Monetary Compensation Can Substitute Reinstatement Even In Cases Of Illegal Termination: MP HC

Background

The case originated from a dispute between Rajguru Dubey and the Nagar Palika Parishad Hata regarding the termination of Dubey's services. The Labour Court, Sagar, in its award dated 13/09/2024, had found that the termination violated Section 25-F of the Industrial Disputes Act. However, instead of directing reinstatement, the Labour Court awarded compensation of Rs. 1,00,000/- in lieu of reinstatement. This decision prompted Dubey to file a petition under Article 227 of the Constitution before the High Court.

Arguments

The petitioner's counsel argued that since the Labour Court had conclusively established that the services were illegally terminated, it should have directed reinstatement with back wages as the appropriate remedy. The counsel contended that mere monetary compensation was insufficient given the finding of illegal termination.

The Court's Decision

The court upheld the Labour Court's decision to award compensation instead of reinstatement. Firstly, it relied on the Supreme Court's decision in Bharat Sanchar Nigam Limited v. Bhurumal (2014), which established that the principle of reinstatement with full back wages cannot be applied mechanically in all cases. While this remedy might be appropriate for regular/permanent workers terminated illegally or through unfair labor practices, a different approach is warranted for daily-wage workers whose termination is procedurally defective. The court emphasized that in such cases, monetary compensation often better serves the ends of justice.

Secondly, the court referenced Jayant Vasantrao Hiwarkar v. Anoop Ganpatrao Bobde (2017), which had upheld compensation in lieu of reinstatement where the employee had worked for only a brief period. This precedent reinforced the view that short service periods may justify monetary compensation over reinstatement. The court also cited Hari Nandan Prasad v. Food Corporation of India (2014), which highlighted that recent court decisions have consistently held that reinstatement with back wages is not automatic, even when termination violates prescribed procedures.

Furthermore, the court stated that reinstatement is not an invariable consequence of finding a termination order void, particularly in public sector undertakings. While reinstatement remains the norm for blue-collar and lower-level white-collar employees, exceptions can be made based on broader considerations. The court also considered the constitutional aspects through Ghaziabad Development Authority v. Ashok Kumar (2008), which emphasized that statutory authorities must make recruitments in compliance with Articles 14 and 16 of the Constitution. Any appointment violating this constitutional scheme or statutory recruitment rules would be void, justifying compensation over reinstatement.

Finally, the court referenced Mahboob Deepak v. Nagar Panchayat (2008), which established that mere completion of 240 days of work in a year preceding retrenchment does not automatically entitle a worker to regularization or reinstatement. This was deemed relevant in determining the appropriateness of monetary compensation as a remedy. Thus, the court found no illegality in the Labour Court's decision to award Rs. 1,00,000/- as compensation instead of directing reinstatement. Consequently, the petition was dismissed.

Decided on: 21-10-2024

Neutral Citation: 2024:MPHC-JBP:52594 (Rajguru Dubey v. Nagar Palika Parishad Hata)

Citation: 2024 LiveLaw (MP) 275

Counsel for the Petitioner: Shri Gaurav Sharma

Counsel for the Respondent: Shri Abhishek Singh (Government Advocate)

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