Page 1 [REPORTABLE]

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL Nos.2417-2418 /2014

(arising out of S.L.P.(Civil) Nos. 29634-29635/2008)

Hari Nandan Prasad & Anr. …Appellants

Vs.

Employer I/R to Mangmt.of FCI & Anr. …Respondents

J U D G M E N T

A.K.SIKRI,J.

1.Leave granted.

2.The two appellants have filed one combined Special Leave

Petition, which arises out of a common judgment dated 27.6.2008

passed by the Division Bench of the Jharkhand High Court in two

LPAs which had been filed by the respondent herein viz. Food

Corporation of India (FCI). The two appellants were working on

casual basis with the FCI. After certain time, their services were

dispensed with. Both of them raised industrial dispute alleging

wrongful termination which was referred to the Central

Government-cum- Industrial Tribunal (CGIT). These proceedings

culminated in two awards dated 12.12.1996 and 18.12.1996

1

Page 2 respectively passed by the CGIT. In both these awards,

termination of both the appellants was held to be illegal and they

were directed to be reinstated with 50% back wages. The CGIT

also ordered their regularization in service. FCI filed Writ Petitions

in both the cases challenging these awards which were initially

admitted sometime in the year 1988 and the operation of the

awards was stayed. However, orders were passed under Section

17-B of the Industrial Disputes Act (ID Act) directing payment of

full wages as last wages drawn to the appellants from the date of

the award in each case. These Writ Petitions were ultimately

dismissed by the learned Single Judge vide common judgment

and order dated 19.5.2005. As pointed out above, this judgment

of the learned Single Judge was challenged by the FCI by filing

LPAs. These LPAs have been allowed by the Division Bench,

thereby setting aside the orders of the learned Single Judge as

well as awards passed by the CGIT. This is how two appellants

are before us in this appeal.

3.Before we proceed further, we deem it appropriate to give

the details of nature of employment of each of the appellants with

the FCI and tenure etc. as well as the gist of the tribunal’s awards.

2

Page 3 Hari Nandan.

4.He was engaged on daily wages basis as Labourer-cum-

Workman, in the exigency of the situation, at Food Storage Depot,

Jasidih by the Depot In-charge, FCI, Jasidih on 1

st

June 1980. On

the ground that services of appellant No.1 were no more required,

he was disengaged w.e.f. 1.3.1983. While doing so, no notice or

notice pay or retrenchment compensation was given to him.

Appellant No.1 raised industrial dispute which was referred to the

CGIT by the Central Government vide reference order dated

1.10.1992, with the following terms of reference:

“Whether the action of the management

of Food Corporation of India, in retrenching Shri

Hari Nandan Prasad, Ex-Casual Workman, in

contravention of Section 25-F of the I.D.Act,

1947 and denying reinstatement with full back

wages and regularization of his service is legal

and justified? If not to what relief the concerned

workman is entitled to?”

5.The CGIT gave its award dated 12.12.1996 holding that the

termination was in contravention of Section 25-F of the Industrial

Disputes Act. The CGIT also, while ordering reinstatement of

appellant No.1, held that he was also entitled to regularization of

3

Page 4 his services from the date of his stoppage from service dated

1.3.1983. Back wages to the extent of 50% were awarded. As far

as direction for regularization is concerned, it was based on

Circular issued by the FCI whereby any temporary worker

employed for more than 90 days was entitled for regularization of

his service. It was noted that as per the said Circular the

Management had regularized the services of 70-75 similarly

situated casual workers and therefore denying the same benefit

to appellant No.1 amounted to discrimination.

Gobind Kumar Choudhary .

6.Appellant No.2 was engaged on daily wages as casual Typist

at the District Office, FCI, Darbhanga against a vacancy of Class-III

post on 5.9.1986. He worked in the capacity till 15.9.1990 when

his name was struck off the rolls. He also raised industrial dispute

which was referred to CGIT with following terms of reference:

“Whether the action of the Management

of Food Corporation of India, Laaherisarai,

Darbhanga is legal and justified in retrenching

Shri Govind Kumar Chaudhary, who was

working as Casual Typist, arbitrarily and in

violation of Section 25-F of the I.D.Act, and

denying reinstatement with full back wages

4

Page 5 and regularization of service is legal and

justified? If not to what relief the concerned

workman is entitled to?”

In his case, the award dated 18.12.1996 was made by the

CGIT on almost identical premise, as in the case of appellant No.1,

supported by similar reasons.

7.The learned Single Judge while dismissing both the Writ

Petitions filed by the FCI concurred with the findings and reasons

given by the CGIT.

