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Incharge Officer And Another v. Shankar Shetty .
Factual and Procedural Background
Shankar Shetty (“the respondent”) was engaged by the appellants as a daily-wage employee beginning in 1978. His engagement was intermittent, the total days worked per year being:
- 57 days in 1978
- 316½ days in 1979
- 335½ days in 1980
- 242½ days in 1981
- 33½ days in 1982
- 10½ days in 1983
- 103 days in 1984
- 50 days in 1985
On 6 September 1985 his services were terminated without complying with Section 25-F of the Industrial Disputes Act, 1947 (“ID Act”). The respondent raised an industrial dispute, which was adjudicated by the Labour Court, Chickmagalur. By award dated 21 December 1994, the Labour Court rejected his claim, holding that he had failed to prove continuous service of 240 days in the year preceding termination and, therefore, Section 25-F was inapplicable.
The respondent challenged the award before the Karnataka High Court. A Single Judge reversed the Labour Court, held Section 25-F attracted, declared the termination illegal, and ordered reinstatement without back wages or continuity of service (judgment dated 13 August 2001). The appellants’ writ appeal was dismissed by a Division Bench on 9 December 2004. The present civil appeal by special leave is confined to the propriety of the relief of reinstatement granted by the High Court.
Legal Issues Presented
- Whether an order of reinstatement automatically follows when a daily-wage employee is retrenched in violation of Section 25-F of the ID Act.
- Consequently, whether the High Court erred in granting reinstatement to the respondent instead of awarding monetary compensation.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Jagbir Singh v. Haryana State Agriculture Marketing Board (2009) 15 SCC 327 | Shift in judicial stance: reinstatement with back wages is not automatic; compensation may be appropriate where Section 25-F is violated. | Treated as the leading authority; its ratio was applied directly to conclude that compensation, not reinstatement, was the proper remedy for the respondent. |
| U.P. State Brassware Corp. Ltd. v. Uday Narain Pandey (2006) 1 SCC 479 | Reinstatement should not be mechanically ordered; compensation can serve justice in cases of illegal retrenchment. | Cited as part of the “catena of decisions” demonstrating the modern approach, reinforcing the Court’s choice of compensation. |
| Uttaranchal Forest Development Corp. v. M.C. Joshi (2007) 9 SCC 353 | Similar principle that relief should be moulded; reinstatement may be inappropriate for daily wagers. | Relied upon to buttress the conclusion that monetary compensation suffices. |
| State of M.P. v. Lalit Kumar Verma (2007) 1 SCC 575 | Distinction between daily wagers and permanent employees; reinstatement normally withheld for the former. | Invoked to underline why a daily-wage worker like the respondent should receive compensation, not reinstatement. |
| Madhya Pradesh Administration v. Tribhuban (2007) 9 SCC 748 | Compensation as an equitable substitute for reinstatement in cases of procedural illegality. | Cited within the collective jurisprudence supporting compensation. |
| Sita Ram v. Moti Lal Nehru Farmers Training Institute (2008) 5 SCC 75 | Reinstatement with full back wages disfavoured for daily wagers; compensation preferred. | Part of the authorities informing the Court’s reasoning. |
| Jaipur Development Authority v. Ramsahai (2006) 11 SCC 684 | Affirmed that illegality of termination does not mandate reinstatement. | Used to demonstrate consistency in the Court’s approach. |
| GDA v. Ashok Kumar (2008) 4 SCC 261 | Emphasised proportional relief; compensation can meet ends of justice. | Added weight to the decision to deny reinstatement. |
| Mahboob Deepak v. Nagar Panchayat, Gajraula (2008) 1 SCC 575 | Reiterated the non-automatic nature of reinstatement where Section 25-F is breached. | Cited collectively to support the award of compensation. |
| Telegraph Deptt. v. Santosh Kumar Seal (2010) 6 SCC 773 | Applied Jagbir Singh; held that monetary compensation, not reinstatement, is appropriate where daily-wage engagement was short-lived and remote in time. | Referenced as the most recent affirmation of the principle; guided the quantum and nature of relief. |
Court's Reasoning and Analysis
The Supreme Court commenced its analysis by framing the decisive question: should reinstatement automatically follow an illegal retrenchment of a daily-wage employee under Section 25-F? Reviewing the “uniform course” of its own recent judgments—especially Jagbir Singh and the cases enumerated therein—the Court reiterated that reinstatement with back wages has ceased to be the default remedy. Instead, relief must be tailored, and compensation is often adequate where:
- The employee was a daily wager, holding no permanent post;
- The period of actual service was intermittent and relatively short; and
- Considerable time has elapsed since termination, making reinstatement impractical or inequitable.
Applying these criteria, the Court noted that:
- The respondent worked intermittently for roughly seven years and had been out of service for about twenty-five years.
- He never held a permanent position; his status was that of a daily-wage worker.
- Ordering reinstatement after such a long hiatus would be disproportionate and inconsistent with modern jurisprudence.
Consequently, guided by Jagbir Singh and its progeny, the Court held that monetary compensation of ₹1,00,000 would “meet the ends of justice.” The amount was to be paid within six weeks, failing which it would carry interest at 9% per annum.
Holding and Implications
Appeal allowed. The orders of the Single Judge and Division Bench directing reinstatement are set aside. In lieu of reinstatement, the respondent is awarded compensation of ₹1,00,000, payable within six weeks with 9% interest thereafter if unpaid.
