[Cites 17, Cited by 0]
Delhi High Court
The Mgmt.Of Esi Scheme vs Raj Bala on 18 February, 2026
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 13.01.2026
Date of decision: 18.02.2026
Uploaded on: 20.02.2026
+ W.P.(C) 16809/2004, CM APPL. 12426/2004
THE MGMT.OF ESI SCHEME .....Petitioner
Through: Ms. Sonam Anand, Mr. Yakesh
Anand, Mr. Shubham Goyal, Advs.
Mr. Dhuv Prasad, Assistant, AR for
ESIC, Basaidarapur
versus
RAJ BALA .....Respondent
Through: Mr. Chirayu Jain and Ms.Tanishqua
Dhar, Advocates
+ W.P.(C) 16739/2004, CM APPL. 12084/2005
THE MGMT. OF ESI HOSPITAL .....Petitioner
Through: Ms. Sonam Anand, Mr. Yakesh
Anand, Mr. Shubham Goyal, Advs.
Mr. Dhuv Prasad, Assistant, AR for
ESIC, Basaidarapur
versus
ASHA RAM & ORS. .....Respondents
Through:
+ W.P.(C) 16813/2004, CM APPL. 12011/2005
THE MGMT. OF ESI HOSPITAL .....Petitioner
Through: Ms. Sonam Anand, Mr. Yakesh
Anand, Mr. Shubham Goyal, Advs.
Mr. Dhuv Prasad, Assistant, AR for
ESIC, Basaidarapur
versus
KAMLESH .....Respondent
Through:
CORAM:
HON'BLE MS. JUSTICE SHAIL JAIN
Signature Not Verified
Signed By:KAPIL
KUMAR W.P.(C) 16809/2004 with connected matters Page 1 of 32
Signing Date:20.02.2026
14:31:40
JUDGMENT
SHAIL JAIN, J.
1. The present Petitions have been filed by the Petitioner herein under
Article 226 of the Constitution of India, inter alia, challenging the Awards
passed by the Presiding Officer, Central Government Industrial Tribunal-
Cum-Labour Courts in different industrial disputes, whereby the learned
Tribunal directed the Petitioner to reinstate the Respondents with back
wages varying from 20% and 25% from their respective dates of
termination.
2. W.P. (C.) No. 16809/2004, titled "The Management of E.S.I.
Scheme vs. Raj Bala", has been filed by the Petitioner-Management
assailing the Award dated 25.05.2004 passed by the learned Presiding
Officer, Central Government Industrial Tribunal-cum-Labour Court-II, New
Delhi in I.D. No. 12/1996. By the said Award, the learned Labour Court
held the termination of the Respondent-Workman, Smt. Raj Bala, to be
illegal and directed her reinstatement with 20% back wages with effect from
24.08.1994.
3. In the same batch, W.P. (C.) No. 16739/2004, titled "The
Management of E.S.I. Scheme vs. Asha Ram &Ors.", has also been
preferred by the Petitioner-Management challenging the Award dated
08.07.2004 passed by the learned Presiding Officer, Central Government
Industrial Tribunal-cum-Labour Court-II, New Delhi in I.D. No. 22/1996.
By the impugned Award therein, the termination of the Respondents-
Workmen, namely Sh. Asha Ram and others, namely, Sh. Mukesh Kumar,
Sh. Ravi Kumar, Smt. Urmila, and Smt. Sunita was held to be illegal, and
reinstatement with 25% back wages, effective from 24.08.1994, was
granted.
4. Likewise, W.P. (C.) No. 16813/2004, titled "The Management of
E.S.I. Scheme vs. Kamlesh", arises out of the Award dated 21.06.2004
passed by the learned Presiding Officer, Central Government Industrial
Tribunal-cum-Labour Court-II, New Delhi in I.D. No. 60/1996, whereby
the termination of the Respondent-Workman, Smt. Kamlesh was declared
illegal, and reinstatement with 25% back wages with effect from 24.08.1994
was directed.
5. All the aforesaid writ petitions arise from a similar factual matrix,
involve identical questions of law, and assail substantially similar findings
returned by the learned Labour Court. Since detailed arguments were
addressed in W.P. (C.) No. 16809/2004, titled "The Management of E.S.I.
Scheme vs. Smt. Raj Bala", the same has been treated as the lead matter in
the present batch, and the decision rendered therein shall govern the
remaining connected petitions as well.
6. Certain regular employees working as sweepers/helpers proceeded on
leave, during which period the Respondents were engaged as a stop-gap
arrangement to perform the duties of sweepers/helpers in order to meet the
resulting exigency. During the course of such engagement, vacancies arose
for regular posts of sweepers/helpers. The Respondents were permitted to
participate in the process for appointment to the regular posts along with
other candidates sponsored by the Employment Exchange. The Respondents
were called to appear before the Selection Board for an interview; however,
the Respondents either did not appear for the interview or were not selected
for the post. Consequently, the Petitioner terminated the Respondents.
Subsequently, various proceedings were initiated before the Central
Government Industrial Tribunal-cum-Labour Courts. Further, Impugned
Awards were passed by the learned Tribunal, which are the subject matter of
challenge in the present Writ Petitions.
BRIEF FACTS
7. The brief background of facts in W.P. (C.) No. 16809/2004, as well
as in the connected writ petitions, is as follows:
A. The Employees' State Insurance Corporation (hereinafter
referred to as "ESI") operates hospitals for the benefit of insured
employees and pensioners. The medical services provided in these
hospitals are financed through contributions made by employees and
employers. To run and maintain these hospitals, personnel are engaged
in various capacities depending on operational requirements. Such
engagements include the engagement of casual workers as well as
regular workers against permanent posts for duties relating to
cleanliness and hygiene, which are essential for the effective
functioning of the hospitals and for maintaining sanitary conditions.
