Delhi High Court Sets Aside SBI Worker’s Regularisation, Awards ₹1 Lakh Compensation for Illegal Retrenchment
Facts
State Bank of India filed a writ petition under Articles 226 and 227 of the Constitution challenging the award dated 13 December 2004 passed by the Central Government Industrial Tribunal-cum-Labour Court-II, New Delhi.
The dispute arose from SBI’s Ajmal Khan Road Branch, Karol Bagh, New Delhi. According to SBI, the respondent, Umed Singh, was never employed by the Bank. SBI claimed that he was only supplying water to the branch between 6 July 1994 and 31 May 1995 and was paid on a per-bucket basis through banker’s cheques.
SBI further claimed that on some occasions, the respondent was reimbursed conveyance charges for delivering urgent papers or documents.
The respondent disputed this version. He claimed that he was actually engaged as a Messenger at the branch from 6 July 1994 and performed regular duties such as delivery and collection of cheques, service of urgent correspondence, outdoor assignments and other messenger/peon work.
According to the respondent, his services were terminated from 1 June 1995 without notice, wages in lieu of notice or retrenchment compensation under the Industrial Disputes Act, 1947.
An industrial dispute was raised. The Central Government referred the dispute to the Tribunal on the question whether SBI’s action in terminating the services of Umed Singh with effect from 1 June 1995 was just and fair.
The Tribunal held that the respondent was not merely a water supplier but was performing duties of a messenger/peon. It found that the so-called water supply bills were used to camouflage the true nature of employment. The Tribunal further held that the respondent had completed more than 240 days of service and that his termination violated Section 25F of the Industrial Disputes Act.
The Tribunal directed SBI to regularise the respondent’s services with continuity from 1 June 1995, but without back wages. SBI challenged the award before the Delhi High Court.
Issues
- Whether the Tribunal’s award suffered from illegality, perversity or jurisdictional error warranting interference under Articles 226 and 227.
- Whether the respondent was a “workman” under Section 2(s) of the Industrial Disputes Act.
- Whether an employer-employee relationship existed between SBI and the respondent despite absence of a formal appointment letter.
- Whether the respondent had completed 240 days of continuous service so as to attract Section 25F of the Industrial Disputes Act.
- Whether termination of the respondent’s engagement amounted to illegal retrenchment.
- Whether the Tribunal was justified in directing regularisation of the respondent’s services.
- What relief was appropriate after nearly three decades had passed since discontinuance of engagement.
Petitioner’s Arguments
SBI argued that no employer-employee relationship ever existed between the Bank and the respondent.
It submitted that the respondent was never appointed as an employee and was only paid for supply of water on a per-bucket basis. The conveyance payments, according to SBI, were only reimbursements for occasional delivery of urgent documents.
SBI contended that no wages or salary were ever paid to the respondent and that the Tribunal wrongly treated him as a workman under the Industrial Disputes Act.
It further argued that the respondent was never appointed through the prescribed recruitment process. The Branch Manager had no authority to appoint subordinate staff, and there was no sanctioned post against which the respondent could have been appointed.
SBI also submitted that the respondent failed to prove completion of 240 days of continuous service. It argued that the burden of proving 240 days was on the workman.
Lastly, SBI contended that even if termination was found defective, the Tribunal could not have directed regularisation. Such a direction, according to SBI, amounted to back-door entry into public employment in violation of Articles 14 and 16 of the Constitution.
Respondent’s Arguments
The respondent supported the Tribunal’s award.
He argued that he was working as a full-fledged messenger/peon and not merely as a water supplier.
He submitted that SBI’s own documents, including conveyance vouchers and monthly payments, showed that he was performing duties such as delivery and collection of cheques, service of urgent correspondence and other outdoor assignments.
According to him, the so-called water supply bills were only a device used by SBI to hide the real nature of his employment.
The respondent argued that he had completed more than 240 days of continuous service and that his termination was illegal because SBI did not comply with Section 25F of the Industrial Disputes Act.
He also argued that absence of a formal appointment order could not deprive him of statutory protection under labour law.
The respondent further submitted that the Tribunal had granted balanced relief by directing continuity of service without back wages.
Analysis of the Law
The Delhi High Court first clarified the limited scope of writ jurisdiction under Articles 226 and 227. The Court held that it does not sit as an appellate court over the Tribunal’s factual findings. Interference is justified only where the award suffers from patent illegality, perversity, jurisdictional error or manifest misapplication of law.
On the question whether the respondent was a workman, the Court examined Section 2(s) of the Industrial Disputes Act. It held that the definition of “workman” is broad and includes persons doing manual, operational or clerical work for hire or reward, whether the employment terms are express or implied.
The Court held that duties such as delivery of documents, outdoor assignments, handling official correspondence and working in the Record Department are clearly manual and operational duties.
The Court rejected SBI’s argument that absence of formal appointment defeated the respondent’s claim. It held that the real nature of the relationship must be determined from the substance of the work performed, not merely from the employer’s description or the mode of payment.
The Court found that SBI’s own conveyance vouchers showed that the respondent was entrusted with official duties, including delivery of clearing cheques, urgent correspondence, visits to bank branches, visits to RBI and work in the Record Department. These records showed supervision and control by the Branch Manager.
The Court therefore upheld the Tribunal’s finding that the respondent was a workman.
