1. Termination of employment without notice or following procedure under Industrial Disputes Act, 1947 — Dispute over continuous service and seniority. (Para 2 )
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2022 Supreme(SC) 971
SUPREME COURT OF INDIA
UDAY UMESH LALIT, CJI., S. RAVINDRA BHAT, J.
Jeetubha Khansangji Jadeja – Appellant
Versus
Kutchh District Panchayat – Respondent
Civil Appeal No.6890 of 2022[@ Special Leave Petition (Civil) No. 8393 of 2022]
Decided on : 23-09-2022
Important Points
The main legal point established in the judgment is that in cases of illegal termination, reinstatement with backwages is the appropriate relief, considering the sustained unemployment of the employee and the management's litigative proclivity.
Subject
Employment Law - Termination of Employment
Act Referred
Headnote
Industrial Disputes Act - Termination of Employment - Section 25B, Section 25G - The court discussed the appellant's termination from employment and the dispute raised under the Industrial Disputes Act, 1947. The court analyzed the evidence presented and the findings of the Labour Court and the Single Judge, ultimately setting aside the impugned judgment and directing the appellant's reinstatement with backwages for a period of two years.
Fact of the Case:
The appellant, a watchman, was terminated from employment without notice or following the procedure prescribed by the Industrial Disputes Act, 1947. The Labour Court held the termination illegal and directed reinstatement without backwages. The High Court affirmed the award, but the Division Bench awarded lumpsum compensation instead of reinstatement.
Finding of the Court:
The court found that the appellant's termination was illegal and reinstated the appellant with backwages for a period of two years. The court set aside the impugned judgment and directed the respondent management to pay the backwages within six weeks.
Issues: The issues revolved around the legality of the appellant's termination, entitlement to benefits under the Industrial Disputes Act, and the appropriate relief to be granted.
Ratio Decidendi: The court held that the appellant's termination was illegal, and reinstatement with backwages was the appropriate relief. The court emphasized the need to consider the appellant's sustained unemployment and the management's litigative proclivity in determining the relief.
Final Decision: The appeal was allowed, setting aside the impugned judgment and directing the appellant's reinstatement with backwages for a period of two years. The respondent management was directed to pay the backwages within six weeks.
Legal Category Hierarchy
Advocates appeared:
For the Appellant : Mr. Mehmood Umar Faruqui, AOR
For the Respondent: Mr. Saroj Raichura, Adv. Mr. Haresh Raichura, AOR Mr. Kalp Raichura, Adv. Mr. Rajat Vats, Adv.
For the Appellant : Mr. Mehmood Umar Faruqui, AOR
For the Respondent: Mr. Saroj Raichura, Adv. Mr. Haresh Raichura, AOR Mr. Kalp Raichura, Adv. Mr. Rajat Vats, Adv.
Table of Contents
2. Management contended temporary employment and lack of continuous service; appellant argued illegal termination and retention of junior employees. (Para 3 , 7 , 8 )
3. Management failed to refute continuous service or seniority claims; substitution of reinstatement with compensation was unwarranted given the management's obdurate litigation. (Para 9 , 10 , 14 )
4. Reinstatement is the normal rule for illegal termination, especially where unfair labour practices or violations of the last-come-first-go principle are established. (Para 11 , 12 , 13 )
5. Impugned judgment set aside — Reinstatement with continuity of service and backwages for a specified period ordered. (Para 15 )
6. When is reinstatement the normal rule in cases of illegal termination?
Reinstatement with continuity of service is the normal rule when termination is found invalid, particularly if the employer's action constitutes an unfair labour practice or violates the last-come-first-go principle. (Para 11 , 13 )
7. What is the legal approach regarding the grant of backwages for illegally terminated employees?
A restitutionary approach is adopted to restore the employee to the position they held before termination. Full backwages are generally granted unless the employer specifically proves the employee was gainfully employed during the intervening period. (Para 11 , 12 )
8. Can reinstatement be substituted with monetary compensation for daily-wage workers?
Yes, if termination is illegal solely due to procedural defects under Section 25-F. However, if termination involves unfair labour practices or retention of juniors, reinstatement remains the rule unless weighty reasons exist. (Para 13 )
9. How does the court treat delays in relief caused by the employer's litigation?
The court holds that an employee should not suffer or be denied relief, such as reinstatement or backwages, due to the employer's obdurate attempts to prolong litigation through the judicial process. (Para 10 , 14 )
JUDGMENT :
S. RAVINDRA BHAT, J.
1. Leave granted. With consent, learned counsels for the parties were heard finally. This appeal is directed against an order of the Gujarat High Court1[Dated 05.07.2021 in LPA No.896/2011 in Special Civil Application No. 5620/2011.].
2. Aggrieved by the termination from employment, the appellant raised an industrial dispute which was referred to the Labour Court, Bhuj, Kutchh District of Gujarat. The appellant was appointed as a Watchman on 05.10.1992 by the respondent society (hereafter referred to as “the management”), and lastly, he was working as a watchman at the Shirai Dam at the Beraja Village of Mundra Taluk, Gujarat, with the respondent. After rendering continuous employment, he was terminated from the services on 30.12.2002 for no cause, without notice and without following the procedure prescribed by the Industrial Disputes Act, 1947. His request for reinstatement was negated; consequently, the industrial dispute.
3. The management disputed the claim on the basis that the appellant worked in a purely temporary basis and could not claim the benefit of Section 25B of the Industrial Disputes Act, 1947 as he had not worked for a continuous period of 240 days in any given year. However, his employment as a workman since 1992 was not denied.
4. Before the Labour Court, the parties led evidence-oral and documentary. A copy of the muster roll maintained by the management was called for. In the evidence, the appellant deposed that the management did not maintain any seniority list nor was it published and that employees junior to him were retained while he was unfairly terminated from service. The respondent management contended that the entire muster roll records was not available as it was destroyed during a natural calamity; they could produce the documents for the years 1994-98. After considering the pleadings and the materials on record, the Labour Court, by Award dated 31.08.2010, held that the appellant’s termination was illegal and directed his reinstatement with continuity but without backwages.
5. The management challenged the award, mainly contending that the appellant workman was not entitled to the benefits of the Industrial Disputes Act. The learned Single judge of the Gujarat High Court endorsed the findings of the Labour Court, affirming the Award, and directed the appellant’s reinstatement. The management, however, appealed to the Division Bench. Initially, the Division Bench rejected the appeal; the management approached this court by special leave petition. This court remitted the matter for fresh consideration.
6. By the impugned order, the Division Bench noticed the findings of the single judge that workmen junior to the appellant had been retained in service despite which his services were terminated and that the management had not maintained proper records. In spite of these facts, the Division Bench set aside the direction to reinstate the appellant workman and instead awarded lumpsum compensation of Rs.1 lakh.
7. The appellant contends that the Labour Court and the learned single Judge concurrently ruled that sufficient material had been brought on record to show that 63 labourers were working with the respondent management, many of whom were junior to the appellant. It was pointed out that the workman appellant had moved the Labour Court to direct the management to produce all relevant service particulars of its employees’ muster roll, pay register, and bonus register. An appropriate direction was issued in this regard. Since the management did not produce the entire records, the Labour Court drew an adverse inference and based on available material concluded that the termination was illegal. In these circumstances, all the findings were endorsed by the High Court; the substitution of the order of reinstatement amounted to a miscarriage of justice. It was submitted that the appellant had been unfairly kept out of employment, despite the fact that the award was made in 2010,
