D. A. Desai, J. - (1.) This appeal by special leave, limited to the question of grant of back wages, raises a very human problem in the field of industrial jurisprudence, namely, where termination of service either by dismissal, discharge or even retrenchment is held invalid and the relief of reinstatement with continunity of service is awarded what ought to be the criterion for grant of compensation, to the extent of full wages or a part of it
(2.) A few relevant facts will highlight the prolem posed. Appellant is a private Limited Company having set up an industrial unit in engineering industry. The raw material for its manufacturing process is tin plates. The appellant served notice of retrenchment on 56 workmen in February, 1974 alleging non-availability of raw material to utilise the full installed capacity, power shedding limiting the working of the unit to 5 days a week, and the mounting loss. Subsequently, negotiations took place between the Union and the appellant leading to an agreement dated 1st April, 1974 whereby the workmen who were sought to be retrenched were taken back in service with continuity of service by the appellant and the workmen on their part agreed to co-operate with the management in implementing certain economy measures and in increasing the productivity so as to make the undertaking economically violable. Simultaneously, the workmen demanded a revision of the wage scales and the appellant pleaded its inability in view of the mounting losses. Some negotiations took place and a draft memorandum of settlement was drawn up which provided for revision of wages on the one hand and higher norms of production on the other, but ultimately the settlement fell through. Appellant thereafter on 1st July, 1974 served a notice of retrenchment on 43 workmen. The Tin Workers' Union, Ghaziabad, espoused the cause of such retrenched workmen and ultimately the Government of Uttar Pradesh by its notification dated 9th October, 1974, issued in exercise of the power conferred by s. 4-K of the U. P. Industrial Disputes Act, 1947, referred the industrial dispute arising out of retrenchment of 43 workmen, between the parties, for adjudication to the Labour Court. Names of the retrenched workmen were set out in an Annexure to the order of reference.
(3.) The Labour Court, after examining the evidence led on both sides and considering various relevant circumstances, held that the reasons stated in the notice dated 1st July, 1974, Ext. E-2, viz., heavy loss caused by nonavailability of tin plates, persistent power curbs and mounting cost of production, were not the real reasons for effecting retrenchment but the real reason was the annoyance felt by the management consequent upon the refusal of the workmen to agree to the terms of settlement contained in the draft dated 5th April, 1974 and, therefore, the retrenchment was illegal. The Labour Court by its award directed that all the workmen shall be reinstated in service from 1st August, 1974 with full back wages, permitting the appellant deduct any amount paid as retrenchment compensation from the amount payable to the workmen as back wages. The appellant challenged the Award in this appeal. When the special leave petition came up for admission, this Court rejected the special leave petition with regard to the relief of reinstatement but limited the leave to the grant of full back wages.;