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Sec. 24 -F and sec.30 of INDUSTRIAL DISPUTES ACT- unfair labour practice – as per the circular the employment of the casual labours regularised as permanent – SCHEME- but only two persons are not given such benefit – Tribunal ordered infavour of workers, High court confirmed the same but the D.B. bench reversed the same basing on Umadevi Case which is not decided under sec.30 of Industrial Disputes Act with out considering the dissented judgement of Apex court in Maharashtra Road Transport case – Apex court in appeal against D.B. held that Hari Nandan. case not fall under the scheme so his appeal was dismissed where as Gobind Kumar Choudhary. case falls under the scheme and as such his appeal was allowed as held by tribunal and single judge of High court and set aside the orders of D.B.= Hari Nandan Prasad & Anr. …Appellants Vs. Employer I/R to Mangmt.of FCI & Anr. …Respondents = 2014 ( Feb.Part) judis.nic.in/supremecourt/filename=41232

Sec. 24 -F and sec.30 of INDUSTRIAL DISPUTES ACT- unfair labour practice – as per the circular the employment of the casual labours regularised as permanent – SCHEME- but only two persons are not given such benefit – Tribunal ordered infavour of workers, High court confirmed the same but the D.B. bench reversed the same basing on Umadevi Case which is not decided under sec.30 of Industrial Disputes Act with out considering the dissented judgement of Apex court in Maharashtra Road Transport case – Apex court in appeal against D.B. held that Hari Nandan. case not fall under the scheme so his appeal was dismissed where as  Gobind Kumar Choudhary. case falls under the scheme and as such his appeal was allowed  as held by tribunal and single judge of High court and set aside the orders of D.B.=

 

The  two

appellants were working on casual basis with the FCI.  After  certain  time,

their services were dispensed with.  

Both of them raised industrial  dispute

alleging wrongful termination which was referred to the Central  Government-

cum- Industrial  Tribunal  (CGIT).   

These  proceedings  culminated  in  two

awards dated 12.12.1996 and 18.12.1996 respectively passed by the CGIT.   

In both these awards, termination  of  both  the  appellants  was  held  to  be

illegal and they were directed to be reinstated with 50%  back  wages.   

The CGIT  also  ordered  their  regularization  in  service.   =

 

 We may record here that the Division Bench  accepted  that  there  was

infraction of Section 25-F of the I.D.Act   in  both  the  cases.   

However,

they were held not entitled to reinstatement  because  of  the  reason  that

they were employed strictly as temporary workers,  without  any  stipulation

or promise that they would be made permanent and therefore reinstatement  of

such workers was not warranted  and  they  were  entitled  to  get  monetary

compensation only. 

 As far as compensation  is  concerned,  since  both  the

appellants were paid the money equivalent to wages last  drawn,  for  number

of years when the Writ Petitions were pending, under Section 17  -B  of  the

I.D. Act, the High Court felt that the  appellants   were  duly  compensated

and no further amount was payable.

 

 13.  Challenging the validity of  the  approach  of  the  High  Court,  the

learned counsel for the appellants submitted that the entire thrust  of  the

judgment of the High Court rests on  the  decision  of  this  Court  in  Uma

Devi’s case which was impermissible as the said  judgment  is  clarified  by

this Court subsequently in the case  of  Maharashtra  State  Road  Transport

Corporation &  Anr.  vs.  Casteribe  Rajya  Parivahan  Karmchari  Sanghatana

(2009) 8 SCC 556, 

wherein it is held, in categorical terms, that in  so  far

as Industrial and Labour Courts are concerned, they enjoy wide powers  under

Section 30(1)(b) of the Industrial Disputes Act to take  affirmative  action

in case of unfair labour practice and these powers include  power  to  order

regularization/permanency. 

The Court has, further, clarified  that  decision

in Uma Devi limits the scope of powers of Supreme  Court  under  Article  32

and High Courts under Article 226 of the Constitution  to  issue  directions

for regularization in the matter of public employment,  but  power  to  take

affirmative action under section 30(1)(b) of the I.D.Act  which  rests  with

the Industrial/Labour Courts, remains intact.  

It  was,  thus,  argued  that

entire edifice of the   impugned judgment of the High Court erected  on  the

foundation of Uma Devi (supra) crumbles.

 

we are of the opinion that when there are posts available,  in  the  absence

of any unfair labour practice the Labour Court would not give direction  for

regularization  only  because  a  worker  has  continued   as   daily   wage

worker/adhoc/temporary worker for number of years. Further, if there are  no

posts  available,   such   a   direction   for   regularization   would   be

impermissible.  In  the  aforesaid  circumstances  giving  of  direction  to

regularize such a person, only on the basis of number of  years  put  in  by

such a worker as daily wager etc. may amount  to  backdoor  entry  into  the

service which is an anathema to Art.14 of the Constitution. Further, such  a

direction would not be given when the concerned worker  does  not  meet  the

eligibility requirement of the post  in  question  as  per  the  Recruitment

Rules. However, wherever it is found that  similarly  situated  workmen  are

regularized by the employer itself under some scheme or  otherwise  and  the

workmen  in question who have approached Industrial/Labour Court are at  par

with them,  direction  of  regularization  in  such  cases  may  be  legally

justified, otherwise, non-regularization of the  left  over  workers  itself

would amount to invidious discrimination qua them in such  cases  and  would

be  violative  of  Art.14  of  the  Constitution.   Thus,   the   Industrial

adjudicator would be achieving the equality by  upholding  Art.  14,  rather

than violating this constitutional provision.

In the aforesaid backdrop, we revert the facts of  the  present  case.

The grievance of the appellants was  that  under  the  Scheme  contained  in

Circular dated 6.5.1997 many similarly placed workmen have been  regularized

and, therefore, they were also entitled to this benefit. It is  argued  that

those who had  rendered  240  days  service  were  regularized  as  per  the

provision      in      that      Scheme/Circular       dated       6.5.1987.

