Rajinder Singh Chauhan & Ors Vs. State of Haryana & Ors  Insc 656 (21
Arijit Pasayat & R.V. Raveendran Arijit Pasayat, J.
Appellants call in question legality of the judgment rendered by a Division
Bench of the Punjab and Haryana High Court holding that the appellants' stand
about applicability of Section 25-N of the Industrial Disputes Act, 1947 (in
short the 'Act') was not correct.
Controversy lies within a narrow compass.
Appellants were employees of the Haryana State Federation of Consumers
Co-operative Wholesales Stores Limited (in short the 'CONFED'), fourth
The service conditions of its employees are covered by CONFED Staff Service
Rules, 1975 (in short the 'Rules'). On account of continued financial losses, a
restructuring plan for gainful employment for employees was prepared. It was
noted that Retail Outlets (in short the 'ROL') were causing huge loss to the
organization. Therefore, it was decided that all ROL should be closed being
Retrenchment compensation in terms of Section 25-F of the Act was paid. In
the retrenchment order it was specifically stated as follows:
"It is made clear that employees of CONFED from where the retrenchment
is being effected are not covered by Chapter V-B of the Industrial Dispute Act,
1947, necessitating any permission under Section 25-N of the said Act.
Therefore the retrenchment is being effected in accordance with Chapter V-A by
employing with Section 25-F and other provisions of the said Chapter."
Questioning the retrenchment, writ petitions were filed before the High Court
taking the stand that provisions of Section 25-N and not Section 25-F were
applicable and in any event the appellants were entitled to the benefit in
terms of Rule 35(b) of the Rules. High Court did not find any substance in the
stand and dismissed the Writ Petitions holding that there was compliance with
the requirements of Section 25-F(b) of the Act.
According to the learned counsel for the appellants the High Court has
erroneously held that Section 25-N has no application. Even otherwise, it was
contended that the appellants were entitled to the benefits available under
It was in this context submitted by the learned counsel for the appellants
that after completion of the probation period, the appellants had become
permanent employees and, therefore, they were governed by the Rules and the
benefits under Rule 35(b) were clearly applicable.
In response, learned counsel for the respondents submitted that the High Court's
view is in order.
In order to appreciate rival submissions the relevant provisions need to be
noted. Section 25-F, 25-K, 25-L and 25-N of the Act read as follows:
"25-F: Conditions precedent to retrenchment of workmen: No workman
employed in any industry who has been in continuous service for not less than
one year under an employer shall be retrenched by that employer until (a) the
workman has been given one month's notice in writing indicating the reasons for
retrenchment and the period of notice has expired, or the workman has been paid
in lieu of such notice, wages for the period of the notice;
(b) the workman has been paid, at the time of retrenchment, compensation
which shall be equivalent to fifteen days' average pay (for every completed year
of continuous service) or any part thereof in excess of six months; and (c)
notice in the prescribed manner is served on the appropriate Government (or
such authority as may be specified by the appropriate Government by
notification in the Official Gazette).
25-K: Application of Chapter V-B: (1) The provisions of this Chapter shall
apply to an industrial establishment (not being an establishment of a seasonal
character or in which work is performed only intermittently) in which not less
than one hundred workmen were employed on an average per working day for the
preceding twelve months.
(2) If a question arises whether an industrial establishment is of a
seasonal character or whether work is performed therein only intermittently,
the decision of the appropriate Government thereon shall be final.
25-L: For the purpose of this chapter, - (a) 'Industrial Establishment"
(i) a factory as defined in clause (m) of Section 2 of the Factories Act,
1948(63 of 1948);
(ii) a mine as defined in clause (j) of sub- section(1) of Section 2 of the
Mines Act, 1952 (35 of 1952); or (iii) a plantation as defined in clause (f) of
Section 2 of the Plantations Labour Act, 1951 (69 of 1951);
(b) notwithstanding anything contained in sub-clause(ii) of clause (a) of
Section 2 ;
(i) in relation to any company in which not less than fifty-one percent of
the paid up share capital is held by the Central Government, or (ii) in
relation to any corporation (not being a corporation referred to in sub-clause
(i) of clause (a) of Section 2) established by or under any law made by
Parliament, the Central Government shall be the appropriate Government.
