Punjab-Haryana High Court
Punjab State Seeds Corporation vs Labour Court And Anr. on 31 October, 1994
Equivalent citations: (1995)IILLJ333P&H, (1995)109PLR574
JUDGMENT G.S. Singhvi, J.
1. Award Annexure P-9 dated June 10, 1985 passed by Labour Court, Jalandhar whereby it has directed reinstatement of the workman- respondent No. 2 with continuity of service and full back wages, is under challenge in this petition filed under Article 226 of the Constitution of India.
2. The workman was appointed in the service of the Petitioner Corporation on August 30, ] 1977 and he continued for a period of over one year before termination of his service. According to the workman he had worked upto December 13, 1978 but according to the employer he worked upto November 30, 1978. Notwithstanding this difference in the pleadings, there is no dispute between the parties that the workman had served the employer for a period of 240 days in a period of 12 months preceding the date of termination of his service.:
3. Against the termination of his service, the workman raised an industrial dispute which was referred to the Labour Court, Jalandhar for adjudication.
4. Before the Labour Court, the workman pleaded that after he had worked for a period of more than one year, his service was terminated by way of retrenchment without any notice or pay in lieu thereof and retrenchment compensation as required by Section 25F of the Industrial Disputes Act, 1947 (for short 'the Act'). The employer namely the petitioner Corporation resisted the claim of the workman by pleading that; workman was employed for a specified work and when no work was left with it, the workman was not taken on duty with effect from November 30, 1978. According to the employer there was no termination of the service of the workman and therefore it was not necessary to comply with the requirements of Section 25 of the Act.
5. After considering the rival pleadings and evidence led by the parties, the Labour Court held that the employer did terminate the service of workman which amounted to retrenchment. It further held that the employer did not comply with the mandatory requirements of Section 25F of the Act. On the basis of these conclusions, the Labour Court passed the impugned award.
6. In assailing the impugned award Shri Hemant Kumar argued that the Labour Court has committed a serious illegality in holding that the service of the workman was terminated by way of retrenchment. He submitted that the employer was left with no work after November 30, 1978 and, therefore, the workman was told not to come on work. This according to the learned counsel, cannot be termed as retrenchment under Section 2(oo) of the Act. Learned counsel argued that by virtue of the Industrial Disputes (Amendment) Act No. 49 of 1982 clause (bb) has been added to Section 2(oo) of 1947 Act, and, therefore, termination of service on account of non-renewal of the contract of employment can no longer be treated as retrenchment. Learned counsel argued that although Clause (bb) has been made effective from August 18, 1984, the same should be applied to all pending cases. This argument of Mr. Hemant Kumar does not merit acceptance. Clause (bb) has been admittedly made effective with effect from August 18, 1984. It is, therefore, evident that the Legislature has not thought it proper to give express retrospectivity to the amendment made in Section 2(oo) of the Act. However, it is to be seen as to whether the amended provisions can be treated as retrospective by implication and can it be said that the amendment made in Section 2(oo) has the effect of validating an order of termination of service, which was otherwise void ab initio on account of violation of Section 25F. This point has been examined by a Division Bench of Rajasthan High Court in Principal Mayo College v. Labour Court and Anr. (1988-II-LLJ-351). That was a case in which termination of the service of a Chowkidar was brought about without compliance of the provisions of Section 25F. The Labour Court held that the termination was illegal on account of non-compliance of the requirements of Section 25F. The Labour Court therefore, directed reinstatement of the workman with consequential benefits. Shri Manoj Sharma, counsel for the petitioner, in that case raised an argument of implied retrospectivity. The Division Bench formulated a question as to whether clause (bb) added to Section 2(oo) by the Amending Act No. 49 of 1984 has retrospective effect or not. After making reference to some decisions of the Supreme Court, the Division Bench stated the principles for deciding the question as to whether the amendment should be given prospective or retrospective effect and then concluded as under:
"13. In the light of the principles laid down by the Supreme Court in the above referred cases if we consider the new Clause (bb) as added to Section 2(oo) by the Amending Act 49 of 1984, we will discover that no retrospective i effect can be given to new Clause (bb) as it is the part of the definition clause.
