Krishi Utpadan Mandi Samiti vs Presiding Officer Labour Court

Ashwani Kumar Mishra, J. - This writ petition is directed against an award passed by Presiding Officer, Labour Court, U.P. Rampur, in Adjudication Case No.76 of 2002, dated 4th June, 2004, upon a reference made by Deputy Labour Commissioner on the question as to whether the removal from service of workman Saleem Khan w.e.f. 27.11.1999, after completing 240 days, is valid or justified or not?, and to what relief is the workman entitled. The Labour Court has returned a finding that workman concerned had worked for more than 240 days, and since he has been removed without complying with the requirement of law, as such, he is entitled to reinstatement along with back wages. The employer, thus aggrieved, have preferred the present writ petition.

It may be noticed that workman concerned originally filed Writ Petition No.602 of 2000 with the allegation that he had been appointed on the post of Clerk-cum-Typist by the Secretary, Mandi Parishad, Rampur, on 18.2.1994. He claimed to have worked continuously till 27.11.1999, when the employer stop taking work from him. The writ petition, which was disposed of with a direction upon the authority concerned to dispose of workman''s representation. The representation of workman was rejected on 31.10.2000, which was again challenged by the workman in Writ Petition No.20646 of 2001. Petition was dismissed with the observation that workman may raise an industrial dispute or approach the Public Service Tribunal. It is in furtherance of such observation that an industrial dispute was ultimately referred by Deputy Labour Commissioner, and registered as Adjudication Case No.76 of 2002. An award was made on 29.5.2012 in favour of the workman, as no evidence was led on behalf of employer. An application for restoration was filed, which appears to have been allowed, and thereafter, the impugned award has been passed on 4th June, 2004.

The workman in his written statement claimed that he was appointed by the Secretary of Mandi Parishad, and he continued to work till 27.11.1999, when the respondents stopped taking work from him, without paying any retrenchment compensation or for any other justifiable cause.

The employer, on the other hand, filed its written statement, stating that workman was never appointed by the Mandi Parishad, and there exists no master servant relationship between the employer and workman. It was claimed that M/s Jyotibha Security Services, Moradabad was granted contract for providing security guards, and that is how respondent workman came to be deployed in the Mandi Parishad. Workman''s claim was repudiated on the ground that no privity of contract existed between the parties, and grievance, if any, between the employer and workman could be directed against the contractor M/s Jyotibha Security Services Company, which was not impleaded as a party. Rejoinder statement was also filed reiterating the respective fact. 18 documents were filed on behalf of workman and 11 documents were filed by the employer. Workman adduced his oral statement, whereas one Ram Das Singh appeared as EW-1 on behalf of employer. Employer also adduced evidence of Harveer Singh on affidavit, who was working as Secretary of the Mandi Samiti. Upon an application of the workman, the Labour Court directed various documents to be produced, but only the general cashbook as well as engagement register of temporary employees from April to November, 1999 alone were produced, as other documents were reportedly not available.

Labour Court has returned a finding that workman has completed more than 240 days working in a calender year. A further finding is returned that employer is not registered as principal employer under the Contract Labour Act, nor relevant forms in that regard were adduced by the employer. A finding has thus been returned stating that employer has failed to establish that a valid contract system was enforced. It was also stated that payment of wages to the workman in the month of April, 1999 is admitted. It is, in such circumstances, that labour court has found the termination to be bad, as no retrenchment compensation was paid by the employer before retrenching him, although period of 240 days in a calender year had been completed.

Learned counsel for the petitioner states that engagement in Mandi Parishad is regulated by statutory service regulations, and reliance has been placed upon the judgment of Apex Court in State of U.P. v. Neeraj Awasthi and others, decided on 16th December, 2015, in Civil Appeal No.4092 of 2001, to contend that de hors the rules, no engagement could have been made. It is also stated that relief of reinstatement ought not to have been allowed, and at best monetary compensation would have been awarded. Reliance has also been placed upon various judgments, which shall be dealt with subsequently.

On behalf of workman, it is stated that once finding of working of 240 days in a calender year is returned, based upon materials available on record, the obvious relief to be extended to the workman is of reinstatement along with back wages, and no interference in the matter is called for. Reliance is placed upon judgment of the Supreme Court in Jasmer Singh v. State of Haryana and another, reported in 2015 (4) SCC 458.

I have heard Sri Archit Mandhyan, holding brief of Sri Satish Mandhyan for the petitioner and Sri Arvind Kumar Singh, learned counsel for the respondent workman, and have perused the records.

