Sanjay Yadav & Anr. vs M/S Yadav Plastics
2011 Latest Caselaw 2521 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

+             WRIT PETITION (CIVIL) NO. 7804/2010

                                         Reserved on: March 11, 2011
                               Date of Pronouncement: May 11, 2011

       SANJAY YADAV & ANR.                     ..... Petitioners
                      Through         Mr. Raj Kumar Maan, Advocate.

                     versus

       M/S YADAV PLASTICS                        ..... Respondent
                      Through         None.

       CORAM:
       HON'BLE MR. JUSTICE SUDERSHAN KUMAR MISRA


1.     Whether Reporters of local papers may be allowed to see the
       judgment? Yes
2.     To be referred to the Reporter or not? Yes
3.     Whether the judgment should be reported in the Digest? Yes


SUDERSHAN KUMAR MISRA, J.

1. The instant writ petition has been preferred against the

Award of the Labour Court, dated 23rd April, 2008, granting

reinstatement in service to the petitioners, to modify it to

reinstatement with full back wages.

2. It is the case of the petitioners that they had been

working with the respondent since January, 1995. The petitioners

allege that no appointment letter, attendance card, leave books,

pay slip, etc were given to them by the respondent. It was further

alleged that when the petitioners demanded their statutory benefits

verbally from the respondent management, the respondent got

enraged and terminated their services on 9th August, 2003. No

reason was assigned for their termination and they were also not

paid their earned wages from 1st February, 2003 to 9th August,

2003. It is further stated that the petitioners sent a demand notice

dated 13th August, 2003, to which the respondents did not give any

reply. Ultimately, they raised a labour dispute claiming

reinstatement in service with full back wages.

3. The matter was then referred to the Labour Court for

adjudication on the following terms;

"Whether the services of Sh. Sanjay Yadav S/o Sh. Nanku Ram Yadav and Sh. Rakesh Kumar Nishad S/o Sh. Paltu Ram have been terminated illegally and/or unjustifiably by the management and if so, to what relief are they entitled and what directions are necessary in this respect?"

4. The Labour Court framed the following issues:

              i)     "Whether    there existed relationship of
                     employer    and employee between the
                     parties?

              ii)    As per terms of reference."

5. The Labour Court decided the first issue in favour of the

petitioners, holding that the relationship of employer and employee

existed between the respondent and petitioners. Regarding the

second issue, the Labour Court held that the services of the

petitioners were terminated illegally since the respondents had not

complied with the provisions of section 25-F of the I.D. Act while

terminating their services. Both the petitioners were, therefore,

granted relief of reinstatement with continuity of service. However,

while granting relief, the Labour Court did not grant any back-

wages to the first petitioner and granted only 30% back-wages to

the second petitioner.

6. The grievance of both the petitioners is that although

they have been reinstated with continuity of service, the Labour

Court ought also to have granted full back-wages to each of the

petitioners, because they had specifically stated in their affidavits

that they had remained unemployed since their termination. In

support of this contention, the petitioners have cited the case of

Hindustan Tin Works Pvt. Ltd. V. Employees of Hindustan Tin

Works Pvt. Ltd. LLJ 1978 240 wherein, according to the

petitioners, the Supreme Court has held that when the termination

of services of a workman is set aside as illegal and unjustified, the

normal relief that shall follow is reinstatement in service with full

back wages and departure from this rule shall be only in cases of

proved gainful employment. Counsel for the petitioners further

submits that the Division Bench of this Court had also followed the

above decision of the Supreme Court in LPA No. 356/2009 titled as

Chand Ram v. Management of MCD & Anr., decided on 17th

September, 2009. In this case, this Court followed the judgment in

Hindustan Tin Works (supra) and modified the Award of the

Labour Court, granting compensation in lieu of reinstatement, and

directed reinstatement of the workman with 50% back wages.

7. The petitioners' contention does not appear to be well

founded. In several of its later judgments, the Supreme Court has

consistently held that full back wages are no longer a natural

consequence in every case of reinstatement. In fact, even in the

case of Hindustan Tin Works (supra), upon which the

petitioners rely, what the Supreme Court has only held that where

termination of service is found to be invalid, the relief of

reinstatement with continuity of service "can be granted". That

Court did not lay down any law in absolute terms to the effect that

in every case where the termination of service is found to be

illegal, it must necessarily be followed by reinstatement and the

grant of full back wages. Regarding back wages, it was further held

in paragraph 11 therein that :

"In the very nature of things there cannot be a straight jacket formula for awarding relief of back wages. All relevant considerations will enter the verdict. More or less, it would be a motion addressed to the discretion of the Tribunal. Full back wages would be the normal rule and the party objecting to it must establish the circumstances necessitating departure. At that stage the Tribunal will exercise its discretion keeping in view all the relevant circumstances. But the discretion must be exercised in a judicial and judicious manner."

