Illegal Daily-Wage Engagement Under the 1999 Act Still Requires Section 25-F Compliance for Termination

1. Introduction

In SARPANCH, GRAM PANCHAYAT THATED v. SHRI BANSHI LAL S/O SHRI MODULAL THROUGH NARENDRA KUMAR TIWARI (Rajasthan High Court, Jaipur Bench; decided on 15-04-2026; [2026:RJ-JP:15604]), the petitioner-Gram Panchayat challenged (i) an ex parte labour award dated 09.11.2021 granting reinstatement to the respondent-workman and (ii) the order dated 30.07.2025 rejecting the Panchayat’s application to set aside the ex parte award.

The Panchayat’s central defence was that the workman’s initial engagement as a daily-wager was illegal because the then Sarpanch allegedly lacked authority to hire him, and that termination was effected pursuant to the Rajasthan (Regulation of Appointments to Public Services and Rationalisation of Staff) Act, 1999 (“Act of 1999), particularly Section 9, which bars regularisation of daily-wage and urgent temporary appointees.

The key legal issue, as addressed by the Court, was narrow but significant: even if Section 9 bars regularisation and treats termination as “retrenchment/termination simpliciter,” does the employer still have to comply with Section 25-F of the Industrial Disputes Act, 1947 when terminating a covered workman?

2. Summary of the Judgment

The High Court dismissed the writ petition at the admission stage, holding that:

  • Section 9 of the Act of 1999 contemplates termination of such daily-wage engagements but expressly preserves the requirement of paying retrenchment compensation where the workman falls within the scope of Section 25-F.
  • The Labour Court’s findings showed the Panchayat did not follow Section 25-F.
  • It was not in dispute that the workman was covered by Section 25-F.
  • Therefore, the High Court found no fault on merits in the Labour Court award directing reinstatement, and refused to interfere.

3. Analysis

3.1 Precedents Cited

The judgment does not cite any prior judicial precedents. The decision turns primarily on the statutory text and its internal logic—particularly the interface between Section 9 of the Act of 1999 and Section 25-F of the Industrial Disputes Act, 1947.

3.2 Legal Reasoning

The Court’s reasoning follows a statutory reconciliation approach:

  1. Employer’s “illegality” argument is not a substitute for retrenchment compliance: Even assuming the workman was engaged without authority and regularisation is barred, termination of a “workman” who attracts Section 25-F must satisfy that provision’s minimum protective conditions.
  2. Section 9 itself imports Section 25-F safeguards: Section 9 bars any right to claim regularisation and declares the service “liable to be terminated,” but its proviso explicitly states that where the workman falls within Section 25-F, retrenchment compensation “as may be payable” must be paid. This textual link makes Section 25-F compliance integral, not optional.
  3. Labour Court’s factual finding on non-compliance was decisive: The High Court notes the Labour Court “clearly demonstrate[s]” non-compliance with Section 25-F. Once that is established, interference under writ jurisdiction is unwarranted, particularly when the statutory scheme itself expects Section 25-F compliance.

In effect, the Court treats Section 9 as a provision dealing with regularisation entitlement and characterisation of termination (as retrenchment/termination simpliciter), but not as a provision that ousts labour-law retrenchment protections where they otherwise apply.

3.3 Impact

This judgment reinforces three practical propositions likely to influence future disputes involving Panchayats and other public bodies in Rajasthan:

  • Illegality of initial engagement does not automatically validate termination if the person is a “workman” and statutory retrenchment conditions apply.
  • Section 9 (Act of 1999) is not an immunity clause; it bars regularisation but still requires compliance with the Industrial Disputes Act where applicable.
  • Writ courts may decline interference where the employer’s non-compliance with Section 25-F is clear and undisputed, even if the award was ex parte, particularly when the challenge does not dislodge the merits of the statutory breach.

4. Complex Concepts Simplified

Section 25-F (Industrial Disputes Act, 1947)
A mandatory condition for valid “retrenchment” of a covered workman—commonly requiring (among other statutory conditions) notice/pay in lieu and payment of retrenchment compensation. If these are not complied with, termination is typically treated as unlawful.
Section 9 (Act of 1999) — “Bar to regularisation of services”
A state-law provision that denies daily-wage/urgent temporary appointees any right to claim regularisation and permits termination with due notice. Importantly, its proviso preserves retrenchment compensation where Section 25-F applies—meaning labour protections can still be triggered.
“Retrenchment” vs “Dismissal/Removal”
“Dismissal/removal” often implies a punitive termination for misconduct. “Retrenchment” is generally a non-punitive termination of service for reasons other than punishment. Section 9’s explanation clarifies that termination under that section is to be treated as retrenchment/termination simpliciter—not punishment—thereby aligning it with Section 25-F’s domain.
“Ex parte award”
An award passed when one party does not participate or appear. Even so, if the merits show statutory non-compliance (here, Section 25-F), courts may uphold the award.

5. Conclusion

The Rajasthan High Court’s decision underscores a clear rule: even when a daily-wage engagement is allegedly unauthorised and regularisation is barred under Section 9 of the Act of 1999, termination of a workman covered by Section 25-F must still comply with Section 25-F. The Court’s refusal to interfere with reinstatement, given admitted coverage under Section 25-F and established non-compliance, strengthens the enforceability of minimum retrenchment safeguards against public employers invoking the Act of 1999 as a blanket justification for termination.