So far as factual issue with regard to engagement of workman as well as his termination without following the requirement of Section 6-N are concerned, this Court finds that factual finding returned by the labour court is not shown to be perverse or erroneous. Admittedly, employer was not registered as principal employer, nor the provisions of Act of 1970 have otherwise been shown to have been complied with. The plea set up by the employer of engagement on contract basis if has been turned down by the labour court, for the reason that provisions of the Act have not been complied with, no exception can be taken to it. It has otherwise been shown that engagement of workman was established for a period of more than 240 days, and the employer''s plea of engagement on contract basis has been disbelieved for the reasons noticed above. The finding that no retrenchment compensation was paid is otherwise not under challenge. In such circumstances, finding that termination of respondent workman is illegal, requires no interference.

The question that now arises is as to what relief is liable to be extended to the workman?

Engagement of workman in Mandi Parishad is regulated by the statutory service regulations. It has not been shown that a valid appointment in accordance with the statutory regulations has been extended to the respondent workman. Learned counsel for the petitioner, thus, is right in contending that Mandi Parishad could make appointment only in terms of statutory service regulations, and no appointment could have been made de hors the regulations. Engagement of respondent workman was not against any sanctioned post. No procedure for recruitment had been followed. As per respondent workman''s own case, he was engaged on daily wage basis. Such engagement of workman was continued upto the year 1999 and a period of nearly 17 years have lapsed since then.

Learned counsel for the petitioner employer has relied upon a recent decision of the Apex Court in Vice Chancellor Lucknow University, Lucknow v. Akhilesh Kumar Khare: (2016) 1 SCC 521. Para 18 & 19 of the judgment is reproduced:-

"18. In considering the violation of Section 25F of the Industrial Disputes Act, 1947 in Incharge Officer & Anr. v. Shankar Shetty (2010) 9 SCC 126 and after referring to the various decisions, this Court held that the relief by way of back wages is not automatic and compensation instead of reinstatement has been held to meet the ends of justice and it reads as under:-

"2. Should an order of reinstatement automatically follow in a case where the engagement of a daily wager has been brought to end in violation of Section 25-F of the Industrial Disputes Act, 1947 (for short "the ID Act")? The course of the decisions of this Court in recent years has been uniform on the above question.

In Jagbir Singh v. Haryana State Agriculture Mktg. Board, (2009) 15 SCC 327, delivering the judgment of this Court, one of us (R.M. Lodha, J.) noticed some of the recent decisions of this Court, namely, U.P. State Brassware Corpn. Ltd. v. Uday Narain Pandey, (2006) 1 SCC 479, Uttaranchal Forest Development Corpn. v. M.C. Joshi, (2007) 9 SCC 353, State of M.P. v. Lalit Kumar Verma (2007) 1 SCC 575, M.P. Admn. v. Tribhuban (2007) 9 SCC 748, Sita Ram v. Moti Lal Nehru Farmers Training Institute (2008) 5 SCC 75, Jaipur Development Authority v. Ramsahai (2006) 11 SCC 684, GDA v. Ashok Kumar (2008) 4 SCC 261 and Mahboob Deepak v. Nagar Panchayat, Gajraula (2008) 1 SCC 575 and stated as follows: (Jagbir Singh case (2009) 15 SCC 327, SCC pp. 330 & 335, paras 7 & 14)

"7. It is true that the earlier view of this Court articulated in many decisions reflected the legal position that if the termination of an employee was found to be illegal, the relief of reinstatement with full back wages would ordinarily follow. However, in recent past, there has been a shift in the legal position and in a long line of cases, this Court has consistently taken the view that relief by way of reinstatement with back wages is not automatic and may be wholly inappropriate in a given fact situation even though the termination of an employee is in contravention of the prescribed procedure. Compensation instead of reinstatement has been held to meet the ends of justice.

It would be, thus, seen that by a catena of decisions in recent time, this Court has clearly laid down that an order of retrenchment passed in violation of Section 25-F although may be set aside but an award of reinstatement should not, however, be automatically passed. The award of reinstatement with full back wages in a case where the workman has completed 240 days of work in a year preceding the date of termination, particularly, daily wagers has not been found to be proper by this Court and instead compensation has been awarded. This Court has distinguished between a daily wager who does not hold a post and a permanent employee."

Jagbir Singh (2009) 15 SCC 327 has been applied very recently in Telegraph Deptt. v. Santosh Kumar Seal (2010) 6 SCC 773, wherein this Court stated: (SCC p. 777, para 11)

"11. In view of the aforesaid legal position and the fact that the workmen were engaged as daily wagers about 25 years back and they worked hardly for 2 or 3 years, relief of reinstatement and back wages to them cannot be said to be justified and instead monetary compensation would sub-serve the ends of justice."