Furthermore, although the Supreme Court in this case laid

down guidelines regarding the payment of back wages,

nevertheless, having regard to the peculiar facts and circumstances

of that matter, the Court thought it fit to modify the relief of full

back wages granted by the Labour Court and reduced it to only

75%, instead.

8. Further, the Supreme Court in paragraph 8 of P.G.I. of

M.E. and Research, Chandigarh v. Raj Kumar 2000 (8) SCALE

469 stated that :

"While it is true that in the event of failure in compliance with Section 25(F) read with Section 25(B) of the Industrial Disputes Act, 1947 in the normal course of events the Tribunal is supposed to award the back wages in its entirety but the discretion is left with the Tribunal in the matter of grant of back wages and it is this discretion, which in Hindustan Tin Works Pvt. Ltd. case (supra) this Court has stated must be exercised in a judicial and judicious manner depending upon the facts and circumstances of each case. "

9. The Apex Court in M.P. State Electricity Board v.

Smt. Jarina Bee AIR 2003 SC 2657 and again in General

Manager, Haryana Roadways v. Rudhan Singh AIR 2005 SC

3966 held that there is no rule of thumb that in every case where

the Industrial Tribunal gives a finding that the termination of service

was in violation of Section 25-F of the Act, entire back wages should

be awarded. Again, in paragraph 18 of Allahabad Jal Sansthan v.

Daya Shankar Rai and Anr. AIR 2005 SC 2372 the Court

observed :

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

The same view was reiterated in M.L. Binjolkar v.

State of Madhya Pradesh (2005) 6 SCC 224, wherein the

Supreme Court, after referring to its earlier decisions, concluded

that in every case of illegal termination, full back wages cannot be

the natural corollary as the same would depend upon several

factors and the Court will have to weigh the pros and cons of each

case. Reference may also be made to another decision of the

Supreme Court, U.P. State Brassware Corpn. Ltd. and Anr. v.

Udai Narain Pandey AIR 2006 SC 586, wherein the Court

stated that "a person is not entitled to get something only because

it would be lawful to do so. If that principle is applied, the functions

of an industrial court shall lose much of its significance." The Court

further stated that while granting relief, application of mind on the

part of the industrial court is imperative and payment of full back

wages cannot be the natural consequence.

10. The Supreme Court again examined the issues with

regard to payment of full back wages in the case of P.V.K.

Distillery Ltd. v. Mahendra Ram (2009) 5 SCC 705, where the

question for consideration was whether the Labour Court was

justified in awarding full back wages while directing the employer to

re-instate the workman in service. The Court concluded that illegal

termination does not create a right of reinstatement with full

employment benefits and further stated that the grant of full back

wages to an employee depends on the facts and circumstances of

each case. The Court, therefore, considered it fair and reasonable to

restrict the back wages payable to 50%, instead of full back wages

awarded by the Labour Court.

11. Further, in Chandra Prabhu International Ltd. v.

Shri Ram Avtar, being Writ Petition(C) No. 949/2008, decided on

21st February, 2008, this Court has reiterated that there is no

precise formula applicable where back wages are claimed and that it

is a discretionary power, where a flexible and realistic approach is

required to be adopted by the Tribunal and the Court. Depending

upon the circumstances, the further relief that the Labour Court can

grant in addition to reinstatement ranges from full back wages to no

back wages at all.

12. A perusal of all the above cases makes it clear that upon

an order of termination being declared illegal, payment of full back

wages cannot be granted mechanically. It would depend upon the

facts and circumstances of each case. Further, a reading of

paragraph 16 and 17 of the impugned order shows that the Labour

Court gave detailed reasons for its decision regarding the grant of

back wages. The Labour Court noted that the first petitioner had not

stated in his affidavit as to where he had tried to get a job and also

how he was maintaining himself and his family without a job. It was

because of the aforesaid reasons that the Labour Court concluded

that the first petitioner had failed to prove that he had been

unemployed since the date of his termination and, therefore, he was

not entitled to any back wages. On the other hand, the second

petitioner managed to prove before the Labour Court that he had

tried and failed to get a job in Delhi, and was now dependent on his

father. However, the Labour Court pointed out that during his cross

examination, the second petitioner had stated that he had started

residing in his native village and was looking after cows and

buffaloes belonging to his family. Therefore, the Court concluded

that although he had proved that he had remained unemployed

since the date of his termination, he must have been getting some

income by selling milk of cows and buffaloes. Accordingly, he was

held entitled to only 30% back wages.

