Holding

Compliance with Section 25‑F is mandatory, but reinstatement with back‑wages is not automatic; the award of reinstatement and 25% back‑wages was set aside and a compensation of Rs. 3 lakhs was ordered.

Summary

The respondent, Radhey Shyam, was employed as a junior clerk by Rajasthan Lalit Kala Academy and was terminated in 1981 without complying with the notice and compensation requirements of Section 25‑F of the Industrial Disputes Act. He raised an industrial dispute; the Labour Court ordered his reinstatement with back‑wages. The Academy repeatedly refused to reinstate him and later terminated him again in 1985, again without complying with Section 25‑F. The Labour Court again found non‑compliance and ordered reinstatement with 25% back‑wages. The Academy challenged these awards in the High Court, which dismissed the challenges. The Supreme Court held that while compliance with Section 25‑F is mandatory, reinstatement with full back‑wages is not automatic; various factors such as length and nature of service must be considered. Consequently, the Court set aside the award of reinstatement and back‑wages and instead directed a lump‑sum compensation of Rs. 3 lakhs to the respondent. The appeal was partly allowed.

Issues considered

Whether compliance with Section 25‑F of the Industrial Disputes Act, 1947 is mandatory in a retrenchment of a workman employed continuously for at least one year.
Whether the Labour Court's finding that the employer failed to comply with Section 25‑F was perverse or erroneous.
Whether reinstatement with continuity of service and back‑wages must be granted automatically upon a finding of illegal termination under Section 25‑F.
Whether a lump‑sum compensation can replace reinstatement and back‑wages in view of the facts and the long‑standing litigation.

Legislation cited

Industrial Disputes Act, 1947s. 17, s. 25-F, s. 2(oo), s. 33(C)(2)

Subjects

industrial disputeretrenchmentSection 25-Freinstatementback-wagescompensationlabour lawunfair labour practicetermination of service

Judgment

[2008] 10 S.C.R. 820

A RAJASTHAN LAUT KALA ACADEMY
v.
RADHEY SHYAM
(Civil Appeal No. 4331 of 2008)
JULY.11, 2008
B
[C.K. THAKKER AND D.K. JAIN, JJ.]

