Holding

In the absence of proof of an agreement specifying a termination date, Section 6‑N applies, obliging the employer to comply with its procedural requirements, but because the post was not State‑sanctioned, the workman is entitled only to compensation, not reinstatement.

Summary

The Ghaziabad Development Authority (appellant) terminated Ashok Kumar (respondent), a daily‑wage Amin, on 1 May 1990. Kumar claimed the dismissal violated Section 6‑N of the Uttar Pradesh Industrial Disputes Act, 1947, which requires a workman who has worked at least 240 days in a year to be given one month’s notice or wages in lieu and compensation. The authority contended that Kumar’s employment was under an agreement that specified a fixed termination date, thereby exempting it from Section 6‑N. The Labour Court and the Allahabad High Court ordered reinstatement with back wages, but the Supreme Court held that the authority failed to prove the existence of such an agreement and therefore Section 6‑N applied. However, because the post was not sanctioned by the State after 31 March 1990 and the authority, as a statutory body, must comply with Articles 14 and 16 of the Constitution, reinstatement was deemed impracticable. The Court set aside the reinstatement order and directed the authority to pay compensation of Rs. 50,000 with interest to the workman.

Issues considered

Whether Section 6‑N of the Uttar Pradesh Industrial Disputes Act, 1947 applies to the termination of a workman employed by a statutory authority when the employer alleges an agreement with a fixed termination date.
Whether the Labour Court was justified in granting reinstatement with full back wages.
Whether the lack of State sanction for the post precludes reinstatement of the workman.
What relief is appropriate – reinstatement or compensation.

Legislation cited

Constitution of Indias. Article 14, s. Article 16
Uttar Pradesh Industrial Disputes Act, 1947s. 25-B, s. 2(k), s. 2(oo), s. 6-N, s. (bb)

Subjects

industrial disputere‑trenchmentSection 6‑Ncompensationreinstatementstatutory authorityconstitutional equalityUttar Pradesh Industrial Disputes Actdaily‑wage employee

Judgment

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[2008] 2 S.C.R. 1069

- y GHAZIABAD DEVELOPMENT AUTHORITY & ANR. A
v.
ASHOK KUMAR & ANR.
(Civ.il Appeal No. 1322 of 2008)
\ FEBRUARY 15, 2008
e·
[S.B. SINHA AND HARJIT SINGH BEDI, JJ.]
I~
Uttar Pradesh Industrial Disputes Act, 1947 - s. 6-N -
Termination of service - After two years of service - lnudstrial
dispute alleging non-compliance of s. 6-N - Workman c
claiming to have worked for 240 days in a year - Employer's
stand that employment taken under an ·agreement providing
for a specific date for termination thereof- Labour court holding
the workman entitled to reinstatement with back wages -
Confirmed by High Court - On appeal, held: In absence of
D
..,.<" proof regarding the employment being under an agreement
providing for date of termination, the workman would be
deemed to have worked for the entire period of two years -
Workman having worked for 240 days in a year, compliance
of s. 6-N was obligatory- However, since there was no sanction
by State for creation of such post, reinstatement of the workman E
_. is not called for - A statutory authority is obliged to make
'• recruitments only on compliance of Articles 14 and 16 of the
.Constitution - Workman is entitled to relief of compensation
instead of reinstatement- Constitution of India, 1950-Articles
...
..._ F,
14 and 16- Industrial Disputes Act, 1947- ss. 2(00), (bb) and
25-B.
Respondent was employed by the appellant-
Authority as an 'Amin'. After two years he was disengaged
from the service. Respondent raised industrial dispute on
G
..,. the ground that his removal from service was without
compliance of s. 6-N of Uttar Pradesh Industrial Disputes
' Act, 1947 as he had worked for 240 days in a year. Stand
~ of the appellant was that appointment of the respondeht
1069 H
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107!0 SUPREME COURT REPORTS [2008] 2 S.C.R.
;
I
was taken under an agreement providing for a specific .
~ -
A I
date for termination thereof. Labour Court passed the ·
,~ward in favour of the respondent holding him entitled to
be reinstated in service with full back wages. Writ petition
against the order of labour court was dismissed. Hence /

