The quantum of compensation in lieu of reinstatement for wrongful dismissal should be reasonable and adequate, taking into account all relevant facts and circumstances of the case.

1. By this application under Article 227 of the Constitution of India the petitioner-management of TATA Robin Fraser Ltd. has impugned the validity of the order dated 20.7.94 passed by the Labour Court, Jamshedpur in respect of the petition filed by respondent no.2 under Sec.26 of this Bihar Shops and Establishment Act. The Labour Court considering the facts and circumstances of the case found the termination of services of the respondent no.2 illegal for the reason the respondent no.2 was not guilty of the alleged misconduct. Consequently the termination order was set aside and the petitioner was directed to reinstate the said respondent with full back wages. In the alternative the petitioner has been given option to grant compensation to the respondent no.2 in lieu of reinstatement, relying on 1987 LIC 25 and 1990 LIC 844. The petitioner la not willing to reinstate the respondent but in lieu thereof grant compensation. The petitioner is aggrieved with the direction of the Labour Court to grant 50 months wages coupled with full back wages as compensation.

2. Shri K. N. Prasad, learned Sr. Counsel for the petitioner has not challenged the award on merits but confined his argument to the latter part of the direction regarding compensation. The learned counsel has contended that the Labour Court has committed serious error of law in determining the quantum of compensation in lieu of reinstatement. Shri Prasad has placed strong reliance on O. P. Bhandari V/s. Indian Tourism Development Corpn. Ltd. (AIR 1987 SC 111) and submitted that compensation in lieu of reinstatement should have been awarded on the basis of this decision. The Supreme Court in para 10 of the report laid down guidelines for determination of compensation in such cases. The said para is extracted below : -

"10. In our considered opinion, compensation equivalent to 3.33 years salary (including allowances as admissible) on the basis of the last pay and allowances drawn by the appellant would be a reasonable amount to award in lieu of reinstatenent taking into account the following factors, viz : -1) The corpus if invested at the prevailing rate of interest (15%) will yield 50% of the annual salary and allowances. In other words every year he will get 50% of what he would have earned by way of salary and allowances with four additional advantages : i) He will be getting this amount without working. ii) He can work somewhere else and can earn annually whatever he is worth, over and above getting 50% of the salary he would have earned. iii) If he had been reinstated he would have earned the salary only up to the date of superannuation (up to 55, 58 or 60 as, the case may be unless he died earlier. As against this 50% he would be getting annually he would get not only beyond the date of superannuation, for his lifetime (if he lives longer) but even his heirs would get it in perpetuity after his demise. iv) The corpus of lump sum compensation would remain intact, in any event. "

3. The decision in Bhandaris case was considered in Workmen of Bharat Fritz Werner (P) Ltd. V/s. Bharat Fritz Werner (P) Ltd (1990 LIC 844 ). The Supreme Court awarded Rs.1,50,000/-towards back wages and compensation for loss of further employment In lieu of reinstatement in addition a sum of Rs.72,000/- which had already been received by them.

4. It is well settled now that in cases of wrongful dismissal or dlschage, the normal rule Is to award reinslatement. But where a case falls In any of the exceptions to the general rule of reinstatement industrial adjudicator has discretion to award reasonable and adequate compensation in lieu of reinstatement. Compensation In such a case is the solatium for unjustified and premature termination of employment (See Anglo Amerlcal Direct Tea Trading Co. V/s. Workmen of Nahortoll Tea Estate (1961) II LLJ 625 ). From the decided cases with respect to compensation In lieu of reinstatement where the discharge or dismissal of the workman has been held to