Reinstatement Is Not Automatic; Madhya Pradesh High Court reiterates

25F of the ID Act states the Conditions precedent to retrenchment of workmen, i.e., “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…(c) notice in the prescribed manner is served on the appropriate Government 3 [or such authority as may be specified by the appropriate Government by notification in the Official Gazette].”

Background Facts

Respondent, the Workman had been employed by Petitioner, the Employer, since 2014, with an income of Rs. 2000 per month, until 2017, when his services were verbally terminated by the Employer, without any reason or notice.

The workman filed a petition and the Labour Court, after considering the evidence, came to a conclusion that Workman had worked for 240 days in every calendar year, and therefore, termination of his services without any notice, and with no reason assigned, is violative of the provisions of Section 25-F of the ID Act, and cannot be upheld. Thus, he was directed to be reinstated with 10% of his back wages by way of compensation.

Arguments Advanced

The petitioner challenged the award, arguing that Labour Court has committed a material illegality by holding that Workman had worked for 240 days in every calendar year, and that even otherwise the Labour Court should have granted compensation in lieu of reinstatement.

On the other hand, the respondent vehemently opposed these contentions, by pointing out that the petitioner was unable to produce any supporting document, in spite of a direction given by the Labour Court.

The respondent relied upon the judgement passed by the Supreme Court in the case of Jeetubha Khansangji Jadeja Vs. Kutchh District Panchayat, in Civil Appeal No.6890/2022 to defend the demand of reinstatement, and not just compensation.

Findings of the Court

Justice Ahluwalia noted that the petitioner did not lead any evidence nor produce any documents, and accordingly affirmed the Labour Court's findings.

As to the Workman being entitled for reinstatement with 10% of back wages by way of compensation or not, he referred to the case Bharat Sanchar Nigam Limited Vs. Bhurumal (2014) 7 SCC 177-

“23. 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...rationale for shifting in this direction is obvious.”

Justice Ahluwalia also highlighted the relevant paragraph of the judgement of the Supreme Court in the case of of O.P. Bhandari Vs. Indian Tourism Development Corporation Limited and others (1986) 4 SCC 337-

“6. Time is now ripe to turn to the next question as to whether it is obligatory to direct reinstatement when the concerned regulation is found to be void. In the sphere of employer-employee…and then only can the public sector undertaking achieve the goals of…the undertaking.

7. It is in public interest…employer pays reasonable compensation as indicated by the Court.”

He reiterated that as far as the judgment relied upon by the respondent in the case of Jeetubha Khansangji Jadeja is concerned, in the said case the juniors were retained. However, presently, 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 would apply.

Justice Ahluwalia gave the rationale behind preferring compensation that even after reinstatement of the respondent, the petitioner can again terminate the workman's services after making payment of retrenchment compensation. Therefore, the Court below should have directed for payment of monetary compensation in lieu of reinstatement.

Lastly, with the above modification, the Bench affirmed the award passed by the Labour Court.

Advocates who appeared in this case:

For Petitioner(s): Shri Mohan Sausarkar

For Respondent(s): Ms. Ankita Khar

Case Title: The Principal v. Pramod Ahirwar