14. Further, it is not with respect to procedural law, but it is a provision whereby some 2 powers are conferred on the employer which is destructive of the protection so far available to the employee prior to August 18, 1984, the date when the new Clause (bb) was inserted in the matter of terminating the con-tract of employment. Prior to the amendment made in the definition of retrenchment by the Amending Act 49 of 1984, retrenchment has been understood to mean termination of services for any reason whatsoever, otherwise3 than as a punishment inflicted by way of disciplinary action, unless it falls within the exception provided in the definition of Section 2(oo). As a result of this amendment contractual termination will not constitute retrenchment, because now by virtue of new Clause (bb) one more exception has been provided in the definition of retrenchment. The new Clause provides as follows:
"(bb) Termination of the service of the 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 termination 4 under a stipulation in that behalf contained therein; or"
Thus, in our opinion, no retrospective effect can be given to the new Clause (bb) which was added to Section 2(oo) by the Amending Act, 49 of 1984."
7. In J. Samson Jayasingh v. Malayalam Plantations Limited (1988) 73 F.J.R. 337, the learned Single Judge of the Kerala High Court took a contrary view and held that though the amendment has been made effective from August 18, 1984, it has the effect of infusing life into an invalidate order of retrenchment. The learned Single Judge of the Kerala High Court took notice of the decisions of the Supreme Court in Sundara Money's case and observed that amendment was made in 1984 in order to overcome the principle laid down by the Supreme Court by Sundara Money's case and other cases and then proceeded to say that termination of service by efflux of time or in accordance with the conditions of contract has been negatived though prospectively by the statutory amendment. He further held that although the order of termination was an invalid order and the employee was entitled to be treated as if he was notionally in service, the position could validly continue only until the Legislature finally clarified the law so as to negative the principle laid down by the Supreme Court. On that logic the learned Judge held that the order of termination remained ineffective till August 18, 1984 i.e. the date when the amendment was made effective. With great respect, I am unable to accept the reason given by the learned Single Judge for holding that the termination of service of the workman which was invalid, remained ineffective till August 18, 1984 only. Once the termination of service of a workman, brought about in violation of Section 25F, has the effect of rendering the order as void, a subsequent Legislation cannot validate the order of termination by implication. The reason given by the learned Judge of the Kerala High Court, if accepted, would lead to serious anomalies. The fate of the orders of retrenchment would then have to depend on purely fortuitous factors. In a given case, if the termination was declared void by the competent court, the workman would become entitled to all benefits. In an identical case if the Court failed to decide the matter in time, workman in the later case would be deprived of the relief of reinstatement. In my considered opinion, the learned Judge did not correctly appreciate the consequences of a retrenchment order passed in violation of the mandatory requirements contained in Section 25F and after holding that the amenemnt was prospective, there was no justification for holding that the order became effective and acquired validity from the date of amendment. I am clearly of the opinion that the law laid down by the Division Bench of Rajasthan High Court in Mayo College's case (supra) is correct and there is no warrant or justification for taking a different view. I, therefore, hold that the finding recorded by the learned Judge, Labour Court that termination of the service of the workman amounts to retrenchment as defined in Section 2(oo) of 1947 Act, is correct and does not call for any interference by this Court.
