Nine-Year Delay & New Employment: P&H HC Awards ₹2 Lakh Compensation

Deputy Excise & Taxation Commissioner (Excise) Vs Mange Ram and another (Punjab & Haryana High Court)

Nine-Year Silence & New Employment End Reinstatement: P&H High Court Substitutes ₹2 Lakh Compensation

Summary:

Relevant facts

In Deputy Excise & Taxation Commissioner (Excise), Jagadhri v. Mange Ram, decided on 17 August 2026, the Punjab & Haryana High Court considered whether reinstatement should continue to be granted to a contractual workman whose services had been illegally terminated, but who raised his industrial dispute after nearly nine years & had already obtained employment elsewhere.

The workman was appointed as a Sweeper-cum-Chowkidar on 3 November 1999 in the office of the Deputy Excise & Taxation Commissioner, Jagadhri. His name had been sponsored through the employment exchange. Though initially appointed contractually for 89 days, his engagement was extended periodically until his services came to an end on 31 March 2004.

The workman served a demand notice only on 13 March 2013. He claimed that he had worked for more than 240 days during the preceding 12 months & that his termination amounted to retrenchment without compliance with Section 25F of the Industrial Disputes Act, 1947. Since neither statutory notice nor retrenchment compensation had been provided, he sought reinstatement with continuity of service & consequential benefits.

As conciliation failed, the dispute was referred to the Labour Court, Ambala.

Contentions before the Labour Court

The workman reiterated that he had completed the qualifying period of 240 days & that his termination violated the mandatory safeguards contained in Section 25F.

The Management contended that he had been appointed contractually for 89 days, with extensions granted periodically. It further claimed that the workman had voluntarily left the job after 31 March 2004 & did not fall within the definition of a “workman” u/s 2(s) of the Act.

After examining the evidence, the Labour Court rejected the Management’s defence. By its award dated 25 July 2014, it found that the workman had completed more than 240 days in the relevant period. His termination without notice or compensation was therefore illegal. The Labour Court ordered reinstatement with continuity of service & 50% back wages.

Proceedings before the Single Judge

The Management challenged the award through a writ petition. The Single Judge noticed that other similarly situated workmen had been allowed to continue in service & remained employed by the Management. Finding no illegality in the Labour Court’s award, the writ petition was dismissed on 30 April 2025.

Significantly, before the Single Judge, the Management primarily argued that compensation should be awarded instead of reinstatement. After failing to obtain that relief, it filed the present Letters Patent Appeal.

Issues before the Division Bench

The primary issue was whether the established violation of Section 25F necessarily required reinstatement, or whether the particular circumstances justified awarding monetary compensation in lieu of reinstatement.

The related question was the appropriate amount of compensation, having regard to the workman’s contractual appointment, length of service, delayed demand, subsequent employment & the considerable passage of time.

Submissions before the High Court

The Management emphasized that the workman had raised the industrial dispute after an unexplained delay of approximately nine years. It further submitted that he had secured employment in another department in 2010, even before the Labour Court’s award, & continued to work there.

More than 22 years had passed since the termination. The Management also pointed out that the Labour Court’s award of 50% back wages had already been implemented. In these circumstances, physical reinstatement after such an extraordinary interval would be neither equitable nor practical. Compensation should therefore replace reinstatement.

The workman maintained that the Labour Court had recorded a specific factual finding that he had completed more than 240 days in service. Since the Management admittedly failed to comply with Section 25F, reinstatement with continuity & 50% back wages had been correctly granted.

Findings of the Court

The Division Bench comprising Justice Suvir Sehgal & Justice Deepinder Singh Nalwa did not disturb the finding that the termination violated Section 25F. However, it disagreed with the remedy of reinstatement.

The Court treated three circumstances as decisive: the workman raised his claim after nearly nine years; he was already gainfully employed elsewhere before the Labour Court’s award; & more than 22 years had elapsed since his termination.

Considering these factors, the Court held that compensation represented a more appropriate remedy. The Labour Court’s award & the Single Judge’s judgment were consequently modified by substituting reinstatement with ₹2 lakh compensation.