LabourLaws:lndustrial Disputes Act, 1947; Ss.2(00), 17,
25-F and 33(C)(2):
C Termination/Retrenchment - Termination of Services of
Workmen - Industrial Dispute -Award by Labour Court direct-
ing employer to reinstate the workman in question and for pay-
ment of backwages - Non-compliance, by Employer - Held:
Compli,ance with the provisions of S.25-F of the Act by employer
D mandatory while retrenching a workman - Finding of Labour
Gour as affirmed by High Court to the effect that employer failed
to adduce any evidence in support of the plea that in lieu of
notice in terms of S. 25-F of the Act a sum of Rs. 18001- had
been paid to the workman in question thus order of termination
E was illegal hence order of Courts below do not suffer from any
perversity warranting interference - However, the Courts below
erred in determining the question of reinstatement and pay-
ment of back wages - Though illegality of the order of termina-
tion is one of the prime considerations for determining quan-
F tum of backwages but it cannot be the sole criterion therefoe -
Hence, the award of Labour Court to that extent cannot be sus-
tained - In the facts and circumstances of the case, interest of
;ustice would be met if instead and in place of reinstatement
and backwages, a sum of Rs. 3 lakhs is to be paid to the work-
G man in question by way of compensation ~ Directions issued -
Retrenchment - Compensation.
Respondent was appointed on June 6, 1980 as Jun-
ior Clerk by the appellant and on April 4, 1981 his services
were terminated. Aggrieved the workman raised an in-
H 820
..._ RAJASTHAN LALIT KALA ACADEMY v. RADHEY 821
-SHYAM
~
i
dustrial dispute. The Labour Court passed an award di- A
recting reinstatement of the respondent with effect from
September 24, 1983 with 50% back-wages. The respon-
dent claims to have submitted his joining report but he
was not taken back on duty by appellant. Instead, the
appellant challenged the validity of the award by filing a B
~ -1 writ petition. The-petition was dismissed by the High Court.
Later, the services of respondent were terminated on
January 31, 1985, treating him to be in service with effect
from November 17, 1984. Respondent again raised an in-
dustrial dispute which was referred to the Labour Court.
The respondent also filed an application under Section c
33C (2) of the Industrial Disputes Act for computation of
wages for certain period. Labour Court held that the man-
agement had failed to adduce any evidence in support of
its plea that a demand draft in the sum of Rs. 1800/- was
given to the respondent in lieu of notice in terms of Sec- D
-~
ti on 25-F of the Act, the appellant had failed to comply with
the statutory requirements and, therefore, order terminat-
ing services of respondent was arbitrary and illegal and
had been passed in a ma/a fide manner in order to victim-
ize the respondent. Accordingly, the Labour Court directed
E
reinstatement of the respondent with continuity in service
and payment of 25% back-wages from the date of termina-
tion of services to the date of award and also payment of
arrears of wages as claimed by the respondent. Appellant
challenged the award by filing writ petition, which was dis-
>- ~ missed by the Single Judge of High Court and Appeal filed F
thereagainst was dismissed by the Division Bench of the
High Court. Hence, the present appeal.
Partly allowing the appeal, the Court
Held: 1. 1. It is trite that in the event of retrenchment G
of a workman, employed in any industry, continuously for
"" -+ not less than one year under an employer, compliance
with the provisions of Section 25-F of the Industrial Dis-
putes Act, in particular clauses (a) and (b) thereof is man-
datory. [Para 14] [827 E-F] H
822 SUPREME COURT REPORTS [2008] 10 S.C.R.
t ~

A 1.2. In the light of the pleadings and undisputed docu-
ments available on record, the Court is convinced that
the finding of the Labour Court to the effect that the ap-
. pellant has failed to adduce any evidence in support of
their plea that a sum of Rs.1800/- had been paid to the
B respondent, does not suffer from any perversity. Thus, it 'r -
cannot be said that the Labour Court or the High Cou.rt
has committed any illegality, warranting interference with
the said concurrent finding of fact. [Para 15] [828 E-G]
2.1. Once the termination of service of an employee
c is held to be illegal, the relief of reinstatement is ordinarily
available to the employee. But the relief of reinstatement
with full back-wages need not be granted automatically
in every case where the Labour Court/Industrial Tribunal
records the finding that the termination of services of a
D workman was in violation of the provisions of the Act. For j-
this purpose, several factors, like the manner and method
of selection; nature of appointment-ad hoc, daily-wage,
temporary or permanent etc., period for which the work-
man had worked and the delay in raising industrial dis-
E pute, are required to be taken into consideration.[Para 17]
[829 A-D]
General Manager, Haryana Roadways Vs. Rudhan
Singh (2005)5 SCC 591; Central P&D Inst. Ltd. Vs. Union of
India & Anr (2005)9 SCC 171; Haryana State Electronics De-
F velopment Corpn. Ltd. Vs. Mamni (2006) 9 SCC 434 and ~ .....'
Madhya Pradesh Administration Vs. Tribhuban (2007) 9 SCC
748 relied on.
2.2. Though, illegality of the order of termination is
one of the prime considerations for determining the ques-
G
tion and quantum of back-wages, but it cannot be the sole
criterion therefor. A host of other factors, are required to
be taken into consideration before issuing directions in +-
...
that behalf. Therefore, the award of the Labour Court to
that extent cannot be sustained. However, at this distant
H
RAJASTHAN LALIT KALA ACADEMY v. RADHEY 823
SHYAM [D.K. JAIN, J.]
t
"' time, it would not be fair to the respondent-workman to A
remit the matter back to the Labour Court or the High Court
for fresh consideration of the issue. In the light of the ob-
servations referred to above and having regard to the
nature and the period of services rendered by the respon-
•. --f dent and the fact that his services were terminated ini- B
tially on 4th April, 1981 and then on 31st January, 1985 and
the vicissitudes of long-drawn litigation, the respondent
has undergone for over 27 years, interest of justice would
be met if instead and in place of direction for reinstate-
ment and back-wages, a sum Rs.3 lakhs is directed to be c
paid to the respondent by way of compensation. [Para
19] [830 E- 831-A]
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 4331
,,
of 2008
-~ D
From the final Judgment and Order dated 1.12.2005 of
the High Court of Judicature for Rajasthan, Bench at Jaipur in
D.S. Special Appeal (Writ) No. 279 of 2001
Dr. Manish Singhvi, and P.V. Yogeswaran for the Appel-
lant. E
S.K. Khesote, H.D. Thanvi, Sarad Singhania and R.C.
Kohli for the Respondent.
The Judgment of the Court was delivered by
.~ -.J. F
D.K. JAIN, J. Leave granted.
2. The appellant-management has challenged in this ap-
peal the judgment and order dated 1st December, 2005, passed
by the High Court of Judicature for Rajasthan at Jaipur in D.S.
Special Appeal (Writ) No. 279 of 2001, dismissing the intra-
G
court appeal against the order of a learned Single Judge in S.S.
........ Civil Writ Petition No.1895 of 1998. The learned Single Judge
had affirmed the award of the Labour Court in L.C.R. No. 348 of
1985, directing reinstatement of the respondent-workman with
continuity of service and 25% back-wages from the date ofter-
H
824 SUPREME COURT REPORTS [2008] 10 S.C.R.

