Delhi High Court
Mahesh Dutt vs Ramjas Foundation on 6 April, 2015
Author: Pradeep Nandrajog
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment Reserved on: March 26, 2015
Judgment Delivered on: April 06, 2015
+ LPA 334/2013
MAHESH DUTT ..... Appellant
Represented by: None.
versus
RAMJAS FOUNDATION ..... Respondent
Represented by: Mr.S.P.Gautam and Mohd.Adil
Rasheed, Advocates.
+ LPA 685/2013
DHARAM PAL & ORS ..... Appellants
Represented by: Mr.A.K.Bajpai, Advocate.
versus
RAMJAS FOUNDATION ..... Respondent
Represented by: Mr.S.P.Gautam and Mohd.Adil
Rasheed, Advocates.
+ LPA 113/2014
TARA CHAND ..... Appellant
Represented by: Mr.A.K.Bajpai, Advocate.
versus
RAMJAS FOUNDATION ..... Respondent
Represented by: Mr.S.P.Gautam and Mohd.Adil
Rasheed, Advocates.
LPA 334/2013 & conn.appeals Page 1 of 16
+ LPA 114/2014
BALRAJ ..... Appellant
Represented by: Mr.A.K.Bajpai, Advocate.
versus
RAMJAS FOUNDATION ..... Respondent
Represented by: Mr.S.P.Gautam and Mohd.Adil
Rasheed, Advocates.
+ LPA 115/2014
SRI NARYAN JHA ..... Appellant
Represented by: Mr.A.K.Bajpai, Advocate.
versus
RAMJAS FOUNDATION ..... Respondent
Represented by: Mr.S.P.Gautam and Mohd.Adil
Rasheed, Advocates.
+ LPA 116/2014
ASHA GABA ..... Appellant
Represented by: Mr.A.K.Bajpai, Advocate.
versus
RAMJAS FOUNDATION ..... Respondent
Represented by: Mr.S.P.Gautam and Mohd.Adil
Rasheed, Advocates.
LPA 334/2013 & conn.appeals Page 2 of 16
+ LPA 117/2014
MAN SINGH ..... Appellant
Represented by: Mr.A.K.Bajpai, Advocate.
versus
RAMJAS FOUNDATION ..... Respondent
Represented by: Mr.S.P.Gautam and Mohd.Adil
Rasheed, Advocates.
+ LPA 118/2014
NARENDER KUMAR ..... Appellant
Represented by: Mr.A.K.Bajpai, Advocate.
versus
RAMJAS FOUNDATION ..... Respondent
Represented by: Mr.S.P.Gautam and Mohd.Adil
Rasheed, Advocates.
+ LPA 119/2014
M K BHARGAV ..... Appellant
Represented by: Mr.A.K.Bajpai, Advocate.
versus
RAMJAS FOUNDATION ..... Respondent
Represented by: Mr.S.P.Gautam and Mohd.Adil
Rasheed, Advocates.
LPA 334/2013 & conn.appeals Page 3 of 16
+ LPA 127/2014
SHRI PRAVEEN KUMAR GUPTA ..... Appellant
Represented by: Mr.Rajiv Aggarwal and
Ms.Neelam Tiwari, Advocates.
versus
RAMJAS FOUNDATION ..... Respondent
Represented by: Mr.S.P.Gautam and Mohd.Adil
Rasheed, Advocates.
+ LPA 128/2014
SMT D LATHA ..... Appellant
Represented by: Mr.Rajiv Aggarwal and
Ms.Neelam Tiwari, Advocates.
versus
RAMJAS FOUNDATION ..... Respondent
Represented by: Mr.S.P.Gautam and Mohd.Adil
Rasheed, Advocates.
+ LPA 134/2014
KUSUM NIGAM ..... Appellant
Represented by: Mr.A.K.Bajpai, Advocate.
versus
RAMJAS FOUNDATION ..... Respondent
Represented by: Mr.S.P.Gautam and Mohd.Adil
Rasheed, Advocates.
LPA 334/2013 & conn.appeals Page 4 of 16
+ LPA 143/2014
DHEER SINGH ..... Appellant
Represented by: Mr.A.K.Bajpai, Advocate.
versus
RAMJAS FOUNDATION ..... Respondent
Represented by: Mr.S.P.Gautam and Mohd.Adil
Rasheed, Advocates.
