SCA/13075/2007 1/10 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 13075 of 2007 For Approval and Signature: HONOURABLE MR.JUSTICE K.M.THAKER ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= ALANKAR CINEMA - Petitioner(s) Versus UMESHBHAI RAMANLAL DESAI & 1 - Respondent(s) ========================================================= Appearance : MR SP MAJMUDAR for Petitioner(s) : 1, NOTICE SERVED BY DS for Respondent(s) : 1, MR BHARAT SHAH for Respondent(s) : 1, UNSERVED-EXPIRED (N) for Respondent(s) : 2, ========================================================= CORAM : HONOURABLE MR.JUSTICE K.M.THAKER Date : 08/08/2008 ORAL JUDGMENT Rule. Mr. Bharat Shah, learned advocate for the respondent waives service of Rule. With the consent of the learned advocates appearing for the parties, the matter is taken up for final hearing today. SCA/13075/2007 2/10 JUDGMENT 2. The petitioner has approached this Court against an award dated 8.6.2006 passed by the Labour Court, Nadiad in Reference No. 150 of 1989 about Respondent's dispute against his termination. By the impugned award, the Labour Court has directed the petitioner herein to reinstate the respondent and pay him 25% of backwages. 3. The relevant facts, as it transpires from the record of present petition, are that the respondent workman was working in the establishment of present petitioner since 1981 as Assistant Manager and at the relevant time his salary was Rs. 400/-. The petitioner is running a cinema theatre at Nadiad, District-Kheda. The respondent alleged that his services were terminated illegally with effect from 30th June, 1986 without complying the procedure prescribed by law. Aggrieved by the said action of the petitioner, the respondent herein initially issued the notice dated 24.10.1986. He also claimed that subsequently he had issued notice on 21st June 1988. The dispute raised by the petitioner could not be settled during conciliation proceedings which SCA/13075/2007 3/10 JUDGMENT appear to have been initiated after respondent's demand for reinstatement vide communication dated 6th August, 1988. The order of Reference came to be made on 19th December, 1988. The petitioner filed its reply – against the respondent's claim statement - to the effect that it had purchased the theatre by a Conveyance Deed executed in July 1987 and by virtue of the terms and conditions of the said conveyance deed, it was agreed between the parties to the agreement that all past liabilities, including that of the employees, was of the erstwhile owner of the theatre. On the basis of the said conveyance deed, the petitioner prayed that it may not be saddled with any liability towards the respondent if the action of the erstwhile owner of the theatre was found to be illegal or unjustified. After hearing the parties, the Labour Court came to the conclusion that the action of respondent's termination was illegal and that therefore the Court directed the petitioner to reinstate the respondent. So far as the issue of backwages is concerned, the Labour Court has observed that it would not be justified to saddle the purchaser-petitioner with the liability of the SCA/13075/2007 4/10 JUDGMENT erstwhile owner, more particularly in view of the time-gap between the alleged termination and the date of order of reference or the date on which the respondent raised demand/dispute. The Court also considered that it was not believable that during the entire period in question the respondent might have remained wholly unemployed during the long gap of 20 years. Considering such aspects, the Labour Court directed the petitioner to pay 20% of backwages. Aggrieved by the said direction, the petitioner has preferred the present petition. 4. Mr. SP Majmudar, learned advocate submitted that the petitioner purchased the theatre in July 1987 and that therefore it is not justified to hold the present petitioner liable for any action of the erstwhile owner, more particularly when the petitioner purchased the theatre with a clear understanding that all liabilities of the period prior to the date of purchase would be that of the erstwhile owner. He further submitted that in view of the fact that the action impugned before the Labour Court was taken by the erstwhile owner of the SCA/13075/2007 5/10 JUDGMENT theatre, it was not justified for the learned Labour Court to accept the submissions of the respondent workman without any corroborating material to substantiate his claim that he was working since 1981 and/or at the time of his alleged termination the procedure prescribed by law was not complied with. Mr. Majmudar further submitted that without prejudice to the contentions and with a view to putting an end to this litigation the petitioner was ready and willing to reinstate the respondent. 