hari nandan prasad vs. employer i_r to mangmt

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9/29/2014 Hari Nandan Prasad Vs. Employer I/R to Mangmt. of FCI (SC) - Law Kerala http://www.lawker.in/case/2014/2/31 1/39 Home Judgments Bare Acts Ask for Judgments Judgments > LAW 2014 Ker. > LAW 2014 (2) Ker. > Hari Nandan Prasad Vs. Employer I/R to Mangmt. of FCI (SC) Contents 1 ACT 1.1 Section 17-B of the Industrial Disputes Act 1.2 Art.14 of the Constitution 2 SUBJECT 2.1 Unfair labour practice 3 HEADNOTE 4 J U D G M E N T 4.1 Hari Nandan. 4.2 Gobind Kumar Choudhary. 4.3 Reg.: Validity of termination. 4.4 Re: Relief of Regularization 4.5 “30. Powers of Industrial and Labour Courts.- 4.6 31. In the language of Krishna Iyer, J: 4.7 (Life Insurance Corpn. Of India v. D.J.Bahadur 1980 Lab IC 1218, 1226(SC), per Krishna Iyer,J.). LAW 2014 (2) Ker. 31 (SC) IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION K.S.Radhakrishnan and A.K.Sikri, JJ. February 17, 2014 0 Search this site Play Rummy Online 24X7 khelplayrummy.com/R125% Welcome Bonus on Rummy Online + Get Free Rs10 Daily. Register Now

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9/29/2014 Hari Nandan Prasad Vs. Employer I/R to Mangmt. of FCI (SC) - Law Kerala

http://www.lawker.in/case/2014/2/31 1/39

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Hari Nandan Prasad Vs. Employer I/R to Mangmt. ofFCI (SC)

Contents

1 ACT1.1 Section 17-B of the IndustrialDisputes Act1.2 Art.14 of the Constitution

2 SUBJECT2.1 Unfair labour practice

3 HEADNOTE4 J U D G M E N T

4.1 Hari Nandan.4.2 Gobind Kumar Choudhary.4.3 Reg.: Validity of termination.4.4 Re: Relief of Regularization 4.5 “30. Powers of Industrial and LabourCourts.- 4.6 31. In the language of Krishna Iyer,J: 4.7 (Life Insurance Corpn. Of India v.D.J.Bahadur 1980 Lab IC 1218,1226(SC), per Krishna Iyer,J.).

LAW 2014 (2) Ker. 31 (SC)

IN THE SUPREME COURT OFINDIA

CIVIL APPELLATE JURISDICTION

K.S.Radhakrishnan and A.K.Sikri,JJ.

February 17, 2014

0

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9/29/2014 Hari Nandan Prasad Vs. Employer I/R to Mangmt. of FCI (SC) - Law Kerala

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CIVIL APPEAL Nos.2417-2418/2014

(arising out of S.L.P.(Civil) Nos.29634-29635/2008)

Hari Nandan Prasad & Anr. …Appellants

Vs.

Employer I/R to Mangmt.of FCI& Anr. …Respondents

ACT

Section 17-B of theIndustrial Disputes Act

Art.14 of the Constitution

SUBJECT

Unfair labour practice

HEADNOTE

When there are posts available,in the absence of any unfairlabour practice the Labour Courtwould not give direction forregularization only because aworker has continued as dailywage worker/adhoc/temporaryworker for number of years.Further, if there are no postsavailable, such a direction forregularization would beimpermissible. In the aforesaidcircumstances giving of directionto regularize such a person, onlyon the basis of number of yearsput in by such a worker as dailywager etc. may amount tobackdoor entry into the servicewhich is an anathema to Art.14of the Constitution. Further,such a direction would not begiven when the concernedworker does not meet theeligibility requirement of thepost in question as per theRecruitment Rules. However,

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wherever it is found thatsimilarly situated workmen areregularized by the employeritself under some scheme orotherwise and the workmen inquestion who have approachedIndustrial/Labour Court are atpar with them, directionofregularization in such casesmay be legally justified,otherwise, non-regularization ofthe left over workers itselfwould amount to invidiousdiscrimination qua them in suchcases and would be violative ofArt.14 of the Constitution. Thus,the Industrial adjudicator wouldbe achieving the equality byupholding Art. 14, rather thanviolating this constitutionalprovision.

J U D G M E N T

A.K.SIKRI,J.

1. Leave granted.

2. The two appellants have filedone combined Special LeavePetition, which arises out of acommon judgment dated27.6.2008 passed by the DivisionBench of the Jharkhand HighCourt in two LPAs which hadbeen filed by the respondentherein viz. Food Corporation ofIndia (FCI). The two appellantswere working on casual basiswith the FCI. After certain time,their services were dispensedwith. Both of them raisedindustrial dispute allegingwrongful termination which wasreferred to the CentralGovernment-cum- IndustrialTribunal (CGIT). Theseproceedings culminated in twoawards dated 12.12.1996 and18.12.1996 respectively passedby the CGIT. In both theseawards, termination of both the

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appellants was held to be illegaland they were directed to bereinstated with 50% back wages.The CGIT also ordered theirregularization in service. FCIfiled Writ Petitions in both thecases challenging these awardswhich were initially admittedsometime in the year 1988 andthe operation of the awards wasstayed. However, orders werepassed under Section 17-B of theIndustrial Disputes Act (ID Act)directing payment of full wagesas last wages drawn to theappellants from the date of theaward in each case. These WritPetitions were ultimatelydismissed by the learned SingleJudge vide common judgmentand order dated 19.5.2005. Aspointed out above, thisjudgment of the learned SingleJudge was challenged by the FCIby filing LPAs. These LPAs havebeen allowed by the DivisionBench, thereby setting aside theorders of the learned SingleJudge as well as awards passedby the CGIT. This is how twoappellants are before us in thisappeal.

3. Before we proceed further,we deem it appropriate to givethe details of nature ofemployment of each of theappellants with the FCI andtenure etc. as well as the gist ofthe tribunal’s awards.

