Full Judgment Text
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CASE NO.:
Appeal (civil) 1239-1244 of 2001
Appeal (civil) 1245-1248 of 2001
PETITIONER:
S.M. Nilajkar & Ors.
RESPONDENT:
Telecom. District Manager, Karnataka
DATE OF JUDGMENT: 31/03/2003
BENCH:
R.C. LAHOTI & BRIJESH KUMAR
JUDGMENT:
J U D G M E N T
R.C. Lahoti, J.
A number of workers were engaged as casual labourers for the
purpose of expansion of telecom facilities in the district of Belgaum,
Karnataka, during the years 1985-86 and 1986-87. The services of
these workers were utilized for digging, laying cables, erecting poles,
drawing lines and other connected works. It appears that the services
of these workmen were terminated sometime during the year 1987
and they were not engaged on work thereafter. In Daily Rated
Casual Labour employed under P&T Deptt. through Bhartiya
Dak Tar Mazdoor Manch Vs. Union of India & Ors., 1988 (1) SCC
122, the Supreme Court by its judgment dated 27.10.1987 directed
the Department to formulate a scheme under which all casual
labourers who had rendered more than one year’s continuous service
could be absorbed. Pursuant to the said directions, the Department of
Telecommunications formulated a scheme called "Casual Labourers
(Grant of Temporary Status and Regularisation) Scheme, 1989" which
came into force w.e.f. 01.10.1989. A list of casual labourers was
drawn up for inclusion under the said scheme. On 16.01.1990, a
number of workers whose names were not included for regularization
under the said scheme, raised disputes before the Assistant Labour
Commissioner, Mangalore. Conciliation proceedings were initiated but
they failed. Several disputes were referred for adjudication by the
Labour Court in the years 1994 to 1997. The disputes which were
referred were almost identically framed. In substance, the dispute
was ’whether the termination of the services of (name of worker)
w.e.f. (a date in 1986 or 1987), Casual Mazdoor by the Management
of Telecom District Manager, Belgaum is justified or not? If not, to
what relief the workman is entitled?’
A consolidated enquiry was held into all the disputes and they
were disposed of by a common award dated 21.06.1999 by the Central
Government Industrial Tribunal cum Labour Court, Bangalore. The
Tribunal directed the employer to reinstate all the workmen into
service, with the benefit of continuity of service and with 50% of back
wages. The employer filed ten writ petitions in the High Court of
Karnataka which were disposed of on 16.09.1999 by a common
judgment delivered by a learned Single Judge. The learned Single
Judge held that the workers were not project employees as contended
by the employer. The appointment was not for any particular project
and hence would not be governed by sub-clause (bb) of clause (oo) of
Section 2 of the Industrial Disputes Act. 1947 (hereinafter ’the Act’ for
short). Of the workmen each had rendered a continuous service
within the meaning of Section 25B of the Act for a period over 240
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days and, therefore, their termination amounted to retrenchment
which was invalid for non-compliance with Section 25F of the Act. The
workmen were, therefore, entitled to reinstatement. However, there
was a delay of nearly 7 to 9 years in raising the disputes. The
workmen had not placed any material on record to hold that there was
no delay and the disputes were promptly raised. It was because of
this delay that the employer was not in a position to produce the
record relating to the days for which the workmen had worked
inasmuch as according to the standing instructions of the Department,
the registers of muster rolls were preserved for a period of 5 years
only, whereafter they were eliminated. The Tribunal did not err in
believing the oral evidence adduced by the workmen as to the period
of their employment (i.e. for over 240 days). On account of delay in
raising the dispute, the High Court held that the workmen were not
entitled to any back wages. The learned Single Judge directed the
award to be modified to that extent and upheld the Tribunal’s award to
the extent to which it directed reinstatement with the benefit of
continuity of service and consequential benefits but without back
wages.
The employer filed intra-court writ appeals under Section 4 of
the Karnataka High Court Act, which were heard and disposed of by a
Division Bench of the High Court vide the impugned order dated
9.02.2000. Before the Division Bench, it was an admitted case of the
parties that the workmen were employed by the Telecom Department
as casual labourers in connection with a project for extension of
telecom facilities in the district of Belgaum. Their services were
utilized for digging, laying of coaxial cables and other sundry work.
The project was completed sometime in the year 1986-87. The
disputes were raised after a lapse of 7 to 9 years.