8.In the LPAs before the Division Bench, the primary

contention of the FCI was that there could not have been any

direction of regularization of services even on the admitted case

of both the workmen, viz. merely on the ground that they had

worked for more than 240 days in a calendar year as casual

employees. It was also submitted that though the District

Manager of the FCI was authorized to employ persons as

temporary workers, such an authority was given for employing

them for 7 days only and no more, and in case of violation of this

strict stipulation contained in the Circular issued by the FCI, the

concerned officer could be proceeded against departmentally. It

5

Page 6 was further argued that even if such temporary employment was

to continue beyond stipulated period of 7 days, since these two

workmen had worked on daily wages basis, that too for a period

of 3 years or so, there could not have been any regularization of

these workmen in view of the judgments of this Court in the case

of Delhi Development Horticulture Employees Union vs. Delhi

Administration AIR 1992 SC 789 and Constitution Bench judgment

in the case of Secretary, State of Karnataka vs. Uma Devi &

Ors. (2006) 4 SCC 1. These contentions have impressed the

Division Bench of the High Court, and accepted by it, giving the

following reasons:

“The Tribunal has apparently

misconceived the principles of law laid down

in this context. In the case of Delhi

Development Horticulture Employees Union

vs. Delhi Administration (AIR 1992) SC 789)

the Supreme Court has categorically laid

down that temporary employees, even if they

have worked for more than 240 days, cannot

claim any right or benefit for automatic

regularization of their services. Similar view

has been taken in the case of Post Master

General, Kolkata & Ors vs. Tutu Das (Dutta),

reported in 2007 (5) SCC 317. More so, where

no posts are created or no vacancies to

sanctioned posts exists, only on the ground of

working for more than 240 days,

regularization cannot be directed. Even in

6

Page 7 cases where there are regular posts and

vacancies, the procedure laid down for

appointment has to be followed.”

9.In so far as contention of the appellant predicated on

Circular dated 6.5.1997 is concerned, on the basis of which they

claimed that 70-75 persons had been regularized and

discriminatory treatment could not be meted to them, this

contention has been brushed aside by the High Court in the

impugned judgment in the following manner:

“The, contention of Mrs.Pal that there

has been discrimination as several persons

were regularized on the basis of the Circular of

the Management dated 6.5.1987, cannot be

accepted. Reliance for this purpose on the

case of U.P. State Electricity Board vs. Pooran

Chandra Pandey reported in (2007) 11 SCC 92,

is also of no help to her. Firstly, there were

several conditions and criteria in the said

Circular for regularization, but there is no

finding that the respondents workmen in these

appeals fulfilled such criteria. Secondly, in the

case of U.P.State Electricity Board matter

(supra) the employees of the Co-operative

Society who were taken over by the Electricity

Board claimed that the decision of the

Electricity Board dated 28.11.1996 permitting

regularization of the employees working from

before 4.5.1990, will also apply to them as

they were also appointed prior to 4.5.1990 in

the Society. It was held that since the taken

7

Page 8 over employees were appointed in the Society

before 4.5.1990, they could not be denied the

benefit of the said decision of the Electricity

Board. There is nothing to show that the

appointment of the taken over employees was

made by the Society without following the

procedure in that behalf, whereas in the

present case, the respondents workmen were

not appointed against vacant and sanctioned

posts after following the procedure of

appointment.

Furthermore, in paragraph 6 of the

judgment of the Constitution Bench in the case

of Secretary, State of Karnataka vs. Uma Devi

(2006) 4 SCC 1, it was held that no

Government order, notification or circular can

be substituted for the statutory rules framed

under the authority of law. In para 16 of the

judgment in the case of R.S.Garg vs. State of

U.P. (2006 (6) SCC 430), it has been held that

even the Government cannot make rules or

issue any executive instructions by way of

regularization. Similar view has been taken in

the case of the Post Master General (supra).

Therefore, the respondent workmen cannot

claim regularization on the basis of the said

Circular of the Management dated 6.5.1987,

nor the said judgment of the U.P. Electricity

Board (supra) is of any help to them.”

10.Heavily relying upon the judgment in the case of Uma Devi

(supra), the High Court has held that as both the appellants did

not render 10 or more years of service, their cases do not come

8

Page 9 even in the exception carved out by the Constitution Bench in

Uma Devi’s case.

11.Another contention raised by the appellants before the High

Court was that the ratio of Uma Devi’s case had no relevance in

the cases of industrial adjudication by the Labour Courts/Industrial

Tribunals. However, even this submission was found to be

meritless by the High Court taking support of the judgment of this

Court in U.P. Power Corporation Vs. Bijli Mazdoor Sangh &

Ors. (2007) 5 SCC 755.

12.We may record here that the Division Bench accepted that

there was infraction of Section 25-F of the I.D.Act in both the

cases. However, they were held not entitled to reinstatement

because of the reason that they were employed strictly as

temporary workers, without any stipulation or promise that they

would be made permanent and therefore reinstatement of such

workers was not warranted and they were entitled to get

monetary compensation only. As far as compensation is

concerned, since both the appellants were paid the money

equivalent to wages last drawn, for number of years when the

9

Page 10 Writ Petitions were pending, under Section 17 -B of the I.D. Act,

the High Court felt that the appellants were duly compensated

and no further amount was payable.

13.Challenging the validity of the approach of the High Court,

the learned counsel for the appellants submitted that the entire

thrust of the judgment of the High Court rests on the decision of

this Court in Uma Devi’s case which was impermissible as the said

judgment is clarified by this Court subsequently in the case of

Maharashtra State Road Transport Corporation & Anr. vs.

Casteribe Rajya Parivahan Karmchari Sanghatana (2009) 8

SCC 556, wherein it is held, in categorical terms, that in so far as

Industrial and Labour Courts are concerned, they enjoy wide

powers under Section 30(1)(b) of the Industrial Disputes Act to

take affirmative action in case of unfair labour practice and these

powers include power to order regularization/permanency. The

Court has, further, clarified that decision in Uma Devi limits the

scope of powers of Supreme Court under Article 32 and High

Courts under Article 226 of the Constitution to issue directions for

regularization in the matter of public employment, but power to

take affirmative action under section 30(1)(b) of the I.D.Act which

10

Page 11 rests with the Industrial/Labour Courts, remains intact. It was,

thus, argued that entire edifice of the impugned judgment of the

High Court erected on the foundation of Uma Devi (supra)

crumbles.

