Non-Renewal Of Contract Not Retrenchment: Gauhati High Court Sets Aside Reinstatement Of Workman

The Gauhati High Court, while setting aside an award directing reinstatement of a workman, has held that termination of service on account of non-renewal of a contractual engagement would not fall within the definition of “retrenchment” under Section 2(oo) of the Industrial Disputes Act, 1947.While dealing with Section 2(oo) of the Act, Justice Sanjay Kumar Medhi, noted, “Sub Section (bb) would clarify that it does not include termination as a result of non-renewal.” "It is not in dispute that the engagement of the respondent no. 3 was periodical and contractual in nature” and that “the discontinuation was not done in the midst of the said period but there was no continuation after expiry of that period," the Court added.On facts, Justice Medhi recorded, “… If according to the petitioner, such continuation was not necessary, it cannot be forced upon them as the same would depend on the necessity as well as the fund position.”“this Court is unable to agree with the conclusion and findings of the learned Tribunal that the respondent no. 3 was able to make out a case of reinstatement,” Justice Medhi further clarified while dealing directly with the Tribunal's conclusion on reinstatement.The above ruling was made in a writ petition arising out of a challenge to an Award passed by the Central Government Industrial Tribunal-cum-Labour Court, Guwahati in a Reference Case.As per the factual matrix of the case, the workman was initially appointed in September 1998 on contractual basis for different periods, with the last appointment being from 08.07.2011 till 31.12.2011. The appointment orders specifically stated that no right would accrue in favour of the workman and that the engagement was not against a regular or sanctioned post. Upon expiry of the last contractual term, the engagement was not continued, leading to an industrial dispute on whether such termination without notice and benefits was justified.The management contended that the discontinuation was not “retrenchment” but a consequence of non-renewal of contract, and therefore Section 25F of the Industrial Disputes Act would not apply. It was also argued that there was no employer-employee relationship in the sense assumed by the Tribunal, no mala fide, and that length of service by itself could not create a right to continuation. On the other hand, the workman argued that he had served for a long period under the control of the management, that no notice was issued, and that the action amounted to unfair labour practice.Upon consideration, the High Court noted that the Tribunal had proceeded on the assumption that the length of service showed continuity, but ultimately held that it was “unable to agree” with the Tribunal's conclusion granting reinstatement.The Court noted that back wages for specific periods had not been paid and accordingly directed, “payment of the full back wages of the aforesaid period apart from the payments already made. Though this Court has interfered with the direction for reinstatement, a specific query was made to the learned counsel for the petitioner as regards payment of a lump sum compensation to the respondent no. 3, who, as a matter of fact had served for a long time periodically with the petitioner.”Additionally, the Court while allowing the writ petition and setting aside the impugned Award, ordered, “a direction is given to pay the entire back-wages including the period mentioned above. Additionally, the petitioner is directed to make a payment of an amount of Rs. 3 lakhs to the workman as lump sum compensation in view of the long period of service rendered, though with interruption and the period of litigation. The aforesaid amount be paid within a period of 45 days from today.”Lastly, the Court clarified that such compensation was granted on the peculiar facts of the case and shall not be treated as a precedent.Case Name: Agricultural and Processed Food Products Export Development Authority (APEDA) v. Union of India & Ors.LL Citation: 2026 LiveLaw (Gau) 52Case Number: WP(C)/2933/2020Click Here To Read Judgement

Non-Renewal Of Contract Not Retrenchment: Gauhati High Court Sets Aside Reinstatement Of Workman

Bhavya Singh

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Non-Renewal Of Contract Not Retrenchment: Gauhati High Court Sets Aside Reinstatement Of Workman

Bhavya Singh

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