A mination of his services to the date of award.
3. A few material facts leading to these proceedings, are
as follows:
The respondent was appointed on 7th June, 1980 on a
B· monthly salary of Rs.300/- to do the work of a Junior Clerk. On
4th April, 1981 his services were terminated. On an industrial
dispute being raised, the Industrial Tribunal, Jaipur; by an award
dated 24th September, 1983, set aside the order of termination
and directed reinstatement of the respondent with effect from
c 24th September, 1983 with 50% back-wages. The respondent
claims to have submitted his joining report on the very next date
of award. The award was published under Section 17 of the
Industrial Disputes Act, 1947 (for short 'the Act') on 17th April,
1984. The respondent agair1 submitted his joining report to the
D Secretary of the appellant but was not taken back on duty.
4. -.The validity of the award was questioned by preferring
a Civil Writ Petition No.1317 of 1984. During the pendency of
the writ petition, the High Court granted stay of the direction in
regard to payment of back-wages. However, direction regard-
E ing reinstatement of the respondent was not stayed. Yet the
respondent was not taken back on duty. Ultimately, the writ pe-
tition was dismissed.
5. Since the appellant did not permit the respondent to
join duty, the respondent took recourse to proceedings under
F Section 29 of the Act against the appellant. According to the
respondent, he again reported for duty on 1711 November, 1984,
but the appellant did not permit him to join. Instead, vide order
dated 31 §t January, 1985, the appellant terminated the services
of the respondent, treating him to be in service with effect from
G 17th November, 1984.
6. The respondent raised an industrial dispute. The dis-
pute was referred to the Labour Court for adjudication, and was
registered as L.C.R. No.348of1985. The respondent also filed
H an application under Section 33C (2) of the Act for computation
RAJASTHAN LALIT KALA ACADEMY v. RADHEY 825
SHYAM [D.K. JAIN, J.]
• 1

