Holding

Back wages are discretionary; in the present case the workman is entitled to only 25% of the total back wages from the date of termination to the date of closure of the undertaking.

Summary

The workman Udai Narain Pandey was engaged on a daily‑wage basis for a fixed tenure by U.P. State Brassware Corporation Ltd. His services were terminated on the expiry of that tenure, but he had rendered more than 240 days of service in the preceding year, making him a "workman" under Section 6‑N of the U.P. Industrial Disputes Act, 1947. The Labour Court ordered his reinstatement with full back wages; the High Court affirmed. The corporation appealed, contending that its establishment had been closed on 26‑Mar‑1993, rendering reinstatement impossible and that back wages should not be awarded in full. The Supreme Court examined whether a declaration of illegal termination under Section 6‑N automatically mandates full back wages, the relevance of the closure of the undertaking, and the burden on the workman to prove unemployment. It held that back wages are not a mechanical consequence and, given the closure, only 25% of the total back wages from the date of termination to the date of closure should be awarded, setting aside the lower courts' orders.

Issues considered

Whether a declaration that a workman was retrenched in violation of Section 6‑N of the U.P. Industrial Disputes Act automatically entitles him to full back wages.
Whether Section 6‑N applies to a workman appointed on a fixed‑tenure daily‑wage contract.
Whether the closure of the appellant's establishment on 26‑Mar‑1993 bars reinstatement and affects the quantum of back wages.
Whether the workman bears the burden of proving that he was not gainfully employed during the interregnum.

Legislation cited

Code of Civil Procedures. Order VII Rule 7
Indian Evidence Act, 1872s. 106
Industrial Disputes Act, 1947s. 11-A, s. 25B(2)(a)
U.P. Industrial Disputes Act, 1947s. 25F, s. 2(oo)(bb), s. 60, s. 6-N

Subjects

re‑trenchmentback wagesSection 6‑Nindustrial disputereinstatementfixed‑tenure contractdiscretionary reliefclosure of establishment

Judgment

U.P. STATE BRASSWARE CORPN. LTD. AND ANR. A
v.
UDAI NARAIN PANDEY

DECEMBER 8, 2005

(S.B. SINHA AND P.K. BALASUBRAMANYAN, JJ.]
B

Labour Law:

U.P. Industrial Disputes Act, 1947:
c
Section 6-N-Retrenchment of workman-Reinstatement of-Award of
back wages-Principles-Workman appointed on daily wages for a fixed
tenure-Services of the said workman terminated on expiry of his tenure-
Industrial undertaking closed down-Labour Court directed reinstatement
with back wages since the workmen rendered240 days of continuous service D
during the previous year-High Court affirmed the decision-Correctness
of-Held: No precise formula can be laid down as to under what circumstances
payment of entire back wages should be allowe~Indisputably, it depends
upon the facts and circumstances of each case-However, back wages should
not be granted mechanically-On facts, back wages confined to 25% of the
total back wages from the date of termination till the closure of the industrial E
undertaking-Industrial Disputes Act, 1947, S. 25F.

The respondent-workman was appointed as a daily wager in the
appellant-Corporation for a fixed tenure. The services of the respondent were
terminated on the expiry of his tenure. The Labour Court directed
reinstatement of the respondent with back wages holding that the termination F
was illegal being in violation of Section 6-N of the U.P. Industrial Disputes
Act, 1947 since the respondent had rendered 240 days of continuous service
during the previous year. The High Court confirmed the decision. Hence the
appeal
G
On behalf of the appellant, it as contended that the appellant-Corporation
was closed down on 26.3.1993 and, therefore, the Labour Court as well as the
High Court erred in passing the impugned judgment

The following question arose before the Court :-
609 H
610 SUPREME COURT REPORTS [2005) SUPP. 5 S.C.R.

A Whether direction to pay back wages upon a declaration that a workman
has been retrenched in violation of the provisions of Section 6-N of the U.P.
Industrial Disputes Act, 1947 was correct?

Allowing the appeal in part, of Court ,
B HELD: 1. No precise formula can be laid down as to under what
circumstances payment of entire back wages should be allowed. Indisputably,
it depends upon the facts and circumstances of each case. It would, however,
not be correct to contend that it is automatic. It should not be granted
mechanically only because on technical grounds or otherwise an order of
C termination is found to be in contravention of the provisions of Section 6-N of
the U.P. Industrial Disputes Act, 1947. [6!6-F)

2. The Industrial Disputes Act, 1947 was principally established for the
purpose of preempting industrial tensions, providing the mechanics of dispute-
.,
resolutions and setting up the necessary infrastructure so that the energies
D of partners in production may not be dissipated in counter-productive battles
and assurance of industrial justice may create a climate of goodwill. (622-Dl

L/Cv. D.J. Bahadur, (1981) 1SCC315, relied on.

E
Uttar Pradesh State Sugar Corporation Ltd v. Om Prakash Upadhyay,
(2002) 10 sec 89, Hindustan Tin Works Pvt. Ltd. v. Employees of Hindustan
.'
r'l
Tin Works Pvt. Ltd, [1979) 1 SCR 563, Management of Panitole Tea Estate
v. The Workmen, (1971) 3 SCR 774, Surendra Kumar Verma v. Central
Government Industrial Tribunal-cum-Labour Court, New Delhi, (1981) 1 SCR
789, Jasbhai Motibhai Desai v. Roshan Kumar, (1976) 1 SCC 671, J.N.
Srivastavav. Union ofIndia, (1998) 9 SCC 559, MD. UP. WarehousingCorpn. ..
'
F v. Vijay Narayan Vajpayee, (1980) 3 sec 459, Jitendra Singh Rathor v. Shri
Baidyanath Ayurved Bhawan Ltd, (1984) 3 SCR 223 and P.G.l of Medical
education and REsearch v. Raj Kumar, (2001) 2 sec 54, referred to.