+ LPA 464/2014
DAYA NAND ..... Appellant
Represented by: Mr.Arun Bhardwaj and
Ms.Gunjan Bansal, Advocates.
versus
RAMJAS FOUNDATION ..... Respondent
Represented by: Mr.S.P.Gautam and Mohd.Adil
Rasheed, Advocates.
+ LPA 611/2014
HEM KUMARI MITTAL ..... Appellant
Represented by: Mr.Rajiv Aggarwal and
Ms.Neeal Tiwari, Advocates.
versus
RAMJAS FOUNDATION ..... Respondent
Represented by: Mr.S.P.Gautam and Mohd.Adil
Rasheed, Advocates.
LPA 334/2013 & conn.appeals Page 5 of 16
CORAM:
HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
HON'BLE MS. JUSTICE PRATIBHA RANI
PRADEEP NANDRAJOG, J.
1. Ramjas Foundation owned a vast tract of land measuring about 16000
bigha in the revenue estate of village Chowkri Mubarikabad and village
Sadhora Khurd. It constructed various buildings on the tract of land, which
were given to different persons on lease and licence basis. Several people
were employed to realize the lease-cum-licence fee and maintain a record
thereof as also keep accounts concerning the lease-cum-licence money
realized and expenditure incurred on the maintenance of the properties and
allied works. In the year 1999-2000 the land was acquired by the Delhi
Development Authority, which resulted in less number of working hands
being required by Ramjas Foundation. These surplus hands, numbering 78,
were retrenched. The management of Ramjas Foundation computed the
compensation payable under Section 25F of the ID Act, 1947 and tendered
the same to the said 78 workmen, who raised the issue that the compensation
paid was not correctly computed because House Rent Allowance, which
forms part of wages, as defined by Section 2(rr) of the ID Act, 1947 was not
taken into account while fixing the wages on basis whereof compensation
payable under Section 25F of the ID Act 1947 was computed. According to
the workmen Ramjas Foundation had established various schools in Delhi
and also a college where they could be adjusted and in respect of which
claim an extended limb made was that workmen who had been appointed in
said institutions after they were appointed should be retrenched and not they.
Pithily put the principle of last come first go was put in the forefront of the
claim.
2. The appellants were amongst the said 78 workmen who were
retrenched. They are the only ones surviving to litigate because most of their
brethren accepted the retrenchment compensation which was tendered and
did not raise any dispute or are happy by the verdict rendered by the learned
Single Judge.
3. By and under different orders, but identically worded, references were
made to the Labour Court by the Appropriate Government. The term of the
reference was:-
"Whether the retrenchment from service of (name of workman)
is illegal and/or unjustified and if so, to what relief is he
entitled and what directions are necessary in this respect?"
4. Vide different awards dated October 24, 2009, October 30, 2009,
October 31, 2009, December 10, 2009 and May 21, 2010, the references
were disposed of.
5. Whereas except for appellant Mahesh Dutt, the awards held that the
termination was illegal. All were directed to be reinstated in service with
continuity; the awards neither expressly grant nor expressly deny back
wages. The award in the reference concerning Mahesh Dutt held the
termination of his service to be illegal and in lieu of reinstatement he was
awarded compensation in sum of `1,00,000/- (Rupees One Lac only).
6. The reasoning in all the awards is the same. The reasoning takes note
of the fact that while computing compensation payable under Section 25F
of the ID Act, 1947 the management of Ramjas Foundation did not include,
as required by Section 2(rr) of the ID Act, 1947, the House Rent Allowance
which was being paid. Taking into account the number of years the
workmen had worked, the violation was on account of sums between
`8,000/- to `17,000/- paid less. In the absence of a seniority list of the
employees being filed, much less proved, a finding has been returned that
the management had failed to comply with Rule 77 of the Industrial
Disputes Rules. But, no finding has been returned expressly with respect to
the violation of Section 25G of the ID Act, 1947.
7. From a perusal of the statement of claims filed by the workmen, apart
from alleging that while reckoning the wages for purposes of retrenchment
compensation the House Rent Allowance was not included, we find that it is
pleaded that the work being done by the workmen was now being done
through other workmen on commission basis, but without disclosing the
names of the said workmen. It has been pleaded that the same work was
being got done through junior workmen, but names of none have been
disclosed. In the statement of claims there are no pleadings that the 78
workmen could be adjusted in other establishments of Ramjas Foundation.