B the present appeal.
Partly allowing the appeal, the Court ~·.
HELD: 1.1 Tt.e offer of appointment has •.,not been
produced. Whether Respondent No. 1 continued to work
c on and from 1.4.1988 in terms of the said offer of
appointment or it was renewed from time to time on the
basis of grant of sanction thereof by the State of U.P. for
specific periods is not known. Therefore, the court would
proceed on the basis that the first respondent worked with
D the appellant authority for the entire period between
1.4.1988 and 31.3.1990. If that period is taken during which "'y
the respondent remained in service into consideration for
the purposes of applicability of Section 6-N of the U.P.
Industrial Disputes Act, there is no doubt whatsoever that
E the first respondent had worked for more than 240 days
in a year from the date of retrenchment. It was, therefore,
obligatory on the par:t of the appellant to comply with the
provisions of Section 6-N of the Act. [Para 7] [107 4-C, D, E]
1.2 Section 6-N of the Act unlike Section 258 of the
-
\

....,.._
F Industrial Disputes Act, 1947 does not provide that
working for a period of 240 days in the preceding year
would subserve the purpose. What is necessary under
the said provision is wbrking for a period of 240 days in
one year. Once, a workman, has been in continuous
G service for not less than one year before his retrenchment, ...,....
one month's notice in writing indicating the reason thereof
or wages in lieu thereof, as also compensation equivalent
to fifteen days average pay for every completed year of
service or in part thereof in excese of six months is
H imperative. Proviso appended to clause (a) of Section 6-
•
-
-(
GHAZIABAD DEVELOPMENT AUTHORITY & ANR. v. 1071
ASHOK KUMAR & ANR.

N of the Act provides that no notice would be necessary A
-- ).' to be served, if the retrenchment has been in terms of
an agreement which specified a date for the termination
of service. The said proviso is not in pari materia with

- Section 2(oo) and (bb) of the Industrial Disputes Act, 1947.
[Para 8) [1075-C, D, E]
1.3 Appellant has failed to prove that the services of
8

--{
"f the first respondent were taken under an agreement
providing for a specific date for termination thereof. Even
otherwise, the same does not absolve the employer from
payment of compensation as envisaged under clause (b) c
of Section 6-N of the Act. [Para 8) [1075-F]
2.1 The Labour Court was not justified in awarding
the relief of reinstatement with full back wages in favour
of the workman. First respondent was admittedly
appointed on a daily wage. He worked for a bit more than D
two years. It has not been disputed that sanction of the
-y"' State of U.P. was necessary for creation of posts. The
contention of the appellant before the Labour Court that
the post was not sanctioned after 31.3.1990 by the State
was not denied or disputed. If there did not exist any E
post, the Labour Court should not have directed
reinstatement of the first respondent in service. [Para 9)
[1075-H; 1076-A, B, CJ
2.2 A statutory authority is obligated to make
.......
recruitments only upon compliance of the equality clause F
contained in Articles 14 and 16 of the Constitution of India.
Any appointment in violation of the said constitutional
scheme as also the statutory recruitment Rules, if any,
would be void. These facts were required to be kept in
mind by the labour court before passing an award of G
reinstatement. Furthermore, public interest would not be
.., subserved if after such a long lapse of time, the first
respondent is. directed to be reinstated in service .

• Therefore, the appellant is directed to pay compensation
to the first respondent instead and in place of the- relief of H
1072 SUPREME COURT REPORTS [2008] 2 S.C.R.

A reinstatement in service. [Paras 9, 10 and 11] [1076-C, D, E]
~ --
CIVILAPPELLATE JURISDICTION: Civil Appeal N.o. 1322 .
of 2008.
,
Frqm the Judgment and Order dated 23.03.2004 of the
B High Court of Judicature at Allahabad in Civil Misc. Writ Petition
No. 30264 of 1996.
Mahavir Singh, Reena Singh, Varun Kumar and T. Mahipal
for the Appellants.
c Tatini Basu and Sudhir Nandrajog for the Respondents.
The Judgment of the Court was delivered by
S.B. SINHA, J. 1. Leave granted.
2. Appellant is an authority constituted under the Uttar
D Pr;adesh Uroan Planning and DevelopmentAct, 1973 (Act). It is
a Local Authority within the meaning of the General Clauses
Act, 1897. "'"t-

