As per case facts, employees were appointed as Clerk-cum-Typist but later suspended and terminated amidst allegations of malpractice and fraud against the management, leading to criminal proceedings. An internal inquiry ...
WP-12706-24 & connected-J.doc
Sayali
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 12706 OF 2024
Suvarna Ratna Pimple
Aged 38, Room No. 2, Choudhari Chawl,
Harishandra Mahajan Road, Dahisar (E),
Mumbai-400 068. … Petitioner
V/s.
Sahitya Ratna Lokshahir Annabhau Sathe
Development Corporation Ltd.,
Having its office at New Administrative Bldg.
2
nd
and 3
rd
Floor, B Wing, R.C. Marg,
Chembur, Mumbai-400 071. ... Respondent
WITH
WRIT PETITION NO. 1161 OF 2026
Ramesh Narendra Chachle
Age 33 Yrs. Shivshankar Chawl, Ganesh
Chowk, Hanuman Tekadi, Borivali (East)
Mumbai-400 068. … Petitioner
V/s.
Sahitya Ratna Lokshahir Annabhau Sathe
Development Corporation Ltd.,
Having its office at New Administrative Bldg.
2
nd
and 3
rd
Floor, B Wing, R.C. Marg,
Chembur, Mumbai-400 071. ... Respondent
WITH
WRIT PETITION NO. 12712 OF 2024
1
SAYALI
DEEPAK
UPASANI
Digitally signed by
SAYALI DEEPAK
UPASANI
Date: 2026.04.30
11:53:09 +0530
WP-12706-24 & connected-J.doc
Laxman Pandurang Mungekar
Aged 44, Room No. 3, Sita Niwas, Kajupada
Raod, Swami Vivekanand Municipal School
Kajupada Ganesh Chowk, Borivali (West),
Mumbai-400 066… Petitioner
V/s.
Sahitya Ratna Lokshahir Annabhau Sathe
Development Corporation Ltd.,
Having its office at New Administrative Bldg.
2
nd
and 3
rd
Floor, B Wing, R.C. Marg,
Chembur, Mumbai-400 071. ... Respondent
WITH
WRIT PETITION NO. 3204 OF 2025
Sahitya Ratna Lokshahir Annabhau Sathe
Development Corporation Ltd.,
Having its office at New Administrative Bldg.
2
nd
and 3
rd
Floor, B Wing, R.C. Marg,
Chembur, Mumbai-400 071. … Petitioner
V/s.
Nilesh Suresh Joshi
Aged 30, Kasturba Zopadi Sangh No.1, FNX
R. No. 89, Mahadev Nagar, Wadala, Mumbai-
400 031. ... Respondent
WITH
WRIT PETITION NO. 2331 OF 2025
Sahitya Ratna Lokshahir Annabhau Sathe
Development Corporation Ltd.,
Having its office at New Administrative Bldg.
2
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2
nd
and 3
rd
Floor, B Wing, R.C. Marg,
Chembur, Mumbai-400 071. … Petitioner
V/s.
Laxman Pandurang Mungekar
Aged 44, Room no. 3, Sita Niwas, Kajupada
road, Swami Vivekanand Municipal School,
Kajupada, Ganesh Chowk, Borivali, Mumbai-
400 066. ... Respondent
WITH
WRIT PETITION NO. 3207 OF 2025
Sahitya Ratna Lokshahir Annabhau Sathe
Development Corporation Ltd.,
Having its office at New Administrative Bldg.
2
nd
and 3
rd
Floor, B Wing, R.C. Marg,
Chembur, Mumbai-400 071. … Petitioner
V/s.
Nayna Nandkumar Salvi
Aged 31, Sai Niwas, 2/2, R.S Bane Marg,
Laxmibaug Ghatkopar (E), Mumbai-400 075.... Respondent
WITH
WRIT PETITION NO. 12709 OF 2024
Nayna Nandkumar Salvi
Aged 34, Sai Niwas, 2/2, R.S Bane Marg,
Laxmibaug Ghatkopar (E), Mumbai-400 075.… Petitioner
V/s.
Sahitya Ratna Lokshahir Annabhau Sathe
Development Corporation Ltd.,
3
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Having its office at New Administrative Bldg.
