Mohan Lal Vs. Management of M/S Bharat
Electronics Ltd. [1981] INSC 95 (21 April 1981)
DESAI, D.A.
DESAI, D.A.
GUPTA, A.C.
CITATION: 1981 AIR 1253 1981 SCR (3) 518 1981
SCC (3) 225 1981 SCALE (1)872
CITATOR INFO :
R 1982 SC 854 (5,6) RF 1983 SC1320 (11) RF
1984 SC 500 (2) F 1984 SC 502 (2) RF 1986 SC 458 (3) RF 1986 SC1680 (4)
ACT:
Retrenchment-Section 2(oo) of the Industrial
Dispute Act-Whether termination of the services of a workman who has put in 240
working days within a period of one year amounts to retrenchment and whether
for non-compliance with the provisions of section 25F the termination of
service is ab initio void-Sections 25A and 25B, scope of-Effect of termination
of service which is ab initio void and inoperative, explained.
HEADNOTE:
The appellant was employed with the
respondent as Salesman at its Delhi Sales Depot on a salary of Rs. 520/- per
month from 8th December, 1973. His service was abruptly terminated by letter
dated 12th October, 1974 with effect from 19th October, 1974. Consequent upon
his termination, an industrial dispute was raised and referred to the Labour
Court, Delhi, on 24th April, 1976. The Labour Court, on evaluation of evidence
both oral and documentary, held that the termination of the service was in
accordance with the standing orders justifying the removal of the employee on
unsuccessful probation during the initial or extended period of probation and,
therefore, the termination would not constitute retrenchment within the meaning
of section 2(oo) read with section 25F of the Industrial Dispute Act. The
Labour Court accordingly held that the termination was neither illegal nor
improper nor unjustified and the claim of the appellant was negatived. Hence
the appeal by special leave.
Allowing the appeal, the Court
HELD: 1. The termination of service of the
appellant was an initio void and inoperative. His case not being covered by any
of the excepted or excluded categories referred to under section 2(oo) and he
has rendered continuous service for one year, the termination of his service
would constitute retrenchment. The pre-condition for a valid retrenchment has
not been satisfied in this case and therefore he will be entitled to all
benefits including back wages etc. (534F G, 535-C-D)
2. Where the termination is illegal
especially where there is an ineffective order of retrenchment, there is
neither termination nor cessation of service and a declaration follows that the
workmen concerned continues to be in service with all consequential benefits.
It is no doubt true that the Supreme Court had held that before granting
reinstatement the court must weigh all the facts and exercise discretion
properly whether to grant reinstatement or to award compensation.
519 Here, no case has been made out for
departure from the normally accepted approach of the courts in the field of
social justice. (535A C) Ruby General Insurance Co. Ltd. v. Chopra (P.P.),
(1970) 2 Labour Law Journal, 63 and Hindustan Steel Ltd., Rourkela v. A.K. Roy
and Others, [1970] 3 S.C.R. 343, referred to.
3:1. Niceties and semantics apart,
termination by the employer of the service of a workman for any reason
whatsoever in section 2(oo) of the Industrial Dispute Act, would constitute
retrenchment except in cases excepted in the section itself. The excepted or
excluded cases are where termination is by way of punishment inflicted by way
of disciplinary action, voluntary retirement of the workman, 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, and termination of the service of a workman on the ground of continued
illhealth. (524 E-F) 3:2. It was not open to the Labour Court to record a
finding that the service of the appellant was terminated during the period of
probation on account of his unsatisfactory work which did not improve in spite
of repeated warnings when there was not even a whisper of any period of
probation in the appointment order or in the rules. The termination of service
being, for a reason other than the excepted category, it would indisputably be
retrenchment within the meaning of section 2(oo) of the Industrial Dispute
Act.(523 G-H, 524A, 525Z) Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills
Mazdoor Union, [1956] S.C.R. 172; Hariprasad Shivshankar Shukla v, A. D.