14.The learned counsel for the FCI, on the other hand, referred

to the judgment in U.P. Power Corporation (supra) wherein this

Court has taken unambiguous view that the law laid down in Uma

Devi is applicable to Industrial Tribunals/Labour Courts as well. It

was submitted that the judgment in U.P. Power Corporation

(supra) was not taken note of in the subsequent judgment in

Maharashtra State Road Transport Corporation (supra) and this

Court should follow the earlier judgment rendered in U.P.Power

Corporation’s case. The learned counsel also relied upon the

recent judgment of this Court in the case of Assistant Engineer,

Rajasthan Development Corporation & Anr. vs. Gitam

Singh (2013) 5 SCC 136 to contend that even when there is a

wrongful termination of services of a daily wager because of non-

compliance of the provisions of Section 25-F of the I.D.Act, such

an employee is not entitled to reinstatement but only monetary

11

Page 12 compensation. On the aforesaid basis, the learned counsel

pleaded for dismissal of the appeal.

15.We have given considerable thoughts to the submissions

made by the learned counsel for the parties on either side. It is

clear from the aforesaid narratives that this case has two facets,

which are reflected even in the terms of references as well on

which the disputes were referred to the CGIT. First refers to the

validity of the termination and the other one pertains to the

regularization. Twin issues, which have, thus, to be gone into, are:

(1) whether termination of

service of the appellants was illegal?

Related issue here would be that if it is illegal, then

whether in the facts and circumstances of this case, the

appellants would be entitled to reinstatement in service or

monetary compensation in lieu of reinstatement would be

justified?

(2) whether the appellants are entitled to regularization of

their services?

12

Page 13 We would also record that both the issues, in the facts

of this case, are somewhat overlapping which would become

apparent, with the progression of our discussion on these issues.

Reg.: Validity of termination.

16.This issue hardly poses any problem. Admitted facts are

that both the appellant had worked for more than 240 days

continuously preceding their disengagement/termination. At the

time of their disengagement, even when they had continuous

service for more than 240 days (in fact about 3 years) they were

not given any notice or pay in lieu of notice as well as

retrenchment compensation. Thus, mandatory pre-condition of

retrenchment in paying the aforesaid dues in accordance with

Section 25-F of the I.D. Act was not complied with. That is

sufficient to render the termination as illegal. Even the High

Court in the impugned judgment has accepted this position and

there was no quarrel on this aspect before us as well. With this,

we advert to the issue of relief which should be granted in such

cases, as that was the topic of hot debate before us as well.

13

Page 14 17.Admittedly, both the workmen were engaged on daily wages

basis. Their engagement was also in exigency of situation. In so

far as appellant No.1 is concerned, he was disengaged way back

in the year 1983. The dispute in his case was referred for

adjudication to CGIT in 1992 only. There is a time lag of 9 years.

Though no reasons are appearing on record for such an abnormal

delay, it seems that he had raised the industrial dispute few years

after his disengagement which can be inferred from the reading

of the award of the CGIT as that reveals that after his

disengagement he kept on making representations only and he

took recourse to judicial proceedings only after Circular dated

6.5.1997 was issued as per which the FCI had decided to

regularize the services of all casual workmen who had completed

more than 90 days before 1996. Be that as it may, at this juncture

what we are highlighting is that appellant No.1 had worked on

daily wages basis for barely 3 years and he is out of service for

last 30 years. Even when the Tribunal rendered his award in

1996, 13 years had elapsed since his termination. On these facts,

it would be difficult to give the relief of reinstatement to the

persons who were engaged as daily wagers and whose services

14

Page 15 were terminated in a distant past. And, further where termination

is held to be illegal only on a technical ground of not adhering to

the provisions of Section 25-F of the Act. Law on this aspect, as

developed over a period of time by series of judgments makes the

aforesaid legal position very eloquent. It is not necessary to

traverse through all these judgments. Our purpose would be

served by referring to a recent judgment rendered by this very

Bench in the case of BSNL vs. Bhurumal 2013 (15) SCALE 131

which has taken note of the earlier case law relevant to the issue.

Following passage from the said judgment would reflect the

earlier decisions of this Court on the question of reinstatement:

“The learned counsel for the appellant

referred to two judgments wherein this Court

granted compensation instead of reinstatement.

In the case of BSNL vs. Man Singh (2012) 1

SCC 558, this Court has held that when the

termination is set aside because of violation of

Section 25-F of the Industrial Disputes Act, it is

not necessary that relief of reinstatement be

also given as a matter of right. In the case of

Incharge Officer & Anr. vs. Shankar Shetty

(2010) 9 SCC 126, it was held that those cases

where the workman had worked on daily wage

basis, and worked merely for a period of 240

days or 2-3 years and where the termination had

taken place many years ago, the recent trend

was to grant compensation in lieu of

reinstatement. In this judgment of Shankar

15

Page 16 Shetty, this trend was reiterated by referring to

various judgments, as is clear from the following

discussion.

