Labour Court’s Reinstatement Order and Backwages: Prem Narain vs. M/S Swadeshi Cotton Mills

The case of PREM NARAIN vs. M/S SWADESHI COTTON MILLS, JUHI & ANR. revolves around an employment termination dispute. The Supreme Court examined whether the High Court was justified in setting aside a Labour Court award on reinstatement and backwages.

Background of the Case

The appellant, Prem Narain, was terminated from service by the respondent, Swadeshi Cotton Mills, on October 31, 1991. He contested his termination before the Labour Court, Kanpur, which ruled in his favor and set aside the termination. This award was published on October 4, 1997.

However, by the time the award was issued, the appellant had already reached the age of superannuation on July 1, 1997. This raised the question of whether he was entitled to reinstatement and backwages.

Legal Proceedings

The Management of Swadeshi Cotton Mills did not challenge the Labour Court’s ruling on reinstatement. Instead, their only contention before the High Court was regarding their liability to pay backwages.

Despite this, the High Court set aside the Labour Court’s entire award, including the reinstatement order, on the ground that the appellant had already attained superannuation.

Feeling aggrieved, the appellant approached the Supreme Court.

Supreme Court’s Judgment

The Supreme Court criticized the High Court’s approach:

“We fail to understand the reasoning and approach made by the High Court. Once the Management does not have any grievance on the award on reinstatement and the grievance was limited only to backwages, the High Court should not have set aside the award as such. Appropriate orders on backwages alone were permissible at the hands of the High Court.”

The Supreme Court held that since the reinstatement was not challenged by the Management, the High Court had no basis to set it aside. It should have only considered the issue of backwages.

Relief Granted to the Appellant

The Supreme Court modified the High Court’s ruling and directed:

• The appellant was entitled to 50% backwages from the date of termination (October 31, 1991) until the date of superannuation (July 1, 1997).
• He would be deemed to have continued in service and superannuated on July 1, 1997, for all other benefits.
• All eligible benefits due to him under this judgment must be computed and paid within three months.
• If payment is not made within three months, an interest rate of 18% per annum will apply from the date of termination until the date of payment.

Final Decision

The Supreme Court set aside the High Court’s order and reinstated the Labour Court’s decision with modifications regarding backwages.

Conclusion

This judgment is a significant ruling on employment termination disputes. It reinforces that courts should not disturb uncontested findings and that employees should not be deprived of lawful benefits due to procedural delays. The Supreme Court ensured justice by granting partial backwages and directing timely compensation.

The appeal was allowed with no order as to costs.

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Download Judgment: Prem Narain vs MS Swadeshi Cotton Supreme Court of India Judgment Dated 15-02-2016-1741852710752.pdf