Delhi High Court: Reinstatement Is the Normal Rule — Workman Reinstated After 36 Years; Repeated Short-Term Appointments with Artificial Breaks for Three Years Held an Unfair Labour Practice
New Delhi | July 1, 2026
In a significant judgment reaffirming the rights of
workmen under the Industrial Disputes Act, the Delhi High Court has directed
the Delhi Financial Corporation (DFC) to reinstate a former peon whose
services had been illegally terminated in 1990 after being employed
continuously through a series of short-term contractual appointments with
artificial breaks.
The Division Bench comprising Justice C. Hari
Shankar and Justice Om Prakash Shukla delivered the judgment in Devender
Kumar v. Delhi Financial Corporation (LPA 274/2013) on 1 July 2026,
holding that once the termination of a workman is found to be illegal and
constitutes an unfair labour practice, reinstatement is the normal rule,
though the Court may appropriately regulate the grant of back wages.
Background of the Case
Devender Kumar was employed as a Peon with the
Delhi Financial Corporation. His services were terminated on 22 May 1990
after he had worked for more than three years through repeated short-term
appointments.
Challenging his termination, he raised an industrial
dispute. The Labour Court was asked to determine whether his termination was
illegal or unjustified and, if so, what relief he was entitled to.
Labour Court Held Termination Illegal
The Labour Court, by its award dated 14 February
1997, held that:
- the
termination amounted to retrenchment under Section 2(oo) of the
Industrial Disputes Act;
- the
employer had failed to comply with the mandatory requirements of Section
25F before retrenching the workman;
- the
repeated contractual appointments with artificial breaks constituted an unfair
labour practice.
Despite these findings, instead of ordering
reinstatement, the Labour Court awarded lump sum compensation of ₹50,000.
Single Judge Upheld Compensation Alone
Both the workman and the Delhi Financial Corporation
challenged the Labour Court's award before the Delhi High Court.
While rejecting DFC's challenge, the Single Judge
agreed that the employer had resorted to unfair labour practice by repeatedly
extending the workman's contractual employment with artificial breaks despite
the work being perennial in nature.
However, relying upon Jagbir Singh v. Haryana State
Agriculture Marketing Board, the Single Judge upheld the award of
compensation instead of reinstatement.
Appeal Before the Division Bench
The workman challenged only the denial of
reinstatement.
Appearing for the appellant, Mr. Anuj Aggarwal,
Advocate, argued that once termination is found to be illegal and in
violation of Section 25F, reinstatement is the normal consequence. He relied
upon the Supreme Court decisions in:
- Deepali
Gundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya
- Jasmer
Singh v. State of Haryana
- Maharashtra
State Road Transport Corporation v. Mahadeo Krishna Naik
It was also argued that the compensation awarded was
unreasonably low.
DFC, on the other hand, contended that compensation
was an adequate relief considering the appellant's short tenure and the limited
scope of interference in a Letters Patent Appeal.
High Court: Reinstatement is the Normal Rule
The Division Bench observed that the finding that the
termination amounted to illegal retrenchment and unfair labour practice had
already attained finality because DFC had not challenged those findings.
The Court relied upon the recent Supreme Court
judgment in Dinesh Chandra Sharma v. Bhartiya Paryatan Vikas Nigam Limited
(2025), which reiterates that reinstatement with back wages is
ordinarily the normal rule where retrenchment is held illegal.
The Bench observed that merely because an employee was
appointed through repeated contractual appointments could not deprive him of
statutory protection where the employer had adopted artificial breaks to avoid
regular employment.
Compensation Retained but Treated as Back Wages
While agreeing that reinstatement ought to have been
granted, the Court did not enhance the monetary compensation.
The Bench noted that:
- the
workman was earning approximately ₹750–₹1,185 per month;
- about
seven years had elapsed between termination and the Labour Court award;
- the
total wages during that period would approximately come to around ₹1 lakh.
Accordingly, the Court held that the compensation of ₹50,000
awarded by the Labour Court would be treated as 50% of the back wages
payable till the date of the Labour Court award.
Final Directions
Allowing the appeal partly, the Delhi High Court
directed that:
- Devender
Kumar shall be reinstated in service.
- He
shall be granted continuity of service from the date of his initial
appointment.
- He
shall receive all consequential service benefits flowing from such
continuity.
- The
compensation of ₹50,000 shall be treated as 50% back wages.
- No
further back wages beyond the amount already upheld shall be payable.
- No
order as to costs was made.
Significance of the Judgment
The judgment reinforces several important principles
governing labour law:
- Employers
cannot avoid statutory obligations by repeatedly issuing fixed-term
appointments with artificial breaks where the work is perennial.
- Once
termination is held to be illegal and amounts to unfair labour practice,
reinstatement remains the ordinary rule.
- Courts
retain discretion regarding back wages but cannot ordinarily deny
reinstatement merely because the employee was appointed on a temporary or
contractual basis.
- Continuity
of service follows where illegal retrenchment has attained finality and is
not challenged by the employer.
The ruling is expected to strengthen protections
available to workmen against disguised contractual employment and arbitrary
retrenchment while reaffirming the remedial framework under the Industrial
Disputes Act.
https://advocateanujaggarwal.com/home.php
Anuj Aggarwal
Advocate
K-17, 2nd Floor, Jangpura Extension,
New Delhi - 110014
483, Block-2, Lawyers Chambers,
Delhi High Court, New Delhi-110003
Mobile – 9891403206
Landline – 011 - 35554905
Email – anujaggarwal1984@gmail.com
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