Divikar, [1957] S.C.R. 121; State of Bombay and Ors. v. The Hospital Mazdoor
Sabha and Ors. [1960] 2 S.C.R. 866 at 872; State Bank of India v. N. Sundara
Money, [1976] 3 S.C.R. 160; Hindustan Steel Ltd. v. The Presiding Officer,
Labour Court, Orissa and Ors., [1977] S.C.R. 586;
Santosh Gupta v. State Bank of Patiala,
[1980] 3 S.C.R. 340 and Delhi Cloth and General Mills Ltd. v. Shambhu Nath
Mukerjee, [1978] 1 S.C.R. 591, explained and followed.
4. Before a workman can complain of
retrenchment being not in consonance with section 25F of the Industrial Dispute
Act, he has to show that he has been in continuous service for not less than
one year under that employer who has retrenched him from service. (529 C) 5:1.
The language employed in sub-sections (1) and (2) of section 25B does not admit
of any dichotomy, namely, (a) sub-section (1) providing for uninterrupted
service and (b) sub-section (2) comprehending a case where the workman is in
continuous service. Sub-sections (1) and (2) introduce a deeming fiction as to
in what circumstances a workman could be said to be in continuous service for
the purposes of Chapter V-A. (530 G H) 5:2. Sub-section (1) provides deeming
fiction in that where a workman is in service for a certain period for that
period even if service is interrupted on account of sickness or authorised
leave or an accident or a strike which is not illegal or a lockout or a
cessation of work which is not due to any fault on the 520 part of the workman.
Sub-section (1) mandates that interruptions therein indicated are to be ignored
meaning thereby that on account of such cessation an interrupted service shall
be deemed to be uninterrupted and such uninterrupted service shall for the
purposes of Chapter V-A be deemed to be continuous service. (530H, 531A, C-D)
5:3. Sub-section (2) incorporates another deeming fiction for an entirely
different situation. It is not necessary for the purposes of sub-section (2)
(a) that the workman should be in service for a period of one year. If he is in
service for a period of one year and that if that service is continuous service
within the meaning of sub- section (1) his case would be governed by
sub-section (1) and his case need not be covered by sub-section (2). Sub-
section (2) envisages a situation not governed by sub- section (1). And
sub-section (2) provides for a fiction to treat a workman in continuous service
for a period of one year despite the fact that he has not rendered
uninterrupted service for a period of one year but he has rendered service for
a period of 240 days during the period of 12 calendar months counting backwards
and just proceeding the relevant date being date of retrenchment.
(531D-E. 532A-B) Both on principle and on
precedent section 25B(2) comprehends the situation where workman is not in
employment for a period of 12 calendar months but has rendered service for a
period of 240 days within the period of 12 calendar months commencing and
counting backwards from the relevant date that is the date of retrenchment, if
he has, he would be deemed to be in continuous service for a period of one year
for the purpose of section 25B and Chapter V-A. In the instant case, the
appellant's case indisputably falls within section 25 B(2) (a) and he shall be
deemed to be in continuous service for a period of one year for the purpose of
Chapter V-A. (534B-D) Sur Enamel and Stamping Works (P) Ltd. v. Their Workmen,
[1964] 3 S.C.R. 616. explained and distinguished.
Surendra Kumar and Ors. v. Central Government
Industrial-cum Labour Court, New Delhi and Another, [1981] 1 S.C.R. 789
followed.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 364 of 1981.
Appeal by special leave from the Award dated
the 31st May, 1980 of the Additional Labour Court, Delhi in Industrial I.D. No.
62 of 1976.
V. M. Tarkunde, Hemant Sharma and P. H.
Parekh for the Appellant.
S. Markendaya for the Respondent.
The Judgment of the Court was delivered by
DESAI, J. The appellant Mohan Lal was employed with the respondent M/s Bharat
Electronics Limited as Salesman at its Delhi 521 Sales Depot on a salary of Rs.
520 per month from 8th December, 1973. His service was abruptly terminated by
letter dated 12th October 1974 with effect from 19th October, 1974. Consequent
upon this termination, an industrial dispute was raised and the Delhi
Administration, by its order dated 24th April, 1976 referred the following
dispute to the Labour Court, Delhi for adjudication:
"Whether the termination of services of
Shri Mohan Lal is illegal and/or unjustified and if so, to what relief is he
entitled and what directions are necessary in this respect?" As the
respondent management at one stage failed to participate in the proceedings,
the reference was heard ex- parte and the Labour Court made an award on 2nd
May, 1977 directing reinstatement of the appellant with continuity of service
and full back wages at the rate of Rs. 520 per month from the date of
termination till reinstatement.