The Management was directed to pay the amount within two months from receipt of the certified judgment. In case of default, the compensation would carry 6% annual interest from the date of the High Court’s judgment until realization.

Legal reasoning

The Court reiterated that illegal retrenchment does not result in automatic reinstatement. Even where Section 25F has been violated, the relief must be moulded according to the facts.

Relevant considerations include the nature & mode of appointment, availability of work or a sanctioned post, length of service, wages previously drawn, period spent out of service, delay in raising the dispute & subsequent gainful employment. No rigid formula governs either the selection of compensation over reinstatement or the determination of its quantum.

Here, the appointment was contractual, the dispute was seriously delayed, the workman had found alternative employment & restoration after 22 years would be artificial. The Court therefore preserved the finding of illegality while modifying only the consequential relief.

Practical implications

The ruling confirms that reinstatement is discretionary, not automatic. A workman may establish illegal termination yet receive only compensation where delay, alternative employment or passage of time makes reinstatement impractical.

For employers, the decision shows that violation of Section 25F still creates financial liability. For workmen, it highlights the importance of raising disputes promptly. The judgment ultimately balances both interests: the illegality was recognized, but the remedy was adapted to present-day realities through ₹2 lakh compensation instead of reinstatement.

FULL TEXT OF THE JUDGMENT/ORDER OF PUNJAB & HARYANA HIGH COURT

1. The present Letters Patent Appeal has been filed against the judgment dated 30.04.2025 passed by the learned Single Judge, whereby, the writ petition filed by the appellants-Management has been dismissed and the award dated 25.07.2014 passed by the Labour Court, Ambala has been upheld.

2. Brief facts of the case are that respondent No.1-workman was appointed on the post of Sweeper-cum-Chowkidar on 03.11.1999 on contract basis in the office of Deputy Excise & Taxation Commissioner (Excise), Jagadhri, District Yamunanagar (hereinafter referred to as the ‘Management’). The name of respondent No.1-workman was sponsored through employment exchange. The contract of respondent No.1-workman was extended from time to time. The services of respondent No.1-workman were terminated on 31.03.2004. Aggrieved against the action of the appellants-Management in terminating the services of respondent No.1-workman, a demand notice dated 13.03.2013 was served by respondent No.1-workman. It was the case of respondent No.1-workman in the abovesaid demand notice that as he had completed more than 240 days in service in the preceding 12 months from the date of the termination, as such, he was entitled for benefit under Section 25-F of the Industrial Disputes Act, 1947 at the time of the termination/retrenchment. As no notice and compensation was given to respondent No.1-workman in terms of Section 25-F of the Act at the time of termination/retrenchment, as such, the termination/retrenchment of respondent No.1-workman was bad in law. Accordingly, respondent No.1-workman was entitled to be reinstated in service with all consequential benefits.

3. No settlement could be arrived at between the parties, as such, the matter was referred to the Labour Court, Ambala. Respondent No.1-workman duly filed claim statement reiterating his stand as taken by him in the demand notice. The appellants-Management duly filed reply to the abovesaid claim statement filed by respondent No.1-workman. The case of the appellants-Management was that respondent No.1-workman was appointed through employment exchange for a period of 89 days on contract basis. Various extensions were granted from time to time to respondent No.1-workman. It was also the case of the appellants-Management that respondent No.1-workman left the job on his own after 31.03.2004. It was also the case of the appellants-Management that respondent No.1-workman does not fall under the definition of ‘workman’ as per Section 2(s) of the Act. The Labour Court, Ambala decided the reference in favour of respondent No.1-workman vide award dated 25.07.2014. As per the said award, respondent No.1-workman was entitled to be reinstated with continuity of service along with 50% back wages.

4. A perusal of the award dated 25.07.2014 passed by the Labour Court, Ambala would show that the Labour Court, Ambala, after taking into consideration the evidence led by the parties, gave a finding that respondent No.1-workman had completed more than 240 days in service in the preceding 12 months from the date of his termination, as such, there was a violation of Section 25-F of the Act.

