have concluded the story. But that did not happen. And now, some years have passed and the Bank has to pay, for no service rendered. Even so, hard cases cannot make bad law. Re- instatement is the necessary relief that follows. At what point ? In the Page 16 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 particular facts and circumstances of this case, the respondent shall be put back where he left off, but his new salary will be what he would draw were he to be appointed in the same post today de novo. As for benefits if any, flowing from service he will be ranked below all permanent employees in that cadre and will be deemed to be a temporary hand upto now. He will not be allowed to claim any advantages in the matter of seniority or other priority inter se among temporary employees on the ground that his retrenchment is being declared invalid by this Court. Not that we are laying down any general proposition of law, but make this direction in the special circumstances of the case. As for the respondent's emoluments, he will have to pursue other remedies, if any.
6. ...................... Plain common sense dictates that the removal of an order terminating the services of workmen must ordinarily lead to the reinstatement of the services of the workmen. It is as if the order has never been and so it must ordinarily lead to back wages too. 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 would the relief, but, ordinarily the relief to be awarded must be reinstatement with full back wages. That relief must be awarded where no special impediment in the way of awarding the relief is clearly shown. True, occasional hardship may be caused to an employer but we must remember that, more often than not comparatively far greater hardship is certain to be caused to the workmen if the relief is denied than to the employer if the relief is granted." (emphasis supplied)
25 Then in the case of "Mohan Lal Vs. Management of Bharat Electronics Ltd." (1981) 3 Supreme Court Cases 225 same view was maintained as taken in the earlier judgments referred to above. The relevant portions from this judgment are reproduced below:-
"19. 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 Page 17 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 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. Chopra (P.P.) [1970] 1 L.L.J. 63 and Hindustan Steel Ltd. Rourkela v. A.K. Roy and Ors.:
(1970) ILLJ 228SC 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 the case.
20. Accordingly, this appeal is allowed and the Award of the Labour Court dated May 31, 1980, is set aside. We hold that the termination of service of the appellant was ab initio void and inoperative and a declaration is made that he continues to be in service with all consequential benefits, namely, back wages in full and other benefits................" (emphasis laid) 26 Now we come to those judgments delivered by two Judge Benches of the Supreme Court, which according to the learned counsel for the Corporation, have brought about the change in the trend from the year 2000 onwards. In "Hindustan Motors vs Tapan Kumar Bhattacharya & anr.", (2002) 6 Supreme Court Cases 41, it was held by the Supreme Court as follows:-
"13. From the award passed by the Industrial Tribunal which has been confirmed by the Division Bench of the High Court it is clear that the order for payment of full back wages to the workman was passed without any discussion and without stating any reason. It appears that the Tribunal and the Division Bench had proceeded on the footing that since the order of dismissal passed by the Management was set aside, the order of reinstatement with full back wages was to follow as a matter of course.
15. The Court, on taking into account the financial position of the employer-Company, thought it fit to modify the award by allowing 75% of the back wages instead of full back wages.
16. In P.G.I. of Medical Education & Research, Chandigarh v. Raj Page 18 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 Kumar, 2001 (2) SCC 54 this Court found fault with the High Court in setting aside the award of the Labour Court which restricted the back wages to 60% and directing payment of full back wages. It was observed thus:
"The Labour Court being the final court of facts came to a conclusion that payment of 60% wages would comply with the requirement of law. The finding of perversity or being erroneous or not in accordance with law shall have to be recorded with reasons in order to assail the finding of the Tribunal or the Labour Court. It is not for the High Court to go into the factual aspects of the matter and there is an existing limitation on the High Court to that effect."
17. Again at paragraph 12, this Court observed:
"Payment of back wages having a discretionary element involved in it has to be delta with, in the facts and circumstances of each case and no straight-jacket formula can be evolved, though, however, there is statutory sanction to direct payment of back wages in its entirety."
18. As already noted, there was no application of mind to the question of back wages by the Labour Court. There was no pleading or evidence whatsoever on the whether the respondent was employed elsewhere during this long interregnum. Instead of remitting the matter to the Labour Court or High Court for fresh consideration at this distance of time, we feel that the issue relating to payment of back wages should be settled finally. On consideration of the entire matter in the light of the observation referred to supra in the matter of awarding back wages, we are of the view that in the context of the facts of this particular case including the vicissitudes of long drawn litigation, it will serve the ends of justice if the respondent is paid 50% of the back wages till the date of reinstatement....................."