25-N: CONDITIONS PRECEDENT TO RETRENCHMENT OF WORKMEN:
(1) No workman employed in any industrial establishment to which this Chapter
applies, who has been in continuous service for not less than one year under an
employer shall be retrenched by that employer until, - (a) the workman has been
given three months' notice in writing indicating the reasons for retrenchment
and the period of notice has expired, or the workman has been paid in lieu of
such notice, wages for the period of the notice; and (b) the prior permission
of the appropriate Government or such authority as may be specified by that
Government by notification in the Official Gazette (hereafter in this section
referred to as the specified authority) has been obtained on an application
made in this behalf.
(2). An application for permission under sub- section (1) shall be made by
the employer in the prescribed manner stating clearly the reasons for the
intended retrenchment and a copy of such application shall also be served
simultaneously on the workmen concerned in the prescribed manner.
(3) Where an application for permission under sub-section (1) has been made,
the appropriate Government or the specified authority, after making such
enquiry as it thinks fit and after giving a reasonable opportunity of being
heard to the employer, the workmen concerned and the persons interested in such
retrenchment, may, having regard to the genuineness and adequacy of the reasons
stated by the employer, the interests of the workmen and all other relevant
factors, by order and for reasons to be recorded in writing, grant or refuse to
grant such permission and a copy of such order shall be communicated to the
employer and the workmen.
(4) Where an application for permission has been made under sub-section (1)
and the appropriate Government or the specified authority does not communicate
the order granting or refusing to grant permission to the employer within a
period of sixty days from the date on which such application is made, the
permission applied for shall be deemed to have been granted on the expiration
of the said period of sixty days.
Xxx xxx xxx (7). Where no application for permission under sub-section (1)
is made, or where the permission for any retrenchment has been refused, such
retrenchment shall be deemed to be illegal from the date on which the notice of
retrenchment was given to the workman and the workman shall be entitled to all
the benefits under any law for the time being in force as if no notice had been
given to him.
Xxx xxx xxx (9). Where permission for retrenchment has been granted under
sub-section (3) or where permission for retrenchment is deemed to be granted under
sub-section (4), every workman who is employed in that establishment
immediately before the date of application for permission under this section
shall be entitled to receive, at the time of retrenchment, compensation which
shall be equivalent to fifteen days' average pay for every completed year of
continuous service or any part thereof in excess of six months." Section
25-F appears in Chapter V-A of the Act which relates to lay-off and
retrenchment. Section 25-K, L and N appear in Chapter V-B which relates to
special provisions relating to lay-off, retrenchment and closure in certain
establishments. In other words Chapter V-A deals with the general provisions
relating to lay-off and retrenchment, while special provisions have been made
for certain establishments covered by Chapter V-B. Section 25-N refers to
workman in an industrial establishment. The expression "Industrial
Establishment" is defined in Section 25-L, which means a factory or a mine
or a plantation.
Admittedly, the employer is not covered by the definition of the
"Industrial Establishment". Therefore, the High Court was right in
holding that Section 25-N has no application.
There is no dispute that the requirements of Section 25-F have been complied
with by the employer.
The residual question is whether any benefit was to be extended under Rule
35. Rule 4, 10(5&6) and 35(b) of the Rules read as follows:
"Rule 4 (a) "Permanent" employee means an employee who has
been continued on vacant permanent post. The staff of the federation shall be
classified into the following:
Class-I Managing Director, Addl.
Managing Director 2.
Class-II Business Manager, Accounts officers, general Manager, establishment
officer and Assistant Manager.
Class-III Accountants, Assistants, purchase and Sale Assistant Accounts
Assistant, Storekeepers, Cashiers, Clerks, Stenographers/Steno-typists and
Class-IV Driver, Peons, Daftri, Chowkidar and Sweepers.
4(b). "Probationer" means an employee who is provisionally
employed to fill a permanent vacancy of post and has not been made permanent or
confirmed in services. The probation period will be 12 months for all the posts
of Class I, II, III which may further be extended by such time as deemed fit,
but in no case it will exceed 24 months, in all. The probation period for
Class-IV shall be 6 months which may further be extended by such time as may be
deemed fit but in no case total period of probation shall exceed 12 months.
4(c). "Temporary" employee means an employee who has been
appointed for a limited period for work which is of an essentially temporary
4(d). An "Apprentice" means a learner who is given a nominal
stipend during the period which will ordinarily be of 6 months before he is
taken up as a temporary employee.
4(e). Every employee shall be given a written order regarding his
appointment, confirmation, promotion, transfer and ending of service as the
case may be.
Rule 10 (5): If the work and conduct of an employee during the period of
probation is found satisfactory, he will be confirmed from the date of
completion of the probation period.
