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Mahboob Deepak v. Nagar Panchayat, Gajraula And Another
Factual and Procedural Background
The appellant, Mahboob Deepak, was engaged on 30 July 1988 as a daily-wage employee by Respondent 1 at a remuneration of Rs 20 per day. Allegations of financial irregularities were levelled against him and, without a departmental enquiry, his services were terminated with effect from 16 July 1989. The appellant raised an industrial dispute asserting that his services were to be regularised after three months of employment.
On 30 November 2002 the Presiding Officer, Labour Court, held the termination illegal and directed immediate reinstatement with continuity of service and attendant benefits. Respondent 1 challenged that award in a writ petition. The High Court set aside the Labour Court’s award, reasoning that a daily-wage employee has no right to a permanent post and that the appointment was de hors the applicable recruitment rules.
The present appeal before the Supreme Court questions the legality of the High Court’s decision and the appropriateness of the relief granted.
Legal Issues Presented
- Whether the termination of a daily-wage employee who had completed 240 days of service was invalid for non-compliance with Section 6-N of the U.P. Industrial Disputes Act, 1947 (relating to retrenchment procedures).
- If the termination was procedurally defective, whether reinstatement with back wages or monetary compensation was the proper relief.
- Whether a daily-wage employee could claim a right to regularisation or permanency after three months of employment when the initial appointment was made without following statutory recruitment rules.
Arguments of the Parties
Appellant's Arguments
- The terms of engagement contemplated regularisation after three months; similarly situated employees had already been made permanent.
- The statutory requirements under Section 6-N (notice, compensation, and compliance with retrenchment procedure) were ignored, rendering the termination illegal.
- Because the termination was illegal, the Labour Court’s direction for reinstatement ought to be restored.
Respondent's Arguments
- The appellant was only a daily-wage worker in Class III; such appointments are purely temporary and confer no right to a post.
- The initial engagement was de hors the recruitment rules and therefore void; no opportunity of hearing was necessary for discontinuation.
- Termination was justified on account of serious financial irregularities and exigencies of work, and the Labour Court failed to appreciate this.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Madhya Pradesh Administration v. Tribhuban (2007) 9 SCC 748 | In cases of illegal retrenchment, courts may grant monetary compensation instead of ordering reinstatement with back wages. | The Supreme Court relied on this authority to substitute reinstatement with a lump-sum compensation of Rs 50,000 to the appellant. |
Court's Reasoning and Analysis
Justice S.B. Sinha observed that if the appellant’s services were terminated on the ground of misconduct, a departmental enquiry was mandatory but absent. Moreover, because the appellant had completed 240 days of service in the twelve months preceding termination, compliance with Section 6-N of the U.P. Industrial Disputes Act was compulsory. The High Court had overlooked this statutory infraction.
Nonetheless, reinstatement was deemed inappropriate for several reasons:
- The initial engagement violated statutory recruitment rules and the constitutional mandates of Articles 14 and 16.
- The appellant had worked only for a short duration (less than one year).
- A blanket order of reinstatement would ignore key factors such as availability of vacancies and the nature of the appointment.
Following the principle in Madhya Pradesh Administration v. Tribhuban, the Court concluded that monetary compensation was a more equitable remedy than reinstatement.
Holding and Implications
Holding: The appeal is allowed in part. The High Court’s judgment is modified by directing Respondent 1 to pay the appellant Rs 50,000 as damages within eight weeks, failing which the amount will carry interest at 9% per annum. Costs of Rs 10,000 are also awarded.
Implications: The decision reinforces the principle that, where statutory recruitment rules are breached and the employee is a daily wager with limited tenure, compensation rather than reinstatement is generally appropriate, even when procedural protections against retrenchment were ignored. No new legal precedent was created, but the judgment applies existing Supreme Court guidance on substituting compensation for reinstatement.
S.B Sinha, J.— Leave granted.
2. The appellant was appointed as a daily wager on a remuneration of Rs 20 per day in the services of Respondent 1 on 30-7-1988. He is said to have been involved in financial irregularities. His services were terminated on and from 16-7-1989. He raised an industrial dispute contending that his services were to be regularised after three months of joining the services. The said contention was accepted by the Presiding Officer, Labour Court in his award dated 30-11-2002. On the said premise, the termination of services of the appellant was found to be illegal. It was directed:
“… since the date of adoption of this award employee Shri Mahboob Deepak, s/o Shri Varan Singh shall be re-established on his post in the investigation of old service and the other facilities or payment of the middle period after discharging date along with which he were to obtain in service period should be paid.”
