Holding

A violation of Sections 25G and 25H does not automatically compel reinstatement with back wages; in this case, compensation of Rs 75,000 was awarded instead.

Summary

The Jaipur Development Authority (JDA), a State entity, terminated the services of daily‑wage worker Ram Sahai on 1 July 1987. Sahai had not completed 240 days of continuous service and the Labour Court held that JDA had violated Sections 25G and 25H of the Industrial Disputes Act, 1947, ordering his reinstatement with full back wages. JDA appealed, and the Supreme Court examined whether the "last‑come‑first‑go" rule under Section 25G is mandatory for daily‑wage workers and whether a breach of Sections 25G/25H automatically mandates reinstatement. The Court held that the rule is not imperative, that continuous service is not a prerequisite for the application of Sections 25G/25H, and that a violation of these provisions does not per se require reinstatement with back wages. In the facts, the Court found no justification for reinstatement and awarded compensation of Rs 75,000 instead. The appeal was partly allowed.

Issues considered

The applicability of Sections 25G and 25H of the Industrial Disputes Act to a daily‑wage worker who had not completed 240 days of continuous service.
Whether the "last‑come‑first‑go" rule under Section 25G is mandatory or discretionary.
Whether a breach of Sections 25G and 25H automatically obliges the employer to reinstate the workman with back wages.
Whether compensation in lieu of reinstatement is appropriate where the workman was not regularly employed.

Legislation cited

Constitution of Indias. Article 12
Industrial Disputes Act, 1947s. 25B, s. 25F, s. 25G, s. 25H

Subjects

Industrial Disputes Actretrenchmentdaily‑wage workerlast‑come‑first‑goreinstatementcompensationseniority listSection 25GSection 25Hlabour law

Judgment

JAIPUR DEVELOPMENT AUTHORITY A
v.

. RAM SAHAI AND ANR .

OCTOBER 31, 2006

[S.B. SINHA AND MARKANDEY KATJU, JJ.] B

Labour laws:

Industrial Disputes Act, 1947:
c
Sections 25G and 25H-Rule of 'last come first go '-Termination of
daily wage earner who had not been in one year continuous service-Order
of reinstatement with full back wages by Labour Court on the ground that
termination was in violation of Sections 25G and 25H-Correctness of-
Held, Not .-:orrect as no case made out that when his services were terminated,
any person who was junior to him in the same category, had been retained- D
ln the interest of justice, compensation of Rs. 75, 000 awarded in place of re-
instatement-Industrial Disputes Rules, 1958-Ru:e 77.
Section 25G-Rule of 'last come first go '-Applicability of-Discussed
Respondent-workman was appointed on daily wage basis. He had not been E
in one year continuous service. On termination of his servkes, he raised
industrial dispute. Labour Court found that the appellant-employer had failed
to comply with the requirements contained in Sections 25G and 25H of
Industrial Disputes Act, 1947 r/w Rule 77 of Industrial Disputes Rules, 1958
and therefore set aside the order of termination and directed reinstatement
with full back wages. Appellant-employer unsuccessfully filed writ petition F
before High Court. Hence the present appeal.

Partly allowing the appeal, the Court

HELD: 1.1. As Respondent was appointed on daily wages and he has not
completed 240 days, his retrenchment by Appellant did not require compliance G
of the provisions of Section 25F of the Industrial Disputes Act, 1947.
199-E\
1.2. Section 25G introduces the rule of 'last come first go'. It is not a
rule which is imperative in nature. The said rule would be 1pplicable when a
95 H
96 SUPREME COURT REPORTS [2006) SUPP. 8 S.C.R. ...
A workman belongs to a particular category of workman. An employer would,
in terms thereof, be ordinarily required to retrench the workman who was
the last person to be employed in that category. However, for reasons to be
recorded, the employer may retrench any other workman. Section 25H
provides for re-employment of retrenched workman, which will apply in case
where the employer proposes to take into employment any person, an
B opportunity has to be given to him to offer himself for r~-employment The
State of Rajasthan has framed Rules known as Rajasthan Industrial Disputes
Rules, 1958. Rule 77 thereof prescribes the procedure in which seniority
list in the particular category of workman was to be maintained. Rule 78
postulates re-employment of retrenched workman. From the scheme of the
C Act and the Rules framed, it appears that Section 25F on the one hand and
Sections 25G and 25H were enacted to meet situations of different kind.
199-F-H; 100-A-BJ

