Supreme Court of India

CIVIL APPEAL NOS. 10690-10691 OF 2014 Judgment Date: Dec 03, 2014

                                                   REPORTABLE

                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION
                   CIVIL APPEAL NOS. 10690-10691   OF 2014
            (Arising out of S.L.P. (C) Nos. 36800-36801 of 2012)


Bhavnagar Municipal Corporation etc.         ...Appellants

Vs.

Jadeja Govubha Chhanubha & Anr.              ...Respondents





                               J U D G M E N T


T.S. THAKUR, J.

1.    Leave granted.

2.    These appeals arise out of a judgement  and  order  dated  20th  July,
2012 passed by the High  Court  of  Gujarat  at  Ahmedabad  whereby  Letters
Patent Appeal No.878 of 2012 filed by  the  appellant-Corporation  has  been
dismissed and the order passed by the learned Single  Judge  of  that  Court
partly modifying the award made in favour of the respondent affirmed.

3.    The respondent, it  appears,  was  employed  as  a  Conductor  in  the
Transport Department of the appellant-Corporation  on  daily-wage  basis  in
October, 1987. He claims to have served in that capacity  till  31st  March,
1989 when his services were terminated.  Aggrieved by the  termination,  the
respondent  raised  an  industrial  dispute  before  the  Assistant   Labour
Commissioner,  Bhavnagar  who  tried  to  resolve  the  same   by   way   of
conciliation but since the conciliation proceedings also  failed,  Reference
No.459 of 1990  was  made  to  the  Labour  Commissioner  at  Bhavnagar  for
adjudication of the dispute between the parties. The  Labour  Court  allowed
the parties to adduce evidence in support of their respective  versions  and
eventually came to the conclusion that the respondent had indeed  worked  as
a Conductor with the appellant-Corporation between  3rd  October,  1987  and
31st March, 1989.  The Labour Court in the process rejected the  appellant's
case that the respondent had worked only for 58 days as Badli Conductor  and
was not, therefore, entitled to protection of Section 25F of the  Industrial
Disputes Act, 1947. The Labour Court placed reliance upon a Xerox copy of  a
certificate allegedly issued by  an  officer  of  the  appellant-Corporation
certifying that the respondent had worked as  a  Conductor  for  the  period
mentioned above. The Labour Court drew  an  adverse  inference  against  the
appellant-Corporation for its omission to produce relevant record  to  prove
that the respondent-workman had worked only for 58 days hence  not  entitled
to the benefit of any retrenchment compensation. The Labour  Court  on  that
basis       held the termination  of  the  respondent  from  service  to  be
illegal and directed reinstatement with 65% back wages.

4.    Aggrieved by the  award  made  by  the  Labour  Court  the  appellant-
Corporation filed Special Civil  Application  No.11508  of  2002  which  was
heard and partly allowed by a learned Single Judge  of  the  High  Court  of
Gujarat at Ahmedabad by his order dated 24th April,  2012.  The  High  Court
referred to the evidence adduced by the parties before the Labour Court  and
came to the conclusion that the appellant-Corporation had not been  able  to
prove its assertion that the respondent had worked for  58  days  only.  The
High Court held that the findings  recorded  by  the  Labour  Court  to  the
effect that the respondent had worked between 3rd  October,  1987  and  31st
March, 1989 were supported by sufficient evidence and  material  on  record.
Having said so, the High Court opined that the award of back  wages  of  65%
was not justified as the Labour Court  had  not  given  any  cogent  reasons
while directing such back wages nor had the Labour  Court  examined  whether
the respondent was gainfully employed during  the  intervening  period.  The
award to the extent it directed payment of 65% back  wages  was,  therefore,
held to be perverse by the learned Single Judge  of  the  High  Court  which
part was accordingly set aside and the writ petition partly allowed.