Subsequently, respondent moved for setting
aside the ex- parte award and seeking permission to participate in the
proceedings, which motion was granted. The respondent inter alia contended that
the appellant was a salesman appointed on probation for six months and
subsequently on the expiry of the initial period, the period of probation was
extended upto 8th Sept., 1974 and on the expiry of this extended period of
probation, his service was terminated by letter dated 12th October, 1974, as he
was not found suitable for the post to which he was appointed.
The Labour Court, on evaluation of evidence
both oral and documentary, held that the termination of the service was in
accordance with the standing orders justifying the removal of the employee on
unsuccessful probation during the initial or extended period of probation; and
therefore the termination in this case, according to the Labour Court, would
not constitute retrenchment within the meaning of section 2(oo) read with
section 25F of the Industrial Dispute Act. Accordingly it was held that the
termination was neither illegal nor improper nor unjustified and the claim of
the appellant was negatived. Hence, this appeal by special leave.
The only point for determination is whether
even in the circumstances, as pleaded by the respondent termination of service
of the appellant would amount to retrenchment within the meaning of the
expression as defined in section 2(oo) of the Industrial Dispute Act, 1947
(`Act' for short)? If the answer is in affirmative, the consequential question
will have to be answered whether in view of 522 the admitted position that the
mandatory pre-condition prescribed by section 25F for a valid retrenchment
having not been satisfied, the appellant would be entitled to reinstatement
with back wages or as contended by Mr. Markandey in the special facts of this
case, the Court should not direct reinstatement but award compensation in lieu
of reinstatement.
An apparent contradiction which stares in the
eye on the stand taken by the respondent is overlooked by the Labour Court
which has resulted in the miscarriage of justice. In this context the facts as
alleged by the respondent may be taken as true. Says the respondent, that the
appellant was appointed by order dated July 21, 1973.
The relevant portion of the order of which
notice may be taken is paragraph 2. It reads as under:
"This appointment will be temporary in
the first instance but is likely to be made permanent." Paragraph 4 refers
to the consequences of a temporary appointment, namely, that the service would
be terminable without notice and without any compensation in lieu of notice on
either side. Paragraph 6 provides that the employment of the appellant shall be
governed by rules, regulations and standing orders of the company then in force
and which may be amended, altered or extended from time to time and the
acceptance of the offer carries with it the necessary agreement to obey all
such rules, regulations and standing orders. There is not even a whisper of any
period of probation prescribed for the appointment nor any suggestion that there
are some rules which govern appointment of the appellant which would initially
be on probation. Thus, the appointment was temporary in the first instance and
there was an inner indication that it was likely to be made permanent. Even if
this promise of likely to be made permanent is ignored, indubitably the
appointment was temporary. The respondent, however, says that note 3 at the
foot of the appointment order intimates to the appellant that in the event of
his permanent appointment the temporary service put in by him will be counted
as part of probationary period of service as required under the rules.
This consequence would follow in the event of
permanent appointment being offered and this is clear from the language
employed in note 3. In this case no permanent appointment having been offered,
the consequence set out in note 3 could not have emerged. Assuming, however,
that this note incorporates all the necessary rules and regulations in the
contract of employment, it was incumbent upon 523 the respondent to show that
even when appointment is not shown to be on probation in the order of
appointment, in view of the rules governing the contract of employment there
shall always be a period of probation for every appointee.
Witness Bawdekar who appeared on behalf of
the respondent stated in his evidence that the appellant was appointed as a
probationary salesman. Even according to him prescribed period of probation was
six months. He then stated that by the letter dated July 10, 1974, respondent
informed the appellant that his service should have been terminated on the
expiry of initial period of probation, i.e. on June 8, 1974. However, as a
special case the probation period was extended upto September 8, 1974. No rule
was pointed out to us enabling the respondent to extend the initial period of
probation. Assuming even then that such was the power of the respondent, on
September 9, 1974, the period of probation having not been further extended nor
termination of service having been ordered during or at the end of the
probationary period on the ground of unsuitability, the consequence in law is
that either he would be a temporary employee or a permanent employee as per the
rules governing the contract of employment between the appellant and the
respondent.