8. Ramjas Foundation filed writ petitions challenging the awards under
which the workmen were directed to be reinstated in service and paid 50%
back wages. Mahesh Dutt challenged the award by filing a writ petition
being aggrieved by the fact that he was paid `1,00,000/- as compensation
and not reinstated in service with 50% back wages.
9. All the writ petitions have been heard and decided by the learned
Single Judge vide impugned judgment dated July 15, 2003. The directions
in the awards that the workmen be reinstated in service and be paid 50%
back wages have been replaced with the direction that the workmen be paid
compensation in sum of `3.25 lacs. Thus, even Mahesh Dutt has been
brought at par with all other workmen because even he has been directed to
be paid compensation in sum of `3.25 lacs. The retrenchment compensation
paid to the workmen has been held liable to be adjusted from out of the sum
of `3.25 lacs directed to be paid by the learned Single Judge.
10. The impugned decision would reveal that the workmen argued before
the learned Single Judge, as per their stand taken before the reference was
made to the Labour Court, that they could be adjusted in other
establishments of Ramjas Foundation, which we note are educational
institutions established by Ramjas Foundation. This was not the case of the
workmen pleaded in the statement of claim before the Labour Court. The
other stand taken by the workmen i.e. retrenchment compensation paid to
them being deficient in law and hence termination of their services being
illegal has been urged before the learned Single Judge. As regards Ramjas
Foundation it argued before the learned Single Judge that the reference made
had two distinct limbs : (i) whether the retrenchment was justified; and (ii)
whether the termination was illegal. Ramjas Foundation relied upon various
judgments which drew the distinction between a retrenchment being
justified, but found to be illegal and in said context holding that in such
cases reinstatement should not be directed and instead monetary
compensation should be paid. With respect to the claim of the workmen that
they could be adjusted in other establishments of Ramjas Foundation,
decisions were cited where in the absence of functional integrity between
independent establishments under the same management, the principle of
adjustment or last come first go could not be applied by treating all the
workmen in different units as having a common seniority.
11. The learned Single Judge has held that with the acquisition of its land
on which buildings were constructed by Ramjas Foundation and from which
rent was being realized there being no requirement to realize rents and
maintain accounts, the management was justified in ordering retrenchment.
Finding justification, the learned Single Judge has held that merely because
House Rent Allowance was not factored while paying the retrenchment
compensation would render the retrenchment compensation paid being less
and in that sense the termination being illegal. Taking cue from the
decisions of the Supreme Court that in such cases monetary compensation
would suffice, the learned Single Judge has awarded monetary
compensation. On the plea of work being available in schools or the
workmen could be adjusted in said schools above those who joined the said
schools later than the workmen, the learned Single Judge held that the
schools were independent establishments.
12. Supporting the findings returned by the learned Labour Court, learned
counsel for the workmen relied upon the decisions reported as AIR 2010 SC
1116 Harjinder Singh Vs. Punjab State Warehousing Corporation, JT 2010
(2) SC 599 Krishan Singh Vs. Executive Engineer Haryana State
Agricultural Marketing Board, JT 2010 (4) SC 229 Anoop Sharma Vs.
Executive Engineer, Public Health Division Haryana, (2013) 10 SCC 324
Deepali Gundu Surwase Vs. Kranti Junior Adhyapak Mahavidyalaya,
decision dated November 18, 2014 in CA No.10353-54/2014 Sudarshan
Rajpoot Vs. UP State Road Transport Corporation, 2005 (81) DRJ 344
(DB) MCD Vs. Satish Kumar, 1990 (LLJ) SC 70 Punjab L.D.& RC Vs. PO
Labour Court, 2004 (VIII) AD (SC) 444 M/s. Nicks India Tools Vs. Ram
Surat & Anr., 1980 (2) LLJ 72 Santosh Gupta Vs. State Bank of India AIR
1987 SC 111 O.P.Bhandari Vs. ITDC AIR 2004 SC 4282 Krishna Bahadur
Vs. Purna Theatre & Ors., 1981 SCC (L&S) 478 Mohan Lal Vs.
Management of Bharti Electronics, 2000 (3) SCC 588 Nar Singh Pal Vs.
UOI & Ors. and (2007) 2 SCC 433 J.K.Synthetic Ltd. Vs. K.P.Aggarwal &
Ors. From the decisions it was urged that wherever retrenchments have
been found to be illegal the normal rule is to direct reinstatement. The
decisions explain what a retrenchment would be. As per the decisions a writ
Court would not interfere with a discretion exercised by a Labour Court
while ordering reinstatement and not directing compensation lieu thereof.