of wages for the period from 24th September, 1983 to 1?th No- A
vember, 1984 the same was registered as L.C.R. No. 438 of
1986.
7. Before the Labour Court, the stand of the appellant was
• 'f
that the respondent was temporarily appointed on 7tn June, 1980
for a period of three months to do the work of gallery attendant; B
he had himself abandoned the work but rejoined service pursu-
ant to order in the writ petition and that his services were termi-
nated due to non requirement of his services, after complying
with the provisions of Section 25-F of the Act by paying an
amount of Rs.1800/- by means of a demand draft. The plea of c
the respondent, on the other hand, was that his services were
terminated without service of any notice, disclosing reasons for
his retrenchment nor any amount was paid to him in lieu of such
notice.
-~ D
8. On appraisal of evidence led by both the sides, the
Labour Court, by award dated 26th April, 1997, came to the
conclusion that the management had failed to adduce any evi-
dence in support of its plea that a demand draft in the sum of
Rs.1800/- was given to the respondent in lieu of notice in terms
of Section 25-F of the Act. Thus, the Labour Court found that in E
terminating the services of the respondent, the appellant had
failed to comply with the statutory requirements and, therefore,
order dated 31st January, 1985 was arbitrary and illegal and
had been passed in a ma/a fide manner in order to victimize
···--' the respondent. Accordingly, the Labour Court directed rein- F
statement of the respondent with continuity in service and pay-
ment of 25% back-wages from the date of termination of ser-
vices to the date of award. In the other application for computa-
tion of wages (L.C.R. No. 438 of 1986), the Labour Court held

- ~
that the respondent was entitled to wages for the period from
4th September, 1983 to 17th November, 1984.

9. The award (in L.C.R. No. 348of1985) was challenged
by the appellant by preferring a writ petition in the Rajasthan
High Court. However, Labour Court's award in L.C.R. No. 438
G

H
826 SUPREME COURT REPORTS [2008] 10 S.C.R.

A of 1986 was not challenged.
10. The learned single Judge as well as the Division Bench
have dismissed the writ petition and the appeal filed by the ap-
pellant against the award of the Labour Court. That is how the
appellant is before us. ~ ~
8
11. We have heard learned counsel for the ;parties.
12. Learned counsel appearing on behalf of the appellant
submitted that in the light of the evidence on record, the Labour
Court as well as the High Court have committed an error in ar-
c riving at a finding that in terminating the services of the respon-
dent, the appellant h::is contravened the provision of Section
25-F of the Act. It was contended that the courts below·ignored
cogent and credible evidence which suggested that a demand
draft in the sum of Rs.1800/-was issued to the respondent and,
D therefore, the finding regarding non compliance with the provi-
sion of Section 25-F is erroneous and perverse. Learned coun-
sel also urged that since the respondent had not rendered any
services, the courts below erred in awarding back-wages to
the respondent and that too on the basis of salary equivalent to
E that of junior employee. Lastly, it was urged that assuming that
the appellant had failed to comply with the provision of Section
25-F of the Act but having regard to the fact that the services of
the respondent had been terminated over two decades ago, it
would not be proper to reinstate the respondent with back-
F wages and instead some reasonable amount of compensation
could be awarded to him in lieu of his reinstatement. In support
of the proposition that award of back-wages is not necessary in
every case where the termination of service is held to be viola-
tive of Section 25-F of the Act, reliance is placed on a decision
G of this Court in General Manager, Haryana Roadways Vs.
Rudhan Singh 1 . Reference is also made to thetdecisions of
this Court in Central P&O Inst. Ltd. Vs. Union of India & Anr 2 ;
Haryana State Electronics Development Cofpn. Ltd. Vs.
Mamni3 and Madhya Pradesh Administration Vs. Tribhuban 4 ,
H where lump sum amounts had been awarded in lieu of rein-
RAJASTHAN LALIT KALA ACADEMY v. RADHEY 827
., -t SHYAM [D.K. JAIN, J.]