In the light of the above discussion, the impugned judgment of the High Court is modified and keeping in view the fact that the respondents are facing hardship on account of pending litigation for more than two decades and the fact that some of the respondents are over aged and thus have lost the opportunity to get a job elsewhere, interest of justice would be met by directing the appellant-university to pay compensation of rupees four lakhs to each of the respondents. By order dated 11.07.2011, this Court directed the appellant to comply with the requirements of Section 17B of the Industrial Disputes Act, 1947 and it is stated that the same is being complied with. The appellant-university is directed to pay the respondents rupees four lakhs each within four months from the date of receipt of this judgment. The payment of rupees four lakhs shall be in addition to wages paid under Section 17B of the Industrial Disputes Act, 1947."

Learned counsel for the respondent workman, on the other hand, has placed reliance upon judgments of the Apex Court in Devinder Singh v. Municipal Council Sanaur: 2011 (3) ESC 514 (SC), Harjinder Singh v. Punjab State Warehousing Corporation: (2010) 3 SCC 192 and Anoop Sharma v. Executive Engineer: (2010) 5 SCC 497, in order to contend that once a finding of violation of section 6-N of the Act is returned, the workman would be entitled to reinstatement along with continuity of service and back wages.

Learned counsel for the petitioner, in reply, relies upon judgment of the Apex Court in Assistant Engineer v. Gitam Singh: (2013) 5 SCC 136, in which judgment of the Apex Court in Harijinder Singh (supra) and Devinder Singh (supra), relied upon on behalf of respondent workman, has been considered. Para 27 to 31 of the judgment in Assistant Engineer (supra) is reproduced:-

"27. We shall now consider two decisions of this Court in Harjinder Singh, (2010) 3 SCC 192 and Devinder Singh, 2011 (3) ESC 514 (SC) upon which heavy reliance has been placed by the learned counsel for the respondent. In Harjinder Singh, (2010) 3 SCC 192, this Court did interfere with the order of the High Court which awarded compensation to the workman by modifying the award of reinstatement passed by the Labour Court. However, on close scrutiny of facts it transpires that was a case where a workman was initially employed by Punjab State Warehousing Corporation as work-charge motor mate but after few months he was appointed as work munshi in the regular pay-scale for three months. His service was extended from time to time and later on by one month''s notice given by the Managing Director of the Corporation his service was brought to end on 05.07.1988. The workman challenged the implementation of the notice in a writ petition and by an interim order the High Court stayed the implementation of that notice but later on the writ petition was withdrawn with liberty to the workman to avail his remedy under the ID Act. After two months, the Managing Director of the Corporation issued notice dated 26.11.1992 for retrenchment of the workman along with few others by giving them one month''s pay and allowances in lieu of notice as per the requirement of Section 25-F(a) of the ID Act. On industrial dispute being raised, the Labour Court found that there was compliance of Section 25-F but it was found that the termination was violative of Section 25-G of the ID Act and, accordingly, Labour Court passed an award for reinstatement of the workman with 50 per cent back wages. The Single Judge of that High Court did not approve the award of reinstatement on the premise that the initial appointment of the workman was not in consonance with the statutory regulations and Articles 14 and 16 of the Constitution and accordingly, substituted the award of reinstatement with 50 per cent back wages by directing that the workman shall be paid a sum of Rs. 87,582/- by way of compensation. It is this order of the Single Judge that was set aside by this Court and order of the Labour Court restored. We are afraid the facts in Harjinder Singh are quite distinct. That was not a case of a daily-rated worker. It was held that Single Judge was wrong in entertaining an unfounded plea that workman was employed in violation of Articles 14 and 16. Harjinder Singh turned on its own facts and is not applicable to the facts of the present case at all.

In Devinder Singh, the workman was engaged by Municipal Council, Sanaur on 01.08.1994 for doing the work of clerical nature. He continued in service till 29.09.1996. His service was discontinued with effect from 30.09.1996 in violation of Section 25-F of ID Act. On industrial dispute being referred for adjudication, the Labour Court held that the workman had worked for more than 240 days in a calendar year preceding the termination of his service and his service was terminated without complying with the provisions of Section 25-F. Accordingly, Labour Court passed an award for reinstatement of the workman but without back wages. Upon challenge being laid to the award of the Labour Court, the Division Bench set aside the order of the Labour Court by holding that Labour Court should not have ordered reinstatement of the workman because his appointment was contrary to the Recruitment Rules and Articles 14 and 16 of the Constitution. In the appeal before this Court from the order of the Division Bench, this Court held that the High Court had neither found any jurisdictional infirmity in the award of the Labour Court nor it came to the conclusion that the award was vitiated by an error of law apparent on the face of the record and notwithstanding these the High Court set aside the direction given by the Labour Court for reinstatement of the workman by assuming that his initial appointment was contrary to law. The approach of the High Court was found to be erroneous by this Court. This Court, accordingly, set aside the order of the High Court and restored the award of the Labour Court. In Devinder Singh, the Court had not dealt with the question about the consequential relief to be granted to the workman whose termination was held to be illegal being in violation of Section 25-F.