3.1. Industrial Courts while adjudicating on disputes betwe~n the
management and the workmen must take such decisions which would be in -.Y.-

G consonance with the purpose the law seeks to achieve. When justice is the
buzzword in the matter of adjudication under the Industrial Disputes Act, it
would be wholly improper on the part of the superior courts to make them
apply the cold letter to the statutes to act mechanically. Rendition of justice
would bring within its purview giving a person what is due to him and not
H what cane be given to him in law. (622-E, F)
U.P. STATEBRASSWARECORPN. LTD. v. UDAINARAIN PANDEY 611

3.2. A person is not entitled to get something only because it would be A
lawful to do so. If that principle is applied, the functions of an industrial court
shall lose much of its significance. (622-G]

4. In the instant case, the establishment of the appellant wherein the
Respondent could be directed to be reinstated had been sold on 26.3.1993. In
that view of the matter, Section 60 of the U.P. Industrial Disputes Act, 1947 B
would apply in terms whereof compensation will be payable in the same manner
as if he was retrenched under Section 6N thereof. (627-BI

5. It is not in dispute that the respondent did not raise any plea in his
written statement that he as not gainfully employed during the said period. It C
is now well-settled by various decisions of this Court that although earlier
this Court insisted that it was for the employer to raise the aforementioned
. plea but having regard to the provisions of Section 106 of the Indian Evidence
Act or the provisions analogous thereto, such a plea should be raised by the
workman. [627-C)
D
Hindustan Motors Ltd. v. Tapan Kumar Bhattacharya, (2002) 6 SCC
41, J11dia11 Railway Construction Co. Ltd. v. Ajay Kumar, (2003) 4 SCC 579,
MP. State Electricity Boardv. Jarina Bee (Smt.), [2003] 6 SCC 141, U.P. State
Textile Corpn. Ltd. v. P.C. Chaturvedi, (2005) 8 SCC 211, S.M Nilajkar v.
Telecom District Manager, (2003) 4 SCC 27, Rattan Singh v. Union of India,
(1977) 11SCC396, Ruby General Insurance Co. Ltd v. Chopra (P.P.), (1969) E
3 SCC 653, Hindustan Steels Ltd. v. A.K. Roy, (1969) 3 SCC 513, Mohan Lal
v. Management of Mis. Bharat Electronics Ltd, (1981) 3 SCC 225, Allahabad
Jal Sansthan v. Daya Shan/car Rai, [2005] 5 SCC 124, General Manager,
Haryana Roadways v. Rudhan Singh, JT (2005) 6 SC 137, A.P. State Road
Transport Corporation v. Abdul Kareem, [2005] 6 SCC 36, M.I. Binjokar v. F
State of Madhya Pradesh, JT (2005) 6 SC 46, Management of Madurantakam
Coop. Sugar Mills Ltd v. S. Viswanathan, [2005] 3 SCC 193, State ofU.P. v.
Ram Bachan Tripathi, (2005] 6 SCC 496 and Rajasthan State Road Transport
Coprn. v. Shyam Bihari Lal Gupta, (2005] 7 SCC 406, referred to.

6. The only question is whether the respondent would be entitled to back G
wages from the date of his termination of service till the date of c.losure of
.... the industrial undertaking. The decision to close down the establishment by
the State like other public sector organ,izations had been taken wherefor a
Government Order (G.O.) had been issued. The said G.O. has substantially

. been implemented. Therefore, interest of justice would be sub-served if the
back wages payable to the respondent is confined to 25% of the total back H
612 SUPREME COURT REPORTS (2005] SUPP. 5 S.C.R.

A wages from the date of the respondent's termination till the date of closure of
the industrial undertaking. [627-F, G)

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 7304 of2005.

From the Judgment and Order dated 6.2.2004 of the Allahabad High
B Court in C.M.W.P. No. 23890of1992.

Ms. Rachana Srivastava for the Appellants.

Bharat Sangal, Ms. Sangeeta Panicker, R.R. Kumar and Samyadip Chatterji
for the Respondent.
c The Judgment of the Court was delivered by

S.B. SINHA, J. Leave granted.

Whether direction to pay backwages consequent upon a declaration
D that a workman has been retrenched in violation of the provisions of Section
6-N of the U.P. Industrial Disputes Act, 1947 (equivalent to Section 25F of the
Industrial Disputes Act, 1947) as a rule is in question in this appeal which
arises out of a judgment and order dated 6.2.2004 passed by a Division Bench
of the High Court of Judicature at Allahabad in Civil Misc. Writ Petition No.
23890of1992 dismissing the appeal preferred by the Appellant herein arising
E out of a judgment and order dated 8th July, 1992 .

.The Appellant is an undertaking of the State of Uttar Pradesh. The
Respondent.herein was appointed on 23rd July, 1984 in a project known as
Project Peetal Basti by .the Appellant for looking after the construction of
F building, cement loading and unloading. He worked in the said project from
23.7.1984 till 8.1.1987. He was thereafter appointed in Non-Ferrous Rolling
Mill. By an order dated 12/13.2.1987, the competent authority of the Non-
ferrous Mill of the Appellant passed the foltowing order: .

