Holding

Reinstatement with back wages is not automatic; compensation is the appropriate relief where the employee is a daily wager with short, intermittent service.

Summary

Jagbir Singh was engaged as a daily wager by the Haryana State Agriculture Marketing Board from 1 September 1995 until his termination on 18 July 1996. He alleged that the termination violated Section 25F of the Industrial Disputes Act, 1947 and sought reinstatement with back wages. The Labour Court awarded reinstatement and back wages, relying on the fact that Singh had worked more than 240 days in the preceding year. The High Court set aside that award, holding that reinstatement is not automatic for daily wagers. The Supreme Court affirmed that relief of reinstatement with back wages is discretionary and not mandatory, especially for daily wagers with short, intermittent service, and directed that compensation of Rs. 50,000 be paid to the appellant, thereby partly allowing the appeal.

Issues considered

Whether termination of a daily wager in contravention of Section 25F of the Industrial Disputes Act mandates automatic reinstatement with back wages.
Whether the High Court was justified in overturning the Labour Court's award of reinstatement and back wages.
Whether compensation should be awarded in lieu of reinstatement for a daily wager with short, intermittent service.

Legislation cited

Industrial Disputes Act, 1947s. 1-A, s. 25F

Subjects

Industrial Disputes ActSection 25Fdaily wagerreinstatementback wagescompensationterminationlabour courtSupreme Court

Judgment

[2009] 10 S.C.R. 908 -
~

A JAGBIR SINGH
v.
HARYANA STATE AGRICULTURE MARKETING BOARD &
ANR.
(Civil Appeal N.o.4334 of 2009)
B
JULY 14, 2009
[TARUN CHATTERJEE AND R.M. LODHA, JJ.] •

INDUSTRIAL DISPUTES ACT, 1947:
c
s. 25F - Order of reinstatement of daily wager with full
back wages when termination was found in contravention of
s.25F - Held : In such cases order of reinstatement should
not automatically be passed merely because the workman
D has completed 240 days in a year preceding the date of
termination - Instead award of compensation would meet the
ends of justice - Ordered accordingly.

The appellant was engaged by the respondent
department as a daily wager w.e.f. 1.9.1995. On 18.~.1996
E his services were terminated. He raised an industrial
dispute contending that his termination was in violation
of s.25F of the Industrial Disputes Act, 1947, and claimed
reinstatement with back wages. The Labour Court .,.·-
allowed the claim holding that the workman having
F worked for 240 days in the year preceding the date of
termination, the department violated s.25F of the Act. The
High Court having rejected the claim, the workman filed
the appeal.

The question for consideration before the Court
G ...
was: whether the High Court, in the 'instant case where
termination of appellant was in contravention of s. 25F of
the 1947 Act, was justified in upsetting the award of
reinstatement of the workman with continuity of service
H 908
JAGBIR SINGH v. HARYANA STATE AGRICULTURE 909
MARKETING BOARD & ANR.
~ and full back wages as had been directed by the Labour A
Court.

Partly allowing the appeal, the Court
-
HELD : 1.1. It is true that earlier view of this Court
articulated in many decisions reflected the legal position B
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 C
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, D
meet the ends of justice. This Court has distinguished
between a daily wager who does not hold a post and a
permanent employee. Therefore, in the instant case, the
view of the High Court that the Labour Court erred in
granting reinstatement and back wages, in the facts and E
circumstances of the case, cannot be said to suffer from
any legal flaw. [Para 7 and 15] [912-C-E; 919-E-F]

UP. State Brassware Corpn. Ltd. vs., Uday Narain
·. Panday (2006) 1 SCC 479; Uttarancha/ Forest Development
Corpn. vs. M. C. Joshi (2007) 9 SCC 353; State of M.P. & Ors. F
vs. La/it Kumar Verma (2007) 1 SCC 575; M.P.
Administration vs. Tribhuwan (2007) 9 SCC 748; Sita Ram
vs. Moti Lal Nehru Farmers Training Institute (2008) 5 SCC
75; Ghaziabad Development Authority & Anr. vs. Ashok
. Kumar & Anr. (2008) 4 SCC 261 and Mahboob Deepak vs. G
_, Nagar Panchayat, Gajraula (2008) 1 SCC 575, relied on.

1.2. However, the High Court erred in not awarding
compensation to the appellant while upsetting the award
H
910 SUPREME COURT REPORTS [2009] 10 S.C.R.

A of reinstatement and back wages. While awarding
compensation, the factors, like the manner and method
of appointment, nature of employment, length of service
etc. are relevant Each case will depend upon its own facts
and circumstances. In the instant case, the total length
B of service rendered by the appellant, who was engaged
as a daily wager, was short and intermittent from
September 1, 1995 to July 18, 1996. Therefore, a
compensation of Rs.50,000/- to the appellant by
respondent No.1 shall meet the ends of justice. Ordered
C accordingly. [Paras 15 and 16) [919-F-H; 920-A]

Case Law Reference :
(2006) 1 sec 479 relied on Para 8
(2007) 9 sec 353 relied on Para 9
D
(2007) 1 sec 575 relied on Para 10
(2007) 9 sec 148 relied on Para 11
(2008) 5 sec 75 relied on Para 12
E (2008) 4 sec 261 relied on Para 13
(2008) 1 sec 575 relied on Para 14

CIVIL APPELLATE JURISDICTION : Civil Appeal No.
F 4334 of 2009.