B. On 01.03.1993, the Respondent Smt. Raj Bala was engaged as
a casual worker, on daily wages as a sweeper, on a temporary and a
stop-gap basis at E.S.I. Hospital, BasaiDarapur, New Delhi. The
Respondent herein rendered service for more than 256 days in 1993
and for 180 days in 1994.
C. During the period of such engagement, vacancies arose for
regular posts of sweepers. The candidates were required to be
sponsored through the Employment Exchange, Delhi, for consideration
for employment. The selection to the posts was conducted by a duly
constituted Selection Board through an interview process. As the
Respondent was already performing duties of a similar nature with the
Corporation in a temporary capacity, the Respondent was permitted to
appear directly before the Selection Board for the interview process.
Interviews for selection to the relevant posts were conducted on
14.01.1994. The Respondent, however, did not appear before the
Selection Board on the said date. As appointments were made against
the regular posts of sweepers, the Respondent's services were brought
to an end on 24.08.1994.
CHART I
FACTUAL CHART OF ALL THE RESPONDENTS
WRIT NAME / APPOINTED INTERVIEW SERVICES NO. OF
PETITION POST ON STATUS CEASED DAYS IN
NO. HELD ON SERVICE
W.P. (C.) Raj Bala 01.03.1993 Held on 24.08.1994 436 days
16809/ (Sweeper) 14.07.1994
2004 -
Absent
W.P. (C.) Asha Ram 24.02.1993 Held on 25.08.1994 420 days
16739/ 2004 (Helper) 12.07.1994
-
Not Selected
Mukesh 24.02.1993 Held on 24.08.1994 440 days
Kumar 14.07.1994
(Sweeper) -
Absent
Ravi Kumar 16.12.1991 Held on 27.08.1994 895 days
(Sweeper) 12.07.1994
-
Not Selected
Urmila 02.01.1991 Held on 28.08.1994 809 days
(Sweeper) 12.07.1994
-
Not Selected
Sunita 24.02.1993 Held on 24.08.1994 546 days
(Sweeper) 13.07.1994
-
Not Selected
W.P. (C.) Kamlesh 26.02.1993 Held on 24.08.1994 544 days
16813/ (Sweeper) 14.07.1994
2004 -
Not Selected
D. After the termination, the Respondent issued a Demand Notice
dated 21.09.1994 to the Petitioner. The notice was served upon the
Regional Office of the ESIC by registered post, with a copy marked to
the Medical Superintendent of the ESI Hospital, BasaiDarapur, New
Delhi. The notice was duly received in the respective offices; however,
no response was issued, nor was any action taken in respect thereof.
E. Thereafter, the Respondent raised a dispute before the
Conciliation Officer (Central). Conciliation proceedings were initiated
but did not result in a settlement. Eventually, an Industrial Dispute
bearing I.D. No. 12 of 1996 was taken up by the Presiding Officer,
Central Government Industrial Tribunal Cum Labour Court - II in the
year 1996, and the Ministry of Labour by its letter No. L-
15012/09/95/IR(Vividh) CENTRAL GOVERNMENT DT. 30.01.1996
referred the following point for adjudication.
"Whether the action of the management of ESI Hospital,
Basaidarapur, Ring Road, New Delhi and the Regional
Director, ESIC, Kotla Road, New Delhi, in terminating the
services of Smt. Raj Bala, SafaiKaramchariw.e.f. 24.8.94 is
just and fair? If not, to what relief the concerned workman
is entitled ?"
F. Subsequently, upon the adjudication of the same, the Award
dated 25.05.2004 was passed. The reasoning adopted by the learned
Presiding Officer of the Central Government Industrial Tribunal-cum-
Labour Court was that the Respondent had rendered service for more
than 240 days in a calendar year and had not been paid retrenchment
compensation. In view of these circumstances, the learned Tribunal
held that Section 25F of the Industrial Disputes Act, 1947, (hereinafter
referred to as 'theAct') was attracted, and directed that the Respondent
was entitled to reinstatement with 20% back wages with effect from
24.08.1994.
G. Moreover, in pursuance of Section 17 of the Act, the Award
was published by the Central Government on 16.06.2004.
H. Consequently, a Show Cause Notice (hereinafter referred to as
"SCN") was issued to the Petitioner, demanding payment of Rs.
57,426/- (Fifty-Seven Thousand Four Hundred Twenty-Six Rupees
only) by the Office of Regional Labour Commissioner (Central), Delhi;
in accordance with the Impugned Award.
I. Being aggrieved by the aforesaid Impugned Awards in the
respective Industrial Disputes, the present Petitions have been preferred
by the Petitioner, inter alia, seeking the following reliefs.
(a) Issue a writ of mandamus or any other writ or
directions to set aside the Award dated 25.05.2004 passed
by the Presiding Officer, Central Government Industrial
Tribunal- Cum-Labour Court-II in I.D. No. 12/1996,
(b) Award the cost of the proceedings throughout,
(c) Pass any other order or orders as this Hon'ble
Court may deem just and proper in the facts and
circumstances of the case.
J. During the pendency of the proceedings, the Petitioner, in W.P.
(C.) No. 16809/2004, filed C.M. Appl. No. 12426/2004 seeking a stay
of the operation of the Impugned Award dated 25.05.2004. Vide Order
dated 15.09.2005, this Court had allowed to stay the operation of the
said Award, subject to the Petitioner depositing the amount directed
under the Impugned Award with the Registry of this Court and further
paying litigation expenses of Rs. 5,000/- (Rupees Five Thousand only)
to the Respondent.