Admittedly his service was terminated by
letter dated October 12, 1974, with effect from October 19, 1974. It is not the
case of the respondent that there was any further extension of the probationary
period. Thus, if the initial appointment which was described as temporary is
treated on probation, even according to the respondent the period of probation
was six months, it expired on June 8, 1974. Even if by the letter dated July
10, 1974, the period of probation was said to have been extended, on its own terms
it expired on September 8, 1974. The service of the appellant was terminated
with effect from October 19, 1974.
What was the nature and character of service
of the appellant from September 8, 1974 when the extended period of probation
expired and termination of his service on October 19, 1974? He was
unquestionably not on probation. He was either temporary or permanent but not a
probationer. How is it open then to the Labour Court to record a finding that
the service of the appellant was terminated during the period of probation on
account of his unsatisfactory work which did not improve in spite of repeated
warnings? The Labour Court concluded that notwithstanding the fact that the
appellant was not shown to have been placed on probation in the initial
appointment letter but in view of the subsequent orders there was a period of
probation prescribed for the appellant and that his service was terminated
during the extended period of 524 probation. This is gross error apparent on
the face of the record which, if not interfered with, would result in
miscarriage of justice.
If on October 19,1974, the appellant was not
on probation and assuming maximum in favour of the respondent that he was a
temporary employee, could termination of his service. even according to the
respondent, not as and by way of punishment but a discharge of a temporary
servant, constitute retrenchment within the meaning of section 2(oo), is the
core question. Section 2(oo) reads as under:
"2(oo) "retrenchment" means
the termination by the employer of the service of a workman for any reason
whatsoever, otherwise than as a punishment inflicted by way 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." Niceties and semantics apart, termination
by the employer of the service of a workman for any reason whatsoever would
constitute retrenchment except in cases excepted in the section itself. The
excepted or excluded cases are where termination is by way of punishment
inflicted by way of disciplinary action, voluntary retirement of the workman,
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, and termination of the service of a workman on the
ground of continued ill- health. It is not the case of the respondent that
termination in the instant case was a punishment inflicted by way of
disciplinary action. If such a position were adopted, the termination would be
a initio void for violation of principle of natural justice or for not
following the procedure prescribed for imposing punishment.
It is not even suggested that this was a case
of voluntary retirement or retirement on reaching the age of superannuation or
absence on account of continued ill- health. The case does not fall under any
of the excepted categories. There is thus termination of 525 service for a
reason other than the excepted category. It would indisputably be retrenchment
within the meaning of the word as defined in the Act. It is not necessary to
dilate on the point nor to refer to the earlier decisions of this Court in view
of the later two pronouncements of this Court to both of which one of us was a
party. A passing reference to the earliest judgment which was the sheet anchor
till the later pronouncements may not be out of place. In Hariprasad
Shivshankar Shukla v. A.D. Divikar, after referring to Pipraich Sugar Mills
Ltd. v. Pipraich Sugar Mills Mazdoor Union, a Constitution Bench of this Court
quoted with approval the following passage from the aforementioned case:
"But retrenchment connotes in its
ordinary acceptation that the business itself is being continued but that a
portion of the staff or the labour 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." This
observation was made in the context of the closure of an undertaking and being
conscious of this position, the question of the correct interpretation of the
definition of the expression `retrenchment' in section 2(oo) of the Act was
left open. Reverting to that question, the view was reaffirmed but let it be
remembered that the two appeals which were heard together in Shukla's case were
cases of closure, one Barsi Light Railway Company Ltd., and another Shri Dinesh
Mills Ltd. Baroda With specific reference to those cases, in State Bank of
India v. N. Sundara Money, Krishna Iyer J. speaking for a three judges bench,
interpreted the expression `termination..for any reason whatsoever' as under:
"A break-down of s. 2(oo) unmistakably
expands the semantics of retrenchment. `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?
Verbal apparel apart, the substance is decisive. A termination takes place
where a term expires either by the active step of the master of the running out
of the stipulated term. To protect the weak against the strong this policy of
comprehensive definition has been effectuated.