Should an order of reinstatement

automatically follow in a case where the

engagement of a daily wager has been brought

to end in violation of Section 25-F of the

Industrial Disputes Act, 1947 (for short “the ID

Act”)? The course of the decisions of this Court

in recent years has been uniform on the above

question.

In Jagbir Singh vs. Haryana State Agriculture

Mktd. Board (2009) 15 SCC 327 delivering the

judgment of this Court, one of us (R.M.Lodha,J.)

noticed some of the recent decisions of this

Court, namely, U.P.State Brassware Corpn. Ltd.

Vs. Uday Narain Pandey (2006) 1 SCC 479,

Uttaranchal Forest Department Corpn. Vs.

M.C.Joshi (2007) 9 SCC 353, State of M.P. vs.

Lalit Kumar Verma (2007) 1 SCC 575,

M.P.Admn. vs. Tribhuban (2007) 9 SCC 748, Sita

Ram vs. Moti Lal Nehru Farmers Training

Institute (2008) 5 SCC 75, Jaipur Development

Authority vs. Ramsahai (2006) 11 SCC 684, GDA

vs. Ashok Kumar (2008) 4 SCC 261 and

Mahboob Deepak vs. Nagar Panchayat, Gajraula

(2008) 1 SCC 575 and stated as follows: (Jagbir

Singh case, SCC pp.330 & 335 paras 7 & 14).

It is true that the earlier view of this Court

articulated in many decision reflected the legal

position that if the termination of an employee

was found to be illegal, the relief of

reinstatement with full back wages would

ordinarily follow. However, in recent past, there

has been a shift in the legal position and in a

long line of cases, this Court has consistently

taken the view that relief by way of

16

Page 17 reinstatement with back wages is not automatic

and may be wholly inappropriate in a given fact

situation even though the termination of an

employee is in contravention of the prescribed

procedure. Compensation instead of

reinstatement has been held to meet the ends

of justice.

It would be, thus, seen that by a catena of

decisions in recent time, this Court has clearly

laid down that an order of retrenchment passed

in violation of Section 25-F although may be set

aside but an award of reinstatement should not,

however, automatically passed. The award of

reinstatement with full back wages in a case

where the workman has completed 240 days of

work in a year preceding the date of

termination, particularly, daily wagers has not

been found to be proper by this Court and

instead compensation has been awarded. This

Court has distinguished between a daily wager

who does not hold a post and a permanent

employee.

Jagbir Singh has been applied very recently in

Telegraph Deptt. Vs. Santosh Kumar Seal (2010)

6 SCC 773, wherein this Court stated: (SCC

p.777, para 11)

In view of the aforesaid legal position and the

fact that the workmen were engaged as daily

wagers about 25 years back and they worked

hardly for 2 or 3 years, relief of reinstatement

and back wages to them cannot be said to be

justified and instead monetary compensation

would subserve the ends of justice.

17

Page 18 Taking note of the judgments referred to in the aforesaid

paragraphs and also few more cases in other portion of the said

judgment, the legal position was summed up in the following

manner:

“It is clear from the reading of the aforesaid

judgments that the ordinary principle of grant of

reinstatement with full back wages, when the

termination is found to be illegal is not applied

mechanically in all cases. While that may be a

position where services of a regular/permanent

workman are terminated illegally and/or

malafide and/or by way of victimization, unfair

labour practice etc. However, when it comes to

the case of termination of a daily wage worker

and where the termination is found illegal

because of procedural defect, namely in

violation of Section 25-F of the Industrial

Disputes Act, this Court is consistent in taking

the view in such cases reinstatement with back

wages is not automatic and instead the

workman should be given monetary

compensation which will meet the ends of

justice. Rationale for shifting in this direction is

obvious.

Reasons for denying the relief of reinstatement

in such cases are obvious. It is trite law that

when the termination is found to be illegal

because of non-payment of retrenchment

compensation and notice pay as mandatorily

required under Section 25-F of the Industrial

Disputes Act, even after reinstatement, it is

always open to the management to terminate

the services of that employee by paying him the

retrenchment compensation. Since such a

18

Page 19 workman was working on daily wage basis and

even after he is reinstated, he has no right to

seek regularization (See: State of Karnataka vs.

Uma Devi (2006) 4 SCC 1). Thus when he cannot

claim regularization and he has no right to

continue even as a daily wage worker, no useful

purpose is going to be served in reinstating such

a workman and he can be given monetary

compensation by the Court itself inasmuch as if

he is terminated again after reinstatement, he

would receive monetary compensation only in

the form of retrenchment compensation and

notice pay.In such a situation, giving the relief

of reinstatement, that too after a long gap, would

not serve any purpose.

We would, however, like to add a caveat here.

There may be cases where termination of a daily

wage worker is found to be illegal on the ground

it was resorted to as unfair labour practice or in

violation of the principle of last come first go viz.

while retrenching such a worker daily wage

juniors to him were retained. There may also be

a situation that persons junior to him wee

regularized under some policy but the concerned

workman terminated. In such circumstances, the

terminated worker should not be denied

reinstatement unless there are some other

weighty reasons for adopting the course of grant

of compensation instead of reinstatement. In

such cases, reinstatement should be the rule and

only in exceptional cases for the reasons stated

to be in writing, such a relief can be denied”.