5. Aggrieved against the award dated 25.07.2014 passed by the Labour Court, Ambala, the appellants-Management filed civil writ petition in this Court being CWP-9655-2015. The said writ petition was dismissed by the learned Single Judge on 30.04.2025. A perusal of the judgment dated 30.04.2025 passed by the learned Single Judge would show that the learned Single Judge has taken into consideration the fact that the similarly situated workmen like respondent No.1-workman were allowed to continue in service with the appellants-Management and are still in service, as such, there was no illegality and infirmity in the award dated 25.07.2014 passed by the Labour Court, Ambala. A perusal of the judgment dated 30.04.2025 passed by the learned Single Judge would also show that the only contention raised by the counsel appearing on behalf of the appellants-Management was that, taking into consideration the facts of the case, respondent No.1-workman was entitled for grant of compensation in lieu of reinstatement in service.

6. Aggrieved against the judgment dated 30.04.2025 passed by the learned Single Judge, the appellants-Management have filed the present appeal.

7. Learned counsel appearing on behalf of the appellants-Management submits that respondent No.1-workman has raised a demand after an inordinate delay of 09 years. He submits that respondent No.1-workman was employed in some other department in the year 2010 and still continues to serve that department. He also contends that the benefit of back wages as awarded by the Labour Court, Ambala vide award dated 25.07.2014, has already been granted to respondent No.1-workman. Learned counsel further submits that taking into consideration the abovesaid facts, respondent No.1-workman is entitled for grant of compensation in lieu of reinstatement in service.

8. On the other hand, learned counsel appearing on behalf of respondent No.1-workman submits that a perusal of the award dated 25.07.2014 passed by the Labour Court, Ambala would show that a specific finding has been given that respondent No.1-workman has completed more than 240 days in service in preceding 12 months from the date of termination of respondent No.1-workman and as such, there was a violation of Section 25-F of the Act. Accordingly, respondent No.1-workman has rightly been held entitled to be reinstated with continuity of service along with 50% back wages.

9. We have heard the learned counsel appearing on behalf of the parties at length and have perused the record with their able assistance.

10. A perusal of the facts of the present case would show that there is no dispute that respondent No.1-workman had raised a demand after almost 09 years. It is also not in dispute that before the award dated 25.07.2014 was passed by the Labour Court, Ambala, respondent No.1-workman was already gainfully employed in some other department and is still in service. It is also not in dispute that more than 22 years have elapsed since services of respondent No.1-workman were terminated/retrenched by the appellants-Management. It is well settled law that there is no concept of automatic reinstatement. Various factors have to be taken into consideration for the purpose of grant of benefit of reinstatement where the service of the workman is terminated/retrenched on account of violation of provisions of the Act i.e. nature and mode of appointment, the availability of work and post, length of service, period of workman out of service etc. Taking into consideration the facts of the case, respondent No.1-workman is held entitled for grant of compensation in lieu of reinstatement in service. In regard to grant of compensation in lieu of reinstatement in service on account of violation of provision of the Act is concerned, there is no straight jacket formula in determining the amount of compensation to be given to the workman in lieu of reinstatement in service. Various factors i.e. post on which the workman was working at the time of termination, wages drawn by the workman at the time of termination, length of service etc. are to be taken into consideration for the purpose of determining the amount of compensation to be given to the workman.

11. Taking into consideration the facts of the present case and relevant factors, it is held that respondent No.1-workman is entitled for grant of compensation of an amount of Rs.2,00,000/- in lieu of reinstatement in service.

12. Accordingly, the award dated 25.07.2014 passed by the Labour Court, Ambala and the judgment dated 30.04.2025 passed by the learned Single Judge are modified to an extent that respondent No.1-workman is entitled for grant of compensation of Rs.2,00,000/- instead of reinstatement in service.

13. The appellants-Management are directed to pay the aforesaid amount of compensation of Rs.2,00,000/- to respondent No.1-workman within a period of 02 months from the date of receipt of a certified copy of this judgment, failing which, the said amount of compensation shall carry an interest at the rate of 6% per annum from the date of passing of this judgment till actual realization.

14. The Letters Patent Appeal is disposed of in the aforesaid terms.

15. Pending miscellaneous application(s), if any, also stands disposed of.