Violation Of Retrenchment Conditions U/s 25F Industrial Disputes Act Would Not Automatically Entail Reinstatement With Full Back-wages: Supreme Court

The Supreme Court observed that the violation of Section 25F of the Industrial Disputes Act, 1947, [Retrenchment conditions] would not automatically entail in the reinstatement with full back wages.

In this case, one Panchamlal Yadav challenged the action of the management of Bundelkhand Kshatriya Gramin Bank, in terminating his services before the Central Government Industrial Tribunal (CGIT). The Tribunal answered the reference against the claimant and held that he was not a regular employee as he was employed on daily wages. It was further observed that he could not prove that he had continuously worked for more than 240 days in a calendar year. Later, allowing his writ petition, the Madhya Pradesh High Court observed that it was incumbent on the part of the management to produce all the material in their possession to establish and prove that the respondent was appointed on a daily wage basis and did not work continuously for 240 days in a calendar year.

The bank approached the Apex Court contending that . It relied on Bharat Sanchar Nigam Limited vs. Bhurumal [(2014) 7 SCC 177]; Telecom District Manager & Ors. vs. Keshab Deb [(2008) 8 SCC 402] and Rajasthan Lalit Kala Academy vs. Radhey Sham [(2008) 13 SCC 248] to contend that violation of Section 25F of the Industrial Disputes Act, 1947 does not automatically entail in reinstatement with back wages.

"Having considered the submissions made on behalf of the parties, we are of the view that the respondent is not entitled for reinstatement in view of the law settled by this Court. The judgments relied upon by Mr. Kapur are clear to the effect that violation of Section 25F of the Industrial Disputes Act, 1947, would not automatically entail in the reinstatement with full back wages. The relief to be granted depends on the facts of individual cases", the bench comprising Justices L. Nageswara Rao and Aniruddha Bose said while allowing the appeal.

The bench however directed the bank to pay a compensation of Rs. 5 Lakhs to him.

Know the Law

Section 25F lists the Conditions precedent to retrenchment of workmen. It reads as follows:

No workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until—

(a) the workman has been given one month's notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice;

(b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days' average pay 2 [for every completed year of continuous service] or any part thereof in excess of six months; and

(c) notice in the prescribed manner is served on the appropriate Government or such authority as may be specified by the appropriate Government by notification in the Official Gazette.

In BSNL vs. Bhurumal case, it was observed thus: "When the termination is found to be illegal because of non-payment of retrenchment compensation and notice pay as mandatorily required under Section 25-F of the Industrial Disputes Act, even after reinstatement, it is always open to the management to terminate the services of that employee by paying him the retrenchment compensation. Since such a workman was working on daily wage basis and even after he is reinstated, he has no right to seek regularization (See: State of Karnataka vs. Uma Devi (2006) 4 SCC 1). Thus when he cannot claim regularization and he has no right to continue even as a daily wage worker, no useful purpose is going to be served in reinstating such a workman and he can be given monetary compensation by the Court itself inasmuch as if he is terminated again after reinstatement, he would receive monetary compensation only in the form of retrenchment compensation and notice pay. In such a situation, giving the relief of reinstatement, that too after a long gap, would not serve any purpose."

Case: Madhya Bharat Gramin Bank vs. Panchamlal Yadav [CA 9792 OF 2010]

Coram: Justices L. Nageswara Rao and Aniruddha Bose said while allowing the appeal.

Citation: LL 2021 SC 299

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