5.    Dissatisfied with the order passed by the Single Judge the  appellant-
Corporation filed Letters Patent Appeal No.878 of  2012  which,  as  noticed
earlier, was dismissed by a Division Bench of the High Court  by  its  order
dated 20th July, 2012. The Division Bench was of the view that the  findings
recorded by the Labour Court did not suffer from any infirmity to  call  for
any interference specially  when  the  other  employees  of  the  appellant-
Corporation appear to have been absorbed by the Corporation upon closure  of
its Transport Department.

6.    On  behalf  of  the  appellant-Corporation  it  was  argued  that  the
findings recorded by the Labour Court to the effect that the respondent  had
worked as a Conductor between 3rd October, 1987 and  31st  March,  1989  was
not  supported  by  any  evidence  and  was,  therefore,  perverse.  It  was
contended that the solitary piece  of  evidence  which  the  respondent  had
produced in support of his  version  was  a  Xerox  copy  of  a  certificate
allegedly issued by an officer of the appellant-Corporation  who  was  never
summoned as a witness. Apart from the said document and  the  self-statement
of the respondent there was no other material to support the  findings  that
the respondent had indeed worked for 240 days as alleged by him  before  his
termination. On the contrary, it was  proved  by  the  documents  placed  on
record by the appellant that the respondent was a Conductor who  had  worked
for just about 58 days hence  was  not  entitled  to  any  protection  under
Section 25F of the Industrial Disputes Act, 1947.  It  was  urged  that  the
Labour Court had wrongly drawn an adverse inference against  the  appellant-
Corporation, overlooking the settled  legal  position  that  the  burden  of
proof lay on the workman to establish that he was in  continuous  employment
for a period of 240 days to be entitled to question the termination  of  his
employment without retrenchment compensation. The Single Judge of  the  High
Court and so also the Division Bench failed to  appreciate  the  essence  of
the controversy and fell in error in upholding the award made by the  Labour
Court.

7.    On behalf of the  respondent,  it  was  contended  that  the  findings
recorded by the Labour Court do not suffer from any perversity to  call  for
our interference. The Single Judge, according to the  learned  counsel,  has
examined the evidence on record and clearly held that there  was  sufficient
material to support the findings that the respondent  had  worked  for  more
than 240 days and was, therefore, entitled to the protection of Section  25-
F and that since no retrenchment compensation had been paid at the  time  of
the termination of his employment, the  order  of  termination  was  illegal
which entitled the respondent to reinstatement. It was also  contended  that
although sufficient number of years had rolled  back  since  the  respondent
last served with the appellant-Corporation, yet the respondent was  entitled
to be reinstated no  matter  the  Transport  Department  of  the  appellant-
Corporation where the respondent was working had been  wound  up.  The  fact
that the similarly situated workmen in the  department  had  been  adjusted,
according  to  the  learned  counsel,  was  a  sufficient  reason  for   the
respondent to seek reinstatement with or without back wages.

8.    It is fairly well-settled that for an  order  of  termination  of  the
services of a workman to be  held  illegal  on  account  of  non-payment  of
retrenchment compensation, it is essential  for  the  workman  to  establish
that he was in continuous service of the  employer  within  the  meaning  of
Section 25B of the Industrial Disputes Act,  1947.  For  the  respondent  to
succeed in that attempt he was required to show that he was in  service  for
240 days in terms of Section 25B(2)(a)(ii). The burden to prove that he  was
in actual and continuous service of the employer for  the  said  period  lay
squarely on the workman.  The  decisions  of  this  Court  in  Range  Forest
Officer v. S.T. Hadimani (2002) 3 SCC 25, Municipal  Corporation,  Faridabad
v. Siri Niwas (2004) 8 SCC 195, M.P. Electricity Board v. Hariram  (2004)  8
SCC 246, Rajasthan State Ganganagar S. Mills Ltd. v. State  of  Rajasthan  &
Anr. (2004) 8 SCC  161,  Surendra  Nagar  District  Panchayat  and  Anr.  v.
Jethabhai  Pitamberbhai  (2005)  8  SCC  450,  R.M.  Yellatti  v.  Assistant
Executive Engineer (2006) 1 SCC 106 unequivocally  recognise  the  principle
that the burden to prove that  the  workman  had  worked  for  240  days  is
entirely upon him. So also the question whether an adverse  inference  could
be drawn against the employer in case he did not produce the  best  evidence
available with it, has been the subject-matter  of  pronouncements  of  this
Court in Municipal Corporation, Faridabad v. Siri  Niwas  (supra)  and  M.P.
Electricity Board v. Hariram (supra), reiterated in  Manager,  Reserve  Bank
of India, Bangalore v. S. Mani (2005) 5 SCC 100. This Court  has  held  that
only because some documents have not been produced  by  the  management,  an
adverse inference cannot be drawn against it.