 

 

 37.  On consideration of the cases before us we find  that  appellant  No.1

was not in service on the date  when  Scheme  was  promulgated  i.e.  as  on

6.5.1987 as his services were dispensed with 4 years  before  that  Circular

saw the light of the day.  Therefore, in our view, the  relief  of  monetary

compensation in lieu of reinstatement would be more appropriate in his  case

and the conclusion in the impugned judgment qua him is unassailable,  though

for the difficult reasons (as recorded by us above) than those  advanced  by

the High Court.  However, in so far as appellant No.2 is concerned,  he  was

engaged on 5.9.1986 and continued till  15.9.1990  when  his  services  were

terminated.  He even raised the Industrial dispute  immediately  thereafter.

Thus, when the Circular dated 5.9.1987 was issued, he  was  in  service  and

within few months of the issuing of that Circular he had completed 240  days

of service.

 

 38.  Non-regularization of appellant No.2, while giving the benefit of that

Circular  dated  6.5.1987  to   other   similar   situated   employees   and

regularizing them would, therefore, be  clearly  discriminatory.   On  these

facts, the CGIT rightly held that he was entitled to the benefit  of  scheme

contained in Circular dated 6.5.1987.  The Division Bench  in  the  impugned

judgment has failed to notice this pertinent and material fact  which  turns

the scales in favour of appellant  No.2.   High  Court  committed  error  in

reversing the direction given by the CGIT, which  was  rightly  affirmed  by

the learned Single Judge as well, to reinstate appellant No.2 with 50%  back

wages and to regularize him in service.  He was entitled  to  get  his  case

considered in terms of that Circular. Had it been done,  probably  he  would

have been regularized. Instead, his  services  were  wrongly  and  illegally

terminated in the year 1990. As an upshot of the  aforesaid  discussion,  we

allow these appeals partly. While dismissing the appeal qua appellant  No.1,

the same is accepted in so far as  appellant  No.2  is  concerned.   In  his

case, the judgment of the Division Bench is set aside and the award  of  the

CGIT is restored.  There shall, however, be no order as to costs.

 

 

 2014 ( Feb.Part) judis.nic.in/supremecourt/filename=41232

K.S. RADHAKRISHNAN, A.K. SIKRI

[REPORTABLE]

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL Nos.2417-2418 /2014
(arising out of S.L.P.(Civil) Nos. 29634-29635/2008)
Hari Nandan Prasad & Anr. …Appellants

Vs.

Employer I/R to Mangmt.of FCI & Anr. …Respondents

 
J U D G M E N T

A.K.SIKRI,J.

1. Leave granted.

2. The two appellants have filed one combined Special Leave Petition,
which arises out of a common judgment dated 27.6.2008 passed by the
Division Bench of the Jharkhand High Court in two LPAs which had been filed
by the respondent herein viz. Food Corporation of India (FCI). The two
appellants were working on casual basis with the FCI. After certain time,
their services were dispensed with. Both of them raised industrial dispute
alleging wrongful termination which was referred to the Central Government-
cum- Industrial Tribunal (CGIT). These proceedings culminated in two
awards dated 12.12.1996 and 18.12.1996 respectively passed by the CGIT. In
both these awards, termination of both the appellants was held to be
illegal and they were directed to be reinstated with 50% back wages. The
CGIT also ordered their regularization in service. FCI filed Writ
Petitions in both the cases challenging these awards which were initially
admitted sometime in the year 1988 and the operation of the awards was
stayed. However, orders were passed under Section 17-B of the Industrial
Disputes Act (ID Act) directing payment of full wages as last wages drawn
to the appellants from the date of the award in each case. These Writ
Petitions were ultimately dismissed by the learned Single Judge vide common
judgment and order dated 19.5.2005. As pointed out above, this judgment of
the learned Single Judge was challenged by the FCI by filing LPAs. These
LPAs have been allowed by the Division Bench, thereby setting aside the
orders of the learned Single Judge as well as awards passed by the CGIT.
This is how two appellants are before us in this appeal.

3. Before we proceed further, we deem it appropriate to give the details
of nature of employment of each of the appellants with the FCI and tenure
etc. as well as the gist of the tribunal’s awards.

Hari Nandan.

4. He was engaged on daily wages basis as Labourer-cum-Workman, in the
exigency of the situation, at Food Storage Depot, Jasidih by the Depot In-
charge, FCI, Jasidih on 1st June 1980. On the ground that services of
appellant No.1 were no more required, he was disengaged w.e.f. 1.3.1983.
While doing so, no notice or notice pay or retrenchment compensation was
given to him. Appellant No.1 raised industrial dispute which was referred
to the CGIT by the Central Government vide reference order dated 1.10.1992,
with the following terms of reference:

“Whether the action of the management of Food Corporation
of India, in retrenching Shri Hari Nandan Prasad, Ex-Casual
Workman, in contravention of Section 25-F of the I.D.Act, 1947 and
denying reinstatement with full back wages and regularization of
his service is legal and justified? If not to what relief the
concerned workman is entitled to?”

 
5. The CGIT gave its award dated 12.12.1996 holding that the termination
was in contravention of Section 25-F of the Industrial Disputes Act. The
CGIT also, while ordering reinstatement of appellant No.1, held that he was
also entitled to regularization of his services from the date of his
stoppage from service dated 1.3.1983. Back wages to the extent of 50% were
awarded. As far as direction for regularization is concerned, it was based
on Circular issued by the FCI whereby any temporary worker employed for
more than 90 days was entitled for regularization of his service. It was
noted that as per the said Circular the Management had regularized the
services of 70-75 similarly situated casual workers and therefore denying
the same benefit to appellant No.1 amounted to discrimination.

Gobind Kumar Choudhary.