13. Per contra learned counsel for Ramjas Foundation cited the decisions
reported as (1969) 2 SCR 976 Parry & Co. Ltd. Vs. P.C.Pal, (1994) 4 SCC
445 Shiv Kumar Sharma & Ors. Vs. State of Haryana & Ors., (2007) 7 SCC
366 District Red Cross Society Vs. Babita Arora & Ors., (1995) 3 SCC 474
Hindustan Steel Works Construction Ltd. & Ors. Vs. Employees Union,
(2000) 10 SCC 490 R.B.Sewak Ram Maternity Hospital Vs. Presiding
Officer, Labour Court, Jalandhar, (2007) 9 SCC 748 Madhya Pradesh
Administration Vs. Tribhuban, (1995) 4 SCC 549 Rolston John Vs. Central
Government Industrial Tribunal and in LPA No.59/2008 P.K.Sharma Vs.
Municipal Corporation of Delhi.
14. From a perusal of the aforesaid paragraphs it is apparent that the
workmen have been shifting stands from time to time. While seeking
reference to their dispute to the learned Labour Court the workmen staked
their claim only on two counts. Firstly while computing wages the language
of Section 2 (rr) of the ID Act, 1947 not being taken into account and as a
result retrenchment compensation paid being not in conformity with Section
25 F of the ID Act, 1947 because House Rent Allowance was ignored.
Secondly that the workmen could be adjusted in various schools and a
college established by Ramjas Foundation and as an extended limb that
those who were appointed in said schools and college after them should
have been retrenched by following the principle of last come first go.
Before the learned Labour Court, in the statement of claim, the second basis
of the claim was not pleaded. Rather it was replaced with a plea that after
retrenching them the management given the same work to others appointed
afterwards and that persons junior to them were retained for the works.
Before the learned Single Judge arguments have been advanced on the
second stand taken while seeking reference of the dispute to the Labour
Court.
15. Thus, we shall be dealing with all the contentions of the workmen
taken at different stages.
16. It would be useless for us to cull out the ratio of law in the 14
decisions cited by learned counsel for the workmen and 8 cited by learned
counsel for Ramjas Foundation, because of the principles of law laid down
in the said decisions are well recognized and accepted. That retrenchment is
a very wide term and would embrace termination of services of the
workmen for whatever reasons other than those expressly excluded by
Section 2 (oo) of the ID Act, 1947; that when retrenchment is found to be
illegal, reinstatement being the norm, the exception would be where the
management does not have work for the workmen and in said eventuality
monetary compensation should be paid; that if there is no functional
integrity of different units or undertakings of a common management, the
workmen would not be entitled to claim a right to be adjusted and absorbed
in other units; that a discretion exercised by a Labour Court would not be
substituted by a Writ Court unless found to be perverse, are the principles of
law laid down in the said 22 decisions. And in our opinion this should
suffice the purpose of our decision in avoidance of the torturous route to cull
out the ratio of each decision separately.
17. The learned Single Judge has correctly opined that the discretion
exercised by the learned Labour Court in favour of the workmen (other than
Mahesh Dutt) was illegal for the reason the learned Labour Court did not
consider the case law on the point of drawing a distinction between the
justification for retrenchment and the legality thereof. The learned Single
Judge has correctly opined that the learned Labour Court has ignored the
reference made.
18. We have noted the reference made in paragraph 3 of the our opinion
above. It embraces the issue of justification of the retrenchment as also the
issue of the legality thereof.
19. The undisputed position is that the 16000 bigha of land owned by
Ramjas Foundation was acquired in the year 1999-2000. Along with the
land were acquired the super structures thereon. Ramjas Foundation had let
out the buildings to the tenants. Rents had to be realized. Money had to be
spent on the maintenance of the structures. Accounts had to be maintained.
All these activities required hands. Thus, as the work dissipated due to the
lands being acquired, the workmen engaged in the jobs became surplus and
thus there is full justification in taking a decision to retrench the surplus
hands. The retrenchment is bona-fide and is not vitiated by any
consideration to victimise any workman. There is no unfair labour practice.
