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CASE NO.: Appeal (civil)  1266 of 2006

PETITIONER: State of M.P. & Ors

RESPONDENT: Arjunlal Rajak

DATE OF JUDGMENT: 24/02/2006

BENCH: S.B. Sinha & P.K. Balasubramanyan

JUDGMENT: J U D G M E N T [Arising out of SLP (C) No. 2567 of 2005]  

S.B. SINHA, J :          Leave granted.   

The respondent was appointed as a Chowkidar by the appellants.  Admittedly, no offer of appointment was issued to him nor the recruitment  rules applicable  for filling up of a permanent or temporary post have been  followed.  The appellants contend that the respondent was engaged in the  production division of Forest Department of District Guna which has since  been wound up.  His services were thereafter terminated.  Contending, inter  alia, that he had worked in different departments of the State from  August,   1984 to  July 8, 1992,   his services were terminated without complying with  the requirements of Section 25F of the Industrial Disputes Act, 1947, a  complaint petition was filed by the respondent before the Presiding Officer,  Labour Court No. 3, Gwalior.  By reason of an award dated 12.7.1999 on a  finding that the Respondent had worked for more than 240 days in a  calendar year and  having regard to the fact that no retrenchment  compensation was paid, he was directed to be reinstated in service with full  back wages.  

The Labour Court does not appear to have taken into consideration the  pleas raised by the appellant herein that the production division at Guna was  wound up by an order dated 3.7.1992 of the State of Madhya Pradesh,  even  while considering the relief which was required to be given in the facts and  circumstances of the case. The High Court on a writ petition filed by the  appellant although noticed the said fact dismissed  the same petition stating:  

"Even though on behalf of the employer, statement of  one Ashok Kumar was recorded  but the aforesaid  witness could not dispute the fact with regard to working  of the employee.  On the contrary, the said witness, in his  cross-examination admitted that the certificates have  been issued to the respondent/employee by the competent  authority of the employer and he had worked for more  than 240 days in a calendar year.  Considering the fact  that no show cause notice was issued or retrenchment  compensation was paid or enquiry was conducted before  terminating the service of respondent/employee, a finding  has been recorded  that the respondent No. 1 was in  employment since 1.8.1984 and he had completed more  than 240 days continuous service in a calendar year.   That being so, in view of the provisions of Section 25-B  of the Industrial Disputes Act, 1947 service of  respondent/employee had been terminated without  following  the mandatory provisions of Section 25-F, no

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show cause notice was issued or retrenchment  compensation paid to him.  Therefore, the finding  recorded is based on appreciation of evidence and  material available on record.  The said finding is neither  perverse nor warrant interference in any manner  whatsoever by this Court."

       Mr. B.S. Banthia, the learned counsel appearing on behalf of the  appellants would submit  that having regard to the fact that the respondent  was appointed on daily wages and the unit in which he was working had  been wound up, the Respondent could not have been directed to be  reinstated with full back wages.   

       Mrs. K. Sharada Devi, learned counsel appearing on behalf of the  respondent, on the other hand, would contend that the appellants had not  made out any case before the Labour Court that the respondent was  appointed under a Scheme.  He, according to the learned counsel, might  have been shifted from one department to the other but the same  would not  mean that he was appointed to work in a particular project/scheme.  It was  pointed out that by reason of the order of reinstatement, the respondent  continues to be a daily wager and there is, thus, no reason  as to why after he  having been reinstated and having worked in one or the other department of  the State from 2001, this Court should exercise its jurisdiction under Article  136 of the Constitution of India.

It is beyond any doubt or dispute that a daily wager does not hold a  post.  The Forest  Department is a wing of the State.  Its employees hold a  status.  For acquiring that status and for obtaining the constitutional  protection in terms of Article 311 of the Constitution of India, all  appointments must be made in conformity with the Constitutional Scheme as  laid down under Articles 14 and 16 of the Constitution of India as well as the  rules made in terms of the proviso to Article 309 of the Constitution of India  or in terms of a Legislative Act. Concededly, while appointing the  respondent, the constitutional provision or the statutory provisions had not  been followed.  The rights and liabilities of the parties are, therefore,   governed by the terms of the contract and/or the provisions of the  statute   applicable in relation thereto.  The respondent was not given any offer of  appointment in writing.  He admittedly worked in different departments of  the State.  His last posting was in the production division of Forest  Department in the District of Guna which as noticed above stood abolished.   It is, however, true that while terminating the services of the respondent the  appellants had not complied with the mandatory requirements of Section 25- F of the Industrial Disputes Act and, thus, ordinarily, the workman could  have been directed to be reinstated with or without back wages, but it is also  well settled that a project or a Scheme or an office itself is abolished, relief  by way of reinstatement is not granted.  