27 Then in "General Manager, Haryana Roadways vs Rudhan Singh", 2005 Judgments Today (6) 137 it was held by the Supreme Court as under:-
"6. The next question, which requires consideration is whether the respondent is entitled to any back wages. The Industrial Tribunal- cum- Labour Court awarded 50% back wages on the ground that in Rohtak District of State of Haryana work of the nature, which was being done by the respondent, is available in plenty as a large work force comes from Eastern UP and Bihar for doing such kind of work. However, a Page 19 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 general observation has been made that keeping in view the facts and circumstances of the case it will be proper to award 50% back wages. The High Court has also not given any reason for upholding this part of the award.
7. In our opinion certain factors, which are relevant for forming an opinion regarding award of back wages, have been completely ignored and, therefore, the award on this point is vitiated. The list of dates given in the Special Leave Petition, which have not been controverted, show that though according to the own case of the respondent his services had been terminated on 18.2.1989, yet he served a demand notice, praying for reinstatement in service after two and half years on 24.8.1991. The State Government made reference to the Industrial Tribunal-cum-Labour Court in the year 1997, which means eight years after the termination of service. Normally, a reference should not be made after lapse of a long period. A labour dispute should be resolved expeditiously and there is no justification for the State Government to sleep over the matter and make a reference after a long period of time at its sweet will. It causes prejudice both to the workman and also to the employer. It is not possible for an employer to retain all the documents for a long period and then to produce evidence, whether oral or documentary, after years as the officers, who may have dealt with the matter, might have left the establishment on account of superannuation or any other reason. The employer is not at fault if the reference is not made expeditiously by the State Government, but it is saddled with an award directing payment of back wages without having taken any work from the concerned workman. The plight of the workman who is thrown out of employment is equally bad as it is a question of survival for his family and he should not be left in a state of uncertainty for a long period.
8. There is no rule of thumb that in every case where the Industrial Tribunal gives a finding that the termination of service was in violation of Section 25-F of the Act, entire back wages should be awarded. A host of factors like the manner and method of selection and appointment, i.e., whether after proper advertisement of the vacancy or inviting applications from the employment exchange, nature of appointment, namely, whether ad hoc, short term, daily wage, temporary or permanent in character, any special qualification required for the job and the like should be weighed and balanced in taking a decision regarding award of back wages. One of the important factors, which has to be taken into consideration, is the length of service, which the workman had rendered with the employer. If the workman has rendered a considerable period of service and his services are wrongfully terminated, he may be awarded full or partial back wages keeping in view the fact that at his age and the qualification possessed by him he may not be in a position to get another employment. However, where the total length of service rendered by a workman is Page 20 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 very small, the award of back wages for the complete period, i.e., from the date of termination till the date of the award, which our experience shows is often quite large, would be wholly inappropriate. Another important factor, which requires to be taken into consideration is the nature of employment. A regular service of permanent character cannot be compared to short or intermittent daily wage employment though it may be for 240 days in a calendar year.
9............. A person appointed on daily wage basis gets wages only for days on which he has performed work.