K. Likewise, in W.P. (C.) No. 16739/2004 and W.P. (C.) No.
16813/2004, the Petitioner preferred C.M. Appl. No. 12048/2004 and
C.M. Appl. No. 12011/2004, respectively, seeking a stay of the Awards
dated 08.07.2004 and 21.06.2004. Vide Orders dated 23.09.2005 passed
in the respective petitions, this Court granted a stay of the operation of
the Impugned Awards, subject to deposit of the awarded amounts with
the Registry of this Court and payment of Rs. 5,000/- (Rupees Five
Thousand only) towards litigation expenses to the concerned
Respondents.
L. Furthermore, the Respondent Raj Bala in W.P.(C.) No.
16809/2004 had also filed an Application bearing C.M. Appl. No.
1552/2012 under Section 17B of the Act, praying for the payment of
wages in terms of the said provision, with effect from 25.05.2004,
being the date of the Impugned Award, till the disposal of the present
proceedings. The said Application was adjudicated and subsequently
allowed vide Order dated 25.03.2014, wherein the following was held:
"In view of the submission of learned counsel for the
respondent/workman, coupled with the fact that the
petitioner/non-applicant has not denied the factum of the
respondent being not gainfully employed, this application
needs to be allowed. I allow the present application and
direct the petitioner to give the respondent benefit under
Section 17-B of the Act by paying her the last drawn wages
or the minimum wages, whichever is higher, on month to
month basis on or before 10th day of each calendar month,
subject to the respondent/workman giving an undertaking in
this Court that in the eventuality the petitioner succeeds in
the writ petition, she would pay back to the petitioner the
difference of last wages drawn and the minimum wages. The
respondent/workman would also be entitled to the arrears
under Section 17-B of the Act with effect from January 31,
2012, the date on which the present application has been
filed. The arrears shall be released to the respondent within
a period of six weeks from today."
M. Therefore, in compliance with the orders of this Court, the
Petitioner Hospital has been paying monthly wages to the Respondent
Raj Bala and, to date, the Respondent Raj Bala has been paid a total
amount of Rs. 20,35,786/- (Rupees Twenty Lakh Thirty-Five Thousand
Seven Hundred and Eighty-Six Only).
N. It is also pertinent to note that in W.P. (C.) No. 16739/2004 and
W.P. (C.) No. 16813/2004, the respective Respondents did not file any
Applications seeking relief under Section 17B of the Act, and
consequently, no benefits under the said provision have been received
by them during the pendency of the present Writ Petitions.
GROUNDS FOR THE PETITIONS
8. The present Petitions have been preferred by the Petitioners on the
following grounds in respect to the reliefs claimed by them -
A. The regular appointments by the Petitioner, an autonomous
statutory body, can be made only through the prescribed selection
process, and that casual engagement confers no right to regular
appointment. Further, mere engagement as a daily-rated or casual
worker does not confer any vested right to regularisation.
B. The Respondent was afforded an opportunity to be considered
for regular appointment, including by relaxation of Employment
Exchange sponsorship, but failed to appear before the Selection
Board.
C. The direction for reinstatement with back wages is untenable in
the absence of any sanctioned vacant post and in view of the
unexplained delay in raising the industrial dispute.
D. The cessation of the Respondent's casual engagement was held
to be illegal, despite such engagement having come to an end upon
filling up of regular posts through a lawful selection process.
E. The Respondents had been gainfully employed after the
cessation of engagement, which disentitled the Respondents to the
relief of reinstatement and back wages.
ISSUES INVOLVED
9. The issues before this Court, in all the Writ Petitions, are, to a great
extent, identical, and are as follows -
I.Whether the cessation of the Respondent's engagement constituted
retrenchment under Section 25F of the Act.
II.Whether the present dispute also attracts the provisions of Sections 25G
and 25H of the Act.
III.Whether, in the facts and circumstances of the case and having regard
to the lapse of time, the relief of reinstatement granted under the
Impugned Awards is liable to be substituted with the relief of monetary
compensation.
SUBMISSIONS ON BEHALF OF THE PARTIES
10. Whether the retrenchment was legal and valid.
a. As regards the submissions advanced on behalf of the
Petitioner, learned counsel submitted that the Respondents were
engaged purely on a casual and stop-gap basis, pending the filling up of
regular posts through a lawful selection process. It was contended that
their engagement was not against any sanctioned permanent post and
was co-terminus with the availability of work.
b. It was further contended that subsequently, the vacant regular
posts were filled in accordance with law through a selection process
conducted by a duly constituted Selection Committee, pursuant to
which interviews were held. It is the claim of the Petitioner that the
Respondents in the present cases either did not appear for the
interviews or were not selected by the Selection Committee. Upon
completion of the regular recruitment process, their casual engagement
came to an end. According to the Petitioner, such cessation of
engagement did not constitute "retrenchment" within the meaning of
Section 2(oo) of the Act, and consequently, the provisions of Section
25F were not attracted.
c. Learned Counsel further submitted that, notwithstanding the
absence of any vested right, the Respondents were permitted to
participate in the interview process directly, without insisting upon the
formal requirement of sponsorship through the Employment Exchange,
thereby granting them an additional opportunity.