       The question came up for consideration before a Division Bench of  this Court in Mahendra L. Jain & Ors. Vs. Indore Development Authority &  Ors. [ (2005 (1) SCC 639] wherein it was categorically held:  

"This case involves 31 employees. A distinction is  sought to be made by Dr. Dhavan that out of them  27 had been appointed to a project and not in a  project. The distinction although appears to be  attractive at the first blush but does not stand a  moment’s scrutiny. As noticed hereinbefore, the  High Court’s observation remained unchallenged,  that the project was to be financed by ODA. The  project was indisputably to be executed by the  Indore Development Authority; and for the  implementation thereof, the appointments had to  be made by it. If the appellants were appointed for  the purpose of the project, they would be deemed

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to have been appointed therefor and only because  such appointments had been made by the  respondent would by itself not entitle them to  claim permanency. The life of the project came to  an end on 30-6-1997. The maintenance job upon  completion thereof had been taken over by the  Indore Municipal Corporation. The appellants  were aware of the said fact and, thus, raised an  alternative plea in their statements of claims. The  Labour Court could not have granted any relief to  them as prayed for, as the Indore Municipal  Corporation is a separate juristic person having  been created under a statute. Such a relief would  have been beyond the scope and purport of the  reference made to the Labour Court by the State  Government. Furthermore, the Indore Municipal  Corporation was not a party and, thus, no  employee could be thrust upon it without its  consent.  In A. Umarani this Court held that once the  employees are employed for the purpose of  scheme, they do not acquire any vested right to  continue after the project is over (see paras 41 and  43 : SCC paras 55 and 57). (See also Karnataka  State Coop.     Apex Bank Ltd. v. Y.S. Shetty and  M.D., U.P. Land Development Corpn. v. Amar  Singh10.)

It is furthermore evident that the persons  appointed as daily-wagers held no posts. The  appointments, thus, had been made for the purpose  of the project which, as indicated hereinbefore,  came to an end. The plea of Dr. Dhavan to the  effect that the appellants in Civil Appeal No. 337  of 2002 were asked to perform other duties also  may not be of much significance having regard to  our foregoing findings. However, it has been seen  that even services of one of them had been  requisitioned only for the project work. The High  Court, in our opinion, was right in arriving at the  conclusion that the appellants were not entitled to  be regularised in service.’

       It is also trite that even for grant of back wages, application of mind   on the part of the Industrial Court is imperative, as a relief of full back   wages may not be granted automatically. In U.P. State Brassware Corpon.  Ltd. & anr. Vs. Uday Narain Pandey [(2006) 1 SCC 479] this Court opined:  

"No precise formula can be laid down as to under  what circumstances payment of entire back wages  should be allowed.  Indisputably, it depends upon  the  facts and circumstances of each case.  It  would, however, not be correct to contend that it is  automatic.  It should not be granted mechanically  only because on technical grounds or otherwise an  order of termination   is found to be in  contravention of the provisions of Section 6-N of  the U.P. Industrial Disputes Act."

It was further held that while a decision to close down the  establishment has been taken, ordinarily, back wages to a limited extent  should be granted

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       The onus to prove that he had completed 240 days of work or he had  not been gainfully employed within the said period  was on the workman.    

       Keeping in view the fact that the services of the respondent were  terminated on the ground that the production unit in which he was working  itself had been closed, we are of the opinion that interest of justice would be  sub-served if a monetary compensation  of Rs. 10,000/- is granted to him.  It,  however, goes without saying that he would be entitled to the wages for the  period he had actually worked pursuant to  or in furtherance of the order of  the Labour Court and as also of the High Court upon his reinstatement.  The  award of the Labour Court as also the judgment of the High Court are set  aside.

       For the reasons aforementioned, the appeal is allowed to the  aforementioned extent.   However, there shall be no order as to costs.