Legal Review and Analysis of State of Uttar Pradesh vs Krishna Murari Sharma 2025 INSC 1500

Case Synopsis

State of Uttar Pradesh vs. Krishna Murari Sharma (2025 INSC 1500)

Synopsis: The Supreme Court reaffirmed the jurisprudential tenet that inordinate delay in instituting an industrial dispute, though not governed by the Limitation Act, constitutes a vital factor warranting the molding of relief, and substituted reinstatement with lump sum compensation to balance the equities between the workman and the employer.

1. Heading of the Judgment

Case Name: State of Uttar Pradesh versus Krishna Murari Sharma
Citation: 2025 INSC 1500
Court: Supreme Court of India
Judges: Hon’ble Mr. Justice Ahsanuddin Amanullah and Hon’ble Mr. Justice K. Vinod Chandran
Date: December 17, 2025

2. Related Laws and Sections

The judgment primarily interprets and applies the following legal provisions:

• Industrial Disputes Act, 1947 (ID Act): Especially Section 10, which deals with reference of disputes to Labour Courts/Tribunals.

• Article 226 of the Constitution of India: Concerning the power of High Courts to issue writs, including to challenge a reference order.

• Judicial precedents on the principle of delay and its effect on relief in industrial disputes.

3. Basic Judgment Details

Facts of the Case
The respondent, a workman, was terminated from service. He raised an industrial dispute after a delay of approximately 15–16 years. The Labour Court found the termination illegal and awarded reinstatement with back wages from May 31, 2006, to April 1, 2015. The High Court upheld this award. The State of Uttar Pradesh appealed to the Supreme Court, contending that the inordinate delay disentitled the workman to back wages. The State offered a lump sum compensation of Rs. 99,000. The workman opposed, claiming back wages of around Rs. 15,00,000.

Issues Before the Court

1. Whether a delay of 15–16 years in raising an industrial dispute can affect the relief (reinstatement and back wages) granted to the workman?

2. Whether the employer can raise the plea of delay before the Labour Court even if it did not challenge the reference order under Article 226 of the Constitution?

Ratio Decidendi (Court's Reasoning)
The Supreme Court allowed the appeal in part. The Court reasoned as follows:

• The Limitation Act, 1963, does not apply to references under the ID Act. However, delay is a relevant factor that the Labour Court must consider while adjudicating and molding relief.

• There are two distinct legal avenues concerning delay: (i) challenging the reference itself under Article 226, and (ii) raising delay as a defense during adjudication before the Labour Court.

• Even if the employer does not challenge the reference under Article 226, it is permissible to raise the plea of delay before the Labour Court. In this case, the State had raised the delay contention in its written submissions before the Labour Court.

• Relying on precedents like Ajaib Singh v. Sirhind Cooperative and Assistant Engineer, Rajasthan State Agricultural Marketing Board v. Mohan Lal, the Court held that in cases of gross delay, the Labour Court has the discretion to mold the relief by denying reinstatement or full back wages and awarding lump sum compensation instead.

• Given the 16-year delay, the Court found it appropriate to award a lump sum compensation rather than reinstatement and back wages.

4. Core Principle of the Judgment

Title: The Discretionary Power to Mold Relief: Addressing Inordinate Delay in Industrial Disputes

Sub-title: Balancing Equitable Relief with the Imperative Against Stale Claims

Main Issue Body and Analysis
The judgment addresses the critical tension between a workman's right to challenge an illegal termination and the employer's legitimate expectation that stale claims should not be entertained without consequence. The Supreme Court clarified that while there is no statutory limitation period for raising an industrial dispute, inordinate delay is not to be ignored. The core of the judgment lies in recognizing the Labour Court's discretionary power to mold relief based on the circumstances, including delay.

The Court analyzed two lines of precedents: one allowing a challenge to the reference itself under Article 226 on the ground of delay, and the other permitting the Labour Court to consider delay while adjudicating the merits. The Court harmonized these by holding that even if the reference is not challenged, the employer can raise the delay plea before the Labour Court, and the Labour Court must consider it as a factor affecting the appropriateness of relief.

The analysis underscores that industrial jurisprudence aims at substantive justice, not just formal legality. A workman's delay, especially when unexplained and gross, can cause prejudice to the employer (e.g., loss of records, witnesses). Therefore, the relief must be equitable. The Court emphasized that the power to mold relief includes substituting reinstatement and back wages with a lump sum compensation, which sufficiently acknowledges the illegality of termination while accounting for the delay.

This approach ensures that the ID Act's beneficial purpose is not misused to resurrect long-buried disputes, thereby promoting industrial peace and finality.

5. Final Outcome

The Supreme Court

• Allowed the appeal in part.

• Set aside the orders of the Labour Court and the High Court to the extent they granted reinstatement and back wages.

• Upheld the finding that the termination of the respondent workman was illegal.

• Directed the State to pay a lump sum compensation of Rs. 2,50,000 to the workman within two months from the date of receipt of the certified copy of the order.

• Ordered that if the compensation is not paid within two months, the State shall pay interest at the rate of 7% per annum from the date of expiry of the two-month period.

6. MCQ Questions Based on the Judgment

Question 1: In State of Uttar Pradesh vs. Krishna Murari Sharma (2025 INSC 1500), what was the primary contention of the State against the Labour Court's award?

A) The termination was justified and legal.

B) The workman was not an employee of the State.

C) The delay of 15-16 years in raising the dispute disentitled the workman to back wages.

D) The Labour Court lacked territorial jurisdiction.

Question 2: According to the Supreme Court's ruling in the aforementioned case, what is the legal consequence of an inordinate delay in raising an industrial dispute?

A) The reference becomes null and void automatically.

B) The workman forfeits all rights to any relief.

C) The Labour Court has the discretion to mold the relief, such as awarding lump sum compensation instead of reinstatement and back wages.

D) The Limitation Act, 1963, applies directly and bars the claim.