18.We make it clear that reference to Uma Devi, in the

aforesaid discussion is in a situation where the dispute referred

19

Page 20 pertained to termination alone. Going by the principles carved

out above, had it been a case where the issue is limited only to

the validity of termination, appellant No.1 would not be entitled to

reinstatement. This could be the position in respect of appellant

No.2 as well. Though the factual matrix in his case is slightly

different, that by itself would not have made much of a

difference. However, the matter does not end here. In the

present case, the reference of dispute to the CGIT was not limited

to the validity of termination. The terms of reference also

contained the claim made by the appellants for their

regularization of service.

19.We have already pointed out that the two aspects viz. that of

reinstatement and regularization are intermixed and overlapping

in the present case. If the appellants were entitled to get their

services regularized, in that case it would have been axiomatic to

grant the relief of reinstatement as a natural corollary. Therefore,

it becomes necessary, at this stage, to examine as to whether the

order of CGIT, as affirmed by the learned Single Judge of the High

Court directing regularization of their service, was justified or the

20

Page 21 approach of the Division Bench of the High Court in denying that

relief is correct.

Re: Relief of Regularization

20.Before we advert to this question, it would be necessary to

examine as to whether the Constitution Bench judgment in Uma

Devi case have applicability in the matters concerning industrial

adjudication. We have already pointed out above the contention

of the counsel for the appellants in this behalf, relying upon

Maharashtra State Road Transport case that the decision in Uma

Devi would be binding the Industrial or Labour Courts. On the

other hand, counsel for the FCI has referred to the judgment in

U.P.Power Corporation for the submission that law laid down in

Uma Devi equally applies to Industrial Tribunals/Labour Courts. It,

thus, becomes imperative to examine the aforesaid two

judgments at this juncture.

21.A perusal of the judgment in U.P. Power Corporation would

demonstrate that quite a few disputes were raised and referred to

the industrial tribunal qua the alleged termination of respondent

Nos.2 and 3 in that case. Without giving the details of those

21

Page 22 cases, it would be sufficient to mention that in one of the cases

the tribunal held that after three years of their joining in service

both respondents 2 and 3 were deemed to have been regularized.

The appellants filed the Writ Petition which was also dismissed.

Challenging the order of the High Court, the appellants had

approached this Court. It was argued that there could not have

been any regularization order passed by the Industrial Court in

view of the decision in Uma Devi. Counsel for the workmen had

taken a specific plea that the powers of the industrial adjudicator

were not under consideration in Uma Devi’s case and that there

was a difference between a claim raised in a civil suit or a Writ

Petition on the one hand and one adjudicated by the industrial

adjudicator. It was also argued that the labour court can create

terms existing in the contract to maintain industrial peace and

therefore it had the power to vary the terms of the contract.

While accepting the submission of the appellant therein viz. U.P.

Power Corporation, the Court gave the following reasons:

“It is true as contended by learned

counsel for the respondent that the question as

regards the effect of the industrial adjudicators’

powers was not directly in issue in Umadevi

case. But the foundation logic in Umadevi case is

22

Page 23 based on Article 14 of the Constitution of India.

Though the industrial adjudicator can very the

terms of the contract of the employment, it

cannot do something which is violative of Article

14. If the case is one which is covered by the

concept of regularization, the same cannot be

viewed differently.

The plea of learned counsel for the

respondent that at the time the High Court

decided the matter, decision in Umadevi case

was not rendered is really of no consequence.

There cannot be a case of regularization without

there being employee-employer relationship. As

noted above the concept of regularization is

clearly linked with Article 14 of the Constitution.

However, if in a case the fact situation is

covered by what is stated in para 45 of Umadevi

case the industrial adjudicator can modify the

relief, but that does not dilute the observations

made by this Court in Umadevi case about the

regularization.

On facts, it is submitted by learned counsel

for the appellants that Respondent No.2 himself

admitted that he never worked as a pump

operator, but was engaged as daily wage basis.

He also did not possess the requisite

qualification. Looked at from any angle, the

direction for regularization, as given, could not

have been given in view of what has been stated

in Umadevi case.”

22.It is clear from the above that the Court emphasized the

underline message contained in Umadevi’s case to the effect that

regularization of a daily wager, which has not been appointed

23

Page 24 after undergoing the proper selection procedure etc. is

impermissible as it was violative of Art.14 of the Constitution of

India and this principle predicated on Art.14 would apply to the

industrial tribunal as well inasmuch as there cannot be any

direction to regularize the services of a workman in violation of

Art.14 of the Constitution. As we would explain hereinafter, this

would mean that the industrial court would not issue a direction

for regularizing the service of a daily wage worker in those cases

where such regularization would tantamount to infringing the

provisions of Art.14 of the Constitution. But for that, it would not

deter the Industrial Tribunals/Labour Courts from issuing such

direction, which the industrial adjudicators otherwise possess,

having regard to the provisions of Industrial Disputes Act

specifically conferring such powers. This is recognized by the

Court even in the aforesaid judgment.