9.    The Labour Court has, in the case at  hand,  placed  reliance  upon  a
Xerox copy of a certificate allegedly issued by an officer of the appellant-
Corporation stating that  the  respondent  was  in  the  employment  of  the
appellant-Corporation as a Conductor between  3rd  October,  1987  and  31st
March, 1989. While it is true that the Xerox copy may  not  be  evidence  by
itself specially when the respondent had stated that the original  was  with
him, but had chosen not to produce the same yet the fact  remains  that  the
document was allowed to be marked at the trial and signature of the  officer
issuing  the  certificate  by  another  officer  who  was  examined  by  the
appellant. Strict rules of evidence, it  is  fairly  well-settled,  are  not
applicable to the proceedings before the Labour Court.  That  being  so  the
admission of the Xerox copy of the certificate, without any  objection  from
the appellant-Corporation, cannot be faulted at  this  belated  stage.  When
seen in the light of the assertion of the  respondent,  the  certificate  in
question clearly  supported  the  respondent's  case  that  he  was  in  the
employment of the appellant-Corporation for the period mentioned  above  and
had completed 240 days of continuous service. That being so, non-payment  of
retrenchment compensation was sufficient to render the termination  illegal.
Inasmuch as the Labour Court declared that to be so it committed no  mistake
nor was there any room for  the  High  Court  to  interfere  with  the  said
finding especially when the findings could not be described as  perverse  or
without any evidence.  The  High  Court  was  also  justified  in  directing
deletion of the back wages from the award made by the Labour  Court  against
which deletion, the respondent did not agitate either  before  the  Division
Bench by filing an appeal or before us.

10.   The only question that remains to be examined in  the  above  backdrop
is whether reinstatement of the respondent as a Conductor is  imperative  at
this late stage. We say so because the appellant claims to have  worked  for
a period of just about 18 months that too  nearly  three  decades  ago.  The
respondent today may be past fifty if not  more.  The  Transport  Department
where he was working appears to have been wound up and  transport  work  out
sourced. That apart, this Court has in a series of decisions held  that  the
illegality  in  an  order  of  termination  on  account  of  non-payment  of
retrenchment compensation does not necessarily result in  the  reinstatement
of the workman in service.  This Court has, in cases where such  termination
is found to be illegal, directed compensation in lieu of  reinstatement.  We
may at this stage refer to some of those decisions:

11.   In Mahboob Deepak v. Nagar Panchayat Gajraula and Anr.  (2008)  1  SCC
575, this Court held that since the appellant had worked only  for  a  short
period, interest of  justice  would  be  sub-served  if  the  direction  for
reinstatement was modified and compensatory payment of Rs.50,000/-  in  lieu
thereof directed to be substituted.  Similarly in Sita Ram and Ors. v.  Moti
Lal Nehru Farmers Training Institute (2008) 5 SCC 75, this Court  took  into
consideration the period during which the  services  were  rendered  by  the
workman and  instead  of  reinstatement  directed  a  lump  sum  payment  of
Rs.1,00,000/- in lieu thereof.

