Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले

1. Leave granted. With consent, learned counsels for the parties were heard
finally. This appeal is directed against an order of the Gujarat High Court1
2. Aggrieved by the termination from employment, the appellant raised an
industrial dispute which was referred to the Labour Court, Bhuj, Kutchh District
of Gujarat. The appellant was appointed as a Watchman on 05.10.1992 by the
respondent society (hereafter referred to as “the management”), and lastly, he
1 Dated 05.07.2021 in LPA No.896/2011 in Special Civil Application No. 5620/2011.
was working as a watchman at the Shirai Dam at the Beraja Village of Mundra
Taluk, Gujarat, with the respondent. After rendering continuous employment, he
was terminated from the services on 30.12.2002 for no cause, without notice and
without following the procedure prescribed by the Industrial Disputes Act, 1947.
His request for reinstatement was negated; consequently, the industrial dispute.
3. The management disputed the claim on the basis that the appellant worked
in a purely temporary basis and could not claim the benefit of Section 25B of the
Industrial Disputes Act,1947 as he had not worked for a continuous period of
240 days in any given year. However, his employment as a workman since 1992
was not denied.
4. Before the Labour Court, the parties led evidence - oral and documentary.
A copy of the muster roll maintained by the management was called for. In the
evidence, the appellant deposed that the management did not maintain any
seniority list nor was it published and that employees junior to him were
retained while he was unfairly terminated from service. The respondent
management contended that the entire muster roll records was not available as it
was destroyed during a natural calamity; they could produce the documents for
the years 1994-98. After considering the pleadings and the materials on record,
the Labour Court, by Award dated 31.08.2010, held that the appellant’s
termination was illegal and directed his reinstatement with continuity but
without backwages.
5. The management challenged the award, mainly contending that the
appellant workman was not entitled to the benefits of the Industrial Disputes
Act. The learned Single judge of the Gujarat High Court endorsed the findings
of the Labour Court, affirming the Award, and directed the appellant’s
reinstatement. The management, however, appealed to the Division Bench.
Initially, the Division Bench rejected the appeal; the management approached
this court by special leave petition. This court remitted the matter for fresh
6. By the impugned order, the Division Bench noticed the findings of the
single judge that workmen junior to the appellant had been retained in service
despite which his services were terminated and that the management had not
maintained proper records. In spite of these facts, the Division Bench set aside
the direction to reinstate the appellant workman and instead awarded lumpsum
compensation of 1 lakh. ₹
7. The appellant contends that the Labour Court and the learned single Judge
concurrently ruled that sufficient material had been brought on record to show
that 63 labourers were working with the respondent management, many of
whom were junior to the appellant. It was pointed out that the workman
appellant had moved the Labour Court to direct the management to produce all
relevant service particulars of its employees’ muster roll, pay register, and bonus
register. An appropriate direction was issued in this regard. Since the
management did not produce the entire records, the Labour Court drew an
adverse inference and based on available material concluded that the termination
was illegal. In these circumstances, all the findings were endorsed by the High
Court; the substitution of the order of reinstatement amounted to a miscarriage
of justice. It was submitted that the appellant had been unfairly kept out of
employment, despite the fact that the award was made in 2010, and the single
judge endorsed it in 2011. The management unjustifiably dragged the matter for
one more decade, which resulted in denial of backwages to him in a very harsh
manner. It was further submitted that the denial of reinstatement to the appellant,
by the impugned order, which did not disturb the findings of the labour court
and the single judge, is not based on any reasoning or norm but has resulted in
8. Learned counsel for the respondent/management argued that this Court
should not interfere with the impugned judgment since the Division Bench acted
correctly in law in not upholding the reinstatement. It was submitted that the
petitioner had been out of employment for over 20 years and in the
circumstances, directing reinstatement was not in the interest of justice.