20. While paying the retrenchment compensation, wages as defined under
Section 2(rr) of the ID Act, 1947 required the House Rent Allowance paid to
the workmen to be taken into account, and this not being so done, resulted in
the retrenchment compensation offered being deficient and thereby resulting
in Section 25 F being violated. In other words a condition precedent to
retrenchment being violated resulted in retrenchment being illegal.
21. The learned Labour Court has not even adverted to this aspect of the
matter, which has been very succinctly captured by the learned Single Judge.
It is obviously a case where while exercising its discretion the learned
Labour Court has not kept in mind a legal principle. It is trite that where an
original authority ignores a recognized principle of law while exercising its
discretion, the exercise of discretion would be illegal and would justify a
corrective action being taken by a Court exercising power of judicial review.
22. The workmen have laid no foundation in their pleadings in the
statement of claim, and as noted above in the statement of claim have not
even pleaded a right to be absorbed in the schools and a college established
by Ramjas Foundation. Thus, the workmen have not pleaded, much less
shown, functional integration in the work of Ramjas Foundation concerning
letting out of its lands and buildings and maintaining the same and collecting
rents as also maintaining accounts thereof and the running of the educational
institutions. It is settled law that in the absence of a functional integration
being established the workmen could not lay a claim of absorption in the
schools and the college established by Ramjas Foundation. The learned
Single Judge has correctly analyzed the Delhi School Education Act, 1972
and the Rules framed thereunder to bring home the point that every school
established in Delhi which is recognized by the Director of Education is an
independent entity, distinct from the parent body which has established the
school and other schools. Thus, the workmen cannot claim a right to be
absorbed in the schools or the college established by Ramjas Foundation.
23. The plea of the workmen that after they were retrenched the work
performed by them was given to fresh hands, has remained a mere plea in
the statement of claim. In the statement of claim name of no workmen
engaged for the same work after the workmen were retrenched has been
pleaded and no evidence has been led by the workmen to establish said fact.
Further, a bald plea that some workmen junior to the retrenched workmen
were retained has not been supported by a definite assertion by giving the
name of the junior workmen retained. There is no evidence led by the
workmen to said effect. Thus, it has to be held that the plea of the workmen
that for the works which they were performing, after they were retrenched
the same work was given to others as also the plea that persons junior to
them were retained remain unsubstantiated.
24. As regards the violation of Rule 77 of the Industrial Disputes
(Central) Rules, 1957, the learned Labour Court has held that since the
management did not produce a seniority list of the workmen engaged, an
adverse inference had to be drawn against the management. The adverse
inference would be that whereas seniors have been retrenched, the juniors
are retained.
25. The learned Labour Court has ignored the law declared by the
Supreme Court in the decision reported as (2006) 5 SCC 123 State Bank of
Bikaner and Jaipur Vs. Om Prakash Sharma that a Labour Court cannot
expand the scope of the reference made and unless the reference made
expressly encompasses a dispute concerning Rule 77 of the Industrial
Disputes (Central) Rules, 1957, a Labour Court would be exercising
jurisdiction not vested in it if it ventures into said Rule. Besides, in the
instant case, as noted hereinabove, in the statement of claim filed by the
workmen they have made no reference to the Rule being violated. A bald
plea, as noted above, that juniors have been retained sans the name of the
any being disclosed, with no evidence led of any junior being retained, is the
additional reason for which the finding returned in the award concerning
Rule 77 and the said reasoning being negated by the learned Single Judge
warrants an upholding of the view taken by the learned Single Judge by us.
26. The question of any reinstatement even otherwise is ruled out for the
simple reason : there is no work. The decision for retrenchment being bona-
fide and justified; the retrenchment being illegal because a condition
precedent for retrenchment being violated i.e. House Rent Allowance not
being included in the wages which were being paid has rightly resulted in
the learned Single Judge ordering monetary compensation to each workman
in sum of `3.25 lacs. As noted above, the shortfall in the retrenchment
compensation paid to the workmen ranges between `8,000/- to `17,000/-
and thus the compensation paid is more than adequate.
27. All the appeals are accordingly dismissed.
28. The amounts directed to be paid by the learned Single Judge to the
appellants shall now be paid by the Management of Ramjas Foundation
within six weeks from today failing which interest shall accrue on said
amount payable at the rate directed by the learned Single Judge.
29. No costs.
(PRADEEP NANDRAJOG)
JUDGE
(PRATIBHA RANI)
JUDGE
APRIL 06, 2015/mamta