12.   In Ghaziabad Development Authority and Anr. v. Ashok  Kumar  and  Anr.
(2008) 4 SCC 261, this Court made a similar order as  is  evident  from  the
following passage:

"10. We are,  therefore,  of  the  opinion  that  the  appellant  should  be
directed to pay compensation to the first respondent instead  and  in  place
of the relief of reinstatement in service. Keeping in  view  the  fact  that
the respondent worked for about six years as also the amount of daily  wages
which he had been getting, we are  of  the  opinion  that  the  interest  of
justice would be subserved if the appellant is directed to pay a sum of  Rs.
50,000/- to the first respondent."

                                            [emphasis supplied]


13.   To the same effect is decision  of  this  Court  in  Jagbir  Singh  v.
Haryana State Agriculture Marketing Board and Anr. (2009) 15 SCC  327  where
this Court held that while awarding compensation in  lieu  of  reinstatement
host of factors should be kept in mind.  The Court said:

16. While awarding compensation, the host  of  factors,  inter-alia,  manner
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. In a case such as this where  the  total  length  of  service
rendered by the appellant was short and intermittent from September 1,  1995
to July 18, 1996  and  that  he  was  engaged  as  a  daily  wager,  in  our
considered  view,  a  compensation  of  Rs.50,000/-  to  the  Appellant   by
Respondent No. 1 shall meet the ends of justice."


                                           [emphasis supplied]


14.   Reference may also be made to the decision of  this  Court  in  Senior
Superintendent Telegraph (Traffic) Bhopal v. Santosh  Kumar  Seal  and  Ors.
(2010) 6 SCC 773, where this Court referred to  the  previous  decisions  on
the subject to declare  that  even  when  a  retrenchment  order  passed  in
violation of  Section  25(F)  may  be  set  aside,  reinstatement  need  not
necessarily follow as a matter of Court.  The  following  passage  from  the
decision is apposite:

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  passed  in
violation of Section  25F  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."

                                        [emphasis supplied]

15.   To the same effect is the decision of this Court in  Incharge  Officer
and Anr. V. Shankar Shetty (2010) 9 SCC 126, where this Court said:

"5. We think  that  if  the  principles  stated  in  Jagbir  Singh  and  the
decisions of this Court referred to therein are kept in  mind,  it  will  be
found that the High Court erred in granting relief of reinstatement  to  the
respondent. The respondent was engaged  as  daily  wager  in  1978  and  his
engagement continued for about 7  years  intermittently  upto  September  6,
1985 i.e. about 25years back. In a case such as the present one, it  appears
to us that relief of reinstatement cannot be justified and instead  monetary
compensation would meet the ends of justice. In our considered opinion,  the
compensation of Rs. 1,00,000/- (Rupees One lac)  in  lieu  of  reinstatement
shall be appropriate, just and equitable."

                                                         [emphasis supplied]


16.    The  case  at  hand,  in  our  opinion,  is  one  such   case   where
reinstatement must give way to award of compensation.   We  say  so  because
looking to the totality of  the  circumstances,  the  reinstatement  of  the
respondent in service does not appear to be an acceptable  option.  Monetary
compensation, keeping  in  view  the  length  of  service  rendered  by  the
respondent, the wages  that  he  was  receiving  during  that  period  which
according to the evidence was around Rs.24.75 per  day  should  sufficiently
meet the ends of justice. Keeping in view all the facts  and  circumstances,
we are of the view that award of a sum of  Rs.2,50,000/-  (Rupees  Two  Lacs
Fifty Thousand only) should meet the ends of justice.

17.   In the result, we allow these appeals but only  in  part  and  to  the
extent that the award made by the Labour Court and the orders  of  the  High
Court shall stand modified to the extent that the respondent shall  be  paid
monetary compensation of  Rs.2,50,000/-  (Rupees  Two  Lacs  Fifty  Thousand
only) in full and final settlement of his claim. The amount  shall  be  paid
by the appellant-Corporation within  a  period  of  two  months  from  today
failing which the said amount shall start earning interest @ 12%  p.a.  from
the date of this order till actual payment of the  amount  is  made  to  the
respondent.

                        ..................................................J.
                                                               (T.S. THAKUR)


                         ..................................................J.
New Delhi;                                                   (R. BANUMATHI)
December 3, 2014