d. Per contra, learned Counsel for the Respondents submitted that
the termination of the Respondents squarely amounted to retrenchment
under the Act. It was argued that the Respondents had admittedly
completed more than 240 days of continuous service in a calendar year
and that their services were terminated without compliance with the
mandatory conditions prescribed under Section 25F, rendering the
retrenchment illegal.
e. Learned Counsel further submitted that the document relied
upon by the Management showing the alleged interview results was
never exhibited or proved before the Labour Court or the Tribunal. It
was further argued that no documentary evidence, such as a public
notice, individual call letters, or any record, was produced by the
Management to establish that the interview process was duly notified
to, or within the knowledge of, the Respondents.
f. Reliance was placed by the learned Counsel upon the cross-
examination of the Management witness to contend that no letters of
appointment or written terms of engagement were ever issued to the
Respondents. It was also argued that if the continuation of employment
was allegedly contingent upon selection in an interview, the
Management ought to have expressly stipulated such a condition in
writing, which it admittedly failed to do.
g. Learned Counsel for the Respondents also submitted that even
assuming compliance with the interview procedure, the retrenchment
remains illegal, as junior workmen were retained and no retrenchment
compensation was paid, rendering the action void ab initio.
h. On another note, it was also argued by the learned Counsel for
the Respondents that there can be no artificial gradation of permanency
based solely on the length of service, and that denial of reinstatement
merely on the ground that the Respondents had worked for a period of
two to three years is unsustainable in law.
11. Whether the dispute attracts the provisions in Sections 25G and
25H of the Industrial Disputes Act, 1947.
a. Learned Counsel for the Respondents, in the present context,
contended that the termination was not only illegal under Section 25F
but was also vitiated by violations of Sections 25G and 25H of the Act.
It was argued that juniors were retained while the Respondents were
terminated, in clear breach of the principle of "last come, first go".
b. It was further submitted on behalf of the Respondents that the
judgments relied upon by the Petitioner pertain primarily to cases
involving isolated violations of Section 25F, whereas the present case
involves cumulative violations of Sections 25F, 25G, and 25H, thereby
warranting a legal consequence.
c. It was further submitted that despite the availability of work
and the continued requirement of sweepers, the Respondents were
neither retained nor offered reemployment, thereby attracting Section
25H of the Act. According to the Respondents, the nature of duties
being perennial, it could not be contended by the Management that the
posts had become redundant.
d. In response, learned Counsel for the Petitioner submitted that
the Impugned Award of the Labour Court is founded solely on an
alleged violation of Section 25F and does not record any finding with
respect to Sections 25G or 25H of the Act. It was contended that in the
absence of pleadings or findings on these provisions, the Respondents
could not seek to assail the Award on grounds beyond those expressly
dealt with by the Labour Court.
12. Whether the relief of reinstatement granted under the Impugned
Awards is liable to be substituted with the relief of monetary
compensation.
a. Learned counsel for the Petitioner submitted that, even
assuming without admitting that there was a procedural violation
attracting Section 25F of the Act, reinstatement after a considerable
lapse of time would neither be just nor equitable, particularly when the
workmen were engaged on a purely casual basis.
b. Reliance was placed upon the consistent judicial trend reflected
in a catena of decisions of the Hon'ble Supreme Court, wherein
monetary compensation, depending upon the facts and circumstances
of each case, has been held to be an appropriate substitute for
reinstatement in such cases.
c. Attention was also drawn to the fact by the learned Counsel that
in W.P. (C) No. 16809/2004, the concerned workman has already
received a sum of approximately Rs. 20,35,786/- (Rupees Twenty Lakh
Thirty-Five Thousand Seven Hundred and Eighty-Six Only) under
Section 17B of the Act, and submitted that granting reinstatement in
addition thereto would result in manifest injustice.
d. Learned Counsel for the Petitioner further submitted that the
age of the Respondents is also a relevant factor while considering the
grant of reinstatement, particularly after a long lapse of time, as
reinstatement at this stage would neither be practical nor in the interest
of administrative efficiency.
e. It was additionally contended that the post of sweeper is no
longer being filled through direct engagement, and that pursuant to
policy decisions, the work relating to sanitation and housekeeping has
since been outsourced through a tendering process to private
contractors. It was submitted that, in view of such subsequent
developments, reinstatement of the Respondents against non-existent or
outsourced posts is neither feasible nor permissible in law, and that
monetary compensation would be the appropriate relief, if any.
f. Learned counsel for the Petitioner, inter alia, placed reliance on
the judgment of the Hon'ble Supreme Court in"State of Uttarakhand
and Another v. Raj Kumar, (2019) 14 SCC 353",which arose out of
similar facts.
"9. In our opinion, the case at hand is covered by the two
decisions of this Court rendered in the case of Bharat
Sanchar Nigam Limited vs. Bhurumal (2014) 7 SCC 177
and District Development Officer and Anr. vs. Satish
KantilalAmerelia (2018) 12 SCC 298. [...]
11. Here is also a case where the respondent claimed to
have worked as daily wager hardly for a period of one year
or so in PWD of the State; Secondly, he had no right to
claim regularization; Thirdly, he had no right to continue as
daily wager and lastly, the dispute was raised by the
respondent (workman) almost after 25 years of the alleged
termination before the Labour Court. [...]