Before the Division Bench, the employer placed reliance on
Circular No. 270/6/84-STM dated 30.03.1985 issued by the Director
General (Posts & Telegraphs), New Delhi to all heads of telecom circles
etc. The Circular reads as under :-
"Copy of Letter No.270/6/84-STN, dated 30.3.1985
from the DG P&T, New Delhi to All Heads of
Telecom Circles., Etc.
Sub. Casual Labour engagement
Sir,
15.6.80 A number of instructions have been
issued from time to time stressing the need to limit
the number of casual labour employed by the
Telecom Units to a minimum. It is, however,
regretted to note that inspite of these instructions,
the number of such casual labours in Telecom.
Circles/Districts is increasing.
2. The position has been reviewed and it
has been decided that fresh recruitment and
employment of casual labour for any type of work
should be stopped forthwith in Telecom
Circles/Districts. The casual labour already in
employment should be utilized only (1) for work of
casual nature, (2) all installation works of
temporary nature, (3) cable laying work and (4)
lines construction/dismantling work. Regular posts
of Mazdoors/Group ’D’ posts are sanctioned for
maintenance/Admn. Work as per standards already
laid down by this office from time to time. As such,
no casual mazdoor are required for utilized for
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maintenance/office work, they should be
reallotted/transferred and used in the works
enumerated above. Every effort should be made to
reduce the number of casual mazdoors employed
and in no case fresh recruitment/employment
made.
3. These orders would, however, not apply
to the coaxial cable laying work in the projects
organization and in line dismantling/constructions
work in the Electrification Projects Circle. The
casual labour for such works in these units could be
engaged only for specific jobs and retrenched as
soon as the work is over.
4. The Heads of Telecom Circles/districts
may take immediate action to bring these
instructions to the notice of all subordinate units for
strict adherence. The receipt of this letter may
please be acknowledged.
xxx xxx xxx xxx
They should ensure that no fresh recruitment
and employment of casual mazdoors for any type
of work is made in future. All subordinate units
may be instructed suitably. They should
acknowledge the receipt of this communication by
next post.
Sd/-
For General Manager, Telecom.
Karnataka Circle, Bangalore-9"
Another Circular No. 269-29/87-STM dated 10th November 1988
issued by the Government of India, Ministry of Communications,
Department of Telecommunications, New Delhi, was relied on, dealing
with the subject of regularization of casual labourers. Guidelines for
eligibility for regularization of casual labourers as against 14,117 posts
of regular mazdoors (group ’D’) for various circles were laid down.
Out of several eligibility conditions, one was that the casual labourer/
part-time casual labourer should have served the Department for a
minimum period of 7 years as on 31.03.1986. Admittedly, the
respondent workmen did not satisfy this eligibility condition.
The Division Bench held that the workmen (respondents before
it) were employed under a project of the Telecom Department and
were, therefore, covered by sub-clause (bb) of clause (oo) of Section 2
of the Act. It was a clear case of termination of services of the
workmen as a result of non-renewal of contract of employment on the
expiry of the contract. The question of compliance of Section 25F of
the Act did not arise. The respondent-workmen could not be said to
have been retrenched. The engagement of the workmen was on daily
wages and only for the purpose of completion of the project
undertaken by the Telecom Department for laying coaxial cables in the
Belgaum District. That the project had been completed in 1986-87
itself, is not in dispute. Because of completion of the project their
services stood terminated ipso facto. The Department’s Circular dated
30.03.1985 was relied upon. The Division Bench placed reliance on
decisions of this Court in Ghaziabad Development Authority & Ors.
v. Vikram Chaudhary & Ors., (1995) 5 SCC 210 and Executive
Engineer, State of Karnataka v. K. Somasetty & Ors., (1997) 5
SCC 434 for forming the opinion that the workmen could not be said
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to have been illegally retrenched. The Division Bench also formed the
opinion that unexplained and undue delay of 7 to 9 years in raising the
disputes before the Tribunal vitiated the reference because of laches.
For taking this view, reliance was placed on Shalimar Works Ltd. v.
Their Workmen, 1960 (1) SCR 150, Ratan Chandra Sammanta v.
Union of India, 1993 Supp.(4) SCC 67 and Nedungadi Bank Ltd. v.
K.P. Madhavankutty & Ors., (2000) 2 SCC 455. The Division Bench
allowed the appeals preferred by the employer and directed the award
of the Tribunal as also the judgment of the learned Single Judge to be
set aside.
Feeling aggrieved by the judgment of the Division Bench, these
ten appeals have been filed by the workers by special leave.
