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 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 Act. Section 11A 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.
Equivalent Citation: AIR2006SC586, 2006(1)AWC667(SC), [2006(108)FLR201], JT2005(10)SC344, (2006)ILLJ496SC,
(2006)1SCC479, 2006(2)SLJ327(SC)
IN THE SUPREME COURT OF INDIA
Civil Appeal No. 7304 of 2005 [Arising out of S.L.P. (C) No. 14945 of 2004]
Decided On: 08.12.2005
Appellants: U.P. State Brassware Corpn. Ltd. and Anr.
Vs.
Respondent: Udai Narain Pandey
Hon'ble Judges: S.B. Sinha and P.K. Balasubramanyan, JJ.
Whether direction to pay backwages consequent 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 (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. 23890 of 1992 dismissing the appeal preferred by the Appellant
herein arising out of a judgment and order dated 8
th
July, 1992.
2. The Appellant is an undertaking of the State of Uttar Pradesh. The Respondent herein was appointed
on 23
rd
July, 1984 in a project known as Project Peetal Rasti by the Appellant for looking after the
construction of 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 following order:
"Following two persons are hereby accorded approval for appointment in Non-Ferrous Rolling Mill on
minimum daily wages for the period w.e.f. date indicated against their name till 31 -3-1987.
Sl No. Name Date
1. Sh. Hori Lal 7-1-1987
2. Sh. Uday Narain Pandey 8-1-1987"
33. The services of the Respondent were terminated on the expiry of his 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. 1-4-87 was illegal and improper? 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.
4. 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 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 his
order together with Rs. 50/-towards cost of litigation to Sh. Uday Narain Pandey. I decide accordingly in
this Industrial Dispute."
5. 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 of 240 days during the period of 12 calendar months
immediately before his retrenchment uninterruptedly, he was not a workman within the meaning of
Section 2(7) 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.
6. An application was tiled 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 tiling 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 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 recorded by the Labour Court cannot be said to be perverse. The learned
senior counsel then contended that the Petitioner No. 1 i.e. U.P. State Brassware Corporation Ltd. has
been closed down. Be that as it may, the position of the Respondent workman would he the same as that
all the similar employees and this cannot be a ground to set aside the award of the Labour Court."
7. 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 committed a serious error in passing the impugned
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.
8. 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 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 tact 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, reliance has been placed on Kendriya Vidyalaya Sangathan and Anr. v. S.C. Sharma,
MANU/SC/0037/2005 : (2005)IILLJ153SC and Allahabad Jal Sansthan v. Daya Shankar Rai and Anr.
MANU/SC/0349/2005 : (2005)IILLJ847SC.
49. Mr. Bharat Sangal, learned Counsel appearing on behalf of the Respondent on the other hand, would
submit that Section 2(oo)(bb) of the Industrial Disputes Act 1947 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 would be entitled to back
wages for the entire period from 1.4.1987 till 26.3.1993 besides the amount of compensation as
envisaged under the U.P. Industrial Disputes Act.
10. 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.
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, 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.
11. A decision had been taken to close down the establishment of the Appellant as tar back on
17.11.1990 where for a Government Order, GO No. 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.
The Labour Court in its impugned award has not arrived at any finding that the order of appointment
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 terms whereof the Respondent's services were approved for
appointment in the said mill on minimum daily wages for the period 8.1.1987 till 313.1987 terminated his
services without giving any notice or paying salary of one month in lieu thereof. No compensation in terms
of Section 6-N of the U.P. Industrial Disputes Act was also paid.
12. Before adverting to the decisions relied upon by the teamed counsel for the parties, we may observe
that 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 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.
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 laid 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.
13. 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 he is not
in continuous service, he shall be deemed to be in continuous service under an employer for a period of
one year.
514. 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 1
st April, 1986 to 31
st
March, 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 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.
15. 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,--
* * *
(oo) 'retrenchment' means the termination by the employer of the 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) * * *
(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;"
However, a similar provision has not been enacted in the U.P. Industrial Disputes Act.
16. The contention of the Appellant as noticed hereinbefore, was that the Respondent having been
appointed for a fixed period was not entitled to any 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
MANU/SC/1344/2001 : (2002)ILLJ241SC wherein it was held that in view of Section 31(1) of Industrial
Disputes (Amendment and Miscellaneous Provisions) Act, 1956, the provisions of Section 2(oo)(bb) 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 therefore 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 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.