3. For its various ·projects, it appoints daily wagers on an
E ad hoc basis. Respondent herein was appointed by the Authority
on 1.4.1988 as a Amin. Appellant contends that he was
appointed on a periodical basis depending on the order of
sanctio11 issued by the State of Uttar Pradesh from time to time.
On the premise that the sanction for the said appointment was
granted only upto 30.3.1990, he was disengaged from services.
F
An industrial dispute was raised by the respondent. The +.,._
State made a reference for adjudication thereof by the Presiding
Judge, Labour Court, U.P., Ghaziabad which is to the following
effect;
G "Whether the·· disengagement/deprivation, by the
employers, of their workman Shri Ashok Kumar s/o Mahipal
Singh, Amin from the work with effect from 1.5.1990 is
proper and lawful? If not, what benefit/reliefs the workman
concerned is entitled to get, along with any other
H particulars?"
GHAZIABAD DEVELOPMENT AUTHORITY & ANR. v. 1073
ASHOK KUMAR & ANR. [S.S. SINHA, J.]
.... !' 3: Before the Labour Court, first respondent contended A
that since his date of recruitment, i.e., on and from 1.4.1988 till
9.4.1990, he continued to work. It, however, appears that his
services had been dispensed with on 1.4.1990.
It was urged that as despite the fact that he had worked for
more than 240 days in one year, the mandatory requirements of B
'l- Section 6-N of the Uttar Pradesh Industrial Disputes Act, 1947
had not been complied with, the same was illegal and, thus, he
was entitled to reinstatement with full back wages. Appellant,
however, in his written statement apart from denying and
disputing the averments made by the respondent that he had c
worked for more than 240 days in the year preceding his
retrenchment, categorically stated that as the Government did
not create any post, no work from the first respondent could be
taken and his services therefore, automatrcally came to an end
after 30.3.1990. D
·-V The learned Labour Court in its award opined that the
respondent No. 1 had worked for more than 240 days in an
year and as the requirement of the provisions of Section 6N of
the U.P. Industrial Disputes Act, 1947 had not been complied
with, he is entitled to be reinstated in service with full back wages. E

It was, however, directed;
"He be re-employed accordingly."
4. A Writ Petition was preferred thereagainst by the F
appellant before the Allahabad High Court. By reason of the I

impugned judgment, the said Writ Petition has been dismissed.
5. Mr. Mahavir Singh, the learned senior counsel appearing
on behalf of the appellant, submitted that the Tribunal and
consequently the High Court committed a serious error in G
,.,, passing the impugned judgment insofar as it failed to take into

. consideration that the services of the first respondent having
been availed only on a periodical basis, it was not necessary
for the appellant to comply with the provisions of Section 6-N of
the Act. It was furthermore urged that the Tribunal in the H
1074 SUPREME COURT REPORTS [2008] 2 S.C.R.

A aforementioned factual backdrop could not have directed
reinstatement of the first respondent.
~ Ms. Tatini Basu, learned counsel appearing on behalf of
the respondent, on the other hand, supported the impugned
judgment.
B
6. Although, a contention has been raised in the Special
Leave Petition that a statutory authority like the appellant is not
an 'Industry' within the meaning of Section 2(k) of the U.P.
Industrial Disputes Act, 1947, the same was not pressed.
C 7. Before us, the offer of appointment has not been
produced. Whether Respondent No. 1 continued to work on and
from 1.4.1988 in terms of the said offer of appointment or it was
renewed from time to time on the basis of grant of sanction
thereof by the State of U.P. for specific periods is not know~.
D We would, thus, have to proceed on the basis that the first
respondent worked with the appellant authority for the entire
period betweE'.n 1.4.1988 and 31.3.1990. If that period is taken
during which the respondent remained in service into
consideration for the purposes of applicability of Section 6-N of
E the U.P. Industrial Disputes Act, there is no doubt whatsoever
that the first respondent had worked for more than 240 days in
a year from the date of retrenchment.
It was, therefore, obligatory on the part of the appellant to
F comply with the provisions of Section 6-N of the Act. It reads thus:
"6-N. Conditions precedent to retrenchment of
workmen.No workman employed in any industry who has
been in continuous service for not less than one year under
an employer shall be retrenched by that employer until
G (a) the workman has been given one months notice in
writing indicating the reasons for retrenchment and
the period bf notice has expired or the workman has
been paid in lieu of such notice wages for the period
of the notice : ·
H
·~
GHAZIABAD DEVELOPMENT AUTHORITY & ANR. v. 1075
ASHOK KUMAR & ANR. [S.B. SINHA, J.].

