Full Judgment Text
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CASE NO.:
Appeal (civil) 7 of 2006
PETITIONER:
Regional Manager, S.B.I.
RESPONDENT:
Rakesh Kumar Tewari
DATE OF JUDGMENT: 03/01/2006
BENCH:
Ruma Pal & Dr.AR.Lakshmanan
JUDGMENT:
J U D G E M E N T
(Arising out of Special Leave Petition (Civil) No.20653 of 2003)
WITH
C.A.Nos.8-9 of 2006
(Arising out of SLP (C) Nos.20003-20004 of 2004)
RUMA PAL, J.
Leave granted.
The respondent was employed as a messenger
on a daily wage in a branch of the appellant Bank.
No appointment letter was issued to him but he
worked for 87 days in that capacity. The question in
this appeal is whether the Labour Court had correctly
found that the termination of the respondent’s
service in 1982 was violative of Section 25G of the
Industrial Disputes Act, 1947 (referred to as the
’Act’).
After the respondent ceased to serve with the
appellant on 5th October, 1982, the respondent
raised a demand under Section 33-C (2) of the Act
before the Labour Court praying for an amount of Rs.
148.74 towards his wages for 8 days holidays
(including Sundays) which occurred during the
period of his employment. The appellant accepted
the demand and paid an amount of Rs. 155.23 to the
respondent which was accepted by the respondent in
full and final satisfaction of his claim. About one
year later, in 1984, the respondent raised an
industrial dispute claiming that his services had
been wrongfully terminated by the appellant. The
Central Government referred the following disputes
to the Industrial Tribunal:
"Whether the action of the management of
State Bank of India, Region-III, Lucknow, in relation
to their Gonda Main Branch in terminating the
services of Shri Rakesh Kumar Tewari, subordinate
staff with effect from 6.10.1982 and not considering
him for further employment under Section 25H of
the Industrial Disputes Act is justified? If not, to
what relief is the concerned workman entitled?"
The respondent filed a statement before the
Tribunal in which he claimed that he had been
appointed by the appellant as a whole time employee
against a vacancy in a permanent post. He said that
after his discharge other employees were taken in
service against the same post, but he was not given
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a chance to continue. He challenged the non-issue of
appointment and termination letters as being in
violation of "service conditions provided in different
bank awards as well as bipartite settlement". It was
alleged that the bank had violated the provisions of
Section 25H of the Act and also paragraph 497 of the
Shastri Award which was applicable to the Bank.
The appellant filed a written statement opposing
the claim of the respondent. A preliminary objection
raised was that after recording of full satisfaction of
his claim against the appellant, the respondent was
barred by the principles of res judicata from raising
an industrial dispute. On the merits of the case it
was contended that the services of the respondent
had been validly terminated upon the payment of all
his dues. It was denied that the respondent had
been appointed against any vacancy. It was stated
that he was engaged against a purely "temporary/ad
hoc requirement of the said branch of the bank".
The Labour Court found that two employees,
namely, Shri Pawan Kumar and Rakesh Kumar
Tewari had been appointed as temporary workmen,
the first between August, 1982 to December, 1982
and the second from January, 1983 to April, 1983.
It was held that therefore the service of Pawan
Kumar should have been dispensed with and not the
respondent’s. Furthermore, according to the
Tribunal, there was a clear violation of Sections 25G
and 25H of the Act. It was also held that the
respondent was not a casual but a temporary
workman in terms of paragraph 207 of the bipartite
settlement. It was held that in terms of the
settlement, the bank should have maintained a
register of all temporary employees and a service
book and should have issued an appointment and
termination letter to the respondent. According to
the Tribunal 14 days notice of retrenchment was also
required to be given which had not been complied
with. Section 25G of the Act and Rule 78 of the
Industrial Disputes Act Central Rules was held to
have been violated. Circulars issued by the
Management being circulars Nos. 168/76 and 69/81
which prohibited the employment of temporary
employees beyond 90 days and the termination of
service of temporary employees after 89 or 90 days
was held to be unfair labour practice. In conclusion it
was held that the termination of the services of the
respondent was illegal and inoperative and that the
respondent was entitled to be reinstated with full
back wages.
The appellant challenged the award under Article
226 of the Constitution before the High Court. The
High Court upheld the view expressed by the Labour
Court and said that the Labour Court was right and
that the appellant’s appointment amounted to unfair
labour practice and was against the mandate of
Section 25H of the Act.