2. Before the Labour Court, muster rolls were prodi;ced by Appellant.
It was noticed that in July, 1985 Respondent had worked regularly. He did
D not work in August, 1985. He worked for 25 days in September, 1985,
whereas, again in October, 1985 he did not work at all. He, however, worked
regularly in November and December, 1985. But in January, 1986 he worked
only for 9 days. Again in February, 1986 he did Rot-work at all. Yet again, in
March, April, May and June of 1986, he worked for 26 day'>, 26 days, 27·days
E and 25 days respectively. In the months of July, August, September and
October of 1986 he did not work at all. Thereafter, in November, 1986, he
worked for 27 days. He was, therefore, not in continuous servir.e. He never
made any complaint prior to raising any indastrial dispute t~at Appellant had
not complied with the provisions of Section 25G or Sectic>n 25H of the Act
1100-E-F; 101-B)
F 3. It ;~ one thing to.say that the workman is retrenched from his
services, but, a daily wager who keeps on coming and going and even has not
taken or been given any work on any day on each month, it was not necessary,
as had been opined by the Labour c;ourt, to initiate a departmental proceeding
against him for his absence from duty. It would have been proper in the
G aforementioned circumstances for the Labour Court to delve deep into the
said question as to whether Appellant deliberately and intentionally did not
allow him to _join in his duties or Respondent himself did not continue to work
since 1.7.1987. pOI-D-E)

4.1. The continuous work in terms of Section 25B of the Act is not
H nece:;o.ary in so far as statutory requirements under Sections 25G and 25H
__ ,
JAIPUR DEVELOPMENT AUTHORITY v. RAM SAHA! [S.B. SINHA, J.) 97

are concerned.1102-AI A

.. Central Bank of India v. S. Satyam & Ors .. 1199615 SCC 419; Samishta
Dube v. City Board. Etawah & Anr.. 1199913 SCC 14 and Regional Manager .
SB/ v. Rakesh Kumar Tewari. 1200611 SCC 530, referred to.

4.2. There had been a violation of Sections 25G and 25H of the Act, but, B
the same by itself, would not mean that the Labour Court should have passed
an Award of re-instatement with entire back wages. This Court ~ime and again
has held that the jurisdiction under Section 11 A must be exercised judiciously.
The workman must be employed by a State within the meaning of Article 12
of the Constitution of India, having regard to the doctrine of public C
employment. It is also required i:o recruit employees in terms of the
provisions of the rules for recruitment framed by it. Respondent had not
regularly served Appellant. The job was not of perennial nature. There was
nothing to show that when his services were terminated any person who was
junior to him in the same category, had been retained. His services were
dispensed with as early as in 1987. It would not be proper to direct his D
reinstatement with back wages. Interest of justice would be sub-served if
instead and in place of re-instatement of his services, a sum of Rs. 75,000/- is
awarded to Respondent by way of compensation. 1103-F-H; 104-AI

State of Rajasthan & Anr. v. Ghyan Chand (Civil Appeal No.3214 of
2006, disposed of qy Sur;reme Court on 28th July, 2006), relied on. E
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4626 of2006

From the Judgment and Final Order dated 26-7-2004 of the High Court
of Judicature for Rajasthan at Jaipur Bench, Jaipur in D.B. Civil Special Appeal
(Writ) No.448/2004.
F
S.K. Bhattacharya for the Appellant.

Sushil Kumar Jain, Pratibha Jain, Puneet Jain and Sarad Singhania for
the Respondents.

The Judgment of the Court was delivered by
G
S.B. SINHA, J. Leave granted.

Appellant herein is a State within the meaning of Article 12 of the
Constitution of India. It is created under the Jaipur Development Authority
Act. Respondent was appointed on daily~wage basis from September, 1986
H
'
98 SUPREME COURT REPORTS (2006) SUPP. 8 S.C.R.