6. Appellant No.2 was engaged on daily wages as casual Typist at the
District Office, FCI, Darbhanga against a vacancy of Class-III post on
5.9.1986. He worked in the capacity till 15.9.1990 when his name was struck
off the rolls. He also raised industrial dispute which was referred to
CGIT with following terms of reference:

“Whether the action of the Management of Food Corporation
of India, Laaherisarai, Darbhanga is legal and justified in
retrenching Shri Govind Kumar Chaudhary, who was working as
Casual Typist, arbitrarily and in violation of Section 25-F of
the I.D.Act, and denying reinstatement with full back wages and
regularization of service is legal and justified? If not to what
relief the concerned workman is entitled to?”

In his case, the award dated 18.12.1996 was made by the CGIT on almost
identical premise, as in the case of appellant No.1, supported by similar
reasons.

7. The learned Single Judge while dismissing both the Writ Petitions
filed by the FCI concurred with the findings and reasons given by the CGIT.

8. In the LPAs before the Division Bench, the primary contention of the
FCI was that there could not have been any direction of regularization of
services even on the admitted case of both the workmen, viz. merely on the
ground that they had worked for more than 240 days in a calendar year as
casual employees. It was also submitted that though the District Manager
of the FCI was authorized to employ persons as temporary workers, such an
authority was given for employing them for 7 days only and no more, and in
case of violation of this strict stipulation contained in the Circular
issued by the FCI, the concerned officer could be proceeded against
departmentally. It was further argued that even if such temporary
employment was to continue beyond stipulated period of 7 days, since these
two workmen had worked on daily wages basis, that too for a period of 3
years or so, there could not have been any regularization of these workmen
in view of the judgments of this Court in the case of Delhi Development
Horticulture Employees Union vs. Delhi Administration AIR 1992 SC 789 and
Constitution Bench judgment in the case of Secretary, State of Karnataka
vs. Uma Devi & Ors. (2006) 4 SCC 1. These contentions have impressed the
Division Bench of the High Court, and accepted by it, giving the following
reasons:

“The Tribunal has apparently misconceived the principles of
law laid down in this context. In the case of Delhi Development
Horticulture Employees Union vs. Delhi Administration (AIR 1992)
SC 789) the Supreme Court has categorically laid down that
temporary employees, even if they have worked for more than 240
days, cannot claim any right or benefit for automatic
regularization of their services. Similar view has been taken in
the case of Post Master General, Kolkata & Ors vs. Tutu Das
(Dutta), reported in 2007 (5) SCC 317. More so, where no posts
are created or no vacancies to sanctioned posts exists, only on
the ground of working for more than 240 days, regularization
cannot be directed. Even in cases where there are regular posts
and vacancies, the procedure laid down for appointment has to be
followed.”

 
9. In so far as contention of the appellant predicated on Circular dated
6.5.1997 is concerned, on the basis of which they claimed that 70-75
persons had been regularized and discriminatory treatment could not be
meted to them, this contention has been brushed aside by the High Court in
the impugned judgment in the following manner:

“The, contention of Mrs.Pal that there has been
discrimination as several persons were regularized on the basis
of the Circular of the Management dated 6.5.1987, cannot be
accepted. Reliance for this purpose on the case of U.P. State
Electricity Board vs. Pooran Chandra Pandey reported in (2007) 11
SCC 92, is also of no help to her. Firstly, there were several
conditions and criteria in the said Circular for regularization,
but there is no finding that the respondents workmen in these
appeals fulfilled such criteria. Secondly, in the case of
U.P.State Electricity Board matter (supra) the employees of the
Co-operative Society who were taken over by the Electricity Board
claimed that the decision of the Electricity Board dated
28.11.1996 permitting regularization of the employees working
from before 4.5.1990, will also apply to them as they were also
appointed prior to 4.5.1990 in the Society. It was held that
since the taken over employees were appointed in the Society
before 4.5.1990, they could not be denied the benefit of the said
decision of the Electricity Board. There is nothing to show that
the appointment of the taken over employees was made by the
Society without following the procedure in that behalf, whereas
in the present case, the respondents workmen were not appointed
against vacant and sanctioned posts after following the
procedure of appointment.

Furthermore, in paragraph 6 of the judgment of the
Constitution Bench in the case of Secretary, State of Karnataka
vs. Uma Devi (2006) 4 SCC 1, it was held that no Government
order, notification or circular can be substituted for the
statutory rules framed under the authority of law. In para 16 of
the judgment in the case of R.S.Garg vs. State of U.P. (2006 (6)
SCC 430), it has been held that even the Government cannot make
rules or issue any executive instructions by way of
regularization. Similar view has been taken in the case of the
Post Master General (supra). Therefore, the respondent workmen
cannot claim regularization on the basis of the said Circular of
the Management dated 6.5.1987, nor the said judgment of the U.P.
Electricity Board (supra) is of any help to them.”

 
10. Heavily relying upon the judgment in the case of Uma Devi (supra), the
High Court has held that as both the appellants did not render 10 or more
years of service, their cases do not come even in the exception carved out
by the Constitution Bench in Uma Devi’s case.

11. Another contention raised by the appellants before the High Court was
that the ratio of Uma Devi’s case had no relevance in the cases of
industrial adjudication by the Labour Courts/Industrial Tribunals. However,
even this submission was found to be meritless by the High Court taking
support of the judgment of this Court in U.P. Power Corporation Vs. Bijli
Mazdoor Sangh & Ors. (2007) 5 SCC 755.

12. We may record here that the Division Bench accepted that there was
infraction of Section 25-F of the I.D.Act in both the cases. However,
they were held not entitled to reinstatement because of the reason that
they were employed strictly as temporary workers, without any stipulation
or promise that they would be made permanent and therefore reinstatement of
such workers was not warranted and they were entitled to get monetary
compensation only. As far as compensation is concerned, since both the
appellants were paid the money equivalent to wages last drawn, for number
of years when the Writ Petitions were pending, under Section 17 -B of the
I.D. Act, the High Court felt that the appellants were duly compensated
and no further amount was payable.