10. In Smt. Saran Kumar Gaur and Ors. v. : State of Uttar Pradesh and Ors. [1991]3SCR559 , this Court observed that when work is not done remuneration is not to be paid and accordingly did not make any direction for award of past salary. In State of U.P. and Anr. V. : Atal Behari Shastri and Anr. (1993) I LLJ317SC , a termination order passed on 15.7.1970 terminating the services of a Licence. Inspector was finally quashed by the High Court in a writ petition on 27.11.1991 and a direction was issued to pay the entire back salary from the date of termination till the date of his attaining superannuation. This Court, in absence of a clear finding that the employee was not gainfully employed during the relevant period, set aside the order of the High Court directing payment of entire back salary and substituted it by payment of a lumpsum amount of Rs. 25,000/-............. In Surjit Ghosh v.: Chairman and Managing Director, United Commercial Bank and Ors. (1995) II LLJ68SC , the appellant (Assistant Manager in the Bank) was dismissed from service on 28.5.1985, but his appeal was allowed by this Court on 6.2.1995 as his dismissal order was found to be suffering from an inherent defect. His claim for arrears of salary for the past period came to about Rs. 20 lakhs but this Court observed that a huge amount cannot be paid to anyone for doing no work and accordingly directed that a compensation amount of Rs. 50,000/- be paid to him in lieu of his claim for arrears of salary. In Anil Kumar Gupta v.: State of Bihar (1996)7SCC83 , the appellants were employed as daily wage employees in Water and Land Management Institute of the Irrigation Department of Government of Bihar and they were working on the posts of steno-
typists, typists, machine operators and peons, etc. This Court allowed the appeal of the workmen and directed reinstatement but specifically held that they would not be entitled to any past salary. These authorities show that an order for payment of back wages should not be passed in a mechanical manner but host of factors are to be taken into consideration before passing any order for award of back wages.
11. In the case in hand the respondent had worked for a very short period with the appellant, which was less than one year. Even during this period there were breaks in service and he had been given short term appointments on daily wage basis in different capacities. The respondent is not a technically trained person, but was working on a Page 21 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 class IV post. According to the finding of the Industrial Tribunal- cum- Labour Court plenty of work of the same nature, which the respondent was doing, was available in the District of Rohtak. In such circumstances we are of the opinion that the respondent is not entitled to payment of any back wages......................." (emphasis supplied) 28 In "Kendriya Vidyalaya Sanghathan vs S. C. Sharma", 2005 Judgments Today (1) 336 it was held as under:
"13. The residual question relates to direction for back wages.
15. When the question of determining the entitlement of a person to back wages is concerned, the employee has to show that he was not gainfully employed. The initial burden is on him. After and if he places materials in that regard, the employer can bring on record materials to rebut the claim. In the instant case, the respondent had neither pleaded nor placed any material in that regard."
29 In "Sonepat Cooperative Sugar Mills Ltd. v. Rakesh Kumar"; JT 2005 (10) SC 6299, which has been relied upon by the counsel for the petitioner herein, the concerned workman was a daily wager and since had put in 240 days service he was awarded reinstatement in service by the Labour Court and that award was upheld by the Apex Court. Relevant observations are as under:-
"6. The contention of the appellant that the respondent was appointed for a specific period, namely, 1.7.1998 to 31.8.1999 and the termination of his service is on account of non-renewal of contract of employment is not borne out either by the pleadings or the evidence....................................... From the evidence led before the Labour Court, the finding recorded by the Labour Court that the respondent was employed on daily wage basis and had worked for more than 240 days during the period of 12 months before the date of termination, did not call for interference. The appellant had examined one Randhir Singh, Time Keeper as MW-2 who had produced the Attendance Register for the period 1.7.1998 to 31.8.1999 and specifically admitted that as per the Attendance Register, the respondent had worked continuously between the said period and further admitted that the respondent had worked for more than 240 Page 22 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 days in a period of one year prior to respondent's termination. In view of it there was a clear violation of S ection 25F and we find no error in the direction for reinstatement."
30 In "Nagar Mahapalika (now Municipal Corpn.) v. State of U.P. & Ors.; AIR 2006 SC 2113, it was held by the Apex Court:-
"8. It was furthermore urged that in any event, the said Respondents having been appointed only on an adhoc basis and not in terms of the provisions of the said Adhiniyam and the rules framed thereunder, had no legal right to continue in service. Moreover, they having been appointed on daily wages, their disengagement from services cannot be construed to be 'retrenchment' under the provisions of the U.P. Industrial Disputes Act.
9. The High Court, however, did not go into the aforementioned questions at all. The High Court dismissed the said writ petition only on the premise that the workmen having completed 240 days of continuous service and as they had been reinstated in service pursuant to the interim order passed by the High Court, it would not be appropriate to displace the workmen from employment and to offer other reliefs, particularly, when a relief of reinstatement can be granted for violation of the provisions of Section 6-N of the Act in view of the decision of this Court in Hindustan Tin Works Pvt. Ltd. v. Employees of Hindustan Tin Works Pvt. Ltd. and Ors.: (1978)IILLJ474SC . However, they were directed to be paid 50% of the backwages.
