The Andhra Pradesh High Court has reaffirmed Supreme Court precedent that, where a daily wage worker is terminated in violation of Section 25-F of the Industrial Disputes Act, reinstatement is not automatic—especially if the establishment is shut or non-functional—and monetary compensation may suffice. This judgment upholds prevailing Supreme Court authority, emphasizing limited judicial review under Article 226 and clarifying the non-availability of reinstatement in such factual contexts. The decision binds subordinate courts in Andhra Pradesh and has persuasive value elsewhere.
Summary
| Category | Data |
|---|---|
| Case Name | WP/32481/2016 of Shaik Baba, Vs The Kovur Co-Operative Sugar Factory Limited, CNR APHC010663982016 |
| Date of Registration | 22-09-2016 |
| Decision Date | 16-10-2025 |
| Disposal Nature | DISMISSED NO COSTS |
| Judgment Author | JUSTICE MAHESWARA RAO KUNCHEAM |
| Court | High Court of Andhra Pradesh |
| Bench | Single Judge Bench |
| Precedent Value | Binding authority within Andhra Pradesh; persuasive elsewhere |
| Overrules / Affirms |
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| Type of Law | Labour and Service Law (Industrial Disputes Act, 1947) |
| Questions of Law |
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| Ratio Decidendi |
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| Judgments Relied Upon |
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| Logic / Jurisprudence / Authorities Relied Upon by the Court |
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| Facts as Summarised by the Court |
The petitioner/Workman was an NMR Security Guard appointed in 1989 by the respondent/Sugar Factory on nominal muster roll basis. His services, along with 280 other NMRs, were terminated by the Sugar Factory in 2005 on grounds of operational shutdown and financial distress. The workman challenged the termination and sought reinstatement and back wages. The Labour Court awarded Rs.50,000 as compensation instead of reinstatement. Both the Workman and the Sugar Factory challenged the award in writ petitions. The Court found the Sugar Factory had not functioned for years, the worker was not permanent, and followed binding Supreme Court precedent to uphold compensation in lieu of reinstatement. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts in Andhra Pradesh |
| Persuasive For | Other High Courts, Supreme Court |
| Follows |
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What’s New / What Lawyers Should Note
- Reaffirms that monetary compensation (not reinstatement) is appropriate for daily wage/casual workers terminated in violation of Section 25-F where the employer establishment is shut or non-functional.
- Clarifies that permanent status for workmen is not presumed without supporting evidence/documentation.
- Confirms that High Courts exercising writ jurisdiction under Article 226 should not reappreciate evidence or interfere with Tribunal awards unless there is manifest illegality or jurisdictional error.
- Asserts that government undertakings falling under Article 12 cannot evade statutory liabilities towards terminated employees by citing financial difficulties.
- Cites Supreme Court’s approach that reinstatement is not an automatic remedy for illegal termination of daily wagers, especially after significant passage of time.
Summary of Legal Reasoning
- The Court first examined the facts: the workman was an NMR/casual Security Guard terminated as part of downsizing when the Sugar Factory was closed.
- The Sugar Factory had not operated since 2003, and the government sought revival and privatization, involving downsizing and Voluntary Retirement Scheme; 281 NMRs were let go.
- The Tribunal found the worker was not a permanent employee and awarded only compensation.
- The Court cited Metropolitan Transport Corporation v V.Venkatesan, Coal India Ltd v Ananta Saha, and Bharat Sanchar Nigam Ltd v Bhurumal, holding that reinstatement is not the automatic or necessary remedy for violations of Section 25-F regarding daily wage workers.
- The reasoning: even if procedural illegality in termination is found (e.g., non-compliance with Section 25-F), only compensation may be warranted, especially when the employer is closed/shut down.
- Relying on Kapila Hingorani v State of Bihar and Haryana State Minor Irrigation Tubewells Corporation v G.S. Uppal, the Court clarified that state entities cannot plead insolvency or financial distress to avoid statutory and constitutional duties to workers.
- Regarding writ intervention, the Court restated principles from Shamshad Ahmad v Tilak Raj Bajaj and Ajay Singh v Khacheru: High Courts’ writ powers are limited and do not include reappreciation of evidence or correction of mere factual/legal errors unless they amount to manifest errors, natural justice violations, or jurisdictional excess.
- As there were no jurisdictional errors or manifest unfairness, and both parties did not contest the essential facts, the petitions were dismissed.
Arguments by the Parties
Petitioner (Workman):
- Claimed appointment as NMR Security Guard against a regular vacancy, with continuous service for over 240 days each year.
- Alleged termination was in violation of Section 25-F of the Industrial Disputes Act, 1947.
- Sought reinstatement with all attendant benefits and back wages.
- Argued that the Sugar Factory’s financial distress does not relieve it from statutory obligations as a State entity under Article 12.
Respondent (Sugar Factory):
- Submitted the factory had been non-functional since 2003, and thus reinstatement was unworkable.
- Asserted the workman was a casual/NMR worker, not a permanent employee.
- Cited severe financial crisis as preventing payment to the workman.
- Initially raised (but did not press) a jurisdictional challenge.
Factual Background
The petitioner worked as a Nominal Muster Roll (NMR) Security Guard in the Sugar Factory from 1989, serving for more than 240 days each year. On 15.04.2005, the services of 281 NMRs, including the petitioner, were terminated as the Sugar Factory had not been functioning for two years due to the absence of government permissions and severe financial losses. The petitioner and others challenged this action; after writ petition and intra-court appeal, they were directed to approach the Labour Court. The Labour Court awarded compensation in lieu of reinstatement. Both the Workman (demanding reinstatement and back wages) and the Sugar Factory (challenging even the compensation) filed writ petitions challenging the award.
Statutory Analysis
- Industrial Disputes Act, 1947: Section 25-F, dealing with the conditions precedent to retrenchment, was central. The Court interpreted Supreme Court precedent holding that procedural non-compliance with Section 25-F for daily wage/casual workers does not automatically entitle the worker to reinstatement; monetary compensation may suffice.
- Constitution of India: Article 12 (definition of ‘State’) and Article 226 (writ jurisdiction). The Sugar Factory was conclusively found to be under Article 12, attracting constitutional obligations. The judgment reaffirmed that Article 226 jurisdiction is limited and supervisory, not appellate.
Dissenting / Concurring Opinion Summary
No dissenting or concurring opinions were recorded in the judgment.
Procedural Innovations
No new procedural precedents, changes to evidence requirements, or suo motu directions were issued in the judgment.
Alert Indicators
- ✔ Precedent Followed – The Court expressly followed and applied established Supreme Court precedent on the relief available for terminated daily wage/casual workers and the limits of writ jurisdiction over Tribunal awards.