Hari Nandan.

4. He was engaged on dailywages basis as Labourer-cum-Workman, in the exigency of thesituation, at Food StorageDepot, Jasidih by the Depot In-charge, FCI, Jasidih on 1st June1980. On the ground thatservices of appellant No.1 wereno more required, he was

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disengaged w.e.f. 1.3.1983.While doing so, no notice ornotice pay or retrenchmentcompensation was given to him.Appellant No.1 raised industrialdispute which was referred tothe CGIT by the CentralGovernment vide referenceorder dated 1.10.1992, with thefollowing terms of reference:

“Whether the action of themanagement of FoodCorporation of India, inretrenching Shri HariNandan Prasad, Ex-CasualWorkman, in contraventionof Section 25-F of theI.D.Act, 1947 and denyingreinstatement with fullback wages andregularization of hisservice is legal andjustified? If not to whatrelief the concernedworkman is entitled to?”

5. The CGIT gave its awarddated 12.12.1996 holding thatthe termination was incontravention of Section 25-F ofthe Industrial Disputes Act. TheCGIT also, while orderingreinstatement of appellant No.1,held that he was also entitled toregularization ofhis servicesfrom the date of his stoppagefrom service dated 1.3.1983.Back wages to the extent of 50%were awarded. As far asdirection for regularization isconcerned, it was based onCircular issued by the FCIwhereby any temporary workeremployed for more than 90 dayswas entitled for regularizationof his service. It was noted thatas per the said Circular theManagement had regularized theservices of 70-75 similarlysituated casual workers andtherefore denying the same

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benefit to appellant No.1amounted to discrimination.

Gobind Kumar Choudhary.

6. Appellant No.2 was engagedon daily wages as casual Typistat the District Office, FCI,Darbhanga against a vacancy ofClass-III post on 5.9.1986. Heworked in the capacity till15.9.1990 when his name wasstruck off the rolls. He alsoraised industrial dispute whichwas referred to CGIT withfollowing terms of reference:

“Whether the action of theManagement of FoodCorporation of India,Laaherisarai, Darbhanga islegal and justified inretrenching Shri GovindKumar Chaudhary, who wasworking as Casual Typist,arbitrarily and in violationof Section 25-F of theI.D.Act, and denyingreinstatement with fullback wagesandregularization of service islegal and justified? If notto what relief theconcerned workman isentitled to?”

In his case, the award dated18.12.1996 was made by theCGIT on almost identicalpremise, as in the case ofappellant No.1, supported bysimilar reasons.

7. The learned Single Judgewhile dismissing both the WritPetitions filed by the FCIconcurred with the findings andreasons given by the CGIT.

8. In the LPAs before theDivision Bench, the primarycontention of the FCI was that

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there could not have been anydirection of regularization ofservices even on the admittedcase of both the workmen, viz.merely on the ground that theyhad worked for more than 240days in a calendar year as casualemployees. It was alsosubmitted that though theDistrict Manager of the FCI wasauthorized to employ persons astemporary workers, such anauthority was given foremploying them for 7 days onlyand no more, and in case ofviolation of this strict stipulationcontained in the Circular issuedby the FCI, the concernedofficer could be proceededagainst departmentally. Itwasfurther argued that even if suchtemporary employment was tocontinue beyond stipulatedperiod of 7 days, since these twoworkmen had worked on dailywages basis, that too for aperiod of 3 years or so, therecould not have been anyregularization of these workmenin view of the judgments of thisCourt in the case of DelhiDevelopment HorticultureEmployees Union vs. DelhiAdministration AIR 1992 SC 789and Constitution Benchjudgment in the caseof Secretary, State ofKarnataka vs. Uma Devi &Ors. (2006) 4 SCC 1. Thesecontentions have impressed theDivision Bench of the High Court,and accepted by it, giving thefollowing reasons:

“The Tribunal hasapparently misconceivedthe principles of law laiddown in this context. Inthe case of DelhiDevelopment HorticultureEmployees Union vs. Delhi

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Administration (AIR 1992)SC 789) the Supreme Courthas categorically laid downthat temporary employees,even if they have workedfor more than 240 days,cannot claim any right orbenefit for automaticregularization of theirservices. Similar view hasbeen taken in the case ofPost Master General,Kolkata & Ors vs. Tutu Das(Dutta), reported in 2007(5) SCC 317. More so,where no posts are createdor no vacancies tosanctioned posts exists,only on the ground ofworking for more than 240days, regularization cannotbe directed. Even incaseswhere there are regularposts and vacancies, theprocedure laid down forappointment has to befollowed.”

9. In so far as contention of theappellant predicated on Circulardated 6.5.1997 is concerned, onthe basis of which they claimedthat 70-75 persons had beenregularized and discriminatorytreatment could not be metedto them, this contention hasbeen brushed aside by the HighCourt in the impugned judgmentin the following manner:

“The, contention ofMrs.Pal that there hasbeen discrimination asseveral persons wereregularized on the basis ofthe Circular of theManagement dated6.5.1987, cannot beaccepted. Reliance for thispurpose on the case ofU.P. State Electricity Boardvs. Pooran Chandra Pandey

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reported in (2007) 11 SCC92, is also of no help toher. Firstly, there wereseveral conditions andcriteria in the said Circularfor regularization, butthere is no finding that therespondents workmen inthese appeals fulfilled suchcriteria. Secondly, in thecase of U.P.StateElectricity Board matter(supra) the employees ofthe Co-operative Societywho were taken over bythe Electricity Boardclaimed that the decisionof the Electricity Boarddated 28.11.1996permitting regularizationof the employees workingfrom before 4.5.1990, willalso apply to them as theywere also appointed priorto 4.5.1990 in the Society.It was held that since thetakenover employees wereappointed in the Societybefore 4.5.1990, theycould not be denied thebenefit of the said decisionof the Electricity Board.There is nothing to showthat the appointment ofthe taken over employeeswas made by the Societywithout following theprocedure in that behalf,whereas in the presentcase, the respondentsworkmen were notappointed against vacantand sanctioned posts afterfollowing the procedure ofappointment.Furthermore, in paragraph6 of the judgment of theConstitution Bench in thecase of Secretary, State ofKarnataka vs. Uma Devi(2006) 4 SCC 1, it was held

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that no Government order,notification or circular canbe substituted for thestatutory rules framedunder the authority of law.In para 16 of the judgmentin the case of R.S.Garg vs.State of U.P. (2006 (6) SCC430), it has been held thateven the Governmentcannot make rules or issueany executive instructionsby way of regularization.Similar view has beentaken in the case of thePost Master General(supra). Therefore, therespondent workmencannot claim regularizationon the basis of the saidCircular of theManagement dated6.5.1987, nor the saidjudgment of the U.P.Electricity Board (supra) isof any help to them.”

