Supreme Court modifies back wages ruling, grants 50% due to employer's financial condition.

The Supreme Court allowed the appeal in part, modifying the orders of the Labour Court and High Court. The respondent was granted 50% of the total back wages instead of full back wages due to the financial condition of the employer and the period of establishment closure. The appellant was directed to calculate and deposit this amount within six weeks, with the Labour Court overseeing the disbursement process. The appeal was allowed in part, with no order as to costs.

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Issues Involved:
1. Legality of termination of the respondent's employment.
2. Existence of master-servant relationship.
3. Entitlement to reinstatement and back wages.
4. Quantum of back wages to be awarded.

Detailed Analysis:

1. Legality of termination of the respondent's employment:
The respondent, employed on a casual basis in 1981 and later shifted to the bottling section as a permanent workman, had his services terminated orally on 19.1.1985. The Labour Court found the termination to be unjustifiable and illegal, as it did not comply with the procedure prescribed in Section 6-N of the U.P. Industrial Disputes Act. The Labour Court directed reinstatement with continuity of service and full employment benefits, including back wages.

2. Existence of master-servant relationship:
The appellants contended that the respondent was engaged by a contractor, Gaya Singh Yadav, and hence, there was no master-servant relationship. However, the Labour Court, upon appreciation of the evidence, concluded that the respondent was in continuous employment of the establishment since 1980, thereby establishing a master-servant relationship.

3. Entitlement to reinstatement and back wages:
The Labour Court's decision to reinstate the respondent with full back wages was challenged by the appellant. The High Court upheld the Labour Court's decision, stating there was no reason to doubt its findings. The Supreme Court noted that the Labour Court had the discretion under Section 11A of the Industrial Disputes Act to provide appropriate relief in cases of unjustifiable termination. The Supreme Court also reviewed several precedents, emphasizing that the grant of back wages is discretionary and must be based on the specific facts and circumstances of each case.

4. Quantum of back wages to be awarded:
The Supreme Court examined whether the Labour Court was justified in awarding full back wages. It referred to various cases, including P.G.I. of M.E. and Research, Chandigarh v. Raj Kumar, Hindustan Motors v. T. K. Bhattacharya, and others, which highlighted that back wages should not be granted automatically and must consider the specific context, including the financial condition of the employer and the period of closure of the establishment. The Court noted that the appellant's factory had been declared sick and remained closed for several years, now under new management. Given these circumstances, the Supreme Court found it unreasonable to burden the appellant with full back wages. Instead, it directed that 50% of the total back wages be paid.

Conclusion:
The Supreme Court allowed the appeal in part, modifying the Labour Court and High Court's orders to the extent that the respondent would receive 50% of the total back wages. The appellant was directed to calculate and deposit this amount within six weeks, with further instructions for the Labour Court to manage the deposit and disbursement process. The appeal was thus allowed in part, with no order as to costs.

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