Hindustan Steel Ltd. Vs. The Presiding
Officer, Labour Court, Orissa & Ors  INSC 221 (15 September 1976)
CITATION: 1977 AIR 31 1977 SCR (1) 586 1976
SCC (4) 222
F 1980 SC1219 (12,13) RF 1980 SC1896 (153) RF
1981 SC 422 (3) RF 1981 SC1253 (8) E 1982 SC 854 (5,6) D 1983 SC 865 (6) R 1983
SC1320 (8,9,11) R 1984 SC 500 (2) E 1990 SC1808 (5)
Industrial Disputes Act 1947--Sec.
2(00)--Meaning of retrenchment---Can termination of service by efflux of time
covered by the expression retrenchment.
The respondents were employed as Head Time
Keepers for a period of 3 years. Pursuant to an alleged policy to streamline
the organisation and to affect economies wherever possible, the appellant chose
not to renew the contracts of service of the Head Time Keepers. There was no
order terminating their services. According to the appellant the termination
was automatic on the expiry of the contractual period of service. The respondents
raised an industrial disputs which was referred by the Government of Orissa to
the Labour Court. The Labour Court vacated the orders of termination and held
that they were entitled to reinstatement with continuity of service and full
back wages. The Labour Court came to the conclusion:
(1) that the respondents were retrenched
without complying with the provisions of section 25F of the Industrial Disputes
Act and, therefore, retrenchment was contrary to law.
(2) The termination was as a result of unfair
labour practice adopted by the appellant employer and was not bonafide.
(3) It was not proved that the respondents
had alternative employment after they were released from service.
The appellant challenged the award by filing
a Writ Petition in the Orissa High Court and contended:
(1) That the services of the, respondents
came to an end by efflux of time and that it was not a case of retrenchment.
(2) That it was for the workmen to prove that
they had tried to minimise their losses by obtaining employment elsewhere.
(3) The Labour Court erred in awarding full
back wages to the respondents without satisfying himself that they had been employed.
The High Court over-ruled the above
contentions and dismissed the Writ Petition.
In an appeal by Special Leave the appellant
(1 ) that the services of the respondents
came to an end by efflux of time and that such termination of service did not
fall within the definition of retrenchment in section 2(00) of the Industrial
(2) That the present appeal is covered
against the appellant by the decision of this Court in the case of State Bank
of India v.N. Sundata Money but that the said decision was contrary to an
earlier decision of a larger Bench in the case of Hari Prasad Shiv Shankar
Dismissing the appeal,
HELD: 1. Section 2(00) which defines
retrenchment makes it clear that the retrenchment means the termination by the
employer of service of a workman for any reasons whatsoever.
Under 8. 25F(a) no workman who has been in
continuous 587 service for not less than one year under an employer can be
retrenched unless he has been given one month's notice or wages in lieu
thereof. A proviso to s. 25F(a) says that no such notice shall be necessary if
the retrenchment is under an agreement which specifies a date for the
termination of service. The proviso would be quite unnecessary if the
retrenchment as defined by section 2(00) was intended not to include
termination of service by efflux of time in terms of an agreement between the
parties. [589B-H, 590A]
2. Hari Prasad Shukla's case does not run
counter to the decision in the case of State Bank of India. In that case what
this Court held was that termination of service on account of the cessation of
the industry itself in a bonafide closure or discontinuance of his business by
the employer does not amount to retrenchment[590B-E] State Bank of India v.N.
Sundara Money; 1976(3) SCR and Pipraich Sugar Mills Ltd. v. Pipraich Sugar
Mills Mazdoor Union  S.C.R. 872 ; followed Hariprasad Shivashankar Shukla
v. A.D. Divikar,  S.C.R. 121; explained.
3. In the Writ petition filed by the
appellant in the High Court the finding that the respondents had no alternative
employment was not challenged. The question of mitigation of loss was not
raised before the Labour Court. The High Court, therefore, rightly refrained
from exercising its discretionary jurisdiction in favour of the employer. [590
CIVIL APPELLATE JURSDICTION: Civil Appeal No.
1580 of 1970.
Appeal by Special Leave from the Judgment and
Order dated 14-8-69 of the Orissa High Court in O.J.C. No. 21/65.
L.N. Sinha, Sol. Genl. of India, Santosh
Chatterjee, G.S. Chatterjee and D.P. Mukherjee; for the Appellant.