10. Heavily relying upon thejudgment in the case of UmaDevi (supra), the High Court hasheld that as both the appellantsdid not render 10 or more yearsof service, their cases do notcomeeven in the exceptioncarved out by the ConstitutionBench in Uma Devi’s case.

11. Another contention raised bythe appellants before the HighCourt was that the ratio of UmaDevi’s case had no relevance inthe cases of industrialadjudication by the LabourCourts/Industrial Tribunals.However, even this submissionwas found to be meritless by theHigh Court taking support of thejudgment of this Court in U.P.Power Corporation Vs. BijliMazdoor Sangh & Ors. (2007) 5SCC 755.

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12. We may record here that theDivision Bench accepted thatthere was infraction of Section25-F of the I.D.Act in both thecases. However, they were heldnot entitled to reinstatementbecause of the reason that theywere employed strictly astemporary workers, without anystipulation or promise that theywould be made permanent andtherefore reinstatement of suchworkers was not warranted andthey were entitled to getmonetary compensation only. Asfar as compensation isconcerned, since both theappellants were paid the moneyequivalent to wages last drawn,for number of years when theWrit Petitions were pending,under Section 17 -B of the I.D.Act, the High Court felt that theappellants were dulycompensated and no furtheramount was payable.

13. Challenging the validity ofthe approach of the High Court,the learned counsel for theappellants submitted that theentire thrust of the judgment ofthe High Court rests on thedecision of this Court in UmaDevi’s case which wasimpermissible as the saidjudgment is clarified by thisCourt subsequently in the caseof Maharashtra State RoadTransport Corporation & Anr.vs. Casteribe Rajya ParivahanKarmchari Sanghatana (2009) 8SCC 556, wherein it is held, incategorical terms, that in so faras Industrial and Labour Courtsare concerned, they enjoy widepowers under Section 30(1)(b) ofthe Industrial Disputes Act totake affirmative action in caseof unfair labour practice andthese powers include power to

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orderregularization/permanency. TheCourt has, further, clarified thatdecision in Uma Devi limits thescope of powers of SupremeCourt under Article 32 and HighCourts under Article 226 of theConstitution to issue directionsfor regularization in the matterof public employment, butpower to take affirmative actionunder section 30(1)(b) of theI.D.Act whichrests with theIndustrial/Labour Courts,remains intact. It was, thus,argued that entire edifice of theimpugned judgment of the HighCourt erected on the foundationof Uma Devi (supra) crumbles.

14. The learned counsel for theFCI, on the other hand, referredto the judgment in U.P. PowerCorporation (supra) wherein thisCourt has taken unambiguousview that the law laid downin Uma Devi is applicable toIndustrial Tribunals/LabourCourts as well. It was submittedthat the judgment in U.P. PowerCorporation (supra) was nottaken note of in the subsequentjudgment in Maharashtra StateRoad Transport Corporation(supra) and this Court shouldfollow the earlier judgmentrendered in U.P.PowerCorporation’s case. The learnedcounsel also relied upon therecent judgment of this Court inthe case of Assistant Engineer,Rajasthan DevelopmentCorporation & Anr. vs. GitamSingh (2013) 5 SCC 136 tocontend that even when there isa wrongful termination ofservices of a daily wagerbecause of noncompliance of theprovisions of Section 25-F of theI.D.Act, such an employee is notentitled to reinstatement but

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only monetarycompensation. Onthe aforesaid basis, the learnedcounsel pleaded for dismissal ofthe appeal.

15. We have given considerablethoughts to the submissionsmade by the learned counsel forthe parties on either side. It isclear from the aforesaidnarratives that this case has twofacets, which are reflected evenin the terms of references aswell on which the disputes werereferred to the CGIT. First refersto the validity of thetermination and the other onepertains to the regularization.Twin issues, which have, thus,to be gone into, are: (1)whether termination of serviceof the appellants was illegal?Related issue here would be thatif it is illegal, then whether inthe facts and circumstances ofthis case, the appellants wouldbe entitled to reinstatement inservice or monetarycompensation in lieu ofreinstatement would bejustified? (2) whether theappellants are entitled toregularization of their services?We would also record that boththe issues, in the facts of thiscase, are somewhat overlappingwhich would become apparent,with the progression of ourdiscussion on these issues.

Reg.: Validity of termination.

16. This issue hardly poses anyproblem. Admitted facts arethat both the appellant hadworked for more than 240 dayscontinuously preceding theirdisengagement/termination. Atthe time of theirdisengagement, even when theyhad continuous service for morethan 240 days (in fact about 3

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years) they were not given anynotice or pay in lieu of notice aswell as retrenchmentcompensation. Thus, mandatorypre-condition of retrenchment inpaying the aforesaid dues inaccordance with Section 25-F ofthe I.D. Act was not compliedwith. That is sufficient to renderthe termination as illegal. Eventhe High Court in the impugnedjudgment has accepted thisposition and there was noquarrel on this aspect before usas well. With this, we advert tothe issue of relief which shouldbe granted in such cases, as thatwas the topic of hot debatebefore us as well.