A to June, 1987. His services were dispensed with, with, effect from I. 7.1987.
He raised an industrial dispute and on receipt of failure report dated 26.4.1988
of the Conciliation Officer, the Government ofRajasthan made a reference for
adjudication of the following dispute to the Presiding Officer, Labour Court
at Jaipur, in exercise of its powe; under Section IO(l)(c) of the Industrial
Disputes Act, 194 7 :
B
"Whether termination of service of workman Shri Ramsahai s/o
Chhotu through Shri M.F. Beg Labour Welfare Centre, near Mayank
Cinema, Station Road, Jaipur w.e.f. 1.7.87 by the Secretary, Jaipur
Development Authority, Jaipur and the Garden Specialist, Jaipur
Development Authority, Jaipur is reasonable and legal. If not then
c to what relief and amount the workman is entitled to receive?'; .

By reason of an Award dated 22.3.1999, the Presiding
' ,. ,· Officer,.Labour
' .
Court held that the termination of services of the workman was not legal. He.
was directed to be reinstated in service with foll back:w~ges. It was held :
D "The terminati.cm of workman Ramsahai son ofShri Chhotu Ram'by
the respondents w.e.f. 1.7.87 is not reasonable and legal. He is
reinstated back in service. His continuity iri service is maintained,
and from the date of his termination till the date of award he is
awarded all back wages along with other benefits which he would
E have received while in continuous seniice and from the date of award
the workman shall receive th~ wages and other benefits which other
similarly situated wor1 ~men junior to him are receiving today."

A writ petition was filed by the appellant before the High Court of
Rajasthan, which was marked asS.B. Civil Writ Petition No.6863 ofl993. The
F said writ petition was dismissed:· A Letters Patent Appeal filed thereagainst
has also been dismissed by a Division Bench of the said Court. The Labour
Court in its A ward, inter alia, held that the respondent has not been in
continuous service for a period of240 days with twelve months immediately
preceding his termination stating :

G ".... In this way the applicant workman under the respondents/
management has not completed one year continuous service according
to the definition of one year continuous service as contemplated
under section 25(8) of the Act. Therefore the Issue No. I is decided
in favour of the respondents/management against the applicant."

H
-j JAIPUR DEVELOPMENT AUTHORITY v. RAM SARAI [S.B. SINHA, J.] 99.
. :',;~~

It was further held that the plea of the appellal}t herein that he had ·A
abandoned his services is not correct. It was further held that the termination

.. of the workman does not \:Ome within the purview of any of the exceptions
contemplated under Section 2(oo) of the Industrial Dispµtes Act ('the Act',
for short). It was however, opined that the appellant failed to comply with
the requirements contained in Section 25G of the Act read with Rule 77 of the B
Industrial Disputes Rules, 1958 ('the Rules', for short) as also Section 25H
thereof.

Mr. S.K. Bhattacharya, learned counsel appearing on behalf of the
appellant would contend that the recruitment and termination of Respondent
being on daily-wage basis, Sections 25G and 25H of the Act have no application C
in the instant case. It was further•submitted that workman having voluntarily
abandoned his services, the Labour Court wrongly opined that he was
·· retrenched from service.

Mr. Sushil Kumar Jain, learned counsel appearing on behalf of the
respondent, on the other hand, would submit that Sections 25G and 25H of D
the.Act stand on a different footings, vis-a-vis, Section 25F thereof, in so far
as, for the purpose of invoking the said provisions, it is not necessary that
the workman must complete a continuous service of240 days within a period
of twelve calendar months preceding the order of termination as envisaged
under Section 25B of the Act.
E
The fact that Respondent was appointed on daily wages and he has not
completed 240 days, is not in dispute. Retrenchment of Respondent by
Appellant, therefore, did not require compliance of the provisions of Section
25F of the Act.

Section 25G introduces the rule of 'last come first go'. It is not a rule F
which is imperative in nature. The said rule would be applicable when a
workman belongs to a particular category of workman. An employer would,
in terms thereof, is ordinarily requi~ed to retrench the workman who was the
last person to be employed in that category. However, for reasons to be
recorded, the employer may retrench any other workman. G
Section 25H provides for re-employment ofretrenched workman, which
will apply in case where the employer proposes to take into employment any
person, an opportunity has to be given to him to offer himself for re-
employment.
H
100 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.
.
A The State of Rajasthan has framed Rules known as Rajasthan Industrial
Disputes Rules, 1958.

