The High Court of Chhattisgarh, in a significant ruling, has held that reinstatement in service is not an automatic consequence of a workman’s retrenchment being declared illegal. A Full Bench, comprising Chief Justice Ramesh Sinha, Justice Naresh Kumar Chandravanshi, and Justice Ravindra Kumar Agrawal, clarified that the relief granted—be it reinstatement or monetary compensation—must be decided based on the specific facts and circumstances of each case.
The Court answered a reference made by a Division Bench, laying down comprehensive parameters for judicial review and the grant of relief in industrial disputes arising from termination of service.
Background of the Case
The matter came before the Full Bench after a Division Bench, hearing a batch of writ appeals, noted “absolutely conflicting judgments being delivered by the different Single Benches of this Court” on the issue of relief for illegal termination.
The lead case, WA No. 355 of 2014, involved an appellant, Surit Ram, who was appointed as a labourer in 1985 and whose services were terminated by an oral order on August 1, 1994. The Labour Court initially rejected his application, but the Industrial Court, in appeal, found the termination illegal for non-compliance with Section 25(F) of the Industrial Disputes Act and ordered his reinstatement.
The State of Chhattisgarh challenged this order in a writ petition. A learned Single Judge modified the Industrial Court’s order, replacing reinstatement with a compensation of Rs. 1,00,000. This modification was challenged by the workman in the present writ appeal.
Observing the inconsistencies in judicial orders, the Division Bench referred the following five questions for consideration by a larger bench:
- What is the extent of the power of judicial review under Articles 226 and 227 of the Constitution of India over awards of Labour Courts/Industrial Tribunals?
- Is a workman automatically entitled to reinstatement if retrenchment is found to be violative of the Industrial Disputes Act, or can compensation be granted instead?
- What are the parameters for granting reinstatement versus compensation?
- What are the parameters for granting full, partial, or no back-wages?
- What is the effect of delay by a workman in challenging the termination?
Arguments of the Parties
Counsel for the appellants, including Mr. Vinod Deshmukh, argued that the workmen were entitled to reinstatement, citing several Supreme Court decisions that supported their contention.
On behalf of the State, Additional Advocate General Mr. Y.S. Thakur submitted that the questions referred were already answered by various Supreme Court judgments, fairly admitting that there were precedents both in favour of and against the State’s position.
Court’s Analysis and Findings
The Full Bench provided a detailed analysis of each question, drawing from established Supreme Court jurisprudence.
On Judicial Review (Question 1): The Court reiterated that while the High Court’s power of judicial review under Article 226 is wide, it is not an appellate jurisdiction. Intervention in the findings of specialized bodies like Labour Courts is limited to circumstances of “jurisdictional errors, error apparent of the face of record, perversity or case of no evidence, violation of natural justice, arbitrariness.” The supervisory power under Article 227 is to be exercised with “great circumspection” to keep tribunals within their bounds.
On Automatic Reinstatement (Question 2): The Court observed a “shift in judicial approach.” While the traditional rule was reinstatement for any termination violating Section 25F of the ID Act, this is no longer automatic. The judgment noted, “The current legal position is that no automatic reinstatement can be awarded even if retrenchment is held to be illegal.” Citing cases like Jagbir Singh v. Haryana State Agriculture Mktg. Board, the court held that compensation can be an adequate relief, especially for daily wagers or short-term employees.
On Parameters for Reinstatement vs. Compensation (Question 3): The Bench laid down key factors to determine the appropriate relief:
- Nature of Employment: Reinstatement is the normal rule for permanent/regular employees, while compensation is usually granted for daily wagers or temporary workers.
- Length of Service: Long, continuous service justifies reinstatement, whereas short service may warrant compensation.
- Delay: A prompt challenge favours reinstatement, while long, unexplained delay may lead to compensation.
- Feasibility: Reinstatement is considered if the post is available and the establishment is functional. If not, compensation is more appropriate.
- Conduct of Workman: A blameless conduct supports reinstatement.
- Equity: Courts must balance the equities, considering factors like economic hardship and industrial peace.
On Back-Wages (Question 4): The court held that full back-wages are not an automatic entitlement upon reinstatement. The decision depends on several factors:
- Full Back-Wages: May be granted in cases of illegal termination of a long-serving permanent workman who was not gainfully employed elsewhere and challenged the termination promptly.
- Partial Back-Wages: Can be awarded where there was a short delay, short tenure of service, or financial hardship for the employer.
- No Back-Wages: May be denied in cases of long, unexplained delay, gainful employment of the workman, or if the termination was bona fide but technically defective.
On Effect of Delay (Question 5): The Court clarified that while the Industrial Disputes Act, 1947, prescribes no limitation period for raising a dispute, the equitable doctrine of delay and laches applies. It held, “A stale claim should not be entertained.” Citing Ajaib Singh v. Sirhind Coop. Marketing Society Ltd., the Bench stated that while delay is not a jurisdictional bar, the relief can be moulded. “A stale claim may result in denial of reinstatement and grant of compensation only.”
Decision
Concluding its analysis, the Full Bench held that no rigid formula could be applied to these questions. The judgment stated, “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 overall facts situation of that particular case.”
Having answered the reference, the Court directed the Registry to list the batch of appeals before the appropriate bench to be decided on their individual merits in light of the principles laid down.