17. Admittedly, both theworkmen were engaged on dailywages basis. Their engagementwas also in exigency ofsituation. In so far as appellantNo.1 is concerned, he wasdisengaged way back in the year1983. The dispute in his casewas referred for adjudication toCGIT in 1992 only. There is atime lag of 9 years. Though noreasons are appearing on recordfor such an abnormal delay, itseems that he had raised theindustrial dispute few yearsafter his disengagement whichcan be inferred from the readingof the award of the CGIT as thatreveals that after hisdisengagement he kept onmaking representations only andhe took recourse to judicialproceedings only after Circulardated 6.5.1997 was issued as perwhich the FCI had decided toregularize the services of allcasual workmen who hadcompleted more than 90 daysbefore 1996. Be that as it may,at this juncture what we arehighlighting is that appellant

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No.1 had worked on daily wagesbasis for barely 3 years and he isout of service for last 30 years.Even when the Tribunalrendered his award in 1996, 13years had elapsed since histermination. On these facts, itwould be difficult to give therelief of reinstatement to thepersons who were engaged asdaily wagers and whose serviceswere terminated in a distantpast. And, further wheretermination is held to be illegalonly on a technical ground ofnot adhering to the provisions ofSection 25-F of the Act. Law onthis aspect, as developed over aperiod of time by series ofjudgments makes the aforesaidlegal position very eloquent. It isnot necessary to traversethrough all these judgments.Our purpose would be served byreferring to a recent judgmentrendered by this very Bench inthe case of BSNL vs.Bhurumal 2013 (15) SCALE 131which has taken note of theearlier case law relevant to theissue. Following passage fromthe said judgment would reflectthe earlier decisions of thisCourt on the question ofreinstatement: “The learnedcounsel for the appellantreferred to two judgmentswherein this Court grantedcompensation instead ofreinstatement. In the caseof BSNL vs. Man Singh (2012) 1SCC 558, this Court has held thatwhen the termination is setaside because of violation ofSection 25-F of the IndustrialDisputes Act, it is not necessarythat relief of reinstatement bealso given as a matter of right.In the case of Incharge Officer& Anr. vs. ShankarShetty (2010) 9 SCC 126, it was

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held that those cases where theworkman had worked on dailywage basis, and worked merelyfor a period of 240 days or 2-3years and where the terminationhad taken place many years ago,the recent trend was to grantcompensation in lieu ofreinstatement. In this judgmentof ShankarShetty, this trend wasreiterated by referring tovarious judgments, as is clearfrom the following discussion.Should an order ofreinstatement automaticallyfollow in a case where theengagement of a daily wager hasbeen brought to end in violationof Section 25-F of the IndustrialDisputes Act, 1947 (for short“the ID Act”)? The course of thedecisions of this Court in recentyears has been uniform on theabove question. In Jagbir Singhvs. Haryana State AgricultureMktd. Board (2009) 15 SCC 327delivering the judgment of thisCourt, one of us (R.M.Lodha,J.)noticed some of the recentdecisions of this Court, namely,U.P.State Brassware Corpn. Ltd.Vs. Uday Narain Pandey (2006) 1SCC 479, Uttaranchal ForestDepartment Corpn. Vs.M.C.Joshi (2007) 9 SCC 353,State of M.P. vs. Lalit KumarVerma (2007) 1 SCC 575,M.P.Admn. vs. Tribhuban (2007)9 SCC 748, Sita Ram vs. Moti LalNehru Farmers Training Institute(2008) 5 SCC 75, JaipurDevelopment Authority vs.Ramsahai (2006) 11 SCC 684,GDA vs. Ashok Kumar (2008) 4SCC 261 and Mahboob Deepakvs. Nagar Panchayat, Gajraula(2008) 1 SCC 575 and stated asfollows: (Jagbir Singh case, SCCpp.330 & 335 paras 7 & 14). It istrue that the earlier view of thisCourt articulated in many

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decision reflected the legalposition that if the terminationof an employee was found to beillegal, the relief ofreinstatement with full backwages would ordinarily follow.However, in recent past, therehas been a shift in the legalposition and in a long line ofcases, this Court has consistentlytaken the view that relief byway of reinstatement with backwages is not automatic and maybe wholly inappropriate in agiven fact situation even thoughthe termination of an employeeis in contravention of theprescribed procedure.Compensation instead ofreinstatement has been held tomeet the ends of justice. Itwould be, thus, seen that by acatena of decisions in recenttime, this Court has clearly laiddown that an order ofretrenchment passed in violationof Section 25-F although may beset aside but an award ofreinstatement should not,however, automatically passed.The award of reinstatement withfull back wages in a case wherethe workman has completed 240days of work in a year precedingthe date of termination,particularly, daily wagers hasnot been found to be proper bythis Court and insteadcompensation has beenawarded. This Court hasdistinguished between a dailywager who does not hold a postand a permanent employee.Jagbir Singh has been appliedvery recently in TelegraphDeptt. Vs. Santosh Kumar Seal(2010) 6 SCC 773, wherein thisCourt stated: (SCC p.777, para11) In view of the aforesaid legalposition and the fact that theworkmen were engaged as daily

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wagers about 25 years back andthey worked hardly for 2 or 3years, relief of reinstatementand back wages to them cannotbe said to be justified andinstead monetary compensationwould subserve the ends ofjustice.Taking note of thejudgments referred to in theaforesaid paragraphs and alsofew more cases in other portionof the said judgment, the legalposition was summed up in thefollowing manner:

“It is clear from thereading of the aforesaidjudgments that theordinary principle of grantof reinstatement with fullback wages, when thetermination is found to beillegal is not appliedmechanically in all cases.While that may be aposition where services ofa regular/permanentworkman are terminatedillegally and/or malafideand/or by way ofvictimization, unfair labourpractice etc. However,when it comes to the caseof termination of a dailywage worker and wherethe termination is foundillegal because ofprocedural defect, namelyin violation of Section 25-Fof the Industrial DisputesAct, this Court isconsistent in taking theview in such casesreinstatement with backwages is not automatic andinstead the workmanshould be given monetarycompensation which willmeet the ends of justice.Rationale for shifting inthis direction is obvious.

