Supreme Court Overturns Labour Court's Award: Reinstatement and Back Wages Denied

The Supreme Court in M/s. Creative Garments Ltd. v. Kashiram Verma delivered a significant judgment concerning the reinstatement of a workman and the award of back wages. The case involved an appeal filed by the management challenging the order of the Bombay High Court, which upheld the Labour Court’s decision to reinstate the workman with continuity of service and full back wages.

The Supreme Court, after considering the workman’s conduct and his failure to report for duty despite several opportunities, ruled in favor of the employer and set aside the Labour Court’s award. This judgment establishes a crucial precedent regarding the responsibility of a workman to accept reinstatement and the limitations of granting back wages.

Background of the Case

Kashiram Verma, the respondent, was employed with M/s. Creative Garments Ltd. and was dismissed from service on December 8, 1997. Challenging his termination, he approached the Labour Court, which, on October 28, 2005, directed his reinstatement with full back wages.

The management challenged this decision before the Bombay High Court. A Single Bench dismissed the petition in 2006, and the Division Bench upheld the same in 2010. Consequently, the management filed an appeal before the Supreme Court.

Arguments by the Parties

Arguments by the Appellant (M/s. Creative Garments Ltd.)

The workman was repeatedly given opportunities to rejoin duty, but he failed to report.
The company sent multiple letters, including notices via registered post and courier, requesting the workman to resume work.
The workman’s non-response indicated that he was gainfully employed elsewhere and was not interested in reinstatement.
The award of back wages was unjustified as the workman never joined duty despite being called upon.

Arguments by the Respondent (Kashiram Verma)

The workman contended that his termination was illegal and that the Labour Court’s award was just and proper.
He argued that the employer had failed to ensure proper communication regarding his reinstatement.
The High Court had already upheld the Labour Court’s decision, and there was no reason for interference.

Supreme Court’s Observations

Failure of Workman to Join Duty

The Court noted that the management had sent multiple notices to the workman, urging him to report for duty. Despite receiving these communications, he never responded. The judgment observed:

“The conduct of the respondent workman in not reporting for duty despite repeated opportunities clearly establishes that he is no more interested in employment.”

Rejection of Back Wages

The Supreme Court ruled that since the workman did not join duty despite being offered reinstatement, he could not claim back wages. It stated:

“An award of back wages is not automatic and depends upon various factors. The workman, by refusing to rejoin despite being offered employment, cannot claim back wages as a matter of right.”

Address of the Workman

The Court also pointed out that the workman had not provided a permanent address, which made it difficult for the employer to serve him notices. The judgment observed:

“Effective relief can be granted to a workman only if the permanent address of the workman is furnished in the pleadings.”

Final Judgment

The Supreme Court ruled:

The appeal was allowed, and the Labour Court’s award was set aside.
The High Court’s decision upholding the Labour Court’s award was also quashed.
The direction for reinstatement and back wages was annulled.
A sum of ₹10,000, which had been deposited by the appellant for the workman’s travel expenses, was directed to be refunded.

Impact of the Judgment

Clarifies Employer’s Obligations: The ruling reinforces that an employer’s duty ends when a genuine opportunity for reinstatement is provided.
Responsibility on Workmen: Workmen must report for duty if reinstated; failure to do so affects their right to claim back wages.
Legal Requirement for Permanent Address: The judgment emphasizes that workmen must furnish permanent addresses for proper communication in employment disputes.

Conclusion

The Supreme Court’s decision in M/s. Creative Garments Ltd. v. Kashiram Verma establishes a crucial precedent on reinstatement and back wages. The ruling clarifies that workmen cannot claim financial benefits while refusing employment and places a responsibility on employees to maintain proper communication in disputes. This judgment will serve as a guiding principle in future labor law cases.

Petitioner Name: M/s. Creative Garments Ltd..
Respondent Name: Kashiram Verma.
Judgment By: Justice Abhay S. Oka, Justice Rajesh Bindal.
Place Of Incident: Mumbai.
Judgment Date: 16-03-2023.

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