West Coast Refrigeration and Food Engineering (Pvt.) Ltd. v. The Presiding Officer Labour Court, Kollam and Gracy M.P.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE AMIT RAWAL** **WEDNESDAY, THE 7[TH] DAY OF DECEMBER 2022 / 16TH AGRAHAYANA, 1944** ## **WP(C) NO. 15524 OF 2019** ## **PETITIONER:** WEST COAST REFRIGERATION AND FOOD ENGINEERING(PVT) LTD. REGISTERED OFFICE, S17, S18, GROUND FLOOR, GCDA SHOPPING COMPLEX, MARINE DRIVE, KOCHI-682031, REPRESENTED BY ITS SENIOR MANAGER, SANAL KUMAR, AGED 44 YEARS, SON OF K.KUTTIKRISHNAN. BY ADVS. P.BENNY THOMAS SRI.B.ASHOK SHENOY SRI.P.S.GIREESH SRI.RIYAL DEVASSY ## **RESPONDENTS:** 1 THE PRESIDING OFFICER LABOUR COURT, KOLLAM-691013. 2 GRACY M.P, WIFE OF JOY, THURUTHELKKALAM HOUSE, ERAMALLUR P.O, CHERTHALA-688537. BY ADV SMT.RESMI NANDANAN SMT.RASHMI.K.M., SR.GOVERNMENT PLEADER THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 07.12.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C)No.15524/2019 2 ## **JUDGMENT** This Writ Petition is preferred by West Coast Refrigeration and Food Engineering (Pvt.) Ltd. against the Labour Court award whereby the court ordered to reinstate the second respondent - workman with 35% back wages. 2. The case set up before the Labour Court was that the 2[nd] respondent/workman was employed as a sweeper with the management since 12.06.1999. The workman was covered under ESI scheme with effect from 18.08.2001 till 30.09.2010. She has been discharging the duties continuously and promptly without any complaint. On 30.09.2010, the Company was closed down without giving any notice of closure to the workman and her service was orally terminated without complying with the provisions of Section 25F of the Industrial Disputes Act (I.D. Act). No compensation as prescribed under the provisions was paid. The management had intentionally treated the workman as temporary for the purpose of depriving the status and privileges of permanent workman, which amounts to unfair labour practice. 3. The management contested the case of the workman by taking the plea that the worker was a registered employee under WP(C)No.15524/2019 3 ESI & EPF scheme which is allotted under code to the contractor and was working under the control and supervision of contractor. On closure of the establishment on 30.09.2010, the contract between the contractor and management terminated. Wages and other benefits including EPF and ESI contributions payable to her was paid by the contractor himself and not by the management. The Labour Court on preponderance of the evidence ordered for reinstatement with 35% wages. 4. Mr.Benny P.Thomas, learned counsel appearing on behalf of the petitioner, submitted that the Labour Court failed to note that the appointment of the subordinate staff is to be made by a competent authority and subject to the fulfillment of eligibility criteria. The appointment of the workman was neither sponsored by any employment exchange nor were issued any appointment letters. There could not be any violation of provisions of Section 25F of the I.D.Act. It was purely on contractual basis and on cessation of the work, service was dispensed with. The appointment was also not against the permanent vacancy sanctioned, but as a stop-gap arrangement. A request was also made to the Labour Court for determining the compensation WP(C)No.15524/2019 4 instead of reinstatement, but the same was not pondered. In support of the contention, relied upon the judgment of the Supreme Court in **State of Uttarakhand and another v. Raj Kumar** _[(2019) 14 SCC 353]_ . 5. On the other hand, learned counsel appearing on behalf of the workman supported the reasoning assigned by the Labour Court on the premise that it was a case of termination without resorting to the provisions of Section 25F, a case of unfair practice in order to overcome the consequential effect of regularisation and payment of other emoluments. The Company had, erroneously, been resorting to employing the workmen and allowing them to work for number of years and then take the plea of closure of the establishment. Such a practice has, in catena of judgments, been deprecated, therefore, the award of the Labour Court ordering reinstatement of the service with 35% back wages is perfectly legal and justified. The workman filed rejoinder raising the contention that the management M/s.West Coast Refrigeration and Food Engineering (Pvt.) Ltd. is only a subsidiary company of the Amalgam Enterprises (Amalgam Group of Companies). The 1[st] management being a subsidiary unit was engaged in the main WP(C)No.15524/2019 5 business for the Holding Company. i.e., M/s.Amalgam Enterprises, the 2[nd] management. Both Companies are owned and managed by Amalgam Group. The petitioner establishment closed down its business under the pretext of huge loss. Therefore, the 2[nd] management is absolutely necessary party for the just and proper adjudication of this industrial dispute and the reference is not bad in law. 6. I have heard the counsel for the parties and appraised the paper book. 7. The workman is of young age and had rendered the service as a sweeper continuously and promptly. Ordering of reinstatement with 35% back wages is an attempt to foist workman upon the management though not comfortable with them as there had been a litigation between them. No doubt the management was required to serve her retrenchment compensation as enumerated under the provisions of Section 25F of the Act, as it is settled law that continuous employment on daily wages or on temporary wages cannot be a ground of defence of contractual employment. 