Reinstatement Not Automatic Remedy For Illegal Termination, Court Awards Lumpsum Compensation; MP HC

Background

Surendra Kumar joined as a steno-typist with MPMKVV in 2007. However, in 2009, his services were abruptly terminated through an oral order. After six years (in 2015) he approached the MP HC through a writ petition. However, the petition was dismissed, and the court allowed him to raise an industrial dispute instead. Accordingly, he approached the labour court, arguing that his termination was illegal, and seeking reinstatement.

The labour court passed an award in 2023 holding that the termination was indeed illegal. The court held that as per Section 25B, Industrial Disputes Act, 1947, he ought to have been provided adequate compensation and notice before retrenchment, as he had served for over 240 days in the preceding year. Aggrieved, the employer filed a writ petition challenging this order.

Arguments

The employer, MPMKVV, argued that the labour court was wrong in asserting that Surendra Kumar had worked continuously for 240 days. They argued that he was only engaged from 27 June 2006 to 31 December 2006 and 27 February 2007 to 27 August 2007. Thus, they argued, that there was no retrenchment as defined under the Industrial Disputes Act. They further submitted that even if the termination was illegal, reinstatement and back wages cannot automatically be granted to a daily wage employee. Relying on Jeetubha Khansangji Jadeja v. Kutchh District Panchayat, Civil Appeal No. 6890 of 2022, they argued that monetary compensation should be preferred over reinstatement in such situations.

Surendra Kumar argued that MPMKVV had filed to produce any records to prove that he had not worked there for 240 days in a year continuously. He submitted that the burden of proof is on the employer since they are in possession of the relevant records. Relying on Union of India v. Ex. Maj. Sudarshan Gupta [Civil Appeal No.4418 of 2004], he argued that the employer not disclosing such documents should lead to an adverse inference against them. He further submitted that the labour court rightly drew such an inference and thus had correctly awarded reinstatement with back wages.

Court's Reasoning

Firstly, the court agreed with the labour court's finding that the termination was illegal. The court also noted that the employer, despite having all the relevant documents and evidence, did not produce any such records. The court also noted that the employer failed to prove that Surendra Kumar did not work continuously for 240 days. Thus, the court agreed that an adverse inference ought to be drawn.

Further, the court held that reinstatement cannot be an automatic consequence of illegal termination, especially if it involves daily wage or contractual workers. The court noted that this case involved procedural defects in termination (such as non-compliance with Section 25F of the Industrial Disputes Act, 1947). Thus, citing BSNL v. Bhurumal S.L.P.(Civil) No. 14572/2012, the court held that in such cases, compensation (instead of reinstatement) would be a more appropriate remedy. The court noted that compensation is adequate relief for workers with short term employment. Citing Hari Nandan Prasad v. Food Corporation of India, the court explained that reinstatement cannot be granted mechanically, and it depends on several factors such as nature of employment, the time elapsed since termination, and even the availability of posts.

Thus, the court partially allowed the writ petition. The court held that although Surendra Kumar's termination was illegal, reinstatement is not the appropriate remedy due to the contractual nature of his appointment and the time passed since his termination. Instead, the court award Rs. 5 Lakh as lumpsum compensation.

Date: 12/6/2025

Case No.: Misc. Petition No.4540 of 2023

Counsel for the Petitioner: Mr. Ravi Jain

Counsel for the Respondent: Mr. Jay Nandan Singh Sengar