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Reasons for denying therelief of reinstatement insuch cases are obvious. Itis trite law that when thetermination is found to beillegal because of non-payment of retrenchmentcompensation and noticepay as mandatorilyrequired under Section 25-F of the Industrial DisputesAct, even afterreinstatement, it is alwaysopen to the managementto terminate the servicesof that employee by payinghim the retrenchmentcompensation. Since suchaworkman was working ondaily wage basis and evenafter he is reinstated, hehas no right to seekregularization (See: Stateof Karnataka vs. Uma Devi(2006) 4 SCC 1). Thus whenhe cannot claimregularization and he hasno right to continue evenas a daily wage worker, nouseful purpose is going tobe served in reinstatingsuch a workman and hecan be given monetarycompensation by the Courtitself inasmuch as if he isterminated again afterreinstatement, he wouldreceive monetarycompensation only in theform of retrenchmentcompensation and noticepay. In such a situation,giving the relief ofreinstatement, that tooafter a long gap, would notserve any purpose. Wewould, however, like toadd a caveat here. Theremay be cases wheretermination of a dailywage worker is found to be

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illegal on the ground it wasresorted to as unfair labourpractice or in violation ofthe principle of last comefirst go viz. whileretrenching such a workerdaily wage juniors to himwere retained. There mayalso be a situation thatpersons junior to him weeregularized under somepolicy but the concernedworkman terminated. Insuch circumstances, theterminated worker shouldnot be deniedreinstatement unless thereare some other weightyreasons for adopting thecourse of grant ofcompensation instead ofreinstatement. In suchcases, reinstatementshould be the rule and onlyin exceptional cases forthe reasons stated to be inwriting, such a relief canbe denied”.

18. We make it clear thatreference to Uma Devi, in theaforesaid discussion is in asituation where the disputereferredpertained totermination alone. Going by theprinciples carved out above, hadit been a case where the issue islimited only to the validity oftermination, appellant No.1would not be entitled toreinstatement. This could be theposition in respect of appellantNo.2 as well. Though the factualmatrix in his case is slightlydifferent, that by itself wouldnot have made much of adifference. However, the matterdoes not end here. In thepresent case, the reference ofdispute to the CGIT was notlimited to the validity of

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termination. The terms ofreference also contained theclaim made by the appellantsfor their regularization ofservice.

19. We have already pointed outthat the two aspects viz. that ofreinstatement and regularizationare intermixed and overlappingin the present case. If theappellants were entitled to gettheir services regularized, inthat case it would have beenaxiomatic to grant the relief ofreinstatement as a naturalcorollary. Therefore, it becomesnecessary, at this stage, toexamine as to whether the orderof CGIT, as affirmed by thelearned Single Judge of the HighCourt directing regularization oftheir service, was justified ortheapproach of the DivisionBench of the High Court indenying that relief is correct.

Re: Relief of Regularization

20. Before we advert to thisquestion, it would be necessaryto examine as to whether theConstitution Bench judgmentin Uma Devi case haveapplicability in the mattersconcerning industrialadjudication. We have alreadypointed out above thecontention of the counsel forthe appellants in this behalf,relying upon Maharashtra StateRoad Transport case that thedecision in Uma Devi would bebinding the Industrial or LabourCourts. On the other hand,counsel for the FCI has referredto the judgment in U.P.PowerCorporation for the submissionthat law laid down in UmaDevi equally applies to IndustrialTribunals/Labour Courts. It,thus, becomes imperative to

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examine the aforesaid twojudgments at this juncture.

21. A perusal of the judgmentin U.P. Power Corporation woulddemonstrate that quite a fewdisputes were raised andreferred to the industrialtribunal qua the allegedtermination of respondent Nos.2and 3 in that case. Withoutgiving the details of thosecases,it would be sufficient to mentionthat in one of the cases thetribunal held that after threeyears of their joining in serviceboth respondents 2 and 3 weredeemed to have beenregularized. The appellants filedthe Writ Petition which was alsodismissed. Challenging the orderof the High Court, the appellantshad approached this Court. Itwas argued that there could nothave been any regularizationorder passed by the IndustrialCourt in view of the decisionin Uma Devi. Counsel for theworkmen had taken a specificplea that the powers of theindustrial adjudicator were notunder consideration in UmaDevi’s case and that there was adifference between a claimraised in a civil suit or a WritPetition on the one hand andone adjudicated by theindustrial adjudicator. It wasalso argued that the labourcourt can create terms existingin the contract to maintainindustrial peace and therefore ithad the power to vary the termsof the contract. While acceptingthe submission of the appellanttherein viz. U.P. PowerCorporation, the Court gave thefollowing reasons:

“It is true as contended bylearned counsel for therespondent that the

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question as regards theeffect of the industrialadjudicators’ powers wasnot directly in issue inUmadevi case. But thefoundation logic inUmadevi case isbased onArticle 14 of theConstitution of India.Though the industrialadjudicator can very theterms of the contract ofthe employment, it cannotdo something which isviolative of Article 14. Ifthe case is one which iscovered by the concept ofregularization, the samecannot be vieweddifferently. The plea oflearned counsel for therespondent that at thetime the High Courtdecided the matter,decision in Umadevi casewas not rendered is reallyof no consequence. Therecannot be a case ofregularization withoutthere being employee-employer relationship. Asnoted above the conceptof regularization is clearlylinked with Article 14 ofthe Constitution. However,if in a case the factsituation is covered bywhat is stated in para 45 ofUmadevi case theindustrial adjudicator canmodify the relief, but thatdoes not dilute theobservations made by thisCourt in Umadevi caseabout the regularization.On facts, it is submitted bylearned counsel for theappellants that RespondentNo.2 himself admitted thathe never worked as a pumpoperator, but was engaged

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as daily wage basis. Healso did not possess therequisite qualification.Looked at from any angle,the direction forregularization, as given,could not have been givenin view of what has beenstated in Umadevi case.”