17. However, as the question as regard termination of service of the 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.
Before adverting to the said question in a bit more detail, let us consider the decisions relied upon by Mr.
Sangal.
618. In Hindustan Tin Works Pvt. Ltd. v. Employees of Hindustan Tin Works Pvt. Ltd.
MANU/SC/0272/1978 : (1978)IILLJ474SC, this Court merely held that the relief of reinstatement with
continuity of service can be granted where termination of service is 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 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 5
th April, 1974".
19. 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 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 corner. The industrial unit is looking up. 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 ail the facts and 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."
20. It will, therefore, be seen that this Court itself, having regard to the factual matrix obtaining in the said
case, directed payment of 75% of the back wages and that too in two equal instalments.
In Management of Panitole Tea Estate v. The Workmen MANU/SC/0517/1971 : (1971)ILLJ233SC, a
two-judge bench of this Court while considering the question as regard grant of relief or reinstatement,
observed:
"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 Tulsidas Paul v. Second Labour Court, W.B. In Tulsidas Paul it has been emphasised
that no hard and 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."
21. In Surendra Kumar Verma v. Central Government Industrial Tribunal-cum-Labour Court New
Delhi and Anr. MANU/SC/0316/1980 : (1981)ILLJ386SC, 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 invalid or inoperative on the premise that semantic luxuries are misplaced in the
interpretation of 'bread and butter' statutes. In that context, Chinnanna Reddy. 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 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 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
but, ordinarily the relief to be awarded must be reinstatement with full back wages. That relief must be
7awarded where no special impediment in the way of awarding the relief is clearly shown. True, occasional
hardship may be caused to an employer but we must remember that., more often than not, comparatively
tar greater hardship is certain to be caused to the workmen if the relief is denied than to the employer if
the relief is granted."
22. 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 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 the desirability of a different relief."
23. The expression 'ordinarily' must be understood given its due meaning. A useful reference in this
behalf may be made to a 4-.Tudge Bench decision of this Court in Jasbhai Motibhai Desai v. Roshan
Kumar, Haji Bashir Ahmed and Ors. MANU/SC/0011/1975 : [1976]3SCR58 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 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."
24. In J.N. Srivastava v. Union of India and Anr. [MANU/SC/1577/1998] 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.
25. We may notice that in M.D., U.P. Warehousing Corporation v. Vijay Naravan Vajpavee
MANU/SC/0432/1980 : (1980)ILLJ222SC and Jitendra Singh Rathor v. Shri Raidyanath Avurved
Bhawan Ltd. although an observation had been made to the effect that in a case where a breach of the
provisions of Section 25F 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.
26. In P.G.I, of Medical Education and Research, Chandigarh v. Raj Kumar [(2001) 2 SCC 54], Baneriee,
J, on the other hand was of the opinion:
"The learned Counsel appearing for the respondents, however, placed strong reliance on a later decision
of this Court in PGI of M.E. and 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 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, obvious that the said decision which centered 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.
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
8statutory sanction to direct payment of back wages in its entirety. As regards s the decision of this Court
in Hindustan Tin Works (P) Ltd. be it noted that though broad guidelines, as regards payment of back
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."
27. The decisions of this Court strongly relied upon by Mr. Sangal. 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.
28. 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 function as court of justice would be totally
impaired. Discretionary jurisdiction in a court need not be conferred always by a statute.
29. 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 Act. Section 11A 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.
30. 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 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.
31. The Industrial Disputes Act was principally established for the purpose 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 counterproductive battles and
assurance of industrial justice may create a climate of goodwill. [See LIC v. D.J. Bahadur,
MANU/SC/0305/1980 : (1981)ILLJ1SC ]
32. 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 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.
33. A person is not entitled to get something only because it would be lawful to do so. If that principle is
applied, the functions of an industrial court shall lose much of its significance.
34. 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.
35. In Hindustan Motors Ltd. v. Tapan Kumar Bhattacharya and Anr. MANU/SC/0584/2002 :
(2002)IILLJ1156SC, 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
elsewhere during this long interregnum. Instead of remitting 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
9referred to supra in the matter of 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..."
36. The Court, therefore, emphasized that while granting relief application of mind on the part of the
industrial court is imperative. Payment of full back wages, therefore, cannot be the natural consequence.