5. Mr. Bharat Shah, appearing for the respondent, on the other hand, submitted the respondent was illegally terminated with effect from June 1986 and that therefore the learned Labour Court is justified in concluding that there was breach of Section 25-F. He also submitted that the Labour Court was also justified in holding that there was breach of Section 25-G and Section 25-H. He submitted that the respondent had served the notices dated 24.10.1986 and 21.6.1988, however the respondent was not reinstated and that therefore the award passed by the Labour Court is correct and SCA/13075/2007 6/10 JUDGMENT justified. As regards the direction for backwages, he submitted that the respondent has remained unemployed and today also he is unemployed and the petitioner could not establish that the respondent was gainfully employed and that therefore the direction regarding backwages is also justified. 6. From the record, it transpires that the order of reference has been made by the appropriate Government on 19th December, 1988. The respondent appears to have claimed that he had served notice dated 24.10.1986, however, it is an undisputed fact that the petitioner herein purchased the establishment in July 1987 and that therefore the said notice could not have been served on present petitioner. The respondent has also claimed that he had thereafter issued notice dated 21.6.1988. Even if the said assertion of the respondent is to be presumed as correct, then also there is time gap of almost 2 years between the date of alleged termination of the notice dated 21.6.1988. It appears that it was two months thereafter that the respondent made an application seeking reinstatement SCA/13075/2007 7/10 JUDGMENT on 6th August 1988 and the industrial dispute ultimately came to be referred on 19.12.1988. Hence, there is a gap of almost 2 years between the alleged date of termination and petitioner taking action for raising an industrial dispute, which would suggest that the respondent remained inactive for 2 years after his alleged termination and did not take active step for raising dispute. In the event of real and genuine unemployment the respondent would not have remained so inactive and passive for almost 26 months in seeking reinstatement. The aforesaid aspect is relevant for considering the respondent's claim for backwages. 7. In view of the willingness expressed by the petitioner to reinstate the respondent, the issues related to the direction granting reinstatement are not required to be examined and that therefore this Court has not gone into the said aspect. 8. The only question which remains for consideration is about respondent's claim for backwages. The Labour Court has granted backwages at SCA/13075/2007 8/10 JUDGMENT the rate of 25%. On the fact that the petitioner raised dispute after a gap of 2 years and on the fact that almost 20 years have passed-by from the date of alleged termination till the date of the decision by the Labour Court, the Labour Court appears to be justified in proceeding on the premise that the respondent could not have remained completely unemployed during the said period of 20 years. Unfortunately, after addressing the aforesaid aspect, the Labour Court failed to consider all relevant circumstances for determining the claim for backwages. By now, in view of the judgment of the Hon'ble Supreme Court, in General Manager, Haryana Roadways V/s. Rudhan Singh reported in [2005(5) SCC 591] it is clear that the direction for backwages is not an automatic consequence of direction for reinstatement and while taking the decision regarding backwages, the Labour Court should take all relevant and attending facts and circumstances into consideration. In present case, the Labour Court has failed to record any satisfactory reason for awarding 25% of backwages. Differently put, the Labour Court has failed to consider relevant aspects and record SCA/13075/2007 9/10 JUDGMENT its reasons and findings in respect of such relevant aspects which ought to be addressed while deciding the issue of backwages and that therefore this Court is not inclined to uphold the said direction regarding backwages. The respondent has failed to explain the delay in raising the dispute and has failed to give any explanation about the means of maintaining himself and his family during past 20 years. On overall consideration of the matter, this Court is of the view that the Labour Court has not addressed the relevant aspects which should have been considered for deciding the issue of backwages and it has also not recorded any sustainable reason for awarding backwages at the rate of 25% and that therefore the said directions deserve to be set aside. Thus, so far as the direction regarding reinstatement is concerned, the same is not disturbed and it is confirmed in view of the statement on behalf of the petitioner. The petitioner is directed to reinstate the respondent. So far as the direction regarding backwages is concerned, the same is set aside. However, it is clarified that the respondent shall be entitled for continuity of service from the SCA/13075/2007 10/10 JUDGMENT date of his original appointment, i.e., from 1981. 9. With the aforesaid clarifications and directions, the petition is disposed of. Rule is made absolute to the aforesaid extent. No order as to costs. [ K.M. Thaker, J. ] rmr.