Supreme Court modifies Labour Court Award in Daily Wage Termination Case: District Development Officer vs. Satish Kantilal Amrelia (2017) INSC 988 (28 November 2017)

Date of the Judgment: 28 November 2017
Citation: (2017) INSC 988
Judges: R.K. Agrawal, J., Abhay Manohar Sapre, J.
Can a daily wage worker, whose services were terminated due to a procedural defect, automatically get reinstatement with full back wages? The Supreme Court addressed this issue while hearing an appeal against a Labour Court award. The Court modified the award, holding that monetary compensation was more appropriate than reinstatement in this specific case of a daily wager. The judgment was delivered by a two-judge bench comprising Justice R.K. Agrawal and Justice Abhay Manohar Sapre, with the opinion authored by Justice Abhay Manohar Sapre.

Case Background

The respondent, Satish Kantilal Amrelia, worked as a Peon-cum-Driver on daily wages in the Panchayat Department of the State of Gujarat at Bhavnagar. He was employed from 18.12.1989 to 31.05.1990 and then again from 01.06.1990 to 12.02.1992, earning Rs. 27.55 per day. His services were terminated on 12.02.1992, with a formal order issued on 23.03.1992.

Timeline

Course of Proceedings

The respondent challenged his termination by filing a civil suit and simultaneously approached the Labour Commissioner, who made an Industrial Reference to the Labour Court. The Civil Court initially ruled in favor of the respondent, ordering reinstatement. However, the Appellate Court reversed this decision. Meanwhile, the Labour Court ruled in favor of the respondent, ordering reinstatement with 40% back wages, finding that the termination was illegal due to non-payment of retrenchment compensation and violation of Section 25-G of the Industrial Disputes Act, 1947. The High Court upheld the Labour Court’s award. The appellant’s Letters Patent Appeal was dismissed by the Division Bench of the High Court, leading to the present appeal before the Supreme Court.

Legal Framework

The case primarily revolves around the interpretation and application of the Industrial Disputes Act, 1947, specifically:

• Section 10 of the Industrial Disputes Act, 1947: This section deals with the reference of disputes to Boards, Courts or Tribunals.
• Section 11-A of the Industrial Disputes Act, 1947: This section empowers the Labour Court to give appropriate relief in case of discharge or dismissal of workmen.
• Section 25-F of the Industrial Disputes Act, 1947: This section mandates the payment of retrenchment compensation before terminating a worker who has worked for 240 days in a year.
• Section 25-G of the Industrial Disputes Act, 1947: This section deals with the procedure for retrenchment, requiring the principle of “last come, first go” to be followed.

The Supreme Court also considered the principles laid down in the case of Bharat Sanchar Nigam Limited vs. Bhurumal [(2014) 7 SCC 177], which deals with the issue of reinstatement and back wages for daily wage workers whose termination is found to be illegal.

Arguments

The arguments were presented by both sides, with the appellant (Panchayat Department) and the respondent (Satish Kantilal Amrelia) making their case before the Supreme Court.

Appellant’s Submissions

• The appellant argued that the respondent was a daily wager and his termination was due to a procedural defect, not due to unfair labor practice.
• The appellant contended that the Labour Court’s order of reinstatement with back wages was excessive, given the respondent’s status as a daily wager.
• The appellant relied on the judgment in Bharat Sanchar Nigam Limited vs. Bhurumal [(2014) 7 SCC 177], arguing that monetary compensation should be awarded instead of reinstatement.

Respondent’s Submissions

• The respondent argued that the Labour Court correctly found his termination illegal due to violation of Section 25-F and Section 25-G of the Industrial Disputes Act, 1947.
• The respondent contended that he was entitled to reinstatement with back wages as per the Labour Court award.
• The respondent emphasized that he had worked for more than 240 days in a year, thus entitling him to the protections under the Industrial Disputes Act, 1947.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section, but the core issue revolved around whether the Labour Court’s award of reinstatement with back wages was justified for a daily wage worker whose termination was found to be illegal due to procedural defects, or whether monetary compensation was more appropriate.