2
nd
and 3
rd
Floor, B Wing, R.C. Marg,
Chembur, Mumbai-400 071. ... Respondent
WITH
WRIT PETITION NO. 12714 OF 2024
Nilesh Suresh Joshi
Aged 33, Kasturba Zopadi Sangh No.1, FNX
R.No.89, Mahadev Nagar Wadala, Mumbai-
400 031. … Petitioner
V/s.
Sahitya Ratna Lokshahir Annabhau Sathe
Development Corporation Ltd.,
Having its office at New Administrative Bldg.
2
nd
and 3
rd
Floor, B Wing, R.C. Marg,
Chembur, Mumbai-400 071. ... Respondent
WITH
WRIT PETITION NO. 3206 OF 2025
Sahitya Ratna Lokshahir Annabhau Sathe
Development Corporation Ltd.,
Having its office at New Administrative Bldg.
2
nd
and 3
rd
Floor, B Wing, R.C. Marg,
Chembur, Mumbai-400 071. … Petitioner
V/s.
Ramesh Narendra Chachle
Aged 31, Shivshankar Chawl, Ganesh Chowk,
Hanuman Tedadi Borivali (E), Mumbai-400
066. ... Respondent
WITH
4
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WRIT PETITION NO. 3205 OF 2025
Sahitya Ratna Lokshahir Annabhau Sathe
Development Corporation Ltd.,
Having its office at New Administrative Bldg.
2
nd
and 3
rd
Floor, B Wing, R.C. Marg,
Chembur, Mumbai-400 071. … Petitioner
V/s.
Suvarna Ratan Pimple
Aged 35, Room No.2, Chudhari Chawl,
Harishchandra Mahajan Raod, Dahisar (E),
Mumbai-400 068. ... Respondent
Mr. Vijay P. Vaidya, with Ms. Shraddha Chavan i/b
Mahendra Agvekar, for petitioner in WP Nos.12706/2024,
1161/2026, 12712/2026, 12714/2024, & 12709/2024
and for respondent in WP Nos. 3204/2025, 3205/2025,
3207/2025, 3206/2025 and 2331/2025.
Mr. Onkar Wable for the petitioner in WP/3204/2025.
Mr. Vijay B. Dighe for the petitioner in WP/3205/2025.
Mr. Chaitanya R. Kulkarni for the petitioner in
WP/3207/2025.
Mr. Hrutik R. Chavan for the petitioner in WP/3206/2025.
Ms. Harshada Shrikhande i/by Mr. Saurabh Patil for the
respondent in 12706/2024, 1161/2026, 12712/2026,
12714/2024, & 12709/2024
CORAM :AMIT BORKAR, J.
RESERVED ON :APRIL 18, 2026
PRONOUNCED ON:APRIL 30, 2026
5
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JUDGMENT:
1.Since an identical question of law arises for consideration in
all the present writ petitions, and the factual background involved
therein is same, this Court considers it appropriate to dispose of all
the petitions by this common judgment and order.
2.By the present petitions instituted under Articles 226 and
227 of the Constitution of India, the petitioners have invoked the
writ and supervisory jurisdiction of this Court and have called in
question the legality, propriety, and correctness of the judgment
and Award dated 28 December 2023 passed by the Labour Court
in respective Reference.
3.The employer has also instituted separate petitions
challenging the same judgment and Award passed by the Labour
Court, insofar as it grants compensation to the workmen, and has
sought dismissal of the references in their entirety.
4.The facts giving rise to the filing of the present petitions,
stated briefly, are as follows. The petitioner challenges the Award
dated 28 December 2023, whereby the Labour Court, while
recording a finding that the termination of the petitioner was
illegal, granted only a nominal lump-sum compensation in lieu of
reinstatement and back wages. The petitioner had submitted an
application dated 29 June 2013 to the respondent seeking
appointment to the post of Clerk/Typist. The said application was
made upon learning that vacancies existed for the said post in the
respondent establishment. The petitioner possessed the requisite
qualifications, was thereafter called for interview, and upon due
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consideration came to be selected for appointment as Clerk-cum-
Typist. It is the case of the petitioner that she was placed in the
regular pay scale applicable to the post of Clerk/Typist, namely Rs.
5,200/- to Rs. 20,200/- with Grade Pay of Rs.1,900/- per month.
