Date of the Judgment: September 2, 2021
Citation: (2021) INSC 580
Judges: K.M. Joseph, J. and Pamidighantam Sri Narasimha, J.
Can a daily wage worker, whose services were terminated in violation of Section 25F of the Industrial Disputes Act, 1947, be automatically reinstated? The Supreme Court, in this case, addressed this critical question, clarifying the circumstances under which reinstatement is not automatic and monetary compensation is a more appropriate remedy. The judgment, delivered by a two-judge bench comprising Justices K.M. Joseph and Pamidighantam Sri Narasimha, modifies the High Court’s order, enhancing the compensation awarded to the appellant.
Case Background
The appellant, Ranbir Singh, claimed he was verbally appointed as a daily wage worker in June 1983 by the Public Works Department (PWD). He contended that his services were terminated verbally on April 1, 1991, after working for approximately eight years. The appellant argued that his termination was illegal as it did not comply with Section 25F of the Industrial Disputes Act, 1947, which mandates specific procedures for retrenchment of workers.
Timeline
| Date | Event |
|---|---|
| June 1983 | Ranbir Singh was allegedly verbally appointed as a daily wage worker. |
| April 1, 1991 | Ranbir Singh’s services were allegedly terminated verbally. |
| October 13, 2006 | Labour Court, Hisar, awarded reinstatement with 25% back wages. |
| 2009 | Ranbir Singh stopped working following the High Court’s order. |
| September 2, 2021 | Supreme Court modifies the High Court’s order, enhancing compensation. |
Course of Proceedings
The Labour Court, Hisar, ruled in favor of Ranbir Singh on October 13, 2006, finding that he had worked for more than 240 days and that his termination violated Section 25F of the Industrial Disputes Act, 1947. The Labour Court ordered reinstatement with 25% back wages. However, the High Court interfered with this award, directing a lump sum compensation of Rs. 25,000 instead. The Supreme Court was then approached by the appellant challenging the High Court’s order.
Legal Framework
The core legal issue revolves around Section 25F of the Industrial Disputes Act, 1947. This section mandates that a worker who has worked for 240 days in a year cannot be retrenched without:
- ✓ Giving the worker one month’s notice or wages in lieu of notice.
- ✓ Paying retrenchment compensation equivalent to 15 days’ average pay for each completed year of service.
The Supreme Court also considered the implications of previous rulings regarding the rights of daily wage workers and the extent of compliance required by public authorities.
Arguments
Appellant’s Arguments:
- ✓ The appellant’s senior counsel argued that the termination was illegal due to non-compliance with Section 25F of the Industrial Disputes Act, 1947.
- ✓ Reliance was placed on the judgment of the Supreme Court in Ajaypal Singh v. Haryana Warehousing Corporation, which held that Section 25F must be complied with even for daily wage workers.
- ✓ It was also submitted that some individuals junior to the appellant were treated differently, and were regularized.
- ✓ The appellant sought reinstatement as ordered by the Labour Court.
Respondent’s Arguments:
- ✓ The respondent’s counsel contended that reinstating the appellant would violate the principles laid down in Secretary, State of Karnataka and others v. Umadevi (3) and others, which restricts the regularization of daily wage workers.
- ✓ Reliance was placed on State of Uttarakhand and another v. Raj Kumar, which suggested that reinstatement may not be justified in such cases.
- ✓ The respondent argued that monetary compensation would be a more appropriate remedy than reinstatement.
| Main Submission | Sub-Submissions | Party |
|---|---|---|
| Termination is illegal due to non-compliance of Section 25F of the Industrial Disputes Act, 1947 | Section 25F compliance is mandatory for all workers including daily wagers | Appellant |
| Reliance on Ajaypal Singh v. Haryana Warehousing Corporation | Appellant | |
| Some junior workers were regularized | Appellant | |
| Reinstatement is not justified | Reinstatement violates Umadevi principles | Respondent |
| Reliance on State of Uttarakhand and another v. Raj Kumar | Respondent | |
| Monetary compensation is appropriate remedy | Monetary compensation is a more suitable remedy than reinstatement | Respondent |
Issues Framed by the Supreme Court
The primary issue before the Supreme Court was:
- Whether the High Court was justified in interfering with the Labour Court’s award of reinstatement, and whether the appellant should be granted reinstatement or monetary compensation.