In our view, Harjinder Singh and Devinder Singh do not lay down the proposition that in all cases of wrongful termination, reinstatement must follow. This Court found in those cases that judicial discretion exercised by the Labour Court was disturbed by the High Court on wrong assumption that the initial employment of the employee was illegal. As noted above, with regard to the wrongful termination of a daily wager, who had worked for a short period, this Court in long line of cases has held that the award of reinstatement cannot be said to be proper relief and rather award of compensation in such cases would be in consonance with the demand of justice. Before exercising its judicial discretion, the Labour Court has to keep in view all relevant factors, including the mode and manner of appointment, nature of employment, length of service, the ground on which the termination has been set aside and the delay in raising the industrial dispute before grant of relief in an industrial dispute.

We may also refer to a recent decision of this Court in Bharat Sanchar Nigam Limited v. Man Singh. That was a case where the workmen, who were daily wagers during the year 1984-85, were terminated without following Section 25-F. The industrial dispute was raised after five years and although the Labour Court had awarded reinstatement of the workmen which was not interfered by the High Court, this Court set aside the award of reinstatement and ordered payment of compensation. In paragraphs 4 and 5 (pg.559) of the Report this Court held as under:

"4. This Court in a catena of decisions has clearly laid down that although an order of retrenchment passed in violation of Section 25-F of the Industrial Disputes Act may be set aside but an award of reinstatement should not be passed. This Court has distinguished between a daily wager who does not hold a post and a permanent employee.

In view of the aforementioned legal position and the fact that the respondent workmen were engaged as "daily wagers" and they had merely worked for more than 240 days, in our considered view, relief of reinstatement cannot be said to be justified and instead, monetary compensation would meet the ends of justice."

In light of the above legal position and having regard to the facts of the present case, namely, the workman was engaged as daily wager on 01.03.1991 and he worked hardly for eight months from 01.03.1991 to 31.10.1991, in our view, the Labour Court failed to exercise its judicial discretion appropriately. The judicial discretion exercised by the Labour Court suffers from serious infirmity. The Single Judge as well as the Division Bench of the High Court also erred in not considering the above aspect at all. The award dated 28.06.2001 directing reinstatement of the respondent with continuity of service and 25% back wages in the facts and circumstances of the case cannot be sustained and has to be set aside and is set aside. In our view, compensation of Rs. 50,000/- by the appellant to the respondent shall meet the ends of justice. We order accordingly. Such payment shall be made to the respondent within six weeks from today failing which the same will carry interest @ 9 per cent per annum."

Reliance on behalf of petitioner employer has also been placed upon judgment of the Apex Court in Bhavnagar Municipal Corporation v. Jadeja Govubha Chhanubha: 2015 AIR SCW 35. Para 14-16 of the judgment is reproduced:-

"14. It would be, thus, seen that by a catena of decisions in recent time, this Court has clearly laid down that an order of retrenchment passed in violation of Section 25F although may be set aside but an award of reinstatement should not, however, be automatically passed. The award of reinstatement with full back wages in a case where the workman has completed 240 days of work in a year preceding the date of termination, particularly, daily wagers has not been found to be proper by this Court and instead compensation has been awarded. This Court has distinguished between a daily wager who does not hold a post and a permanent employee."

[emphasis supplied]

To the same effect is the decision of this Court in Incharge Officer and Anr. v. Shankar Shetty (2010) 9 SCC 126, where this Court said:

"5. We think that if the principles stated in Jagbir Singh and the decisions of this Court referred to therein are kept in mind, it will be found that the High Court erred in granting relief of reinstatement to the respondent. The respondent was engaged as daily wager in 1978 and his engagement continued for about 7 years intermittently upto September 6, 1985 i.e. about 25 years back. In a case such as the present one, it appears to us that relief of reinstatement cannot be justified and instead monetary compensation would meet the ends of justice. In our considered opinion, the compensation of Rs. 1,00,000/- (Rupees One lac) in lieu of reinstatement shall be appropriate, just and equitable."

