Supreme Court awards compensation instead of reinstatement for temporary employee: LIC vs. Dinesh Singh (2019)

LEGAL ISSUE: Whether a temporary employee, whose services were terminated, should be reinstated or compensated, considering the specific facts of the case and the long lapse of time.

CASE TYPE: Service Law

Case Name: The Regional Manager, Life Insurance Corporation of India vs. Dinesh Singh

Judgment Date: 26 March 2019

Date of the Judgment: 26 March 2019

Citation: (2019) INSC 264

Judges: Abhay Manohar Sapre, J., Dinesh Maheshwari, J.

Can an employer be compelled to reinstate a temporary employee after a long period, especially when there have been complaints against the employee? The Supreme Court of India addressed this question in a case involving the Life Insurance Corporation of India (LIC) and one of its former temporary employees. This case explores the balance between an employee’s right to service and an employer’s need for a functional workplace. The Supreme Court, in this case, decided to award compensation instead of reinstatement, considering the peculiar facts and circumstances. The judgment was delivered by a two-judge bench consisting of Justice Abhay Manohar Sapre and Justice Dinesh Maheshwari.

Case Background

In 1994, Mr. Dinesh Singh was appointed as a Caretaker on a temporary basis by the Life Insurance Corporation of India (LIC). His job was to take care of a VIP Guest House of the LIC at Bhopal. His salary was fixed at Rs. 1000 per month. The appointment was made under Regulation 8 of the Regulations framed under the Life Insurance Corporation Act, 1956, which allows for temporary appointments of Class III and IV employees. In 2001, LIC terminated Mr. Singh’s services.

Timeline

Course of Proceedings

The termination of Mr. Singh’s services led to a reference to the Industrial Tribunal (CGIT), Jabalpur, by the Central Government in 2005. The Tribunal, on 11.02.2014, ruled partly in favor of Mr. Singh, setting aside the termination order and directing LIC to reinstate him, but without any back wages. LIC, aggrieved by this order, filed a writ petition in the High Court of Madhya Pradesh at Jabalpur. The High Court (Single Judge) dismissed LIC’s petition on 10.03.2017, affirming the Tribunal’s award. This led LIC to appeal to the Supreme Court.

Legal Framework

The appointment of Mr. Singh was made under Regulation 8 of the Regulations framed under the Life Insurance Corporation Act, 1956. This regulation empowers specified officers to appoint persons of Class III and IV categories on a temporary basis from time to time. The judgment does not specify the exact wording of the regulation, but it acknowledges the power to make temporary appointments.

Arguments

The arguments presented by both sides were considered by the Supreme Court.

• Appellant (LIC) Arguments:
  • The LIC argued that there were several complaints against Mr. Singh during his tenure.
  • They contended that they had lost confidence in Mr. Singh.
  • LIC emphasized that Mr. Singh was a temporary employee appointed under Regulation 8 to take care of the guest house.
  • They also highlighted that it had been almost 19 years since Mr. Singh had been out of their services.
• Respondent (Mr. Dinesh Singh) Arguments:
  • The respondent argued for reinstatement as directed by the Industrial Tribunal and affirmed by the High Court.

Issues Framed by the Supreme Court

The Supreme Court did not frame specific issues but considered the facts and circumstances to determine the appropriate relief.

Treatment of the Issue by the Court

Authorities

The Supreme Court did not cite any specific cases or legal provisions, other than Regulation 8 of the Regulations framed under the Life Insurance Corporation Act, 1956.

Judgment

The Supreme Court allowed the appeal and modified the High Court’s order. Instead of reinstating Mr. Singh, the Court directed LIC to pay him a compensation of Rs. 1,00,000 (One Lakh Rupees) in full and final settlement of all his claims.

What weighed in the mind of the Court?

The Supreme Court was primarily influenced by the peculiar facts of the case. The court took into account the complaints against the respondent, the loss of confidence by the appellant in the respondent, the temporary nature of the respondent’s employment, and the long period of 19 years since the respondent was out of service. The Court aimed to balance the equities between the parties and put an end to the long-standing litigation. The court decided that awarding a lump sum compensation would be a more appropriate remedy than reinstatement.

The Court stated, “In our opinion, having regard to the peculiar facts and circumstances of this case coupled with the fact that there were several complaints, which were being regularly received by the appellant against the respondent during his tenure, and further the appellant having lost their confidence on the respondent and also the fact that the respondent was appointed temporarily under Rule 8 of the Regulations to take care of the appellant’s guest house and lastly, it is now almost 19 years that the respondent has been out of appellant’s services…”

The Court further clarified, “…we are of the view that the interest of justice would be met if a compensation of Rs.One Lakh (Rs.1,00,000/-) is awarded to the respondent in full and final satisfaction in lieu of his right to claim reinstatement in the appellant’s services and also in lieu of all his service claims against the appellant.”

The Court also mentioned, “Since we have formed an opinion to dispose of this appeal by awarding to the respondent a lump sum compensation of Rs. one Lakh in lieu of his all claims arising out of this case, we do not consider it necessary to examine any legal issue arising in the case though argued by the learned counsel for the parties in support of their respective contentions.”

Key Takeaways

• Temporary Employees: Temporary employees do not have an absolute right to reinstatement, especially if there are valid reasons such as complaints, loss of confidence, and a long lapse of time.
• Compensation: In certain cases, compensation can be an appropriate remedy instead of reinstatement, balancing the equities between the parties.
• Peculiar Facts: The courts consider the peculiar facts and circumstances of each case while deciding on the relief to be granted.
• Lapse of time: The long lapse of time can be a factor in deciding whether to order reinstatement.

Directions

The Supreme Court directed the appellant (LIC) to pay a sum of Rs. 1,00,000 (One Lakh Rupees) to the respondent within a period of 3 months from the date of the judgment.

Development of Law

The ratio decidendi of this case is that in cases involving temporary employees, where there are complaints against the employee, loss of confidence by the employer, and a significant lapse of time, the court may award compensation instead of reinstatement. This decision emphasizes the importance of considering the specific facts and circumstances of each case, and it does not establish a new legal principle but rather applies existing principles to a specific factual scenario.

Conclusion

The Supreme Court’s judgment in the case of LIC vs. Dinesh Singh highlights that reinstatement is not always the appropriate remedy for a terminated temporary employee. The Court considered the peculiar facts of the case, including the complaints against the employee, the loss of confidence by the employer, and the long lapse of time, and decided that compensation was a more suitable remedy. This decision underscores the importance of balancing the rights of employees with the practical considerations of the employer.