23.For detailed discussion on this aspect, we proceed to discuss

the ratio in the case of Maharashtra State Road Transport

Corporation (supra). In that case the respondent Karamchari

Union had filed two complaints before the Industrial Court,

24

Page 25 Bombay alleging that the appellant-Corporation had indulged in

unfair labour practice qua certain employees who were engaged

by the appellant as casual labourers for cleaning the buses

between the years 1980-1985. It was stated in the complaints

that these employees were made to work every day at least for 8

hours at the depot concerned of the Corporation; the work done

by them was of permanent nature but they were being paid a

paltry amount; and even when the post of sweepers/cleaners

were available in the Corporation, these employees had been

kept on casual and temporary basis for years together denying

them the benefit of permanency. After adjudication, the

Industrial Court held that the Corporation had committed unfair

labour practice under items 5 and 9 of Schedule IV to the

Maharashtra Recognition of Trade Unions and Prevention of Unfair

Labour Practice Act, 1971 (MRTU and PULP Act). As a

consequence, it directed the Corporation to pay equal wages to

the employees concerned which was being paid to Swachhaks

and also pay arrears of wages to them. In the second complaint,

the Industrial Court returned the finding that the Corporation was

indulging in unfair labour practice under Item 6 of Schedule IV, by

25

Page 26 continuing these employees on temporary/casual/daily wage

basis for years together and thereby depriving them the benefits

of permanency. The direction in this complaint was to cease and

desist from the unfair labour practice by giving them the status,

wages and all other benefits of permanency applicable to the post

of cleaners, w.e.f. 3.8.1982. The Corporation challenged these two

orders of the Industrial Court before the High Court of Judicature

at Bombay in five separate Writ Petitions. These were disposed of

by the learned Single Judge vide common judgment dated

2.8.2001 holding that complaints were maintainable and the

finding of the Industrial Court that the Corporation had indulged in

unfair labour practice was also correct. The Corporation

challenged the decision of the learned Single Judge by filing LPAs

which were dismissed by the Division Bench on 6.5.2005. This is

how the matter came before the Supreme Court. One of the

contentions raised by the appellants before this Court was that

there could not have been a direction by the Industrial Court to

give these employees status, wages and other benefits of

permanency applicable to the post of cleaners as this direction

was contrary to the ratio laid down by the Constitution Bench of

26

Page 27 this Court in Umadevi (supra). The Court while considering this

argument went into the scheme of the MRTU and PULP Act. It

was, inter-alia, noticed that complaints relating to unfair labour

practice could be filed before the Industrial Court. The Court

noted that Section 28 of that Act provides for the procedure for

dealing with such complaints and Section 30 enumerates the

powers given to the Industrial and Labour Courts to decide the

matters before it including those relating to unfair labour practice.

On the reading of this section, the Court held that it gives specific

power to the Industrial/Labour Courts to declare that an unfair

labour practice has been engaged and to direct those persons not

only to cease and desist from such unfair labour practice but also

to take affirmative action. Section 30(1) conferring such powers

is reproduced below:

“30. Powers of Industrial and Labour Courts.-

(1)Where a court decides that any person named in

the complaint has engaged in, or is engaging in,

any unfair labour practice, it may in its order-

(a)declare that an unfair labour practice has

been engaged in or is being engaged in by that

person, and specify any other person who has

engaged in, or is engaging in the unfair labour

practice;

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Page 28 (b) direct all such persons to cease and desist

from such unfair labour practice, and take such

affirmative action (including payment of

reasonable compensation to the employee or

employees affected by the unfair labour practice,

or reinstatement of the employee or employees

with or without back wages, or the payment of

reasonable compensation), as may in the opinion

of the Court be necessary to effectuate the policy

of the Act;

(c) where a recognized union has engaged in

or is engaging in, any unfair labour practice, direct

that its recognition shall be cancelled or that all or

any of its rights under sub-section(1) of Section 20

or its right under Section 23 shall be suspended.”

24.It was further noticed that Section 32 of the Act provides

that the Court shall have the power to decide all connected

matters arising out of any application or a complaint referred to it

for decision under any of the provisions of this Act. The Court

then extensively quoted from the judgment in Uma Devi in order

to demonstrate the exact ratio laid down in the said judgment

and thereafter proceeded to formulate the following question and

answer thereto:

“The question that arises for

consideration is: have the provisions of the

MRTU and PULP Act been denuded of the

statutory status by the Constitution Bench

28

Page 29 decision in Umadevi? In our judgment, it is

not.”

25.Detailed reasons are given in support of the conclusion

stating that the MRTU and PULP Act provides for and empowers

the Industrial/Labour Courts to decide about the unfair labour

practice committed/being committed by any person and to

declare a particular practice to be unfair labour practice if it so

found and also to direct such person ceased and desist from

unfair labour practice. The provisions contained in Section 30

giving such a power to the Industrial and Labour Courts vis-à-vis

the ratio of Uma Devi are explained by the Court in the following

terms:

“The power given to the Industrial and Labour

Courts under Section 30 is very wide and the

affirmative action mentioned therein is inclusive

and not exhaustive. Employing badlis, casuals

or temporaries and to continue them as such for

years, with the object of depriving them of the

status and privileges of permanent employees

is an unfair labour practice on the part of the

employer under Item 6 of Schedule IV. Once

such unfair labour practice on the part of the

employer is established in the complaint, the

Industrial and Labour Courts are empowered to

issue preventive as well as positive direction to

an erring employer.

29

Page 30 The provisions of the MRTU and PULP Act and

the powers of the Industrial and Labour Courts

provided therein were not at all under

consideration in Umadevi. As a matter of fact,

the issue like the present one pertaining to

unfair labour practice was not at all referred to,

considered or decided in Umadevi. Unfair labour

practice on the part of the employer in

engaging employees as badlis, casuals or

temporaries and to continue them as such for

years with the object of depriving them of the

status and privileges of permanent employees

as provided in Item 6 of Schedule IV and the

power of the Industrial and Labour Courts under

Section 30 of the Act did not fall for adjudication

or consideration before the Constitution Bench.