Rule 77 of the Rajasthan Industrial Disputes Rules prescribes the
procedure in which seniority list in the particular category of workman was
to be maintained. Rule 78 postulates re-employment ofretrenched workman.
B
From the scheme of the Act and the Rules framed, it appears that 25F
on the one hand and Sections 25G and 25H were enacted to meet situations
of different kind.

It contemplates industries where different categories of workman would
C be appointed. Provision~ relating to retrenchment of workman was
contemplated in different situation namely where it can be pre-detennined or
a contingency which can be foreseen.

The statute does not envisage application of the provisions of the Act
and Rule where both recruitment and termination is uncertain or when the
D workmen are not required to be recruited in a category-wise service, e.g.,
skilled, semi-skilled or unskilled, etc.

Before the Labour Court, muster rolls were produced by Appellant. It
was noticed that in July, 1985 Respondent had worked regularly. He did not
E work in August, 1985. He worked for 25 days in September, 1985, whereas,
again in October, 1985 he did not work at all. He, however, worked regularly
in November and December of 1985. But in January, 1986 he worked only for
9 days. Again in February, 1986 he did not work at all. Yet again, in March,
April, May and June of 1986, he worked for 26 days, 26 days, 27 days and
25 days respectively. In the months of July, August, September and October
F of 1986 he did not work at all. Thereafter, in November, 1986, he worked for
27 days.

It is not in dispute that he had not been appointed in accordance with
the recruitment Rules.

G In the Award of the Labour Court it is stated :

"As per the muster rolls submitted by the respondents/management
the working period in September 86 vide Annexure-1 is 25 days, in
October 86 vide Annexure-2 is 26 days, in December 86 vide Annexure-
4 is 27 days, in January 87 vide Annexure-5 is 27 days, in March 87
H vide Annexure-7 is 24'h days, in April 87 vide Annexure-8 is 26 days,

•
JAIPUR DEVELOPMENT AUTHORITY v. RAM SAHA! [S.B. SINHA, J.] l 01

in June 87 vide Annexure-10 is 26 days. In this manner from September A
86 to June 87 the applicant workman worked in total for 181 Yi days.
If weekly holidays of 21 days are further included in it, then total of
work days comes to 202Yi days only. Thus it does not make 240 days
but it is lesser than it."

He was, therefore, not been regularly appointed. He was not in B
continuous service. He never made any complaint prior to raising any industrial
dispute that Appellant had not complied with the provisions of Section 25G
or Section 25H of the Act.

The Labour Court committed a serious error in opining that only because
his name was not included in the muster roll of July, 1987, the same would C
amount to removal of his services from the muster rolls. Labour Court should
have probed deeper into the matter.

It is one thing to say that the workman is retrenched from his services,
but, a daily wager who keeps on coming and going and even has not taken D
or been given any work on any day on each month, it was not necessary, as
had been opined by the Labour Court, to initiate a departmental proceeding
against him for his absence from duty. It would have been proper in the
aforementioned circumstances for the Labour Court to delve deep into the
said question as to whether Appellant deliberately and intentionally did not
allow him to join in his duties or Respondent himself did not continue to work E
since l.7.1987.

Labour Court may be correct in arriving at the conclusion that there was
nothing to show that the provisions of Sections 25G and 25H had been
complied, but there is also no finding as to whether in a situation of this
nature the same were required to be complied with. F
The State of Rajasthan has framed Rules in regard to the manner in
which the seniority of workmen in a particular category from which retrenchment
is contemplated, should be maintained. It, however, pre-supposes that a
daily-wager would fall in a particular"category of workman. Only when a G
daily-wager is employed in a particular category of workman, a seniority list
is required to be maintained in terms of Rule 77 of the Rules. We may,
however, do not intend to lay down any law in this behalf as it is not
necessary for the purpose of this case. In an appropriate case, this Court may
have to consider the question of justification of giving extended meaning to
the terms 'retrenchment' and 'industry'. H
102 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

A Mr. Jain appears to be right when he submits that continuous work in
terms of Section 25B of the Act is not necessary in so· far as statutory
requirements under Sections 25G and 25H are concerned.· The said question
appears to have been· considered by this Court in some decisions.