"Following two persons are hereby accorded approval for appointment
in Non-Ferrous Rolling Mill on minimum daily wages for the period
G w.e.f. date indicated against their name till 31-3-1987.

·SINo. Name Date
1. Sh. Hori Lal 7-1-1987

2. Sh. Uday Narain Pandey 8-1-1987"
H
U.P.STATEBRASSWARECORPN.LTD. v. UDAINARAINPANDEY[SINHA,J.] 613
The services of the Respondent were terminated on the expiry of his A
tenure. An industrial dispute having been raised, the appropriate government
by an order dated 14.9.1998 referred the following dispute for adjudication by
the Presiding Officer, Labour Court, Uttar Pradesh:

"Whether the employer's decision to terminate the Workman Sh. Uday
Narain son of Pateshwari Pandey w.e.f. l-4-87 was illegal and improper? B·
If yes whether the concerned workman is entitled to the benefit of
retrenchment and other benefit?"

_, The Project Officer of the Appellant-Corporation appears to have granted
a certificate showing the number of days on which the Respondent performed
his duties. c
The Labour Court in its award dated 31.10 .1991 came to the finding that
the Respondent worked for more than 240 days in each year of 1985~ 1986. It
was directed:

"Therefore, I reached to the decision that the employer should reinstate D
the concerned workman Uday Narain Pandey son of Sh. Pateshwari
Pandey w.e.f. the date of retrenchment i.e. 1-4-87 and he should be
paid entire backwage with any other allowances w.e.f. same date

-
within 30 days from the date of th!s order togethei: with Rs. 50/-
towards cost of litigation to Sh. Uday Narain Pandey. l decide
E
accordingly in this Industrial Dispute."

The Appellant herein filed a writ petition before the Allahabad High
Court in May, 1992 which was marked as Civil Misc. Writ Petition No. 23890
of 1992 inter alia contending that as the Respondent had not rendered
service continuously for a period of240 days during the period of 12 calendar F
months immediately before his retrenchment uninterruptedly, he was not a
workman within the meaning of Section 2(z) of the U.P. Industrial Disputes
Act. It was further contended that the appointment of the Respondent was
on contractual basis for a fixed tenure which came to an end automatically
as stipulated in the aforementioned order dated 12/13.2.1987.
G
An application was filed by the Respondent herein under the Payment
of Wages Act wherein an award was passed. The said order was also
questioned by the Appellant by filing a writ application before the High Court
and by an order dated 12.8.1993, the High Court directed it to pay a sum of
'-. rupees ten thousand to the Respondent. Pursuant to or in furtherance of the
' H
614 SUPREME COURT REPORTS [2005] SUPP. 5 S.C.R.

A said order, the Respondent is said to have been paid wages upto February,
1996. By reason of the impugned order dated 6.2.2004, the writ petition was
dismissed holding:

"Having heard the learned counsel for the Petitioners and having
perused the record, I am of the opinion that the aforesaid findings
B recorded by the Labour Court cannot be said to be perverse. The
learned senior counsel then contended that the Petitioner No. l i.e.
U.P. State Brassware Corporation Ltd. has been closed down. Be that
as it may, the position of the Respondent workman would be the same
as that all the similar employees and this cannot be a ground to set t'

aside the award of the Labour Court."
c
Ms. Rachana Srivastava, learned counsel appearing on behalf of the
Appellant would bring to our notice that the Appellant's industries have been
lying closed since 26.3.1993 and in that view of the matter, the Labour Court
as also the High Court c_ommitted a serious error in passing the impugned
D judgment. The appointment of the Respondent, the learned counsel would
contend, being a contractual one for a fixed period, Section 6-N of the U.P.
Industrial Disputes Act would 'have no application.

Relying on or on the basis of the principle of 'no work no pay', it was
urged that for the period the Respondent did not work, he was not entitled
E to any wages and as such the grant of back wages by the Labour Court as
also by the High Court is wholly illegal, particularly, in view of the fact that
no statement was made in his written statement filed before the Labour Court
that he was not employed with any other concern. In any event, the Respondent
was also not interested in a job. In support of the aforementioned contention,
F reliance has been placed on Kendriya Vidyalaya Sangathan and Anr. v. S.C.
Sharma, (2005] 2 SCC 363 and Allahabad Jal Sansthan v. Daya Shankar Rai
and Anr., (2005] 5 SCC 124.

Mr~ Bharat Sangal, learned counsel appearing on behalf of the
Respondent, on the other hand, would submit that Section 2 (oo)(bb) of the
G Industrial Disputes Act, 194 7 applies to the workmen working in the State of
Uttar Pradesh as there does not exist any such provision in the U.P. Industrial
Disputes Act. It was conceded that in view of the fact that establishment of
the Appellant was sold out on 26.3.1993, the Respondent may not be entitled
to an order of reinstatement with full back wages but having regard to the
fact that his services were wrongly terminated with effect from 1.4.1987, he
H would be entitled to back wages for the entire period from l .4.1987 till 26.3.1993
U.P. STATE BRASSWARECORPN. LTD. v. UDAI NARAIN PANDEY [SINHA, J.] 615
besides the amount of compensation as envisaged under the U.P. Industrial A
Disputes Act.

