Reportable

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.4334 OF 2009 (Arising out of SLP© No. 987/2009)

Jagbir Singh            …Appellant

Versus   

Haryana State Agriculture Marketing Board  & Anr.   …Respondents

JUDGEMENT

R.M. Lodha, J.

Leave granted.

2. The  appellant  was  engaged  as  a  daily  wager  by  the  

Respondent No. 1, Haryana State Agriculture Marketing Board  

on September 1, 1995. He worked with the Respondent No. 1  

upto July 18, 1996. Thereafter,  his services came to an end.  

During  his  employment,  the  appellant  was paid  consolidated

wages  @  Rs.  1,498/-  per  month.  The  appellant  raised  the  

industrial dispute contending that his services were retrenched  

illegally in violation of Section 25F of Industrial  Disputes Act,  

1947 (for short, ‘the Act, 1947’). He claimed reinstatement with  

continuity of service and full back wages.  

3. The  Presiding  Officer,  Industrial  Tribunal-cum-Labour  

Court, Panipat, after recording evidence and hearing the parties  

held that the appellant had worked for more than 240 days in  

the  year  preceding  the  date  of  termination  and  that  the  

Respondent No. 1 violated the provisions of Section 25F of the  

Act  1947 by not  giving him notice,  pay in lieu of  notice and  

retrenchment compensation before his termination. The Labour  

Court,  accordingly, vide its award dated September 16, 2005  

declared that the appellant was entitled to reinstatement with  

continuity  of  service  and  full  back  wages  from  the  date  of  

demand notice, i.e., January 27, 1997.  

4. The present  Respondent  Nos.  1  and  2  challenged  the  

award before the High Court for Punjab and Haryana. The High  

Court held that even if the appellant had completed 240 days of  

service  in  a  calendar  year,  he  was  neither  entitled  to  be  

reinstated nor could be granted back wages. The High Court  

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set aside the award holding that it was not sustainable in law.  It  

is this order of the High Court that has been challenged by the  

appellant in this appeal by special leave.

5. The question that falls for our consideration is whether the  

High  Court,  in  a  case  such  as  this  where  termination  of  

appellant was in contravention of Section 25F, was justified in  

upsetting  the  award  of  the  Labour  Court  whereby  the  first  

respondent  was  directed  to  reinstate  the  appellant  with  

continuity of service and full back wages.

6. The learned counsel for the appellant strenuously urged  

that once the termination of service of the appellant was held to  

be in violation of Section 25F of the Act 1947, the Labour Court  

rightly ordered reinstatement with continuity of service and full  

back wages and the High Court was not justified in interfering  

with the just award passed by the Labour Court. On the other  

hand, the learned counsel for the respondents supported the  

order of the High Court.  

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  

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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  Corpn.  Ltd. v. Uday  Narain  

Pandey1, 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  6-N 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  

1 (2006) 1 SCC 479

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functions  of  an  Industrial  Court  shall  lose  much  of  their  significance. 43. The changes brought about by the subsequent decisions  of this Court, probably having regard to the changes in the  policy decisions of the Government in the wake of prevailing  market  economy,  globalisation,  privatisation  and  outsourcing, is evident. 44. …………………………………………………………. 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  

Corpn. V. M.C. Joshi2 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 and the delay  

in  raising  the  industrial  dispute.  This  Court  granted  

compensation  instead  of  reinstatement  although  there  was  

violation  of  Section  6-N  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 6-N 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  

2 (2007) 9 SCC 353

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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. & Ors. v. Lalit Kumar Verma3,   

this  Court  substituted  the  award  of  reinstatement  by  

compensation.

11. In yet another decision in the case of M.P. Administration  

v.  Tribhuwan4,  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 11-A of the Industrial  Disputes Act. It merely directed the amount of compensation  to which the respondent was entitled had the provisions of  Section 25-F 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. 13. We, therefore, are of the opinion that keeping in view the  peculiar facts and circumstances of this case and particularly  

3 (2007) 1 SCC 575 4 (2207) 9 SCC 748

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in  view  of  the  fact  that  the  High  Court  had  directed  reinstatement  with full  back wages,  we are of  the opinion  that interest of justice would be subserved if  the appellant  herein be directed to pay a sum of Rs. 75,000 by way of  compensation to the respondent. This appeal is allowed to  the aforementioned extent.”

