1. Employment of a daily wage cleaner — Termination of services — Non-compliance with retrenchment procedure under Section 6-N, Uttar Pradesh Industrial Disputes Act, 1947. (Para 1 , 2 )
Back
Next 
1999 Supreme(SC) 1455
SUPREME COURT OF INDIA
S.B.Majmudar : U.C.Banerjee
State Of U.P.
Versus
Rajendra Singh Butola
Case No. : 7295 of 1997
Date of Decision : 12/8/99
Retrenchment procedures must be followed for daily wage workers who have completed a substantial period of service; failure to do so warrants reinstatement. Back wages may be reduced to a lump sum based on the court's discretion and the workman's conduct.
Headnote:(A) Industrial Disputes Act, 1947 - Section 6-N - Termination of service - Retrenchment procedure - Daily wage worker - If a workman has worked for a significant period, such as four years, the procedure for retrenchment must be followed even if the employee is a daily wager - Failure to comply with the condition precedent for retrenchment justifies an order of reinstatement. (Para 3)
(B) Back wages - Quantum - Discretion of the court to reduce back wages to a lump sum, particularly when the workman does not appear to contest the proceedings and there is a possibility of gainful employment elsewhere. (Para 4)
Facts of the case:
A daily wage cleaner was terminated from service after four years of employment because the vehicle he operated became out of order and was not replaced. The employer did not follow the statutory retrenchment procedure. The Labour Court and High Court ordered reinstatement with full back wages.
Findings of Court:
The court confirmed the order of reinstatement with continuity of service as the mandatory retrenchment procedure was not followed. However, the award for back wages was modified and reduced to a lump sum.
Issues: Whether the termination of a daily wage worker without following retrenchment procedures is legal after four years of service, and whether the award of full back wages is justified.
Ratio Decidendi: The court held that the status of a daily wager does not exempt the employer from following retrenchment procedures if the workman has completed a substantial period of service. Furthermore, back wages can be reduced to a lump sum based on the circumstances of the case and the conduct of the workman.
Result: Appeal partly allowed.
Legal Category Hierarchy
Table of Contents
2. Whether the status of a daily wage employee exempts the employer from following the retrenchment procedure under Section 6-N, Uttar Pradesh Industrial Disputes Act, 1947. (Para 3 )
3. Continuous employment for several years necessitates following retrenchment procedures; back wages may be reduced if the workman fails to appear and contest the proceedings. (Para 3 , 4 )
4. Termination of an employee with established continuous service requires compliance with statutory retrenchment procedures, regardless of their classification as a daily wager. (Para 3 )
5. Appeal partly allowed — Reinstatement with continuity of service confirmed — Back wages reduced to a lump sum. (Para 4 )
6. Does the status of a daily wage worker exempt an employer from following retrenchment procedures?
No. If a daily wage worker has established a significant period of continuous service, the employer is required to follow the prescribed retrenchment procedure under the relevant Industrial Disputes Act. (Para 3 )
7. Can the court reduce awarded back wages if the workman fails to appear in proceedings?
Yes. The court may reduce back wages to a lump sum or a percentage if the workman does not appear to contest the proceedings, considering the possibility of gainful employment elsewhere. (Para 4 )
(1) THE State of Uttar Pradesh and other being the Executive Engineer of the Irrigation Department, have brought in challenge the order of the High court which in its turn has confirmed the order of reinstatement and back wages as awarded by the Presiding Officer, Labour Court, Dehradun in favour of respondent No. 1 -workman.
(2) AT the relevant time, respondent No. 1 was working as a daily wage cleaner on the motor truck belonging to the Irrigation Department of the appellant - State. According to respondent - workman the truck became out of order and no new truck was purchased and as a result, because the exigencies of the work had come to an end the services of respondent No. 1 were dispensed with on 21/09/1988. He raised an industrial dispute which was adjudicated upon by the Presiding Officer, Labour court, Dehradun in Case No.77 of 1993. After hearing the parties, the Labour court came to the conclusion that respondent No.1 - workman was employed from September, 1984 to 20/09/1988. It was also found that when his services were terminated, retrenchment procedure as per Section 6-N of the Uttar Pradesh Industrial Disputes Act, 1947 was not followed. As a result, an award was passed setting aside the order of termination and directing his reinstatement with full back wages and Rs.500.00 as costs. This order came to be confirmed by the High Court in a writ petition moved by the appellants. This is how on grant of special leave the appellants are before us.
(3) IN the light of the concurrent finding of facts reached by the trial court as well as by the High court, it becomes clear that though the appellants contended that the workman was a daily wager and therefore, the provision of Section 6-N of the U.P.Industrial Disputes Act, 1947, did not apply there is no escape from the conclusion that the workman had worked for four years as clearly established and if he was to be terminated due to any exigencies of service, the procedure for retrenchment was required to be followed. As the condition precedent to such retrenchment was not complied with, the order of reinstatement granted by the Labour court could not be found fault with.
(4) LEARNED Additional Advocate General of State of U.P. is right when he contends that for year since September, 1988, the workman might have been gainfully employed somewhere else especially when he has not thought it fit to appear and contest in this proceeding, back wages for all these years may not be granted. This grievance of the appellants appear to be well sustained especially when respondent No. 1 has not thought it fit to appear and contest this proceeding. Keeping in view these facts and the absence of respondent No.1 in the present proceedings, we deem it fit to direct while confirming the order of reinstatement as granted with continuity of service of respondent No.1 as Cleaner, that back wages awarded to respondent No.1 deserve to be sliced down to 50 percent and to be quantified as a lump sum. Respondent No.1 at the relevant time as a Cleaner was drawing a salary of Rs.540.00 and if that amount is sliced down to 50 percent, an amount of Rs 250.00 works out per month and multiplied by 12, it comes to Rs. 3,000.00 - Per year. According to us, 10 years back wages on that basis amounting to Rs.30,000.00 would meet respondents case so far as back wages are concerned. The appeal is partly allowed. The judgment and order of the High court and the Labour court will stand modified accordingly. Respondent No.1 workman will be reinstated in service as cleaner with continuity of service and will be paid towards full and final satisfaction of his claim for back wages a lump sum of Rs.30,000.00 which shall be paid to him within eight weeks from the date on which respondent No.1 reports for duty. The order of reinstatement with continuity of service shall be complied with by the appellants within eight weeks from today. No costs.
