LABOUR LAW- II INTERNAL ASSESSMENT

CASE ANALYSIS

Haryana Tourism Corporation Ltd. Vs. Fakir Chand and Ors.

AIR 2003 SC 4465

Decided on: 14.10.2003

Coram: K.G. Balakrishnan and P. Venkatarama Reddi, JJ.

VAISHALI RATHI
V YEAR, E
15010126478
BATCH- 2015-2020
FACTS OF THE CASE-

The Appellant, Haryana Tourism Corporation Limited, is a Government-owned company

incorporated under the Companies Act engaged in the tourism-related activities in the State of
Haryana. On 8.11.1988, the Appellant started various fast food centers and tourist complexes in
different parts of the State. To meet its daily requirements, the respondents were engaged as
Kichen Helper, Gardener or Sweeper as daily wage workers as per the Appellant.

The Appellant alleged that these centres and complexes were running into losses and thus, the
State Government, in 1991, reviewed its policies and decided to discontinue some of the centres
and complexes which were then returned to the Transport Department. The Appellant stated that
the changed policy required retrenchment of workmen and therefore, the respondent workmen
were terminated from their services in August and October, 1991.

The termination of services was challenged and the matter was directed to the Labour Court
under the Industrial Disputes Act, 1947. The Labour Court awarded reinstatement of the
respondents in service with 25 per cent back wages. This award was challenged by the Appellant
before the High Court of Punjab & Haryana which refused to interfere. The High Court’s
decision was challenged before the Hon’ble Supreme Court.

ISSUES-

Whether the respondent workmen should be reinstated in service as per the award of the Labour
Court?

RULES APPLICABLE-

1. Section 2A of the Industrial Disputes Act, 1947, discharge, dismissal, retrenchment or

termination of services of an individual workman by an employer should be deemed to be
an industrial dispute.
2. Section 11A of the Industrial Disputes Act vests powers in Labour Courts, Tribunals and
National Tribunals to give appropriate relief in case of discharge or dismissal of
workmen if it is satisfied that the order of discharge or dismissal was not justified. It has
 the power to set aside the order of discharge or dismissal and direct reinstatement of the
workman on terms and conditions, if required, or give any other relief to the workman
including the award of any lesser punishment in lieu of discharge or dismissal as the
circumstances of the case may require.
3. Under Section 25FFF, if an undertaking is closed down, every workman who has been in
continuous service for not less than one year in that undertaking immediately before such
closure shall be entitled to notice and compensation in accordance with the provisions of
section 25F, as if the workman had been retrenched. In case of closing down on account
of unavoidable circumstances beyond the control of the employer, the compensation to be
paid to the workman under clause (b) of section 25F shall not exceed his average pay for
three months.
However, it has been explained that financial difficulties including financial losses are
not deemed as unavoidable circumstances.

ANALYSIS-

In the present case, the Labour Court had passed the order of reinstatement without considering
that the Appellant is already facing losses in running some of the fast food centers and tourist
complexes as the Appellant did not raise the contention in the present case. However, it was
accepted that the Labour Court in other cases also relied on “Ex. M-1 copy of the minutes of the
meeting dated 8.11.1988 of the State Govt. for starting catering services at the bus stands and
also Ex. M-3 copy of the minutes of the subsequent meeting dated 5.9.1991 for taking a decision
for closing down the said services and for handing over the possession of the bus stands to the
Transport Department”.

Thus, taking into the above facts, the Supreme Court directed the Appellant to pay a sum of Rs.
70,000/- to each of these respondents by way of compensation in lieu of reinstatement.

The Industrial and Labour Laws have evolved in an amusing and sensational way. The judicial
thinking has, during the last four decades undergone radical changes.

In the last few decades, the Supreme Court has interpreted the law on industrial disputes broadly
especially in cases of reinstatement and back wages. There has been a change in the basics of the
concept. Earlier the Supreme Court held that “every termination of service is retrenchment
except the cases in the definition”. At that time it was opined that the back wages must be paid in
cases of bad termination. Though eventually the judicial thinking transformed and it was
observed that instead of “invariable reinstatement” awarding “liberal compensation” could also
serve the ends of justice.

