Dubey, J.:— The three petitioners who were employed in Gwalior Sugar Company Ltd., Dabra, have filed this petition under Arts. 226 and 227 of the Constitution of India for quashing the order, dated 1 August 1985, passed in three appeals, disposed of by one common order, in appeal No. 989.KPIR/1983.
2. The facts leading to this petition are not much in dispute. The services of the petitioners along with others were terminated by the employer, as according to the employer they were involved in a theft committed between 4 and 5 August 1968, of brass bearings and other materials of the company. All these employees were prosecuted for offences under Ss. 457 and 380, I.P.C, but were acquitted by the Additional District Magistrate (J.), Gwalior, vide judgment dated 11 May 1973, passed in Criminal Case No. 770 of 1968 (State v. Dayaram) holding that the prosecution has failed to substantiate the charges against the accused persons under Ss. 457 and 380, I.P.C The employees filed their separate applications before the Labour Court wherein they prayed for declaring the action of the employer in not allowing them in employment as illegal, which amounted to termination of their services. They, therefore, prayed for reinstatement with full back-wages and all ancillary benefits. The respondent-company contended that all these employees did not report for duty after the said incident of theft, committed in between 4 and 5 August 1968. After inquiry, the Labour Court held the action of the employer as illegal removal of service from the employment and ordered reinstatement or in lieu of reinstatement, to pay compensation. The employer preferred revisions before the Industrial Court. The revisions were allowed and the order of the Labour Court was set aside. The said order of the Industrial Court was challenged by the employees before this Court. This Court in writ jurisdiction quashed the order of the Industrial and remitted the ease to the Labour Court with a direction to give clear findings regarding the dispute raised before it.
3. After the remand, the Labour Court framed additional issues and, after recording the evidence of parties on those issues, granted the relief of reinstatement with half back-wages. Against this order, the employer preferred appeals before the Industrial Court. The Industrial Court did not agree with the contention of the employer that the employees voluntarily abandoned their employment, but on the submission of the employer that the employer has lost confidence in them as they were involved in a case of theft, in lieu of reinstatement, compensation was awarded with 50 per cent back-wages, as the factory of the employer is a seasonal factory. In the opinion of the Industrial Court, in lieu of reinstatement, Rs. 5,000 to each employee was proper compensation with half back-wages for each season when the factory actually worked. It also directed employer to make payment of retaining allowance to the employees. Against this order (annexure P2) the petitioners have approached this Court under Arts. 226 and 227 of the Constitution.
4. Sri H.N Upadhyaya, learned counsel for the petitioners, contended that refusal of reinstatement by the Industrial Court was illegal, particularly when the petitioners were acquitted in the criminal case. In the alternative, Sri Upadhyaya submitted that in lieu of reinstatement, the compensation so awarded with half back-wages is too low. Reliance was placed on a Division Bench decision of this Court in Madhukar v. General Manager, Bhilai Steel Project Project [1966 Jab. L.J 934]. On the other hand, Sri K.N Gupta, learned counsel for the company, contended that the finding with respect to loss of confidence is a finding of fact, and the discretion exercised by the Industrial Court, in the peculiar circumstances of the case, in not ordering reinstatement is not liable to be interfered under Art. 227 of the Constitution. Learned counsel also contended that the compensation awarded, in the facts of the case, is just and fair. Sri Gupta pressed into service two decisions of the apex Court in Sant Raj v. O.P Singla [1985-II L.L.N 42] and Hindustan Steels, Ltd., Rourkela v. A.K Roy [(1969) 3 SCC 513 : A.I.R 1970 S.C 1401]. Sri Gupta also contended that sufficiently long period has passed and out of the three petitioners, one has already attained the age of superannuation in the year 1985. Hence, for remaining two, who are not permanent employees, reinstatement be not directed. During the course of hearing, learned counsel for the parties filed their respective statements showing the entitlement of wages, allowances, retaining allowance, bonus, gratuity, etc.
5. The petitioners are “blue collar” workmen. The employer has not preferred any petition challenging the order setting aside the action of the employer terminating the services of the petitioners. When an order of termination is declared illegal and void, in cases of “blue collar” workmen and “white collar” employees, other than those belonging to the managerial or similar high level cadre, reinstatement is a rule, and compensation in lieu thereof, a rare exception. (See Bhandari (O.P) v. Indian Tourism Development Corporation, Ltd. [1986-II L.L.N 1051]; Chandu Lal v. Pan American World Airways Inc. [1985-II L.L.N 582] and Hindustan Steels, Ltd. v. A.K Roy [(1969) 3 SCC 513 : A.I.R 1970 S.C 1401] (vide supra). In the peculiar facts of the present case, the Industrial Court has exercised the discretion to award compensation instead of reinstatement, on the ground of loss of confidence and for security reasons, and in the opinion of the Industrial Court, reinstatement was inexpedient and improper. After going through the record and facts of the case, we are also of opinion that the discretion has been exercised judiciously after carefully examining the circumstances of each case in accordance with well-recognised principles. It can also not be disputed that in the present case the employer has placed material and circumstances for loss of confidence, and when loss of confidence has been set up as a defence to reinstatement, we are of the view that though the action of termination of the services has been held to be bad, reinstatement in the circumstances of the case cannot be directed, and the discretion so exercised by the Industrial Court, which is not mechanical, cannot be interfered in writ jurisdiction (See the case of the the apex Court in Hindustan Steels, Ltd., Rourkela v. A.K Roy [(1969) 3 SCC 513 : A.I.R 1970 S.C 1401] (vide supra).
