Retrenched Workers Can't Claim Reinstatement After Failed Amalgamation Process: Punjab & Haryana High Court Dismisses Appeal By Workers' Union

The Punjab & Haryana High Court has held that retrenched employees cannot claim statutory right for reinstatement under the Industrial Disputes Act, 1947 after failed amalgamation process.

The Court was considering twelve Letters Patent Appeals against the order of the single judge whereby the Labour Court's award directing Respondent Company to pay compensation as also reinstate the retrenched workers was set-aside.

The division bench of Justice Sudhir Singh and Justice Sukhvinder Kaur observed, ".......Even if, the arguments of the learned counsel for the appellants that 1500 acres land stood transferred in favour of respondent No.1 i.e., Punjab Agro Industries Corporation limited, which land belonged to PLDRCL, the erstwhile employer of the appellants, then also, the right arising out of that transfer of the land, cannot be related to a dispute under the ID Act. Under the ID Act, it is to be adjudicated upon whether the retrenchment of the workman was as per the provisions of the said Act and whether such workman has been paid retrenchment compensation and/or while retrenching the workman, any domestic enquiry was held or not. In the instant case, as has been noticed by the learned Single Judge, the retrenchment of the workmen by their erstwhile employer was found to be valid. It was also found that the workmen had been paid retrenchment compensation. Therefore, we find that the alleged transfer of the land of the PLDRCL in favour of respondent No.1-Punjab Agro Industries Corporation Limited, if any, does not give any equitable right to the appellants to claim their reinstatement with respondent No.1. The learned Single Judge has rightly found that the workmen were only entitled to the retrenchment compensation from the assets and liabilities of their erstwhile employer i.e., PLDRCL and once, such compensation was paid, no right of the workmen as against respondent No.1-Punjab Agro Industries Corporation Limited had survived."

The Appellants were represented by Advocate H.S. Dhandi while the Respondent was represented by Senior Advocate Akshay Bhan.

Facts of the Case

Respondent No.4-Punjab Land Development and  Reclamation Corporation Limited (PLDRCL) closed down in 2002 and approval in terms of Section 25-O of the Industrial Disputes Act, 1947 was granted as the revival of the unit was not viable. The closure was made effective in 2003 and thee employees were ordered to be retrenched and paid compensation within a period of six months. The Workers’ Union challenged the retrenchment order. However, in the meantime, the Government of Punjab declared amalgamation of PLDRCL with Punjab Agro Industries Corporation Limited, Respondent No.1 with all assets and liabilities, including 199 retrenched employees, whose services were to be taken as a part of amalgamation plan “as is where is basis”. Pursuant to the said amalgamation scheme, the workers of PLDRCL were appointed by Respondent No.1 and Review Petition before the Court was accordingly dismissed. However, subsequently, in 2004, the the State Government withdrew the amalgamation and the workers were accordingly relieved. Subsequently, The Labour Court held that the retrenchment order was legal and valid but the Punjab Agro Industries Corporation Limited was held liable to pay compensation as also to reinstate the workmen because as per amalgamation scheme. The single-judge bench, however set aside the Labour Court's order via the impugned order.

Counsel for the Appellants argued that once the Government had taken a decision to amalgamate PLDRCL with the Punjab Agro Industries Corporation Limited, which are entities of the State Government and once, the Punjab Agro Industries Corporation Limited had received the land measuring 1500 acres as a result of the scheme of amalgamation, it was the liability of the Punjab Agro Industries Corporation Limited to absorb the workers of the PLDRCL and it cannot be allowed to shirk from its liability. It was further argued that merely because the workers were appointed for initial period of 06 month does not give any right to the Punjab Agro Industries Corporation Limited to relieve the workers within a very short span of time i.e., two months and the Labour Court had rightly ordered reinstatement of the workmen with full back wages. It was also argued that merely because the Labour Court had found the retrenchment of the workmen as valid, is no ground to hold that their subsequent relieving by the Punjab Agro Industries Corporation Limited was also legal, especially when the State Government had taken a decision consciously and conscientiously to amalgamate the two entities and absorb the employees of one of them. It was further argued that the finding of the Single Judge as regards the workmen being contractual employees and having been relieved within two months thereof and not being covered by the provisions of the ID Act as regards the Punjab Agro Industries Corporation Limited is legally unsustainable. 

Reasoning By Court

The Court at the outset pointed out that it is not the case of the Appellants that the amalgamation scheme had failed due to any mala fide on the part of the State Government or its entity(ies), including Respondent No.1 i.e., Punjab Agro Industries Corporation Limited.

With respect to the legal issue as to whether the right in equity, being claimed by the Appellants can be equated with the provisions of the ID Act, which stipulate a procedure for adjudicating upon a dispute sought to be raised by way of a reference before the Labour Court, the Court answered in negative.

It concluded that transfer of the land of the PLDRCL in favour of respondent No.1-Punjab Agro Industries Corporation Limited, if any, does not give any equitable right to the Appellants to claim their reinstatement with Respondent No.1.

Cause Title: Punjab Land Development & Reclamation Corporation Worker's Union Ludhiana vs. Punjab Argo Industries Corporation Ltd.& Ors.

Appearances:

Appellants- Advocate H.S. Dhandi, Advocate Ashok Bhardwaj

Respondent- Senior Advocate Akshay Bhan, Advocate Ranjit Singh Kalra, Advocate Mona Yadav, Advocate Y.P. Singla

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Click here to read/ download Order