P.S. Khera; for Respondent No. 4.
Gobind Das, (Mrs.) S. Bhandare, M.S.
Narasimhan, A.K. Mathur and A.K. Sharma; for Respondent No. 5.
B.P. Singh and A.K. Srivastava; for
Respondent No. 6.
The Judgment of the Court was delivered by
GUPTA, J. Respondents Nos. 3, 4 and 5 had been employed as Head Time Keepers in
the Rourkela Unit of Hindustan Steel Limited, appellant herein. The third and
the fourth respondents were appointed on September 24, 1959 and September 14,
1959 respectively, each for a period of three years.
The fifth respondent was also appointed for a
period of three years from July 15, 1957 but as Time Keeper, not Head Time
Keeper. In his case the period was extended after the expiry of three years
from time to time till October 15,1962. In the meantime he had been promoted from
Time Keeper to Head Time Keeper with effect from November 3, 1960. Pursuant to
an alleged policy to "streamline the organisation and to effect economies
wherever possible", the appellant chose not to renew the contracts of
service the Head Time Keepers who were eight in number including these three
respondents. There was no order terminating their services;
6---1234SCI/76 588 according to the appellant
the termination was automatic on the expiry of the contractual period of
service. The aforesaid three respondents raised an industrial dispute through
their Union, respondent No. 6, Rourkela Mazdoor Sabha. The dispute whether the
termination of the services of the three respondents was justified and, if not,
to what relief they were entitled, was referred by the Government of Orissa for
adjudication to the Labour Court of Orissa, Bhubaneswar.
The Presiding Officer of the Labour Court by
his award dated December 12, 1964 vacated the orders of termination passed
against these three respondents and held that they were entitled to
"reinstatement with continuity of service" and also to "full
wages for the period between the date of their release from service and the
date or dates of their reinstatement". The award is based on the following
(i) the three respondents had been retrenched
from employment, and the requirements of section 25F of the Industrial Disputes
Act not having been satisfied, the retrenchment was contrary to law;
(ii) in terminating the services of these
employees the management had adopted unfair labour practice and the action of
the employer was not bonafide; and that.
(iii) it had not been proved that they had
any alternative employment after they were released from service.
The appellant challenged the award by filing
a writ petition in the Orissa High Court. It was contended before the High
Court that the services of these employees had come to end by efflux of time,
that the management had not terminated their services and as such these were
not cases of retrenchment. Another submission made on behalf of the management
was that the employees not having proved that they had made efforts to minimize
their losses during the period of unemployment, the award for payment of full
back wages was erroneous, The High Court overruled both the contentions and
dismissed the writ petition. In this appeal by special leave the appellant
questions the correctness of the decision of the High Court.
The main question in this appeal is whether
the three respondents had been retrenched by their employer as found by the
Labour Court. If these were cases of retrenchment, the order of reinstatement
made by the Labour Court was obviously a valid order as, admittedly, the
condition precedent to the retrenchment of workmen laid down in section 25F of
the Industrial Disputes Act had not been satisfied. The contention raised on
behalf of the appellant both here and in the High Court was that the services
of the three respondents came to an end by efflux of time and that such
termination of service did not fall within the definition of retrenchment in
section 2(00) of the Industrial Disputes Act. The Solicitor General appearing
for the appellant frankly conceded that this appeal was covered by a recent
decision of this Court, State Bank of India v. N. Sundara Money,(1) and the
decision 1976(3) S.C.R.
589 was against the contention of the
appellant. He however submitted that this decision which was rendered by a
Bench of three Judges was in apparent conflict with an earlier decision of this
Court, Hariprasad Shivshankar Shukla v. A.D. Divikar, (1) which was by a larger
Bench and that Sundarn Money's case therefore required reconsideration.
Retrenchment has, been defined in section
2(00) of the Industrial Disputes Act as follows:
"2. (00). "retrenchment" means
the termination by the employer of the service of a workman for any reason
whatsoever, otherwise than as a punishment inflicted by away of disciplinary action,
but does not include-(a) voluntary retirement of the workman; or (b) retirement
of the workman on reaching the age of superannuation if the contract of
employment between the employer and the workman concerned contains a
stipulation in that behalf; or (c) termination of the service of a workman on
the ground of continued ill-health;" Analysing this definition in State
Bank of India v.N. Sundarn Money, (supra) this Court held:
"Termination.. for any reason whatsoever
are the key words. Whatever the reason, every termination spells retrenchment.
