Violation of Retrenchment conditions u/s 25F Industrial Disputes Act would not automatically entail reinstatement with full back wages – Supreme Court

By Manju Chauhan

In the case of Madhya Bharat Gramin Bank v. Pancham Lal Yadav LL 2021 SC 299 the Supreme Court observed that the violation of section 25F of the Industrial Disputes Act, 1947 [Retrenchment conditions] would not automatically entail the reinstatement with full back wages.

In this case the employee Pancham lal Yadav challenged the action of management of Bundelkhand Kshatriya Gramin Bank, in terminating his service before Central Govt. Industrial Tribunal (CGIT) on which the Tribunal held that he was not a regular employee as he was employed on daily wages.

Later the respondent files the writ petition before Madhya Pradesh High Court challenging the award of CGIT.

By allowing his petition the High Court observed that it was mandatory on the part of the management to produce all the material in their possession and relevant evidences to establish and prove that the respondent (Pancham Lal) was appointed on a daily wages basis and did not work for more than 240 days in a calendar year.

The appeal filed by the appellant bank was dismissed by the Divisional Bench of the High Court on the ground that appellant bank failed to produce relevant records to show that the respondent has not worked for more than 240 days in a calendar year.

While challenging the judgment of the High Court the Bank moves to the Apex court.

The learned council of Appellant Bank Mr. Kapur argued that respondent admitted that he was working on daily wage basis which is clear from the award of CGIT and relied the judgment of this court in case of Bharat Sanchar Nigam Limited vs. Bhurumal (2014) 7 SCC 177; Telecom District Manager & Ors vs. Keshab Deb (2008) 8 SSC 402 and Rajasthan Lalit Kala Academy vs. Radhey Sham (2008) 13 SSC 248 to contend the violation of sec 25F of the industrial dispute does not automatically entail in reinstatement with the back wages.

According to him the respondent is entitled for compensation of Rs. 1.5 lakh.

On the other hand council appearing for respondent submitted the deduction towards provident funds made by management which clearly proves that the respondent was an employee on regular basis and not working on daily basis and also he is entitled for the reinstatement as till date he has not attained the age of superannuation.

Also demanded Rs.17 lakhs, compensation for respondent.

The bench comprising J. Nageswara Rao and J. Aniruddha Bose said while allowing the appeal.

“Having considered the submission made on behalf of the parties, we are of the view that the respondent is not entitled for reinstatement in view of the law settled by this Court .The judgment relied upon by Mr. Kapur is clear to the effect that violation of Section 25 F of the Industrial Disputes Act, 1947 would not automatically entail the reinstatement with full back wages. The relief to be granted depends on the fact of individual cases.”

The court provides reasonable compensation of Rs.5 lakh to the respondent and directs the Appellant Bank to pay the amount within 8 week from the date of judgment.