statement. A
13. Per contra, Mr. S.K. Keshote, learned senior counsel
appearing on behalf of the respondent, submitted that on the
basis of the material on record, all the courts have returned a
• y finding that the appellant had not only failed to pay to the re-
spondent any amount in lieu of notice in terms of clause (a) of B
Section 25-F and compensation in terms of clause (b) thereof,
they had also committed unfair labour practice by victimizing
the respondent. The submission was that these being pure find-
ings of fact, this Court should decline to interfere with the award
of the Labour Court, affirmed by the High Court. Learned coun- c
sel asserted that having regard to the conduct of the appellant,
where they deliberately did not comply with the first award de-
spite the fact that the High Court had declined to stay the direc-
tion with regard to reinstatement, no fault could be found with
-~
the direction of the Labour Court regarding reinstatement of the D
respondent with only 25% back-wages.
14. It is trite that in the event of retrenchment of a wor.k-
man, employed in any industry, continuously for not less than
one year under an employer, compliance with the provisions of
Section 25-F of the Act, in particular clauses (a) and (b) thereof E
is mandatory. A bare reading of Section 25-F of the Act shows
that retrenchment within the meaning of Section 2 (oo) of the
Act, which admittedly is the case here, must satisfy the follow-
ing conditions:
~ ~
F
(i) the workman is given one month's notice - (a) in
writing (b) indicating the reasons for retrenchment;
(ii) the retrenchment must take effect after the expiry of
the period of notice. i.e., one month or else, the

.. J
(iii)
workman should be paid in lieu of such notice, wages
for the period of the notice:

at the time of retrenchment, the workman has been
G

paid compensation, equivalent to fifteen days' average
pay for every completed year of continuous service or
H
828 - SUPREME COURT REPORTS [2008] 10 S.C.R.
t- .,.
~

A any part thereof in excess of six months; and •~

(iv) The notice in the prescribed manner is served on the
appropriate government or such authority as may be
specified.

B 15. As noted above, the specific plea of the appellant-
...,,. ..
management before the Labour Court was that services of the
respondent were terminated on 31st January, 1985 after pay-
ment of Rs.1800/- by demand draft, in compliance with the pro-
vision of Section 25-F of the Act. However, in the award, the
c Labour Court has observed that the management has not ad-
duced any such evidence wherefrom a conclusion could be
drawn that the workrnan had received the said amount of
Rs.1800/-. It is pointed out that neither any receipt, acknowl-
edging receipt of draft was produced nor the workman was
cross-examined o"n this aspect. Even the computation ofcom- ~--
D
pensation allegedly paid was not correct. The labour court, thus,
held that payment of compensation in accordance with Section
25-F of the Act was not proved. In the light of the pleadings and
undisputed documents available on record, we are convinced
that the finding of the Labour Court to the effect that the appel-
E lant has failed to adduce any evidence in support of their plea
that an amount of Rs.1800/- had been paid to the respondent,
does not suffer from any perversity as pleaded by learned coun-
sel for the appellant. Thus, it cannot be said that the Labour
I
Court or the High Court has committed any illegality, warranting
F interference with the said concurrent finding of fact. In that view >-- ... '.
t:::
of the matter, we deem it unnecessary to examine the issue
whether termination of respondent's services was by way of
victimisation and thus, the appellant was guilty of unfair labour
practice, as held by the Labour Court.
G
16. The question which now survives for consideration is
whether on facts in hand, relief of reinstatement with continuity ~·
..::
of service and 25% back-wages should have been granted to
the respondent?

H
RAJASTHAN LAUT KALA ACADEMY v. RADHEY 829
SHYAM [D.K. JAIN, J.]