Umadevi does not denude the Industrial and

Labour Courts of their statutory power under

Section 30 read with Section 32 of the MRTU

and PULP Act to order permanency of the

workers who have been victims of unfair labour

practice on the part of the employer under Item

6 of Schedule IV where the posts on which they

have been working exist. Umadevi cannot be

held to have overridden the powers of the

Industrial and Labour Courts in passing

appropriate order under Section 30 of the MRTU

and PULP Act, once unfair labour practice on the

part of the employer under Item 6 of Schedule

IV is established.”

26.The Court also accepted the legal proposition that Courts

cannot direct creation of posts, as held in Mahatma Phule

Agricultural University vs. Nasik Zilla Sheth Kamgar Union

30

Page 31 (2001) 7 SCC 346. Referring to this judgment, the Court made it

clear that inaction on the part of the State Government to create

posts would not mean an unfair labour practice had been

committed by the employer (University in that case) and as there

were no posts, the direction of the High Court to accord the

status of permanency was set aside. The Court also noticed that

this legal position had been affirmed in State of Maharashtra

vs. R.S.Bhonde (2005) 6 SCC 751. The Court also reiterated

that creation and abolition of post and regularization are purely

Executive functions, as held in number of judgments and it was

not for the Court to arrogate the power of the Executive or the

Legislature by directing creation of post and absorbing the

workers or continue them in service or pay salary of regular

employees. This legal position is summed up in para 41 which

reads as under:

“Thus, there is no doubt that creation of

posts is not within the domain of judicial

functions which obviously pertains to the

executive. It is also true that the status of

permanency cannot be granted by the Court

where no such posts exist and that executive

functions and powers with regard to the

creation of posts cannot be arrogated by the

courts.”

31

Page 32 27.However, the Court found that factual position was different

in the case before it. Here the post of cleaners in the

establishment were in existence. Further, there was a finding of

fact recorded that the Corporation had indulged in unfair labour

practice by engaging these workers on temporary/causal/daily

wage basis and paying them paltry amount even when they were

discharging duties of eight hours a day and performing the same

duties as that of regular employees.

28.In this backdrop, the Court was of the opinion that direction

of the Industrial Court to accord permanency to these employees

against the posts which were available, was clearly permissible

and with the powers, statutorily conferred upon the

Industrial/Labour Courts under Section 30 (1)(b) of the said Act

which enables the Industrial adjudicator to take affirmative action

against the erring employees and as those powers are of wide

amplitude abrogating within its fold a direction to accord

permanency.

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Page 33 29.A close scrutiny of the two cases, thus, would reveal that the

law laid down in those cases is not contradictory to each other. In

U.P. Power Corporation, this Court has recognized the powers of

the Labour Court and at the same time emphasized that the

Labour Court is to keep in mind that there should not be any

direction of regularization if this offends the provisions of Art.14 of

the Constitution, on which judgment in Umadevi is primarily

founded. On the other hand, in Bhonde case, the Court has

recognized the principle that having regard to statutory powers

conferred upon the Labour Court/Industrial Court to grant certain

reliefs to the workmen, which includes the relief of giving the

status of permanency to the contract employees, such statutory

power does not get denuded by the judgment in Umadevi’s case.

It is clear from the reading of this judgment that such a power is

to be exercised when the employer has indulged in unfair labour

practice by not filling up the permanent post even when available

and continuing to workers on temporary/daily wage basis and

taking the same work from them and making them some purpose

which were performed by the regular workers but paying them

much less wages. It is only when a particular practice is found to

33

Page 34 be unfair labour practice as enumerated in Schedule IV of MRTP

and PULP Act and it necessitates giving direction under Section 30

of the said Act, that the Court would give such a direction.

30.We are conscious of the fact that the aforesaid judgment is

rendered under MRTP and PULP Act and the specific provisions of

that Act were considered to ascertain the powers conferred upon

the Industrial Tribunal/Labour Court by the said Act. At the same

time, it also hardly needs to be emphasized the powers of the

industrial adjudicator under the Industrial Disputes Act are equally

wide. The Act deals with industrial disputes, provides for

conciliation, adjudication and settlements, and regulates the

rights of the parties and the enforcement of the awards and

settlements. Thus, by empowering the adjudicator authorities

under the Act, to give reliefs such as a reinstatement of

wrongfully dismissed or discharged workmen, which may not be

permissible in common law or justified under the terms of the

contract between the employer and such workmen, the

legislature has attempted to frustrate the unfair labour practices

and secure the policy of collective bargaining as a road to

industrial peace.

34

Page 35 31.In the language of Krishna Iyer, J:

The Industrial Disputes Act is a benign

measure, which seeks to pre-empt industrial

tensions, provide for the mechanics of dispute-

resolutions and set up the necessary

infrastructure, so that the energies of the

partners in production may not be dissipated

in counter-productive battles and the

assurance of industrial justice may create a

climate of goodwill.”(Life Insurance Corpn. Of

India v. D.J.Bahadur 1980 Lab IC 1218,

1226(SC), per Krishna Iyer,J.).