22. It is clear from the abovethat the Court emphasized theunderline message containedin Umadevi’s case to the effectthat regularization of a dailywager, which has not beenappointedafter undergoing theproper selection procedure etc.is impermissible as it wasviolative of Art.14 of theConstitution of India and thisprinciple predicated on Art.14would apply to the industrialtribunal as well inasmuch asthere cannot be any direction toregularize the services of aworkman in violation of Art.14of the Constitution. As we wouldexplain hereinafter, this wouldmean that the industrial courtwould not issue a direction forregularizing the service of adaily wage worker in those caseswhere such regularization wouldtantamount to infringing theprovisions of Art.14 of theConstitution. But for that, itwould not deter the IndustrialTribunals/Labour Courts fromissuing such direction, which theindustrial adjudicators otherwisepossess, having regard to theprovisions of Industrial DisputesAct specifically conferring suchpowers. This is recognized bythe Court even in the aforesaidjudgment.

23. For detailed discussion onthis aspect, we proceed todiscuss the ratio in the caseof Maharashtra State Road

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Transport Corporation (supra).In that case the respondentKaramchari Union had filed twocomplaints before the IndustrialCourt,Bombay alleging that theappellant-Corporation hadindulged in unfair labourpractice qua certain employeeswho were engaged by theappellant as casual labourers forcleaning the buses between theyears 1980-1985. It was stated inthe complaints that theseemployees were made to workevery day at least for 8 hours atthe depot concerned of theCorporation; the work done bythem was of permanent naturebut they were being paid apaltry amount; and even whenthe post of sweepers/cleanerswere available in theCorporation, these employeeshad been kept on casual andtemporary basis for yearstogether denying them thebenefit of permanency. Afteradjudication, the IndustrialCourt held that the Corporationhad committed unfair labourpractice under items 5 and 9 ofSchedule IV to the MaharashtraRecognition of Trade Unions andPrevention of Unfair LabourPractice Act, 1971 (MRTU andPULP Act). As a consequence, itdirected the Corporation to payequal wages to the employeesconcerned which was being paidto Swachhaks and also payarrears of wages to them. In thesecond complaint, the IndustrialCourt returned the finding thatthe Corporation was indulging inunfair labour practice underItem 6 of Schedule IV,bycontinuing these employeeson temporary/casual/daily wagebasis for years together andthereby depriving them thebenefits of permanency. The

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direction in this complaint wasto cease and desist from theunfair labour practice by givingthem the status, wages and allother benefits of permanencyapplicable to the post ofcleaners, w.e.f. 3.8.1982. TheCorporation challenged thesetwo orders of the IndustrialCourt before the High Court ofJudicature at Bombay in fiveseparate Writ Petitions. Thesewere disposed of by the learnedSingle Judge vide commonjudgment dated 2.8.2001holding that complaints weremaintainable and the finding ofthe Industrial Court that theCorporation had indulged inunfair labour practice was alsocorrect. The Corporationchallenged the decision of thelearned Single Judge by filingLPAs which were dismissed bythe Division Bench on 6.5.2005.This is how the matter camebefore the Supreme Court. Oneof the contentions raised by theappellants before this Court wasthat there could not have been adirection by the Industrial Courtto give these employees status,wages and other benefits ofpermanency applicable to thepost of cleaners as this directionwas contrary to the ratio laiddown by the Constitution Benchofthis Court in Umadevi (supra).The Court while considering thisargument went into the schemeof the MRTU and PULP Act. Itwas, inter-alia, noticed thatcomplaints relating to unfairlabour practice could be filedbefore the Industrial Court. TheCourt noted that Section 28 ofthat Act provides for theprocedure for dealing with suchcomplaints and Section 30enumerates the powers given tothe Industrial and Labour Courts

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to decide the matters before itincluding those relating to unfairlabour practice. On the readingof this section, the Court heldthat it gives specific power tothe Industrial/Labour Courts todeclare that an unfair labourpractice has been engaged andto direct those persons not onlyto cease and desist from suchunfair labour practice but alsoto take affirmative action.Section 30(1) conferring suchpowers is reproduced below:

“30. Powers of Industrialand Labour Courts.-

(1) Where a court decidesthat any person named inthe complaint has engagedin, or is engaging in, anyunfair labour practice, itmay in its order-

(a) declare that anunfair labour practicehas been engaged inor is being engaged inby that person, andspecify any otherperson who hasengaged in, or isengaging in the unfairlabour practice;

(b) direct all suchpersons to cease anddesist from suchunfair labourpractice, and takesuch affirmativeaction (includingpayment ofreasonablecompensation to theemployee oremployees affectedby the unfair labourpractice, orreinstatement of theemployee or

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employees with orwithout back wages,or the payment ofreasonablecompensation), asmay in the opinion ofthe Court benecessary toeffectuate the policyof the Act;

(c) where arecognized union hasengaged in or isengaging in, anyunfair labourpractice, direct thatits recognition shallbe cancelled or thatall or any of its rightsunder sub-section(1)of Section 20 or itsright under Section23 shall besuspended.”

24. It was further noticed thatSection 32 of the Act providesthat the Court shall have thepower to decide all connectedmatters arising out of anyapplication or a complaintreferred to it for decision underany of the provisions of this Act.The Court then extensivelyquoted from the judgmentin Uma Devi in order todemonstrate the exact ratio laiddown in the said judgment andthereafter proceeded toformulate the following questionand answer thereto:

“The question that arisesfor consideration is: havethe provisions of the MRTUand PULP Act beendenuded of the statutorystatus by the ConstitutionBenchdecision in Umadevi?

In our judgment, it is

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not.”

