M/S Genesis Printers vs Shri Rati Ram Jatav Presiding ...
2010 Latest Caselaw 4945 Del

 *            IN THE HIGH COURT OF DELHI AT NEW DELHI

 +                W.P.(C) No. 61/1997

 %                                      27th October, 2010

 M/S GENESIS PRINTERS                         .... Petitioner
                            Through:    Mr. Sandeep Prabhakar, Ms.
                                        Prerna Mehta and Mr. Amit
                                        Kumar, Advocates.
                      VERSUS

 SHRI RATI RAM JATAV PRESIDING OFFICERS& ORS
                                                   ....Respondents

                            Through:    Mr. Vinay Sabharwal, Advocate.

 CORAM:
 HON'BLE MR. JUSTICE VALMIKI J.MEHTA

1. Whether the Reporters of local papers may be allowed to see the judgment?

2. To be referred to the Reporter or not? Yes

3. Whether the judgment should be reported in the Digest? Yes

VALMIKI J. MEHTA, J (ORAL)

1. By means of the present petition under Articles 226 and 227 of

the Constitution of India the petitioner/employer/sole-proprietorship

concern challenges the ex parte Award dated 24.2.1996 passed by the

Labour Court directing the reinstatement of the workman with back

wages, and also the order dated 18.12.1996 dismissing the application

moved under Order 9 Rule 13 CPC read with Section 11 of the Industrial

Disputes Act, 1947 for setting aside the ex parte Award. The issue with

regard to the merits of the Award can only be examined if the order

dated 18.12.1996 dismissing the application under Order 9 Rule 13 CPC

is set aside. This is for the reason that the documents which have been

filed in this court on behalf of the petitioner were not before the Labour

Court when the impugned Award came to be passed. This court will

therefore first have to see the validity of the order dated 18.12.1996

dismissing the application under Order 9 Rule 13 CPC read with Section

11 of the Industrial Disputes Act.

2. That an ex parte Award can be set aside on account of giving

valid reasons for non-appearance is no longer res integra inasmuch as

it has been held by the Supreme Court in the case of Anil Sood Vs.

Presiding Officer, Labour Court II (2001) 10 SCC 534 that such an

application is indeed maintainable and it cannot be said that the Labour

Court has no jurisdiction to set aside the ex parte Award.

3. The reason pleaded by the petitioner for setting aside the ex

parte Award was that its counsel without any reason stopped appearing

in the case, although, for a few dates he appeared. It is contended that

there was no reason for the management not to contest the present

case because not only the notice dated 9.5.1988 specifically asked the

workmen to come and collect the dues under Section 25-F but also

because the dues under Section 25-F were only a sum of Rs.1440+960

i.e., a total sum of Rs.2,400/-, being the amount calculated as per 15

days pay for each year of service and also a notice pay of 30 days.

4. In my opinion, the Labour Court has clearly fallen into an error in

dismissing the application of the petitioner under Section 9 Rule 13

read with Section 11 of the Industrial Disputes Act inasmuch as a client

cannot be made to suffer for the fault of his advocate. This is the

position right from the decision of the Supreme Court in the case of

Rafiq Vs.Munshi Lal AIR 1981 SC 1400 in which it was laid down

that a party should not suffer for the inaction, deliberate omission or

mis- demeanour of his lawyer. No doubt, this cannot be a general rule,

and, facts of each case have to be seen, however, I am of the firm

belief in the facts of the present case that considering that only an

amount of only Rs.2,400/- was liable to be paid in compliance of Section

25-F there was no reason for the management not to contest the case.

Further, the status of the petitioner, at the relevant point of time when

the workman was employed was a partnership firm and which was

subsequently dissolved whereby one of the partner who is the present

sole proprietor ship concern took over the business of the partnership

firm. It is possible that on account of this reason there may have been

miscommunication or lack of communication with the counsel or that

the counsel otherwise failed to appear inasmuch as it was the other

partner who was in touch with the Advocate, however, it cannot be said

that there is a deliberate and conscious negligence of the petitioner to

contest the proceedings so as to deny the relief of setting aside the ex

parte proceedings. At best on setting aside ex parte proceedings the

case will be decided considering the respective merits. There is

therefore no grave prejudice in setting aside ex parte proceedings.