Treatment of the Issue by the Court

Authorities

The Supreme Court relied on the following authorities:

Judgment

Authorities

• Bharat Sanchar Nigam Limited vs. Bhurumal [(2014) 7 SCC 177]: The Supreme Court relied heavily on this case, which held that reinstatement with full back wages is not automatic in cases of daily wage workers whose services are terminated due to procedural defects. The Court stated that “when it comes to the case of termination of a daily-wage worker and where the termination is found illegal because of a procedural defect, namely, in violation of Section 25-F of the Industrial Disputes Act, this Court is consistent in taking the view that in such cases reinstatement with back wages is not automatic and instead the workman should be given monetary compensation which will meet the ends of justice.”

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the fact that the respondent was a daily wage worker and that his termination was due to a procedural defect, not any unfair labor practice. The Court also considered the long passage of time since the termination (approximately 25 years). The Court emphasized that in such cases, reinstatement is not automatic and that monetary compensation can adequately meet the ends of justice. The Court also took into account the fact that the respondent had pursued parallel litigation in civil and labour courts, resulting in conflicting orders.

The Court reasoned that since the respondent was a daily wager, he had no right to seek regularization. Even if reinstated, his services could be terminated again by paying retrenchment compensation. Therefore, awarding monetary compensation directly was deemed more practical and just. The Court also noted that “giving the relief of reinstatement, that too after a long gap, would not serve any purpose.” However, the Court also clarified that in cases of unfair labor practices or violation of the principle of “last come first go”, reinstatement should be the rule. The Court stated that, “In such cases, reinstatement should be the rule and only in exceptional cases for the reasons stated to be in writing, such a relief can be denied.”

The Court found that the present case did not fall under the exceptional circumstances requiring reinstatement, despite the violation of Section 25-G of the Industrial Disputes Act, 1947. The Court stated that, “In our opinion, taking note of overall factual scenario emerging from the record of the case and having regard to the nature of the findings rendered and further the averments made in the SLP justifying the need to pass the termination order, this case does not fall in exceptional cases as observed by this Court in Para 35 of Bharat Sanchar Nigam Limited case (supra) due to finding of Section 25-G of the Act recorded against the appellant.”

Key Takeaways

• Reinstatement with full back wages is not automatic for daily wage workers whose services are terminated due to procedural defects.
• Monetary compensation is often a more appropriate remedy for daily wage workers, especially when a long time has passed since termination.
• The principles laid down in Bharat Sanchar Nigam Limited vs. Bhurumal are applicable to cases involving daily wage workers and procedural defects in termination.
• Even if there is a violation of Section 25-G of the Industrial Disputes Act, 1947, reinstatement is not automatic if the termination was not due to unfair labor practices.

Directions

The Supreme Court directed the appellant (State) to pay a total sum of Rs. 2,50,000 to the respondent within three months from the date of the judgment. If the payment was not made within this period, the amount would carry an interest of 9% per annum from the date of the judgment until the date of payment.

Development of Law

The ratio decidendi of this case is that reinstatement with full back wages is not automatic for daily wage workers whose services are terminated due to procedural defects. The judgment reinforces the principle established in Bharat Sanchar Nigam Limited vs. Bhurumal, clarifying that monetary compensation is a more suitable remedy in such cases, especially when a significant time has passed since the termination and there is no evidence of unfair labor practices.

Conclusion

The Supreme Court allowed the appeals in part, setting aside the orders of the High Court and modifying the Labour Court’s award. The Court held that instead of reinstatement with back wages, the respondent was entitled to a monetary compensation of Rs. 2,50,000. This decision underscores the principle that reinstatement is not automatic for daily wage workers terminated due to procedural defects, and monetary compensation can be a more appropriate remedy.