Payment of back wages, Mr. Sangal would urge, is automatic consequent
upon a declaration that the order of termination is unsustainable for any
reason whatsoever and in particular when it is found to be in violation of the
provisions of Section 6-N of the U.P. Industrial Disputes Act. B
It is not in dispute that the Respondent was appointed on daily wages.
He on his own showing was appointed in a project work to look after the
construction of building.

The construction of the building, the learned Labour Court noticed, C
came to an end in the year 1988. The reference by the appropriate government
'pursuant to an industrial dispute raised by the Respondent was made in the
year 1990.

A decision had been taken to close down the establishment of the
Appellant as far back on 17 .11.1990 wherefor a Government Order, GO No. D
395/18 Niryat-3151/90 dated 17.11.1990 was issued. In its rejoinder affidavit
filed before the High Court, it was contended that the said GO was implemented
substantially and all the employees including the regular employees save and
except some skeleton staff for winding up were retrenched. The Non Ferrous
Mill of the Appellant was sold on 26.3.1993. E
The Labour Court in its impugned award has not arrived at any finding
that the order of appointm~nt dated 8.1.1987 whereby the Respondent was
appointed afresh in the Non Ferrous Rolling Mill was by way of unfair labour
practice. It is, however, true that the Appellant relying on or on the basis of
the aforementioned order dated 12/13.2.1987 in tenns whereof the Respondent's F
services were approved for appointment in the said mill on minimum daily
wages for the period 8.1.1987 till 31.3.1987 terminated his services without
giving any notice or paying salary of one month in lieu thereof. No compensation
in tenns of Section 6-N of the U.P. Industrial Disputes Act was also paid.

Before adverting to the decisions relied upon by· the learned counsel for G
the parties, we may observe t~at although direction to pay full back wages
on a declaration that the order of termination was invalid used to be the usual
result but now, with the passage of time, a pragmatic view of the matter is
being taken by the court realizing that an industry may not be compelled to
pay to the workman for the period during which he apparently contributed H
616 SUPREME COURT REPORTS [2005] SUPP. S S.C.R.

A little or nothing at all to it and/ or for a period that was spent unproductively
as .a result whereof the employer would be compelled to go back to a situation
which prevailed many years ago, namely, when the workman was retrenched.

It is not disputed that the Respondent did not plead that he after his
purported retrenchment was wholly unemployed.
B
Section 6-N of the U.P. Industrial Disputes Act provides for service of
one month notice as also payment of compensation to be computed in the
manner lai~ down therein. Proviso to clause (a) of the said provision, however,
excludes the requirement of giving such notice in the event the appointment
was for a fixed tenure.
c
Section 25B(2)(a) of the Industrial Disputes Act raises a legal fiction
that if a workman has actually worked under the employer continuously for
a period of more than 240 days during a period of twelve calendar months
preceding the date with reference to which calculation is to be made, although
D he is not in continuous service, he shall be deemed to be in continuous
service under an employer for a period of one year ..

The Labour Court although passed its award relying on or on the basis
of the certificate issued by the Appellant, it did not hold that during the
preceding 12 months, namely, for the period Jst April, 1986 to 31st March,
E 1987 the workman had completed 240 days of service. Unfortunately, neither
the Labour Court nor the High Court considered this aspect of the matter in
..
right perspective.

No precise formula can be laid down as to under what circumstances
payment of entire back wages should be allowed. Indisputably, it depends
F upon the facts and circumstances of each case. It would, however, not be
correct to contend that it is automatic. It should not be granted mechanically
only because on technical grounds or otherwise an order of termination is
found to be in contravention of the provisions of Section 6-N of the U.P.
· Industrial Disputes Act.

G Section 2(oo )(bb) of the Central Act as inserted by Industrial Disputes
Amendment Act, 1984 is as under:

"2. Definitions.In this Act, unless there is anything repugnant in the
subject or context,-

H •••
U.P. STATE BRASSWARECORPN. LTD. v. UDAI NARAIN PANDEY [SINHA, J.] . 617

(oo) 'retrenchment' means the termination by the employer of the A
service of a workman for any reason whatsoever, otherwise than as
a punishment inflicted by way of disciplinary action, but does not
include

(a) •••
(b) ...
B

(bb) termination of the service of the workman as a result of the non-
renewal of the contract of employment between the employer and the
workman concerned on its expiry or of such contract being terminated
under a stipulation in that behalf contained therein;" C
However, a similar provision has not been enacted in the U.P. Industrial
Disputes Act.

The contention of the Appellant, as noticed hereinbefore, was that the
Respondent having been appointed for a fixed period was not entitled to any I:>
compensation under the provisions of Section 6-N of the U.P. Industrial
Disputes Act. But, in this connection our attention has been drawn to a 2-
Judge Bench decision of this Court in Uttar Pradesh State Sugar Corporation
Ltd v. Om Prakash Upadhyay, [2002] l LLJ 241: [2002] 10 SCC 89] wherein
it was held that in view of Section 31 (I) of Industrial Disputes (Amendment
and Miscellaneous Provisions) Act, 1956, the provisions of Section 2(oo)(bb) E
of the Central Industrial Disputes Act would not be applicable. In that view
of the matter, although no notice was required to be service in view of the
proviso to Clause (a) of Section 6-N of the U.P. Industrial Disputes Act,
compensation therefor as provided for in Clause (b) was payable. But, it is
not necessary for us to go into the correctness or otherwise of the said F
decision as it is not disputed that before the provisions of Section 6-N of the
U.P. Industrial Disputes Act can be invoked, the concerned workman must
work at least for 240 days during a period of twelve calendar months preceding
the date with reference to which calculation is to be made.

