Gamon India Limited Vs. Niranjan Dass
[1983] INSC 193 (5 December 1983)
DESAI, D.A.
DESAI, D.A.
MISRA, R.B. (J) MISRA RANGNATH
CITATION: 1984 AIR 500 1984 SCR (1) 959 1984
SCC (1) 509 1983 SCALE (2)863
ACT:
Industrial Disputes Act 1947, Section 2 (oo)
retrenchment-What is-Services terminated on account of recession in
work-Termination whether amounts to retrenchment.
HEADNOTE:
The respondent was employed by the
appellant-Company as a Senior Clerk till he received a notice terminating his
services. The notice stated that on account of reduction in volume of the
business of the Company as a result of recession, his services were being
terminated.
On a reference by the Government, whether the
retrenchment of the respondent was unjustified or illegal the Industrial
Tribunal held that since the conditions for a valid retrenchment have not been
complied with, the respondent continued to be in service.
In a petition under Article 226, a Single
Judge held that since the termination of the services was consequent upon the
closure of the Delhi office, the case would be governed by Section 25 FFF of
the Industrial Disputes Act 1947 which does not prescribe payment of
compensation as a condition precedent to a valid termination of service by way
of retrenchment.
In the Letters Patent Appeal, the Division Bench
set aside the judgment of the Single Judge on the ground that the reference to
the Industrial Tribunal was to consider whether the retrenchment was illegal or
unjustified and therefore it was not open to the Single Judge to come to the
conclusion that the case was one of closure governed by Section 25 FFF. The
Division Bench therefore restored the Tribunal's award.
Dismissing the Appeal of the Company,
HELD: 1. The award of the Tribunal was
correct and unassailable. The respondent had become surplus on account of
reduction in volume of work and that constitutes retrenchment even in the
traditional sense of the term [963 H] Pipraich Sugar Mills Ltd. v. Pipraich
Sugar Mills Mazdoor Union, [1956] SCR 172; State Bank of India v. N. Sundara
Money, [1976] 3 SCR 160; Hindustan Steel Ltd. v. The Presiding Officer, Labour
Court, Orissa and others, [1977] 1 SCR 586; Santosh Gupta v. State Bank of
Patiala, [1980] 3 SCR 340; Delhi Cloth and 960 Genral Mills Ltd. v. Shambu Nath
Mukerjee, [1978] 1 SCR 591;
Mohan Lal v. Management of M/s Bharat
Electronics Ltd. [1981] 3 SCR 518; L. Robert D'suoza v. The Executive Engineer,
Southern Railway & Anr. [1982] 3 SCR 251, referred to.
2. The pre-requisite for a valid retrenchment
as laid down in Section 25 F has not been complied with, and therefor the
retrenchment bringing about termination of service is ab initio void. [964 E]
In the instant case, the notice recites that as a result of the recession in
the volume of the work of the company, the services of the respondent would not
be required by the company after October 14, 1967 and that this notice
contemplated by section 25F (a). Not even one word is stated in the notice that
the office to which the respondent was attached was in the process of being
closed down, so his services would no more be required. [963 D-E]
3. The termination of service for the reasons
mentioned in the notice is not covered by any of the Clauses (a), (b) and (c)
of Section 2 (oo) which defines retrenchment and it is now well-settled that
where the termination of service does not fall within any of the excluded
categories, the termination would be ipso facto retrenchment. It was not even
attempted to be urged that the case of the respondent would fall in any of the
excluded categories. It is therefore, indisputably a case of retrenchment. [964
C-D] 4 (i). The appellant will have to establish the fact that the respondent
has reached the age of superannuation and that physical reinstatement is not
possible. [965 A] (ii). The respondent will be entitled to all backwages
including benefit of revised wages or salary if there is revision of pay-scales
with yearly increment, revised dearness allowance or variable dearness
allowance and all terminal benefits if he was reached the age of superannuation
such as Provident Fund, Gratuity etc. Back wages should be calculated as if the
respondent continued in service uninterrupted. [965 B-C] (iii). The respondent
has been unlawfully kept out of service. The appellant-company shall therefore
pay all the arrears with 12 per cent interest from the date the amount became
due and payable till realisation. [965 D]
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 1741 of 1980.
From the Judgment and Order dated 16th
January, 1980 of the High Court of Delhi at New Delhi, in Letters Patent Appeal
No. 25 of 1970.
U.R. Lalit, V.N. Ganpule and Mrs. V.D. Khanna
for the Appellant.
