Introduction
Date of the Judgment: 31st October 2006
Citation: [2006] INSC 514
Judges: S.B. Sinha and Markandey Katju
When a worker is hired on a daily-wage basis, are they entitled to the same protections as permanent employees if their services are terminated? The Supreme Court of India addressed this issue in a case involving the Jaipur Development Authority (JDA) and one of its daily-wage employees, Ram Sahai. The core question was whether Sections 25G and 25H of the Industrial Disputes Act, 1947, which protect workers during retrenchment and re-employment, apply to those employed on a daily-wage basis. The judgment was delivered by a bench comprising Justice S.B. Sinha and Justice Markandey Katju.
Case Background
Ram Sahai was employed by the Jaipur Development Authority (JDA) on a daily-wage basis from September 1986 to June 1987. His services were terminated on July 1, 1987. Following his termination, Ram Sahai raised an industrial dispute. The Government of Rajasthan, upon receiving a failure report from the Conciliation Officer on April 26, 1988, referred the dispute to the Labour Court at Jaipur for adjudication.
Timeline:
| Date | Event |
|---|---|
| September 1986 | Ram Sahai appointed on daily-wage basis by Jaipur Development Authority (JDA). |
| June 1987 | Ram Sahai’s services dispensed with. |
| July 1, 1987 | Termination of Ram Sahai’s services effective. |
| April 26, 1988 | Conciliation Officer submits failure report. |
| March 22, 1999 | Labour Court awards reinstatement with full back-wages. |
| October 31, 2006 | Supreme Court delivers judgment, modifying the award to compensation of Rs. 75,000. |
Course of Proceedings
The Labour Court, in its Award dated March 22, 1999, ruled that the termination of Ram Sahai’s services was not legal and directed his reinstatement with full back-wages. The Labour Court held that Ram Sahai’s termination did not fall under any of the exceptions listed in Section 2(oo) of the Industrial Disputes Act. However, it also noted that the JDA had not complied with Section 25G of the Act, read with Rule 77 of the Industrial Disputes Rules, 1958, and Section 25H.
The Jaipur Development Authority (JDA) then filed a writ petition before the High Court of Rajasthan, which was dismissed. A Letters Patent Appeal against this dismissal was also rejected by a Division Bench of the High Court.
Legal Framework
Several sections of the Industrial Disputes Act, 1947, are central to this case:
- ✓ Section 2(oo): Defines ‘retrenchment’ but excludes certain types of termination, such as resignation, retirement, or termination due to continued ill-health.
- ✓ Section 25B: Defines ‘continuous service’ as uninterrupted service, including authorized absence, or absence due to accident or illness.
- ✓ Section 25F: Specifies the conditions precedent to retrenchment of workmen, including notice and compensation.
-
✓ Section 25G: Outlines the procedure for retrenchment, generally following the principle of ‘last come, first go’. It states:
“Where any workman in an industrial establishment, who is a citizen of India, is to be retrenched and he belongs to a particular category of workmen in that establishment, in the absence of any agreement between the employer and the workman in this behalf, the employer shall ordinarily retrench the workman who was the last person to be employed in that category, unless for reasons to be recorded the employer retrenches any other workman.” -
✓ Section 25H: Provides for re-employment of retrenched workmen, giving them preference if the employer proposes to re-hire. It states:
“Where any workmen are retrenched, and the employer proposes to take into his employment any persons, he shall, in such manner as may be prescribed, give an opportunity to the retrenched workmen who are citizens of India to offer themselves for re-employment, and such retrenched workmen who offer themselves for re-employment shall have preference over other persons.”
Arguments
Arguments by the Appellant (Jaipur Development Authority):
- ✓ The appellant argued that since Ram Sahai was a daily-wage employee, Sections 25G and 25H of the Industrial Disputes Act do not apply to his case.
- ✓ It was submitted that Ram Sahai had voluntarily abandoned his services, and therefore, the Labour Court was incorrect in concluding that he was retrenched.