The appellant challenged the decision of the
High Court by way of a Special Leave Petition under
Article 136 of the Constitution. While issuing notice
on 17th November, 2003, this Court stayed the
operation of the High Court’s order. In the
meantime and during the pendency of the
proceedings before the High Court the appellant has
paid the respondent a sum of approximately Rs. 3.80
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lakhs under Section 17-B of the Act.
Mr. V.A.Bobde, learned counsel appearing on
behalf of the appellant, has contended that there
was no unfair labour practice indulged in by the
appellant as defined in Section 2(ra) read with the
5th Schedule item 10 of the Act. It was also
contended that the case for violation under Section
25G had never been pleaded by the respondent in
his statement of claim nor was any such alleged
violation referred to the Industrial Tribunal for
adjudication. It was submitted that Section 25G did
not in any event apply as the procedure for
retrenchment as defined in section 2(oo) of the Act
did not apply to persons on a daily-wage. Reliance
has been placed on the decision of Regional
Manager, State Bank of India Vs. Raja Ram,
(2004) 8 SCC 164, and Himanshu Kumar
Vidyarthi & Ors. Vs. State of Bihar & Ors.
(1997) 4 SCC 391. It was contended that Section
25H which requires an employer to give re-
employment to a retrenched workman in preference
over other persons did not for that reason apply. In
any event it had been complied with. Three
advertisements had been issued by the appellant
calling upon retrenched employee to offer
themselves for reemployment but the respondent did
not apply.
Mr Nagendra Rao appearing in SLP (C) Nos.
20003-20004 of 2004, State Bank of India Vs.
Kanhaiya Lal Sahu has also supported the
submissions of Mr. Bobde and has adopted his
submissions. In his case however, the period of
service was 98 days between July,1980 to March,
1981 on daily wages. In that case also the Labour
Court had held that the termination of the
workman’s services was not justified and directed
the reinstatement of the workman with full back
wages. The application filed by the appellant before
the High Court under Article 226 was dismissed on
the ground that in compliance with an interim order
passed by the High Court the appellant had
reinstated the workman and the workman had been
continuing in service for the last 16 years. The High
Court however allowed the writ petition to the extent
that the Labour Court had directed the payment of
back wages. It needs to be mentioned here that
until the order was passed by the High Court
disposing of the writ petition, the respondent had
been paid approximately Rs.200902/-on account of
salary. The appellant filed a review application
stating that the respondent had in fact not been
reinstated but had been paid idle wages without
taking any work from him in terms of the liberty
granted to the appellant by an interim order of the
High Court. However, the review petition was
dismissed by merely recording that there was no
ground for review. Apart from this factual error, Mr.
Rao has emphasized that Section 25H could not be
said to have been violated. It was further argued
that the employees who would be affected by the
award of the Labour Court had not been made
parties in violation of Rule 3 of the Industrial Dispute
(Central) Rules 1957.
Learned counsel appearing on behalf of the
respondents in both the appeals has submitted that
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the definition of retrenchment had undergone an
amendment in 1984, whereas both the terminations
in question had taken place prior thereto. In terms
of the unamended definition, daily wage employees
whose services were terminated were also
retrenched. Reliance has been placed on the
decisions in Central Bank of India Vs. S. Satyam
& Ors. (1996) 5 SCC 419 ; Workmen of Subong
Tea Estate Vs. The Outgoing Management of
Subong Tea Estate & Anr. (1964) 5 SCR 602;
Punjab Land Devl. & Reclamation Corpn. Ltd.
Vs. Presiding Officer, Labour Court (1990) 3
SCC 682, L.Robert D’Souza Vs. The Executive
Engineer, Southern Railway & Anr. (1982) 3
SCR 251 and S.M. Nilajkar & Ors. Vs. Telecom
District Manager, Karnataka, (2003) 4 SCC 27,
to contend that in the circumstances of the case the
finding of the Tribunal that the services of the
workmen had been illegally retrenched and that they
were entitled to reinstatement and backwages was
correct.
Both civil appeals arising out SLP(Civil) No.
20653 of 2003 and SLP(Civil) Nos.20003-20004 of
2004 which are referred to respectively as the first
and second appeal, are disposed of by this
judgment.
Section 25G provides for the procedure for
retrenchment of a workman. The respondents have
correctly submitted that the provisions of Sections
25G and 25H of the Act do not require that the
workman should have been in continuous
employment within the meaning of Section 25B
before he could said to have been retrenched. The
decision in Central Bank of India v. S. Satyam
(1996) 5 SCC 419 is clear authority on the issue.
We see no reason to take a contrary view.