Termination embraces not merely the act of
termination by the employer, but the fact of termination howsoever produced.
May be, the present may be a hard case, but we can visualise abuses by
employers, by suitable verbal devices, circumventing the armour of section 25F
and section 2(oo). Without speculating on possibilities, we may agree that
`retrenchment' is no longer terra incognita but area covered by an expansive
definition. It means `to end, conclude, cease'. In the present case the
employment ceased, concluded, ended on the expiration of nine
days-automatically may be, but cessation all the same. That to write into the order
of appointment the date of termination confers no moksha from section 25F(b) is
inferable from the proviso to section 25F(1). True, the section speaks of
retrenchment by the employer and it is urged that some act of volition by the
employer to bring about the termination is essential to attract section 25F and
automatic extinguishment of service by effluxion of time cannot be
sufficient." It would be advantageous to refer to the facts of that case
to appreciate the interpretation placed by this Court on the relevant section.
State Bank of India appointed the respondent by an order of appointment which
incorporated the two relevant terms relied upon by the Bank at the hearing of
the case. They were: (i) the appointment is purely a temporary one for a period
of 9 days but may be terminated earlier, without assigning any reason there for
at the Bank's discretion; (ii) the employment, unless terminated earlier, will
automatically cease at the expiry of the period i.e.
18.11.1972. It is in the context of these
facts that the Court held that where the termination was to be automatically
effective by a certain date as set out in the order of appointment it would
nonetheless be a retrenchment within the meaning section 2(oo) and in the
absence of strict compliance with the requirements of section 25F, termination
was held to be invalid.
Continuing this line of approach, in
Hindustan Steel Ltd. v. The Presiding Officer, Labour Court, Orissa and Ors., a
bench of three judges examined the specific contention that the decision in
Sundara Money's case runs counter to the construction placed on that section by
a Constitution Bench and, therefore, the decision is 527 per incuriam. This
Court analysed in detail Shukla's case and Sundara Money's case and ultimately
held that the Court did not find anything in Shukla's case which is
inconsistent with what has been held in Sundara Money's case. In reaching this
conclusion it was observed that in Shukla's case the question arose in the
context of closure of the whole of the undertaking while in Hindustan Steel's
case and Sundara Money's case the question was not examined in the context of
closure of whole undertaking but individual termination of service of some
employees and it was held to constitute retrenchment within the meaning of the
expression. This question again cropped up in Santosh Gupta v. State Bank of
Patiala. Rejecting the contention for reconsideration of Sundara Money's case
on the ground that it conflicted with a Constitution Bench decision in Shukla's
case and adopting the ratio in Hindustan Steel's case that there was nothing in
the two aforementioned decisions which is inconsistent with each other and
taking note of the decision in Delhi Cloth and General Mills Ltd. v. Shambu
Nath Mukerjee wherein this Court had held that striking off the name of a
workman from the rolls by the management was termination of service which was
retrenchment within the meaning of section 2(oo), the Court held that discharge
of the workman on the ground that she had not passed the test which would
enable her to obtain confirmation was retrenchment within the meaning of
section 2(oo) and, therefore, the requirements of section 25F had to be
complied with. It was pointed out that since the decision in Shukla's case, the
Parliament stepped in and introduced section 25FF and section 25FFF by
providing that compensation shall be payable to workman in case of transfer or
closure of the undertaking, as if the workmen had been retrenched. The effect
of the amendment was noticed as that every case of termination of service by
act of employer even if such termination was as a consequence of transfer or
closure of the undertaking was to be treated as `retrenchment' for the purposes
of notice, compensation, etc. The Court concluded as under:
"Whatever doubts might have existed
before Parliament enacted sections 25FF and 25FFF about the width of section
25F there cannot be any doubt that the expression `termination of service for
any reason whatsoever' now covers every kind of termination of service except
those not 528 expressly provided for by other provisions of the Act such as
sections 25FF and 25FFF." Reverting to the facts of this case, termination
of service of the appellant does not fall within any of the excepted, or to be
precise, excluded categories. Undoubtedly therefore the termination would
constitute retrenchment and by a catena of decisions it is well settled that
where pre- requisite for valid retrenchment as laid down in section 25F has not
been complied with, retrenchment bringing about termination of service is ab
initio void. In State of Bombay and Ors. v. The Hospital Mazdoor Sabha and
Ors., this Court held that failure to comply with the requirement of section
25F which prescribes a condition precedent for a valid retrenchment renders the
order of retrenchment invalid and inoperative. In other words, it does not
bring about a cessation of service of the workman and the workman continues to
be in service. This was not even seriously controverted before us.