The learned counsel for the workmen-appellants have submitted
that the workmen were employed for general maintenance work of the
Telecom Department and not in any project work. There are two types
of organizations in Telecom Department, namely, (i) Telecom Circles
and, (ii) Telecom Project Circles. The workmen were employed in
Karnataka Telecom Circle, Belgaum Division. The Circular dated
30.03.1985 has no application to these workmen. The disputes were
promptly raised and pursued. The reference sought for by the
workmen cannot be said to be delayed or suffering from lapse,
particularly when the law does not prescribe any period of limitation
for raising a limitation under Section 10 of the Act. It was, therefore,
submitted that the award as given by the Tribunal was not liable to be
interfered with. On behalf of the employer-respondent, the same
pleas have been reiterated as were taken before the Tribunal and the
High Court. It is submitted that the workmen are project employees
whose services are liable to be dispensed with ipso facto on
termination of the project and that the Division Bench of the High
Court has rightly held the disputes raised by the workmen to be
vitiated by delay and laches.
Let it be stated that on the material available we are not
inclined to upset the finding of fact arrived at in the impugned
judgment that the appellant workmen are project employees and not
employed in any department. The principal issue argued by the
learned counsel for the parties centers around the status of project or
scheme employees whether the workmen recruited for discharging
temporary job under a project can insist on compliance of Section 25F
of the Act if their services are dispensed with on the project coming to
an end?
Section 2(oo) and 25F and of the Act, relevant for our purpose,
provide as under:
2. Definitions : In this Act, unless there is
anything repugnant in the subject or context, __
xxx xxx xxx xxx
[(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
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that behalf; or
[(bb) termination of the service of a
workman as a result of the non-
renewal of the contract of employment
between the employer and the
workman concerned on its expiry or of
such contract being terminated under
a stipulation in that behalf contained
therein; or]
(c) termination of the service of a
workman on the ground of continued
ill-health;]"
"25F. Conditions precedent to retrenchment of
workmen. __ 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;
(b) the workman has been paid, at the time of
retrenchment, compensation which shall be
equivalent to 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]."
It is common knowledge that the Government as a welfare State
floats several schemes and projects generating employment
opportunities, though they are short-lived. The objective is to meet
the need of the moment. The benefit of such schemes and projects is
that for the duration they exist, they provide employment and
livelihood to such persons as would not have been able to secure the
same but for such schemes or projects. If the workmen employed for
fulfilling the need of such passing-phase-projects or schemes were to
become a liability on the employer-State by too liberally interpreting
the labour laws in favour of the workmen, then the same may well act
as a disincentive to the State for floating such schemes and the State
may opt to keep away from initiating such schemes and projects even
in times of dire need, because it may feel that by opening the gates of
welfare it would be letting-in onerous obligations entailed upon it by
extended application of the labour laws. Sub-clause (bb) in the
definition of retrenchment was introduced to take care of such like-
situations by Industrial Disputes (Amendment) Act, 1984 with effect
from 18.8.1984.
’Retrenchment’ in its ordinary connotation is discharge of labour
as surplus though the business or work itself is continued. It is well-
settled by a catena of decisions that labour laws being beneficial pieces
of legislation are to be interpreted in favour of the beneficiaries in
case of doubt or where it is possible to take two views of a provision.
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It is also well-settled that the Parliament has employed the expression
"the termination by the employer of the service of a workman for any
reason whatsoever" while defining the term "retrenchment", which is
suggestive of the legislative intent to assign the term ’retrenchment’ a
meaning wider than what it is understood to have in common
parlance. There are four exceptions carved out of the artificially
extended meaning of the term ’retrenchment’, and therefore,
termination of service of a workman so long as it is attributable to the
act of the employer would fall within the meaning of ’retrenchment’ de
hors the reason for termination. To be excepted from within the
meaning of ’retrenchment’ the termination of service must fall within
one of the four excepted categories. A termination of service which
does not fall within the categories (a), (b), (bb) and (c) would fall
within the meaning of ’retrenchment’.
The termination of service of a workman engaged in a scheme
or project may not amount to retrenchment within the meaning of
sub-clause (bb) subject to the following conditions being satisfied :-
(i) that the workman was employed in a project or scheme of
temporary duration;
(ii) the employment was on a contract, and not as a daily-wager
simplicitor, which provided inter alia that the employment shall
come to an end on the expiry of the scheme or project; and
(iii) the employment came to an end simultaneously with the
termination of the scheme or project and consistently with the
terms of the contract.
