High Court reiterates that reinstatement with full back wages is not automatic for casual or daily-wage workers terminated in violation of Section 25-F of the Industrial Disputes Act; monetary compensation may instead be awarded. The judgment follows the binding Supreme Court precedents and reaffirms the narrow scope of Article 226 judicial review over industrial tribunal awards. Precedent value: Binding within Andhra Pradesh, persuasive elsewhere.
Summary
| Category | Data |
|---|---|
| Case Name | WP/29145/2016 of M/s. Kovur Co-Operative Sugar Factory Ltd., Vs The State of Andhra Pradesh, CNR APHC010773752016 |
| Date of Registration | 29-08-2016 |
| Decision Date | 16-10-2025 |
| Disposal Nature | DISMISSED NO COSTS |
| Judgment Author | MAHESWARA RAO KUNCHEAM |
| Court | High Court of Andhra Pradesh |
| Bench | Single Judge |
| Precedent Value | Binding within jurisdiction; persuasive for other High Courts and tribunals |
| Overrules / Affirms | Affirms Supreme Court precedent on reinstatement and compensation for daily wagers |
| Type of Law | Labour/Service Law; Industrial Disputes Act |
| Questions of Law | Whether reinstatement with full back wages is mandatory upon procedural violation of Section 25-F ID Act for daily wagers |
| Ratio Decidendi |
The High Court held that reinstatement with back wages is not automatic for daily wage/workmen whose termination is only procedurally defective under Section 25-F of the Industrial Disputes Act; monetary compensation may be substituted to meet the ends of justice. This is particularly true when the employer is facing financial duress and the nature of employment is not permanent. The Court relied upon several Supreme Court decisions, which make it clear that compensation is often more appropriate than reinstatement, especially after a substantial time lapse. Judicial review under Article 226 over Tribunal awards is narrow and does not include reappreciation of facts unless there is manifest error. The plea of financial crisis does not absolve a state-controlled employer of liability to pay compensation. |
| Judgments Relied Upon |
|
| Logic / Jurisprudence / Authorities Relied Upon by the Court |
Reinstatement with back wages is not a mechanical consequence of procedural violation in termination under Section 25-F, especially for daily wagers or casual workers. Monetary compensation suffices and accords with Supreme Court jurisprudence. Judicial review does not entail reappreciation of evidence absent jurisdictional error. State/public sector undertakings’ plea of financial incapacity does not negate statutory liability. |
| Facts as Summarised by the Court |
The workman was a NMR Security Guard at the sugar factory since 1989. Due to the factory’s closure for two years owing to financial issues and government directions, 281 NMRs were terminated by proceedings dated 04.04.2005. The termination was challenged first in High Court writ proceedings, then as an industrial dispute per the direction of the Division Bench. The Tribunal awarded monetary compensation of Rs.50,000/- instead of reinstatement. Both the workman (for reinstatement) and factory (against compensation) challenged the award; both writ petitions were dismissed, and the Tribunal’s compensation award was confirmed. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts, tribunals, and quasi-judicial authorities within Andhra Pradesh |
| Persuasive For | Other High Courts, Industrial Tribunals, and Labour Courts outside Andhra Pradesh; authoritative citation for compensation v. reinstatement |
| Follows |
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What’s New / What Lawyers Should Note
- Reiterates that for daily wage/casual workers, violation of Section 25-F ID Act does not automatically entitle reinstatement; compensation may be considered adequate.
- Cites and applies authoritative Supreme Court precedents to affirm substitution of reinstatement with monetary compensation, especially after prolonged periods and non-functioning of the employer.
- Limits scope of Article 226 review over Tribunal awards to manifest error, jurisdictional excess, or violation of natural justice; factual findings generally unreviewable.
- Clarifies that state/public sector entities cannot cite financial incapacity to avoid statutory liabilities towards workers.
Summary of Legal Reasoning
- The Court first summarized the factual context: the closure of the sugar factory, termination of 281 NMR workers, and the shifting of the dispute from High Court to industrial dispute proceedings per Division Bench directions.
- The Tribunal’s decision to deny reinstatement but award compensation was examined.
- The Court relied on Supreme Court precedents (Bharat Sanchar Nigam Ltd. v. Bhurumal, Metropolitan Transport Corporation v. Venkatesan, Coal India Ltd. v. Ananta Saha) which state that reinstatement with back wages is not automatic for daily wage workers even if termination is illegal solely due to breach of Section 25-F.
- It confirmed the rationale: daily wagers do not have an entitlement for regularization, and after such a time lapse or financial non-viability of the employer, only compensation is just.
- The scope of writ jurisdiction under Article 226 was clarified with reference to Shamshad Ahmad v. Tilak Raj Bajaj and Ajay Singh v. Khacheru: High Courts cannot reappreciate evidence or substitute factual findings of the Tribunal unless there is manifest error or excess of jurisdiction.
- The argument of financial crisis by state/public sector undertakings was rejected, following Kapila Hingorani and Haryana State Minor Irrigation Tubewells Corp. cases, holding that State entities cannot evade statutory obligations to workers.
Arguments by the Parties
Petitioner (Workman):
- Appointed as NMR Security Guard in a regular vacancy, worked for more than 240 days in a year.
- Termination was in violation of Section 25-F of the Industrial Disputes Act.
- Sought reinstatement with all attendant benefits and full back wages.
Petitioner (Sugar Factory):
- Workman was only a casual worker/NMR, not a permanent employee.
- Factory had not functioned since 2003 and faced severe financial difficulties.
- Financial crisis precluded any payment; reinstatement was not possible.
- (During hearing, did not press the jurisdictional argument.)
Factual Background
The workman, a Nominal Muster Roll (NMR) Security Guard, was engaged by the sugar factory from 1989 and worked for over 240 days in a calendar year. Due to prolonged closure and financial duress, the factory dispensed with the services of 281 NMR employees, including the workman, effective 15.04.2005. The termination was challenged: first via a writ petition, then as an industrial dispute after a Division Bench of the High Court directed such course. The Labour Court Tribunal awarded Rs. 50,000/- as compensation in lieu of reinstatement, which was challenged by both parties in writ petitions before the High Court.
Statutory Analysis
- Section 25-F of the Industrial Disputes Act, 1947: The Court discussed the requirement for notice and retrenchment compensation as a prerequisite for lawful termination.
- Article 226 of the Constitution of India: The scope of judicial review over tribunal/industrial adjudicator decisions was analyzed and found to be limited to manifest error, violation of natural justice, or jurisdictional excess.
- Article 12 and Part IV of the Constitution (Directive Principles): Cited only in passing to reinforce State/public sector liability for statutory and welfare obligations.
Alert Indicators
- ✔ Precedent Followed – The High Court has faithfully followed binding Supreme Court precedents on compensation in lieu of reinstatement and the limits of judicial review over industrial tribunal awards.