13. Challenging the validity of the approach of the High Court, the
learned counsel for the appellants submitted that the entire thrust of the
judgment of the High Court rests on the decision of this Court in Uma
Devi’s case which was impermissible as the said judgment is clarified by
this Court subsequently in the case of Maharashtra State Road Transport
Corporation & Anr. vs. Casteribe Rajya Parivahan Karmchari Sanghatana
(2009) 8 SCC 556, wherein it is held, in categorical terms, that in so far
as Industrial and Labour Courts are concerned, they enjoy wide powers under
Section 30(1)(b) of the Industrial Disputes Act to take affirmative action
in case of unfair labour practice and these powers include power to order
regularization/permanency. The Court has, further, clarified that decision
in Uma Devi limits the scope of powers of Supreme Court under Article 32
and High Courts under Article 226 of the Constitution to issue directions
for regularization in the matter of public employment, but power to take
affirmative action under section 30(1)(b) of the I.D.Act which rests with
the Industrial/Labour Courts, remains intact. It was, thus, argued that
entire edifice of the impugned judgment of the High Court erected on the
foundation of Uma Devi (supra) crumbles.

14. The learned counsel for the FCI, on the other hand, referred to the
judgment in U.P. Power Corporation (supra) wherein this Court has taken
unambiguous view that the law laid down in Uma Devi is applicable to
Industrial Tribunals/Labour Courts as well. It was submitted that the
judgment in U.P. Power Corporation (supra) was not taken note of in the
subsequent judgment in Maharashtra State Road Transport Corporation (supra)
and this Court should follow the earlier judgment rendered in U.P.Power
Corporation’s case. The learned counsel also relied upon the recent
judgment of this Court in the case of Assistant Engineer, Rajasthan
Development Corporation & Anr. vs. Gitam Singh (2013) 5 SCC 136 to contend
that even when there is a wrongful termination of services of a daily wager
because of non-compliance of the provisions of Section 25-F of the I.D.Act,
such an employee is not entitled to reinstatement but only monetary
compensation. On the aforesaid basis, the learned counsel pleaded for
dismissal of the appeal.

15. We have given considerable thoughts to the submissions made by the
learned counsel for the parties on either side. It is clear from the
aforesaid narratives that this case has two facets, which are reflected
even in the terms of references as well on which the disputes were referred
to the CGIT. First refers to the validity of the termination and the other
one pertains to the regularization. Twin issues, which have, thus, to be
gone into, are: (1) whether termination
of service of the appellants was illegal?

Related issue here would be that if it is illegal, then whether
in the facts and circumstances of this case, the appellants would be
entitled to reinstatement in service or monetary compensation in lieu of
reinstatement would be justified?

(2) whether the appellants are entitled to regularization of their
services?

We would also record that both the issues, in the facts of
this case, are somewhat overlapping which would become apparent, with the
progression of our discussion on these issues.

Reg.: Validity of termination.

16. This issue hardly poses any problem. Admitted facts are that both the
appellant had worked for more than 240 days continuously preceding their
disengagement/termination. At the time of their disengagement, even when
they had continuous service for more than 240 days (in fact about 3 years)
they were not given any notice or pay in lieu of notice as well as
retrenchment compensation. Thus, mandatory pre-condition of retrenchment
in paying the aforesaid dues in accordance with Section 25-F of the I.D.
Act was not complied with. That is sufficient to render the termination as
illegal. Even the High Court in the impugned judgment has accepted this
position and there was no quarrel on this aspect before us as well. With
this, we advert to the issue of relief which should be granted in such
cases, as that was the topic of hot debate before us as well.

17. Admittedly, both the workmen were engaged on daily wages basis. Their
engagement was also in exigency of situation. In so far as appellant No.1
is concerned, he was disengaged way back in the year 1983. The dispute in
his case was referred for adjudication to CGIT in 1992 only. There is a
time lag of 9 years. Though no reasons are appearing on record for such an
abnormal delay, it seems that he had raised the industrial dispute few
years after his disengagement which can be inferred from the reading of the
award of the CGIT as that reveals that after his disengagement he kept on
making representations only and he took recourse to judicial proceedings
only after Circular dated 6.5.1997 was issued as per which the FCI had
decided to regularize the services of all casual workmen who had completed
more than 90 days before 1996. Be that as it may, at this juncture what we
are highlighting is that appellant No.1 had worked on daily wages basis for
barely 3 years and he is out of service for last 30 years. Even when the
Tribunal rendered his award in 1996, 13 years had elapsed since his
termination. On these facts, it would be difficult to give the relief of
reinstatement to the persons who were engaged as daily wagers and whose
services were terminated in a distant past. And, further where termination
is held to be illegal only on a technical ground of not adhering to the
provisions of Section 25-F of the Act. Law on this aspect, as developed
over a period of time by series of judgments makes the aforesaid legal
position very eloquent. It is not necessary to traverse through all these
judgments. Our purpose would be served by referring to a recent judgment
rendered by this very Bench in the case of BSNL vs. Bhurumal 2013 (15)
SCALE 131 which has taken note of the earlier case law relevant to the
issue. Following passage from the said judgment would reflect the earlier
decisions of this Court on the question of reinstatement:

“The learned counsel for the appellant referred to two
judgments wherein this Court granted compensation instead of
reinstatement. In the case of BSNL vs. Man Singh (2012) 1 SCC 558,
this Court has held that when the termination is set aside because
of violation of Section 25-F of the Industrial Disputes Act, it is
not necessary that relief of reinstatement be also given as a
matter of right. In the case of Incharge Officer & Anr. vs. Shankar
Shetty (2010) 9 SCC 126, it was held that those cases where the
workman had worked on daily wage basis, and worked merely for a
period of 240 days or 2-3 years and where the termination had taken
place many years ago, the recent trend was to grant compensation in
lieu of reinstatement. In this judgment of Shankar Shetty, this
trend was reiterated by referring to various judgments, as is clear
from the following discussion.