On continuous service, the Court held that Section 25B must be interpreted purposively. It is not necessary to prove each individual working day through a separate document if the cumulative material shows continuous engagement.
The Court found that the respondent’s engagement extended from July 1994 to May 1995, that he was regularly paid through banker’s cheques, and that the work was recurring and connected with the branch’s day-to-day functioning. Therefore, the Tribunal’s finding that the respondent completed 240 days was upheld.
The Court then held that discontinuance of the respondent’s engagement amounted to retrenchment under Section 2(oo), and since no notice, wages in lieu of notice or retrenchment compensation was paid, Section 25F was violated.
However, the Court held that violation of Section 25F does not automatically entitle a workman to regularisation or permanent absorption.
Precedent Analysis
The Court relied on Syed Yakoob v. K.S. Radhakrishnan to explain that writ jurisdiction over Tribunal awards is supervisory and not appellate.
On employer-employee relationship, the Court referred to Dharangadhra Chemical Works Ltd. v. State of Saurashtra, where the Supreme Court held that the test is whether the employer had the right to supervise and control the work.
The Court also relied on Silver Jubilee Tailoring House v. Chief Inspector of Shops and Establishments, which held that no single test is conclusive and that payment on a piece-rate basis does not by itself negate employment.
The Court referred to Gujarat Electricity Board v. Hind Mazdoor Sabha and K.V. Anil Mithra v. Sree Sankaracharya University of Sanskrit to hold that the real nature of the engagement must be examined and that irregular appointment does not by itself deprive a workman of protection under the Industrial Disputes Act.
On 240 days and continuous service, the Court relied on Workmen of American Express International Banking Corporation v. Management of American Express International Banking Corporation, where the Supreme Court held that “actually worked under the employer” must receive a broad interpretation.
The Court also considered Surendra Kumar Verma v. Central Government Industrial Tribunal-cum-Labour Court and Mohan Lal v. Management of Bharat Electronics Ltd. on the computation and purpose of Section 25B.
SBI relied on Surendranagar District Panchayat v. Jethabhai Pitamberbhai and State of M.P. v. Arjunlal Rajak to argue that the burden of proving 240 days lies on the workman. The Court accepted the general principle but held that the respondent had discharged the burden through SBI’s own records.
On Section 25F, the Court relied on Anoop Sharma v. Executive Engineer, Public Health Division No. 1, Panipat, where the Supreme Court held that retrenchment without compliance with Section 25F renders the employer’s action void.
On regularisation, the Court applied Secretary, State of Karnataka v. Umadevi, holding that courts cannot ordinarily direct regularisation or permanent absorption where the engagement was not made through a constitutionally compliant recruitment process.
For compensation instead of reinstatement, the Court relied on Jagbir Singh v. Haryana State Agriculture Marketing Board, which recognised that monetary compensation may be appropriate depending on the facts of the case.
Court’s Reasoning
The Court upheld the Tribunal’s finding that the respondent was not merely a water supplier. The Bank’s own documents showed that he was performing regular messenger/peon duties under the supervision of the Branch Manager.
The Court noted that delivery of clearing cheques and official correspondence involved institutional trust and accountability, which was inconsistent with SBI’s claim that he was only an independent water vendor.
The Court also held that SBI failed to produce any vendor agreement, supply contract or commercial document supporting its claim that the respondent was only an independent water supplier.
The Court further found that the respondent’s work was continuous and recurring. The monthly banker cheque payments and conveyance vouchers showed regular utilisation of his services from July 1994 to May 1995.
Since SBI did not produce attendance records, establishment records or evidence of another employee performing those duties, the Court held that the respondent had established completion of 240 days.
The Court therefore held that termination without compliance with Section 25F was illegal.
However, the Court disagreed with the Tribunal’s direction for regularisation. It held that reinstatement after illegal termination and regularisation in service are legally distinct. Regularisation gives permanent status and cannot be ordered merely because the workman completed 240 days or because Section 25F was violated.
The Court noted that there was no sanctioned post, no recognised recruitment process, and no specific claim for regularisation in the industrial dispute. Therefore, the Tribunal exceeded its jurisdiction by directing regularisation.
Considering that the respondent worked for only about eleven months, that more than three decades had passed since the engagement ended, and that the Tribunal itself had denied back wages, the Court held that lump sum compensation would be appropriate.
Conclusion
The Delhi High Court partly allowed SBI’s writ petition.
The Court upheld the Tribunal’s finding that Umed Singh was a workman and that his disengagement violated Section 25F of the Industrial Disputes Act.
However, the Court set aside the Tribunal’s direction requiring SBI to regularise his services.
The Court substituted the regularisation direction with an order directing SBI to pay ₹1,00,000 as lump sum compensation in full and final settlement of all claims arising from discontinuance of his engagement.
The compensation was directed to be paid within eight weeks. If not paid within that period, it would carry simple interest at 8% per annum until realisation.
Case Details
Case: State Bank of India v. Umed Singh
Court: Delhi High Court
Case Number: W.P.(C) 8492 of 2005
Judge: Justice Shail Jain
Date: 07 July 2026
Result: Writ petition partly allowed; finding of illegal retrenchment upheld; regularisation set aside; ₹1 lakh compensation awarded to the workman.