I, therefore, set aside the impugned order dated 18.12.1996 by

which the application under Order 9 Rule 13 read with Rule 11 of the

Industrial Disputes Act was dismissed.

5. The question then is what follows. Once an application under

Order 9 Rule 13 CPC is to be allowed, then, normally a case, should

thereafter be remanded back to the original forum for decision in

accordance with law. My initial reaction was to remand the matter

back to the Labour Court for a decision in accordance with law, but,

considering that the retrenchment in question is of the year 1988 i.e.

22 years back, and the impugned Award is dated 24.2.1996-fourteen

years old, I find that the present is a fit case for exercising my

jurisdiction under Articles 226 and 227 of the Constitution of India to

decide the main case itself. I, therefore, proceed to decide the main

case inasmuch as the petition as filed in this court is supported by

documents and reply thereto has also been filed by the workman.

Certain admitted position emerges from the records and the documents

filed, which enables this court to itself decide the case on merits

considering the long pendency of litigation.

6. The facts of the case are that the workman was employed for the

purpose of running of a Mercedes Super Machine relating to printing.

The employment letter is dated 6.6.1985 (a holograph) and which

specifically makes reference to the fact of the prayer for the

employment of the workman for running the Mercedes Super Machine.

The counsel for the respondent states that the appointment letter does

not reflect this position but he has not been able to show any such

appointment letter. In the counter-affidavit filed in this court, the

workman has not disputed the writing of this letter, however, it is

stated that the letter was written at the dictates of the management.

The workman therefore contends that this letter was written under

undue influence and coercion. In the opinion of this court, if there was

undue influence or coercion, then, surely either the workman would

have preferred not to take up the employment or may have complained

to any appropriate authority, including the Labour Commissioner, as to

the unfair means adopted for the purpose of granting of an

employment at any time after employment, but this admittedly is not

the position. Therefore, it does not stand to reason that the workman

would have written this letter under any coercion or undue influence as

claimed. The facts of the case and the conduct of the workman belie

this stand which is taken up in the counter-affidavit.

7. The workman who was employed on 6.6.1985, his services were

terminated vide the termination letter dated 9.5.1988. The fact that

this letter was received by the workman is not disputed. What is

contended on behalf of the workman is that such an action of requiring

the workman to come and collect the dues instead of sending the

amount due along with the letter is illegal. On behalf of the petitioner,

it is not seriously disputed that the amount in question namely the sum

of Rs.2,400/- ought to have been sent with the termination letter dated

9.5.1988, but, it is pleaded that this technical error is not such that any

huge benefit would have accrued to the employer at the relevant point

of time because as stated above only a sum of Rs.2,400/- was payable

if the provision of Section 25-F was to have been complied with.

8. There is no dispute as to the legal proposition that it is the

discretion of the courts as to whether the facts of the case justify a

reinstatement or that compensation would be an adequate relief. It is

however contended by the learned counsel for the respondent that this

court should not exercise its discretion under Section 226 and 227 of

the Constitution of India because the Labour Court has allowed

reinstatement and it cannot be said that exercise of discretion is illegal.

It is also contended that the facts with regard to whether reinstatement

should be granted or compensation should be paid was a matter to be

decided by the Labour Court.

I am of the opinion that since this court has been persuaded to

decide the main case itself in the peculiar facts and circumstances of

this case, it is this court which would decide the issue of whether

reinstatement is the appropriate remedy or compensation would be

justified in the facts and circumstances of the present case because the

Labour Court had no occasion to examine the issue of compensation in

lieu of reinstatement as the Award is an ex parte Award.