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 vs. Haryana State Agriculture Mktd. 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. Vs. Uday Narain Pandey
(2006) 1 SCC 479, Uttaranchal Forest Department Corpn. Vs.
M.C.Joshi (2007) 9 SCC 353, State of M.P. vs. Lalit Kumar Verma
(2007) 1 SCC 575, M.P.Admn. vs. Tribhuban (2007) 9 SCC 748, Sita
Ram vs. Moti Lal Nehru Farmers Training Institute (2008) 5 SCC 75,
Jaipur Development Authority vs. Ramsahai (2006) 11 SCC 684, GDA
vs. Ashok Kumar (2008) 4 SCC 261 and Mahboob Deepak vs. Nagar
Panchayat, Gajraula (2008) 1 SCC 575 and stated as follows: (Jagbir
Singh case, SCC pp.330 & 335 paras 7 & 14).

It is true that the earlier view of this Court articulated in
many decision 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,
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 has been applied very recently in Telegraph Deptt.
Vs. Santosh Kumar Seal (2010) 6 SCC 773, wherein this Court stated:
(SCC p.777, para 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 subserve the ends of justice.

 
Taking note of the judgments referred to in the aforesaid paragraphs and
also few more cases in other portion of the said judgment, the legal
position was summed up in the following manner:

“It is clear from the reading of the aforesaid judgments that
the ordinary principle of grant of reinstatement with full back
wages, when the termination is found to be illegal is not applied
mechanically in all cases. While that may be a position where
services of a regular/permanent workman are terminated illegally
and/or malafide and/or by way of victimization, unfair labour
practice etc. However, when it comes to the case of termination of
a daily wage worker and where the termination is found illegal
because of procedural defect, namely in violation of Section 25-F
of the Industrial Disputes Act, this Court is consistent in taking
the view 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. Rationale for
shifting in this direction is obvious.

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. Since such a workman
was working on daily wage basis and even after he is reinstated, he
has no right to seek regularization (See: State of Karnataka vs.
Uma Devi (2006) 4 SCC 1). Thus when he cannot claim regularization
and he has no right to continue even as a daily wage worker, no
useful purpose is going to be served in reinstating such a workman
and he can be given monetary compensation by the Court itself
inasmuch as if he is terminated again after reinstatement, he would
receive monetary compensation only in the form of retrenchment
compensation and notice pay. In such a situation, giving the
relief of reinstatement, that too after a long gap, would not serve
any purpose.

We would, however, like to add a caveat here. There may be
cases where termination of a daily wage worker is found to be
illegal on the ground 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.
There may also be a situation that persons junior to him wee
regularized under some policy but the concerned workman terminated.
In such circumstances, the terminated worker should not be denied
reinstatement unless there are some other weighty reasons for
adopting the course of grant of compensation instead of
reinstatement. 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”.

 
18. We make it clear that reference to Uma Devi, in the aforesaid
discussion is in a situation where the dispute referred pertained to
termination alone. Going by the principles carved out above, had it been a
case where the issue is limited only to the validity of termination,
appellant No.1 would not be entitled to reinstatement. This could be the
position in respect of appellant No.2 as well. Though the factual matrix in
his case is slightly different, that by itself would not have made much of
a difference. However, the matter does not end here. In the present case,
the reference of dispute to the CGIT was not limited to the validity of
termination. The terms of reference also contained the claim made by the
appellants for their regularization of service.

19. We have already pointed out that the two aspects viz. that of
reinstatement and regularization are intermixed and overlapping in the
present case. If the appellants were entitled to get their services
regularized, in that case it would have been axiomatic to grant the relief
of reinstatement as a natural corollary. Therefore, it becomes necessary,
at this stage, to examine as to whether the order of CGIT, as affirmed by
the learned Single Judge of the High Court directing regularization of
their service, was justified or the approach of the Division Bench of the
High Court in denying that relief is correct.

Re: Relief of Regularization

20. Before we advert to this question, it would be necessary to examine as
to whether the Constitution Bench judgment in Uma Devi case have
applicability in the matters concerning industrial adjudication. We have
already pointed out above the contention of the counsel for the appellants
in this behalf, relying upon Maharashtra State Road Transport case that the
decision in Uma Devi would be binding the Industrial or Labour Courts. On
the other hand, counsel for the FCI has referred to the judgment in
U.P.Power Corporation for the submission that law laid down in Uma Devi
equally applies to Industrial Tribunals/Labour Courts. It, thus, becomes
imperative to examine the aforesaid two judgments at this juncture.
21. A perusal of the judgment in U.P. Power Corporation would demonstrate
that quite a few disputes were raised and referred to the industrial
tribunal qua the alleged termination of respondent Nos.2 and 3 in that
case. Without giving the details of those cases, it would be sufficient to
mention that in one of the cases the tribunal held that after three years
of their joining in service both respondents 2 and 3 were deemed to have
been regularized. The appellants filed the Writ Petition which was also
dismissed. Challenging the order of the High Court, the appellants had
approached this Court. It was argued that there could not have been any
regularization order passed by the Industrial Court in view of the decision
in Uma Devi. Counsel for the workmen had taken a specific plea that the
powers of the industrial adjudicator were not under consideration in Uma
Devi’s case and that there was a difference between a claim raised in a
civil suit or a Writ Petition on the one hand and one adjudicated by the
industrial adjudicator. It was also argued that the labour court can create
terms existing in the contract to maintain industrial peace and therefore
it had the power to vary the terms of the contract. While accepting the
submission of the appellant therein viz. U.P. Power Corporation, the Court
gave the following reasons:

“It is true as contended by learned counsel for the
respondent that the question as regards the effect of the industrial
adjudicators’ powers was not directly in issue in Umadevi case. But
the foundation logic in Umadevi case is based on Article 14 of the
Constitution of India. Though the industrial adjudicator can very
the terms of the contract of the employment, it cannot do something
which is violative of Article 14. If the case is one which is
covered by the concept of regularization, the same cannot be viewed
differently.