25. Detailed reasons are given insupport of the conclusion statingthat the MRTU and PULP Actprovides for and empowers theIndustrial/Labour Courts todecide about the unfair labourpractice committed/beingcommitted by any person and todeclare a particular practice tobe unfair labour practice if it sofound and also to direct suchperson ceased and desist fromunfair labour practice. Theprovisions contained in Section30 giving such a power to theIndustrial and Labour Courts vis-à-vis the ratio of Uma Devi areexplained by the Court in thefollowing terms:

“The power given to theIndustrial and LabourCourts under Section 30 isvery wide and theaffirmative actionmentioned therein isinclusive and notexhaustive. Employingbadlis, casuals ortemporaries and tocontinue them as such foryears, with the object ofdepriving them of thestatus and privileges ofpermanent employees is anunfair labour practice onthe part of the employerunder Item 6 of ScheduleIV. Once such unfair labourpractice on the part of theemployer is established inthe complaint, theIndustrial and LabourCourts are empowered toissue preventive as well aspositive direction to anerring employer.Theprovisions of the MRTU andPULP Act and the powersof the Industrial and

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Labour Courts providedtherein were not at allunder consideration inUmadevi. As a matter offact, the issue like thepresent one pertaining tounfair labour practice wasnot at all referred to,considered or decided inUmadevi. Unfair labourpractice on the part of theemployer in engagingemployees as badlis,casuals or temporaries andto continue them as suchfor years with the objectof depriving them of thestatus and privileges ofpermanent employees asprovided in Item 6 ofSchedule IV and the powerof the Industrial andLabour Courts underSection 30 of the Act didnot fall for adjudication orconsideration before theConstitution Bench.Umadevi does not denudethe Industrial and LabourCourts of their statutorypower under Section 30read with Section 32 of theMRTU and PULP Act toorder permanency of theworkers who have beenvictims of unfair labourpractice on the part of theemployer under Item 6 ofSchedule IV where theposts on which they havebeen working exist.Umadevi cannot be held tohave overridden thepowers of the Industrialand Labour Courts inpassing appropriate orderunder Section 30 of theMRTU and PULP Act, onceunfair labour practice onthe part of the employerunder Item 6 of Schedule

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IV is established.”

26. The Court also accepted thelegal proposition that Courtscannot direct creation of posts,as held in Mahatma PhuleAgricultural University vs.Nasik Zilla Sheth KamgarUnion(2001) 7 SCC 346.Referring to this judgment, theCourt made it clear that inactionon the part of the StateGovernment to create postswould not mean an unfair labourpractice had been committed bythe employer (University in thatcase) and as there were noposts, the direction of the HighCourt to accord the status ofpermanency was set aside. TheCourt also noticed that this legalposition had been affirmedin State of Maharashtra vs.R.S.Bhonde (2005) 6 SCC 751.The Court also reiterated thatcreation and abolition of postand regularization are purelyExecutive functions, as held innumber of judgments and it wasnot for the Court to arrogate thepower of the Executive or theLegislature by directing creationof post and absorbing theworkers or continue them inservice or pay salary of regularemployees. This legal position issummed up in para 41 whichreads as under:

“Thus, there is no doubtthat creation of posts isnot within the domain ofjudicial functions whichobviously pertains to theexecutive. It is also truethat the status ofpermanency cannot begranted by the Courtwhere no such posts existand that executivefunctions and powers withregard to the creation of

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posts cannot be arrogatedby the courts.”

27. However, the Court foundthat factual position wasdifferent in the case before it.Here the post of cleaners in theestablishment were in existence.Further, there was a finding offact recorded that theCorporation had indulged inunfair labour practice byengaging these workers ontemporary/causal/daily wagebasis and paying them paltryamount even when they weredischarging duties of eight hoursa day and performing the sameduties as that of regularemployees.

28. In this backdrop, the Courtwas of the opinion that directionof the Industrial Court to accordpermanency to these employeesagainst the posts which wereavailable, was clearlypermissible and with thepowers, statutorily conferredupon the Industrial/LabourCourts under Section 30 (1)(b) ofthe said Act which enables theIndustrial adjudicator to takeaffirmative action against theerring employees and as thosepowers are of wide amplitudeabrogating within its fold adirection to accord permanency.

29. A close scrutiny of the twocases, thus, would reveal thatthe law laid down in those casesis not contradictory to eachother. In U.P. PowerCorporation, this Court hasrecognized the powers of theLabour Court and at the sametime emphasized that theLabour Court is to keep in mindthat there should not be anydirection of regularization if thisoffends the provisions of Art.14

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of the Constitution, on whichjudgment in Umadevi isprimarily founded. On the otherhand, in Bhonde case, the Courthas recognized the principle thathaving regard to statutorypowers conferred upon theLabour Court/Industrial Court togrant certain reliefs to theworkmen, which includes therelief of giving the status ofpermanency to the contractemployees, such statutory powerdoes not get denuded by thejudgment in Umadevi’s case. Itis clear from the reading of thisjudgment that such a power is tobe exercised when the employerhas indulged in unfair labourpractice by not filling up thepermanent post even whenavailable and continuing toworkers on temporary/dailywage basis and taking the samework from them and makingthem some purpose which wereperformed by the regularworkers but paying them muchless wages. It is only when aparticular practice is found tobeunfair labour practice asenumerated in Schedule IV ofMRTP and PULP Act and itnecessitates giving directionunder Section 30 of the said Act,that the Court would give such adirection.

30. We are conscious of the factthat the aforesaid judgment isrendered under MRTP and PULPAct and the specific provisionsof that Act were considered toascertain the powers conferredupon the IndustrialTribunal/Labour Court by thesaid Act. At the same time, italso hardly needs to beemphasized the powers of theindustrial adjudicator under theIndustrial Disputes Act are

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equally wide. The Act deals withindustrial disputes, provides forconciliation, adjudication andsettlements, and regulates therights of the parties and theenforcement of the awards andsettlements. Thus, byempowering the adjudicatorauthorities under the Act, togive reliefs such as areinstatement of wrongfullydismissed or dischargedworkmen, which may not bepermissible in common law orjustified under the terms of thecontract between the employerand such workmen, thelegislature has attempted tofrustrate the unfair labourpractices and secure the policyof collective bargaining as aroad to industrial peace.