9. A lot of water has flown since the early 80‟s when reinstatement

was considered to be automatic and a matter of right on account of

violation of Section 25-F. There are atleast now a few dozen judgments

of the Supreme Court that reinstatement is not automatic and facts of

each case have to be seen as to whether reinstatement should be

granted or compensation is an adequate remedy. Various factors such

as the industry in question, financial capacity of the employer, peculiar

circumstances of each case, the nature and period of employment and

so on have to be seen. In a recent judgment in the case of Incharge

Officer and Anr. Vs. Shankar Shetty 2010 (8) Scale 583, the

Supreme Court has referred to its various earlier judgments and has

held that reinstatement is not automatically a matter of right because

of violation of Section 25 F. Paras 2 and 3 of this judgment are relevant

and the same read as under:-

"2. The only question to be considered in this appeal by special leave is with regard to the relief of reinstatement granted to the respondent by the Single Judge of the High Court of Karnataka in his judgment and order dated August 13, 2001 and affirmed by the Division Bench vide its judgment and order dated December 9, 2004 in the writ appeal. 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 25F of the Industrial Disputes Act, 1947 (for short „ID Act‟)? The course of decisions of this Court in recent years has been uniform on the above question. In the case of Jagbir Singh v. Haryana State Agriculture Marketing Board and Anr, 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 Corporation Ltd. & Anr. V. Uday Narain Pandey; Uttranchal Forest Development Corporation vs. M.C. Joshi; State of M.P.& Ors v. Lalit Kumar Verma; Madhya Pradesh Admn v. Tribhuban; Sita Ram & Ors. V. Motil Lal Nehru Farmers

Training Institute; Jaipur Development Authority v. Ramasahai & Anr; Ghaziabad Development Authority & Anr. v. Ashok Kumar & Anr. and Mahboob Deepak v. Nagar Panchayat, Gajraula & Anr. and stated as follows:

"It is true that the earlier view of this Court articulated in many decisions 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 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, be 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".

3. Jagbir Singh has been applied very recently in the case of Senior Superintendent Telegraph (Traffic) Bhopal v. Santosh Kumar Seal & Ors. (Civil Appeal No. 3815 of 2010) decided on April 26,2010 wherein this Court stated:

"In view of the aforesaid legal position and the fact that the workmen were engaged as daily wagers about 25years 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."

The learned counsel for the petitioner has also relied upon the case of

Jagbir Singh Vs. Haryana State Agriculture Marketing Board

and Anr. MANU/SC/1213/2009 and in which the Supreme Court has

held that reinstatement is not automatic. Paras 3, 6, 7, 8 and 12 of the

said judgment are relevant and the same read as under:-

"3. The Presiding Officer, Industrial Tribunal-cum- Labour Court, Panipat, after recording evidence and hearing the parties held that the appellant had worked for more than 240 days in the year preceding the date of termination and that the Respondent No. 1 violated the provisions of Section 25F of the Act 1947 by not giving him notice, pay in lieu of notice and retrenchment compensation before his termination. The Labour Court, accordingly, vide its award dated September 16, 2005 declared that the appellant was entitled to reinstatement with continuity of service and full back wages from the date of demand notice, i.e., January 27, 1997.

6. The learned Counsel for the appellant strenuously urged that once the termination of service of the appellant was held to be in violation of Section 25F of the Act 1947, the Labour Court rightly ordered reinstatement with continuity of service and full back wages and the High Court was not justified in interfering with the just award passed by the Labour Court. On the other hand, the learned Counsel for the respondents supported the order of the High Court.

7. It is true that earlier view of this Court articulated in many decisions 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 long line of cases, this Court has consistently taken the view that relief by way of 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 to the prescribed procedure. Compensation instead of

reinstatement has been held to meet the ends of justice.