The plea of learned counsel for the respondent that at the
time the High Court decided the matter, decision in Umadevi case was
not rendered is really of no consequence. There cannot be a case of
regularization without there being employee-employer relationship.
As noted above the concept of regularization is clearly linked with
Article 14 of the Constitution. However, if in a case the fact
situation is covered by what is stated in para 45 of Umadevi case
the industrial adjudicator can modify the relief, but that does not
dilute the observations made by this Court in Umadevi case about the
regularization.

On facts, it is submitted by learned counsel for the appellants
that Respondent No.2 himself admitted that he never worked as a pump
operator, but was engaged as daily wage basis. He also did not
possess the requisite qualification. Looked at from any angle, the
direction for regularization, as given, could not have been given in
view of what has been stated in Umadevi case.”

 
22. It is clear from the above that the Court emphasized the underline
message contained in Umadevi’s case to the effect that regularization of a
daily wager, which has not been appointed after undergoing the proper
selection procedure etc. is impermissible as it was violative of Art.14 of
the Constitution of India and this principle predicated on Art.14 would
apply to the industrial tribunal as well inasmuch as there cannot be any
direction to regularize the services of a workman in violation of Art.14 of
the Constitution. As we would explain hereinafter, this would mean that
the industrial court would not issue a direction for regularizing the
service of a daily wage worker in those cases where such regularization
would tantamount to infringing the provisions of Art.14 of the
Constitution. But for that, it would not deter the Industrial
Tribunals/Labour Courts from issuing such direction, which the industrial
adjudicators otherwise possess, having regard to the provisions of
Industrial Disputes Act specifically conferring such powers. This is
recognized by the Court even in the aforesaid judgment.
23. For detailed discussion on this aspect, we proceed to discuss the
ratio in the case of Maharashtra State Road Transport Corporation (supra).
In that case the respondent Karamchari Union had filed two complaints
before the Industrial Court, Bombay alleging that the appellant-Corporation
had indulged in unfair labour practice qua certain employees who were
engaged by the appellant as casual labourers for cleaning the buses between
the years 1980-1985. It was stated in the complaints that these employees
were made to work every day at least for 8 hours at the depot concerned of
the Corporation; the work done by them was of permanent nature but they
were being paid a paltry amount; and even when the post of
sweepers/cleaners were available in the Corporation, these employees had
been kept on casual and temporary basis for years together denying them the
benefit of permanency. After adjudication, the Industrial Court held that
the Corporation had committed unfair labour practice under items 5 and 9 of
Schedule IV to the Maharashtra Recognition of Trade Unions and Prevention
of Unfair Labour Practice Act, 1971 (MRTU and PULP Act). As a consequence,
it directed the Corporation to pay equal wages to the employees concerned
which was being paid to Swachhaks and also pay arrears of wages to them.
In the second complaint, the Industrial Court returned the finding that the
Corporation was indulging in unfair labour practice under Item 6 of
Schedule IV, by continuing these employees on temporary/casual/daily wage
basis for years together and thereby depriving them the benefits of
permanency. The direction in this complaint was to cease and desist from
the unfair labour practice by giving them the status, wages and all other
benefits of permanency applicable to the post of cleaners, w.e.f. 3.8.1982.
The Corporation challenged these two orders of the Industrial Court before
the High Court of Judicature at Bombay in five separate Writ Petitions.
These were disposed of by the learned Single Judge vide common judgment
dated 2.8.2001 holding that complaints were maintainable and the finding of
the Industrial Court that the Corporation had indulged in unfair labour
practice was also correct. The Corporation challenged the decision of the
learned Single Judge by filing LPAs which were dismissed by the Division
Bench on 6.5.2005. This is how the matter came before the Supreme Court.
One of the contentions raised by the appellants before this Court was that
there could not have been a direction by the Industrial Court to give these
employees status, wages and other benefits of permanency applicable to the
post of cleaners as this direction was contrary to the ratio laid down by
the Constitution Bench of this Court in Umadevi (supra). The Court while
considering this argument went into the scheme of the MRTU and PULP Act.
It was, inter-alia, noticed that complaints relating to unfair labour
practice could be filed before the Industrial Court. The Court noted that
Section 28 of that Act provides for the procedure for dealing with such
complaints and Section 30 enumerates the powers given to the Industrial and
Labour Courts to decide the matters before it including those relating to
unfair labour practice. On the reading of this section, the Court held that
it gives specific power to the Industrial/Labour Courts to declare that an
unfair labour practice has been engaged and to direct those persons not
only to cease and desist from such unfair labour practice but also to take
affirmative action. Section 30(1) conferring such powers is reproduced
below:

“30. Powers of Industrial and Labour Courts.- (1)Where a court
decides that any person named in the complaint has engaged in, or is
engaging in, any unfair labour practice, it may in its order-

(a)declare that an unfair labour practice has been engaged in or
is being engaged in by that person, and specify any other person who
has engaged in, or is engaging in the unfair labour practice;

(b) direct all such persons to cease and desist from such unfair
labour practice, and take such affirmative action (including payment
of reasonable compensation to the employee or employees affected by
the unfair labour practice, or reinstatement of the employee or
employees with or without back wages, or the payment of reasonable
compensation), as may in the opinion of the Court be necessary to
effectuate the policy of the Act;

(c) where a recognized union has engaged in or is engaging in,
any unfair labour practice, direct that its recognition shall be
cancelled or that all or any of its rights under sub-section(1) of
Section 20 or its right under Section 23 shall be suspended.”

 
24. It was further noticed that Section 32 of the Act provides that the
Court shall have the power to decide all connected matters arising out of
any application or a complaint referred to it for decision under any of the
provisions of this Act. The Court then extensively quoted from the judgment
in Uma Devi in order to demonstrate the exact ratio laid down in the said
judgment and thereafter proceeded to formulate the following question and
answer thereto:

“The question that arises for consideration is: have
the provisions of the MRTU and PULP Act been denuded of the
statutory status by the Constitution Bench decision in Umadevi?
In our judgment, it is not.”