In Central Bank of India v. S. Satyam & Ors., (1996) 5 SCC 419, this
B Court opined :

"The next provision is Section 25-H which is couched in wide
language and is capable of application to all retrenched workmen, not
merely those covered by Section 25-F. It does not require curtailment
of the ordinary meaning of the word 'retrenchment' used therein. The
c provision for reemployment of retrenched workmen merely gives
preference to a retrenched workman in the matter of re-employment
over other persons. It is enacted for the benefit of the retrenched
workmen and there is no_ reason to restrict its ordinary meaning which
pro~otes the object of the enactment without causing 'any prejudice
D to a better plated retrenched workman."

Yet again in Samishta Dube v. City Board, Etawah & Anr., [1999] 3 SCC
14, this Court held :

"We shall next deal with the point whether, in case employees
junior to the appellant were retained, the directio!1s issued by the
E
Labour Court could be treated as valid. Section 6-P of the U.P. Act
(which corresponds to Section 25 G of the Central Act of 1947) states
that where any workman in an industrial establishment is to be
retrenched and he belongs to a particular category of workmen in that
establishment, in the absence of any agreement between the employer
F and the workmen in this behalf the employer shall ordinarily retrench
the workmen who was the last person to be employed in that category,
unless for reasons to be recorded, the employer retrenches any other
person. Now this provision is not contr<;>lled by conditions as to
length of service contained in Section 6-N (which corresponds to
Section 25-F of the Industrial Disputes Act, 1947). Section 6-P does
G
not require any particular period of continuous service as required by
Section 6~N. In Kamlesh Singh v. Presiding Officer5 in a matter \vhich
arose under this very Section 6-P of the U.P. Act, it was so held.
Hence the High Court was wrong in relying on the fact that the
appellant had put in only three and a half months of service and in
H
JAIPUR DEVELOPMENT AUTHORITYv. RAM SAHA! [S.8. SINHA, J.]l 03

denying relief. (See also in this connection Central Bank of India v. A
S. Satyam 6.)

Nor was the High Court correct in stating that no rule of seniority
was applicable to daily-wagers. There is no such restriction in Section
6-P of the U.P. Act read with Section 2(z) of the U.P. Act which defines
workman. B
It is true that the rule of first come, last go in Section 6-P could
be deviated from by an employer because the section uses the word
ordinarily. It is, therefore, permissible for the employer to deviate from
the rule in cases of lack of efficiency or loss of confidence, etc., as
held in Swadesamitran Ltd v. Workmen 7• But the burden will then be C
on the employer to justify the deviation. No such attempt has been
made in the present case. Hence, it is clear that there is clear violation
of Section 6-P of the U.P. Act."

Yet again recently in Regional Manager, SB! v. Rakesh Kumar Tewari,
[2006] I SCC 530, this Court followed Cent~al Bank ofIndia (supra), stating: D
"Section 25G provides for the procedure for retrenchment of a
workman. The respondents have correctly submitted that the
provisions of Sections 25G and 25H of the Act do not require that the
workman should have been in continuous employment within the
meaning of Section 25B before he could said to have been retrenched.'? E
We would, therefore, proceed on the basis that there had been a violation
of Sections 25G and 25H of the Act, but, the same by itself, in our opinion,
would not mean that the Labour Court should have passed an Award of re-
instatement with entire back wages. This Court time and again has held that F
the jurisdiction under Section 11 A must be exercised judiciously. The workman
must be employed by a State within the meaning of Article 12 of the
Constitution of India, having regard to the doctrine of public employment. It
is also required to recruit employees in terms of the provisions of the rules
for recruitment framed by it. Respondent had not regularly served Appellant.
The job was not of perennial nature. There was nothing to show that he, G
when his services were terminated any person who was junior to him in the
same category, had been retained. His services were dispensed with as early
as in 1987. It would not be proper to direct his reinstatement with back wages.
We, therefore, are of the opinion that interest of justice would be sub-served
if instead and in place of re-instatement of his services, a sum of Rs.75,000 H
104 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

A is awarded to Respondent by way of compensation as has been done by this
Court in a number of its judgments. [See State of Rajasthan & Anr. v. Ghyan
Chand (Civil Appeal No.3214 of 2006, disposed ofon 28th July, 2006.)

This appeal is allowed in part and to the extent mentioned hereinbefore.
There shall be no order as to costs.
B
D.G. Appeal partly allowed.