However, as the question as regard termination of service of the G
Respondent by the Appellant is not in issue, we would proceed on the basis
that the services of the Respondent were terminated in violation of Section
6-N of the U.P. Industrial Disputes Act. The primary question, as noticed by
us herein before, is as to whether even in such a situation the Respondent
would be entitled to the entire back wages.
H
618 SUPREME COURT REPORTS [2005) SUPP. 5 S.C.R.

A Before adverting to the said question in a bit more detail, let us consider
the decisions relied upon by Mr. Sangal.

In Hindustan Tin Works Pvt. ltd. v. Employees of Hindustan Tin Works
Pvt. ltd, [ 1979) 1 SCR 563, this court merely held that the reliefof reinstatement
with continuity of service can be granted where termination of service is
B found to be invalid. It, therefore, does not lay down a law in absolute terms
to the effect that right to claim back wages must necessarily follow· an order
declaring that the termination of service is invalid in law.

In Hindustan Tin Works, (supra) notice for retrenchment was issued
C inter alia for non-availability of raw material to utilize the full installed capacity,
power shedding limiting the working of the unit to 5 days a week and the
mounting loss which were found to be factually incorrect. The real reason for
issuing such a notice was held to be "the annoyance felt by the management
consequent upon the refusal of the workmen to agree to the terms of settlement
contained in the draft dated 5th April, 1974".
D
Laws proverbial delay, it was urged therein, is a matter which should be
kept in view having regard to the fact situation obtaining in each case and
the conduct of the parties. Such a contention was raised on the ground that
the company was suffering losses. The court analysed factual matrix obtaining
therein to the effect that a sum of Rs. 2,80,000/- was required to be paid by
E way of back wages and an offer was made by way of settlement to pay 50%
of the back wages observing:

"Now, undoubtedly the appellant appears to have turned the comer.
The industrial unit is looking up.

F It has started making profits. The workmen have already been reinstated
and, therefore, they have started earning their wages. It may, however,
be recalled that the appellant has still not cleared its accumulated loss.
Keeping in view all the facts ~:nd circumstances of this case it would
be appropriate to award 75% of the back wages to the workmen to be
paid in two equal instalments."
G
It will, therefore, be seen that this Court itself, having regard to the
factual matrix obtaining in the said case, directed payment of75% of the back
wages and that too in two equal instalments.

In Management of Panitole Tea Estate v. The Workmen, (1971) 3 SCR
H 774, a two-judge bench of this Court while considering the question as regard
U.P.STATEBRASSWARECORPN. LTD. v. UDAI NARAINPANDEY[SINHA,J.] 619

grant of relief or reinstatement, observed: A
"The general. rule of reinstatement in the absence of special
circumstances was also recognised in the case of Workmen of Assam
Match Co. Ltd v. Presiding Officer, Labour Court, Assam and has
again been affirmed recently in Tu/sidas Paul v. Second Labour
Court, W.B. In Tulsidas Paul it has been emphasised that no hard and S
fast rule as to which circumstances would establish an exception to
the general rule could be laid down and the Tribunal must in each case
decide the question in a spirit of fairness and justice in keeping with
the objectives of industrial adjudication."

In Surendra Kumar Verma v. Central Government Industrial Tribunal- C
cum-Labour Court, New Delhi & Anr., [1981] 1 SCR 789, this Court refused
to go into the question as to whether termination of services of a workman
in violation of the provisions of Section 25F is void ab initio or merely invali~.
or inoperative on the premise that semantic luxuries are misplaced in the
interpretation of'bread and butter' statutes. In that context, Chinnappa Reddy, D
J. observed:

" ... Plain common sense dictates that the removal of an order terminating
the services of workmen must ordinarily lead to the reinstatement of
the services of the workmen. It is as if the order has never been, and
so it must ordinarily lead to back wages too. But there may be E
exceptional circumstances which make it impossible or wholly
inequitable vis-a-vis the employer and workmen to direct reinstatement
with full back wages. For instance, the industry might have closed
down or might be in severe financial doldrums; the workmen concerned
might have secured better or other employment elsewhere and so on.
In such situations, there is a vestige of discretion left in the court to F
make appropriate consequential orders. The court may deny the relief
of reinstatement where reinstatement is impossible because the industry
has closed down. The court may deny the relief of award of full back
wages where that would place an impossible burden on the employer.
In such and other exceptional cases the court may mould the relief, G
but, ordinarily the relief to be awarded must be reinstatement with full
back wages. That relief must be awarded where no special impediment
in the way of awarding the relief is clearly shown. !rue, occasional
hardship may be caused to an employer but we must remember that,
more often than not, comparatively far greater hardship is certain to
be caused to the workmen if the relief is denied than to the employer H
620 SUPREME COURT REPORTS [2005] SUPP. 5 S.C.R .

.A if the relief is granted."

Yet again, no law in absolute terms had been laid down therein. The
court proceeded on the basis that there may be situations where grant of full
back wages would be inequitable. In the fact situation obtaining therein, the
court, however was of the opinion that there was no impediment in the way
B of awarding the relief. It is interesting to note that Pathak, J., as His Lordship
then was, however was of the view:

"Ordinarily, a workman who has been retrenched in contravention of the
law is entitled to reinstatement with full back wages and that principle yields
only where the justice of the case in the light of the particular facts indicates
C the desirability of a different relief."