17. Once the termination of service of an employee is held A
to be illegal, the relief of reinstatement is ordinarily available to ·
the employee. But the relief of reinstatement with full back-wages
need not be granted automatically in every case where the
Labour Court/Industrial Tribunal records the finding that the ter-
mination of services of a workman was in violation of the provi- B
sions of the Act. For this purpose, several factors, like the man-
ner and method of selection; nature of appointment-ad hoc,
daily-wage, temporary or permanent etc:, period for which the
workman had worked and the delay in raising industrial dis-
pute, are required to be taken into consideration. c
18. On this aspect, in General Manager, Haryana Road-
ways case (supra), a three-Judge Bench of this Courfhas ob-
served thus:
..
"There is no rule of thumb that in every case where the
0
Industrial Tribunal gives a finding that the termination of
service was in violation of Section 25-F of the Act, entire
back wages should be awarded. A host of factors like the
manner and method of selection and appointment, i.e.,
whether after proper advertisement of the vacancy or
inviting applications from the employment exchange, nature-;.;. E
of appointment, namely, whether ad hoc, short term, daily
wage, temporary or permanent in character, any special
qualification required for the job and the like should be
weighed and balanced in taking a decision regarding
award of back wages. One of the important factors, which F
has to be taken into consideration, is the length of service, ·
which the workman had rend_ered with the employe_r. If the
workman has rendered a considerable period of service ,
and his services 'are wrongfully terminated, he may be
awarded full or partial back wages keeping in view the G
fact that at his age and the qualification possessed by him .
he may not be in a position to get another employment.
However, where the total length of service rendered by a,
workman is very small, the award of back wages for the
H
830 SUPREME COURT REPORTS [2008] 10 S.C.R.
-t ~
.
A complete period, i.e., from the date of termination till the
date of the award, which our experience shows is often
quite large, would be wholly inappropriate. Another
irriportant factor, which requ"ires to be taken ·into
consideration is the nature· of employment. A regular
6

B · service of permanent ch aracter cannot be· compared to 'y---
short or intermittent-daily wage employme.nt though it may
be for 240 days in a· calendar year:" ·.

. 19. I~ appears to us that in the present case there has not
been due application of m~nd either by the Labour Court or the
c High Court on the question of reinstatement and payment of
25% back-wages. The only ground on which reinstatement and
continuity of service has been ordered is because the order of
termination has been held to be unlawful. Similarly, 25% back-
wages have ,been awarded for the reason that the services of
D the petitioner w_ere terminated with immediate effect but no spe- r
.cific reason as such has been assigned for the award of the
said back-wages. In our opinion, though, illegality of the order
of termination is one of the prime considerations for determin-
ing the question and quantum of back-wages, but it cannot be
E the sole. criterion therefor. A host of other factors, a few enumer-
ated above, are required to be taken into consideration before
jssuing directions in that behalf. Therefore, the award of the
Labour Court to that extent cannot be sustained. However, we
.feel that at this distant time, it would not be fair to the respon-
F ·dent-workman to remit the matter back to the Labour Court or }--... .
t~e High Court for fresh consideration of the issue. In the light of
,..,
the observations referred to supra and having regard to the \.

nature and the period of services rendered by .the respondent
and the fact that his. services were terminated initially on 41h April,
1981 and then on 31st January, 1985 and the vicissitudes of
G
long-drawn litigation, the respondent has undergone for over
27 years, interest of justice would be met if in~tead and in place ....
~
-of direction for reinstatement and back-wages-a. sum Rs.3
lakhs is directed to be paid to the respondent by way of com-
pensation. We direct accordingly. The payment shall be made
H

_,.
RAJASTHAN LAUT KALA ACADEMY v. RADHEY 831
-;- SHYAM [D.K. JAIN, J.]

within eight weeks from today, failing which it shall carry interest A
@ 9% per annum from the date of this judgment till the date of
actual payment. We may note that in the affidavit, filed in re-
sponse to the query raised by the Court on 29th April, 2008, it is
stated that if the present appeal is dismissed, the appellant
' 'f' would be liable to pay to the respondent more than Rs.8 lakhs. B
It goes without saying that the said amount of compensation is
over and above the amount, the respondent is entitled to re-
ceive in terms of award dated 24th September, 1983, which has
attained finality.
20. Resultantly, the appeal is allowed to the extent indi- C
cated above. However, in the facts and circumstances of the
case, there shall be no order as to costs.
S.K.S Appeal Partly allowed.
STATE OF MAHARASHTRA & ORS.
D
II.
ZUBAIR HAJI QASIM
(Criminal Appeal No. 1064 of 2008 etc.)