10. The learned Counsel appearing on behalf of the Appellant would contend that having regard to the nature of appointment, the impugned award could not have been passed. The learned Counsel appearing on behalf of the Respondent, on the other hand, would support the impugned award.
11. This is one of those cases which clearly depict as to how the officers of the local-self government at their own whims and caprice have been making appointments without following the procedures laid down under the Adhiniyam. The Administrator of a Municipal Corporation is a public servant. He was bound to follow the provisions of the Adhiniyam and the Rules. It is surprising how the Respondents could be appointed even prior to creation of the temporary posts by the State............ Evidently, the provisions of the Apprentice Act, 1961 have also not been followed.......................
12. This Court in a large number of decisions has expressed its concern Page 23 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 on how and in what manner appointments on daily basis or by way of ad hoc arrangement are made in flagrant violations of constitutional provisions enshrined under Articles 14 and 16 of the Constitution of India and/ or the statutory recruitment rules. This Court has also been noticing that the State or the public sector undertakings or the local self governments themselves are making all endeavours to regularise the services of such employees who have entered the services through the backdoor. The Industrial Tribunals, in some cases the High Courts also, had been generous enough to direct regularisation for the services of such workmen without proper application of mind.
13. Recently, a Constitution Bench of this Court has held that such appointments being contrary to the provisions of Articles 14 and 16 of the Constitution of India are illegal. [See Secy., State of Karnataka and Ors. v. Umadevi and Ors.: (2006)IILLJ722SC .........
14................... It is unfortunate that the writ petition filed in the year 1989 has been disposed of in 2004 but the Appellants cannot be blamed therefor........................................................................
15. In our opinion, the High Court did not adopt a correct approach in the matter. Non-compliance of the provisions of Section 6-N of the U.P. Industrial Disputes Act, although, may lead to the grant of a relief of reinstatement with full backwages and continuity of service in favour of the retrenched workmen, the same would not mean that such a relief is to be granted automatically or as a matter of course.
16. The Labour Court in its award did not take into consideration the relevant facts for exercise of its discretion in granting the relief. It is now well-settled, by reason of a catena of decisions of this Court, that only because the Labour Court may grant the relief of reinstatement with full backwages, the same should be granted as a matter of course. The Appellant herein has clearly stated that the appointments of the Respondents have been made in violation of the provisions of the Adhiniyam. An appointment made in violation of the provisions of Adhiniyam is void. The same, however, although would not mean that the provisions of the Industrial Disputes Act are not required to be taken into consideration for the purpose of determination of the question as to whether the termination of workmen from services is legal or not but the same should have to be considered to be an important factor in the matter of grant of relief. The Municipal Corporation deals with public money. Appointments of the Respondents were made for carrying out the work of assessment. Such assessments are done periodically. Their services, thus, should not have been directed to be continued despite the requirements therefore having come to an end. It is, therefore, in our considered view, not a case where the relief of reinstatement should have been granted."(underlining is mine) Page 24 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021
31 In "Narendra Kumar v. Reginal Manager, Punjab National Bank and Others"; (2009) 14 SCC 219 it was held as under:-
"4. The Labour Court vide its order dated 31-12-2007, while allowing the claim in part, has directed the respondents to pay a sum of rupees fifty thousand only (Rs 50,000) by way of compensation in lieu of reinstatement into service. The award passed by the Labour Court was the subject-matter of the writ petition before the High Court at the instance of the workman. The High Court has dismissed the writ petition in limine and thereby has affirmed the award passed by the Labour Court.
5. The learned counsel for the appellant submits that the amount of compensation awarded by the Labour Court in lieu of reinstatement into service vide its order dated 31-12-2007 is meagre and therefore, this Court may exercise its discretion and enhance the compensation awarded by the Labour Court.
6. Ordinarily, we would not have interfered with the concurrent findings of the Labour Court and the High Court. At the same time, we cannot be obdurate to the hard realities of life. In matters of this nature, a humane and pragmatic approach to the various factors, including the steep escalation in prices in the commodity market, the cost of living, the cost of education of children, etc. is required.