(iv) the workman ought to have been apprised or made aware of the
abovesaid terms by the employer at the commencement of
employment.
The engagement of a workman as a daily-wager does not by
itself amount to putting the workman on notice that he was being
engaged in a scheme or project which was to last only for a particular
length of time or upto to the occurrence of some event, and therefore,
the workman ought to know that his employment was short-lived. The
contract of employment consciously entered into by the workman with
the employer would result in a notice to the workman on the date of
the commencement of the employment itself that his employment was
short-lived and as per the terms of the contract the same was liable to
termination on the expiry of the contract and the scheme or project
coming to an end. The workman may not therefore complain that by
the act of employer his employment was coming to an abrupt
termination. To exclude the termination of a scheme or project
employee from the definition of retrenchment it is for the employer to
prove the abovesaid ingredients so as to attract the applicability of
sub-clause (bb) abovesaid. In the case at hand, the respondent-
employer has failed in alleging and proving the ingredients of sub-
clause (bb), as stated hereinabove. All that has been proved is that
the appellants were engaged as casual workers or daily-wagers in a
project. For want of proof attracting applicability of sub-clause (bb), it
has to be held that the termination of the services of the appellants
amounted to retrenchment.
The appropriate provision which should govern the cases of the
appellants is Section 25FFF, the relevant part whereof is extracted and
reproduced hereunder:-
"25 FFF. Compensation to workmen in case of
closing down of undertakings.__(1)Where an
undertaking is closed down for any reason
whatsoever, every workman who has been in
continuous service for not less than one year in
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that undertaking immediately before such closure
shall, subject to the provisions of sub-section (2),
be entitled to notice and compensation in
accordance with the provisions of section 25F, as if
the workman had been retrenched:
Provided that where the undertaking is closed down
on account of unavoidable circumstances beyond
the control of the employer, the compensation to
be paid to the workman under clause (b) of section
25F shall not exceed his average pay for three
months.
[Explanation : An undertaking which is closed down
by reason merely of
(i) financial difficulties (including financial
losses); or
(ii) accumulation of undisposed of stocks; or
(iii) the expiry of the period of the lease or
licence granted to it; or
(iv) in a case where the undertaking is engaged
in mining operations, exhaustion of the
minerals in the area in which such operations
are carried on,
shall not be deemed to be closed down on account
of unavoidable circumstances beyond the control of
the employer within the meaning of the proviso to
this sub-section.]
1A. [Not reproduced]
1B. [Not reproduced]
(2) Where any undertaking set-up for the
construction of buildings, bridges, roads, canals,
dams or other construction work is closed down on
account of the completion of the work within two
years from the date on which the undertaking had
been set up, no workman employed therein shall
be entitled to any compensation under clause (b) of
section 25F, but if the construction work is not so
completed within two years, he shall be entitled to
notice and compensation under that section for
every [completed year of continuous service] or
any part thereof in excess of six months."
It is pertinent to note that in Hariprasad Shivshanker Shukla
and Anr. Vs. A.D. Divikar and Ors. (1957) SCR 121 the Supreme
Court held that ’retrenchment’ as defined in Section 2(oo) and as used
in Section 25F has no wider meaning than the ordinary accepted
connotation of the word, that is, discharge of surplus labour or staff by
the employer for any reason whatsoever otherwise than by way of
punishment inflicted in disciplinary action. Retrenchment was held to
have no application where the services of all workmen were
terminated by the employer on a real and bona fide closure of
business or on the business or undertaking being taken over by
another employer. The abovesaid view of the law taken by the
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Supreme Court resulted in promulgation of the Industrial Disputes
(Amendment) Ordinance, 1957 with effect from 27.4.1957, later on
replaced by an Act of Parliament (Act 18 of 1957) with effect from
6.6.1957 whereby Section 25FF and Section 25FFF were introduced in
the body of the Industrial Disputes Act, 1957. Section 25FF deals with
the case of transfer of undertakings with which we are not concerned.