The expre·ssion 'ordinarily' must be understood given its due meaning.
A useful reference in this behalf may be made to a 4-Judge Bench decision
of this Court in Jasbhai Motibhai Desai v. Roshan Kumar, Haji Bashir
D Ahmed and Ors., [ 1976] I SCC 671 wherein it has been held:

"35. The expression "ordinarily" indicates that this is not a cast-iron
rule. It is flexible enough to take in those cases where the applicant
has been prejudicially affected by an act or omission of an authority,
even though he has no proprietary or even a fiduciary interest in the
E subject-matter. That apart, in exceptional cases even a stranger or a
person who was not a party to the proceedings before the authority,
but has a substantial and genuine interest in the subject-matter of the
proceedings will be covered by this rule. The principles enunciated in
the English cases noticed above, are not inconsistent with it."

F In J.N. Srivastava v. Union of India and Anr., [I 9_98] 9 SCC 559 again
no law has been laid down in the fact situation obtaining therein. The court
held that the workmen had all along been ready and willing to work, the plea
of 'no work no pay' as prayed for should not be applied.

We may notice that in MD., UP. WarehousingCorpn. v. Vijay Narayan
G Vajpayee, [1980] 3 SCC 459 and Jitendra Singh Rathor v. Shri Baidyanath
Ayurved Bhawan Ltd., although an observation had been made to the effect
that in a case where a breach of the provisions of Section 25-F has taken
place, the workmen cannot be denied back wages to any extent, no law, which
may be considered to be binding precedent has been laid down therein.

H In P.G.I. of Medical Education & Research, Chandigarh v. Raj Kumar,
U.P. STA TE BRASSWARE CORPN. LTD. v. UDAI NARAIN PANDEY [SINHA, J.] 621

[2001] 2 sec 54, Banerjee, J., on the other hand, was of the opinion: A
"The learned counsel appearing for the respondents, however, placed
strong reliance on a later decision of this Court in PG/ of M.E. &
Research Chandigarh v. Vinod Krishan Sharma wherein this Court
directed payment of balance of 60% of the back wages to the
respondent within a specified period of time. It may well be noted that B
the decision in Soma case has been noticed by this Court in Vinod
Sharma case wherein this Court apropos the decision in Soma case
observed:

"A mere look at the said judgment shows that it was rendered
. in the peculiar facts and circumstances of the case. It is, therefore, C
obvious that the said decision which centred round its own facts
cannot be a precedent in .the present case which is based on its
own facts."

We also record our concurrence with the observations made therein.
D
Payment of back wages having a discretionary element involved
in it has to be dealt with, in the facts and circumstances of each case
and no straight-jacket formula can be evolved, though, however, there
is statutory sanction to direct payment of back wages in its entirety.
As regards the decision of this Court in Hindustan Tin Works (P) Ltd.
be it noted that though broad guidelines, as regards payment of back: E
wages, have been laid down by this Court but having regard to the
peculiar facts of the matter, this Court directed payment of 75% back
wages only."

The decisions of this Court strongly relied upon by Mr. Sangal, .F
therefore, do not speak in one voice that the industrial court or for that matter
the High Court or this Court would not have any discretionary role to play
in the matter of moulding the relief. If a judgment is rendered merely having
regard to the fact situation obtaining therein, the same, in our opinion, could
not be a declaration of law within the meaning of Article 141 of the Constitution
of India. G
It is one thing to say that the court interprets a provision of a statute
and lays down a law, but it is another thing to say that the courts although
exercise plenary jurisdiction will have no discretionary power at all in the
matter of moulding the relief or otherwise give any such reliefs, as the parties
may be found to be entitled to in equity and justice. If that be so, the court's H
622 SUPREME COURT REPORTS (2005] SUPP. 5 S.C.R.

A function as court of justice would be totally impaired. Discretionary jurisdiction
in a court need not be conferred always by a statute.

Order VII, Rule 7 of the Code of Civil Procedure confers power upon
the court to mould relief in a given situation. The provisions of the Code of
Civil Procedure are applicable to the proceedings under the Industrial Disputes
B Act. Section 11-A of the Industrial Disputes Act empowers the Labour Court,
Tribunal and National Tribunal to give appropriate relief in case of discharge
or dismissal of workmen.

The meaning of the word 'discharge' is somewhat vague. In this case,
we have noticed that one of the contentions of the Appellant was that the
C services of the Respondent had been terminated in terms of its order dated
12/13.2.1987 whereby and whereunder the services of the Respondent herein
was approved till 31.3.1987.

The Industrial Disputes Act was principally established for the purpose
D of pre-empting industrial tensions, providing the mechanics of dispute-
resolutions and setting up the necessary infrastructure so that the energies
of partners in production may not be dissipated in counter-productive battles
and assurance of industrial justice may create a climate of goodwill. [See L/C
v. D.J. Bahadur, [1981] 1SCC315.]

E Industrial Courts while adjudicating on disputes between the
management and the workmen, therefore, must take such decisions which
would be in consonance with the purpose the law seeks to achieve. When
justice is the buzzword in the matter of adjudication under the Industrial
Disputes Act, it would be wholly improper on the part of the superior courts
to make them apply the cold letter of the statutes to act mechanically. Rendition
F of justice would bring within its purview giving a person what is due to him
and not what can be given to him in law.

A person is not entitled to get something only because it would be
lawful to do so. Ifthat principle is applied, the functions of an industrial court
G shall lose much of its significance.