Provided that no such· notice shall be necessary if the A'
• )1
retrenchment is under an agreement which specifies a
date for the termination of service;
(b) the workman has been paid, at the time of
retrenchment, compensation which shall be
equivalent to fifteen days average pay for every B
... completed year of service or any part t~ereof in
'f excess of six months, and
(c) notice in the prescribed manner is served on the
State Government."
c
8. Section 6-N of the Act unlike Section 258 of the
Industrial DisputesAct, 1947 does not provide that working for
a period of 240 days in the preceding year would subserve the
purpose. What is necessary under the said provision is working
for a period of 240 days in one year. Once, a workman, has D
been in continuous service for not less than one year before his
·,f retrenchment, one months notice in writing indicating the reason
thereof or wages in lieu thereof, as also compensation equivalent
to fifteen days average pay for every completed year of service
or in part thereof in excess of six months is imperative. Proviso
E
--t appended to clause (a) of Section 6-N of the Act provides that
no notice would be necessary to be served, ifthe retrenchment
has been in terms of an agreement which specified a date for
the termination of service. The said proviso is not in pari materia
with Section 2(oo)(bb) of the Industrial Disputes Act, 1947.
F
"""" Appellant has miserably failed to prove that the services
of the first respondent were taken under an agreement providing
-4 for a specific date for termination thereof. Even otherwise, the
same does not absolve the employer from payment of
-~ compensation as envisaged under clause (b) of Section 6-N of G i

the Act. The Labour Court and consequentially the High Court,
....

..
therefore, in our opinion were correct in holding that the
provisions of Section 6-N of the Act had not been complied with.
9. The question which however, arises for consideration
'• is as to whether the Labour Court was justified in awarding the H
......
1076 SUPREME COURT REPORTS [2008] 2 S.C.R.

A relief of reinstatement with full back wages in favour of the ,"/:, (

workman.
First respondent was admittedly appointed on a daily wage
of Rs.17/- per day. He worked for a bit more than two years. It
has not been disputed before us that sanction of the State of
B U. P. was necessary for creation of posts. The contention of the
appellant before the Labour Court that the post was not
sanctioned after 31.3.1990 by the State was not denied or
"'('
r-
disputed. If there did not exist any post, in our opinion, the Labour
Court should not have directed reinstatement of the first
c respondent in service.
A statutory authority is obligated to make recruitments only
upon compliance of the equality clause contained in Articles 14
and 16 of the Constitution of India. Any appointment in violation [
of the said constitutional scheme as also the statutory
D recruitment Rules, if any, would be void. These facts were
. required to be kept in mind by the labour court before passing ~- '
an award of reinstatement.
10. Furthermore, public interest would not be subserved if
after such a long lapse of time, the first respondent is directed
E to be reinstated in service.
11. We are, therefore, of the opinion that the appellant
should be directed to pay compensation to the first respondent
instead and in place of the relief of reinstatement in service.
F Keeping in view the fact that the respondent worked for ~-
about six years as also the amount of daily wages which he had
been getting, we are of the opinion that the interest of justice ;......
would be subserved if the appellant is directed to pay a sum of
Rs.50,000/- to the first respondent. The said sum should be paid
G to the respondent within eight weeks from date, failing which
the same shall carry interest at the rate of 12% per annum. The
-¥
appeal is allowed ~o the aforesaid extent. However, in the facts
and circumstances of this case, there shall be no order as
to costs.
H K.K.T. Appeal partly allowed. •
~