It was, however, urged that section 25F is
not attracted in this case for an entirely different reason. Mr. Markendaya
contended that before section 25F is invoked, the condition of eligibility for
a workman to complain of invalid retrenchment must be satisfied. According to him
unless the workman has put in continuous service for not less than one year his
case would not be governed by section 25F. That is substantially correct
because the relevant provision of section 25F provides as under:
"25F. "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;
Provided that no such notice shall be
necessary if the retrenchment is under an agreement which specifies a date for
the termination of service;
529 (b) the workman has been paid, at the
time of retrenchment, compensation which shall be equivalent of 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)."
Before a workman can complain of retrenchment being not in consonance with
section 25F, he has to show that he has been in continuous service for not less
than one year under that employer who has retrenched him from service. Section
25B is the dictionary clause for the expression `continuous'. It reads as
under;
"25B (1) a workman shall be paid to be
in continuous service for a period if he is, for that period in uninterrupted
service, including service which may be interrupted on account of sickness or
authorised leave or an accident or a strike which is not illegal, or a lockout
or a cessation of work which is not due to any fault on the part of the
workman;
(2) where a workman is not in continuous
service within the meaning of clause (1) for a period of one year or six
months, he shall be deemed to be in continuous service under an employer- (a) for
a period of one year, if the workman, during a period of twelve calendar months
preceding the date with reference to which calculation is to be made, has
actually worked under the employer for not less than- (i) one hundred and
ninety days in the case of a workman employed below ground in a mine; and (ii)
two hundred and forty days, in any other case;
530 (b) for a period of six months, if the
workman, during a period of six calendar months preceding the date with
reference to which calculation is to be made has actually worked under the
employer for not less than- (i) ninety-five days, in the case of a workman
employed below ground in a mine;
and (ii) one hundred and twenty days, in any
other case.
Explanation- For the purposes of clause (2),
the number of days on which a workman has actually worked under an employer
shall include the days on which- (i) he has been laid-off under an agreement or
as permitted by standing orders made under the Industrial Employment (Standing
Orders) Act, 1946, or under this Act or under any other law applicable to the
industrial establishment;
(ii) he has been on leave with full wages,
earned in the previous years;
(iii)he has been absent due to temporary
disablement caused by accident arising out of and in the course of his
employment; and (iv) in the case of a female, she has been on maternity leave;
so, however, that the total period of such maternity leave does not exceed
twelve weeks.
Mr. Markendaya contended that clauses (I) and
(2) of section 25B provide for two different contingencies and that none of the
clauses is satisfied by the appellant. He contended that sub-section (I)
provides for uninterrupted service and sub-section (2) comprehends a case where
the workman is not in continuous service. The language employed in sub-sections
(1) and (2) does not admit of this dichotomy. Sub-sections (1) and (2)
introduce a deeming fiction as to in what circumstances a workman could be said
to be in continuous service for the purposes of Chapter VA. Sub-section (1)
provides a deeming fiction in that where a workman is in service 531 for a
certain period he shall be deemed to be in continuous service for that period
even if service is interrupted on account of sickness or authorised leave or an
accident or a strike which is not illegal or a lockout or a cessation of work
which is not due to any fault on the part of the workman. Situations such as
sickness, authorised leave, an accident, a strike not illegal, a lockout or a
cessation of work would ipso facto interrupt a service. These interruptions
have to be ignored to treat the workman in uninterrupted service and such
service interrupted on account of the aforementioned causes which would be
deemed to be uninterrupted would be continuous service for the period for which
the workman has been in service. In industrial employment or for that matter in
any service, sickness, authorised leave, an accident, a strike which is not
illegal, a lockout and a cessation of work not due to any fault on the part of
the workman, are known hazards and there are bound to be interruptions on that
account. Sub- section (I) mandates that interruptions therein indicated are to
be ignored meaning thereby that on account of such cessation an interrupted
service shall be deemed to be uninterrupted and such uninterrupted service
shall for the purposes of Chapter VA be deemed to be continuous service.