According to the petitioner, she discharged her duties diligently
and sincerely, and during the period of service there was no
complaint whatsoever regarding her work or conduct. It is further
asserted that along with the petitioner, 82 other employees were
similarly recruited by the respondent. The petitioner states that in
or about October 2015 she came to know that allegations had
surfaced against the Chairman, Managing Director, and certain
other officers of the respondent Organization to the effect that
they had indulged in malpractice and fraud, resulting in initiation
of criminal proceedings against them. It was alleged that the fraud
committed by the said officials was to the extent of Rs. 147 crores.
One of the accusations levelled against the executives of the
respondent Organization was that recruitment of 82 employees in
Categories C and D had been undertaken without obtaining prior
permission of the State Government. It is further stated that the
Enforcement Directorate as well as the Police issued notices to the
newly appointed 82 employees for ascertaining whether any illegal
gratification had been paid during the recruitment process.
According to the petitioner, upon completion of detailed enquiry,
the concerned authorities were fully satisfied that neither the
petitioner nor the other recruited employees had indulged in any
malpractice. The petitioner seeks leave to refer to and rely upon
the report submitted by the Secretary, Department of Social
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Welfare, which is stated to have exonerated the said employees.
5.By an order dated 5 April 2016, the petitioner came to be
placed under suspension on allegations which, according to her,
were wholly false and baseless. Thereafter, a charge-sheet dated 28
June 2017 was served upon her. Similar charge-sheets were also
issued to other employees similarly situated. The petitioner
submitted her reply denying all allegations and contended that she
was being victimized by the officers of the Organization despite
having no role in the fraud allegedly committed by the Chairman,
Managing Director, and other executives or officers of the
respondent. It is her grievance that false rumours were deliberately
spread suggesting breach of procedure in the appointments of the
petitioner and the other 82 employees.
6.An enquiry was thereafter conducted into the allegations
contained in the charge-sheet dated 28 June 2017 through an
independent Enquiry Officer. The enquiry proceeded on several
dates and, upon conclusion of the evidence, the Enquiry Officer
submitted a report dated 11 July 2018. By the said report, the
petitioner was fully exonerated, and the allegations levelled
against her were held to be false and baseless. The petitioner
further states that during the pendency of the enquiry, she and the
other suspended employees were not paid subsistence allowance,
compelling them to institute Complaint (ULP) No.430 of 2016
alleging unfair labour practices. By an interim order dated 19 July
2017, the Industrial Court directed the respondent to pay 100%
wages during pendency of the enquiry or until revocation of the
suspension order. Immediately upon receipt of the said order, the
8
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respondent revoked the suspension by communication dated 10
August 2017. According to the petitioner, after revocation of
suspension she continuously worked in the respondent office until
27 July 2020. However, to her shock and surprise, the respondent
decided to terminate the services of 74 employees recruited during
the years 2012 to 2015, and by order dated 27 July 2020 the
services of the petitioner also came to be terminated. It is further
contended that nine employees appointed during the same period
were retained in service and their services were not terminated.
7.Being aggrieved by the said termination, which according to
the petitioner was illegal and unjustified, she along with 11 others
approached this Court by filing Writ Petition No. 93601 of 2020
before the High Court at Bombay. By order dated 13 October 2020,
the Division Bench permitted withdrawal of the said petition with
liberty to adopt appropriate proceedings before the Labour Court.
Pursuant to the liberty so granted, the petitioner raised an
industrial demand by letter dated 23 October 2020 seeking
reinstatement with full back wages and continuity of service. A
copy thereof was also forwarded to the office of the Labour
Commissioner requesting initiation of conciliation proceedings
under Section 2-A of the Industrial Disputes Act. The petitioner
asserts that despite waiting for issuance of notice of conciliation,
no steps were taken by the office of the Labour Commissioner.
Since no action was initiated for conciliation, the petitioner was
constrained to directly approach the Labour Court under Section 2-
A(2) of the Industrial Disputes Act, 1947.
9
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8.In Application No. 45 of 2021, the petitioner, inter alia,
contended that the termination of her services was illegal and
unsustainable on several grounds. It was urged that if the
impugned termination is construed as punitive in nature, the same
is ex facie illegal since the Enquiry Officer had already exonerated
her of all charges contained in the charge-sheet. It was further
contended that if the termination is treated as simpliciter and non-
punitive, even then the same would be vitiated for non-compliance
with Section 25-F of the Industrial Disputes Act. The allegation in
the termination order that the initial appointment of the petitioner
was illegal was also challenged as untenable, it being asserted that
all employees working with the respondent had been appointed in
a similar manner and none through any public advertisement.
