Reinstatement and Re-Employment Rights Under Industrial Disputes Act: A Supreme Court Ruling

The case of Management of the Barara Cooperative Marketing-cum-Processing Society Ltd. vs. Workman Pratap Singh revolves around the issue of reinstatement and re-employment rights under the Industrial Disputes Act, 1947. The Supreme Court, through this judgment, clarifies the applicability of Section 25(H) of the Act concerning the right of a terminated employee to seek re-employment.

The appellant, a cooperative marketing society, employed the respondent as a peon since July 1, 1973. However, the respondent’s employment was terminated on July 1, 1985. The respondent then sought redress through the Labour Court, which declared his termination unlawful and granted him lump sum compensation of Rs.12,500 in lieu of reinstatement.

Background of the Case

The respondent accepted the compensation but later filed a representation claiming re-employment under Section 25(H) of the Industrial Disputes Act when the appellant regularized two other peons in 1992. This request was denied by the employer.

The respondent pursued legal recourse through an industrial reference, which was adjudicated in favor of the appellant by the Labour Court. However, the Single Judge of the High Court set aside this decision and directed the employer to reinstate the respondent. The Division Bench upheld this ruling, leading to an appeal before the Supreme Court.

Petitioner’s Arguments

The appellant contended that:

• The respondent had already accepted compensation in lieu of reinstatement, and thus, the matter had reached finality.
• Section 25(H) of the Industrial Disputes Act was not applicable as no new vacancies were being filled; the employer had merely regularized existing employees.
• The respondent’s claim for re-employment was time-barred, given that he had been terminated in 1985.

Respondent’s Arguments

The respondent asserted that:

• Since the appellant had regularized the services of two peons, he had a right to claim re-employment.
• Section 25(H) mandates an opportunity for re-employment to retrenched workers before hiring new employees.
• The High Court had rightly directed the appellant to reinstate him based on equitable grounds.

Supreme Court’s Observations and Ruling

The Supreme Court ruled in favor of the appellant, setting aside the High Court’s orders and restoring the Labour Court’s decision. The Court highlighted the following key points:

1. Acceptance of Compensation Ends the Right to Reinstatement

The Court noted:

“The respondent having accepted the compensation awarded to him in lieu of his right of reinstatement in service, the said issue had finally come to an end.”

2. Section 25(H) Does Not Apply

The Court clarified:

“Section 25(H) of the ID Act applies to cases where the employer has proposed to take into their employment any persons to fill up the vacancies.”

The Court emphasized that mere regularization of an existing employee does not amount to filling up a vacancy.

3. No Fresh Employment, Only Regularization

The judgment further explained:

“There lies a distinction between ‘employment’ and ‘regularization of service’. Employment signifies fresh hiring, whereas regularization means confirming an existing employee’s status.”

Conclusion

In allowing the appeal, the Supreme Court reaffirmed the principle that once compensation is accepted in lieu of reinstatement, the issue is concluded. Furthermore, Section 25(H) does not apply where an employer is not hiring new employees but merely regularizing existing ones.

This ruling clarifies the rights of retrenched workers and the limitations of re-employment provisions under industrial law.

Petitioner Name: Management of the Barara Cooperative Marketing-cum-Processing Society Ltd..
Respondent Name: Workman Pratap Singh.
Judgment By: Justice Abhay Manohar Sapre, Justice Indu Malhotra.
Place Of Incident: Punjab & Haryana.
Judgment Date: 02-01-2019.

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