961 Jitendra Sharma for the Respondent.
The Judgment of the Court was delivered by
DESAI, J. Respondent Shri Niranjan Dass was employed as a Senior Clerk by the
appellant-company as per the appointment order contained in the letter dated
April 10, 1962. The letter of appointment inter alia provided that the
respondent may be posted anywhere in India or abroad as per the requirements of
the company and it was signed by its Zonal Manager, Central Zone, Delhi.
Respondent continued to serve in that capacity when on September 14, 1967, he
was served with a notice terminating his services. The notice reads as under:
"Due to the reduction in the volume of
business of the Company as a result of the recession in (sic) services will not
be required by the company after the 14th October, 1967, and this may be
treated as statutory notice of one month of termination of your service.
Your leave shall run concurrently with the
notice period, and you may avail of leave due to you, if any, during the notice
period.
Personnel Section at Head Office have been
advised to settle your dues, and you may write to them in the matter.
We take this opportunity to thank you for
your past services, and it is very unfortunate that the present circumstances
have compelled us to issue this notice.
Should it be possible for us to offer you a
job at any of our works sites at a later date, we shall make you a fresh offer
at that time." Respondent raised an industrial dispute and the appropriate
Government by the order dated May 30, 1968 referred the industrial dispute for
adjudication to the Industrial Tribunal. The reference was couched in the
following language.
962 "Whether the retrenchment of Shri
Niranjan Dass is unjustified or illegal and if so, what directions are
necessary in this respect." By the award dated February 25, 1969. the
Industrial Tribunal held that the retrenchment of the respondent was illegal
and unjustified and gave a declaration that he continues to be in service of
the appellant-company and is entitled to his wages till he is lawfully
retrenched.
Appellant-company challenged the award in
Civil Writ No. 462 of 1969 filed by it in the High Court of Delhi. A learned
Single Judge held that as the Delhi office of the appellant- company was
closed, the case of the respondent would be governed by Sec. 25FFF being
termination consequent upon closure, and therefore payment of compensation was
not a condition precedent and the termination of service was valid, The learned
Judge accordingly set aside the award and remitted the matter to the Tribunal
to decide what directions, if any, are necessary in respect of retrenchment of
the respondent in the light of the discussion in the judgment Respondent
preferred Letters Patent Appeal No. 25 of 1970 against the decision of the
learned Single Judge. A Division Bench of Delhi High Court held that the
reference made by the appropriate Government required the Industrial Tribunal to
consider whether the retrenchment was illegal or unjustified and therefore it
was implicit in the reference itself that it was a case of retrenchment,
validity of which to be examined in the reference and therefore it was not open
to the learned Single Judge to change the 'base' of the reference and to come
to the conclusion that the case was one of closure of the industrial
undertaking governed by Sec. 25FFF of the Industrial Disputes Act. Approaching
the matter from this angle, the Division Bench set aside the decision of the
learned Single Judge and restored the award made by the Industrial Tribunal.
Hence this appeal by the company by special leave.
The Industrial Tribunal held that respondent
was retrenched from service by the appellant and the pre- conditions for a
valid retrenchment were not complied with and therefore the respondent was
entitled to a declaration that he continues to be in service with all the
benefits flowing from the said declaration. A learned Single Judge of the High
Court interfered with this award holding that the appellant-company had closed
its Delhi office and therefore the termination of service was consequent upon
the closure and even if it constitutes retrenchment, the case would be governed
by Sec. 25FFF which does not prescribe payment of compensation as a 963
condition-precedent to a valid termination of service by way of retrenchment.
In the Letters Patent Appeal at the instance of the respondent, the Division
Bench set aside the judgment of the learned Single Judge holding that it was
not open to the learned Single Judge to hold that it was a case of closure
covered by Sec. 25FFF because it was implicit in the reference that the case
was one of retrenchment and the only question with the Industrial Tribunal was
called upon to decide was whether the retrenchment was unjustified or illegal.
It is not necessary to examine the view expressed by the Division Bench of the
High Court whether the assumption underlying an order of reference is
unquestionable at the hearing of the reference. The question, however, is
whether the learned Single Judge, who interfered with the award of the Tribunal
was justified in coming to the conclusion that the case was one of closure
covered by Sec. 25FFF or the Industrial Tribunal was right in holding that it
is a case of retrenchment covered by Sec. 25F of Industrial Disputes Act. This
point can be answered by mere reference to the notice served by the appellant-
company on the respondent intimating to him that his services will no more be
required effective from October 14, 1967. The notice as a whole has been
extracted hereinbefore.