 
25. Detailed reasons are given in support of the conclusion stating that
the MRTU and PULP Act provides for and empowers the Industrial/Labour
Courts to decide about the unfair labour practice committed/being committed
by any person and to declare a particular practice to be unfair labour
practice if it so found and also to direct such person ceased and desist
from unfair labour practice. The provisions contained in Section 30 giving
such a power to the Industrial and Labour Courts vis-à-vis the ratio of Uma
Devi are explained by the Court in the following terms:

“The power given to the Industrial and Labour Courts under
Section 30 is very wide and the affirmative action mentioned
therein is inclusive and not exhaustive. Employing badlis, casuals
or temporaries and to continue them as such for years, with the
object of depriving them of the status and privileges of permanent
employees is an unfair labour practice on the part of the employer
under Item 6 of Schedule IV. Once such unfair labour practice on
the part of the employer is established in the complaint, the
Industrial and Labour Courts are empowered to issue preventive as
well as positive direction to an erring employer.

The provisions of the MRTU and PULP Act and the powers of the
Industrial and Labour Courts provided therein were not at all
under consideration in Umadevi. As a matter of fact, the issue
like the present one pertaining to unfair labour practice was not
at all referred to, considered or decided in Umadevi. Unfair
labour practice on the part of the employer in engaging employees
as badlis, casuals or temporaries and to continue them as such for
years with the object of depriving them of the status and
privileges of permanent employees as provided in Item 6 of
Schedule IV and the power of the Industrial and Labour Courts
under Section 30 of the Act did not fall for adjudication or
consideration before the Constitution Bench.

Umadevi does not denude the Industrial and Labour Courts of
their statutory power under Section 30 read with Section 32 of the
MRTU and PULP Act to order permanency of the workers who have been
victims of unfair labour practice on the part of the employer
under Item 6 of Schedule IV where the posts on which they have
been working exist. Umadevi cannot be held to have overridden the
powers of the Industrial and Labour Courts in passing appropriate
order under Section 30 of the MRTU and PULP Act, once unfair
labour practice on the part of the employer under Item 6 of
Schedule IV is established.”

 
26. The Court also accepted the legal proposition that Courts cannot
direct creation of posts, as held in Mahatma Phule Agricultural University
vs. Nasik Zilla Sheth Kamgar Union (2001) 7 SCC 346. Referring to this
judgment, the Court made it clear that inaction on the part of the State
Government to create posts would not mean an unfair labour practice had
been committed by the employer (University in that case) and as there were
no posts, the direction of the High Court to accord the status of
permanency was set aside. The Court also noticed that this legal position
had been affirmed in State of Maharashtra vs. R.S.Bhonde (2005) 6 SCC 751.
The Court also reiterated that creation and abolition of post and
regularization are purely Executive functions, as held in number of
judgments and it was not for the Court to arrogate the power of the
Executive or the Legislature by directing creation of post and absorbing
the workers or continue them in service or pay salary of regular employees.
This legal position is summed up in para 41 which reads as under:

“Thus, there is no doubt that creation of posts is not
within the domain of judicial functions which obviously pertains
to the executive. It is also true that the status of permanency
cannot be granted by the Court where no such posts exist and that
executive functions and powers with regard to the creation of
posts cannot be arrogated by the courts.”

 
27. However, the Court found that factual position was different in the
case before it. Here the post of cleaners in the establishment were in
existence. Further, there was a finding of fact recorded that the
Corporation had indulged in unfair labour practice by engaging these
workers on temporary/causal/daily wage basis and paying them paltry amount
even when they were discharging duties of eight hours a day and performing
the same duties as that of regular employees.

28. In this backdrop, the Court was of the opinion that direction of the
Industrial Court to accord permanency to these employees against the posts
which were available, was clearly permissible and with the powers,
statutorily conferred upon the Industrial/Labour Courts under Section 30
(1)(b) of the said Act which enables the Industrial adjudicator to take
affirmative action against the erring employees and as those powers are of
wide amplitude abrogating within its fold a direction to accord permanency.

29. A close scrutiny of the two cases, thus, would reveal that the law
laid down in those cases is not contradictory to each other. In U.P. Power
Corporation, this Court has recognized the powers of the Labour Court and
at the same time emphasized that the Labour Court is to keep in mind that
there should not be any direction of regularization if this offends the
provisions of Art.14 of the Constitution, on which judgment in Umadevi is
primarily founded. On the other hand, in Bhonde case, the Court has
recognized the principle that having regard to statutory powers conferred
upon the Labour Court/Industrial Court to grant certain reliefs to the
workmen, which includes the relief of giving the status of permanency to
the contract employees, such statutory power does not get denuded by the
judgment in Umadevi’s case. It is clear from the reading of this judgment
that such a power is to be exercised when the employer has indulged in
unfair labour practice by not filling up the permanent post even when
available and continuing to workers on temporary/daily wage basis and
taking the same work from them and making them some purpose which were
performed by the regular workers but paying them much less wages. It is
only when a particular practice is found to be unfair labour practice as
enumerated in Schedule IV of MRTP and PULP Act and it necessitates giving
direction under Section 30 of the said Act, that the Court would give such
a direction.

30. We are conscious of the fact that the aforesaid judgment is rendered
under MRTP and PULP Act and the specific provisions of that Act were
considered to ascertain the powers conferred upon the Industrial
Tribunal/Labour Court by the said Act. At the same time, it also hardly
needs to be emphasized the powers of the industrial adjudicator under the
Industrial Disputes Act are equally wide. The Act deals with industrial
disputes, provides for conciliation, adjudication and settlements, and
regulates the rights of the parties and the enforcement of the awards and
settlements. Thus, by empowering the adjudicator authorities under the Act,
to give reliefs such as a reinstatement of wrongfully dismissed or
discharged workmen, which may not be permissible in common law or justified
under the terms of the contract between the employer and such workmen, the
legislature has attempted to frustrate the unfair labour practices and
secure the policy of collective bargaining as a road to industrial peace.

