Once Termination Of Workman Is Declared Illegal, Remedy Is Limited To Either Reinstatement Or Lumpsum Compensation: Gujarat High Court

Considering the impracticality of reinstatement due to passing of substantial time after termination and the Workman's proximity to retirement age, the High Court held it appropriate to award a lump sum compensation to the Workman.

Brief Facts:

The Petitioner (“Workman”) worked as a Class-IV employee from 01.03.1979 until his termination on 08.11.1995, after almost 16 years of service. Alleging that the termination did not adhere to the procedures outlined in Section 25F of the Industrial Disputes Act, 1947, the Workman raised an industrial dispute. The Assistant Labour Commissioner referred the matter to the Labour Court. Despite the Labour Court deeming the termination illegal, it awarded lump sum compensation of Rs. 30,000/- instead of reinstatement.

The Range Forest Officer (“Management”), dissatisfied with the Labour Court's decision, filed a writ petition in Gujarat High Court (“High Court”) which was dismissed, confirming the award of lump sum compensation. The Workman, also unhappy with the non-reinstatement, filed a Special Civil Application. The Single Judge of the High Court then increased the compensation to Rs. 5 Lakh.

Feeling aggrieved, the Management filed a Letters Patent Appeal before the High Court and contended that since the earlier writ petition confirming the Labor Court's decision was dismissed, the Single Judge should not have enhanced the compensation. It argued that Rs. 30,000/- was a just and proper amount, and such a substantial increase in compensation was unwarranted.

Observations by the High Court:

The High Court held that the Workman's case, as presented in Special Civil Application, needed to be evaluated independently. Moreover, it held that the dismissal of the separate petition filed by the Management did not negate the illegality of the Workman's termination. It held that once it was established that the termination was unlawful, the options are narrowed down to either reinstatement or awarding lump sum compensation.

The High Court noted that the termination occurred in 1995, the Labor Court's award was issued in 2007, and the Single Judge's order was made in 2023. Given the substantial time elapsed and the Workman's proximity to retirement age, it held that it was impracticality for him to get reinstated. Additionally, it noted that even if reinstated, the Management retained the ability to terminate the services, albeit by providing retrenchment compensation. Therefore, it held that the prospect of reinstatement for a daily wage laborer seemed less pragmatic compared to providing monetary compensation. This shift towards favoring lump sum compensation over reinstatement was underscored by Supreme Court decisions in Bhopal vs. Santosh Kumar Seal [(2010) 6 SCC 773] and Jagbir Singh vs. Haryana State Agriculture Marketing Board [(2009) 15 SCC 327].

Furthermore, the Supreme Court decisions in Rajasthan Development Corporation vs. Gitam Singh [(2013) 5 SCC 136] and Uttaranchal Forest Development Corporation vs. M.C. Joshi [(2013) 5 SCC 136] acknowledged the discretion of courts in awarding compensation instead of reinstatement based on various factors such as the nature of employment, length of service, and manner of appointment.

Considering these factors, including the length of service (almost 16 years) and the practicalities surrounding reinstatement, the High Court held that the decision of the Single Judge to award Rs. 5 lakhs as lump sum compensation was reasonable and justified. Consequently, the Patent Appeal was dismissed.

Case Title: Range Forest Officer Versus Virjibhai Ranchhodbhai & Anr.

LL Citation: 2024 LiveLaw (Guj) 58

Case Number: R/Letters Patent Appeal No. 381 Of 2024 In R/Special Civil Application No. 7322 Of 2009 With Civil Application (For Stay) No. 1 Of 2024 In R/Letters Patent Appeal No. 381 Of 2024

Advocate for the Petitioner: Mr Sanjauy Udhwani Assistant Government Pleader

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