The Delhi High Court has cancelled a Labour Court order that directed State Bank of India (SBI) to regularise the employment of a worker whose services were illegally terminated.
Justice Shalinder Kaur Jain observed that a violation of the Industrial Disputes Act, 1947, does not automatically give a worker the right to regularisation in government employment. However, the Court directed SBI to pay a lump-sum compensation of ₹1 lakh to the worker as a full and final settlement of all claims related to his illegal termination.
Worker Claimed He Was Employed as a Peon
The dispute began after the worker claimed that SBI had employed him as a peon from July 1994 to May 1995. However, according to records, his work was shown as that of a water supplier.
The worker alleged that SBI terminated his services on June 1, 1995, without giving him any notice or paying retrenchment compensation.
SBI argued that there was no employer-employee relationship between the bank and the worker. The bank claimed that he only supplied water to the branch and was sometimes reimbursed for travel expenses when he delivered important documents.
The case is related to SBI’s Ajmal Khan Road Branch in Karol Bagh, New Delhi. According to the Bank, Umed Singh supplied water to the branch between 6 July 1994 and 31 May 1995, for which he was paid on a per-bucket basis. SBI maintained that he was never appointed as an employee and was only occasionally reimbursed for delivering urgent papers and documents.
Umed Singh, however, claimed that although payments were shown as water-supply charges, he had actually been engaged as a messenger from 6 July 1994 until 31 May 1995. He alleged that he regularly performed duties such as delivering and collecting cheques, carrying official correspondence and undertaking other outdoor assignments. He further contended that his services were terminated with effect from 1 June 1995 without notice or retrenchment compensation, contrary to the Industrial Disputes Act.
Bank Records Showed Worker Performed Regular Duties
After examining the records, the Delhi High Court found that travel vouchers prepared by SBI showed that the worker regularly performed several official duties.
These duties included delivering cheques and official letters, visiting the Reserve Bank of India and other institutions, and working in the bank branch’s record department during fixed working hours.
The Court said the bank’s records and monthly payments showed that the worker was performing duties under the supervision and control of the branch manager. This established an implied contract of service between the worker and SBI.
Worker Completed More Than 240 Days of Service
The Court also found that the worker had continuously worked for more than 240 days as required under Section 25B of the Industrial Disputes Act.
Before terminating his services, SBI had neither issued a notice nor paid retrenchment compensation. The Court held that the termination violated the mandatory requirements of Section 25F of the Industrial Disputes Act and was therefore illegal.
Regularisation Cannot Be Granted Automatically
The matter reached the Labour Court, and labour court orders regularisation of the worker. Despite finding the termination illegal, the Delhi High Court said the Labour Court had exceeded its authority by ordering regularisation of the worker’s employment.
Referring to the Supreme Court’s judgment in the Secretary, State of Karnataka v. Umadevi case, the Court noted that the worker was not appointed through a recognised recruitment process or against a sanctioned post. The Court also observed that the worker had not specifically requested regularisation as a relief in the industrial dispute.
Reinstatement and Regularisation Are Different
The Delhi High Court explained that reinstatement and regularisation of service are two different concepts. Reinstatement restores an employee to the position held before illegal termination. Regularisation, on the other hand, gives an employee permanent status in service.
The Court said the Labour Court went beyond its jurisdiction by granting regularisation when the worker had not specifically sought such relief.
SBI Ordered to Pay ₹1 Lakh Compensation
The Court noted that the worker had worked for SBI for around 11 months and more than three decades had passed since his termination.
Considering these circumstances, the Delhi High Court directed SBI to pay ₹1 lakh as lump-sum compensation to the worker. The amount must be paid within eight weeks and will be treated as a full and final settlement of all claims arising from the illegal termination.
Conclusion: What Banks Should Do
Banks should avoid using temporary workers for long periods without proper appointment. If a person is engaged temporarily and continues to work for more than 240 days, the bank should ensure that all labour laws are followed. Before terminating such a worker, the bank must complete the legal formalities, including giving notice and paying retrenchment compensation wherever required under the Industrial Disputes Act.
Banks should also maintain clear records of the work performed by temporary workers and ensure that regular banking duties are assigned only through proper recruitment. Following these practices can help banks avoid legal disputes and unnecessary litigation in the future.
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