Full Judgment Text
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PETITIONER:
MOHAN LAL
Vs.
RESPONDENT:
MANAGEMENT OF M/S BHARAT ELECTRONICS LTD.
DATE OF JUDGMENT21/04/1981
BENCH:
DESAI, D.A.
BENCH:
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 ab 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
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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
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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.
JUDGMENT:
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
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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."
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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
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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 ab 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
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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 pro-
526
tect 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
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earlier, without assigning any reason therefor 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
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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
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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
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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
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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
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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
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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
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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) have
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
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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
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have to be quantified by the Labour Court.
S.R. Appeal allowed.
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