8. In U.P. State Brassware Corporation Ltd. v. Uday Narain Pandey MANU/SC/2321/2005:

(2006)ILLJ496SC , the question for consideration before this Court was whether direction to pay back wages consequent upon a declaration that a workman has been retrenched in violation of the provisions of the Section 6N of the U.P. Industrial Disputes Act, 1947 (equivalent to Section 25F of `the Act, 1947') as a rule was proper exercise of discretion. This Court considered a large number of cases and observed thus:

41. The 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.

42. 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 their significance.

43. 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, globalisation, privatisation and outsourcing, is evident.

44. ...

45. The Court, therefore, emphasised 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.

12. In this case, the Industrial Court exercised its discretionary jurisdiction under Section 11A of the Industrial Disputes Act. It merely directed the amount of compensation to which the respondent was entitled had the provisions of Section 25F been complied with should be sufficient to meet the ends of justice. We are not suggesting that the High Court could not interfere with the said order, but the discretionary jurisdiction exercised by the Industrial Court, in our opinion, should have been taken into consideration for determination of the question as to what relief should be granted in the peculiar facts and circumstances of this case. Each case is required to be dealt with in the fact situation obtaining therein." (Emphasis added)

10. A reading of the aforesaid judgment in the case of Incharge

Officer (supra) and also various other judgments which have been

referred to show that the reinstatement is not automatic and the facts

and circumstances of each case have to be examined by the court. The

learned counsel for the respondent sought to place reliance upon

Harjinder Singh Vs. Punjab State Warehousing Corporation

MANU/SC/0060/2010 to contend that this court should not interfere

with the exercise of discretion by the labour court for granting

reinstatement in service. I do not find that the reading of the judgment

shows that the decisions referred to in the case of Incharge Officer

(supra) are said to have laid down the incorrect law. Whether or not

reinstatement is to be granted or only a compensation should be

granted is surely in the realm of facts of each case, a legal position

which is not disputed even by the counsel for the respondent. And, in

the facts of this case, as already stated, the Labour Court had no

occasion to examine the issue as to whether compensation should be

granted instead of reinstatement as the Award is an ex parte Award.

11. Let us therefore examine the facts of the present case to decide

whether reinstatement ought to be granted or compensation is enough.

Firstly, the fact of the matter is that the employment letter specifically

states that the workman was wanting to be employed for working of

the Mercedes Super Machine pertaining to printing. I have already held

above, that it cannot be said that this letter has been obtained by any

coercion or undue influence. The employment of the workman was

therefore specifically towards the working of the Mercedes Super

Machine used in the printing business. This printing machine was

thereafter sold by the employer on account of change in the technology

of printing and also because of rapid decline of the work of the

company and due to financial problems faced by the management.

These aspects as stated in the notice dated 9.5.1988 have not been

replied as denied to as per the records in the present case. On behalf

of the respondent, it was sought to be contended that there is no

inherent right of retrenchment and there must be given valid reasons

for retrenchment. I do not agree. The only requirement of Section

2(oo) and Section 25 is that the retrenchment must be of the type

falling under Section 2(oo) and in accordance with Section 25F i.e.,

retrenchment letter must be accompanied by the amount which would

be 15 days pay for each year of service and a 30 days notice pay and

the retrenchment must be of the type which is mentioned under

Section 2(oo). The facts of the present case show that there is indeed a

retrenchment in terms of the Section 2(oo) but there is a technical

violation in that instead of sending the amount along with the

termination letter, the workman was asked to collect the amount. As

already stated, it is not as if the amount was very huge and the

employer would have derived great benefit in not sending the amount

of Rs.2,400/-. Another aspect which emerges in the facts of the present

case is that the employment is not of a very large number of years that

the reinstatement should automatically follow. The employment was

for a period of just about 3 years and that too, which came to an end

way back in the year 1988. I am also guided by the fact that though the

total compensation payable under Section 25-F would have been Rs.