37. To the same extent are the decisions of this Court in Indian Railway Construction Co. Ltd. v. Ajay
Kumar MANU/SC/0166/2003 : (2003)IILLJ150SC and M.P. State Electricity Board v. Jarina Bee
(Smt.) MANU/SC/0462/2003 : (2003)IIILLJ244SC.
The said decisions have recently been considered and followed in U.P. State Textile Corporation Ltd. v.
P.C. Chaturvedi and Ors. MANU/SC/0792/2005 : (2006)ILLJ413SC.
38. Lahoti, J., as the learned Chief Justice then was, in S.M. Nilajkar and Ors. v. Telecom District
Manager, Karnataka MANU/SC/0261/2003 : (2003)IILLJ359SC opined:
"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-CumLabour
Court. The employee cannot be blamed for the delay. The learned Single Judge has denied the
relief of back wages while directing the appellants to be reinstated. That appears to be a just and
reasonable order..."
39. In Rattan Singh v. Union of India MANU/SC/1746/1997 : (1997)11SCC396, 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 and the date of order.
40. In Ruby General Insurance Co. Ltd. v. Chopra (P.P.) MANU/SC/0318/1969 : (1970)ILLJ63SC and
Hindustan Steels Ltd. v. A.K. Roy MANU/SC/0315/1969 : (1970)ILLJ228SC, 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.
41. The said decisions were, however, distinguished in Mohan Lal v. Management of Bharat
Electronics Ltd. MANU/SC/0327/1981 : (1981)IILLJ70SC. Desai, 1 was of the opinion:
"17... But there is a catena of decisions which rule that where the termination is illegal especially where
there is an ineffective order of retrenchment, 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."
42. In Allahabad Jal Sansthan v. Daya Shankar Rai and Anr. MANU/SC/0349/2005 :
(2005)IILLJ847SC, 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, 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. 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 tar 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
submitting, that a pleading to that effect in the written statement by the workman was necessary. Not only
10no 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"
It was further stated:
"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 he realised that industry is being compelled to pay the workman for a
period during which he apparently 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 he offered but the golden mean may he arrived
at."
43. Yet again in General Manager, Haryana Roadways v. Rudhan Singh MANU/SC/0408/2005 :
(2005)IIILLJ4SC, 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 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
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 he 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 a
considerable period of service and his services are wrongfully terminated, 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 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 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 may be for 240 days in a calendar year."
44. In A.P. State Road Transport Corporation and Ors. v. Abdul Kareem MANU/SC/0448/2005 :
(2005)IIILLJ477SC 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.
45. A Division Bench of this Court In M.L. Binjolkar v. State of Madhya Pradesh MANU/SC/0443/2005
: (2005)IIILLJ524SC, referring to a large number of decisions, held:
"7... The earlier view was that whenever there is interference with the order of termination or retirement,
full back wages were the natural corollary. It has been laid down in the cases noted above that it would
depend upon several factors and the Court has to weigh the pros and cons of each case and to take a
pragmatic view..."
46. In Management of Madurantakam Coop. Sugar Mills Ltd. v. S. Viswanathan MANU/SC/0139/2005
: (2005)IILLJ1SC, 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
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..."
1147. In State of 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.
48. In Rajasthan State Road Transport Corporation and Ors. v. Shyam Bihari Lal Gupta
MANU/SC/0552/2005 : AIR2005SC3476, it was observed:
"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 relief sought for. Learned counsel for the respondent on the other hand
submitted that when the decree clearly indicated that the termination was illegal non est, as a natural
corollary, the plaintiff was entitled to the back wages."
49. 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. 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.
50. 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 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.
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 if he
places materials in that regard, the employer can bring on record materials to 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 61
51. The only question is whether the Respondent would be entitled to back 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
where for 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 be subserved if the back wages payable to the Respondent for the period
1.4,1987 to 263.1993 is confined to 25% of the total back wages payable during the said period.
52. The judgments and orders of the Labour Court and the High Court are set aside and it is directed that
the Respondent herein shall he entitled to 25% back wages of the total back wages payable during the
aforesaid period and compensation payable in terms of 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.
53. For the reasons aforementioned, the appeal is allowed in part and to the extent mentioned
hereinbefore. However, there shall be no order as to costs.