12. In  the  case  of   Sita  Ram  v.  Moti  Lal  Nehru  Farmers  

Training  Institute5,  this  Court  considered  the  question  as  to  

whether  the  Labour  Court  was  justified  in  awarding  

reinstatement of the appellants therein:

“21. The question, which, however, falls for our consideration  is as to whether the Labour Court was justified in awarding  reinstatement of the appellants in service. 22. Keeping in  view the  period during  which  the services  were rendered by the respondent (sic appellants);  the fact  that  the  respondent  had  stopped  its  operation  of  bee  farming, and the services of the appellants were terminated  in December 1996, we are of the opinion that it is not a fit  case where the appellants could have been directed to be  reinstated in service. 23. Indisputably,  the  Industrial  Court,  exercises  a  discretionary jurisdiction,  but  such discretion is required to  be  exercised  judiciously.  Relevant  factors  therefor  were  required  to  be  taken  into  consideration;  the  nature  of  appointment,  the  period  of  appointment,  the  availability  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.  (See  Jaipur  Development Authority v.  Ramsahai  [(2006) 11 SCC 684],  M.P.  Admn. v.  Tribhuban  [(2007)  9  SCC  748] and  Uttaranchal  Forest  Development  Corpn. v.  M.C.  Joshi   [(2007) 9 SCC 353]) 25. Having  regard  to  the  facts  and  circumstances  of  this  case, we are of the opinion that payment of a sum of Rs.  1,00,000 to each of the appellants, would meet the ends of  justice. This appeal is allowed to the aforementioned extent.  In the facts and circumstances of this case, there shall be no  order as to costs.”

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13. In  Ghaziabad  Development  Authority  &  Anr.  v.  Ashok  

Kumar  &  Anr.6,  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. It has not been disputed before us that sanction  of the State of U.P. was necessary for creation of posts. The  contention of the appellant before the Labour Court that the  post was not sanctioned after 31-3-1990 by the State was  not denied or disputed. 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. 20.  Furthermore, public interest would not be subserved if  after  such  a  long  lapse  of  time,  the  first  respondent  is  directed to be reinstated in service. 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.  22. Keeping in view the fact that the respondent worked for  about six years as also the amount of daily wages which he  had been getting, we are of the opinion that the interest of  justice would be subserved if the appellant is directed to pay  a sum of Rs 50,000 to the first  respondent.  The said sum  should be paid to the respondent  within eight  weeks from  date, failing which the same shall carry interest at the rate of  12%  per  annum.  The  appeal  is  allowed  to  the  aforesaid  

6 (2008) 4 SCC 261

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extent. However, in the facts and circumstances of this case,  there shall be no order as to costs.”

14. In  Mahboob  Deepak  v.  Nagar  Panchayat,  Gajraula7,  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 6-N 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 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. 10. Applying  the  legal  principles,  as  noticed  hereinbefore,  the relief  granted in favour of the appellant  by the Labour  Court is wholly unsustainable. The same also appears to be  somewhat unintelligible. 11. The High Court, on the other hand, did not consider the  effect of non-compliance with the provisions of Section 6-N  

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of the U.P. Industrial Disputes Act, 1947. The appellant was  entitled to compensation, notice and notice pay. 12. It  is  now well  settled by a catena of  decisions of  this  Court that in a situation of this nature instead and in place of  directing reinstatement  with full  back wages, the workmen  should be granted adequate monetary compensation. (See  M.P. Admn. v. Tribhuban [(2007) 9 SCC 748].) 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. Such payment should be made  within eight weeks from this date, failing which the same will  carry interest at the rate of 9% per annum.”

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.  The award of reinstatement  

with  full  back  wages  in  a  case  where  the  workman  has  

completed 240 days of work in a year preceding the date of  

termination, particularly, daily wagers has not been found to be  

proper  by  this  Court  and  instead  compensation  has  been  

awarded. This Court has distinguished between a daily wager  

who  does  not  hold  a  post  and  a  permanent  employee.  

Therefore,  the view of  the High Court  that  the Labour  Court  

erred in granting reinstatement and back wages in the facts and  

circumstances of the present case cannot be said to suffer from  

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any legal flaw. However, in our view, the High Court erred in not  

awarding  compensation  to  the  appellant  while  upsetting  the  

award of reinstatement and back wages. As a matter of fact, in  

all the judgments of this Court referred to and relied upon by  

the High Court while upsetting the award of reinstatement and  

back wages, this Court has awarded compensation.

16. While awarding compensation, the host of factors,  inter-

alia, manner and method of appointment, nature of employment  

and length of service are relevant.  Of course, each case will  

depend upon its own facts and circumstances. In a case such  

as  this  where  the  total  length  of  service  rendered  by  the  

appellant was short and intermittent from September 1, 1995 to  

July 18, 1996 and that he was engaged as a daily wager, in our  

considered  view,  a  compensation  of  Rs.  50,000/-  to  the  

Appellant by Respondent No. 1 shall meet the ends of justice.  

We order accordingly. Such payment should be made within six  

weeks from today failing which the same will carry interest @  

9% per annum.

17. Appeal is partly allowed to the aforementioned extent with  

no order as costs.

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……………………J (Tarun Chatterjee)

…….……………..J         (R. M. Lodha)

New Delhi July 14, 2009.

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