Introduction:

In the case State of Himachal Pradesh v. Ramesh Chand (Neutral Citation: 2025:HHC:3754), the Himachal Pradesh High Court, through a Single Judge Bench of Justice Ajay Mohan Goel, set aside the termination of a daily wage worker employed by the Public Works Department (PWD). The Court ruled that his termination under the guise of retrenchment was illegal, as it was essentially a punishment imposed without conducting a proper departmental inquiry. The Court upheld the Labour Court’s findings that the dismissal violated the principles of natural justice, emphasizing that termination for misconduct cannot be equated with retrenchment under the Industrial Disputes Act.

Arguments of Both Sides:

The petitioner, the State of Himachal Pradesh, represented by Mr. Sumit Sharma, argued that a preliminary inquiry had established that Ramesh Chand had tampered with official records, and he had even admitted his guilt. Therefore, the termination was justified, and the Labour Court had erred in granting relief to the workman. It was contended that since a one-month notice of retrenchment had been served in accordance with Section 25-F of the Industrial Disputes Act, the termination was legally sound. On the other hand, the respondent, Ramesh Chand, represented by Mr. Sanjeev Bhushan, contended that his dismissal was not a mere retrenchment but a disguised form of punishment imposed without following due process. He argued that he had not been given an opportunity to defend himself through a departmental inquiry, which was a fundamental requirement when termination is based on allegations of misconduct. Moreover, he pointed out that he had been acquitted in the criminal proceedings arising from the same allegations, which further indicated that his termination was wrongful.

Court’s Judgment:

The Himachal Pradesh High Court extensively examined the concept of retrenchment under Section 25-F and Section 2(oo) of the Industrial Disputes Act, which defines retrenchment as termination for any reason other than dismissal by way of disciplinary action. The Court noted that Ramesh Chand’s termination was based on a preliminary inquiry, and there was no proper charge sheet or departmental inquiry conducted before passing the termination order. The Court relied on the Supreme Court’s judgment in Nar Singh Pal v. Union of India (2000 INSC 169), which established that an order of dismissal imposed as a punishment cannot be treated as retrenchment. Since the termination order itself referred to misconduct and was not based on performance or lack of work, it was clearly punitive. The Court further emphasized that once an employee is dismissed for misconduct, the employer must conduct a full-fledged departmental inquiry following the principles of natural justice. Simply serving a notice of retrenchment does not absolve the employer from ensuring procedural fairness. Additionally, the Court took into account the fact that Ramesh Chand was acquitted in the criminal case, which indicated that the allegations against him were not conclusively proven. The Court concluded that the Labour Court had correctly ruled in favor of the workman, as his termination violated established legal principles. Therefore, the petition filed by the State was dismissed, and the order of reinstatement granted by the Labour Court was upheld.