1 IN THE HIGH COURT OF JUDICTURE FOR RAJASTHAN AT JODHPUR. O R D E R National Fertilisers Ltd. Versus State of Rajasthan & Anr. & ors. S.B. Civil Writ Petition No. 4227/2003 ... Date of Order: March 01, 2007 PRESENT HON'BLE MR. JUSTICE H.R. PANWAR Mr. Sunil Beniwal, for the petitioners. Mr. B.L. Tiwari, Government Advocate. Mr. G.J. Gupta, for the respondent No.3-workman. BY THE COURT: Reportable. The Award dated 29-12-2001 Annx.7 passed by the respondent No.2 Labour Court, Sri Ganganagar (for short, “the Labour Court” hereinafter) has been impugned by the petitioner- employers by way of this writ petition. The facts and circumstances giving rise to the instant writ petition are that the respondent No.3, the workman, raised an industrial dispute. Conciliation proceedings were held and on failure thereof, the respondent-State referred the industrial dispute to the Labour Court under Section 10 (1) (C ) of the Industrial Disputes Act, 1947 (for short, “the I.D. Act” hereinafter) for adjudication. By the Award Annx.7 dated 29-12- 2001, the Labour Court adjudicated the dispute raised by the 2 respondent-workman and held that the retrenchment/ termination of services of the respondent-workman with effect from 1-4-1996 was neither proper nor valid and was in violation of the provisions of the I.D. Act and directed the petitioner- employer to reinstate the respondent-workman as also to pay him 30% of the back wages. The Award Annx.7 was published under the provisions of Section 17 of the I.D. Act vide Annx.8. Aggrieved by the award impugned, the employer-petitioners have filed the instant writ petition. I have heard learned counsel for the parties. It is contended by the learned counsel for the petitioners that the engagement of the respondent-workman made by the Regional Manager of the petitioner company is dehors the rules. The petitioners came with the case by way of filing a reply to the claim petition before the Labour Court that for appointment on the post of Class IV, the Service Rules are provided and the governing provisions are given in the Personnel Manual, Clause 1.5 whereof pertains to the Source of Recruitment and the procedure has been enumerated therein. The petitioner-employer also came with the case that the respondent-workman was engaged purely on temporary basis without there being any sanctioned post and evidence to this effect has been led by the petitioner-employer before the Labour Court. It is further contended that the engagement of the 3 respondent-workman was purely on ad hoc and temporary basis, more so, the respondent-workman was engaged by an incompetent Authority, who had no power to make such engagement. Even otherwise, the order of reinstatement cannot be made unless there is a sanctioned post, to which the person has been engaged by following the procedure provided for appointment of an employee. The Personnel Manual and the governing policy, by which the appointments are made, has been placed on record. Recruitment rule 1.5 provides the Sources of Recruitment, which reads as under:- “1.5. Sources of Recruitment.- Recruitment to various posts will normally be made from the following sources:- (a) Employment Exchange as per the provisions of the Employment Exchange (Compulsory Notification of Vacancies) Act, 1959. (b) Zila Sainik Boards, Director General Resettlement. (c ) Direct Recruitment by advertisement. (d)Company's own trainees who have satisfactorily completed their training. (e) Employees on deputation from Government/ other Public Sector Undertakings. (f) By transfer, selection and/or promotion from amongst the existing employees of the Company. (g) On contract for a specified period. (h) By transfer from other Public Sector Undertakings. 4 (i)Apprentices recruited under the Apprentices Act, 1961. (j) Persons as declared surplus employees of the Company or of other Public Sector Undertakings. (k) Oustees or their dependents, whose lands have been acquired for construction of the factories of National equalizers as per prescribed procedure.” Learned counsel for the respondent-workman failed to show as to whether the respondent-workman was engaged by following the recruitment rules, as referred hereinabove. Learned counsel for the petitioners has relied on a number of decisions of the Hon'ble Supreme Court, wherein it was held that if the engagement of a workman is dehors the rules and even if the retrenchment/termination of his services is in violation of the provisions of Section 25-F of the I.D. Act, the respondent-workman, at the best, can be paid compensation and not the relief of reinstatement. In Rajasthan Tourism Development Corporation Ltd. & Anr. Vs. Intejam Ali Zafri, (2006) 6 SCC 275, the Hon'ble Apex Court held that it is settled proposition of law that when the initial appointment itself is void then the provisions of Section 25-F of the Industrial Disputes Act are not applicable while