That is only one part of the fiction.
Sub-section (2) incorporates another deeming
fiction for an entirely different situation. It comprehends a situation where a
workman is not in continuous service within the meaning of sub-section (1) for
a period of one year or six months, he shall be deemed to be in continuous
service under an employer for a period of one year or six months, as the case
may be, if the workman during the period of 12 calendar months just preceding
the date with reference to which calculation is to be made, has actually worked
under that employer for not less than 240 days. Sub-section (2) specifically
comprehends a situation where a workman is not in continuous service as per the
deeming fiction indicating in sub-section (1) for a period of one year or six
months. In such a case he is deemed to be in continuous service for a period of
one year if he satisfies the conditions in clause (a) of sub-section (2). The
conditions are that commencing the date with reference to which calculation is
to be made, in case of retrenchment the date of retrenchment, if in a period of
12 calendar months just preceding such date the workman has rendered service
for a period of 240 days, he shall be deemed to be in continuous service for a
period of one year for the purposes of Chapter VA. It is not necessary for the
purposes of sub-section (2) (a) that the workman should be in service 532 for a
period of one year. If he is in service for a period of one year and that if
that service is continuous service within the meaning of sub-section (1) his
case would be governed by sub-section (1) and his case need not be covered by
sub-section (2). Sub-section (2) envisages a situation not governed by
sub-section (1). And sub-section (2) provides for a fiction to treat a workman
in continuous service for a period of one year despite the fact that he has not
rendered uninterrupted service for a period of one year but he has rendered
service for a period of 240 days during the period of 12 calendar months
counting backwards and just preceding the relevant date being the date of
retrenchment. In other words, in order to invoke the fiction enacted in
sub-section 2(a) it is necessary to determine first the relevant date, i.e.,
the date of termination of service which is complained of as retrenchment.
After that date is ascertained, move backward to a period of 12 months just
preceding the date of retrenchment and then ascertain whether within the period
of 12 months, the workman has rendered service for a period of 240 days. If
these three facts are affirmatively answered in favour of the workman pursuant
to the deeming fiction enacted in sub-section 2(a) it will have to be assumed
that the workman is in continuous service for a period of one year and he will
satisfy the eligibility qualification enacted in section 25F. On a pure
grammatical construction the contention that even for invoking sub-section (2)
of section 25B the workman must be shown to be in continuous service for a
period of one year would render sub-section (2) otiose and socially beneficial
legislation would receive a set back by this impermissible assumption. The
contention must first be negatived on a pure grammatical construction of
sub-section (2). And in any event, even if there be any such thing in favour of
the construction, it must be negatived on the ground that it would render
sub-section (2) otiose. The language of sub- section (2) is so clear and
unambiguous that no precedent is necessary to justify the interpretation we
have placed on it. But as Mr. Markandaya referred to some authorities, we will
briefly notice them.
In Sur Enamel and Stamping Works (P) Ltd. v.
Their Workmen, referring to section 25B as it then stood read with section
2(eee) which defined continuous service, this Court held as under:
"The position therefore is that during a
period of employment for less than 11 calendar months these two 533 persons
worked for more than 240 days. In our opinion that would not satisfy the
requirement of section 25B.