From the Judgment & Order dated 15.12.2008 of the High
Court of Punjab & Haryana at Chandigarh in Civil Writ Petition
No. 493 of 2006.

G D.P. Singh, Shuchita Shrivastva and Sanjay Jain, for the
Appellant.

Govind Goel, Ambuj Agarwal, Nitin Singh and B.S. Banthia
for the Respondents.

H
JAGBIR SINGH v. HARYANA STATE AGRICULTURE 911
MARKETING BOARD & ANR.

,.. The !Judgment of the Court was delivered by A

-. R.M. LODHA, J. 1. 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 B
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, c
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 D
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
E
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 F
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
set aside the award holding that it was not sustainable in law. G
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
H
912 SUPREME COURT REPORTS [2009) 10 S.C.R.

A 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.

8 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
C 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
D 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
E 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
F 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
G 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,
H must take such decisions which would be in consonance
JAGBIR SINGH v. HARYANA STATE AGRICULTURE 913
MARKETING BOARD & ANR. [R.M. LODHA, J.]
~
with the purpose the law seeks to achieve. WhP.n justice A

·- 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 B
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.
c
43. The changes brought about by the subsequent
decisions of this Court, probably having regard to the
J
changes in the policy decisions of the Government in the
wake of prevailing market economy, globalisation, D
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 E
is imperative. Payment of full back wages, therefore,
cannot be the natural consequence."

9. This Court in the case of Uttarancha/ Forest
Development Corpn. V. M. C. Joshi2 held that relief of F
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 G
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 H
914 SUPREME COURT REPORTS [2009] 10 S.C.R.

A 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
B 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
c 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."
D
10. In the case of State of M.P & Ors. v. La/it Kumar
Verma 3, this Court substituted the award of reinstatement by
compensation.

E 11. In yet another decision in the case of M.P.
Administration v. Tribhuwan 4 , 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
F discretionary jurisdiction under Section 1 ~-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
G 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
H circumstances of this case. Each case is required to be
JAGBIR SINGH v. HARYANA STATE AGRICULTURE 915
MARKETING BOARD & ANR. [R.M. LODHA, J.]

; dealt with in the fact situation obtaining therein. A

-- 13. We, therefore, are of the opinion that keeping in view
the peculiar facts and circumstances of this case and
particularly in view of the fact that the High Court had
directed reinstatement with full back wages, we are of the B
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 c
Training lnstitute5, 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 D
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 E
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. F

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 G
appointment, the period of appointment, the availability of
the job, etc. should weigh with t'1e court for determination
r
' of such an issue.

24. This Court in a large number of decisions opined that
payment of adequate amount of compensation iD place of H
916 SUPREME COURT REPORTS [2009] 10 S.C.R.

A 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], MP. Admn. v. Tribhuban [(2007) 9 SCC 748] and
Uttaranchal Forest Development Corpn. v. M.C. Joshi
B [(2001) 9 sec 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
c extent. In the facts and circumstances of this case, there
shall be no order as to costs."

13. In Ghaziabad Development Authority & Anr. v. Ashok
Kumar & Anr.6, this Court again considered the question
D 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
E
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
F 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
G 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.
H
JAGBIR SINGH v. HARYANA STATE AGRICULTURE 917
MARKETING BOARD & ANR. [R.M . LODHA, J.)

20. Furthermore, public interest would not be subserved if A
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
8
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 C
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 D
aforesaid extent. However, in the facts and circumstances
of this case, there shall be no order as to costs."

14. 19 Mahboob Deepak v. Nagar Panchayat, Gajraula7 ,
it was observed :
E
"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 F
in violation of the sa.id 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.
G
7. i he fadors 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;
H
918 SUPREME COURT REPORTS [2009] 10 S.C.R.

A (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.
B
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
c 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
D
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
E 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
F 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 of the U.P. Industrial Disputes Act, 1947. The appellant
G 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
H workmen should be granted adequate monetary
JAGSIR SINGH v. HARYANA STATE AGRICULTURE 919
MARKETING BOARD & ANR. [R.M. LODHA, J.]

,> compensation. (See M.P. Admp. v. Tribhuban [(2007) 9 A
sec 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 B
modified by directing payment of a sum of Rs 50,000
(Rupees fifty thousand only) by way of damages to the
.... appellant by th,e respondent. Such payment shou!d be
made within eight weeks from this date, failing which the
~
.\ same will carry interest at the rate of 9% per annum."
.,
c
,,. 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 '-:iolation of Section 25F although may
be set aside but an award of reinstatement should not,
however, be automatically passed. The award of reinstatement D
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 E
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
any legal flaw. However, in our view, the High Court erred in F
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. G
16. While awarding compensatio:i, 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
H
920 SUPREME COURT REPORTS [2009] 10 S.C.R.

A 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
I

our considered view, a compensation of Rs. 50,000/- to the
Appellant by Respondent No. 1 shall meet the ends of justice.
B 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.
c
R.P. Appeal partly allowed.

•