Labour Law | Reinstatement with back wages is not an automatic remedy for illegal termination: Punjab and Haryana High Court

In a significant ruling Punjab and Haryana High Court upheld the award of ₹5,00,000 lump sum compensation to a dismissed worker who had served for 14 years without an inquiry, while enhancing the compensation by 20% due to delays in payment. Justice Jagmohan Bansal, addressing cross-petitions by both the employer, Maruti Suzuki Limited, and the worker, refused reinstatement due to the worker’s age and the lapse of 24 years since dismissal.

The decision reaffirms the principles of fairness in labor law disputes and limits judicial review under Articles 226 and 227 of the Constitution, emphasizing that the scope of writ jurisdiction is supervisory, not appellate.

“Compensation Instead of Reinstatement Is Appropriate in Long-Separation Cases”
The Court emphasized that reinstatement is not a default remedy, particularly where procedural lapses occurred, but the circumstances do not warrant full back wages or reinstatement. Referring to B.S.N.L. v. Bhurumal (2014) and State of Uttarakhand v. Raj Kumar (2019), the Court observed:

“When a worker is terminated in violation of Section 25-F of the Industrial Disputes Act, 1947, reinstatement is not an automatic remedy. Compensation may suffice, especially when the worker has been long separated, the termination was based on procedural lapses, and the worker has reached superannuation.”

The bench highlighted that the worker had been terminated in 2000, and 24 years had passed since. Reinstatement at this stage would be neither practical nor equitable. Instead, monetary compensation, enhanced by 20%, would meet the ends of justice.

The worker, employed by Maruti Suzuki Limited since 1986, was dismissed in 2000 without an inquiry, allegedly for grave misconduct during a labor dispute that temporarily disrupted factory operations. The worker approached the Labour Court, which, in its 2013 award, ordered the company to pay ₹5,00,000 as lump sum compensation but refused reinstatement due to the worker’s age and prolonged separation.

Both parties challenged the Labour Court’s award before the High Court:

The Management’s Claim: The company argued that the worker’s dismissal was justified due to misconduct and that the compensation awarded was excessive.
The Worker’s Claim: The worker sought reinstatement with full back wages, arguing that the dismissal was illegal due to the lack of an inquiry.

The High Court reiterated that its role under Articles 226 and 227 of the Constitution is limited to correcting jurisdictional errors or violations of natural justice, rather than reappreciating facts or acting as an appellate body. Referring to Syed Yakoob v. K.S. Radhakrishnan (1964) and Central Council for Research in Ayurvedic Sciences v. Bikartan Das (2023), the Court stated:

“The High Court’s supervisory jurisdiction is not appellate. Errors of fact or inadequacy of evidence cannot be reexamined unless there are jurisdictional errors or principles of natural justice have been violated. Findings of fact by the Labour Court cannot be reopened unless based on no evidence or patently erroneous.”

The Court found no such errors in the Labour Court’s findings, which were well-reasoned and supported by evidence.

“Delay in Payment Warrants Compensation Enhancement”
The Court criticized both parties for delays in resolving the case. It noted that neither the management paid the compensation awarded in 2013, nor did the worker attempt to enforce the award. To balance the equities, the Court enhanced the compensation amount by 20%, stating:

“The awarded compensation of ₹5,00,000 shall be increased by 20%, making it ₹6,00,000. This amount must be paid within 8 weeks. If not, interest at 9% per annum shall apply to the total amount.”

The worker’s dismissal without an inquiry violated Section 25-F, which mandates retrenchment procedures to ensure fairness.

Reinstatement was deemed impractical due to the lapse of 24 years and the worker’s attainment of superannuation.

Compensation, rather than reinstatement, was held to be a just and equitable remedy in light of the worker’s service of 14 years and the long separation from employment.

The Court sought to balance the interests of both parties by enhancing compensation but limiting the interest rate for delayed payment.

The Court dismissed both petitions filed by the management and the worker, upholding the Labour Court’s award with modifications. The judgment reaffirms the principle that:

“Relief by way of reinstatement with back wages is not automatic and depends on the facts and circumstances of each case, particularly in cases of procedural lapses.”

The decision strikes a balance between ensuring justice for the worker and acknowledging the practical constraints of long-pending labor disputes.

Decision Date: December 9, 2024