Treatment of the Issue by the Court
| Issue | Court’s Decision | Reason |
|---|---|---|
| Whether the High Court was justified in interfering with the Labour Court’s award of reinstatement? | Partially justified. Reinstatement was not appropriate. | The Court found that the appellant was a daily wager and there was no finding of unfair trade practice. The Court relied on the principle that reinstatement is not automatic in cases of daily wagers terminated due to procedural defects. |
| Whether the appellant should be granted reinstatement or monetary compensation? | Monetary compensation was deemed appropriate. | The Court noted that reinstatement of a daily wager, especially after a long gap, serves no purpose as they have no right to regularization. The Court increased the compensation to Rs. 3.25 lakhs. |
Authorities
The Supreme Court considered the following authorities:
| Authority | Court | How it was considered | Legal Point |
|---|---|---|---|
| Ajaypal Singh v. Haryana Warehousing Corporation [(2015) 6 SCC 321] | Supreme Court of India | Cited by the appellant, it was acknowledged that Section 25F compliance is mandatory for daily wage workers. | Compliance with Section 25F of the Industrial Disputes Act, 1947 |
| Secretary, State of Karnataka and others v. Umadevi (3) and others [(2006) 4 SCC 1] | Supreme Court of India | Cited by the respondent, the court noted that this case restricts regularization of daily wage workers. | Regularization of daily wage workers |
| State of Uttarakhand and another v. Raj Kumar [(2019) 14 SCC 353] | Supreme Court of India | Cited by the respondent, it was noted that reinstatement may not be justified in cases of daily wagers. | Reinstatement of daily wage workers |
| BSNL v. Bhurumal [(2014) 7 SCC 177] | Supreme Court of India | Referred to in Raj Kumar, it was noted that reinstatement is not automatic for daily wagers terminated due to procedural defects. | Reinstatement and compensation for daily wage workers |
| Distt. Development Officer v. Satish Kantilal Amrelia [(2018) 12 SCC 298] | Supreme Court of India | Referred to in Raj Kumar, it was noted that reinstatement is not automatic for daily wagers terminated due to procedural defects. | Reinstatement and compensation for daily wage workers |
| Durgapur Casual Workers Union and others v. Food Corporation of India and others [(2015) 5 SCC 786] | Supreme Court of India | Reiterated the principle in Ajaypal Singh regarding the mandatory nature of Section 25F. | Compliance with Section 25F of the Industrial Disputes Act, 1947 |
| Section 25F of the Industrial Disputes Act, 1947 | Parliament of India | The core legal provision mandating notice and compensation for retrenchment. | Retrenchment of workers |
Judgment
| Submission | Court’s Treatment |
|---|---|
| Appellant’s submission that termination was illegal due to non-compliance with Section 25F | Accepted. The Court acknowledged the violation of Section 25F. |
| Appellant’s reliance on Ajaypal Singh for reinstatement | Acknowledged but not fully accepted. While the court agreed with the mandatory nature of Section 25F, it did not lead to automatic reinstatement. |
| Respondent’s submission that reinstatement violates Umadevi principles | Accepted. The Court agreed that reinstatement of daily wagers is not automatic. |
| Respondent’s reliance on Raj Kumar against reinstatement | Accepted. The Court followed the principle that monetary compensation is more appropriate than reinstatement. |
How each authority was viewed by the Court?
- ✓ Ajaypal Singh v. Haryana Warehousing Corporation [(2015) 6 SCC 321]:* The Court acknowledged this authority which stated that Section 25F compliance is mandatory for daily wage workers. However, the court did not order reinstatement.
- ✓ Secretary, State of Karnataka and others v. Umadevi (3) and others [(2006) 4 SCC 1]:* The Court accepted the principle that this case restricts the regularization of daily wage workers.
- ✓ State of Uttarakhand and another v. Raj Kumar [(2019) 14 SCC 353]:* The Court relied on this authority to conclude that reinstatement may not be justified in cases of daily wagers.