According to the petitioner, the employees were being made
scapegoats in the course of investigation into corrupt practices
allegedly committed by the Chairman and Managing Director.
9.The petitioner further contended that the reasons assigned in
the termination order were wholly illegal, and the decision had
been taken in breach of the principles of natural justice. It was also
alleged that Sections 25-G and 25-H of the Industrial Disputes Act
had been violated inasmuch as the work earlier performed by the
petitioner was thereafter being carried out by newly engaged
persons through a contractor. On these grounds, reinstatement
with full back wages and continuity of service was sought. The
respondent opposed the proceedings by filing its written statement
and contended that the reference before the Labour Court itself
was not maintainable as the respondent did not constitute an
10
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“industry” within the meaning of Section 2(j) of the Industrial
Disputes Act, 1947. It was further contended that the petitioner’s
appointment was itself illegal and, there being no compliance with
Articles 14 and 16 of the Constitution of India, the termination
order was justified and lawful.
10.The Labour Court, after hearing the parties and considering
the material placed on record, passed the Award dated 28
December 2023 holding that the petitioner was entitled only to
compensation of Rs.2,50,000/- and rejecting the claim for
reinstatement, back wages, and continuity of service. The
petitioner contends that the said Award is arbitrary, perverse,
contrary to law, and unsustainable. On that basis, it has been
urged that the impugned Award deserves to be quashed and set
aside.
11.Mr. Vijay Vaidya, learned Advocate appearing on behalf of
the petitioners, submitted that the Labour Court has committed a
manifest error in failing to consider and properly apply the law
laid down by the Hon’ble Supreme Court in the case of Shri
Ajaypal Singh, wherein it has been clearly held that in proceedings
arising under Section 2-A of the Industrial Disputes Act, the Labour
Court cannot travel into the question regarding validity of the
original appointment of the employee. According to the learned
counsel, the Labour Court has erred, particularly in paragraph 21
of the impugned Award, in holding that the termination of service
was attributable to an illegal appointment. It was contended that
had the Labour Court duly appreciated that the petitioner had
already been exonerated of the charge relating to alleged illegal
11
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appointment, no such adverse conclusion could have been
recorded. It was further submitted that the Labour Court has
ignored the categorical findings of the Enquiry Officer, who had
fully exonerated the petitioner from the allegations which formed
the basis of disciplinary action. Learned counsel for the petitioners
further submitted that the Labour Court ought not to have entered
into the issue concerning legality of appointment, since the same
was not the subject-matter referred for adjudication. According to
him, the Labour Court has erred in paragraph 23 of the Award in
failing to appreciate that none of the 213 employees who
continued in service had been appointed pursuant to any
procedure demonstrably compliant with Articles 14 and 16 of the
Constitution of India. It was urged that termination of the
petitioner alone, while retaining others similarly situated, clearly
amounted to victimization and discriminatory treatment. It was
further submitted that even retention of certain employees
appointed along with the petitioner, without any rational or
justifiable basis, constitutes hostile discrimination in law. He
further submitted that the Labour Court has misconstrued the
extent and nature of its jurisdiction while adjudicating a dispute
under Section 2-A of the Industrial Disputes Act, 1947. It was
contended that the Labour Court failed to consider the well-
recognised principle of indoor management applicable to corporate
bodies, under which an outsider dealing with the employer is
entitled to presume that internal formalities have been duly
complied with. According to the learned counsel, an employee
accepting appointment is entitled to presume that the authority
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issuing the appointment order was duly empowered and that the
prescribed recruitment procedure had been followed by the
employer.
12.Learned counsel submitted that the impugned action of
termination was arbitrary and selective, inasmuch as out of 74
employees whose appointments were alleged to be illegal, 9
employees were continued in service though they had been
appointed in the same manner. According to him, such selective
retention clearly demonstrates victimization and unequal
treatment. It was further argued that the Labour Court could not
have adjudicated upon the legality of appointment, particularly
when the proceedings arose from an application under Section 2-
A(2) of the Industrial Disputes Act and not from a reference
specifically made by the appropriate Government on such issue.