9. The record indicates that both the Labour Court and the learned Single
Judge elaborately considered the depositions of the parties as well as the
evidence on the record. In fact, the appellant workman had applied under the
RTI Act, eliciting relevant documents to substantiate his claim that employees
junior to him, were retained in the service. The management was unable to
refute the material on record. On the other hand, it claimed the inability to
produce the relevant documents, i.e., the muster roll for the later period of the
appellant’s service. Concededly, the appellant had worked for over 10 years. In
the absence of precise details as to the so-called periods when the appellant had
not been employed – as alleged by the management, both the Labour Court and
the learned Single Judge concluded that his claim for having continuously
worked within the meaning of Section 25B of the Industrial Disputes Act stood
proved. Furthermore, the workman had deposed that employees junior to him
were retained in the service, contrary to Section 25G of the Industrial Disputes
10. This Court discerns no material to establish the proposition put forth by
the appellant. In the circumstances, given the fact that the direction of the
Labour Court was only to reinstate but not pay backwages, the Division Bench’s
substitution of that relief is not based on any known principle. In the present
case, the Labour Court had rendered its award on 31.08.2010; the learned Single
Judge rejected the management’s writ petition on 04.05.2011. The
management’s appeal was, in the first instance, rejected on 16.01.2014;
however, it approached this Court by filing special leave petition, which was
allowed on 29.04.2016. It was thereafter – 5 years later, that the impugned
judgment was delivered. Having regard to these factors, the Court is of the
opinion that the appellant workman could not have been made to suffer on
account of the management’s obdurate attempt to have the relief set aside.
Furthermore, the Division Bench’s impugned judgment has not interfered with
the factual findings. Therefore, the direction to substitute the relief of
reinstatement with one for lumpsum payment was not warranted in the
circumstances of this case.
11. This court, in a three-judge Bench decision, in Hindustan Tin Works (P)
Ltd.v. Employees of M/s Hindustan Tin Works Pvt. Ltd. And Others 2
retrenchment of services of 56 employees due to non-availability of the raw
material necessary for utilisation of full installed capacity by the employer, was
held to be illegal, held that:
“‘9. It is no more open to debate that in the field of industrial
jurisprudence a declaration can be given that the termination
of service is bad and the workman continues to be in service.
The spectre of common law doctrine that contract of personal
service cannot be specifically enforced or the doctrine of
mitigation of damages does not haunt in this branch of
law. The relief of reinstatement with continuity of service can
be granted where termination of service is found to be invalid.
It would mean that the employer has taken away illegally the
right to work of the workman contrary to the relevant law or in
breach of contract and simultaneously deprived the workman
of his earnings. If thus the employer is found to be in the wrong
as a result of which the workman is directed to be reinstated,
the employer could not shirk his responsibility of paying the
wages which the workman has been deprived of by the illegal
or invalid action of the employer. Speaking realistically, where
termination of service is questioned as invalid or illegal and
the workman has to go through the gamut of litigation, his
capacity to sustain himself throughout the protracted litigation
is itself such an awesome factor that he may not survive to see
the day when relief is granted. More so in our system where the
law's proverbial delay has become stupefying. If after such a
2 (1979) 2 SCC 80
protracted time and energy consuming litigation during which
period the workman just sustains himself, ultimately he is to be
told that though he will be reinstated, he will be denied the
back wages which would be due to him, the workman would be
subjected to a sort of penalty for no fault of his and it is wholly
undeserved. Ordinarily, therefore, a workman whose service
has been illegally terminated would be entitled to full back
wages except to the extent he was gainfully employed during
the enforced idleness. That is the normal rule. Any other view
would be a premium on the unwarranted litigative activity of
the employer. If the employer terminates the service illegally
and the termination is motivated as in this case viz. to resist the
workmen's demand for revision of wages, the termination may
well amount to unfair labour practice. In such circumstances
reinstatement being the normal rule, it should be followed with
full back wages.”