[emphasis supplied]

The case at hand, in our opinion, is one such case where reinstatement must give way to award of compensation. We say so because looking to the totality of the circumstances, the reinstatement of the respondent in service does not appear to be an acceptable option. Monetary compensation, keeping in view the length of service rendered by the respondent, the wages that he was receiving during that period which according to the evidence was around Rs.24.75 per day should sufficiently meet the ends of justice. Keeping in view all the facts and circumstances, we are of the view that award of a sum of Rs.2,50,000/- (Rupees Two Lacs Fifty Thousand only) should meet the ends of justice."

Reliance has also been placed upon judgment of the Apex Court in T.N. Terminated Full Time Temporary LIC Employees Association v. Life Insurance Corporation of India: JT 2015 SC 520 and Tapash Kumar Paul v. BSNL and another: (2014) 4 SCR 875.

This Court in Nagar Palika Parishad v. Presiding Officer, Labour Court, delivered in Writ Petition No. 25467 of 2013, after elaborately considering judgments of the Apex Court, on the subject, has observed as under in para 18 & 19:-

"18. Having considered the aforesaid submission, this Court finds that law for guidance of the courts with regard to grant of relief, in such circumstances, has been clearly laid down by the Apex Court. Relief of reinstatement and back wages, in a case of violation of Section 6-N or Section 25-F, is the normal rule. Industrial jurisprudence and service jurisprudence operated in distinct fields. However, after the exhaustive definition assigned to industry in Banglore Water Supply case, this distinction has got blurred. Many of governmental activities upon which provisions of Articles 14 and 16 apply have come within the definition of industry. Applicability of constitutional provisions, which regulates governmental activity, cannot be excluded from consideration merely because it is an industry. In view of the law laid down by the Apex Court in Hari Nandan Prasad (supra), considerations like existence of post, manner of recruitment, length of working, entitlement of regularisation in case of daily wager etc. are relevant in case of a State instrumentality notwithstanding it being an industry. Grant of relief of reinstatement to a daily wager is not automatic, when no post itself is available. The nature of engagement is relevant, inasmuch as if it is found that initial engagement was contrary to Article 16 of the Constitution of India, the Court may not be justified in granting relief of reinstatement, as it may not sub-serve the larger cause sought to be addressed by Article 16 of the Constitution of India. Although, as a result of non-compliance of Section 6-N, workman is entitled to be reinstated, but in the absence of existence of any vacant post of Tax Collector, it would not be possible to award relief of reinstatement against a non-existent post. This is particularly so as the employer herein is a State Authority and in the matter of recruitment thereunder is governed by the statutory service regulations, and dictum of Articles 14 and 16 would clearly be attracted.

Even otherwise, reinstatement is permissible on the same status as was held by the workman at the time of his termination. The Labour Court has held that workman was engaged on daily wage basis, and his reinstatement would have to be as a daily wage earner. The workman''s plea of regularisation has not been granted. No such relief can otherwise be granted in the matter of employment by State/Agency of State, against a non-existent post without following the procedure for recruitment. In the facts of the present case, engagement of respondent was apparently a back-door entry, courtesy the then Chairman, without any advertisement or existence of post. Despite a specific plea taken in the written statement, the workman has not adduced any evidence to show that he was appointed against a vacant post, after procedure was followed. Relief of noncompliance of the provisions of Section 6-N of the U.P. Industrial Disputes Act can not be granted, which has the effect of violating mandate laid under Articles 14 and 16 of the Constitution of India. Consequence flowing from the non-compliance of Section 6-N, therefore, has to be restricted in a manner such that constitutional protection guaranteed under Article 14 and 16 of the Constitution of India itself is not violated."

Considering the fact that engagement of respondent workman was on daily wage basis and had continued till May, 1999, and that he was not appointed against a vacant sanctioned post, and no procedure for recruitment etc. had been followed, and a period of nearly 17 years have lapsed, this Court is of the opinion that labour court was not justified in granting relief of reinstatement and a lump sum compensation ought to have been awarded to the respondent workman. In the opinion of this Court, a sum of Rs.3,00,000/- would be adequate compensation for the purpose.

For the reasons aforesaid, the award passed by Presiding Officer, Labour Court in Adjudication Case No.76 of 2002, dated 4.6.2004, is modified to the extent that respondent workman shall be entitled to a lump sum amount of Rs.3 lacs. The said amount shall be paid within a period of six weeks from today. The amount of Rs.50,000/- lying in deposit pursuant to the interim order passed in the matter shall be adjusted.

The writ petition is, accordingly, disposed of. No order as to costs.