terminating the services of the workman. In Himanshu Kumar Vidyarthi & ors. Vs. State of Bihar & ors., AIR 1997 SC 3657, the Hon'ble Supreme Court held 5 that when the appointments are regulated by the statutory rules, the concept of “industry” to that extent stands excluded. Admittedly, they were not appointed to the posts in accordance with the rules but were engaged on the basis of need of the work. They are temporary employees working on daily wages. Under these circumstances, their disengagement from service cannot be construed to be a retrenchment under the Industrial Disputes Act. The concept of “retrenchment”, therefore, cannot be stretched to such an extent as to cover these employees. In M.P. State Agro Industries Development Corporation Ltd. & Anr. Vs. S.C. Pandey, (2006) 2 SCC 716, the Hon'ble Supreme Court held that if an order of confirmation is passed when no post was available and that too by a person not authorised therefor, the appointment would be void. A Division Bench of this Court, in Arjun Singh & 4 ors. Vs. Labour Court, Jodhpur & ors., (2004 (4) WLC (Raj.) 145, held that the appellants therein did not go through a process of selection and were merely appointed on daily wages basis. The time lag in each case between the passing of the award and the date of termination is quite a substantial one. Again, between date of termination of services of the appellants and as of now, several years have gone by. In the circumstances, the Labour Court and the learned Single Judge were right in not foisting the appellants on the employer after such long spells of time. The 6 appellants cannot be directed to be reinstated now as they have been out of touch with their respective jobs for long. It is well known that faculties rust when they are not used for long. An employee who is out of job for number of years, loses his proficiency, productivity and efficiency. In case the appellants are directed to be reinstated after several years, it will lead to complex situations. Not only question of their seniority, promotion and emoluments would arise, it will also affect the seniority and chances of promotion of employees who have been working continuously with respondents after the termination of the services of the appellants. The Division Bench further held as under:- “We are conscious of the fact that the normal rule is to direct reinstatement of a workman whose services have been termination in violation of the industrial law, but reinstatement cannot be directed in every case. The question whether an employee should be reinstated or not depends upon various factors viz. (1) the nature of employment; (2) the period between the date of appointment and date of termination i.e. length of service; (3) the period between the date of termination and the date of award; (4) the period between the date of termination and the conclusion of the proceedings. In case a person is appointed for a short period of time without making him go through a process of selection and the gap between the date of termination and the award/conclusion of proceedings is a large one, ordinarily the employee should be awarded compensation in lieu of reinstatement when it is found that his termination was in violation of the provisions of Section 25-F of the Industrial Disputes Act.” 7 In Punjab Land Development and Reclamation Corporation Ltd., Chandigarh Vs. The Presiding Officer, Labour Court, Chandigarh & ors., 1990 (4) SLR 154, a Constitution Bench of the Hon'ble Apex Court held that compensation in lieu of reinstatement and back wages is now the norm. In State of M.P. & ors. Vs. Arjun Lal Rajak,(2006) 2 SCC 711, the Hon'ble Supreme Court held that it is beyond any doubt or dispute that a daily-wager does not hold a post. The Forest Department is a wing of the State. Its employees hold a status. For acquiring that status and for obtaining a Constitutional protection in terms of Article 311 of the Constitution of India, all appointments must be made in conformity with the Constitutional scheme as laid down under Articles 14 and 16 of the Constitution as well as the rules made in terms of the proviso to Article 309 of the Constitution or in terms of a legislative Act. Concededly, while appointing the respondent, the Constitutional provision or the statutory provisions had not been followed. The rights and liabilities of the parties are, therefore, governed by the terms of the contract and/or the provisions of the statute applicable in relation thereto. The respondent was not given any offer of appointment in writing. He admittedly worked in different departments of the State. His last posting was in the production division of the Forest Department in the district of Guna which as noticed above 8 stood abolished. It is, however, true that while terminating the services of the respondent, the appellants had not complied with the mandatory requirements of Section 25-F