31. In the language of Krishna Iyer, J:

The Industrial Disputes Act is a benign measure, which seeks to
pre-empt industrial tensions, provide for the mechanics of dispute-
resolutions and set up the necessary infrastructure, so that the
energies of the partners in production may not be dissipated in
counter-productive battles and the assurance of industrial justice
may create a climate of goodwill.” (Life Insurance Corpn. Of
India v. D.J.Bahadur 1980 Lab IC 1218, 1226(SC), per Krishna
Iyer,J.).

 
In order to achieve the aforesaid objectives, the Labour
Courts/Industrial Tribunals are given wide powers not only to enforce the
rights but even to create new rights, with the underlying objective to
achieve social justice. Way back in the year 1950 i.e. immediately after
the enactment of Industrial Disputes Act, in one of its first and
celebrated judgment in the case of Bharat Bank Ltd. V. Employees of Bharat
Bank Ltd. [1950] LLJ 921,948-49 (SC) this aspect was highlighted by the
Court observing as under:

“In settling the disputes between the employers and the workmen,
the function of the tribunal is not confined to administration of
justice in accordance with law. It can confer rights and
privileges on either party which it considers reasonable and
proper, though they may not be within the terms of any existing
agreement. It has not merely to interpret or give effect to the
contractual rights and obligations of the parties. It can create
new rights and obligations between them which it considers
essential for keeping industrial peace.”

 
32. At the same time, the aforesaid sweeping power conferred upon the
Tribunal is not unbridled and is circumscribed by this Court in the case of
New Maneckchowk Spinning & Weaving Co.Ltd.v. Textile Labour Association
[1961] 1 LLJ 521,526 (SC) in the following words:

“This, however, does not mean that an industrial court can do
anything and everything when dealing with an industrial dispute.
This power is conditioned by the subject matter with which it is
dealing and also by the existing industrial law and it would not
be open to it while dealing with a particular matter before it to
overlook the industrial law relating to the matter as laid down
by the legislature or by this Court.”

 
33. It is, thus, this fine balancing which is required to be achieved
while adjudicating a particular dispute, keeping in mind that the
industrial disputes are settled by industrial adjudication on principle of
fair play and justice.

34. On harmonious reading of the two judgments discussed in detail above,
we are of the opinion that when there are posts available, in the absence
of any unfair labour practice the Labour Court would not give direction for
regularization only because a worker has continued as daily wage
worker/adhoc/temporary worker for number of years. Further, if there are no
posts available, such a direction for regularization would be
impermissible. In the aforesaid circumstances giving of direction to
regularize such a person, only on the basis of number of years put in by
such a worker as daily wager etc. may amount to backdoor entry into the
service which is an anathema to Art.14 of the Constitution. Further, such a
direction would not be given when the concerned worker does not meet the
eligibility requirement of the post in question as per the Recruitment
Rules. However, wherever it is found that similarly situated workmen are
regularized by the employer itself under some scheme or otherwise and the
workmen in question who have approached Industrial/Labour Court are at par
with them, direction of regularization in such cases may be legally
justified, otherwise, non-regularization of the left over workers itself
would amount to invidious discrimination qua them in such cases and would
be violative of Art.14 of the Constitution. Thus, the Industrial
adjudicator would be achieving the equality by upholding Art. 14, rather
than violating this constitutional provision.

35. The aforesaid examples are only illustrated. It would depend on the
facts of each case as to whether order of regularization is necessitated to
advance justice or it has to be denied if giving of such a direction
infringes upon the employer’s rights

36. In the aforesaid backdrop, we revert the facts of the present case.
The grievance of the appellants was that under the Scheme contained in
Circular dated 6.5.1997 many similarly placed workmen have been regularized
and, therefore, they were also entitled to this benefit. It is argued that
those who had rendered 240 days service were regularized as per the
provision in that Scheme/Circular dated 6.5.1987.
37. On consideration of the cases before us we find that appellant No.1
was not in service on the date when Scheme was promulgated i.e. as on
6.5.1987 as his services were dispensed with 4 years before that Circular
saw the light of the day. Therefore, in our view, the relief of monetary
compensation in lieu of reinstatement would be more appropriate in his case
and the conclusion in the impugned judgment qua him is unassailable, though
for the difficult reasons (as recorded by us above) than those advanced by
the High Court. However, in so far as appellant No.2 is concerned, he was
engaged on 5.9.1986 and continued till 15.9.1990 when his services were
terminated. He even raised the Industrial dispute immediately thereafter.
Thus, when the Circular dated 5.9.1987 was issued, he was in service and
within few months of the issuing of that Circular he had completed 240 days
of service.

38. Non-regularization of appellant No.2, while giving the benefit of that
Circular dated 6.5.1987 to other similar situated employees and
regularizing them would, therefore, be clearly discriminatory. On these
facts, the CGIT rightly held that he was entitled to the benefit of scheme
contained in Circular dated 6.5.1987. The Division Bench in the impugned
judgment has failed to notice this pertinent and material fact which turns
the scales in favour of appellant No.2. High Court committed error in
reversing the direction given by the CGIT, which was rightly affirmed by
the learned Single Judge as well, to reinstate appellant No.2 with 50% back
wages and to regularize him in service. He was entitled to get his case
considered in terms of that Circular. Had it been done, probably he would
have been regularized. Instead, his services were wrongly and illegally
terminated in the year 1990. As an upshot of the aforesaid discussion, we
allow these appeals partly. While dismissing the appeal qua appellant No.1,
the same is accepted in so far as appellant No.2 is concerned. In his
case, the judgment of the Division Bench is set aside and the award of the
CGIT is restored. There shall, however, be no order as to costs.

 

 

 

…………………………………..J.
(K.S.Radhakrishnan)

 

 

 
……………………………………J.
(
A.K.Sikri)
New Delhi,
February 17, 2014

 

 

 

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