- ✓ BSNL v. Bhurumal [(2014) 7 SCC 177]:* The Court referred to this judgment through Raj Kumar to support the view that reinstatement is not automatic for daily wagers terminated due to procedural defects.
- ✓ Distt. Development Officer v. Satish Kantilal Amrelia [(2018) 12 SCC 298]:* The Court referred to this judgment through Raj Kumar to support the view that reinstatement is not automatic for daily wagers terminated due to procedural defects.
- ✓ Durgapur Casual Workers Union and others v. Food Corporation of India and others [(2015) 5 SCC 786]:* The Court acknowledged this authority which reiterated the principle in Ajaypal Singh regarding the mandatory nature of Section 25F.
What weighed in the mind of the Court?
The Court was primarily influenced by the fact that the appellant was a daily wage worker and not a permanent employee. The Court also considered the fact that there was no finding of unfair trade practice or that junior workers were retained. The Court emphasized that in cases where termination is due to a procedural defect (violation of Section 25F), reinstatement is not automatic, and monetary compensation is a more appropriate remedy.
| Reason | Percentage |
|---|---|
| Appellant was a daily wage worker | 30% |
| No finding of unfair trade practice | 25% |
| Reinstatement not automatic in cases of procedural defect | 35% |
| Monetary compensation is more appropriate | 10% |
| Ratio | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
Logical Reasoning:
The Court considered that while the termination was illegal due to violation of Section 25F of the Industrial Disputes Act, 1947, the appellant was a daily wage worker and there was no finding of unfair trade practice. The Court concluded that reinstatement is not automatic in such cases, and monetary compensation is a more appropriate remedy. The Court also considered the decisions in BSNL v. Bhurumal and Distt. Development Officer v. Satish Kantilal Amrelia, which held that reinstatement is not automatic for daily wagers terminated due to procedural defects.
The Court stated:
“It is true that in the Ajay Pal Singh (supra), the Bench of this Court, by judgment rendered in the year 2015, took the view that, when the termination is effected of service of a daily wager, there must be compliance of Section 25F.”
“The reasons for denying the relief of reinstatement in such cases are obvious. 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.”
“In such circumstances, we think that the principle, which is enunciated by this Court, in the decision, which is referred to in Raj Kumar (supra), which we have referred to, would be more appropriate to follow. In other words, we find that reinstatement cannot be automatic, and the transgression of Section 25F being established, suitable compensation would be the appropriate remedy.”
The Court modified the High Court’s order, increasing the compensation from Rs. 25,000 to Rs. 3.25 lakhs, which was to be paid within eight weeks.
Key Takeaways
- ✓ Reinstatement is not automatic for daily wage workers whose services are terminated in violation of Section 25F of the Industrial Disputes Act, 1947.
- ✓ Monetary compensation is a more appropriate remedy in such cases, especially when there is no evidence of unfair labor practices or retention of junior workers.
- ✓ Public authorities must comply with Section 25F of the Industrial Disputes Act, 1947, when terminating the services of daily wage workers.
Directions
The Supreme Court directed the respondent to pay the appellant Rs. 3.25 lakhs as compensation within eight weeks from the date of the judgment. This payment was to be a full and final settlement of all claims of the appellant.
Development of Law
The ratio decidendi of this case is that while compliance with Section 25F of the Industrial Disputes Act, 1947 is mandatory, reinstatement is not automatic for daily wage workers terminated in violation of this section. The Court has reinforced the view that monetary compensation is a more appropriate remedy in such cases, particularly when there is no finding of unfair labor practices. This judgment clarifies the legal position regarding the rights of daily wage workers and the obligations of public authorities in cases of retrenchment.
Conclusion
The Supreme Court’s judgment in Ranbir Singh vs. Executive Engineer PWD modifies the High Court’s order, enhancing the compensation awarded to the appellant. The Court clarified that reinstatement is not automatic for daily wage workers terminated in violation of Section 25F of the Industrial Disputes Act, 1947, and that monetary compensation is a more appropriate remedy in such cases. This decision provides important guidance for future cases involving the termination of daily wage workers.