This change in approach has changed the entire landscape. Earlier the employer had to raise the
plea and prove the gainful employment during the period the workmen was out of employment
to oppose the back wages. However, under the new approach, the workman has to raise the plea
of not being gainfully employed with evidence in this regard which can be rebutted by the
employer. The Tribunal or the Court would not be justified in granting full back wages in case
the workman fails to prove no gainful employment.

The Supreme Court has now been consistently holding that “relief by way of reinstatement with
back wages is not a rule nor it is automatic if the termination of an employee was found to be
illegal or in contravention of the prescribed procedure”. It has further held that the monetary
compensation in lieu of reinstatement and back wages in cases of such nature would be
appropriate and would meet the ends of justice.1

A perusal of the ratio decidendi of this view holding would show how it has been through a sea
change. In the case of Jagbir Singh V/s Haryana State Agriculture Marketing Board & anrs.2 the
Apex Court made a very pertinent observation as follows:

"It is true that the earlier view of this court articulated in many decision reflected the
legal position that if the termination of an employee was found to be illegal, the relief of
reinstatement with full back wages would ordinarily follow. However, in recent past,

1
A reference could be made to the cases of Uttaranchal Forest Department Corporation V/s M.C. Joshi 2007 (iii)
CLR 84: Sate of MP & ors. V/s Lalit Kumar Verma 2007 (1) SCC 575; M.P. Administration Vs. Tribhuvan 2007 (ii)
CLR 694 (SC); Sita Ram and others V/s Motilal Nehrtu Farmers Training Institute 2008 (ii) CLR 763 (SC), Jaipur
Development Authority V/s. Ram Sahai & ano. (2006) (ii) SCC 681, Ghazibad Development Authority & ors. Ashok
Kumar & anr. (2008) 4 SCC 261, Mahaboob Deepak V/s. Nagar Panchayat Gajraula (2008) 1 SCC 575, Senior
Superintendent Telegraph (Traffic) Bhopal V/s Santosh Kumar Seal and ors. 2010 III CLR 17, Incharge Officer and
ors. V/s Shankar Shetty 2010 (9) SCC 126, Raj Kumar S/o Rohit Lal Mishra V/s Jalgawan Municipal Corporation
2013 LLR 305 (SC)
2
2009 CLR 6289 SC
 there has been a shift in the legal position and in a long line of cases, this court has
consistently taken the view that relief by way of reinstatement with back wages is not
automatic and may be wholly inappropriate in a given fact situation even though the
termination of an employee is in contravention of the prescribed procedure compensation
instead of reinstatement has been held to meet the end of justice."

Moving ahead with this approach, the Apex Court recently held that even if the termination of
workman service is illegal, the relief of reinstatement with back wages wouldn’t be automated
and the reasonable monetary compensation would serve the ends of justice.3

Apart from these situations, there have been cases where it was not considered desirable or
expedient to reinstate a workman. So to enumerate these could be cases where there had been

 strained relations between master and servant,

 the post held by the employee had been one of trust and confidence and the employee has
forfeited confidence of his master or
 the employee was found to have been guilty of activity subversive of or prejudicial to the
interest of the industry.

There an order of compensation instead of reinstatement was found proper when the employee
held crucial and sensitive assignment where it was hazardous or prejudicial to the interest of the
industry to continue him in service. These are some illustrative cases which could form the basis
for making exception to general rule as it then existed.

CONCLUSION

It is thus clear that in 1970’s and 1980’s the normal rule was reinstatement with back wages in
case of illegal termination of services but the tables got turned in around 1990's when the Apex
Court held the view that compensation serves better ends of justice. It is expected that this trend
of judgments ought to give a seamless working environment more particularly to new age
companies who should find this as spurring them on.

3
U.P. State Sugar Corporation Ltd. V/s Kaushal Kumar Sinha, 2017 LLR 673 (SC)
So in the present situation if the employer is ready to pay compensation, he can easily ensure
unhampered functioning of his establishment. This gives social security to the workmen for
being forced out of work for no fault of theirs. Excessive employees are disguised employees and
in most case, the establishments are not able to pay right wages to the workmen.

Thus, in the case of Haryana Tourism Corporation Ltd. Vs. Fakir Chand and Ors, the decision
of the Supreme Court is a result of the broader approach where both the parties are free and not
under any loss. However, the rate of compensation should be devised judiciously as that is the
basis of justice and in the present case, the workmen had spent more than a decade waiting for
justice, thus, the compensation should have been higher.