13.In support of the aforesaid submissions, learned counsel
placed reliance upon the judgment of the Supreme Court in
Ajaypal Singh vs. Haryana Warehousing Corporation, reported in
(2015) 6 SCC 321. Relying upon the said decision, he submitted
that the scope of enquiry before the Labour Court was confined to
examining whether compliance with Section 25-F of the Industrial
Disputes Act had been made prior to termination. He contended
that the Labour Court wrongly cast the burden upon the petitioner
to establish alleged irregularities in the procedure adopted for her
appointment, though such burden did not legally lie upon her.
14.Learned counsel invited attention to paragraph 49 of the said
judgment and submitted that the petitioners had no role
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whatsoever in securing their appointments and were not aware of
any alleged illegality said to have been committed by the then
Managing Director or other officials. He further invited attention
to orders passed by Labour Courts within the State of Maharashtra
in respect of 9 similarly situated employees, wherein relief of
reinstatement with full back wages had been granted. It was
submitted that the respondent has accepted and implemented
those judgments. On such premises, learned counsel submitted
that the impugned judgment and Award deserve to be quashed
and set aside.
15.Per contra, learned Advocates appearing for the employer
submitted that in the facts of the case relied upon by the
petitioners, no plea had been raised by the employer that the
workman had been appointed in breach of Articles 14 and 16 of
the Constitution of India or that the appointment was secured
through a backdoor method. According to her, in the present
matter a specific plea to that effect has been raised by the
respondent-employer, and therefore the contention that the
enquiry must be restricted only to compliance of Section 25-F is
wholly inapplicable to the present facts. Learned counsel for the
respondents invited attention to the findings recorded by the
Labour Court that the appointments of the petitioners were void ab
initio. She submitted that once such appointments are held to be
void, no relief of reinstatement can be granted in law. It was
further submitted that in the lead petition the respondents
themselves have challenged the grant of compensation, since once
the appointments are held void, even compensation in lieu of
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reinstatement ought not to have been awarded. According to her,
the grant of monetary compensation in such circumstances is
legally unsustainable.
16.Learned counsel further submitted that from 13 August 2012
to 12 December 2014, one Mr. Ramesh Nagnath Kadam was
functioning as Chairman of the respondent Corporation, while Mr.
Santosh Shankar Ingale and Mr. Shravan Kisan Bavane were
serving as Managing Directors. It was submitted that during the
period from October 2014 to December 2014, the said officials
were allegedly involved in corrupt practices and serious
malpractices. The allegations included illegal appointments,
irregular promotions, unlawful sanction and disbursement of
loans, and other acts of misconduct. It was further submitted that
on 22 December 2014, the issue of such corrupt practices was
raised on the floor of the Maharashtra Legislative Assembly,
whereupon the State Government assured investigation into the
alleged financial irregularities. Pursuant to preliminary enquiry, an
FIR came to be registered on 18 July 2015 at Dahisar Police
Station, Mumbai under Sections 7 and 13(1)(c) of the Prevention
of Corruption Act, together with Sections 406, 408, 409, 420, 465,
468, 471, 384, 120-B read with Section 34 of the Indian Penal
Code.
17.Learned counsel for the respondents further submitted that
the Government of Maharashtra appointed Mr. Ranjitsinh Deol,
IAS, then Commissioner of Social Welfare, to conduct a
departmental enquiry and submit a report regarding the illegalities
committed during the period from 01 January 2010 to 31
15
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December 2014. It was submitted that Mr. Deol submitted his
report on 17 March 2015 and recorded several illegalities and
irregularities, including appointment of 82 employees without
following any prescribed recruitment procedure applicable to
public employment. It was further noted in the report that no
sanctioned posts were available, yet the said 82 employees were
recruited without any lawful sanction of vacancies. Learned
counsel then submitted that compensation on retrenchment can be
awarded only in terms of Section 25-F of the Industrial Disputes
Act, 1947, which provides both the condition precedent and the
quantum payable under clause (b) thereof, namely compensation
equivalent to fifteen days’ average pay for every completed year of
continuous service. According to the respondents, the petitioner
was appointed on 1 August 2014 and her services came to be
terminated by notice dated 27 July 2020, thereby completing
approximately five years of service. It was therefore contended
that at the highest, compensation equivalent to seventy-five days’
average pay could be payable. On the aforesaid grounds, learned
counsel prayed for dismissal of the present petitions.