8. In view of the above legal position regarding applicability of Clause (bb) of Section 2(oo) of 1947 Act, case of the respondent workman shall have to be judged on the basis of the provisions contained in Section 2(oo) as it stood in September, 1978. The term 'retrenchment' as defined in Section 2(oo) (Unamended) has been interpreted by the Supreme Court in several cases. Hari Prasad Shiv Shankar Shukla v. A.D. Divakar, A.I.R. 1957 S.C. 121 was the first case in which some observations were made by the Supreme Court regarding the scope of the term retrenchment. Though that was a case of closure of industry and their Lordships of the Supreme Court were considering interpretation of Sections 25FF and 25FFF, some observations were made by the Apex Court suggesting that termination of services of workmen on a; bonafide closure of an industry or on change of ownership or management of the industry does not amount to retrenchment. However, in State Bank of India v. N. Sundara Money (1976-1-LLJ-478)(S.C), definition of Section 2(oo) directly came up for interpretation by the Supreme Court. In that case, the Apex Court took the view that the expression "termination of service for any reason whatsoever" includes within its scope termination of service by efflux of time or in accordance with the terms contained in the contract of employment and it is not necessary that there must be an overt act by the employer for bringing an end to the employment of the workman. This wider literal interpretation of the definition of retrenchment was applied by the Supreme Court in its subsequent decision in Delhi Cloth and General Mills Ltd v. Shambhu Nath Mukherjee (1918-l-LU~\\ Santosh Gupta v. State Bank of Patiala (1980-H-LLJ-72), Mohan Lal v. Bharat Electronics Ltd., (1981-11-LLJ-70), L. Robert D'Souza v. The Executive Engineer, Southern Railways (1982-I-LLJ-330), and a large number of other cases, After about 12 years of the judgment of Sundara Money's case some doubts were expressed about its correctness in view of the observations made by the Constitution Bench in Hari Prasad Shiv Shankar Shukla's case (supra). Therefore, the question was once again referred to a Constitution Bench. In Punjab Land Development and Reclamation Corporation v. Presiding Officer, Labour Court (1990-II-LU-70), the Constitution Bench examined the so- called conflict between its two judgments, namely, Hari Prasad Shiv Shankar Shukla v. A.D. Divakar (supra) and State Bank of India v. N. Sundara Money's case (supra). After considering its various earlier judgments, the Supreme Court held that: (p. 93):
"Although there are apparent incongruities when the definition clause 2(oo) is considered in the context of the main provisions viz. Sections 25F, 25G, 25H, but there is room for harmonious construction. Their Lordships further observed:- (p. 94):
"As a result of construing retrenchment in its wider sense the rights of the employer under the standing orders and under the contracts of employment in respect of the workman whose service has been terminated may have been affected by introduction of Section 2(oo), 25F and the other relevant sections, Secondly, it may be said, the rights as such are not affected or taken away, but only an additional social obligation has been imposed on the employer as to give the retrenchment benefit to the affected workmen, perhaps for immediate tiding over of the financial difficulty. Looked at from this angle there is implicit a social policy. As the maxim goes-State pro ration voluntas populi, the will of the people stands in place of a reason. (pp. 87-89):
"The wider literal meaning has since been adopted by the Supreme Court in Sundara Money and subsequent cases rejecting the narrow, natural and contextual meaning. The question of the subsequent decisions of the Supreme Court being per incuriam on ground of failure to apply the law earlier laid down by the Constitution Bench of the Court in Hariprasad Shukla case could arise only if the ratio in Sundara Money and subsequent decisions in the line was in conflict with the ratio in Hariprasad and Anakapalle. Analysing the complex syllogism of Hariprasad case it appears that its major premise was that retrenchment meant termination of surplus labour of an existing industry and the minor premise was, that the termination in that case was of all the workmen on closure of business on change of ownership. The decision was that there was no retrenchment. However, Hariprasad case is not an authority for the proposition that Section 2(oo) only covers cases of discharge of surplus labour and staff. The Judgments in Sundara Money and the subsequent decisions in the line could not be held to be per incuriam inasmuch as in Hindustan Steel and Santhosh Gupta cases, the Division Benches of the Supreme Court had referred to Hariprasad case, and rightly held that its ratio did not extend beyond a case of termination on the ground of closure and as such it would not be correct to say that the subsequent decisions ignored a binding precedent. In a fast developing branch of Industrial and Labour Law it may not always be of particular importance to rigidly adhere; to a precedent, and a precedent may need be departed from if the basis of legislation changes."
9. In view of the above referred pronounce-meats of the Supreme, Court, it must be held that termination of service of the respondent workman brought about on account of alleged nonavailability of work has rightly been held by the Labour Court to be retrenchment in the impugned award and I do not find any ground to interfere with the findings recorded by the Labour Court.