12
Print Page
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 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 Act. Section 11A 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.
Equivalent Citation: AIR2006SC586, 2006(1)AWC667(SC), [2006(108)FLR201], JT2005(10)SC344, (2006)ILLJ496SC,
(2006)1SCC479, 2006(2)SLJ327(SC)
IN THE SUPREME COURT OF INDIA
Civil Appeal No. 7304 of 2005 [Arising out of S.L.P. (C) No. 14945 of 2004]
Decided On: 08.12.2005
Appellants: U.P. State Brassware Corpn. Ltd. and Anr.
Vs.
Respondent: Udai Narain Pandey
Hon'ble Judges: S.B. Sinha and P.K. Balasubramanyan, JJ.
Whether direction to pay backwages consequent 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 (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. 23890 of 1992 dismissing the appeal preferred by the Appellant
herein arising out of a judgment and order dated 8
th
July, 1992.
2. The Appellant is an undertaking of the State of Uttar Pradesh. The Respondent herein was appointed
on 23
rd
July, 1984 in a project known as Project Peetal Rasti by the Appellant for looking after the
construction of 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 following order:
"Following two persons are hereby accorded approval for appointment in Non-Ferrous Rolling Mill on
minimum daily wages for the period w.e.f. date indicated against their name till 31 -3-1987.
Sl No. Name Date
1. Sh. Hori Lal 7-1-1987
2. Sh. Uday Narain Pandey 8-1-1987"
33. The services of the Respondent were terminated on the expiry of his 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. 1-4-87 was illegal and improper? 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.
4. 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 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 his
order together with Rs. 50/-towards cost of litigation to Sh. Uday Narain Pandey. I decide accordingly in
this Industrial Dispute."
5. 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 of 240 days during the period of 12 calendar months
immediately before his retrenchment uninterruptedly, he was not a workman within the meaning of
Section 2(7) 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.
6. An application was tiled 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 tiling 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 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 recorded by the Labour Court cannot be said to be perverse. The learned
senior counsel then contended that the Petitioner No. 1 i.e. U.P. State Brassware Corporation Ltd. has
been closed down. Be that as it may, the position of the Respondent workman would he the same as that
all the similar employees and this cannot be a ground to set aside the award of the Labour Court."
7. 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 committed a serious error in passing the impugned
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.
8. 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 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 tact 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, reliance has been placed on Kendriya Vidyalaya Sangathan and Anr. v. S.C. Sharma,
MANU/SC/0037/2005 : (2005)IILLJ153SC and Allahabad Jal Sansthan v. Daya Shankar Rai and Anr.
MANU/SC/0349/2005 : (2005)IILLJ847SC.
49. Mr. Bharat Sangal, learned Counsel appearing on behalf of the Respondent on the other hand, would
submit that Section 2(oo)(bb) of the Industrial Disputes Act 1947 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 would be entitled to back
wages for the entire period from 1.4.1987 till 26.3.1993 besides the amount of compensation as
envisaged under the U.P. Industrial Disputes Act.
10. 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.
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, 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.
11. A decision had been taken to close down the establishment of the Appellant as tar back on
17.11.1990 where for a Government Order, GO No. 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.
The Labour Court in its impugned award has not arrived at any finding that the order of appointment
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 terms whereof the Respondent's services were approved for
appointment in the said mill on minimum daily wages for the period 8.1.1987 till 313.1987 terminated his
services without giving any notice or paying salary of one month in lieu thereof. No compensation in terms
of Section 6-N of the U.P. Industrial Disputes Act was also paid.
12. Before adverting to the decisions relied upon by the teamed counsel for the parties, we may observe
that 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 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.
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 laid 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.
13. 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 he is not
in continuous service, he shall be deemed to be in continuous service under an employer for a period of
one year.
514. 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 1
st April, 1986 to 31
st
March, 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 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.
15. 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,--
* * *
(oo) 'retrenchment' means the termination by the employer of the 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) * * *
(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;"
However, a similar provision has not been enacted in the U.P. Industrial Disputes Act.
16. The contention of the Appellant as noticed hereinbefore, was that the Respondent having been
appointed for a fixed period was not entitled to any 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
MANU/SC/1344/2001 : (2002)ILLJ241SC wherein it was held that in view of Section 31(1) of Industrial
Disputes (Amendment and Miscellaneous Provisions) Act, 1956, the provisions of Section 2(oo)(bb) 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 therefore 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 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.
