SC Enhances Compensation to Rs. 1 Lakh per Year for Illegal Retrenchment

Case Details: Ram Prem vs. Deputy Director, Animal Husbandry and Wool Research - [2025] 179 taxmann.com 142 (SC)

Judiciary and Counsel Details

• Vikram Nath & Prashant Kumar Mishra, JJ.
• Ms Shruti Bisht, AOR (VC) for the Petitioner
• Kaushal Pati Gautam, A.A.G., Ashutosh Kumar Sharma, AOR & Ms Saakshi Singh Rawat, Adv. for the Respondent

Facts of the Case

In the instant case, the appellants had worked for about 12 to 15 years and thereafter their services were retrenched, which retrenchment was found to be illegal. In lieu of reinstatement, the Tribunal awarded compensation of Rs. 2 lakhs.

Upon the filing of a writ by the appellants, the High Court increased the compensation to Rs. 10 lakhs, along with 6% interest per annum from the date of initiation of the industrial dispute. Thereafter, an appeal was made before the Supreme Court.

It was noted that It is not in dispute that the appellants had worked for about 12 to 15 years and thereafter their services were retrenched, which retrenchment was found to be illegal. However, in lieu of reinstatement, compensation of Rs.2,00,000/- was awarded by the Tribunal.

Having considered the facts and circumstances of the case and the submissions advanced, it is felt that the compensation awarded by the High Court should be commensurate with the number of years of service rendered by the respective appellants.

Supreme Court Held

The Supreme Court held that the compensation awarded by the High Court should be commensurate with the number of years of service rendered by the respective appellants – Held, yes – Whether, therefore, an amount of Rs. 1 lakh per year of service rendered, along with interest, would be an adequate compensation payable to the appellants.

List of Cases Reviewed

• Order of High Court of Uttarakhand at Nainital in WPMS-2989-2018, 16-11-2021 (para 9) modified.