2,400/- the respondent-2/workman has in fact till date pursuant to the

an order under Section 17-B received a sum of about Rs.2,01,702/-from

1.5.1997 at a monthly amount of Rs.960/- per month. In the ultimate

analysis, in my opinion, the impugned Award deserves to be set aside

in that it directs reinstatement. In the opinion of this court, the facts

and circumstances of the case as set out above are such that

compensation would be an adequate relief and remedy to the

workman. Taking a sum of Rs.2,400/- in the year 1988 and giving a

reasonable rate of return considering that the amount would stand

doubled in about roughly 7 to 10 years, the sum of Rs.2,400/-, even as

on date from 1988 would at the very best be an amount of about

Rs.40,000/-. On the other hand, the workman has already received

amount in excess of Rs.2 lacs.

Therefore, in the facts and circumstances of the case, I find that

instead of reinstatement, the workman should receive a sum of Rs.1 lac

as compensation for illegal retrenchment in violation of Section 25-F.

12. The issue then arises is what should happen to the excess

amount received by the workman pursuant to the orders under Section

17-B. Though an order under Section 17B is only an interim order

which is subject to the final decision in the case, however, the Supreme

Court in the case of Dena Bank Vs. Kirtikumar T.Patel (1999) 2

SCC 106 has held that the payment under Section 17 B is in the nature

of subsistence allowance which would not be refundable or recoverable

even if the Award is set aside by a higher court. On a careful reading of

this judgment, I am of the opinion that this judgment cannot be said to

be laying down an intractable position that even if the employee has

other sources of income, although he has simultaneously received the

payment under Section 17B, even then there can be no recovery of the

amount received in excess of the compensation which is finally

determined by the Court.

The stand as taken on behalf of the petitioner by its counsel is

quite far as it is urged that as long as the Award is set aside, the

petitioner is agreeable to not press the issue of recovery of

compensation and that whatever amount which stands paid to the

respondent /workman should be taken as full and final settlement of

dues of the petitioner towards the workman for illegal retrenchment

provided of course that the workman did not have other sources of

income when he was receiving the payment under Section 17B. The

counsel for the petitioner however submits that as per the information

received by the petitioner, it is not as if the respondent workman is a

poor person and has no source of income except the monies which

were paid under Section 17B. The counsel for the petitioner states that

the workman in fact owns a premises and he has let out a floor of these

premises and is earning rent therefrom. This aspect of course has not

been established on record and is also strongly disputed by the learned

counsel for the workman.

13. The object of the ratio of the judgment of the Supreme Court in

the case of Dena Bank (supra) that the workman should not be asked

to refund any amount received under Section 17B was because the

workman is not a rich person who has various sources of income and

his only source of income is the payment that he would be receiving

under Section 17B. It is for this purpose, the payment under Section

17B has therefore being categorized "subsistence allowance" by the

Supreme Court in Dena Bank's case. Surely, the payment under

Section 17B cannot be treated as a subsistence allowance, if the

workman is having other sources of income. Accordingly, in the opinion

of this court in case, the workman during this period after passing of

the order under Section 17B from 1.5.1997 is not having any other

source of income except the payment which is received under Section

17B, then the workman will not be bound to refund the amount in

excess of Rs.1 lac which has been decided by this court as

compensation for illegal termination, however, in case during the said

period if the workman has other additional source(s) of income

including from other employment, then, the workman is bound to

refund to the petitioner the amount in excess of Rs.1 lac. I may note

that in compliance of the order under Section 17B, the petitioner has

been making payments by cheque to the respondent and this amount

of cheque is being regularly credited every month in the bank account

of the workman/respondent no.2. The respondent/workman is therefore

directed within a period of four weeks from the passing of this order to

file an affidavit along with copies of his bank accounts that he had no

other source(s) of income during the period he received payment

pursuant to an order under Section 17B so that there is no need of any

recovery from him.

With the aforesaid orders, the present petition is disposed of by

setting aside the impugned Award dated 24.2.1996 and it is directed

that compensation as stated above would be appropriate relief to

workman instead of reinstatement. Parties are left to bear their own

costs.

VALMIKI J. MEHTA, J.

OCTOBER 27, 2010 ib