of the Industrial Disputes Act and, thus, ordinarily, the workman could have been directed to be reinstated with or without back wages, but it is also well settled that when a project or a scheme or an office itself is abolished, relief by way of reinstatement is not granted. Accordingly, keeping in view the fact that the services of the respondent therein were terminated on the ground that the production unit in which he was working itself had been closed, the Hon'ble Supreme Court awarded monetary compensation of Rs.10,m000/- to the workman. In Nagar Mahapalika (Now Municipal Corporation) Vs. State of U.P. & ors., (2006) 5 SCC 127, the Hon'ble Supreme Court, finding the appointment of the workman therein in violation of the U.P. Mahapalika Adhiniyam, 1959, held that since the provisions of the U.P. Industrial Dispute Act, 1947 had not been complied, instead and in place of issuing a direction for reinstatement of service, interests of justice would be subserved if a compensation of Rs.30,000/- is directed to be paid. In Rattan Singh Vs. Union of India & Anr., (1997) 11 SCC 396, where termination of services of the workman was made without complying with the provisions of Section 25-F of the Industrial Disputes Act, 1947, the Supreme Court, ordered 9 payment of Rs. 25,000/- as compensation in lieu of reinstatement and back wages. In this regard, the Apex Court observed as under:- “We find merit in the said submission of Shri Ashri. From the dates mentioned in the judgment of the First Appellate Court dated 21-1-1985, it appear that the appellant had continuously worked for more than 240 days in a year. Since he was a workman, he was entitled to the protection of Section 25-F of the Act and the said protection could not be denied to him on the ground that he was a daily-rated worker. It is not the case of the respondents that the provisions of Section 25-F of the Act were complied with while terminating the services of the appellant. In these circumstances, the termination of services of the appellant cannot be upheld and has to be set aside. The services of the appellant were terminated in the year 1976. Nearly 20 years have elapsed since then. In these circumstances, we are not inclined to direct reinstatement of the appellant. But having regard to the facts and circumstances of the case, we direct that a consolidated sum of Rs.25,000/- be paid to the appellant in lieu of compensation for back wages as well as reinstatement. This amount is being paid in full and final settlement of all the claims of the appellant. The said amount shall be paid within two months. The appeal is disposed of accordingly. No costs.” The Division Bench of this Court, in State of Rajasthan Vs. Rashid Mohammed, 2004 (5) WLC (Raj.) 463, while dealing with a case where respondent Rashid Mohammed was appointed as a Guard on daily wages basis on 01-2-1990 and was finally removed on 17-5-1994 and taking into consideration the facts that already nine years have elapsed, modified the judgment of the learned Single Judge by directing 10 that instead of reinstatement, the respondent would be entitled to a lump-sum amount of Rs.50,000/- as compensation for full and final settlement of all his claims while relying on the decisions of the Hon'ble Supreme Court in Hindustan Tin Works Pvt. Ltd Vs. Employees of Hindustan Tin Works Pvt. Ltd., AIR 1979 SC 95; Chandu Lal Vs. The Management of M/s. PAN American World Airways, AIR 1985 SC 1128; Gujarat State Road Transport Corporation & Anr. Vs. Malu Amra, AIR 1994 SC 112; Sain Steel Products Vs. Naipal Singh & ors., AIR 2001 SCW 2426; O.P. Bhandari Vs. Indian Tourism Development Corporation Ltd. & ors., (1986) 4 SCC 337; and Rolston Johan Vs. Central Government Industrial Tribunal and Labour Court & ors., AIR 1994 SC 131. Keeping in view the decisions of the Hon'ble Supreme Court and Division Benches decisions of this Court referred hereinabove and the fact that the respondent-workman was engaged on a temporary basis without following the governing rules provided for such engagements, in my view, the Labour Court fell in error in directing reinstatement of the respondent- workman with 30% back wages. However, on the basis of the evidence produced before the Labour Court, the Labour Court came to the conclusion that termination of the services of the respondent-workman was in violation of the provisions of Section 25-F of the I.D. Act, therefore, the respondent-workman is 11 entitled for compensation in lieu of reinstatement.. In this view of the matter, the writ petition is partly allowed. The impugned Award Annx.7 dated 29-12-2001, to the extent of directing reinstatement of the respondent-workman with 30% of back wages, is set aside; and it is directed that instead of reinstatement, the respondent-workman is entitled for compensation of Rs.40,000/- (Rs. Forty thousand). There shall be no order as to costs. (H.R. PANWAR), J. mcs