The notice recites that as a result of
recession in the volume of work of the company, services of the respondent
would no more be required by the company after October 14, 1967 and this notice
may be treated as a statutory notice as contemplated by Sec. 25F(a). There is
not even a whisper in the notice that as the Delhi office is being closed down,
the services of the respondent would not be required. An attempt was made while
leading evidence before the Industrial Tribunal to show that the Zonal office
at Delhi was closed on January 31, 1968 while the Central Zone office was
closed somewhere in October, 1967. If by September, 1967, the appellant company
had resolved to close the office at Delhi to which the respondent was attached,
it is unthinkable that aspect would not be recited in the notice.
The necessity for termination of service of
the respondent recited in the notice was recession in the work handled by the
company. Not even one word is stated in the notice that the office to which the
respondent was attached was in the process of being closed down, so his
services would no more be required. On a true construction of the notice, it
would appear that the respondent had become surplus on account of reduction in
volume of work and that constitutes retrenchment even in the traditional sense
of the term as interpreted in Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills
964 Mazdoor Union(1) though that view does not hold the field in view of the
recent decisions of this Court in State Bank of India v. N. Sundara Money(2) Hindustan
Steel Ltd. v. The Presiding Officer, Labour Court, Orissa and Others;(3)
Santosh Gupta v. State Bank of Patiala;(4) Delhi Cloth and General Mills Ltd.
v. Shambu Nath Mukerjee;(5) Mohan Lal v. Management of M/s Bharat Electronics
Ltd(6) and L. Robert D'souza v. The Executive Engineer, Southern Railway &
Anr.(7) The recitals and averments in the notice leave no room for doubt that
the service of the respondent was terminated for the reason that on account of
recession and reduction in the volume of work of the company, respondent has
become surplus. Even apart from this, the termination of service for the
reasons mentioned in the notice is not covered by any of the clauses (a), (b)
and (c) of Sec. 2(oo) which defines retrenchment and it is by now well-settled
that where the termination of service does not fall within any of the excluded
categories, the termination would be ipso facto retrenchment. It was not even
attempted to be urged that the case of the respondent would fall in any of the
excluded categories. It is there indisputably a case of retrenchment.
It is not disputed that the pre-requisite for
a valid retrenchment as laid down in Sec. 25f has not been complied with and
therefore the retrenchment bringing about termination of service is ab initio
void. Viewed from this angle, the award of the Industrial Tribunal was correct
and unassailable and the learned Single Judge was in error in interfering with
the same. Undoubtedly, the Division Bench of the High Court has set aside the
order of the learned Single Judge and restored the award for reasons of its
own.
However, for the reasons herein indicated,
the decision of the Division Bench in Letters Patent Appeal No. 25 of 1970 is
upheld and confirmed and this appeal must therefore fail and accordingly it is
dismissed.
In the course of hearing of this appeal, it
was stated that the respondent has reached the age of superannuation therefore
physical reinstatement in service is not possible.
Appellant will have to 965 establish that
fact but in the event, the appellant shows that under a valid rule, respondent
has reached the stage of superannuation and therefore physical reinstatement is
not possible, it is hereby declared that the respondent shall continue to be in
service uninterruptedly from the date of the attempted termination of service
till the date of superannuation. Respondent would be entitled to all back wages
including the benefit of revised wages or salary if during the period there is
revision of pay-scales with yearly increment, revised dearness allowance or
variable dearness allowance and all terminal benefits if he has reached the age
of superannuation such as Provident Fund, Gratuity etc. Back wages should be
calculated as if the respondent continued in service uninterrupted. He is also
entitled to leave encashment and bonus if other workmen in the same category
were paid the same. It appears that the respondent has been unlawfully kept out
of service, therefore it is but just that the appellant-company shall pay all
the arrears as calculated according to the directions herein given with 12%
interest from the date the amount became due and payable till realisation.
Appellant shall also pay costs to the respondent quantified at Rs. 5,000. The
appellant is directed to pay the amount as herein directed to be paid within 3
months from today.
Mr. Jitendra Sharma, learned counsel for the
respondent stated that the costs awarded to the respondent be paid to the Legal
Aid Cell set up by Indian Association of Lawyers in collaboration with Womens'
Council.
Order accordingly.
N.V.K. Appeal dismissed.
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