High Court Modifies Reinstatement to Rs. 75,000 Compensation for Daily Wager Terminated 7 Years Ago

Sagar, M.P. - In a significant ruling concerning labour disputes, the High Court has modified an award by the Labour Court, Sagar (M.P.), directing monetary compensation instead of reinstatement for a workman whose services were terminated in violation of the Industrial Disputes Act, 1947. The Court emphasized that for daily-wage workers with short service periods, and where termination was due to procedural defects, compensation often serves the ends of justice better than reinstatement, especially after a considerable lapse of time.

The petition, filed under Article 227 of the Constitution, challenged the Labour Court's award dated 30.11.2019, which had ordered the workman's reinstatement with 10% backwages.

Background of the Dispute

The case originated from a reference by the Deputy Labour Commissioner on 13.10.2017 to the Labour Court. The workman claimed he was appointed as a Peon in July 2014, paid Rs. 2000/- per month, and had worked for over 240 days in each calendar year. He alleged his services were verbally terminated on 2.6.2017 without any reason, notice, or retrenchment compensation, purportedly after he demanded equal pay.

The employer (petitioner) denied the claim. However, the petitioner did not examine any witnesses before the Labour Court and was proceeded against ex-parte. The Labour Court found that the workman had indeed worked for 240 days in every calendar year and held his termination illegal for violating Section 25-F of the Industrial Disputes Act, leading to the reinstatement order.

Arguments Before the High Court

The petitioner (employer) challenged the Labour Court's finding on the 240-day work period and argued that, in any case, compensation should have been granted in lieu of reinstatement.

The respondent (workman) vehemently opposed the petition, highlighting that the petitioner was ex-parte before the Labour Court and that an adverse inference had been rightly drawn against them for not producing documents despite court orders. The workman relied on the Supreme Court judgment in Jeetubha Khansangji Jadeja v. Kutchh District Panchayat (2022) to support the reinstatement order.

High Court's Rationale and Application of Precedents

The High Court first addressed the factual finding of the Labour Court. It noted:

"Admittedly, the petitioner was proceeded ex parte. The petitioner did not lead any evidence. In spite of a direction given by the Labour Court, petitioner did not produce any documents and therefore, the Labour Court had rightly drawn an adverse inference against the petitioner."

Consequently, the High Court affirmed the Labour Court's finding that the workman had completed 240 days of service in each calendar year.

The central question then became whether reinstatement was the appropriate relief. The High Court extensively reviewed Supreme Court jurisprudence on this issue:

Bharat Sanchar Nigam Limited v. Bhurumal (2014) 7 SCC 177 : The Court cited this judgment, which established that reinstatement is not automatic for daily-wage workers whose termination is illegal due to procedural defects (like S.25-F violation). Monetary compensation is often preferred. > "It is clear from the reading of the aforesaid judgments that the ordinary principle of grant of reinstatement with full back wages, when the termination is found to be illegal is not applied mechanically in all cases... when it comes to the case of termination of a daily-wage worker and where the termination is found illegal because of a procedural defect, namely, in violation of section 25-F of the Industrial Disputes Act, this Court is consistent in taking the view that in such cases reinstatement with back wages is not automatic and instead the workman should be given monetary compensation which will meet the ends of justice."

Hari Nandan Prasad v. Food Corporation of India (2014) 7 SCC 190 : This case reiterated the shift in legal position, where compensation is often favored over reinstatement for daily wagers, even if termination violates Section 25-F. The Court quoted: > "It would be, thus, seen that by a catena of decisions in recent time, this Court has clearly laid down that an order of retrenchment passed in violation of section 25-F although may be set aside but an award of reinstatement should not, however, be automatically passed... This Court has distinguished between a daily-wager who does not hold a post and a permanent employee."

Jayant Vasantrao Hiwarkar v. Anoop Ganaptrao Bobde (2017) 11 SCC 244 : This case supported granting compensation where the workman had worked for a short period (one year in that instance).

The High Court distinguished the Jeetubha Khansangji Jadeja case (relied upon by the workman), stating, "in the said case the juniors were retained. However in the present case, it is not the case of the respondent that any junior was retained. Therefore, the law laid down by the Supreme Court in the case of Bhurumal (supra) would apply."

The Court further reasoned:

"Even after reinstatement of the respondent, the petitioner can again terminate his services after making payment of retrenchment compensation. Therefore, this Court is of the considered opinion that the Court below should have directed for payment of monetary compensation in lieu of reinstatement."

Considering that the workman had worked for only about three years (2014-2017) and seven years had passed since his termination, the Court found compensation to be more appropriate.

Final Decision

The High Court modified the Labour Court's award, setting aside the direction for reinstatement with 10% backwages. Instead, it ordered:

"Workman would be entitled for compensation of Rs.75,000/- (Rupees Seventy Five Thousand only) in lieu of his reinstatement as well as 10% of backwages by way of compensation."

The petition was allowed to this extent, affirming the Labour Court's award with the aforesaid modification. This judgment underscores the evolving jurisprudence favoring lumpsum compensation for daily wagers in cases of illegal termination due to procedural flaws, particularly when coupled with short service and significant time lapse.