31. In the language of KrishnaIyer, J:

The Industrial Disputes Actis a benign measure, whichseeks to pre-emptindustrial tensions, providefor the mechanics ofdisputeresolutions and setup the necessaryinfrastructure, so that theenergies of the partners inproduction may not bedissipated in counter-productive battles and theassurance of industrialjustice may create aclimate of goodwill.”

(Life Insurance Corpn. OfIndia v. D.J.Bahadur 1980Lab IC 1218, 1226(SC), perKrishna Iyer,J.).

In order to achieve the aforesaidobjectives, the LabourCourts/Industrial Tribunals aregiven wide powers not only toenforce the rights but even to

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create new rights, with theunderlying objective to achievesocial justice. Way back in theyear 1950 i.e. immediately afterthe enactment of IndustrialDisputes Act, in one of its firstand celebrated judgment in thecase of Bharat Bank Ltd. V.Employees of Bharat Bank Ltd.[1950] LLJ 921,948-49 (SC) thisaspect was highlighted by theCourt observing as under:

“In settling the disputesbetween the employersand the workmen, thefunction of the tribunal isnot confined toadministration of justice inaccordance with law. Itcan conferrights andprivileges on either partywhich it considersreasonable and proper,though they may not bewithin the terms of anyexisting agreement. It hasnot merely to interpret orgive effect to thecontractual rights andobligations of the parties.It can create new rightsand obligations betweenthem which it considersessential for keepingindustrial peace.”

32. At the same time, theaforesaid sweeping powerconferred upon the Tribunal isnot unbridled and iscircumscribed by this Court inthe case of New ManeckchowkSpinning & Weaving Co.Ltd.v.Textile Labour Association[1961] 1 LLJ 521,526 (SC) in thefollowing words:

“This, however, does notmean that an industrialcourt can do anything andeverything when dealing

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with an industrial dispute.This power is conditionedby the subject matter withwhich it is dealing and alsoby the existing industriallaw and it would not beopen to it while dealingwith a particular matterbefore it to overlook theindustrial law relating tothe matter as laid down bythe legislature or by thisCourt.”

33. It is, thus, this fine balancingwhich is required to be achievedwhile adjudicating a particulardispute, keeping in mind thatthe industrial disputes aresettled by industrialadjudication on principle of fairplay and justice.

34. On harmonious reading ofthe two judgments discussed indetail above, we are of theopinion that when there areposts available, in the absenceof any unfair labour practice theLabour Court would not givedirection for regularization onlybecause a worker has continuedas daily wageworker/adhoc/temporaryworker for number of years.Further, if there are no postsavailable, such a direction forregularization would beimpermissible. In the aforesaidcircumstances giving of directionto regularize such a person, onlyon the basis of number of yearsput in by such a worker as dailywager etc. may amount tobackdoor entry into the servicewhich is an anathema to Art.14of the Constitution. Further,such a direction would not begiven when the concernedworker does not meet theeligibility requirement of thepost in question as per the

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Recruitment Rules. However,wherever it is found thatsimilarly situated workmen areregularized by the employeritself under some scheme orotherwise and the workmen inquestion who have approachedIndustrial/Labour Court are atpar with them, directionofregularization in such casesmay be legally justified,otherwise, non-regularization ofthe left over workers itselfwould amount to invidiousdiscrimination qua them in suchcases and would be violative ofArt.14 of the Constitution. Thus,the Industrial adjudicator wouldbe achieving the equality byupholding Art. 14, rather thanviolating this constitutionalprovision.

35. The aforesaid examples areonly illustrated. It would dependon the facts of each case as towhether order of regularizationis necessitated to advancejustice or it has to be denied ifgiving of such a directioninfringes upon the employer’srights.

36. In the aforesaid backdrop,we revert the facts of thepresent case. The grievance ofthe appellants was that underthe Scheme contained inCircular dated 6.5.1997 manysimilarly placed workmen havebeen regularized and, therefore,they were also entitled to thisbenefit. It is argued that thosewho had rendered 240 daysservice were regularized as perthe provision in thatScheme/Circular dated6.5.1987.

37. On consideration of thecases before us we find thatappellant No.1 was not in

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service on the date whenScheme was promulgated i.e. ason 6.5.1987 as his services weredispensed with 4 years beforethat Circular saw the light of theday. Therefore, in our view, therelief of monetary compensationin lieu of reinstatement wouldbe more appropriate in his caseand the conclusion in theimpugned judgment qua him isunassailable, though for thedifficult reasons (as recorded byus above) than those advancedby the High Court. However, inso far as appellant No.2 isconcerned, he was engaged on5.9.1986 and continued till15.9.1990 when his serviceswere terminated. He even raisedthe Industrial disputeimmediately thereafter. Thus,when the Circular dated5.9.1987 was issued, he was inservice and within few monthsof the issuing of that Circular hehad completed 240 days ofservice.

38. Non-regularization ofappellant No.2, while giving thebenefit of that Circular dated6.5.1987 to other similarsituated employees andregularizing them would,therefore, be clearlydiscriminatory. On these facts,the CGIT rightly held that hewas entitled to the benefit ofscheme contained in Circulardated 6.5.1987. The DivisionBench in the impugnedjudgment has failed to noticethis pertinent and material factwhich turns thescales in favourof appellant No.2. High Courtcommitted error in reversing thedirection given by the CGIT,which was rightly affirmed bythe learned Single Judge as well,to reinstate appellant No.2 with

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50% back wages and toregularize him in service. Hewas entitled to get his caseconsidered in terms of thatCircular. Had it been done,probably he would have beenregularized. Instead, his serviceswere wrongly and illegallyterminated in the year 1990. Asan upshot of the aforesaiddiscussion, we allow theseappeals partly. While dismissingthe appeal qua appellant No.1,the same is accepted in so far asappellant No.2 is concerned. Inhis case, the judgment of theDivision Bench is set aside andthe award of the CGIT isrestored. There shall, however,be no order as to costs.

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