REASONS AND ANALYSIS:
18.Having heard the learned advocates for the parties and
having examined the material placed before the Court.The
petitioners rely upon
Ajaypal Singh to say that in a proceeding
under Section 2-A of the Industrial Disputes Act the Labour Court
ought not to have entered into the question of validity of
appointment. The respondents, on the other hand, rely upon the
later line of authority, including
ONGC v. Krishan Gopal, to submit
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that where public employment is shown to have been obtained
without sanctioned post, without due procedure, and in breach of
Articles 14 and 16, the Court cannot compel reinstatement or
perpetuate an illegality. Both sides are partly correct, but neither
submission can be accepted in the manner in which it is pressed.
19.The first circumstance which emerges from the record is that
the present matter does not arise out of retrenchment from a
regular establishment. The materials relied upon by the
respondents indicate that allegations of large-scale irregularities
and misuse of authority had surfaced against the management of
the respondent Corporation. It appears that because of those
allegations, the Government authorities considered it necessary to
direct a departmental enquiry. A report thereafter came to be
submitted by the Commissioner of Social Welfare, and in addition
thereto criminal proceedings were also initiated. The report
records that appointments of 82 employees were made without
following the recruitment process and without sanction of posts. It
is true that the petitioners contend that they were interviewed,
selected, and thereafter appointed, and that they had no
participation in any irregular act of the then management. This
submission may have relevance while considering fault of the
petitioners. However, absence of personal misconduct on part of an
employee cannot be equated with validity of the appointment. A
person may not be involved in fraud, and still his appointment
may suffer from defect if mandatory recruitment norms were
bypassed. Therefore, the Court cannot close its eyes to material
merely because the petitioners claim lack of involvement in the
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misconduct.
20.If management officers committed acts beyond authority, the
employee may not be criminally liable. Yet the question still
remains whether such officers could validly create employment
contrary to procedure. A finding that the petitioners were not
parties to corruption cannot conclude that their appointments
were lawful in the constitutional sense. The enquiry report relied
upon by the petitioners, by which they were exonerated from
allegations, also does not conclude the controversy. That report
may show that the petitioners were not guilty of misconduct. If the
charge-sheet alleged participation in malpractice and such charge
failed, then naturally the petitioners gain benefit of that. But the
effect of such exoneration must remain confined to the enquiry.
21.The issue whether a person committed misconduct while in
service is different from the issue whether the appointment into
service was made in accordance with law. A disciplinary enquiry
examines conduct of employee. It may not adjudicate legality of
recruitment process. Therefore, an exoneration in disciplinary
proceedings does not regularise or validate an unsanctioned
appointment. If sanctioned posts were absent, if advertisement was
not issued, or if selection norms were bypassed, such defects are
not cured because misconduct charges failed.
22.For this reason, the Labour Court was not bound to treat the
enquiry report as answer to every issue raised before it. The
Labour Court was required to consider the total circumstances,
namely the nature of appointment, allegations, length of service,
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termination order, and statutory protections under labour law. A
court deciding industrial dispute must see the entire picture.
Therefore, merely because the Labour Court did not accept the
petitioners’ contention, it cannot be said that it committed such
illegality as would invite interference.
23.The judgment in Ajaypal Singh undoubtedly lays down that
where an employer resorts to retrenchment, compliance with
Section 25-F of the Industrial Disputes Act is mandatory. Notice
pay, retrenchment compensation, and statutory compliance are
conditions precedent. The employer cannot terminate a workman
and thereafter attempt to justify breach by alleging that the
appointment was contrary to Articles 14 and 16 of the
Constitution. The same judgment holds that where the employer
raises establishes that the appointment was irregular,
unconstitutional the dispute may assume a different character.
24.The respondent has stated in termination order and also
pleaded that the appointments were void, made without
sanctioned posts. Here it arises from enquiries and allegations
touching the recruitment process. In that view of matter, the
petitioners cannot contend that the Labour Court was prohibited
from examining the nature and source of appointment. Once such
plea was raised termination order, enquiry into that issue became
unavoidable. The Labour Court may be right or wrong in degree of
appreciation, but jurisdiction to look into the matter cannot be
denied.