Section 25G requires the employer to "ordinarily
retrench the workman who was the last person to be
employed in a particular category of workman unless
for reasons to be recorded the employer retrenches
any other workman". This "last come first go", rule
predicates. 1) that the workman retrenched belongs
to a particular category; 2) that there was no
agreement to the contrary;3) that the employer had
not recorded any reasons for not following the
principle. These are all questions of fact in respect of
which evidence would have to be led, the onus to
prove the first requirement being on the workman
and the second and third requirements on the
employer. Necessarily a fair opportunity of leading
such evidence must be available to both parties.
This would in turn entail laying of a foundation for
the case in the pleadings. If the plea is not put
forward such an opportunity is denied, quite apart
from the principle that no amount of evidence can be
looked into unless such a plea is raised. [See Siddik
Mahomed Shah vs. Mt. Saran AIR 1930 PC 57
(1); Bondar Singh & Or. Vs.Nihal Singh and
Ors. (2003) 4 SCC 161].
In J.K.Iron and Steel Company Ltd. vs. The
Iron and Steel Mazdoor Union Kanpur (1955) 2
SCR 1315, the court noted that even though
industrial tribunals are not bound by all technicalities
of civil courts:
"\005\005.they must nevertheless follow
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the same general pattern. Now the
only point of requiring pleadings and
issues is to ascertain the real dispute
between the parties, to narrow the area
of conflict and to see just where the
two sides differ. It is not open to the
Tribunals to fly off at a tangent and
disregarding the pleadings, to reach
any conclusions that they think are just
and proper".
In the first appeal, the respondent had raised no
allegation of violation of Section 25G in his
statement of claim before the Industrial Tribunal.
His only case was that Section 25H of the Act had
been violated. Section 25H unlike Section 25G deals
with a situation where the retrenchment is assumed
to have been validly made. In the circumstances, if
the employer wishes to re employ any employee, he
must offer to employ retrenched workman first and
give them preference over others. The two sections
viz 25G and 25H therefore operate in different fields
and deal with two contradictory fact situations. The
Tribunal ignored the fact that there was no pleading
by the respondent in support of an alleged violation
of Section 25G. Indeed the order of reference by the
Central Government did not also refer to Section 25G
but only to Section 25H. In the circumstances it was
not open to the Tribunal to "go off on a tangent"
and conclude that the termination of service of the
respondent was invalid because of any violation of
Section 25G by the appellant.
Besides the Tribunal in both appeals did not
consider the plea of the appellant that there was no
vacancy against which the respondent had been
appointed and that it was merely an ad hoc
arrangement. In taking into consideration the
names of the two employees who were appointed
temporarily after the termination of services of the
respondent, the Tribunal did not also consider in
what capacity these persons had been appointed
namely whether they were actually appointed as
messenger in place of the respondent.
The respondent’s case in the first appeal of
violation of paragraph 497 of the Shastri Award was
also wholly misconceived. That paragraph deals with
the rights of apprentices and has no application to
temporary employees like the respondent. Assuming
that there was a violation of the Shastri Award by
the appellant in both cases either in not issuing
appointment letters or not maintaining a seniority
list, service book in respect of temporary employees
etc., this would not mean that therefore the
respondents had been properly appointed and their
services wrongly terminated. Admittedly no
procedure whether in law or under any award or
settlement was followed in appointing either of the
respondents in both appeals. No condition of services
were agreed to and no letter of appointment was
given. The nature of the respondents’ employment
was entirely ad hoc. They had been appointed
without considering any rule. It would be ironical if
the person who have benefited by the flouting of the
rules of appointment can rely upon those rules when
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their services are dispensed with.
The Tribunal also failed to deal with the issue
raised by the appellant in the first appeal that no
grievance had been made nor any demand raised by
the respondent either in his application under
Section 33 C (2) or otherwise that his services had
been illegally terminated. It may be that the
principles of res judicata may not disqualify the
respondent from contending that his termination was
invalid, nevertheless non raising of the issue earlier
was a factor which the Tribunal should have taken
into consideration in weighing the evidence.
Significantly the High Court upheld the decision of
the Tribunal as if the Tribunal had proceeded under
Section 25H. As we have said Section 25H proceeds
on the assumption that the retrenchment has been
validly made. Therefore, the High Court’s view that
the termination was invalid under Section 25H
cannot in any event be sustained.
Section 25H says:
"25H. Re-employment of
retrenched workmen.- Where
any workmen are retrenched, and
the employer proposes to take into
his employ any persons, he shall,
in such manner as may be
prescribed, give an opportunity to
the retrenched workmen who are
citizens of India to offer
themselves for re-employment,
and such retrenched workmen who
offer themselves for re-
employment shall have preference
over other persons".