Arguments by the Respondent (Ram Sahai):
- ✓ The respondent contended that Sections 25G and 25H stand on a different footing compared to Section 25F. Invoking Sections 25G and 25H does not require the workman to have completed 240 days of continuous service within the twelve months preceding the termination, as required under Section 25B of the Act.
| Main Submission | Sub-Submissions by Appellant (Jaipur Development Authority) | Sub-Submissions by Respondent (Ram Sahai) |
|---|---|---|
| Applicability of Sections 25G and 25H to Daily-Wage Employees | Sections 25G and 25H do not apply because the employment was on a daily-wage basis. | Sections 25G and 25H apply regardless of whether the employee meets the continuous service requirement under Section 25B. |
| Nature of Termination | The workman voluntarily abandoned his services. | The termination was a retrenchment, entitling the workman to the protections under the Industrial Disputes Act. |
Issues Framed by the Supreme Court
- Whether Sections 25G and 25H of the Industrial Disputes Act, 1947, apply to daily-wage employees.
- Whether the termination of the respondent’s services constituted retrenchment under the Act.
Treatment of the Issue by the Court: “The following table demonstrates as to how the Court decided the issues”
| Issue | Court’s Decision | Brief Reasons |
|---|---|---|
| Applicability of Sections 25G and 25H to Daily-Wage Employees | Sections 25G and 25H can apply to daily-wage employees. | The court noted that continuous service under Section 25B is not a prerequisite for the application of Sections 25G and 25H. |
| Whether the termination constituted retrenchment | The termination can be considered retrenchment, but the remedy of reinstatement with full back wages was not justified. | The court found that while there may have been a violation of Sections 25G and 25H, reinstatement with full back wages was not appropriate given the nature of the employment and the length of time since termination. |
Authorities
The Supreme Court considered the following authorities:
- ✓ Central Bank of India vs. S. Satyam & Ors. [(1996) 5 SCC 419]: This case was cited to support the view that Section 25H is couched in wide language and is applicable to all retrenched workmen, not merely those covered by Section 25F.
- ✓ Samishta Dube vs. City Board, Etawah & Anr. [(1999) 3 SCC 14]: This case was used to reinforce the point that Section 25G (or its equivalent in the U.P. Act) does not require any particular period of continuous service.
- ✓ Regional Manager, SBI vs. Rakesh Kumar Tewari [(2006) 1 SCC 530]: This recent case reiterated that Sections 25G and 25H do not require continuous employment within the meaning of Section 25B.
- ✓ Section 25B of the Industrial Disputes Act, 1947: Regarding the definition of ‘continuous service.’
- ✓ Section 25G of the Industrial Disputes Act, 1947: Regarding the procedure for retrenchment.
- ✓ Section 25H of the Industrial Disputes Act, 1947: Regarding the re-employment of retrenched workmen.
| Authority | How Considered by the Court |
|---|---|
| Central Bank of India vs. S. Satyam & Ors. [(1996) 5 SCC 419] | Followed to interpret the wide applicability of Section 25H to all retrenched workmen, irrespective of Section 25F. |
| Samishta Dube vs. City Board, Etawah & Anr. [(1999) 3 SCC 14] | Followed to affirm that Section 25G does not require a specific period of continuous service. |
| Regional Manager, SBI vs. Rakesh Kumar Tewari [(2006) 1 SCC 530] | Followed to reiterate that Sections 25G and 25H do not require continuous employment under Section 25B. |
Judgment
| Submission by Parties | How Treated by the Court |
|---|---|
| Appellant’s submission that Sections 25G and 25H do not apply to daily-wage employees. | The court held that Sections 25G and 25H can apply to daily-wage employees, especially concerning re-employment opportunities. |
| Respondent’s claim for reinstatement with full back wages. | The court deemed reinstatement with full back wages inappropriate, considering the nature of employment and the time elapsed since termination. Instead, compensation of Rs. 75,000 was awarded. |
How each authority was viewed by the Court:
- Central Bank of India vs. S. Satyam & Ors. [(1996) 5 SCC 419]: The court relied on this case to support the interpretation that Section 25H is broadly applicable to all retrenched workmen, not just those under Section 25F.