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25.The argument based on the doctrine of indoor management
also does not carry the petitioners further. That doctrine protects
outsiders dealing in good faith with a corporation by permitting
certain presumptions regarding internal compliance. Even
assuming the doctrine has persuasive value, its application in cases
of public employment must remain minimum. Public posts are
subject to constitutional mandates of fairness and expenditure
from public funds. There can be no estoppel against law. If
constitutional requirement mandates sanctioned posts, those
requirements cannot be displaced by invoking private law
presumptions. Where the record indicates absence of sanctioned
posts or defects in procedure, an employee cannot claim right.
26.It is one thing to say that a workman should not be punished
for every lapse of the employer. But it is another matter to say that
an appointment suffering from constitutional infirmity must be
perpetuated because the employee was unaware of the defect.
27.The grievance that nine similarly situated employees were
retained in service also deserves scrutiny. If those employees were
appointed through same process, performing similar duties, and
yet spared without objective criteria, then the complaint of
unequal treatment cannot be lightly dismissed. At the same time,
equality clause cannot be converted into claim for continuation of
illegality. If one set of employees was wrongly retained, another set
cannot demand continuation solely on that basis. Article 14 is a
positive concept. It ensures equality, not parity in error. Therefore,
a mistaken benefit conferred on some persons does not create
entitlement for others. The retention of some employees may
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indicate inconsistent action by the employer. Yet it does not ignore
the larger issue, namely whether the appointments themselves
were made without proper sanction. Hence, while the petitioners’
plea of victimization has some force and cannot be brushed aside,
it is insufficient to compel reinstatement as a matter of right.
28.The submission that some other employees, stated to be
similarly situated, were continued in service or had secured relief
in other proceedings, cannot be accepted, having regard to
principle laid down in
State of U.P. v. Neeraj Awasthi, (2006) 1
SCC 667. The Supreme Court has made it clear that where
appointments are made without following prescribed procedure, or
where certain persons so appointed were regularised in earlier
time, such past actions do not become legal pattern requiring
repetition by Court. Earlier irregularity does not convert itself into
enforceable right. If illegality has happened once, same cannot be
directed to continue merely because parity is demanded. This
principle gives answer to the argument of petitioners that because
nine employees allegedly appointed through same process were
continued, all remaining employees must also be restored in
service. If retention of certain employees was contrary to rules, the
same does not enlarge rights of others. At highest, it may call for
scrutiny of those cases. It cannot become foundation for directing
continuation of an admitted defect by judicial order. Even if some
vacancies are said to be available, the Supreme Court has clarified
that it remains within domain of employer authority to fill such
posts in accordance with applicable rules and procedure. The
Court cannot assume function of appointing authority, nor can it
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compel absorption dehors recruitment process. Therefore,
reinstatement in present matter cannot be claimed only because
work was earlier taken from petitioners or because vacancies are
alleged to exist somewhere in establishment.
29.The decision in ONGC v. Krishan Gopal, (2021) 18 SCC 707
gives assistance in resolving the present controversy. The Supreme
Court there clarified that Labour Courts and Industrial Courts
cannot issue directions of regularisation where such direction
would offend Article 14 in matters of public employment. Courts
cannot create sanctioned posts, nor can they validate appointments
made outside constitutional framework merely because long
service has been rendered. The same judgment also recognises that
relief may be granted where unfair labour practice is established,
especially where workmen are deliberately continued for years as
temporary, casual, or daily wagers against available permanent
work only to deprive them of lawful benefits. In such cases, the
Court may intervene to cure exploitation. The present case does
not squarely fall in that latter category. The petitioners were not
shown to be temporaries retained for decades against permanent
vacancies while management denied them benefits. Rather, the
controversy begins at the threshold, namely that their
appointments are alleged to be illegal and unsupported by
sanctioned posts. If reinstatement with continuity of service is
granted in such circumstances, it may indirectly validate an entry
which is itself under legal cloud. Therefore, the principle stated in
ONGC v. Krishan Gopal supports the conclusion that reinstatement
and continuity of service could not have been granted in the
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peculiar facts of the present case.
30.Though this Court has found no case made out for grant of
reinstatement, continuity of service or full back wages, the
question still survives regarding adequacy of compensation
awarded by the Labour Court. The Labour Court has granted lump-
sum amount of Rs.2,50,000/-. Such amount, in facts of present
matter, appears on lower side. Therefore, this Court is required to
consider whether limited interference on quantum is necessary.