In order to achieve the aforesaid objectives, the Labour

Courts/Industrial Tribunals are given wide powers not only to

enforce the rights but even to create new rights, with the

underlying objective to achieve social justice. Way back in the

year 1950 i.e. immediately after the enactment of Industrial

Disputes Act, in one of its first and celebrated judgment in the

case of Bharat Bank Ltd. V. Employees of Bharat Bank Ltd. [1950]

LLJ 921,948-49 (SC) this aspect was highlighted by the Court

observing as under:

“In settling the disputes between the

employers and the workmen, the function of

the tribunal is not confined to administration of

justice in accordance with law. It can confer

35

Page 36 rights and privileges on either party which it

considers reasonable and proper, though they

may not be within the terms of any existing

agreement. It has not merely to interpret or

give effect to the contractual rights and

obligations of the parties. It can create new

rights and obligations between them which it

considers essential for keeping industrial

peace.”

32.At the same time, the aforesaid sweeping power conferred

upon the Tribunal is not unbridled and is circumscribed by this

Court in the case of New Maneckchowk Spinning & Weaving

Co.Ltd.v. Textile Labour Association [1961] 1 LLJ 521,526 (SC) in

the following words:

“This, however, does not mean that an

industrial court can do anything and

everything when dealing with an industrial

dispute. This power is conditioned by the

subject matter with which it is dealing and also

by the existing industrial law and it would not

be open to it while dealing with a particular

matter before it to overlook the industrial law

relating to the matter as laid down by the

legislature or by this Court.”

33.It is, thus, this fine balancing which is required to be

achieved while adjudicating a particular dispute, keeping in mind

36

Page 37 that the industrial disputes are settled by industrial adjudication

on principle of fair play and justice.

34.On harmonious reading of the two judgments discussed in

detail above, we are of the opinion that when there are posts

available, in the absence of any unfair labour practice the Labour

Court would not give direction for regularization only because a

worker has continued as daily wage worker/adhoc/temporary

worker for number of years. Further, if there are no posts

available, such a direction for regularization would be

impermissible. In the aforesaid circumstances giving of direction

to regularize such a person, only on the basis of number of years

put in by such a worker as daily wager etc. may amount to

backdoor entry into the service which is an anathema to Art.14 of

the Constitution. Further, such a direction would not be given

when the concerned worker does not meet the eligibility

requirement of the post in question as per the Recruitment Rules.

However, wherever it is found that similarly situated workmen are

regularized by the employer itself under some scheme or

otherwise and the workmen in question who have approached

Industrial/Labour Court are at par with them, direction of

37

Page 38 regularization in such cases may be legally justified, otherwise,

non-regularization of the left over workers itself would amount to

invidious discrimination qua them in such cases and would be

violative of Art.14 of the Constitution. Thus, the Industrial

adjudicator would be achieving the equality by upholding Art. 14,

rather than violating this constitutional provision.

35.The aforesaid examples are only illustrated. It would depend

on the facts of each case as to whether order of regularization is

necessitated to advance justice or it has to be denied if giving of

such a direction infringes upon the employer’s rights

36.In the aforesaid backdrop, we revert the facts of the present

case. The grievance of the appellants was that under the Scheme

contained in Circular dated 6.5.1997 many similarly placed

workmen have been regularized and, therefore, they were also

entitled to this benefit. It is argued that those who had rendered

240 days service were regularized as per the provision in that

Scheme/Circular dated 6.5.1987.

37.On consideration of the cases before us we find that

appellant No.1 was not in service on the date when Scheme was

38

Page 39 promulgated i.e. as on 6.5.1987 as his services were dispensed

with 4 years before that Circular saw the light of the day.

Therefore, in our view, the relief of monetary compensation in lieu

of reinstatement would be more appropriate in his case and the

conclusion in the impugned judgment qua him is unassailable,

though for the difficult reasons (as recorded by us above) than

those advanced by the High Court. However, in so far as

appellant No.2 is concerned, he was engaged on 5.9.1986 and

continued till 15.9.1990 when his services were terminated. He

even raised the Industrial dispute immediately thereafter. Thus,

when the Circular dated 5.9.1987 was issued, he was in service

and within few months of the issuing of that Circular he had

completed 240 days of service.

38.Non-regularization of appellant No.2, while giving the benefit

of that Circular dated 6.5.1987 to other similar situated

employees and regularizing them would, therefore, be clearly

discriminatory. On these facts, the CGIT rightly held that he was

entitled to the benefit of scheme contained in Circular dated

6.5.1987. The Division Bench in the impugned judgment has

failed to notice this pertinent and material fact which turns the

39

Page 40 scales in favour of appellant No.2. High Court committed error in

reversing the direction given by the CGIT, which was rightly

affirmed by the learned Single Judge as well, to reinstate

appellant No.2 with 50% back wages and to regularize him in

service. He was entitled to get his case considered in terms of

that Circular. Had it been done, probably he would have been

regularized. Instead, his services were wrongly and illegally

terminated in the year 1990. As an upshot of the aforesaid

discussion, we allow these appeals partly. While dismissing the

appeal qua appellant No.1, the same is accepted in so far as

appellant No.2 is concerned. In his case, the judgment of the

Division Bench is set aside and the award of the CGIT is restored.

There shall, however, be no order as to costs.

…………………………………..J.

(K.S.Radhakrishnan)

……………………………………J.

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Page 41 ( A.K.Sikri)

New Delhi,

February 17, 2014

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