13. I do not find any perversity in the reasoning given by

the Labour Court. However, counsel for the petitioners insists that

the above reasoning is bad since there is no positive evidence by

the management of the petitioners being employed somewhere else

after their termination. I do not agree. In paragraph 16 of

Kendriya Vidyalaya Sangathan and Anr. v. S.C. Sharma AIR

2005 SC 768, the Supreme Court had clearly stated that:

"When the question of determining the entitlement of a person to back wages is concerned, the employee has to show that he was not gainfully employed. The initial burden is on him. After and if he places materials in that regard, the employer can bring on record materials to rebut the claim."

However, in the present case, the petitioners failed to

discharge this burden and satisfy the Labour Court as to how they

were maintaining themselves and their families if they were not

gainfully employed.

14. Counsel for the petitioners contends that once he has

stated that he had tried to get a job but had failed, his client's

obligation to try and mitigate the loss stands discharged, and

nothing more could be expected from him in this behalf. The

principle of mitigation of loss is a concept that has to be borne in

mind by the Court while awarding damages. In M. Lachia Setty

and Sons Ltd. v. Coffee Board, Bangalore and Giri Coffee

Works Vs. Coffee Board, Bangalore, AIR 1981 SC 162 the

Court noted in paragraph 14 that :

"the correct statement of law in this behalf is to be found in Halsbury's Laws of England (4th Edn.) Vol. 12, para 1193 at page 477 which runs thus :

1193. Plaintiff's duty to mitigate loss. The plaintiff must take all reasonable steps to mitigate the loss which he has sustained consequent upon the defendant's wrong, and, if he fails to do so, he cannot claim damages for any such loss which he ought reasonably to have avoided."

Thus, the claimant is under a duty to mitigate or minimize the

losses suffered by him by taking all reasonable steps to avoid

losses. If he fails to take such measures, the party in breach may

claim a reduction in the damages in the amount by which the loss

should have been mitigated, since the claimant is not entitled to

profit from his own neglect. Therefore, the petitioners ought to have

made an attempt to mitigate the loss and satisfy the Court that

they had indeed made efforts to find a job. It was necessary for the

petitioners to at least spell out the efforts made to secure

employment, and if they had got one and left the same after some

time, then for how long did they work with that company, and so on

and so forth. The first petitioner, however, merely stated in his

affidavit that he had tried to find a job but without any success. He

did not state where and in what manner he had tried to find a job or

any other relevant particulars. Such a bald statement clearly failed

to inspire confidence and persuade the Labour Court. Hence, the

Labour Court held that he was not entitled to any back wages.

However, the second petitioner had proved before the Court that he

had tried to find a job in Delhi and had even gone to many shops in

the Pahar Ganj area looking for a job. He was, accordingly, granted

30% back wages, keeping in mind the fact that he must have been

making some income by selling milk of cows and buffaloes

belonging to his family.

15. Even as regards the relief of reinstatement, the legal

position has been constantly evolving and it is no longer axiomatic

for reinstatement to be ordered in every case of illegal termination

of service. In the case of M/s Lords Homeopathic Laborites

Pvt. Ltd. vs. Ms. Lissy Unnikunju & Ors. 2006 IV AD (DB) 739, a

Division Bench of this Court examined the question with reference

to number of decisions of this Court, and of the Supreme Court, to

conclude that it is not always mandatory to order reinstatement

after holding that the termination is illegal. Currently, the relief of

reinstatement is considered more valuable than mere back wages

and, often, in their desire to secure employment, workmen are

willing to forego back wages so long as future employment is

secured. In this case, the Labour Court has decided to direct

reinstatement of the petitioners thereby ensuring continued

employment to the petitioners. It appears that after having secured

this relief, and since the Management has chosen not to challenge

the same, the petitioners have decided to take a chance on any

further relief that they could get from the High Court towards back

wages also.

16. A reading of the impugned Award shows that while

deciding the relief of back wages, the Labour Court has set down

clear reasons for its conclusions, which cannot be said to be far

fetched or untenable. In view of the facts and circumstances in this

case, I do not think that the Award of the Labour Court can be said

to have resulted in a gross miscarriage of justice or any other

perversity requiring interference of a writ court under Article 226 of

the Constitution.

17. Consequently, the writ petition is dismissed.

SUDERSHAN KUMAR MISRA, J.

MAY 11, 2011