Retrenchment without prior governmental permission under Section 25N is illegal.

The five workmen were employed at the respondent’s Anand plant.

After the Management decided to suspend operations there, it transferred them to plants in other states.

When they did not report at the transferred locations, the Management retrenched them, paying amounts calculated under Section 25F of the Industrial Disputes Act, 1947 (“ID Act”)

The Labour Court held the terminations illegal and ordered reinstatement with continuity of service, but no back wages.

The Single Judge set aside that award and rejected the references, reasoning, among other things, that the workmen had not complied with the transfer orders and had received retrenchment compensation.

The workmen appealed.

Whether the Single Judge was justified in setting aside the Labour Court’s award of reinstatement with continuity of service

Whether the retrenchments were invalid because the Management failed to comply with the requirements of Section 25N of the ID Act

Under Section 10(4) of the ID Act, a Labour Court must confine its adjudication to the points referred and matters incidental to them

Where Chapter V-B applies under Section 25K, Section 25N requires, as conditions precedent to retrenchment, three months’ written notice stating the reasons or wages in lieu of that notice, and prior permission from the appropriate Government or specified authority; an application for permission must be made in the prescribed manner.

Retrenchment without the required permission is illegal under Section 25N(7).

Payment or unilateral transfer of retrenchment compensation does not, without clear evidence of the workman’s unequivocal acceptance, establish acceptance of the retrenchment.

No judicial precedent was cited.

The Management’s witnesses admitted that it employed more than 1,000 employees, bringing it within Chapter V-B and making Section 25N applicable.

The retrenchment letters showed that the Management paid only one month’s wages in lieu of notice under Section 25F, and it was undisputed that the Management had neither given the required three months’ notice or wages in lieu nor applied for or obtained prior Government permission.

The transfer orders and the workmen’s failure to report at the new locations did not cure that statutory non-compliance.

Nor did the deposit of compensation in the workmen’s salary accounts amount to acceptance of valid retrenchment.

Although the Labour Court’s observations on closure were unnecessary in the references concerning retrenchment, its conclusion that the retrenchments were illegal was independently supported by the Section 25N violation.

It allowed the appeals, set aside the Single Judge’s order, restored the Labour Court’s award, and directed the Management to reinstate the workmen with continuity of service within eight weeks of receiving the order.

The connected stay applications were disposed of, and the respondent’s oral request for a stay was rejected.