Punitive Retrenchment Without Regular Departmental Inquiry Violates Industrial Disputes Act: HP HC

Himachal Pradesh High Court: A Single Judge Bench of Justice Ajay Mohan Goel set aside the termination of a daily wage worker's services. The court noted that the termination was done under the guise of retrenchment following a preliminary inquiry. It upheld the Labour Court's finding that termination based on alleged misconduct without conducting a proper departmental inquiry was illegal. The court clarified that termination as punishment cannot be treated as simple retrenchment under the Industrial Disputes Act. Background Ramesh Chand was engaged as a daily wage Beldar by the Public Works Department, Himachal Pradesh. Though he claimed to a Supervisor, he was served with a one-month notice of retrenchment on February 26, 1999. The basis for his termination was an allegation of misconduct for tampering with official records. After his termination, Ramesh Chand raised an industrial dispute, and the appropriate government referred the matter to the Labour Court. The reference questioned whether the termination of his services was proper. Before the Labour Court, Ramesh Chand contended that no proper inquiry was conducted, nor were principles of natural justice followed. He argued that he was not given an opportunity to be heard. He further stated that although a criminal case was registered against him regarding the same allegations, he was acquitted by the Judicial Magistrate. The PWD Department, on the other hand, argued that Ramesh Chand was working as a Beldar and was not entitled to work charge status or regularization. They contended that his services were terminated after serving one month's notice of retrenchment because he was found tampering with records instead of assisting in sorting out documents. The Labour Court agreed with Ramesh Chand, and held that an order of dismissal cannot be passed without holding a regular departmental inquiry. Aggrieved by this, the PWD department filed a writ challenging the Labour Court's order. Arguments Mr. Sumit Sharma, representing the State of Himachal Pradesh, argued that a preliminary inquiry had been conducted and that Ramesh Chand had admitted his guilt. Therefore, he argued that the Labour Court could not have ruled in favor of the workman. Thus, he sought setting aside of the award passed by the Labour Court. Mr. Sanjeev Bhushan, appearing for Ramesh Chand, defended the award. He submitted that the findings were clearly supported by the record. He argued that Ramesh Chand's service was terminated in the guise of retrenchment without affording him any due opportunity to defend himself. This, he argued, made the termination illegal. Court's Reasoning Firstly, the court noted that the retrenchment notice dated February 26, 1999, mentioned that Ramesh Chand had been found guilty of tampering official records with malafide intention. It observed that this finding was based only on the preliminary inquiry and his own admission of guilt. Thus, the court ruled that the termination was entirely rooted in the preliminary inquiry itself. Secondly, the court referred to Section 25-F and Section 2(oo) of the Industrial Disputes Act. It noted that the provisions define “retrenchment” as termination for any reason whatsoever, “otherwise than as a punishment inflicted by way of disciplinary action.” The court also observed that an FIR had been registered against Ramesh Chand regarding the same allegations, but he was acquitted in the trial. Thus, noting that Chand's termination was clearly a punishment inflicted on the basis of a preliminary inquiry, the court ruled that it was not simple retrenchment. Finally, relying on Nar Singh Pal v. Union of India (2000 INSC 169), the court held that where an order of termination is passed by way of punishment, it cannot be treated as a simple order of retrenchment. It observed that an order of dismissal passed without holding a regular departmental inquiry is not sustainable in law. The court emphasized that the preliminary inquiry and Ramesh Chand's alleged admission of guilt were inconsequential; since, no proper inquiry was conducted after issuing a charge sheet and no due opportunity was afforded to him to defend himself. Thus, the High Court upheld the Labour court's order, and dismissed the petition. Decided on: 24.02.2025 Neutral Citation: 2025:HHC:3754 | State of HP v. Ramesh Chand Counsel for the Petitioners: Mr. Sumit Sharma Counsel for the Respondent: Mr. Sanjeev Bhushan, with Mr. Sparsh Bhushan Click Here To Read/Download The Order

Punitive Retrenchment Without Regular Departmental Inquiry Violates Industrial Disputes Act: HP HC

Pranav Kumar

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