7. Therefore, keeping in view the peculiar facts and circumstances of this case, in our view, it would be in the interest of justice to enhance the compensation from rupees fifty thousand (50,000) to rupees one lakh (1,00,000) only. Accordingly, the appeal is allowed in part. The award passed by the Labour Court in ID No. 52 of 1996 is modified by enhancing the compensation awarded from Rs 50,000 (Rupees fifty thousand only) to Rs 1,00,000 (Rupees one lakh only)" (emphasis supplied)
32 In "Jagbir Singh vs. Haryana State Agriculture Marketing Board and Anr.; (2009) 15 Supreme Court Cases 327, which was a case of termination of the services of a daily wager who had worked from 01.09.1995 to 18.07.1996 and in which judgment the Supreme Court took note of its various judgments rendered after 2000 and held as follows:-
Page 25 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 "7. It is true that 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 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 to the prescribed procedure. Compensation instead of reinstatement has been held to meet the ends of justice.
8. In U.P. State Brassware Corporation Ltd. v. Uday Narain Pandey (2006 ) I LLJ 496 SC , the question for consideration before this Court was whether direction to pay back wages consequent upon a declaration that a workman has been retrenched in violation of the provisions of the Section 6N of the U.P. Industrial Disputes Act, 1947 (equivalent to Section 25F of `the Act, 1947') as a rule was proper exercise of discretion. This Court considered a large number of cases and observed thus:
"41. The Industrial Courts while adjudicating on disputes between the management and the workmen, therefore, must take such decisions which would be in consonance with the purpose the law seeks to achieve. When justice is the buzzword in the matter of adjudication under the Industrial Disputes Act, it would be wholly improper on the part of the superior courts to make them apply the cold letter of the statutes to act mechanically. Rendition of justice would bring within its purview giving a person what is due to him and not what can be given to him in law.
42. A person is not entitled to get something only because it would be lawful to do so. If that principle is applied, the functions of an Industrial Court shall lose much of their significance.
45. The Court, therefore, emphasised that while granting relief, application of mind on the part of the Industrial Court is imperative. Payment of full back wages, therefore, cannot be the natural consequence."
9. This Court in the case of Uttaranchal Forest Development Corporation v. M.C. Joshi (2007) 2LLJ 390 SC held that relief of reinstatement with full back wages were not being granted automatically only because it would be lawful to do so and several factors have to be considered, few of them being as to whether appointment of the workman had been made in terms of statute/rules Page 26 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 and the delay in raising the industrial dispute. This Court granted compensation instead of reinstatement although there was violation of Section 6N of the U.P. Industrial Disputes Act, 1947 (equivalent to Section 25F) of the Act, 1947. This is what this Court said:
"9. Although according to the learned Counsel appearing on behalf of the appellant the Labour Court and the High Court committed an error in arriving at a finding that in terminating the services of the respondent, the provisions of Section 6N of the U.P. Industrial Disputes Act were contravened, we will proceed on the basis that the said finding is correct. The question, however, would be as to whether in a situation of this nature, relief of reinstatement in services should have been granted. It is now well settled by reason of a catena of decisions of this Court that the relief of reinstatement with full back wages would not be granted automatically only because it would be lawful to do so. For the said purpose, several factors are required to be taken into consideration, one of them being as to whether such an appointment had been made in terms of the statutory rules. Delay in raising an industrial dispute is also a relevant fact."
10. In the case of State of M.P. and Ors. v. Lalit Kumar Verma AIR 2007 SC 528, this Court substituted the award of reinstatement by compensation.
11. In yet another decision in the case of M.P. Administration v. Tribhuwan : (2007) 9 SCC 748, this Court reversed the High Court's order directing reinstatement with full back wages and instead awarded compensation. It was opined:
"12. In this case, the Industrial Court exercised its discretionary jurisdiction under Section 11A of the Industrial Disputes Act. It merely directed the amount of compensation to which the respondent was entitled had the provisions of Section 25F been complied with should be sufficient to meet the ends of justice. We are not suggesting that the High Court could not interfere with the said order, but the discretionary jurisdiction exercised by the Industrial Court, in our opinion, should have been taken into consideration for determination of the question as to what relief should be granted in the peculiar facts and circumstances of this case. Each case is required to be dealt with in the fact situation obtaining therein."
