Court Affirms Labor Tribunal's Decision Awarding Compensation for Illegal Retrenchment under Industrial Disputes Act
In a landmark decision, the Rajasthan High Court, Jaipur Bench, presided by Justice Anand Sharma, upheld the Labor Court's award of monetary compensation instead of reinstatement for a daily wager whose termination was deemed illegal under Section 25F of the Industrial Disputes Act, 1947. The judgment, delivered on January 6, 2026, in the case of Satya Narain v. Judge, Central Industrial Tribunal, Kota Rajasthan, emphasizes the appropriateness of compensation over reinstatement in cases involving short-term, ad hoc employment.
Satya Narain, the petitioner, was engaged as a daily wage worker in 1997 and was terminated in 1998 without compliance with Section 25F, which mandates certain procedures before retrenchment. Despite the Labor Court's finding of illegal termination in 2010, it awarded Narain a compensation of Rs. 60,000, a decision he contested, seeking reinstatement.
Counsel for Narain argued that the finding of illegal retrenchment should have resulted in automatic reinstatement with continuity of service. They relied on precedents such as Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya to support their stance. However, the respondent's counsel countered, highlighting Narain’s short-term, non-regular employment and the significant time lapse since his termination, arguing that monetary compensation was more appropriate.
The High Court, after reviewing the submissions, aligned with the Labor Court's decision, citing Supreme Court precedents. It noted that reinstatement is not an automatic remedy for violation of Section 25F, particularly when the worker's employment was brief and adjudicated after a long delay. The Court referenced cases like Bharat Sanchar Nigam Ltd. v. Bhurumal and Amit Kumar Dubey v. M.P.P.K.V.V. Co. Ltd., which advocate for monetary compensation in similar scenarios.
Justice Sharma asserted that reinstating a daily wager after such a prolonged period could disrupt the employer’s operational stability and is disproportionate to the circumstances. The Court emphasized that monetary compensation provides a fair and just outcome, considering the elapsed time and the nature of employment.
The judgment concluded by modifying the compensation amount, directing the respondent to pay Narain Rs. 1.5 lakh per year of service within eight weeks, with a 9% annual interest in case of default. The decision reaffirms the evolving judicial stance on balancing justice for workers with practical considerations for employers, particularly in cases of non-regular employment.
Bottom Line:
Termination of a daily wager without compliance with Section 25F of the Industrial Disputes Act, 1947, does not automatically entitle the workman to reinstatement. Monetary compensation is an appropriate relief considering the nature of employment, length of service, and time elapsed since termination.
Statutory provision(s): Industrial Disputes Act, 1947 Section 25F, Constitution of India - Articles 226 and 227