Implications: The decision reinforces the judicial trend that reinstatement is not an automatic consequence of violating Section 25-F, particularly for daily-wage employees whose engagement was intermittent and remote in time. While it applies existing precedent rather than creating new law, it underscores the preference for monetary compensation in analogous situations.
R.M Lodha, J.— Leave granted. The only question to be considered in this appeal by special leave is with regard to the relief of reinstatement granted to the respondent by the Single Judge of the High Court of Karnataka in his judgment and order dated 13-8-2001 and affirmed by the Division Bench vide its judgment and order dated 9-12-2004 in the writ appeal.
2. Should an order of reinstatement automatically follow in a case where the engagement of a daily wager has been brought to end in violation of Section 25-F of the Industrial Disputes Act, 1947 (for short “the ID Act”)? The course of the decisions of this Court in recent years has been uniform on the above question.
3. In Jagbir Singh v. Haryana State Agriculture Mktg. Board (2009) 15 SCC 327, delivering the judgment of this Court, one of us (R.M Lodha, J.) noticed some of the recent decisions of this Court, namely, U.P State Brassware Corpn. Ltd. v. Uday Narain Pandey (2006) 1 SCC 479, Uttaranchal Forest Development Corpn. v. M.C Joshi (2007) 9 SCC 353, State of M.P v. Lalit Kumar Verma (2007) 1 SCC 575, M.P Admn. v. Tribhuban (2007) 9 SCC 748, Sita Ram v. Moti Lal Nehru Farmers Training Institute (2008) 5 SCC 75, Jaipur Development Authority v. Ramsahai (2006) 11 SCC 684, GDA v. Ashok Kumar (2008) 4 SCC 261, and Mahboob Deepak v. Nagar Panchayat, Gajraula (2008) 1 SCC 575 and stated as follows: (Jagbir Singh case (2009) 15 SCC 327 & 335, paras 7 & 14)
“7. It is true that the earlier view of this Court articulated in many decisions reflected the legal position that if the termination of an employee was found to be illegal, the relief of reinstatement with full back wages would ordinarily follow. However, in recent past, there has been a shift in the legal position and in a long line of cases, this Court has consistently taken the view that relief by way of reinstatement with back wages is not automatic and may be wholly inappropriate in a given fact situation even though the termination of an employee is in contravention of the prescribed procedure. Compensation instead of reinstatement has been held to meet the ends of justice.
14. It would be, thus, seen that by a catena of decisions in recent time, this Court has clearly laid down that an order of retrenchment passed in violation of Section 25-F although may be set aside but an award of reinstatement should not, however, be automatically passed. The award of reinstatement with full back wages in a case where the workman has completed 240 days of work in a year preceding the date of termination, particularly, daily wagers has not been found to be proper by this Court and instead compensation has been awarded. This Court has distinguished between a daily wager who does not hold a post and a permanent employee.”
4. Jagbir Singh (2009) 15 SCC 327 has been applied very recently in Telegraph Deptt. v. Santosh Kumar Seal (2010) 6 SCC 773, wherein this Court stated:
“11. In view of the aforesaid legal position and the fact that the workmen were engaged as daily wagers about 25 years back and they worked hardly for 2 or 3 years, relief of reinstatement and back wages to them cannot be said to be justified and instead monetary compensation would subserve the ends of justice.”
5. Shankar Shetty, the respondent was initially engaged as a daily wager by the appellants in 1978. He worked for 57 days in that year. The respondent had also worked for 316½ days in 1979, 335½ days in 1980, 242½ days in 1981, 33½ days in 1982, 10½ days in 1983, 103 days in 1984 and 50 days in 1985. According to him he was terminated from service on 6-9-1985 without following the procedure prescribed in Section 25-F of the ID Act. He raised an industrial dispute relating to his retrenchment which was referred for adjudication to the Labour Court, Mysore but later on the dispute was transferred to the Labour Court, Chickmagalur. The Labour Court, Chickmagalur by its award on 21-12-1994 rejected the respondent's claim. The Labour Court held that Section 25-F of the ID Act was not attracted since the workman failed to prove that he had worked continuously for 240 days in the calendar year preceding his termination on 6-9-1985.
6. The respondent challenged the award passed by the Labour Court by filing a writ petition before the Karnataka High Court. The Single Judge of the High Court overturned the finding of the Labour Court about non-applicability of Section 25-F and held that Section 25-F of the ID Act was attracted and the procedure provided therein having not been followed, the termination of the respondent (the petitioner therein) was illegal. The Single Judge, accordingly, vide his judgment and order dated 13-8-2001 directed reinstatement of the respondent into service but without back wages and continuity of service. The present appellants challenged the judgment and order of the Single Judge in writ appeal before the Division Bench but without any success. On 9-12-2004, the writ appeal preferred by the present appellants was dismissed by the Division Bench.
7. We think that if the principles stated in Jagbir Singh (2009) 15 SCC 327 and the decisions of this Court referred to therein are kept in mind, it will be found that the High Court erred in granting relief of reinstatement to the respondent. The respondent was engaged as a daily wager in 1978 and his engagement continued for about 7 years intermittently up to 6-9-1985 i.e about 25 years back. In a case such as the present one, it appears to us that relief of reinstatement cannot be justified and instead monetary compensation would meet the ends of justice. In our considered opinion, the compensation of Rs. 1,00,000 (Rupees one lakh) in lieu of reinstatement shall be appropriate, just and equitable. We order accordingly. Such payment shall be made within 6 weeks from today failing which the same shall carry interest at the rate of 9% per annum.
8. The appeal is allowed to the above extent. Since the respondent has not chosen to appear despite service of notice, there will be no order as to costs.
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