23. Indisputably, the Industrial Court, exercises a discretionary jurisdiction, but such discretion is required to be exercised judiciously. Relevant factors therefore were required to be taken into consideration; the nature of appointment, the period of appointment, the availability Page 27 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 of the job, etc. should weigh with the court for determination of such an issue.
24. This Court in a large number of decisions opined that payment of adequate amount of compensation in place of a direction to be reinstated in service in cases of this nature would subserve the ends of justice....................................
13. In Ghaziabad Development Authority and Anr. v Ashok Kumar and Anr. (2008) I LLJ 1013 SC , this Court again considered the question whether the Labour Court was justified in awarding the relief of reinstatement with full back wages in favour of the workman and held:
"18. The first respondent was admittedly appointed on a daily wage of Rs. 17 per day. He worked for a bit more than two years......... If there did not exist any post, in our opinion, the Labour Court should not have directed reinstatement of the first respondent in service.
19. A statutory authority is obligated to make recruitments only upon compliance with the equality clause contained in Articles
14 and 16 of the Constitution of India. Any appointment in violation of the said constitutional scheme as also the statutory recruitment rules, if any, would be void. These facts were required to be kept in mind by the Labour Court before passing an award of reinstatement.
21. We are, therefore, of the opinion that the appellant should be directed to pay compensation to the first respondent in stead and in place of the relief of reinstatement in service.""
33 In Mahboob Deepak v. Nagar Panchayat, Gajraula (2008) ILLJ 855 SC, it was observed:
"6. Such termination of service, having regard to the fact that he had completed 240 days of work during a period of 12 months preceding the said date, required compliance with the provisions of Section 6N of the U.P. Industrial Disputes Act. An order of retrenchment passed in violation of the said provision although can be set aside but as has been noticed by this Court in a large number of decisions, an award of reinstatement should not, however, be automatically passed.
7. The factors which are relevant for determining the same, inter alia, are:
(i) whether in making the appointment, the statutory rules, if any, had Page 28 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 been complied with;
(ii) the period he had worked;
(iii) whether there existed any vacancy; and
(iv) whether he obtained some other employment on the date of termination or passing of the award.
8. The respondent is a local authority. The terms and conditions of employment of the employees are governed by a statute and statutory rules. No appointment can be made by a local authority without following the provisions of the recruitment rules. Any appointment made in violation of the said rules as also the constitutional scheme of equality as contained in Articles 14 and 16 of the Constitution of India would be a nullity.
9. Due to some exigency of work, although recruitment on daily wages or on an ad hoc basis was permissible, but by reason thereof an employee cannot claim any right to be permanently absorbed in service or made permanent in absence of any statute or statutory rules. Merely because an employee has completed 240 days of work in a year preceding the date of retrenchment, the same would not mean that his services were liable to be regularised.
13. In this view of the matter, we are of the opinion that as the appellant had worked only for a short period, the interest of justice will be subserved if the High Court's judgment is modified by directing payment of a sum of Rs 50,000 (Rupees fifty thousand only) by way of damages to the appellant by the respondent................................"
15. It would be, thus, seen that by 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 passed........... This Court has distinguished between a daily wager who does not hold a post and a permanent employee. ..................." (emphasis laid) 34 In "P. V. K. Distillery vs. Mahendra Ram"; (2009) 5 Supreme Court Cases 705 it was held as under:-
"11. In the case of P.G.I. of M.E. and Research, Chandigarh v. Raj Kumar; 2000(8)SCALE469 , this Court has held that the payment of back wages having a discretionary element involved in it, has to be dealt with, in the facts and circumstances of each case and no straight-Page 29 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022
C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 jacket formula can be evolved, though, however, there is statutory sanction to direct payment of back wages in its entirety. ...............................................
12. In the case of Hindustan Motors v. T.K. Bhattacharya:
(2002)IILLJ1156SC , this Court has stated that Section 11A as amended in 1971, is couched in wide and comprehensive terms. It vests a wide discretion in the Tribunal in the matter of awarding proper punishment and also in the matter of the terms and conditions on which reinstatement of the workman should be ordered. It necessarily follows, that, the Tribunal is duty-bound to consider whether in the circumstances of the case, back wages have to be awarded and if so, to what extent................................ we are of the view that in the context of the facts of this particular case including the vicissitudes of long-
drawn litigation, it will serve the ends of justice if the respondent is paid 50% of the back wages till the date of reinstatement.
