Supreme Court modifies compensation for daily wage worker: State of Uttarakhand vs. Raj Kumar (2019)

Date of the Judgment: January 07, 2019

Citation: (2019) INSC 12

Judges: Abhay Manohar Sapre, J., Indu Malhotra, J.

Can a daily wage worker, terminated without following due procedure, automatically get reinstatement with full back wages? The Supreme Court of India addressed this question in a case where a daily wager’s services were terminated by the State of Uttarakhand. The court examined whether the High Court was correct in ordering reinstatement despite a significant delay in raising the dispute. The judgment, delivered by a two-judge bench comprising Justices Abhay Manohar Sapre and Indu Malhotra, modifies the High Court’s order, focusing on the appropriate relief for daily wage workers whose termination is deemed illegal due to procedural defects.

Case Background

The respondent, Raj Kumar, claimed to have worked as a Beldar (a type of manual laborer) on a daily wage basis in the Public Works Department (PWD) of the State of Uttarakhand in Haridwar. He stated that he was employed from June 1986 to May 1987, after which his services were terminated without following the legally mandated procedure. After nearly 25 years, Raj Kumar approached the Labour Court in Haridwar, challenging his termination.

Timeline:

Course of Proceedings

The Labour Court, Haridwar, initially awarded a compensation of Rs. 30,000 to Raj Kumar in lieu of reinstatement. Aggrieved by this, Raj Kumar filed a writ petition before the High Court of Uttarakhand at Nainital. The High Court modified the Labour Court’s award, ordering the State to reinstate Raj Kumar but without any back wages. The State then filed a review application, which was dismissed by the High Court. The State then appealed to the Supreme Court challenging the High Court’s order.

Legal Framework

The Supreme Court considered the provisions of the Uttar Pradesh Industrial Disputes Act, 1947, particularly Section 11-A, which deals with the powers of the Labour Court to give appropriate relief in cases of dismissal or discharge of workmen. The court also referred to Section 25-F of the Industrial Disputes Act, which mandates payment of retrenchment compensation and notice pay before terminating the services of a workman. The Court also considered the concept of unfair labour practice.

Arguments

Arguments by the State of Uttarakhand:

• The State argued that the High Court erred in ordering reinstatement of the respondent, given that he was a daily wager and had approached the Labour Court after a delay of 25 years.
• The State contended that the Labour Court’s decision to award compensation was appropriate, considering the nature of the employment and the delay in raising the dispute.
• The State relied on the Supreme Court’s judgments in Bharat Sanchar Nigam Limited vs. Bhurumal (2014) 7 SCC 177 and District Development Officer and Anr. vs. Satish Kantilal Amerelia (2018) 12 SCC 298, which held that reinstatement is not automatic for daily wagers terminated due to procedural defects.

Arguments by Raj Kumar (Respondent):

• The respondent argued that his termination was illegal as it was done without following the due procedure prescribed by law.
• He contended that he was entitled to reinstatement with full back wages as a remedy for the illegal termination.
• He argued that the Labour Court’s award of a mere Rs. 30,000 was inadequate and did not provide sufficient relief.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section, but the core issue that the court addressed was:

• Whether the High Court was justified in ordering reinstatement of the respondent, a daily wage worker, who was terminated illegally, or whether monetary compensation was the appropriate remedy.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court relied on the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Supreme Court relied on Bharat Sanchar Nigam Limited vs. Bhurumal (2014) 7 SCC 177* and District Development Officer and Anr. vs. Satish Kantilal Amerelia (2018) 12 SCC 298* to establish that reinstatement is not automatic for daily wage workers when termination is illegal due to procedural defects. The court used these cases to support its decision to award compensation instead of reinstatement.
• The Court used Section 11-A of the Uttar Pradesh Industrial Disputes Act, 1947, to justify awarding a lump sum monetary compensation to the respondent. The Court also referred to Section 25-F of the Industrial Disputes Act, which mandates payment of retrenchment compensation and notice pay before terminating the services of a workman.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• The respondent was a daily wage worker with no right to claim regularization.
• The respondent had worked for a short period (about a year).
• The dispute was raised after a significant delay of 25 years.
• The Court considered the principle that reinstatement is not automatic for daily wagers when termination is illegal due to procedural defects, as laid down in Bharat Sanchar Nigam Limited vs. Bhurumal (2014) 7 SCC 177 and District Development Officer and Anr. vs. Satish Kantilal Amerelia (2018) 12 SCC 298.

The Court’s reasoning can be summarized as follows:

The Court considered that reinstating a daily wage worker after such a long period would not serve any useful purpose, as the worker has no right to regularization. The Court also noted that if the worker was reinstated, the employer could terminate the services again by paying retrenchment compensation, which would be similar to the monetary compensation awarded by the court. The court quoted from Bharat Sanchar Nigam Limited vs. Bhurumal (2014) 7 SCC 177:

“It is trite law that 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.”

The Court also observed:

“In such a situation, giving the relief of reinstatement, that too after a long gap, would not serve any purpose.”

However, the Court also added a caveat:

“There may be cases where termination of a daily-wage worker is found to be illegal on the ground that it was resorted to as unfair labour practice or in violation of the principle of last come first go viz. while retrenching such a worker daily wage juniors to him were retained.”

Key Takeaways

• Reinstatement is not an automatic remedy for daily wage workers whose services are terminated illegally due to procedural defects.
• Monetary compensation is often considered a more appropriate remedy in such cases, especially when there has been a significant delay in raising the dispute.
• The courts may consider the nature of employment, the length of service, and the delay in raising the dispute when deciding on the appropriate relief.
• The Supreme Court has clarified that the principle of reinstatement with full back wages, which is generally applicable to regular employees, does not automatically apply to daily wage workers.
• This judgment reinforces the principle that in cases of procedural irregularities in the termination of daily wage workers, monetary compensation is a more practical and just solution than reinstatement.

Directions

The Supreme Court directed the State of Uttarakhand to pay Rs. 1,00,000 to Raj Kumar within three months from the date of the judgment.

Development of Law

The ratio decidendi of this case is that reinstatement is not an automatic remedy for daily wage workers whose termination is found to be illegal due to procedural defects. The court upheld the principle that monetary compensation is a more appropriate remedy in such cases, especially when there is a significant delay in raising the dispute. This case clarifies the position of law regarding the remedies available to daily wage workers upon illegal termination, affirming the principle laid down in previous cases like Bharat Sanchar Nigam Limited vs. Bhurumal (2014) 7 SCC 177. The court modified the High Court order, which had ordered reinstatement, and instead awarded a higher compensation than the Labour Court.

Conclusion

The Supreme Court’s judgment in State of Uttarakhand vs. Raj Kumar modifies the High Court’s order, holding that reinstatement is not the automatic remedy for daily wage workers terminated due to procedural defects. Instead, the Court awarded a lump sum compensation of Rs. 1,00,000, emphasizing that monetary compensation is more appropriate in cases where there has been a significant delay in raising the dispute. The decision highlights the distinction between the remedies available to regular employees and daily wage workers, reinforcing the principle that reinstatement is not always the most practical or just solution in cases of daily wage employment.