17. However, as the question as regard termination of service of the 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.
Before adverting to the said question in a bit more detail, let us consider the decisions relied upon by Mr.
Sangal.
618. In Hindustan Tin Works Pvt. Ltd. v. Employees of Hindustan Tin Works Pvt. Ltd.
MANU/SC/0272/1978 : (1978)IILLJ474SC, this Court merely held that the relief of reinstatement with
continuity of service can be granted where termination of service is 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 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 5
th April, 1974".
19. 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 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 corner. The industrial unit is looking up. 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 ail the facts and 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."
20. It will, therefore, be seen that this Court itself, having regard to the factual matrix obtaining in the said
case, directed payment of 75% of the back wages and that too in two equal instalments.
In Management of Panitole Tea Estate v. The Workmen MANU/SC/0517/1971 : (1971)ILLJ233SC, a
two-judge bench of this Court while considering the question as regard grant of relief or reinstatement,
observed:
"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 Tulsidas Paul v. Second Labour Court, W.B. In Tulsidas Paul it has been emphasised
that no hard and 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."
21. In Surendra Kumar Verma v. Central Government Industrial Tribunal-cum-Labour Court New
Delhi and Anr. MANU/SC/0316/1980 : (1981)ILLJ386SC, 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 invalid or inoperative on the premise that semantic luxuries are misplaced in the
interpretation of 'bread and butter' statutes. In that context, Chinnanna Reddy. 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 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 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
but, ordinarily the relief to be awarded must be reinstatement with full back wages. That relief must be
7awarded where no special impediment in the way of awarding the relief is clearly shown. True, occasional
hardship may be caused to an employer but we must remember that., more often than not, comparatively
tar greater hardship is certain to be caused to the workmen if the relief is denied than to the employer if
the relief is granted."
22. 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 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 the desirability of a different relief."
23. The expression 'ordinarily' must be understood given its due meaning. A useful reference in this
behalf may be made to a 4-.Tudge Bench decision of this Court in Jasbhai Motibhai Desai v. Roshan
Kumar, Haji Bashir Ahmed and Ors. MANU/SC/0011/1975 : [1976]3SCR58 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 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."
24. In J.N. Srivastava v. Union of India and Anr. [MANU/SC/1577/1998] 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.
25. We may notice that in M.D., U.P. Warehousing Corporation v. Vijay Naravan Vajpavee
MANU/SC/0432/1980 : (1980)ILLJ222SC and Jitendra Singh Rathor v. Shri Raidyanath Avurved
Bhawan Ltd. although an observation had been made to the effect that in a case where a breach of the
provisions of Section 25F 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.
26. In P.G.I, of Medical Education and Research, Chandigarh v. Raj Kumar [(2001) 2 SCC 54], Baneriee,
J, on the other hand was of the opinion:
"The learned Counsel appearing for the respondents, however, placed strong reliance on a later decision
of this Court in PGI of M.E. and 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 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, obvious that the said decision which centered 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.
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
8statutory sanction to direct payment of back wages in its entirety. As regards s the decision of this Court
in Hindustan Tin Works (P) Ltd. be it noted that though broad guidelines, as regards payment of back
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."
27. The decisions of this Court strongly relied upon by Mr. Sangal. 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.
28. 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 function as court of justice would be totally
impaired. Discretionary jurisdiction in a court need not be conferred always by a statute.
29. 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 Act. Section 11A 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.
30. 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 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.
31. The Industrial Disputes Act was principally established for the purpose 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 counterproductive battles and
assurance of industrial justice may create a climate of goodwill. [See LIC v. D.J. Bahadur,
MANU/SC/0305/1980 : (1981)ILLJ1SC ]
32. 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 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.
33. A person is not entitled to get something only because it would be lawful to do so. If that principle is
applied, the functions of an industrial court shall lose much of its significance.
34. 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.
35. In Hindustan Motors Ltd. v. Tapan Kumar Bhattacharya and Anr. MANU/SC/0584/2002 :
(2002)IILLJ1156SC, 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
elsewhere during this long interregnum. Instead of remitting 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
9referred to supra in the matter of 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..."
36. The Court, therefore, emphasized that while granting relief application of mind on the part of the
industrial court is imperative. Payment of full back wages, therefore, cannot be the natural consequence.
