S.25F ID Act Not Complied: Jammu & Kashmir High Court Says Acceptance Of Compensation Won't Estop Workmen From Challenging Retrenchment

The Jammu and Kashmir and Ladakh High Court recently ruled that in cases where there is a failure on the part of an employer to abide by the prescription of Section 25 of the Industrial Disputes Act 1947, the application of doctrine of Estoppel cannot lie against the employee who accepted compensation, while challenging his retrenchment order.

A bench comprising Justices Rajnesh Oswal and Mohan Lal observed,

"From the records, it is established that the retrenchment amount was paid to the Respondents in utter disregard of Section 25-F of the Act of 1947 and, therefore, once the employer has not followed the statutory obligation, then the acceptance of the retrenchment amount would not to be an estoppel for the workmen to challenge the order of retrenchment...If the manner of doing a particular act is prescribed under any Statute, then the act must be done in that manner only. Once an act prescribed under any Statute is not done in accordance with the conditions prescribed for its performance, then the doer of the said act cannot derive any benefit of that Act."

The observations came while hearing an LPA against a Judgment of the writ court in terms of which it had upheld the impugned award passed by the Deputy Labour Commissioner Kashmir, whereby the Tribunal had held the retrenchment of the respondents by the appellant -Corporation as illegal.

The writ court in its judgment had further directed the reinstatement of the respondents in terms of the impugned award passed by the Labour Commissioner while directed the tribunal to re-visit and reconsider the case of the respondents 1, 3 and 5 afresh for payment of compensation in lieu of the reinstatement, as they had already superannuated.

In the instant matter, the respondents had been retrenched by the Appellant-Corporation under Section 25-F of the Industrial Disputes Act, 1947 on the ground of closure of the establishment. As the conciliation efforts had failed in the matter, the then State Government referred the matter to the Industrial Tribunal-cum-Labour Court, J&K, Srinagar for its adjudication.

Sec 25F of the Act lays down the conditions precedent to retrenchment of workmen, with one of the condition prescribing that the workman should have been paid, at the time of retrenchment a 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

The Tribunal, after considering the rival contentions of the contesting parties had directed the Appellant-Corporation to reinstate the respondents with full back wages on revision basis, along with other consequential benefits with 9% interest on full back wages.

Aggrieved of the same, the appellant- Corporation assailed the award before the writ court, which upheld the award of the tribunal with certain modifications.

The appellant Corporation in its appeal with respect to Respondent Nos. 2 and 4 only, urged that the Writ Court has wrongly rejected the plea of the Appellants that after accepting the retrenchment amount, the notice amount, gratuity and other terminal dues voluntarily and without any protest, the Respondents could not have raised any dispute about their retrenchment, on the premise that the Appellants had not raised the said plea before the learned Tribunal.

Senior Advocate Jahangir Iqbal Ganai on behalf of the appellants further argued that in case the retrenchment of the workmen is found to be illegal, then the workmen can be suitably compensated instead of ordering reinstatement of the said workmen.

Contesting the plea the Respondents, submitted that the Appellants cannot adopt a selective approach while filing the appeal against the Respondent Nos. 2 and 4 only since they have not filed the appeal with regard to the rest of the Respondents, viz. Respondent Nos. 1, 3 and 5 even though when the case was identical in nature. The Appellant has resorted to discriminatory attitude while passing the Order of retrenchment, therefore, the present appeal is required to be dismissed on this ground alone, they countered.

After examining the the record the bench noted that all the respondents were retrenched by the appellant Corporation but during the proceedings before the Tribunal proceedings three Respondents had attained superannuation as a result of which the learned Writ Court directed the Tribunal to re-visit and re-consider their case for the payment of compensation in lieu of reinstatement, besides the grant of retiral benefits in their favour.

Pointing out to the findings made by the Tribunal in its award that the Appellant-Corporation could have passed the order for voluntary retirement of the workmen and given them all the retirement benefits or it could have transferred these employees to Delhi for their adjustment in different units, the bench observed that there has not been valid retrenchment of the Respondents in terms of Section 25-F of the Act of 1947, and the said retrenchment of the respondents is discriminatory.

"This is an established fact that the Respondents were not paid retrenchment compensation at the time of retrenchment in terms of Section 25-F of the Act of 1947, but thereafter", the bench added.

Highlighting the fact that the Appellants, by not preferring an appeal against the order passed in favour of the Respondents who attained superannuation, have accepted the findings returned by the Tribunal, the bench underscored that the Appellants now cannot be heard to say that in case of respondents other than those who superannuated that there has been no discrimination.

"This clearly shows that the Appellants have accepted the fact that the order of retrenchment was bad in law qua the Respondents who had attained superannuation", the bench said.

Dealing with the contention of the appellants that the respondents are estopped from challenging the order of retrenchment, after accepting the retrenchment compensation, the bench observed that the retrenchment amount was paid to the respondents in utter disregard of Section 25-F of the Act of 1947 and, therefore, once the employer has not followed the statutory obligation, the acceptance of the retrenchment amount would not be an estoppel for the workmen to challenge the order of retrenchment.

In view of the legal position the bench upheld the judgment of the writ court and also confirmed the direction of reinstatement with regard to respondents 1 & 4 who were yet to superannuate.

Case Title: India Tourism Development Corporation Limited & Anr Vs Fayaz Ahmad Sheikh & Ors.

Citation: 2023 LiveLaw (JKL) 60

Counsel For Petitioner: Mr Jahangir Iqbal Ganai, Senior Advocate with Mr Omais Kawoos, Advocate.

Counsel For Respondent: Mr Mohammad Iqbal Dar, Advocate with

Mr Mohammad Yawar, Advocate.

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