The changes brought about by the subsequent decisions of this Court
probably having regard to the changes in the policy decisions of the
government in the wake of prevailing market economy, globalization,
privatization and outsourcing is evident.
H
U.P. STATE BRASSWARECORPN. LTD. v. UDAI NARAIN PANDEY [SINHA, J.) 623

In Hindustan Motors Ltd v. Tapan Kumar Bhattacharya and Anr., A
(2002) 6 SCC 41, this Court noticed Raj Kumar, (supra) and Hindustan Tin
Works, (supra) but held:

"As already noted, there was no application of mind to the question
of back wages by the Labour Court. There was no pleading or evidence
whatsoever on the aspect whether the respondent was employed B
elsewhere during this long interregnum. Instead ofremitting the matter
to the Labour Court or the High Court for fresh consideration at this
distance of time, we feel that the issue relating to payment of back
wages should be settled finally. On consideration of the entire matter
in the light of the observations referred to supra in the matter of C
awarding back wages, we are of the view that in the context of the
facts of this particular case including the vicissitudes of long-drawn
litigation, it will serve the ends of justice if the respondent is paid 50%
of the back wages till the date of reinstatement..."

The Court, therefore, emphasized that while granting relief application D
of mind on the part of the industrial court is imperative. Payment of full back
wages, therefore, cannot be the natural consequence.

To the same extent are the decisions of this Court in Indian Railway
Construction Co. Ltd. v. Ajay Kumar, (2003) 4 SCC 579 and MP. State
Electricity Board v. Jarina Bee (Smt.) (2003) 6 SCC 141. E
The said decisions have recently been considered and followed in U.P.
State Textile Corpn. Ltd v. P.C. Chaturvedi and Ors., (2005) 8 SCC 211.

Lahoti, J., as the learned Chief Justice then was, in S.M Nilajkar and
Ors. v. Telecom District Manager, Karnataka (2003) 4 SCC 27 opined: F
"The fact remains that there was delay, though not a fatal one, in
initiating proceedings calculating the time between the date of
termination and initiation of proceedings before the Industrial Tribunal-
cum-Labour Court. The employee cannot be blamed for the delay. The
learned Single Judge has denied the relief of back wages while directing G
the appellants to be reinstated. That appears to be a just and reasonable
order..."

In Rattan Singh v. Union ofIndia, [ 1997) 11 SCC 396, the Court directed
payment of a consolidated sum of Rs. 25,000/- in lieu of back wages and
reinstatement having regard to the time lag between the date of termination H
624 SUPREME COURT REPORTS [2005) SUPP. 5 S.C.R.

A and the date of order.
In Ruby General Insurance Co. ltd. v. Chopra (P.P.) [1969] 3 SCC 653
and Hindustan Steels ltd. v. A.K. Roy, [1969] 3 SCC 513, this Court held that
before granting reinstatement, the court must weight all the facts and exercise
discretion whether to grant reinstatement or to award compensation.
B
The said decisions were, however, distinguished in Mohan Lal v.
Management of Mis. Bharat Electronics ltd., [ 1981] 3 SCC 225. Desai, J. was
of the opinion: ·.
"17 ... But there is a catena of decisions which rule that where the
c termination is illegal especially where there is an ineffective order of
retre!lchment, there is neither termination nor cessation of service and
a declaration follows that the workman concerned continues to be in
service with all consequential benefits. No case is made out for
departure from this normally accepted approach of the courts in the
field of social justice and we do not propose to depart in this case."
D
In Allahabad Jal Sansthan v. Daya Shankar Rai and Anr., [2005] 5 SCC
124, in which one of us was a party, this Court had taken into consideration
most of the decisions relied upon by Mr. Sangal and observed:

"A law in absolute terms cannot be laid down as to in which cases,
E and under what circumstances, full back wages can be granted or
denied. The Labour Court and/or Industrial Tribunal before which
industrial dispute has been raised, would be entitled to grant the relief
having regard to the facts and circumstances of each case. For the
said purpose, several factors are required to be taken into consideration.
F It is not in dispute that Respondent 1 herein was appointed on an ad
hoc basis; his services were terminated on the ground of a policy
decision, as far back as on 24-1-1987. Respondent 1 had filed a written
statement wherein he had not raised any plea that he had been sitting
idle or had not obtained any other employment in the interregnum.
The learned counsel for the appellant, in our opinion, is correct in
G submitting that a pleading to that effect in the written statement by
the workman was necessary. Not only no such pleading was raised,
even in his evidence, the workman did not say that he continued to
remain unemployed. In the instant case, the respondent herein had
been reinstated from 27-2-2001."
H
U.P. STATE BRASSWARECORPN. LTD. v. UDAI NARAIN PANDEY [SINHA, J.] 625

It was further stated: A
"16. We have referred to certain decisions of this Court to highlight
that earlier in the event of an order of dismissal being set aside,
reinstatement with full back wages was the usual result. But now with
the passage of time, it has come to be realised that industry is being
compelled to pay the workman for a period during which he apparently B
contributed little or nothing at all, for a period that was spent
unproductively, while the workman is being compelled to go back to
a situation which prevailed many years ago when he was dismissed.
It is necessary for us to develop a pragmatic approach to problems
dogging industrial relations. However, no just solution can be offered C
but the golden mean may be arrived at."