37. To the same extent are the decisions of this Court in Indian Railway Construction Co. Ltd. v. Ajay
Kumar MANU/SC/0166/2003 : (2003)IILLJ150SC and M.P. State Electricity Board v. Jarina Bee
(Smt.) MANU/SC/0462/2003 : (2003)IIILLJ244SC.
The said decisions have recently been considered and followed in U.P. State Textile Corporation Ltd. v.
P.C. Chaturvedi and Ors. MANU/SC/0792/2005 : (2006)ILLJ413SC.
38. Lahoti, J., as the learned Chief Justice then was, in S.M. Nilajkar and Ors. v. Telecom District
Manager, Karnataka MANU/SC/0261/2003 : (2003)IILLJ359SC opined:
"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-CumLabour
Court. The employee cannot be blamed for the delay. The learned Single Judge has denied the
relief of back wages while directing the appellants to be reinstated. That appears to be a just and
reasonable order..."
39. In Rattan Singh v. Union of India MANU/SC/1746/1997 : (1997)11SCC396, 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 and the date of order.
40. In Ruby General Insurance Co. Ltd. v. Chopra (P.P.) MANU/SC/0318/1969 : (1970)ILLJ63SC and
Hindustan Steels Ltd. v. A.K. Roy MANU/SC/0315/1969 : (1970)ILLJ228SC, 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.
41. The said decisions were, however, distinguished in Mohan Lal v. Management of Bharat
Electronics Ltd. MANU/SC/0327/1981 : (1981)IILLJ70SC. Desai, 1 was of the opinion:
"17... But there is a catena of decisions which rule that where the termination is illegal especially where
there is an ineffective order of retrenchment, 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."
42. In Allahabad Jal Sansthan v. Daya Shankar Rai and Anr. MANU/SC/0349/2005 :
(2005)IILLJ847SC, 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, 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. 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 tar 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
submitting, that a pleading to that effect in the written statement by the workman was necessary. Not only
10no 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"
It was further stated:
"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 he realised that industry is being compelled to pay the workman for a
period during which he apparently 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 he offered but the golden mean may he arrived
at."
43. Yet again in General Manager, Haryana Roadways v. Rudhan Singh MANU/SC/0408/2005 :
(2005)IIILLJ4SC, 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 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
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 he 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 a
considerable period of service and his services are wrongfully terminated, 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 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 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 may be for 240 days in a calendar year."
44. In A.P. State Road Transport Corporation and Ors. v. Abdul Kareem MANU/SC/0448/2005 :
(2005)IIILLJ477SC 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.
45. A Division Bench of this Court In M.L. Binjolkar v. State of Madhya Pradesh MANU/SC/0443/2005
: (2005)IIILLJ524SC, referring to a large number of decisions, held:
"7... The earlier view was that whenever there is interference with the order of termination or retirement,
full back wages were the natural corollary. It has been laid down in the cases noted above that it would
depend upon several factors and the Court has to weigh the pros and cons of each case and to take a
pragmatic view..."
46. In Management of Madurantakam Coop. Sugar Mills Ltd. v. S. Viswanathan MANU/SC/0139/2005
: (2005)IILLJ1SC, 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
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..."
1147. In State of 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.
48. In Rajasthan State Road Transport Corporation and Ors. v. Shyam Bihari Lal Gupta
MANU/SC/0552/2005 : AIR2005SC3476, it was observed:
"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 relief sought for. Learned counsel for the respondent on the other hand
submitted that when the decree clearly indicated that the termination was illegal non est, as a natural
corollary, the plaintiff was entitled to the back wages."
49. 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. 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.
50. 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 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.
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 if he
places materials in that regard, the employer can bring on record materials to 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 61
51. The only question is whether the Respondent would be entitled to back 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
where for 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 be subserved if the back wages payable to the Respondent for the period
1.4,1987 to 263.1993 is confined to 25% of the total back wages payable during the said period.
52. The judgments and orders of the Labour Court and the High Court are set aside and it is directed that
the Respondent herein shall he entitled to 25% back wages of the total back wages payable during the
aforesaid period and compensation payable in terms of 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.
53. For the reasons aforementioned, the appeal is allowed in part and to the extent mentioned
hereinbefore. However, there shall be no order as to costs.
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