Before a workman can be considered to have completed
one year of continuous service in an industry it must be shown first that he
was employed for a period of not less than 12 calendar months and, next that
during those 12 calendar months had worked for not less than 240 days. Where,
as in the present case, the workmen have not at all been employed for a period
of 12 calendar months it becomes unnecessary to examine whether the actual days
of work numbered 240 days or more. For, in any case, the requirements of
section 25B would not be satisfied by the mere fact of the number of working
days being not less than 240 days." If section 25B had not been amended,
the interpretation which it received in the aforementioned case would be
binding on us. However, section 25B and section 2(eee) has been the subject-matter
of amendment by the Industrial Disputes (Amendment) Act, 1964. Section 2(eee)
was deleted and section 25B was amended. Prior to its amendment by the 1964
amendment Act, section 25B read as under:
"For the purposes of ss. 25C and 25F a
workman who during the period of 12 calendar months has actually worked in an
industry for not less than 240 days, shall be deemed to have completed one year
of continuous service in the industry." We have already extracted section
25B since its amendment and the change in language is the legislative
exposition of which note must be taken. In fact, we need not further dilate
upon this aspect because in Surendra Kumar Verma and Ors. v. Central Government
Industrial-cum-Labour Court, New Delhi and Anr., Chinnappa Reddy. J., after
noticing the amendment and referring to the decision in Sur Enamel and Stamping
Works (P) Ltd case, held as under:
"These changes brought about by Act 36
of 1964 appear to be clearly designed to provide that a workman who has
actually worked under the employer for not less 534 than 240 days during a
period of twelve months shall be deemed to have been in continuous service for
a period of one year whether or not he has in fact been in such continuous
service for a period of one year. It is enough that he has worked for 240 days
in a period of 12 months, it is not necessary that he should have been in the
service of the employer for one whole year." In a concurring judgment
Pathak J. agreed with this interpretation of section 25B(2). Therefore, both on
principle and on precedent it must be held that section 25B(2) comprehends a
situation where a workman is not in employment for a period of 12 calendar
months, but has rendered service for a period of 240 days within the period of
12 calendar months commencing and counting backwards from the relevant date,
i.e. the date of retrenchment. If he has, he would be deemed to be in
continuous service for a period of one year for the purpose of section 25B and
Chapter VA.
Reverting to the facts of this case,
admittedly the appellant was employed and was on duty from December 8, 1973 to
October 19, 1974 when his service was terminated. The relevant date will be the
date of termination of service, i.e. October 19, 1974 Commencing from that date
and counting backwards, admittedly he had rendered service for a period of 240
days within a period of 12 months and, indisputably, therefore, his case falls
within section 25B(2) (a) and he shall be deemed to be in continuous service
for a period of one year for the purpose of Chapter VA.
Appellant has thus satisfied both the
eligibility qualifications prescribed in section 25F for claiming retrenchment
compensation. He has satisfactorily established that his case is not covered by
any of the excepted or excluded categories and he has rendered continuous
service for one year. Therefore, termination of his service would constitute
retrenchment. As pre-condition for a valid retrenchment has not been satisfied
the termination of service is ab initio void, invalid and inoperative. He must,
therefore, be deemed to be in continuous service.
The last submission was that looking to the
record of the appellant this Court should not grant reinstatement but award
compensation. If the termination of service is ab initio void and inoperative,
there is no question of granting reinstatement because there is no cessation of
service and a mere declaration follows that 535 he continues to be in service
with all consequential benefits. Undoubtedly, in some decisions of this Court
such as Ruby General Insurance Co. Ltd v. Chopra (P.P.), and Hindustan Steel
Ltd. Rourkela v. A. K. Roy and Others it was held that the Court before
granting reinstatement must weigh all the facts and exercise discretion
properly whether to grant reinstatement or to award compensation. But there is
a catena of decisions which rule that where the termination is illegal
especially where there is an ineffective order of retrenchment, there is
neither termination nor cessation of service and a declaration follows that the
workman concerned continues to be in service with all consequential benefits.
No case is made out for departure from this
normally accepted approach of the Courts in the field of social justice and we
do not propose to depart in the case.
Accordingly, this appeal is allowed and the
Award of the Labour Court dated May 31, 1980, is set aside. We hold that the
termination of service of the appellant was ab initio void and inoperative and
a declaration is made that he continues to be in service with all consequential
benefits, namely, back wages in full and other benefits, if any. However, as
the Award is to be made by the Labour Court, we remit the case to the Labour Court to make an appropriate Award in the light of the findings of this Court. The
respondent shall pay the costs of the appellant in this Court quantified at Rs.
2000 within four weeks from the date of this judgment and the costs in the
Labour Court have to be quantified by the Labour Court.
S.R. Appeal allowed.
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