14. Having regard to the totality of the facts taken note of
supra, we consider it just and reasonable to award a sum of
Rs.1,00,000/( Rs. One lakh) to the respondent in lieu of his
right to claim reinstatement and back wages in full and final
satisfaction of this dispute in place of Rs. 30,000/awarded
by the Labour Court. Only to this extent we modify the
award of the Labour Court in quantum of award of
compensation by enhancing it from Rs.30,000/- to
Rs.1,00,000 (one lakh)."
g. Learned Counsel for the Respondents, on the other hand,
opposed the substitution of reinstatement with compensation and
submitted that reinstatement continues to be the normal rule where
retrenchment is held to be illegal. Reliance was placed on relevant
precedents to contend that denial of reinstatement would cause serious
prejudice to the Respondents, particularly where the delay in
adjudication was not attributable to them.
h. With respect to the decision in "State of Uttarakhand v. Raj
Kumar(2019) 14 SCC 353", learned Counsel for the Respondent
submitted that the grant of lump-sum compensation therein was
justified solely on account of an inordinate delay of 25 years in raising
the dispute, a circumstance which is wholly absent in the present cases.
It was reiterated that the delay in adjudication cannot be attributed to
the Respondents in the present Petitions.
i. Further, emphasis was placed on the prejudice and irreparable
hardship that would be caused to the Respondents if reinstatement were
denied. Reliance was placed upon Paragraph 35 of the judgment in
"Bharat Sanchar Nigam Ltd. vs. Bhurumal, (2014) 7 SCC 177", by
the learned Counsel appearing for the Respondent.
"35. We would, however, like to add a caveat here. There
may be cases where termination of a daily wage worker is
found to be illegal on the ground it was resorted to as unfair
labour practice or in violation of the principle of last come
first go viz. while retrenching such a worker daily wage
juniors to him were retained. There may also be a situation
that persons junior to him were regularized under some
policy but the concerned workman terminated. In such
circumstances, the terminated worker should not be denied
reinstatement unless there are some other weighty reasons
for adopting the course of grant of compensation instead of
reinstatement. In such cases, reinstatement should be the
rule and only in exceptional cases for the reasons stated to
be in writing, such a relief can be denied."
j. Lastly, learned Counsel appearing on behalf of the Respondents
submitted that the Petitioner could not derive benefit from the
subsequent judicial trend favouring compensation over reinstatement,
particularly when such precedents were not in existence at the time
when the dispute arose, or the Awards were passed, and where the
Respondents were diligent in pursuing their remedies.
DISCUSSION
13. This Court has considered the aforesaid submissions. At the outset, it
must be observed that the jurisdiction of this Court under Articles 226 and
227 of the Constitution of India, while examining an Award passed by the
Labour Court, is supervisory and circumscribed. Interference is justified
only where the Award is vitiated by patent illegality, perversity, or an error
apparent on the face of the record. The present petition does not call upon
this Court to re-appreciate the evidence or reevaluate findings of fact, but is
confined to scrutinizing the legality and correctness of the relief granted by
the learned Labour Court.
14. In that backdrop, nevertheless, it becomes necessary to consider
whether the findings returned by the learned Labour Court about the nature
of engagement of the Respondent, the completion of 240 days of continuous
service, and the alleged violation of Section 25F of the Act suffer from any
perversity or manifest illegality to warrant interference in the exercise of this
Court's supervisory jurisdiction.
A. AS REGARDS THE NATURE OF RETRENCHMENT
15. The undisputed position in the present Petitions is that the
Respondents were engaged as sweepers/helpers on a casual basis. It is also
not in dispute that they were not appointed to sanctioned posts, nor was any
formal appointment letter issued to them. The engagement was admittedly
not pursuant to a regular selection process.
16. The Petitioner's case herein is that the engagement was purely stop-
gap, pending regular recruitment, and that upon completion of such
recruitment, the casual engagement came to an end. On this premise, it is
urged that the cessation of engagement does not amount to retrenchment
under Section 2(oo) of the Act. However, the manner in which the
engagement came to an end assumes significance.
17. Along the same lines, Section 2(oo) of the Act defines retrenchment
as the termination of service of a workman by the employer for any reason
whatsoever, other than as a punishment inflicted by way of disciplinary
action, subject to expressly enumerated exclusions. These exclusions include
the following -
a. Voluntary retirement of the workman;
b. Retirement on reaching the age of superannuation, where the
contract of employment contains such a stipulation;
c. Termination as a result of non-renewal of a contract of
employment, or termination under a contractual stipulation (Section
2(oo)(bb));
d. Termination on the ground of continued ill-health.
Thus, unless the termination falls within these exclusions, it is treated as
retrenchment, irrespective of the employer's motive. Once termination
qualifies as retrenchment under Section 2(oo), the employer must comply
with Chapter V-A of the Act.
18. In other words, once this threshold of completion of 240 days of
continuous service is crossed, the termination of service, however described,
attracts the statutory protection under Chapter V-A of the Act, unless it falls
within one of the recognised exceptions.
19. In view of the aforesaid, it is noted that the Respondents admittedly
had completed more than 240 days of continuous service in a calendar year.
This factual position stands admitted based on material on record and settled
principles governing the burden of proof. This Court, therefore, in exercise
of its supervisory jurisdiction under Articles 226 and 227 of the Constitution
of India, finds no perversity, arbitrariness or error apparent on the face of the
record so as to justify interference with this conclusion.
20. In progression of the above, Section 25F of the Act lays down
mandatory conditions that an employer must fulfil before retrenching a
workman who has completed continuous service of not less than one year in
an industrial establishment, and reads as under:
"25F. Conditions precedent to retrenchment of workmen-
No workman employed in any industry who has been in
continuous service for not less than one year under an
employer shall be retrenched by that employer until--
(a) the workman has been given one month's notice in
writing indicating the reasons for retrenchment and the
period of notice has expired, or the workman has been paid
in lieu of such notice, wages for the period of the notice;
(b) the workman has been paid, at the time of retrenchment,
compensation which shall be equivalent to fifteen days'
average pay for every completed year of continuous service
or any part thereof in excess of six months; and
(c) notice in the prescribed manner is served on the
appropriate Government or such authority as may be
specified by the appropriate Government by notification in
the Official Gazette."
