HC upholds compensation in place of reinstatement as just, fair

The Punjab and Haryana High Court has affirmed that awarding lump sum compensation instead of reinstatement is just and fair in cases where reinstatement is not feasible. The assertion came as Division Bench of Justice Sureshwar Thakur and Justice Sudeepti Sharma dismissed an appeal challenging a Single Bench’s decision to award Rs 2.5 lakh compensation to a retrenched employee rather than reinstating him.

The court noted that the retrenchment violated Section 25F of the Industrial Disputes Act, 1947, as the statutory conditions for lawful retrenchment—such as issuing prior notice or compensating in lieu of notice—were not met. Despite these violations, the Single Bench concluded that reinstatement was untenable due to the employee’s superannuation.

The Division Bench asserted the Single Bench in the impugned order directed the employer to pay the workman Rs 2.5 lakh within four weeks from the receiving the order. The verdict, pronounced by the Single Bench, was challenged by the aggrieved workman through the filing the appeal before the court.

The Bench upheld the reasoning, while asserting that reinstatement in such cases could create logistical and operational challenges. It observed that the Single Bench recorded a well-reasoned justification for denying the relief of reinstatement, particularly given the substantial obstacles to reinstating the appellant. Consequently, the denial of reinstatement to the appellant could not be interfered with and this portion of the order stood affirmed and upheld.

The Bench asserted: “The Single Bench of this court granted a lump sum compensation of Rs.2.5 lakh to the present appellant. The awarding of compensation to the present appellant in lieu of reinstatement is both just and fair, especially as no compelling evidence exists on record to indicate that, from the time of his retrenchment from service until the filing of the reference petition, he was not gainfully employed”.

The Bench further noted that any enhancement in compensation would have required substantiating evidence, which the appellant failed to produce. “Consequently, had the appellant provided the evidence, it may have compelled this court to consider enhancing the compensation amount. However, in the absence of such evidence, the awarding of the lump sum compensation to the appellant remains unchallenged and cannot be interfered with,” the court observed.