So the sole question is has the employee's service been terminated ? .. A
termination takes place where a term expires either by the active step of the
master or the running out of the stipulated term ..... Termination embraces not
merely the act of termination by the employer, but the fact of termination
...... an employer terminates employment not
merely by passing an order as the service runs. He can, .do so by writing a
composite order, one giving employment and the other ending or limiting it. A
separate, subsequent determination is not the sole magnetic pull of the
provision. A preemptive provision to terminate is struck by the same vice as
the post-appointment termination." This decision, as conceded by the
Solicitor General, goes against the contention of the appellant and is
conclusive on the main question that arises for consideration in this appeal.
It may also be noted that section 25F(a) which lays down that no workman who
has been in continuous service for not less than one year under an employer
shall be retrenched by that employer unless he has been given one month's
notice or wages in lieu of such notice, has a proviso which says that "no
such notice shall be necessary if the retrenchment is under an agreement which
specifies a date for the termination of service".
(1)  S.C.R. 121.
590 Clearly, the proviso would have been
quite necessary if retrenchment as defined in section 2(00) was intended not to
include termination of service by efflux of time in terms of an agreement
between the parties. This is one more reason why it must be held that the
Labour Court was right in taking the view that the respondents were retrenched
contrary to the provisions of section 25F.
In Hariprasad Shivshankar Shukla v.A.D.
Divikar, (supra) to which the Solicitor General referred, one of the questions
that arose for decision was whether the definition of retrenchment in section
2(00) goes "so far beyond the accepted notion of retrenchment as to
include the termination of service of all workmen in an industry when the
industry itself ceases to exist on a bonafide closure or discontinuance of his
business by the employer?" The question was answered in the negative on
the authority of an even earlier case, Pipraich Sugar Mills Ltd. v. Pipraich
Sugar Mills Mazdoor Union,(1) which held that "retrenchment connotes in
its ordinary acceptation that the business itself is being continued but that a
portion of the stall or the force is discharged as surplusage and the
termination of services of all the workmen as a result of the closure of the
business cannot therefore be properly described as retrenchment".
Following Pipraich Sugar Mills' case it was held in Hariprasad Shivshankar
Shukla v. A. D. Divikar (supra) that the words "for any reason
whatsoever" used in the definition would not include a bonafide closure of
the whole business because "it would be against the entire scheme of the
Act to give the definition clause relating to retrenchment such a meaning as
would include within the definition termination of service of all workmen by
the employer when the business itself ceases to exist". On the facts of
the case before us, giving full effect to the words "for any reason
whatsoever" would be consistent with the scope and purpose of section 25F
of the Industrial Disputes Act, and not contrary to the scheme of the Act. We
do not find anything in Hariprasad's case which is inconsistent with what has
been held in State Bank of India v. N. Sundara Money (supra).
Another point made on behalf of the appellant
was that the Presiding Officer of the Labour Court was wrong in awarding full
back wages to the respondents without satisfying himself that they had been
unemployed after they were released from service by the appellant and, further,
that they had taken all reasonable steps to mitigate their losses consequent on
their retrenchment. The Labour Court has found that it had not been proved that
the respondents had any alternative employment. In the writ petition filed by
the appellant in the High Court, the finding that the respondents had no
alternative employment was not challenged.
From the judgment of the High Court it
appears that the submission on the propriety of awarding full back wages to the
respondents was confined to the ground that the respondents had not proved that
they had tried to mitigate their losses during the period of unemployment. In
the special leave petition also what has been urged is that the High Court
should have held that the respondents were not entitled to full back wages
unless they succeeded in proving that they (1)  S.C.R. 872.
591 tried to secure alternative employment
but failed. The Labour Court awarded full back wages to the respondents on the
finding that they had been illegally retrenched. It does not appear that the question
of mitigation of loss for deprivation of employment had at all been raised
before the Labour Court. The High Court therefore refrained from exercising its
"discretionary jurisdiction in favour of the employer" and proposed
not to "deprive the workmen of the benefit they had been found entitled to
by the Presiding Officer". That the respondents were unemployed cannot now
be disputed. In these circumstances the High Court was justified, in our
opinion, in refusing to interfere on this point.
The appeal fails and is dismissed with costs.
P.H.P. Appeal dismissed.