It is difficult to understand the reasoning of the learned Presiding Officer, Labour Court.
3. The High Court, however, by reason of the impugned judgment passed in the writ petition filed by the respondent herein set aside the said award holding:
“I have heard learned counsel for the parties, I find that the respondent employee was deployed as a daily wager in Class III category and he has no right to the post and deployment of daily wager is made purely on temporary basis, on day-to-day basis and the respondent employee could not have been deployed against any Class III post and the appointment is said to have been de hors the rules and daily wagers are not entitled to opportunity of hearing at the time of dispensation of service on the ground of misconduct. Here the award impugned passed by the Presiding Officer, Labour Court did not consider that the termination order dated 16-7-1989 was passed in reference to serious irregularities and misconduct. I find force in the contention of the petitioner. The deployment of daily wagers is made in exigency of work and when there was no work the deployment of daily wagers is dispensed with without any notice or opportunity of hearing, even non-renewal of appointment in consonance with the terms and conditions of appointment is not illegal. The petitioners have no right to the post after a limited period.”
4. Ms Suresh Kumari, learned counsel appearing for the appellant, inter alia, submitted that as the services of the appellant were to be made permanent after three months, the High Court committed an error in passing the impugned judgment, particularly, in view of the fact that other persons similarly situated have been made permanent. In any event, it was urged, as the statutory requirements for valid termination of service have not been complied with, the award of the Presiding Officer should be restored.
5. The High Court, in its impugned judgment, inter alia, took into consideration the purported misconduct committed by the appellant herein. If services were to be terminated on the ground that he was involved in financial irregularities, a departmental proceeding was required to be initiated against him. As indicated hereinbefore, he was asked not to join his duties w.e.f 16-7-1989.
6. Such termination of service, having regard to the fact that he had completed 240 days of work during a period of 12 months preceding the said date, required compliance with the provisions of Section 6-N of the U.P Industrial Disputes Act. An order of retrenchment passed in violation of the said provision although can be set aside but as has been noticed by this Court in a large number of decisions, an award of reinstatement should not, however, be automatically passed.
7. The factors which are relevant for determining the same, inter alia, are:
(i) whether in making the appointment, the statutory rules, if any, had been complied with;
(ii) the period he had worked;
(iii) whether there existed any vacancy; and
(iv) whether he obtained some other employment on the date of termination or passing of the award.
8. The respondent is a local authority. The terms and conditions of employment of the employees are governed by a statute and statutory rules. No appointment can be made by a local authority without following the provisions of the recruitment rules. Any appointment made in violation of the said rules as also the constitutional scheme of equality as contained in Articles 14 and 16 of the Constitution of India would be a nullity.
9. Due to some exigency of work, although recruitment on daily wages or on an ad hoc basis was permissible, but by reason thereof an employee cannot claim any right to be permanently absorbed in service or made permanent in absence of any statute or statutory rules. Merely because an employee has completed 240 days of work in a year preceding the date of retrenchment, the same would not mean that his services were liable to be regularised.
10. Applying the legal principles, as noticed hereinbefore, the relief granted in favour of the appellant by the Labour Court is wholly unsustainable. The same also appears to be somewhat unintelligible.
11. The High Court, on the other hand, did not consider the effect of non-compliance with the provisions of Section 6-N of the U.P Industrial Disputes Act, 1947. The appellant was entitled to compensation, notice and notice pay.
12. It is now well settled by a catena of decisions of this Court that in a situation of this nature instead and in place of directing reinstatement with full back wages, the workmen should be granted adequate monetary compensation. (See M.P Admn. v. Tribhuban (2007) 9 SCC 748, (2007) 5 Scale 397.)
13. In this view of the matter, we are of the opinion that as the appellant had worked only for a short period, the interest of justice will be subserved if the High Court's judgment is modified by directing payment of a sum of Rs 50,000 (Rupees fifty thousand only) by way of damages to the appellant by the respondent. Such payment should be made within eight weeks from this date, failing which the same will carry interest at the rate of 9% per annum.
14. The appeal is allowed to the aforementioned extent with costs. Counsel's fee assessed at Rs 10,000.
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