6. Coming to the question of compensation, the submission of Sri Upadhyaya deserves consideration. The contention of Sri Gupta, learned counsel for the employer, on placing reliance on the decision of the apex Court in Sant Raj v. O.P Singla [1985-II L.L.N 42] (vide supra), that the employees are entitled to back-wages at the rate of wages drawn at the time of termination, and compensation is to be calculated at the same rate, cannot be accepted. In that case, the apex Court has not laid down that back-wages are to be calculated at the rate drawn by an employee at the time of his termination. It is settled, nor it can be disputed, that whenever an order of termination is set aside, an employee is deemed to be in continuous service of the employment without any interruption in service. Such an employee is entitled to all back-wages at the rate or scale of pay prevalent from time to time, with all other benefits, which are paid to an employee who is in service.
7. Sri Upadhyaya's contention that according to the view of this Court in Madhukar v. General Manager, Bhilai Steel Project Project [1966 Jab. L.J 934] (vide supra), whenever reinstatement in refused and compensation is awarded in lieu of reinstatement, the proper compensation in such a case would be full wages from the date of order of dismissal or discharge to the date of the order of the Tribunal and the wages for the remainder period of service, cannot be accepted. The apex Court in Anglo-American Direct Tea Trading Company, Ltd. v. Workmen of Nahortoli Tea Estate [1961–62 (20) F.J.R 523], while considering a case for awarding compensation, observed that for unjustified and premature termination of employment, retrenchment compensation at the rate of 15 days' average pay for each completed year of service is not proper: it stands to reasons that where workman lost his job on account of unjustified and premature termination of his employment, he should get something more than what he would have got as compensation if it was a proper case of retrenchment. In that case, the apex Court upheld the award of one months' average pay for each completed year of service as not to be excessive compensation for unjustified and premature termination of employment with one month's notice-pay. This was followed by Division Bench of this Court in Suman Verma v. Nava Bharat Karmachari Sangh, Indore [A.I.R 1967 M.P 275] and Madhukar v. General Manager, Bhilai Steel Project Project [1966 Jab. L.J 934] (vide supra). A learned Single Judge of this Court in Miscellaneous Petition No. 202 of 1979, decision on 19 July 1985, Champalal v. Madhya Pradesh State Road Transport Corporation, also took the same view. Though in the case of Bhandari (O.P) v. Indian Tourism Development Corporation, Ltd. [1987-II L.L.N 1051] (vide supra), for awarding compensation for premature termination of employment of an employee belonging to “gold collar” (managerial cadre), it has been laid down certain guidelines and principles, in the case of “blue collar” employees, no guidelines for calculating compensation has been laid down. In view of the principle laid down in case of Anglo-American Direct Tea Trading Company, Ltd. v. Workmen of, Nahortoli Tea Estate [1961–62 (20) F.J.R 523] (vide supra), and followed by this Court consistently, there is no reason for us to depart from this principle and to accept the contention of Sri Upadhyaya to award full back-wages for the remainder period of service.
7-A. In the present case, admittedly, the factory is a seasonal factory, where the seasonal employees do not work throughout the year, but work only for five months, this period also varies and for the remaining period of the year seasonal employees are paid retaining allowance. Considering all the relevant factors, the learned Member-Judge of the Industrial Court, instead of awarding full wages, has awarded half back-wages for the season and retaining allowance till the date of order of the Industrial Court, i.e, 1 August 1985. Award of half back-wages and retaining allowance in full for each year, hence, in the facts of the case, in our opinion, cannot be interfered, nor the petitioners have challenged the same seriously. When the services of the employees were terminated, they were getting between Rs. 110 to 140. From time to time, the wage-scale increased, and in the year 1985–86 the wage-scale of these employees varied from Rs. 682 to 950. Retaining allowance was also increased from time to time. Petitioner, Pannalal, who was a permanent employee, as chowkidar, attained the age of superannuation before the decision in the appeal by the Industrial Court. As the employees are entitled to wages and other allowances according to the rates prevalent from year to year, the two petitioners, namely, Dayaram and Harcharan, being seasonal employees, would be entitled to half back-wages, i.e, half of the five month's wages per year, from the date of their termination till the date of the order of the Industrial Court, besides retaining allowance for the period at the rates prevalent. They will also be entitled to one month's pay for each completed year of service, from the date of their appointment till the date of order of the Industrial Court. They will also be entitled for payment of gratuity, which is to be calculated in accordance with the provisions of Payment of Gratuity Act, 1972. Pannalal who is said to have attained the age of superannuation and was a permanent employee, will be entitled to half back-wages from the date of termination of his services to the date of the order of the Industrial Court according to the rates prevalent. He will also be entitled to bonus from the date of termination till the date of superannuation, which has to be calculated according to the provisions of Payment of Bonus Act. He will also be entitled to gratuity, to be calculated in accordance with the provisions of Payment of Gratuity Act, 1972. He will not be entitled to any amount of compensation, as he has been awarded half back-wages up to the date of his superannuation, to which he reached before the passing of the order by the Industrial Court in appeal.
8. The amount already paid or deposited by the employer shall be given due credit. Balance amount shall be paid by the employer within three months from today, failing which the balance amount shall carry an interest at the rate of 12 per cent per annum after expiry of the period of 3 months.
9. The aforesaid directions we have given to do substantial justice between the parties, considering the circumstances of the case that the poor employees are fighting for their rights and due since 1969 and this is the second time when the case has reached this Court. If the matter is to be sent back, it will take another inning and the employer may drag them again in litigation. Wisdom and justice, therefore, require that the matter is decided now once for all under Art. 226, which is intended to do justice between the parties and save wastage of time, and the circumstances of the case require that the matter be decided once for all without the case being remitted to the Labour Court or the Industrial Court.
10. In the result, the petition is allowed to the exent indicated hereinabove with costs. Counsel's fee Rs. 750, if already certified, which are also to be paid by the employer within the time specified for payment of compensation. Security amount, if any, be refunded to the petitioners.