Reinstatement In Service Not Automatic When Retrenchment Is Held Violative Of Industrial Disputes Act: Chhattisgarh High Court

The Chhattisgarh High Court held that reinstatement in service is not automatic when retrenchment is held violative of the Industrial Disputes Act, 1947 (ID Act).

The Court held thus in a batch of Appeals preferred by the employees, challenging the order of termination and discontinuance from service.

A Full Bench comprising Chief Justice Ramesh Sinha, Justice Naresh Kumar Chandravanshi, and Justice Ravindra Kumar Agrawal observed, “Compensation in lieu of reinstatement is increasingly granted, especially where reinstatement is impractical. A permanent / regular employee with long service is likely to get reinstatement, of course, subject to equities and on the contrary, a daily wager/ short term workers or where claims are raised belatedly, are likely to get monetary compensation instead of reinstatement. As such, it can be concluded that when retrenchment is held violative of the ID Act, reinstatement in service is not automatic. The Court/Tribunal has discretion, based on facts and equities, to award compensation instead of reinstatement, and this has become the prevailing trend of the Hon’ble Apex Court in recent years.”

The Bench emphasised that the High Court, in writ jurisdiction, can interfere only in limited circumstances i.e., jurisdictional errors, error apparent of the face of record, perversity or case of no evidence, violation of natural justice, arbitrariness.

Advocate Vinod Deshmukh appeared on behalf of the Appellants while Additional Advocate General (AAG) Y.S. Thakur appeared on behalf of the Respondents.

Facts of the Case

In the lead case, the Appellant was initially appointed as a Labour in 1985 and continuously worked till 1994 without any break of service. All of a sudden, the Appellant’s services were discontinued and terminated by the Sub Divisional Officer (SDO) by oral order without assigning any reason. The services of the similarly situated employees were also terminated on the basis of circular issued by the erstwhile Madhya Pradesh Government. Against the termination or discontinuation of service, the Appellant approached the Labour Court, by moving an application under Section 31(3) of the Madhya Pradesh Industrial Relations Act, 1960 (MPIR Act). The Labour Court without appreciation of evidence and materials, rejected the said application.

The Appellant then approached the Industrial Court, which held that the Labour Court did not properly appreciate the evidence and documents. Hence, in pursuance of the award passed by the Industrial Court, the Appellant was reinstated in service. In between, the State Government issued a notification/circular deciding that the daily wages employees who were working prior to December 31, 1988 and 1997 would be entitled for regularization on their respective posts. Due to the pendency of the Writ Petition filed by the Department, the State Government did not consider the Appellant’s case for his regularization. Thereafter, the Single Judge modified the reinstatement order, allowed the Department’s Petition, and held that the Appellant was entitled to Rs. 1 lakh as compensation. This was under challenge before the Full Bench.

Reasoning

The High Court in view of the facts and circumstances of the case, noted, “With respect to the first question referred by the learned Division Bench, the extent of judicial review under Articles 226 of the Constitution of India, a writ Court has a very wide power. It can issue writs for enforcement of fundamental rights as well as for any other purpose i.e., legal rights. The jurisdiction is discretionary, equitable and extraordinary. However, it is not an appellate jurisdiction. The High Court does not re appreciate evidence as if sitting in appeal. So far as Article 227 of the Constitution is concerned, it is the power of superintendence.”

The Court said that the High Court has power of superintendence over all Trial Courts/Tribunals which includes keeping Tribunals within the bounds of their authority, ensuring they do not act perversely or illegally.

“It is not meant to correct every error of fact or law, but only such errors that go to jurisdiction, perversity, or miscarriage of justice. The Labour Courts and Industrial Tribunals are specialized fact-finding and adjudicatory bodies under the Industrial Disputes Act, 1947 (for short, the ID Act). Their awards are generally final on facts”, it added.

The Court remarked that over time, the Supreme Court has nuanced the rule, recognising that automatic reinstatement is not always proper, especially when: (i) the workman was a casual/temporary employee, (ii) the industry/employer has reorganised or downsized (iii) long delay has occurred in raising the dispute or (iv) industrial peace or practical feasibility is at stake.

“In case of prompt challenge, reinstatement is more likely to be granted and on the contrary but if there is long unexplained delay, reinstatement may be denied and compensation may be granted”, it observed.

The Court further noted that reinstatement is not automatic and Courts/ Tribunals consider nature of employment, length of service, delay, conduct of workman, feasibility, and balance of equities.

“Where reinstatement is impracticable or inequitable, compensation is granted instead. … In recent years, the Hon’ble Apex Court has clarified that grant of full back wages is not automatic and depends of facts, equities and conduct and the relief must balance the interests of both employer and employee. Full back-wages may be granted when it is a case of Illegal / unjustified termination of a permanent or long-serving workman, the workman was not gainfully employed during the period of termination, the challenge made to the illegal termination was prompt and without delay, and further no misconduct is attributable to the workman”, it reiterated.

The Court enunciated that partial back-wages can be awarded when there is some delay in raising the dispute, the tenure of service of the workman was short, existence of any intervening circumstances such as closure of Unit, financial hardship of employer and the possibility of gainful employment, even if not conclusively proved.

Conclusion

The Court also said, “Delay is not a jurisdictional bar; the dispute can still be referred. However, relief may be denied or modified, reinstatement may be refused and instead a lump-sum compensation may be awarded, back wages may be restricted or denied and the underlying principle behind the same is that a Court is expected to balance the equities, on the one hand, the workman should not suffer injustice merely because of lack of limitation and on the other, the employer should not face hardship of reinstating someone after decades when industrial peace and records have moved on.”

The Court added that delay by the workman in challenging termination does not bar the dispute under the ID Act, but it seriously affects the relief and a stale claim may result in denial of reinstatement and grant of compensation only.

“What can be culled out from the above discussion is that no straitjacket formula can be laid with respect to the questions referred and the same cannot be answered settling the issues once for all, and the questions, if raised in any particular case, has to be dealt with keeping in view the over all facts situation of that particular case”, it concluded.

Accordingly, the High Court answered the reference made by the Division Bench and directed the Registry to list Appeals before the Bench having the Roster to decide the same on merits.

Cause Title- Surit Ram v. State of Chhattisgarh & Anr. (Case Number: WA No. 355 of 2014)

Appearance:

Appellants: Advocates Vinod Deshmukh, Ritesh Giri, Harshal Chouhan, and Keshav Dewangan.

Respondents: AAG Y.S. Thakur

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