21. The aforesaid provision mandates that a workman who has completed
240 days of continuous service shall not be retrenched unless the above
statutory requirements are complied with. It is an admitted position in this
case that the Respondents were neither issued any notice nor paid
retrenchment compensation at the time their services were discontinued.
Non-compliance with the mandatory conditions prescribed under Section
25F of the Act renders the termination illegal. The Labour Court, therefore,
rightly held that the termination of the Respondent was illegal for violation
of Section 25F of the Act.
22. The Petitioner herein relied upon an alleged interview process to
contend that the Respondents were afforded an opportunity to continue.
However, the record placed before the Labour Court does not substantiate
this assertion. The interview result relied upon by the Management was
neither exhibited nor proved. No contemporaneous documentary evidence,
such as call letters, public notices, or individual intimation, was produced to
establish that the Respondents were duly informed of, or participated in, the
said process. Further, the Management witness, in cross-examination,
admitted that no written terms governed the engagement of the Respondents.
If continuation of employment was indeed conditional upon selection
through an interview, such a condition ought to have been expressly
recorded. The absence of any such stipulation weakens the Management's
plea that the engagement automatically came to an end upon non-selection.
In industrial adjudication, the burden to justify termination rests squarely on
the employer. That burden has not been discharged in the present case.
23. Moreover, the contention of the Petitioner that cessation of casual
engagement does not amount to retrenchment cannot be accepted in
isolation in the present context. What is determinative is not the
nomenclature of the engagement, but the effect of the termination. It is
reiterated that in the present case, the services of workmen who had
rendered continuous service were brought to an end without compliance
with Section 25F. No material was produced to demonstrate adherence to
the statutory order of retrenchment. Equally, there is no dispute that
retrenchment compensation was not paid.
24. In view thereof, this Court thinks that the termination of the
Respondents answers the description of "retrenchment" under Section 2(oo)
and suffers from non-compliance with the mandatory conditions under
Section 25F of the Act. The finding of illegality recorded by the Labour
Court, therefore, does not warrant interference on this ground.
B. AS REGARDS THE APPLICATION OF PROVISIONS OF
SECTIONS 25G AND 25H OF THE ACT
25. The Respondents have further contended that the termination was
vitiated not only for violation of Section 25F, but also on account of non-
compliance with Sections 25G and 25H of the Act.
26. Section 25G embodies the principle of "last come, first go" and
mandates that, in the absence of any recorded reasons to the contrary, an
employer shall ordinarily retrench the workman who was the last person to
be employed in a particular category. Section 25H, on the other hand,
confers a preferential right of re-employment upon retrenched workmen,
requiring the employer to offer an opportunity of reengagement to such
workmen in the event of future vacancies in the establishment.
27. Upon a perusal of the Impugned Award, however, it is evident that the
learned Labour Court has primarily rested its conclusion on the finding of
non-compliance with Section 25F of the Act, which prescribes the
mandatory conditions precedent to retrenchment. No specific or independent
finding has been recorded with respect to any alleged infraction of the
principles embodied in Sections 25G or 25H.
28. It is trite that an Award is to be examined based on the pleadings and
findings recorded therein, and ordinarily, grounds which were neither urged
nor adjudicated upon before the Labour Court cannot be pressed into service
before this Court. In the present case, the material on record clearly
establishes non-compliance with the mandatory requirements of Section
25F, and the illegality of the retrenchment stands demonstrated on that
ground alone.
29. In view thereof, this Court is of the considered opinion that the
Impugned Award need not be tested on the anvil of Sections 25G and 25H.
The admitted non-compliance with Section 25F is, by itself, sufficient to
sustain the finding that the retrenchment was illegal. While the submissions
advanced on behalf of the Respondents with respect to Sections 25G and
25H have been duly noted, this Court refrains from returning any definitive
finding on the said provisions, particularly in the absence of any
adjudication thereon by the learned Labour Court.
C. AS REGARDS THE RELIEF TO THE RESPONDENTS
HEREIN
30. The only issue that now remains for consideration is whether the
learned Labour Court was justified in granting the relief of reinstatement
along with back wages.
31. It is well settled that a declaration of illegality in termination does not
invariably result in an order of reinstatement. Although earlier judicial
pronouncements regarded reinstatement with full back wages as the normal
consequence of illegal retrenchment, the Hon'ble Supreme Court has, over
time, departed from that rigid approach. The Hon'ble Apex Court has, in
recent decisions, consistently held that reinstatement is not to follow as an
automatic or mechanical outcome of a violation of Section 25F, and that the
appropriate relief must be fashioned in view of the nature of employment,
the duration of service, and the overall facts and circumstances of each case.
32. As mentioned earlier, in the present case, the Respondents were
engaged as casual sweepers/ helpers. They were not appointed against
sanctioned posts. Their engagement was not preceded by a regular selection
process. The termination occurred several years ago. The litigation has
remained pending for a considerable period of more than thirty-two years,
given the alleged termination.
33. Moreover, the Petitioner has also brought on record subsequent
developments, namely, that sanitation and housekeeping services are now
being outsourced through private contractors pursuant to policy decisions.
This assertion has not been seriously disputed. Reinstatement against posts
which are no longer filled through direct engagement would raise serious
administrative and legal complications.