13. In U.P. State Brassware Corp. Ltd. v. Uday Narain Pandey :
(2006)ILLJ496SC , it is observed that the person is not entitled to get something only because it would be lawful to do so. If that principle is applied, the functions of an Industrial Court shall lose much of their significance. Although direction to pay full back wages on a declaration that the order of termination was invalid used to be the usual result but now, with the passage of time, a pragmatic view of the matter is being taken by the court realizing that an industry may not be compelled to pay to the workman for the period during which he apparently contributed little or nothing at all to it and/or for a period that was spent unproductively as a result whereof the employer would be compelled to go back to a situation which prevailed many years ago, namely, when the workman was retrenched.
14. In the case of Haryana Urban Development Authority v. Om Pal:
(2007)2LLJ1030SC , it is stated that, it is now also well-settled that despite a wide discretionary power conferred upon the Industrial Courts under Section 11A of the 1947 Act, the relief of reinstatement with full back- wages should not be granted automatically only because it would be lawful to do so. Grant of relief would depend on the fact situation obtaining in each case. It will depend upon several factors; one of which would be as to whether the recruitment was effected in terms of the statutory provisions operating in the field, if any.
15. In deciding the question, as to whether the employee should be recompensed with full back wages and other benefits until the date of reinstatement, the tribunals and the courts have to be realistic albeit the ordinary rule of full back wages on reinstatement............
18.In Allahabad Jal Sansthan v. Daya Shankar Rai : (2005)IILLJ847SC , this Court has observed: A law in absolute terms cannot be laid down as Page 30 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 to in which cases, and under what circumstances, full back wages can be granted or denied. The Labour Court and/or Industrial Tribunal before which industrial dispute has been raised, would be entitled to grant the relief having regard to the facts and circumstances of each case. For the said purpose, several factors are required to be taken into consideration.
19. In Madurantakam Coop. Sugar Mills Ltd. v. S. Viswanathan:
(2005)II LLJ SC, the quantum of back wages was confined to 50%,..........................................."
20................... The point that his services were terminated in the year 1985 and since then the case is pending for the last two decades in different courts also has no relevance, since he had approached the court within a reasonable time. It is not his fault that the case is still pending before the court. These grounds could not be held against him for denying the relief of back wages otherwise he would suffer double jeopardy of losing back wages and delay in getting the reinstatement for no fault of his. Therefore, it would have been more enlightening, had the High Court reasoned out as to why the appellant should reinstate the respondent with full employment benefits and should pay full back wages to him for nothing in return from him in terms of work, production etc.
21. Giving a realistic approach to the matter and in spite of all these circumstances we are restricting ourselves to the question of 50% of the total back wages. Although services of the respondent have been terminated unjustifiably and illegally, it itself does not create a right of reinstatement with full employment benefits and full back wages. The notice was issued with a view that the appellant's factory has been taken over by a new management altogether and by asking the appellant to pay full back wages for the long interregnum would be unfair and unjust. ........ it would be unreasonable to put a huge burden on the appellant by directing them to reinstate respondent with continuity of service and with full back wages......................" (underlining is mine) 35 We may refer to and rely upon a decision of the Supreme Court in the case of Hari Nandan Prasad and others vs. Employer I/R to Management of FCI and others reported in (2014) 7 SCC 190. The relevant observations of the Supreme Court made in paras 32, 33 and 34 read thus:
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32. At the same time, the aforesaid sweeping power conferred upon the Tribunal is not unbridled and is circumscribed by this Court in the case of New Maneckchowk Spinning & Weaving Co. Ltd. v. Textile Labour Association [1961] 1 LLJ 521, 526 (SC) in the following words:
"This, however, does not mean that an industrial court can do anything and everything when dealing with an industrial dispute. This power is conditioned by the subject matter with which it is dealing and also by the existing industrial law and it would not be open to it while dealing with a particular matter before it to overlook the industrial law relating to the matter as laid down by the legislature or by this Court."
