2005 (12) TMI 582 - SC - Indian Laws

Termination of the service of the workman - Non- Ferrous Mill - Whether direction to pay backwages consequent upon a declaration that a workman has been retrenched in violation of the provisions of Section 6-N of the U.P. Industrial Disputes Act 1947 (equivalent to Section 25F of the Industrial Disputes Act 1947) as a rule ? - HELD THAT - In the instant case we have noticed hereinbefore that the establishment of the Appellant wherein the Respondent could be directed to be reinstated had been sold on 26.3.1993. In that view of the matter Section 6 of the U.P. Industrial Disputes Act would apply in terms whereof compensation will be payable in the same manner as if he was retrenched under Section 6N thereof. It is not in dispute that the Respondent did not raise any plea in his written statement that he was not gainfully employed during the said period. It is now well-settled by various decisions of this Court that although earlier this Court insisted that it was for the employer to raise the aforementioned plea but having regard to the provisions of Section 106 of the Indian Evidence Act or the provisions analogous thereto such a plea should be raised by the workman. The only question is whether the Respondent would be entitled to back wages from the date of his termination of service till the aforementioned date. The decision to close down the establishment by the State of Uttar Pradesh like other public sector organizations had been taken as far back on 17.11.1990 wherefor a GO had been issued. It had further been averred which has been noticed hereinbefore that the said GO has substantially been implemented. Thus we are of the opinion that interest of justice would be subserved if the back wages payable to the Respondent for the period 1.4.1987 to 26.3.1993 is confined to 25% of the total back wages payable during the said period. The judgments and orders of the Labour Court and the High Court are set aside and it is directed that the Respondent herein shall be entitled to 25% back wages of the total back wages payable during the aforesaid period and compensation payable in terms of Section 6-N of the U.P. Industrial Disputes Act. If however any sum has been paid by the Appellant herein the same shall be adjusted from the amount payable in terms of this judgment. Thus the appeal is allowed in part and to the extent mentioned hereinbefore.

Summary

Issues Involved:
1. Whether the direction to pay back wages is automatic upon a declaration of wrongful retrenchment under Section 6-N of the U.P. Industrial Disputes Act.
2. Whether the respondent was entitled to back wages and reinstatement despite the closure of the appellant's establishment.
3. Whether the respondent had worked for 240 days in the twelve months preceding his termination.
4. Whether the respondent was gainfully employed during the period post-termination.

Issue-wise Detailed Analysis:

1. Automatic Payment of Back Wages:
The primary issue was whether the direction to pay back wages is automatic upon a declaration that a workman has been retrenched in violation of Section 6-N of the U.P. Industrial Disputes Act. The Court noted that although traditionally, full back wages were granted upon such a declaration, a more pragmatic approach is now taken. The Court emphasized that payment of back wages is not automatic and depends on the specific facts and circumstances of each case. The Labour Court and the High Court must consider various factors, including whether the workman remained unemployed or was gainfully employed during the period in question.

2. Entitlement to Back Wages and Reinstatement:
The respondent's entitlement to back wages and reinstatement was questioned due to the closure of the appellant's establishment. The Court acknowledged that the establishment was sold on 26.3.1993 and that a Government Order (GO) had been issued on 17.11.1990 to close down the establishment. The Court concluded that reinstatement was not feasible due to the closure. Therefore, the respondent was entitled to compensation as per Section 6-N of the U.P. Industrial Disputes Act and 25% of the total back wages for the period from 1.4.1987 to 26.3.1993.

3. Completion of 240 Days of Service:
The Court examined whether the respondent had worked for 240 days in the twelve months preceding his termination. The Labour Court had relied on a certificate issued by the appellant to conclude that the respondent had completed 240 days of service. However, the Court found that neither the Labour Court nor the High Court had properly considered whether the respondent had indeed completed 240 days of service in the twelve months preceding his termination. The Court emphasized the importance of this aspect in determining the respondent's entitlement to back wages.

4. Gainful Employment Post-Termination:
The Court addressed whether the respondent was gainfully employed during the period post-termination. The respondent did not plead that he was unemployed during this period. The Court held that the burden of proof lies on the employee to show that he was not gainfully employed. Since the respondent did not provide any evidence of unemployment, the Court concluded that he was not entitled to full back wages. Instead, the Court awarded 25% of the total back wages for the period from 1.4.1987 to 26.3.1993.

Conclusion:
The Supreme Court allowed the appeal in part, setting aside the judgments and orders of the Labour Court and the High Court. The respondent was awarded 25% of the total back wages for the period from 1.4.1987 to 26.3.1993 and compensation under Section 6-N of the U.P. Industrial Disputes Act. The Court emphasized that payment of back wages is not automatic and must be determined based on the specific facts and circumstances of each case.