8. I am of the view that the award of Labour Court ordering WP(C)No.15524/2019 6 reinstatement in such circumstances is not appropriated. The course would have been for determination of the compensation in view of the ratio culled out in the judgment aforementioned. For the sake of brevity, the findings rendered in _**Raj Kumar**_ (supra) reads as under : _“9. In our opinion, the case at hand is covered by the two decisions of this Court rendered in BSNL v. Bhurumal [BSNL Bhurumal, (2014) 7 SCC 177 : (2014) 2 SCC (L&S) 373] and Distt. Development officer v. Satish Kantilal Amrelia [Distt. Development officer v. Satish Kantilal Amrelia, (2018) 12 SCC 298: (2018) 2 SCC (L&S) 276] ._ _10. It is apposite to reproduce what this Court has held in BSNL [BSNL v. Bhurumal, (2014) 7 SCC 177: (2014) 2 SCC (L&S) 373] : (SCC p. 189, paras 33-35)_ _"33. It is clear from the reading of that the of the aforesaid judgments ordinary principle of grant of reinstatement with full back wages, when the termination is found to be illegal is not applied mechanically in all cases. While that may be a position where services of a regular/permanent workman are terminated illegally and/or mala fide and/or of by way victimisation, unfair labour practice, etc. However, when it comes to the case of termination of a daily-wage worker and where the termination is found illegal because of a procedural defect, namely, in violation of Section 25-F of the Industrial Disputes Act, this Court is consistent in taking the view that in such cases reinstatement with back wages is not automatic and instead the workman should be given monetary compensation which will meet the ends of justice. Rationale for shifting in this direction is obvious. 34. The reasons for denying the relief of reinstatement in such cases are obvious. It is trite law that when the termination is found to be illegal because of non-payment of retrenchment compensation and notice mandatorily required under Section 25-F of the Industrial Disputes Act, even after reinstatement, it is always open to the management to terminate the services of that employee by paying him the retrenchment compensation. Since such a workman was working on dailywage basis and even after he is reinstated, he has no right to seek regularisation [see State of Karnataka v. Umadevi (3) [State of Karnataka V. Umadevi (3), (2006) 4 SCC 1: 2006 SCC (L&S) 753] ]. Thus when he cannot claim regularisation and he has no right to continue even as a daily-wage worker, no useful purpose is going to be served in reinstating such a workman and he can be given monetary compensation by the Court itself inasmuch as if he is terminated again after_ WP(C)No.15524/2019 7 _reinstatement, he would receive monetary compensation only in the form of retrenchment compensation and notice pay. In such a situation, giving the relief of reinstatement, that too after a long gap, would not serve any purpose._ _35. We would, however, like to add a caveat here. There may be cases where termination of a daily-wage worker is found to be illegal on the ground that it was resorted to as unfair labour practice or in violation of the principle of last come first go viz. while retrenching such a a worker daily wage juniors to him were retained. There may also be a a situation that persons junior to him were regularised under some policy but the workman concerned terminated. In such circumstances, the terminated worker should not be denied reinstatement unless there are some other weighty reasons for adopting the course of grant of compensation instead of reinstatement. In such cases, reinstatement should be the rule and only in exceptional cases for the reasons stated to be in writing, such a relief can be denied."_ 9. Accordingly, I modify the award of the Labour Court and hold that instead of ordering reinstatement with 35% back wages, compensation of Rs.3,50,000/- (Rupees Three Lakh Fifty Thousand only) is ordered to be paid to respondent No.2 within a period of two months from the date of receipt of a certified copy of the judgment. Writ Petition stands disposed of. Sd/- **AMIT RAWAL JUDGE** csl WP(C)No.15524/2019 8 ## **APPENDIX OF WP(C) 15524/2019** PETITIONER'S EXHIBITS - EXHIBIT P1 TRUE COPY OF PETITION DATED 20.12.2011 FILED BY 2ND RESPONDENT BEFORE THE DISTRICT LABOUR OFFICER, ALAPPUZHA. - EXHIBIT P2 TRUE COPY OF ORDER G.O(RT) NO.194/2013/LBR DATED 28.11.2013 ISSUED BY GOVERNMENT OF KERALA. - EXHIBIT P3 TRUE COPY OF CLAIM STATEMENT DATED 15.11.2013 IN I.D.NO.17 OF 2013 FILED BY 2ND RESPONDENT BEFORE THE 1ST RESPONDENT. - EXHIBIT P4 TRUE COPY OF COUNTER STATEMENT DATED 27.3.2014 IN I.D.NO.17 OF 2013 FILED BY PETITIONER BEFORE THE 1ST RESPONDENT. - EXHIBIT P5 TRUE COPY OF REJOINDER DATED 17.7.2013 IN I.D. NO.17 OF 2013 FILED BY 2ND RESPONDENT BEFORE THE 1ST RESPONDENT. - EXHIBIT P6 TRUE COPY OF AWARD DATED 2.11.2017 IN I.D. NO.17 OF 2013 OF THE 1ST RESPONDENT.