Case Note & Summary
The dispute arose from a fixed-term appointment in the State of Rajasthan where the respondent employee challenged termination after completing more than 240 days of service. The respondent was appointed on January 28, 1988 for a period of three months or till regularly selected candidate assumes office, and his appointment was terminated on November 19, 1988. The employee filed a writ petition before the Rajasthan High Court; the learned single Judge held that since he had completed more than 240 days, the termination violated Section 25F of the Industrial Disputes Act, 1947 and directed fresh appointment. The State appealed against the latter part of the order, and the Division Bench set aside the latter part and directed reinstatement with back wages. The State then appealed to the Supreme Court by special leave. The Supreme Court referred to its earlier decision in M. Venugopal v. Divisional Manager, LIC, (1994) 2 SCC 323, which held that once an appointment is for a fixed period, Section 25F does not apply as it is covered by clause (bb) of Section 2(oo) of the Industrial Disputes Act. The Court held that when appointment is for a fixed period, unless there is a finding that the power under clause (bb) was misused or vitiated by mala fide exercise, the termination cannot be held illegal. The lower courts had not recorded any such finding. Therefore, the termination in terms of the letter of appointment was lawful, and neither reinstatement nor fresh appointment could have been ordered. However, since the appellant had not filed an appeal against the single judge's order of fresh appointment, and the respondent came to be appointed afresh on June 27, 1992, he would continue in service till the regular incumbent assumes office as originally ordered. The Court held that the respondent was not entitled to back wages because the termination was in accordance with the appointment terms. The appeal was allowed to that extent, and the direction for back wages was set aside. No costs were awarded.
Headnote
A) Labour Law - Retrenchment - Fixed-Term Employment - Industrial Disputes Act, 1947, Section 2(oo)(bb), Section 25F - The respondent's appointment was for a fixed period of three months or till regular candidate assumed office, and termination upon expiry of that period was not retrenchment requiring compliance with Section 25F. The Court held that once appointment is for a fixed period, Section 25F does not apply as it is covered by clause (bb) of Section 2(oo); unless clause (bb) was misused or vitiated by mala fide exercise, the termination cannot be held illegal. (Paras 1-2) B) Labour Law - Back Wages - Lawful Termination - Industrial Disputes Act, 1947, Section 25F, Section 2(oo)(bb) - The High Court erred in directing reinstatement with back wages when the termination was in terms of the letter of appointment and saved by clause (bb). Since the termination was lawful, the respondent was not entitled to back wages; the fresh appointment ordered by the single Judge (not appealed) would continue till regular incumbent assumes office. Held that the appeal is allowed to that extent and the direction for back wages is set aside. (Paras 1-2) C) Administrative Law - Mala Fide Exercise - Colourable Exercise of Power - Industrial Disputes Act, 1947, Section 2(oo)(bb) - The Court noted that the employer could terminate services in terms of the letter of appointment unless it was a colourable exercise of power or the power under clause (bb) was misused. Neither the single Judge nor the Division Bench recorded any finding of misuse or mala fides. Held that in the absence of such finding, the termination cannot be held illegal. (Paras 1-2)
Issue of Consideration
Whether termination of a fixed-term employee after completing 240 days of service violates Section 25F of the Industrial Disputes Act, 1947 when the appointment is for a fixed period; whether back wages are payable on reinstatement where the termination was lawful.
Final Decision
The Supreme Court allowed the appeal to the extent that the Division Bench's direction for payment of back wages was set aside; respondent continued in service till regular incumbent assumed office as per fresh appointment dated June 27, 1992, but was not entitled to back wages; no costs.
Law Points
- Termination of a fixed-term appointment in accordance with terms is not retrenchment under Section 2(oo)(bb) of Industrial Disputes Act
- 1947
- Section 25F does not apply to fixed-term appointments unless clause (bb) is misused or exercised mala fide
- back wages not payable when termination is lawful
- fresh appointment ordered by single judge was erroneous in law but since not appealed
- employee continued till regular incumbent.