12. In a more recent decision, Deepali Gundu Surwase v. Kranti Junior
Adhyapak Mahavidyalaya and Others,3
 this court highlighted the need to adopt a
restitutionary approach, when a court has to consider whether to reinstate an
employee and if so, the extent to which backwages is to be ordered. The court
“22. The very idea of restoring an employee to the position
which he held before dismissal or removal or termination of
service implies that the employee will be put in the same
position in which he would have been but for the illegal action
taken by the employer. The injury suffered by a person, who is
dismissed or removed or is otherwise terminated from service
cannot easily be measured in terms of money. With the passing
of an order which has the effect of severing the employeremployee relationship, the latter's source of income gets dried
up. Not only the employee concerned, but his entire family
suffers grave adversities. They are deprived of the source of
sustenance. The children are deprived of nutritious food and all
opportunities of education and advancement in life. At times,
the family has to borrow from the relatives and other
acquaintance to avoid starvation. These sufferings continue till
the competent adjudicatory forum decides on the legality of the
action taken by the employer. The reinstatement of such an
employee, which is preceded by a finding of the competent
3 (2013) 10 SCC 324
judicial/quasi-judicial body or court that the action taken by
the employer is ultra vires the relevant statutory provisions or
the principles of natural justice, entitles the employee to claim
full back wages. If the employer wants to deny back wages to
the employee or contest his entitlement to get consequential
benefits, then it is for him/her to specifically plead and prove
that during the intervening period the employee was gainfully
employed and was getting the same emoluments. The denial of
back wages to an employee, who has suffered due to an illegal
act of the employer would amount to indirectly punishing the
employee concerned and rewarding the employer by relieving
him of the obligation to pay back wages including the
13. In Bharat Sanchar Nigam Limited v. Bhurumal,4
 on the other hand, the
discretion of the court in directing reinstatement with backwages in the event
of a retrenchment being declared illegal, was described in the following terms:
“33. 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 mala fide and/or by way of
victimisation, 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 a procedural
defect, namely, in violation of Section 25-F of the Industrial
Disputes Act, this Court is consistent in taking the view that in
such cases reinstatement with back wages is not automatic and
instead the workman should be given monetary compensation
which will meet the ends of justice. Rationale for shifting in this
direction is obvious.
34. The reasons for denying the relief of reinstatement in such
cases are obvious. It is trite law that when the termination is
found to be illegal because of non-payment of retrenchment
compensation and notice pay as mandatorily required under
Section 25-F of the Industrial Disputes Act, even after
reinstatement, it is always open to the management to
terminate the services of that employee by paying him the
retrenchment compensation. Since such a workman was
4 2014 (7) SCC 177
working on daily-wage basis and even after he is reinstated, he
has no right to seek regularisation [see State of
Karnataka v. Umadevi (3) [(2006) 4 SCC 1]. Thus when he
cannot claim regularisation 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.
35. 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 that 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 were regularised under some policy but the
workman concerned 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.”
14. In the present case, this court finds no perversity or unreasonableness on
the part of the Labour Court and the single judge in directing the appellant’s
reinstatement. Had the respondent management chosen to accept the verdict, the
appellant would have been spared the agony of waiting for more than 10 years.
In such circumstances, the denial of backwages, has resulted in punishing him,
although the delay is attributable to the judicial process. However, the
respondent management cannot be absolved of the primary responsibility in its
litigative proclivity. In these circumstances, the appellant shall be entitled to
backwages for a period of two years immediately preceding, i.e., from
01.01.2020 to 01.01.2022.
15. In light of the above discussion, the impugned judgment is hereby set
aside. The appellant workman shall be reinstated in the services of the
respondent within six weeks from today. He shall also be entitled to backwages
for a period of two years immediately preceding, i.e., from 01.01.2020 to
01.01.2022. The direction of the Labour Court and the learned Single Judge for
continuity of service is also restored. The respondent management is directed to
pay the backwages as directed by this court, at current rates, within 6 weeks
from today. Hence, the appeal is allowed in above terms, with no order as to

New Delhi,
September 23, 2022.


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