34. The age of the Respondents constitutes an additional relevant factor
for consideration. Reinstatement at this belated stage, that is, after an
inordinate lapse of thirty-two years due to the pendency of litigation, would
neither be feasible nor advance the ends of justice, and the Respondents
would now be of an advanced age and, in all probability, nearing the age of
superannuation.
35. Accordingly, Coordinate Bench of this Court in "AIIMS vs Ashok
Kumar, 2024 SCC OnLine Del 3286", has clarified the current position on
the subject of compensation being granted in place of reinstatement, after
due consideration of the judgments in BSNL vs. Bhurumal(supra) as well
as State of Uttarakhand &Anr. vs. Raj Kumar (supra). The relevant part of
the judgment is extracted hereunder.
"26. Upon perusal of the aforementioned judicial dictum, it
is inferred that ordinarily when the termination is found to
be illegal, the principle of grant of reinstatement with full
back wages has to be applied as per the facts and
circumstances of each case and shall not be awarded
mechanically. It is further observed that termination of a
daily-wage worker where, found illegal on account of
procedural defects, reinstatement with back wages is not to
be construed automatically rather, in the interest of justice,
the workman shall be granted a relief in the form of a lump
sum monetary compensation as it is more appropriate."
36. Additionally, the Apex Court in State of Uttarakhand and Another v.
Raj Kumar, (2019) 14 SCC 353, which arose out of similar facts as in that
of the present Petitions, after adverting to and relying upon BSNL v.
Bhurumal (supra), held that where the Respondent had worked as a daily
wager for hardly a period of one year, reinstatement with back wages is not
automatic and instead, awarded a lump-sum compensation of ₹1,00,000/-
(Rupees One Lakh only) in lieu of reinstatement and all consequential
benefits.
37. Furthermore, in the case Bharat Sanchar Nigam Ltd. vs.
Bhurumal(supra), the aforesaid position has been made clear.
"33. It is clear from the reading of the aforesaid judgments
that the ordinary principle of grant of reinstatement with
full back wages, when the termination is found to be illegal
is not applied mechanically in all cases. While that may be a
position where services of a regular/permanent workman
are terminated illegally and/or mala fide and/or by way of
victimisation, unfair labour practice, etc. However, when it
comes to the case of termination of a daily-wage worker and
where the termination is found illegal because of a
procedural defect, namely, in violation of Section 25-F of
the Industrial Disputes Act, this Court is consistent in taking
the view that in such cases reinstatement with back wages is
not automatic and instead the workman should be given
monetary compensation which will meet the ends of justice.
Rationale for shifting in this direction is obvious.
34. The reasons for denying the relief of reinstatement in
such cases are obvious. It is trite law that when the
termination is found to be illegal because of non-payment of
retrenchment compensation and notice pay as mandatorily
required under Section 25-F of the Industrial Disputes Act,
even after reinstatement, it is always open to the
management to terminate the services of that employee by
paying him the retrenchment compensation. Since such a
workman was working on daily-wage basis and even after
he is reinstated, he has no right to seek regularisation [see
State of Karnataka v. Ullladevi (3) [(2006) 4 SCC 1: 2006
SCC (L&S) 753}]. Thus when he cannot claim
regularisation and he has no right to continue even as a
daily-wage worker, no useful purpose is going to be served
in reinstating such a workman and he can be given
monetary compensation by the Court itself inasmuch as if he
is terminated again after reinstatelllellf, he would receive
monetary compensation only in the form of retrenchment
compensation and notice pay. In such a situation, giving the
relief of reinstatement, that too after a long gap, would not
serve any purpose."
38. In the judgment of Jagbir Singh vs. Haryana State Agriculture
Marketing (2009) 15 SCC 327, the Hon'ble Apex Court dealt with similar
issues and held that -
"7. It is true that earlier view of this Court articulated in
many decisions reflected the legal position that if the
termination of all 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.
[.....]
14. 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 if 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.
17. While awarding compensation, the host of factors, inter-
alia, matter and method of appointment, nature of
employment and length of service are relevant. Of course,
each case will depend upon its own facts and
circumstances."
39. On this point, this Court also finds support from the judgment of the
Hon'ble Supreme Court of India in the case titled "Employers, Management
of Central P & D Inst. Ltd Vs Union of India & Another, AIR 2005
Supreme Court 633. The contextual part is extracted hereunder.
"But it is to be noticed that it is not always mandatory for
the courts to order reinstatement in cases where there has
been violation of section 25F of the Act (5A of the Standing
Orders) which can be substituted for good reasons by
awarding compensation. [.....]"
40. Having regard to the aforesaid principles and upon an examination of
the facts of the present case, this Court observes that the Respondents were
appointed only as daily-rated workers for brief and intermittent periods. The
infirmity noted by the learned Labour Court pertains solely to non-
observance of the procedural mandate under Section 25F of the Act and
does not involve any finding of substantive illegality or unfair labour
practice. It is an admitted position that the cessation of service occurred in
the year 1994, and an inordinate period of over three decades has elapsed
thereafter. In view of such prolonged passage of time, an order of
reinstatement at this juncture would be neither feasible nor just and would
not further the cause of industrial harmony or justice.
41. In addition, this Court cannot lose sight of the fact that in W.P.(C)
No. 16809/2004, a substantial amount has already been paid to the workman
Raj Bala under Section 17B of the Act. Granting reinstatement in addition
thereto would result in a disproportionate outcome.
42. The Respondents, as well, have relied upon the judgment in BSNL vs.
Bhurumal (supra) to contend that reinstatement remains the normal rule.