Section 25FFF deals with closing down of undertakings. The term
’undertaking’ is not defined in the Act. The relevant provisions use the
term ’industry’. Undertaking is a concept narrower than industry. An
undertaking may be a part of the whole, that is, the industry. It
carries a restricted meaning. (see Bangalore Water Supply &
Sewerage Board etc. Vs. A. Rajappa and Ors. etc. (1978) 2 SCC
213 and the Management of Hindustan Steel Ltd. Vs. The
Workmen & Ors. (1973) 3 SCC 564 ). With this amendment it is
clear that closure of a project or scheme by the State Government
would be covered by closing down of undertaking within the meaning
of Section 25FFF. The workman would therefore be entitled to notice
and compensation in accordance with the provisions of Section 25F
though the right of employer to close the undertaking for any reason
whatsoever cannot be questioned. Compliance of Section 25F shall be
subject to such relaxations as are provided by Section 25FFF. The
undertaking having been closed on account of unavoidable
circumstances beyond the control of the employer, i.e. by its own force
as it was designed and destined to have a limited life only, the
compensation payable to the workman under clause (b) of Section 25F
shall not exceed his average pay for three months. This is so because
of failure on the part of respondent employer to allege and prove that
the termination of employment fell within sub-Clause(bb) of Clause
(oo) of Section 2 of the Act.
It was submitted on behalf of the respondent that on account of
delay in raising the dispute by the appellants the High Court was
justified in denying relief to the appellants. We cannot agree. It is
true, as held in M/s Shalimar Works Limited Vs. Their Workmen
(supra) that merely because the Industrial Disputes Act does not
provide for a limitation for raising the dispute it does not mean that
the dispute can be raised at any time and without regard to the delay
and reasons therefor. There is no limitation prescribed for reference
of disputes to an industrial tribunal; even so it is only reasonable that
the disputes should be referred as soon as possible after they have
arisen and after conciliation proceedings have failed particularly so
when disputes relate to discharge of workmen wholesale. A delay of 4
years in raising the dispute after even re-employment of the most of
the old workmen was held to be fatal in M/s Shalimar Works
Limited Vs. Their Workmen (supra). In Nedungadi Bank Ltd. Vs.
K.P. Madhavankutty and Ors. (supra), a delay of 7 years was held
to be fatal and disentitled the workmen to any relief. In Ratan
Chandra Sammanta and Ors. Vs. Union of India and Ors.(supra),
it was held that a casual labourer retrenched by the employer deprives
himself of remedy available in law by delay itself; lapse of time results
in losing the remedy and the right as well. The delay would certainly
be fatal if it has resulted in material evidence relevant to adjudication
being lost and rendered not available. However, we do not think that
the delay in the case at hand has been so culpable as to disentitle the
appellants for any relief. Although the High Court has opined that
there was a delay of 7 to 9 years in raising the dispute before the
Tribunal but we find the High Court factually not correct. The
employment of the appellants was terminated sometime in 1985-86 or
1986-87. Pursuant to the judgment in Daily Rated Casual
Employees Under P & T Department Vs. Union of India (supra)
the department was formulating a scheme to accommodate casual
labourers and the appellants were justified in awaiting the outcome
thereof. On 16.1.1990 they were refused to be accommodated in the
scheme. On 28.12.1990 they initiated the proceedings under the
Industrial Disputes Act followed by conciliation proceedings and then
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the dispute was referred to the Industrial Tribunal-cum-Labour Court.
We do not think that the appellants deserve to be non-suited on the
ground of delay.
The fact remains that there was delay, though not a fatal one, in
initiating proceedings calculating the time between the date of
termination and initiation of proceedings before the Industrial Tribunal-
cum-Labour Court. The employee cannot be blamed for the delay.
The learned Single Judge has denied the relief of back-wages while
directing the appellants to be reinstated. That appears to be a just
and reasonable order. Moreover, the judgment of the learned Single
Judge was not put in issue by the appellants by filing an appeal.
For all the foregoing reasons we are of the opinion that the
decision of the Division Bench deserves to be set aside and that of the
learned Single Judge restored, except for the finding that the
appellants were not project employees.
During the course of hearing it was stated at the Bar that there
are a number of matters pending in different fora, Industrial-cum-
Labour Court or High Court, raising similar issues awaiting decision in
this case. We clarify that all such pending cases shall be heard and
decided in accordance with the law as stated hereinabove. The project
in which the workmen were engaged has come to an end. The
respondent Government may consider the appellants being
accommodated in some other project or scheme or regular
employment, if available, by issuing suitable instructions or guidelines.
If it be not possible, the respondent shall be at liberty to terminate the
employment of the appellants after reinstating them as directed by the
High Court and then complying with Section 25F of the Industrial
Disputes Act.
The appeals are allowed. The impugned decision of the Division
Bench is set aside and that of the learned single Judge is restored as
above. The appellants shall be entitled to their costs throughout.