33. It is, thus, this fine balancing which is required to be achieved while adjudicating a particular dispute, keeping in mind that the industrial disputes are settled by industrial adjudication on principle of fair play and justice.
34. On harmonious reading of the two judgments discussed in detail above, we are of the opinion that when there are posts available, in the absence of any unfair labour practice the Labour Court would not give direction for regularization only because a worker has continued as daily wage worker/adhoc/temporary worker for number of years. Further, if there are no posts available, such a direction for regularization would be impermissible. In the aforesaid circumstances giving of direction to regularize such a person, only on the basis of number of years put in by such a worker as daily wager etc. may amount to backdoor entry into the service which is an anathema to Article14 of the Constitution. Further, such a direction would not be given when the concerned worker does not meet the eligibility requirement of the post in question as per the Recruitment Rules. However, wherever it is found that similarly situated workmen are regularized by the employer itself under some scheme or otherwise and the workmen in question who have approached Industrial/Labour Court are at par with them, direction of regularization in such cases may be legally justified, otherwise, non-regularization of the left over workers itself would amount to invidious discrimination qua them in such cases and would be violative of Article 14 of the Constitution. Thus, the Industrial adjudicator would be achieving the equality by upholding Article 14, rather than violating this constitutional provision."
36 From the aforesaid judgments of the Supreme Court, it is quite clear that till date, it has not been held so far in any of the decisions by the Supreme Court that in no case the relief of reinstatement and back Page 32 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 wages should be granted to the workmen who succeed in getting a declaration from the industrial adjudicators that the termination of their services by their employers was illegal and unjustified. The crux of these decisions is that these reliefs should not be granted by the Courts mechanically after holding the termination of services of the concerned workmen to be illegal and by ignoring special and peculiar facts and circumstances in each case which justify refusal of these reliefs and grant of lump sum monetary compensation in lieu thereof. It is however significant to notice, and as was pointed out even by the learned counsel for the respondent also, that as far as daily wagers are concerned the Supreme Court is now taking the view that they should not be reinstated and instead monetary compensation should be awarded to them.
37 While dealing with the present appeal, one has to bear in mind that a intra-Court appeal is really not a statutory appeal preferred against the judgment and order of an inferior to the superior Court. The appeal inter se in a High Court from one Court to another is really an appeal from one coordinate Bench to another Coordinate Bench and it is for this reason that a writ cannot be issued by one Bench of the High Court to another Bench of the High Court nor can even the Supreme Court issue writ to a High Court. Thus, unlike an appeal, in general, an intra-Court appeal is an appeal on principle and that is why, unlike an appeal, in an ordinary sense, such as a criminal appeal, where the whole evidence on record is examined afresh by the appellate Court, what is really examined, in an intra-Court appeal, is the legality and validity of the Judgment and/or Order of the Single Judge and it can be set aside or should be set aside only when there is a patent error on the face of the record or the judgment is against the established or settled principle of law. If two views are possible and a view, which is reasonable and logical, has been adopted by a Single Judge, the other view, howsoever Page 33 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022 C/LPA/930/2017 JUDGMENT DATED: 13/07/2021 appealing such a view may be to the Division Bench, it is the view adopted by the Single Judge, which should, normally, be allowed to prevail. Hence, the impugned judgment of the learned Single Judge should not be completely ignored and this Court has to consider the judgment and order in its proper perspective and if this Bench, sitting as an appellate Bench, is of the view that the decision has been arrived at by the learned Single Judge without any material error of fact or law, then, the judgment, in question, should be allowed to prevail.
38 In such circumstances referred to above, we have reached to the conclusion that we should not disturb the impugned judgement and order passed by the learned Single Judge.
39 In the result, this appeal fails and is hereby dismissed.
LETTERS PATENT APPEAL NO.1899 OF 2017:
This appeal at the instance of the Corporation seeks to challenge the very same judgement and order passed by the learned Single Judge. This appeal is also ordered to be dismissed.
(J. B. PARDIWALA, J) (VAIBHAVI D. NANAVATI,J) CHANDRESH Page 34 of 34 Downloaded on : Sat Jan 15 23:37:38 IST 2022