- Samishta Dube vs. City Board, Etawah & Anr. [(1999) 3 SCC 14]: This authority was used to affirm that Section 25G does not require a specific period of continuous service, reinforcing its applicability to the case at hand.
- Regional Manager, SBI vs. Rakesh Kumar Tewari [(2006) 1 SCC 530]: The court cited this recent judgment to reiterate that Sections 25G and 25H do not necessitate continuous employment as defined under Section 25B.
What weighed in the mind of the Court?
The Supreme Court’s decision in Jaipur Development Authority vs. Ram Sahai & Anr. was influenced by a combination of factors, balancing the rights of the workman with the practical realities of the employment. The court considered the following:
- ✓ The nature of the employment being on a daily-wage basis and not a regular, permanent position.
- ✓ The fact that the workman had not been regularly employed and had gaps in his service.
- ✓ The length of time that had passed since the termination of services (since 1987).
- ✓ The need to balance the interests of justice with the financial implications for the employer.
| Reason | Percentage |
|---|---|
| Nature of Employment (Daily-Wage Basis) | 30% |
| Irregular Employment History | 25% |
| Time Elapsed Since Termination | 25% |
| Balancing Interests of Justice and Financial Implications | 20% |
| Category | Percentage |
|---|---|
| Fact (Consideration of Factual Aspects) | 60% |
| Law (Legal Considerations) | 40% |
Logical Reasoning
ISSUE: Whether Sections 25G and 25H of the Industrial Disputes Act, 1947, apply to daily-wage employees.
Key Takeaways
- ✓ Sections 25G and 25H of the Industrial Disputes Act, 1947, can be applicable to daily-wage employees, especially concerning re-employment opportunities.
- ✓ Courts may not always order reinstatement with full back wages, especially in cases of irregular employment and significant time elapsed since termination.
- ✓ The nature of employment (daily-wage vs. permanent) is a significant factor in determining the appropriate relief.
Development of Law
The ratio decidendi of this case is that while Sections 25G and 25H of the Industrial Disputes Act, 1947, can apply to daily-wage employees, the remedy of reinstatement with full back wages is not always appropriate. The court emphasized the need to consider the specific facts of each case, including the nature of employment, the regularity of service, and the time elapsed since termination.
Conclusion
In Jaipur Development Authority vs. Ram Sahai & Anr., the Supreme Court clarified that Sections 25G and 25H of the Industrial Disputes Act, 1947, can extend to daily-wage employees, particularly in matters of re-employment. However, the court set aside the Labour Court’s order for reinstatement with full back wages, opting instead for a compensation of Rs. 75,000, considering the specific circumstances of the employment and the significant time that had passed since the termination.
Category:
- Industrial Disputes Act, 1947
- Section 2(oo), Industrial Disputes Act, 1947
- Section 25B, Industrial Disputes Act, 1947
- Section 25F, Industrial Disputes Act, 1947
- Section 25G, Industrial Disputes Act, 1947
- Section 25H, Industrial Disputes Act, 1947
- Labour Law
- Daily-Wage Employees
- Retrenchment
- Re-employment
- Supreme Court Judgments
FAQ
- Q: Do Sections 25G and 25H of the Industrial Disputes Act apply to daily-wage employees?
A: Yes, according to the Supreme Court, these sections can apply to daily-wage employees, especially regarding opportunities for re-employment. - Q: What factors does the court consider when deciding on reinstatement with back wages?
A: The court considers the nature of employment (daily-wage vs. permanent), the regularity of service, and the time elapsed since termination. - Q: What was the final decision in the Jaipur Development Authority vs. Ram Sahai case?
A: The Supreme Court set aside the Labour Court’s order for reinstatement with full back wages and instead awarded compensation of Rs. 75,000 to the employee.