Yet again in General Manager, Haryana Roadways v. Rudhan Singh,·
JT (2005) 6 SC 137: [2005] 5 SCC 591, a 3-Judge Bench of this Court in a case
where the workman had worked for a short period which was less than a year
and having regard to his educational qualification, etc. denied back wages D
although the termination of service was held to have been made in violation
of Section 25F of the Industrial Disputes Act, 1947 stating:

" ... 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 of E
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
has to be taken into consideration, is the length of service, which the
workman had rendered with the employer. If the workman has rendered F
a considerable period of service and his services are wrongfully
tern,inated, he may be awarded full or partial back wages keeping in
view the fact that at his age and the qualification possessed by him
he may not be in a po~hion to get another employment. However,
where the total length of service rendered by a workman is very small, G
the award of back wages for the 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 important
factor, which requires to be taken into consideration is the nature of
employment. A regular service of permanent character cannot be
compared to short or intermittent daily-wage employment though it H
626 SUPREME COURT REPORTS [2005] SUPP. S S.C.R.

A may be for 240 days in a calendar year."

In A.P. State Road Transport Corporation and Ors. v. Abdul Kareem,
[2005] 6 SCC 36 While the Labour Court directed reinstatement with continuity
of service of the Respondent but without back wages, this Court denied even
the continuity of service.
B
A Division Bench of this Court In ML. Binjo/kar v. State of Madhya
Pradesh, JT (2005) 6 SC 461 : [2005] 6 SCC 224], referring to a large number
of decisions, held:

"7 ... The earlier view was that whenever there is interference with the
c order of tennination 9r retirement, full back wages were the natural
corollary. It has been laid down in the cases noted above that it would
depend upon sev.eral factors and the Court has to weigh the pros and
cons of each case and to take a pragmatic view ....."

In Management of Madurantakam Coop. Sugar Mills Ltd. v. S.
D Viswanathan, [2005] 3 sec 193, quantum of back wages was confined to 50%
stating:

. "19 ... It is an undisputed fact that the workman had since attained the
age of superannuation and the question of reinstatement does not
arise. Because of the award, the respondent workman will be entitled
E to his retiral benefits like gratuity, etc. and accepting the statement of
the learned Senior Counsel for the appellant Mills that it is undergoing
a financial crisis, on the facts of this case we think it appropriate that
the full back wages granted by the Labour Court be reduced to 50%
·-
of the back wages ..... "
F In State o/U.P. and Ors. v. Ram Bachan Tripathi, [2005] 6 SCC 496, this
Court denied the service benefits for the period the employee remained absent.

In Rajasthan State Road Transport Corpn. and Ors. v. Shyam Bihari
Lal Gupta [2005] 7 SCC 406, it was observed:
G "3 ..... According to the learned counsel for the appellant Corporation,
the decree is absolutely silent so far as the back wages are concerned.
The decree in essence contains only a declaratory relief without any
consequential payment. for monetary benefits. That being so, the
executing court and the High Court were not justified in granting the
H relief sought for. Learned counsel for the respondent on the other
U.P.STATEBRASSWARECORPN.LTD.1•. UDAINARAINPANDEY[SINHA,J.] 627
hand submitted that when the decree clearly indicated that the A
termination was illegal non est, as a natural corollary, .the plaintiff was
entitled to the back wages."

In the instant case, we have noticed hereinbefore that the establishment
of the Appellant wherein the Respondent could be directed to be reinstated
had been sold on 26.3.1993. In that view of the matter, Section 60 of the U.P. B
Industrial Disputes Act would apply in terms whereof compensation will be
payable in the same manner as if he was retrenched under Section 6N thereof.

- It is not in dispute that the Respondent did not raise any plea in his
written statement that he was not gainfully employed during the said period.
It is now well-settled by various decisions Of this Court that although earlier C
this Court insisted that it was for the employer to raise the aforementioned
plea but having regard to the provisions of Section 106 of the Indian Evidence
Act or the provisions analogous thereto, such a plea should be raised by the
workman.
D
In Kendriya Vidyalaya Sangathan (supra), this Court held:

" ... When the question of determining the entitlement of a person to
back wages is concerned, the employee has to show that he was not
gainfully employed. The initial burden is on him. After and ifhe places
materials in that regard, the employer can bring on record materials to E
rebut the claim. In the instant case, the respondent had neither pleaded
nor placed any material in that regard."

[See also Allahabad Jal Sansthan (supra), para 6)

The only question is whether the Respondent would be entitled to back F
wages from the date of his termination of service till the aforementioned date.
The decision to close down the establishment by the State of Uttar Pradesh
like other public sector organizations had been taken as far back on 17.11.1990
wherefor a GO had been issued. It had further been averred, which has been
noticed hereinbefore, that the said GO has substantially been implemented.
In this view of the matter, we are of the opinion that interest of justice would G
be subserved if the back wages payable to the Respondent for the period
1.4.1987 to 26.3.1993 is confined to 25% of the total back wages payable
during the said period.

The judgments and orders of the Labour Court and the High Court are
set aside and it is directed that the Respondent herein shall be entitled to 25% H
628 SUPREME COURT REPORTS (2005) SUPP. S S.C.R.

A back wages of the total back wages payable during the aforesaid period and
compensation payable in terms o~ Section 6-N of the U.P. Industrial Disputes
Act. If, however, any sum has been paid by the Appellant herein, the same
shall be adjusted from the amount payable in terms of this judgment.

For the reasons aforementioned, the appeal is allowed in part and to the
B extent mentioned hereinbefore. However, there shall be no order as to costs.
v.s.s. Appeal partly allowed.