Employment Termination Dispute: Supreme Court Upholds Compensation Over Reinstatement

The case of Dharamraj Nivrutti Kasture v. Chief Executive Officer and Anr. deals with a long-standing employment dispute involving unfair termination. The Supreme Court examined whether the appellant, who was appointed as a daily-wage peon and later terminated, should be reinstated or compensated. The Court upheld the High Court’s decision of awarding monetary compensation instead of reinstatement, considering the extended period the appellant remained out of service.

Background of the Case

The appellant, Dharamraj Nivrutti Kasture, was employed as a daily-wage peon by the Zilla Parishad on March 23, 1983. His appointment was on a temporary basis for two months, but he continued working until December 31, 1987, when his services were discontinued. He subsequently filed a complaint under the Maharashtra Recognition of Trade Unions & Prevention of Unfair Labour Practices Act, 1971, alleging unfair termination. He argued that he had completed 240 days in each year of employment, making his termination illegal under Section 25-F of the Industrial Disputes Act, 1947.

Legal Journey of the Case

Labour Court’s Verdict

The Labour Court, in its decision dated October 23, 2000, ruled in favor of the appellant, ordering his reinstatement with continuity of service. However, it denied back wages, reasoning that he had already received 75% of his last drawn wages as per an interim order for nearly 12 years without work.

Industrial Tribunal’s Decision

The Zilla Parishad challenged the Labour Court’s order before the Industrial Tribunal, but the Tribunal upheld the Labour Court’s decision on January 22, 2002, dismissing the Zilla Parishad’s revision application.

High Court’s Ruling

The Zilla Parishad further appealed to the Bombay High Court, which overturned the Tribunal’s decision on January 7, 2016. The High Court ruled that reinstating the appellant was not justified because:

• His initial appointment was in violation of service rules and public employment procedures.
• The Labour Court had not made any concrete findings regarding unfair labor practices.
• The appellant had already been out of service for over 30 years.

Instead of reinstatement, the High Court awarded him Rs. 50,000 in compensation as a final settlement.

Arguments of the Parties

Petitioner’s (Appellant’s) Argument

• The appellant argued that he had worked for more than 240 days each year and was terminated without following the due procedure of the Industrial Disputes Act.
• He contended that the termination amounted to an unfair labor practice and warranted reinstatement.
• The appellant sought continuity of service with all employment benefits.

Respondent’s (Zilla Parishad’s) Argument

• The Zilla Parishad argued that the appellant was appointed on a temporary basis, and his termination was lawful.
• They contended that his appointment was made without following proper recruitment rules.
• Given that the appellant was out of service for over 30 years, reinstatement was impractical.

Supreme Court’s Analysis

Key Observations

The Supreme Court carefully reviewed the facts and the lower courts’ findings. The following key aspects were considered:

• The appellant had not been in service for over three decades.
• He had already received financial relief by being paid 75% of his last drawn salary for nearly 12 years.
• His initial appointment was not in accordance with proper recruitment rules, making reinstatement questionable.

Judges’ Verbatim Observations

The Court noted:

“Considering the facts and circumstances of the case and the fact that the appellant has been out of employment for more than three decades, we are not inclined to interfere with the order of the High Court declining reinstatement.”

Instead of reinstatement, the Court enhanced the compensation amount from Rs. 50,000 to Rs. 1,50,000, stating:

“The compensation of Rs.50,000/- awarded to the appellant is enhanced to Rs.1,50,000/- (Rupees One Lakh Fifty Thousand).”

The Court further directed that since the Zilla Parishad had already paid Rs. 50,000 in compliance with the High Court’s order, only the balance amount of Rs. 1,00,000 should be paid within eight weeks.

Final Judgment

The Supreme Court partly allowed the appeal, modifying the High Court’s order by increasing the compensation but rejecting the plea for reinstatement:

“In the result, the impugned order is modified to the extent indicated above and the appeal is partly allowed. There shall be no order as to costs.”

Significance of the Judgment

This ruling provides crucial guidance on employment disputes, particularly regarding reinstatement versus compensation. The judgment reinforces:

• That reinstatement is not always a suitable remedy, especially in cases where long periods have elapsed.
• The importance of following proper recruitment procedures to prevent disputes over employment rights.
• The balance between ensuring fair compensation for employees and maintaining administrative discipline in public employment.

Conclusion

The case of Dharamraj Nivrutti Kasture v. Chief Executive Officer and Anr. is a landmark ruling in Indian labor law. It highlights that courts may prefer compensation over reinstatement in cases where a significant time gap exists. This judgment serves as a reminder to both employees and employers to adhere to proper employment practices to avoid prolonged legal battles.

Petitioner Name: Dharamraj Nivrutti Kasture.
Respondent Name: Chief Executive Officer and Anr..
Judgment By: Justice R. Banumathi, Justice A.S. Bopanna.
Place Of Incident: Maharashtra.
Judgment Date: 31-07-2019.

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