10. Second argument of Mr. Hemant Kumar is that the respondent workman was a casual and daily rated worker and, therefore, it was not necessary for the employer to comply with the requirement of Section 25F (a) and (b) of 1947 Act. A look at Section 25F along with Section 25(b) of 1947 Act shows that every employer is under a statutory obligation to give one month's notice or pay in lieu thereof and retrenchment compensation at the rate of 15 days average pay to a workman who has worked under him continuously for a period of one year and whose service is sought to be terminated by way of retrenchment. The Industrial Disputes Act, 1947 is one of the social welfare legislations intended not only to maintain industrial peace and harmony but also to protect the rights of the employees covered by the term workman as defined in Section 2(s) of the Act. Neither Section 2(s) nor Section 25F of the Act refers to the source of recruitment of the employee nor it refers to his status or nature of employment. It does not even refer to the mode of payment of wages. By applying the golden rule of interpretation of statutes, it has to be held that the provisions of Section 25F are to be complied by the employer in case of retrenchment of a workman irrespective of the fact that the workman is permanent or temporary or causal or daily wage earner. The status of the employee has no relevance in the context of applicability of Section 25F of the Act. The only thing which the employee is required to prove for invoking applicability of Section 25F is that he has worked under the employer for 240 days within a period of 12 months preceding the date of termination of service. He is not required to show that he was in regular service or that he was holding a post in substantive capacity or that he was a temporary employee. In whatever capacity the employee may be working, it is obligatory for the employer to comply with the condition precedent enumerated in Sub-section (2) of Section 25F. Question relating to applicability of Section 25F in the case of casual or seasonal workman should be treated as concluded in view of the Supreme Court decision in L. Robert D'Souza v. The Executive Engineer, Southern Railway (Supra). In that case Supreme Court Specifically rejected an argument that the provisions of Section 25F are not attracted in the cases of casual or daily rated employees. While repelling such a submission, the Supreme Court observed, (p. 343):
"There is no dispute that the appellant would be a workman within the meaning of expression in Section 2(s) of the Act. Further, it is incontrovertible that he has rendered continuous service for a period over 20 years. Therefore, the first condition of Section 25F that appellant is a workman who has rendered the service for not less than one year under the Railway Administration, an employer carrying on an industry, and that his service is terminated which for the reasons here-inabove given would constitute retrenchment. It is immaterial that he is a daily rated worker. He is either doing manual or technical work or his salary was less than Rs. 500/-and the termination of his service does not fall in any of the excepted categories. Therefore, assuming that he was a daily rated worker, once he has rendered continuous uninterrupted service for a period of one year; or more, within the meaning of Section 25F of the Act and his service is terminated for any reason whatsoever and the case does not fall in any of the excepted categories, notwithstanding the fact that Rule 2505 would be: attracted, it would have to be read subject to the provisions of the Act. Accordingly, the termination of service in this case would constitute retrenchment and for not complying with preconditions to valid retrenchment, the order of; termination would be illegal and invalid."
11. In view of this authoritative pronouncement of the Supreme Court, it must be held that: the mere fact that respondent No. 2 was, according to the petitioner, a daily waged employee did not absolve the petitioner from the responsibility of complying with the requirement of Section 25F of the Act. It must logically be held that the finding recorded by the Labour Court that the employer had failed to fulfil the requirement of Section 25F and, therefore, the termination of workman was liable to be declared as null and void does not call for interference by this Court.
12. Mr. Hemant Kumar lastly argued that the learned Labour Court has committed an error in awarding full back wages to the workman. He argued that the employer had specifically pleaded that the workman was gainfully employed throughout the period after the termination of his service and had produced two witnesses namely Santokh Singh and Wariam Singh in support of this. According to the learned counsel even though these two witnesses did not directly support the case of the employer that the workman was gainfully employed all along after the termination of his service, the learned Labour Court could not altogether ignore their testimony particularly when the workman did not produce any evidence to show that he was not gainfully employed after the termination of his service. Though Shri Hemant Kumar is correct that when employer had raised a plea of gainful employment of workman after termination and produced Santokh Singh and Wariam Singh, in support of his plea of gainful employment, the Labour Court ought to have called upon the workman to explain the statements made by these two persons, in my opinion, the evidence produced by the employer was too weak and sketchy so as to deny back wages to workman in totality. Taking into consideration the fact that the petitioner is a public employer and the workman had not come before the Labour Court with a candid stand on the question of gainful employment, in my opinion ends of justice would be met if it is ordered that the petitioner shall pay 50% of the back wages to the workman instead of full back wages.
13. Consequently, the writ petition is dismissed in so far as challenge to the impugned award regarding reinstatement and continuity of service of workman is concerned. However, award regarding full back wages is modified and it is ordered that the petitioner shall pay 50% of back wages to the workman between the date of termination of his service and date of publication of the award. No costs.