31.It is true that where appointment itself is under legal defect,
the Court should not grant relief which may indirectly validate
irregular public employment. For that reason, reinstatement has
been declined. However, once it is accepted that petitioners had in
fact worked with respondent establishment for considerable period
and their services were utilised by respondent, then denial of
reasonable monetary recompense would also cause imbalance.
Even where reinstatement is refused, compensation may become
substitute depending on length of service, nature of termination,
conduct of parties and circumstances of each case.
32.In present case, petitioners were continued in service for
number of years. During such tenure, there is no material showing
any complaint regarding day to day discharge of duties by
petitioners. The record indicates that they had rendered service
and were paid wages. Thus, petitioners were in employment for
long duration. Such factor deserves consideration while assessing
compensation. Another relevant aspect is that petitioners were
subjected to suspension, disciplinary proceedings and uncertainty
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for substantial time. Though enquiry appears to have exonerated
them from misconduct, ultimately services came to be terminated.
33.The Court cannot ignore that controversy regarding
appointments arose mainly from acts attributed to former
management and administrative authorities. Petitioners at highest,
became beneficiaries of a process found irregular. Therefore, while
they cannot claim vested right to post, they equally cannot be
treated as main wrongdoers.
34.Further, some material is placed showing that certain
similarly situated employees were continued or granted relief
elsewhere. Even if that circumstance does not create enforceable
right of reinstatement, it does show uneven consequences. Where
one set continues and another set loses livelihood, modest
enhancement in compensation becomes justified.
35.The amount of Rs.2,50,000/- awarded by Labour Court does
not appear proportionate when seen against years of service
rendered, wages last drawn, lapse of time since termination, and
rising cost of living. Compensation must be realistic. Balance has to
be maintained between irregularity of appointment and service
rendered with hardship suffered. Therefore, moderate
enhancement would meet ends of justice.
36.Considering totality of circumstances, this Court is of opinion
that compensation requires enhancement from Rs.2,50,000/- to
Rs.5,00,000/- for each petitioner. Accordingly, while maintaining
remaining part of Award, compensation granted by Labour Court
stands modified and enhanced to Rs.5,00,000/- payable to each
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petitioner. The enhanced amount shall be paid within period of
twelve weeks from date of this order, failing which it shall carry
interest at rate of 6% per annum from expiry of said period till
realization.
37.Based on above discussion and for reasons recorded
hereinabove, the following order is passed:
(i) Writ Petition Nos. 12706 of 2024, 12714 of 2024,
12709 of 2024, 12712 of 2024 and Writ Petition No. 1161 of
2026 are partly allowed;
(ii) The judgment and Award dated 28 December 2023
passed by the Labour Court stands modified only to the
extent of quantum of compensation granted to the concerned
petitioners in the aforesaid writ petitions;
(iii) The compensation awarded by the Labour Court to
each of the petitioners in Writ Petition Nos. 12706 of 2024,
12714 of 2024, 12709 of 2024, 12712 of 2024 and Writ
Petition No. 1161 of 2026 is enhanced from Rs.2,50,000/-
and Rs.2,00,000/- to Rs.5,00,000/- each;
(iv) If any amount out of the compensation already
awarded has been paid and received, the same shall be given
due adjustment, and only the balance enhanced amount
shall remain payable;
(v) The respondent employer shall pay the balance amount
of compensation to the respective petitioners within a period
of twelve weeks from the date of this order, failing which the
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unpaid amount shall carry interest at the rate of 6% per
annum from expiry of the said period till realization;
(vi) Save and except the aforesaid modification regarding
enhancement of compensation, the remaining part of the
judgment and Award dated 28 December 2023 is
maintained;
(vii) Writ Petition Nos. 3205 of 2025, 3206 of 2025, 3207 of
2025, 2331 of 2025 and 3204 of 2025, filed by the employer
challenging grant of compensation, stand dismissed;
(viii) Rule is made absolute in the aforesaid terms in Writ
Petition Nos. 12706 of 2024, 12714 of 2024, 12709 of 2024,
12712 of 2024 and 1161 of 2026. Rule stands discharged in
Writ Petition Nos. 3205 of 2025, 3206 of 2025, 3207 of
2025, 2331 of 2025 and 3204 of 2025;
(ix) There shall be no order as to costs.
(AMIT BORKAR, J.)
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