10(6). No employee will be deemed to have been confirmed in the federation
service unless specific orders in this regard are issued. The appointing
authority shall have to take a decision regarding confirmation or reversion or
removal of a probationer within the prescribed period of probation.
35(b). Confirmed employee shall be entitled to one month's pay and allowance
for every completed year of service. In addition to this, they will also be
entitled to such pay and allowance as may be due to them on account of
accumulated earned leave upto the maximum of one month.
Rule 35(b) inter-alia provides that confirmed employees shall be entitled to
one month's pay and allowance for every completed year of service on
retrenchment of service. In addition they are entitled to pay and allowance as
may be admissible to them on account of accumulative earned leave upto the
maximum of one month.
The stand of the respondents was that the appellants were not confirmed
employees. The appointment order of each of the appellants contains the
stipulations which are as follows:
"1. Your appointment as Sales man is purely temporary.
2. During the period of probation, your services are liable to be terminated
without giving any notice or assigning any reason.
3. You shall be governed by the terms and conditions contained in the Staff
Service Rules of the Federation, amended from time to time." This is a
case where the period of probation is fixed having regard to Rule 4(b) read
with Rule 10 as quoted above.
Rule 10(6) no doubt provides that no employee shall be deemed to have been
confirmed in the service unless specific order in this regard is issued.
Relying on this provision, learned counsel for the fourth respondent submitted
that there was no specific orders of confirmation and, therefore, the
appellants should be deemed to have continued as probationers till the date of
termination of their services. A similar stand was considered in Om Prakash Maurya
v. U.P. Co- operative Sugar Factories Federation, Lucknow and Ors. (AIR 1986 SC
1844). A Constitution Bench of this Court in The State of Punjab v. Dharam
Singh (AIR 1968 SC 1210) noted as follows:
"Where as in the present case, the service rules fix a certain period
of time beyond which the probationary period cannot be extended and an employee
appointed or promoted to a post on probation is allowed to continue in the post
after completion of the maximum period of probation without an express order of
confirmation, he cannot be deemed to continue in that post as a probationer by
implication. The reason is that such an implication is negatived by the service
rule forbidding extension of the probationary period beyond the maximum period
fixed by it. In such a case, it is permissible to draw the inference that the
employee allowed to continue in the post on completion of the maximum period of
probation has been confirmed in the post by implication." In High Court of
M.P. through Registrar and Ors. v.
Satya Narayan Jhavar (2001 (7) SCC 161), this Court categorised the
provisions for probation as follows:
"The question of deemed confirmation in service jurisprudence, which is
dependent upon the language of the relevant service rules, has been the
subject-matter of consideration before this Court, times without number in
various decisions and there are three lines of cases on this point. One line of
cases is where in the service rules or in the letter of appointment a period of
probation is specified and power to extend the same is also conferred upon the
authority without prescribing any maximum period of probation and if the
officer is continued beyond the prescribed or extended period, he cannot be
deemed to be confirmed. In such cases there is no bar against termination at
any point of time after expiry of the period of probation. The other line of
cases is that where while there is a provision in the rules for initial
probation and extension thereof, a maximum period for such extension is also
provided beyond which it is not permissible to extend probation. The inference
in such cases is that the officer concerned is deemed to have been confirmed
upon expiry of the maximum period of probation in case before its expiry the
order of termination has not been passed. The last line of cases is where,
though under the rules maximum period of probation is prescribed, but the same
requires a specific act on the part of the employer by issuing an order of
confirmation and of passing a test for the purposes of confirmation. In such
cases, even if the maximum period of probation has expired and neither any
order of confirmation has been passed nor has the person concerned passed the
requisite test, he cannot be deemed to have been confirmed merely because the
said period has expired." In above view of the matter, the stand of the
appellants that they were deemed to have been confirmed at the end of 24 months
and they were permanent employees is in terra firma. 'Salesmen' belong to Class
III of the category of permanent employees. The definition of
"Probationer" given in Rule 4(b) fully supports the appellants' stand
that the probation period shall not exceed 24 months in all.
Therefore as was held in Om Prakash's case, Satya Narayan Jhavar's case and
Dharam Singh's case (supra) the appellants inferentially have to be treated as
permanent employees, and consequently the benefits under Rule 35(b) were
available to them. But the same shall not be in addition to what is payable
under Section 25-F. The amount which is higher of the two i.e. of Section 25-F
or Rule 35(b) shall be paid to the appellants. If any amount has already been
paid in terms of Section 25-F the same shall be adjusted while making the
payment under Rule 35(L), which shall be made within three months. The appeal
is allowed to the aforesaid extent. No costs.