However, even Bhurumal (supra)recognises that compensation may be an
appropriate substitute where reinstatement is rendered impracticable due to
lapse of time or the nature of employment.
43. Similarly, the decision in State of Uttarakhand v. Raj Kumar (supra)
cannot be read as confined only to cases involving extreme delay. The
principle that relief must be equitable and proportionate permeates the
jurisprudence on the subject.
44. In the considered opinion of this Court, while the retrenchment of the
Respondents was illegal, reinstatement at this stage would not be an
appropriate or workable remedy. The ends of justice would be met by
substituting the relief of reinstatement with monetary compensation,
commensurate with the length of service rendered by the Respondents and
the attendant circumstances.
45. At this stage, it is apposite to refer to the decision of the Supreme
Court in Amit Kumar Dubey v. M.P.P.K.V.V. Co. Ltd. &Anr. (Civil Appeal
arising out of SLP (C) No. 20902/2024 and connected matters, decided on
29 January 2025), which lays down clear guidelines for determination of
the quantum of compensation in cases where reinstatement is substituted
with monetary relief. Herein, the Apex Court has categorically held that
compensation cannot be nominal, uniform, or arbitrary, and must bear a
direct nexus with the length of service rendered by the workman. It was
emphasised that a blanket award of compensation, without regard to the
duration of employment, would violate the principle of proportionality. The
relevant part of the judgment is extracted here under-
"9. Therefore, in the facts and circumstances of the matters,
we deem it fit to enhance the compensation granted to the
appellants by the High Court. We hold that the appellants
would be entitled to enhanced compensation at the rate of
Rs. 1.5 lakhs per year for the period they have worked and
in case, they have worked for a part of the year, then the
amount of compensation is to be calculated at the same rate
to be applied on a pro-rata basis.[...]"
46. In light of the above principles, as enunciated by the Supreme Court
in Amit Kumar Dubey v. M.P.P.K.V.V. Co. Ltd. &Anr. (supra), this Court
deems it fit and appropriate that the compensation in the present case be
awarded in accordance with the aforesaid parameters, having due regard to
the duration of service rendered by the Respondents and the attendant facts
and circumstances.
47. In W.P.(C) No. 16809/2004, having regard to the brief tenure of the
Respondent's engagement as a daily-wage worker, this Court is of the view
that the amount already received is far in excess of the compensation
ordinarily awarded in lieu of reinstatement in comparable cases. Further,
taking note of the considerable lapse of time since the cessation of service
and the substantial amount already disbursed to the Respondent, the amount
paid under Section 17B of the Act shall be treated as full and final
compensation in the matter. No further amount shall be payable.
48. It is further observed that, inasmuch as no applications under Section
17B of the Act, were preferred by the remaining Respondents, it may
reasonably be presumed that they were gainfully employed during the
pendency of the proceedings. In accordance, in W.P.(C) Nos. 16739/2004
and 16813/2004, the Petitioner shall pay a lump-sum compensation to each
Respondent within a period of three months from today, in accordance with
the table set out below.
49. The specific amounts of the lump-sum compensation granted to the
Respondents in W.P.(C.) 16739/2004 and W.P.(C.) 16739/2004, as
mentioned below, have been calculated in accordance with the guidelines
laid out by the Hon'ble Apex Court in the case Amit Kumar Dubey v.
M.P.P.K.V.V. Co. Ltd. &Anr. (supra). Further, the amount shall be paid by
the Petitioner to the Respondents/Workmen within a period of three months
from the date of the Order, failing which the Respondent Workmen shall be
entitled to interest at the rate of 9% per annum, from the date of default till
the payment is actually made to the Respondent Workmen.
(CHART II)
AMOUNT OF LUMP-SUM COMPENSATION TO BE PAID TO
RESPONDENTS IN W.P.(C.) 16739/2004 and W.P.(C.) 16739/2004
NAME OF THE DATE OF DATE OF PERIOD AMOUNT OF
RESPONDENT JOINING TERMINATION OF COMPENSATION
SERVICE
Raj Bala 01.03.1993 23.08.1994 1 Year Amount already paid
(Sweeper) 5 Months under Section 17B of
the Act of 1947
Asha Ram 24.02.1993 25.08.1994 1 Year Rs. 3,00,000/
(Helper) 6 Months
Mukesh Kumar 24.02.1993 24.08.1994 1 Year Rs. 3,00,000/
(Sweeper) 6 Months
Ravi Kumar 16.12.1991 27.08.1994 2 Years Rs. 5,00,000/-
(Sweeper) 8 Months
Urmila 02.01.1991 28.08.1994 3 Years Rs. 6,50,000/-
(Sweeper) 7 Months
Sunita 24.02.1993 24.08.1994 1 Year Rs. 3,00,000/
(Sweeper) 6 Months
Kamlesh 26.02.1993 24.08.1994 1 Year Rs. 3,00,000/
(Sweeper) 6 Months
50. Having regard to the legal position crystallised by the precedents
discussed and the findings recorded herein, this Court is of the view that the
Petitioners have made out a fit case for interference. Accordingly, the
present Petitions are allowed to the effect that the finding of the Tribunal
that the retrenchment violated Section 25F of the Industrial Disputes Act,
1947, is upheld.
51. The directions for reinstatement with back wages in the Impugned
Awards are set aside. In substitution thereof, the Respondents shall be
entitled to lump-sum monetary compensation as mentioned above, which, in
the facts of the present cases, is held to be a just and equitable relief.
52. Pending applications, if any, are disposed of. There shall be no order
as to costs.
SHAIL JAIN
JUDGE
FEBRUARY 18, 2026/M.M.