A statutory obligation is thus cast on the
employer to give an opportunity to the retrenched
workman to offer himself for re-employment.
In fact pursuant to settlements entered into
between the appellant and the employees’ union,
several advertisements had been issued by the
appellant offering re-employment to retrenched
workers. It may be that these facts were not raised
by the appellant either before the Tribunal or the
High Court, but as was said in Regional Manager
SBI vs. Raja Ram (2004) 8 SCC 164 at p. 168:
"However the respondent’s counsel
is incorrect in his submission that
the benefit of the Scheme could
not have been availed of by the
respondent because no offer was
made to the respondent by the
appellant. The settlements were
advertised and it was for the
respondent to have taken
advantage of the Scheme.
Although the settlements are,
strictly speaking, not relevant to
the question of the correctness of
award, nevertheless their terms
are necessary to be considered for
the purpose of deciding whether,
assuming everything in favour of
the respondent and against the
appellant, the respondent should
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be reinstated as a casual employee
since the Scheme had been
propounded by the employer with
workmen with a view to granting
benefit to persons whose services
had been terminated as casual
employees".
Neither of the respondents in the appeals had
offered themselves for re-employment.
The conclusion of the Tribunal in both appeals
that the circulars endorsed an unfair labour practice
being followed by the appellant or that the appellant
had indulged in unfair labour practice was also
incorrect. Unfair labour practice has been defined in
Clause (ra) of Section 2 of the Act as a meaning any
of the practices specified in the Fifth Schedule. The
Fifth Schedule to the Act contains several items of
unfair labour practices on the part of the employer
on the one hand and on the part of workmen on the
other. The relevant item is Item 10 which reads as
follows:
"To employ workmen as ’badlis’,
casuals or temporaries and to
continue them as such for years,
with the object of depriving them of
the status and privileges of
permanent workmen".
We have already dealt with this issue in Raja
Ram’s case (supra) where we had said:
"before an action can be termed as
an unfair labour practice it would
be necessary for the Labour Court
to come to a conclusion that the
badlis, casuals and temporary
workmen had been continued for
years, as badlis, casuals or
temporary workmen, with the
object of depriving them of the
status and privileges of permanent
workmen. To this has been added
the judicial gloss that artificial
breaks in the service of such
workmen would not allow the
employer to avoid a charge of
unfair labour practice. However, it
is the continuity of service of
workmen over a period of years
which is frowned upon. Besides, it
needs to be emphasized that for
the practice to amount to unfair
labour practice it must be found
that the workman had been
retained on a casual or temporary
basis with the object of depriving
the workman of the status and
privileges of a permanent
workman. There is no such finding
in this case. Therefore, Item 10 in
List I of the Fifth Schedule to the
Act cannot be said to apply at all to
the respondent’s case and the
Labour Court erred in coming to
the conclusion that the respondent
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was in the circumstances, likely to
acquire the status of a permanent
employee".
We see no reason to take a contrary view
particularly when the facts in Raja Ram’s case are
materially indistinguishable from those in the
appeals now before us.
In directing reinstatement, neither the High
Court nor the Tribunal had considered that the order
might affect the interest of those others who were
employed after the respondent. As was said in
Central Bank of India vs. S. Satyam (supra):
"The other persons employed in
the industry during the intervening
period of several years have not
been impleaded. Third party
interests have arisen during the
interregnum. These third parties
are also workmen employed in the
industry during the intervening
period of several years. Grant of
relief to the writ petitioners
(respondent herein) may result in
displacement of those other
workmen who have not been
impleaded in these proceedings, if
the respondents have any claim for
re-employment".
Besides in the second appeal admittedly
several persons had been appointed prior to the
respondent on a temporary basis. They would have
prior rights to reemployment over the respondent
on the basis of the principles contained in Sections
25G or 25H.
In the circumstances, the award of the Tribunal
and the decision of the High Court holding that the
respondent’s services were wrongfully terminated
were both incorrect. They are accordingly set
aside. There is as such no question of payment of
any back wages. Additionally the only other reason
given by the High Court for directing reinstatement
of the respondent in the second appeal was based
on an equitable consideration of the respondent
having allegedly been reinstated. The factual basis
for this conclusion was erroneous. Both appeals are
accordingly allowed. However the appellant has
paid sums to the respondents in both the cases
which sums shall not be recoverable from the
respondents by reason of the allowing of these
appeals. There will be no order as to costs.