Madras High Court
The State Bank Of India, Represented By ... vs The Presiding Officer, Central ... on 19 July, 1990
Equivalent citations: (1991)2MLJ93
Author: A.S. Anand
Bench: A.S. Anand
JUDGMENT A.S. Anand, C.J.
1. The ambit and scope of Section 25-F read with Section 25-B of the Industrial Disputes Act, 1947 (hereinafter called the Act) is the pivotal question requiring determination at our hands in this writ appeal. The circumstances leading to the filing of the appeal need a notice at the threshold.
2. The following industrial dispute between a workman and. the Management of State Bank of India, Madras, was referred to the Industrial Tribunal, Madras for adjudication under Section 10(1)(d) of the Act by Government of India, vide order No. L-12012/209/80-D.II-A, dated 30th July, 1981:
Whether the action of the Management of State Bank of India, Madras in terminating the services of Shri A. Perumal, Ex-watchman with effect from 21.5.1979 is justified? If not, to what relief is the workman concerned entitled?
3. The cause of Perumal had been espoused by the second respondent herein. According to the case of the workman, he after serving in the Indian Army, as a driver, for about 15 years was discharged from the Army on 4th April, 1978, where after he got himself registered with the Ex-servicemen Welfare D.S.S. and A. Board.
4. The workman was appointed as a substitute Watchman by the State Bank of India at their branch at Guindy on 9th May, 1978 and served there till 22nd December, 1978. Prior to being so appointed, he was asked to furnish a declaration to the effect that he had not served the State Bank of India in any temporary capacity earlier and the necessary declaration was furnished by him. After 22nd December, 1978, he worked at the Adyar Branch of the State Bank of India for three days, viz., 13th, 14th and 15th January, 1979 and thereafter served at the local Head Office of the State Bank of India from 17th January, 1979 till 21st May, 1979. His services were terminated at the close of duty hours on 21st May, 1979 without any rhyme or reason. At the time of termination of his services, however, he was neither given any notice nor any retrenchment compensation. He, therefore, raised an industrial dispute, which, on the failure of conciliation proceedings, came to be referred for adjudication to the Industrial Tribunal as notice above. In the claim petition filed by the workman before the Industrial Tribunal, he, inter alia, averred that:
He was appointed by the respondent Bank as a watchman in their branch at Guindy from 9.5.1978 and he was retained there till 22.12.1978. Thereafter he was given three days work namely on 13,14 and 15th January, 1979 at their Adyar Branch. Subsequently, he was employed by the respondent at their local Head Office from 17.1.1979 till 21.5.1979. The respondent Bank without any rhyme or reason terminated the services of A. Perumal at the close of duty hours on 21.5.1979. At the time of termination he was neither given any notice nor any compensation was offered to him.
and urged that since he has put in 279 days within a period of 12 months between 9th May, 1978 and 21st May, 1979, his services could not be terminated without following the procedure prescribed by Section 25-F of the Act, notwithstanding the interruptions of his services by the management on two occasions.
5. The claim of the workman was resisted by the Management and inter alia it was pleaded that since the Guindy Branch of the State Bank of India was in need of a temporary watchman, the workman was appointed, on the basis of his application with effect from 9th May, 1978 and was specifically informed at the time of his temporary appointment that the period of his temporary engagement by the Bank might not exceed 180 days: that before the expiry of 180 days, his services were terminated on 12.12.1978 and his accounts settled: That his subsequent appointments for three days at the Adyar Branch and during 17.1.1979and 21.5.1979 at the Head Office were fresh appointments, unconnected with his earlier appointment at the Guindy Branch which had come to an end on 22.12.1978. According to the Management, the employment of the workman at Adyar branch or local Head Office was not meant to be in continuation of the previous engagement by the Guindy Branch and that each employment was under a "separate employer" made without reference to the other "engagements", and the workman not having served for 240 days under either of the employers during the period of previous 12 months, was not entitled to the benefits of Section 25-F of the Act.
6. Before the Tribunal, evidence was led, both oral and documentary. The Tribunal, after a detailed discussion of the evidence, both oral and documentary, and referring to various provisions of the Act, came to the conclusion that the action of the Management in terminating the services of the workman was illegal and unjustified. The Tribunal specifically found that the effort made by the Management to rely upon a declaration alleged to have been given by the workman before his so-called "fresh temporary appointment" in the local Head Office of the State Bank of India, dated 10.1.1979, was a futile effort to escape the consequences envisaged by Section 85-F of the Act. It found as a fact that the so-called declaration had not only not been proved but that it had not been made by the Workman, Thiru Perumal at all and was falsely put up to resist his claim. According to the Tribunal, reliance on the declaration dated 10th January, 1979, was aimed at substantiating the plea taken by the Management to the effect that the workman had been given a fresh and separate engagement at the Head Office and that the said engagement was not in continuation of his previous engagements either in the Guindy or the Adyar Branches.
7. The Tribunal, accordingly, after recording the finding that the workman had served under the same employer, for a period of more than 240 days, during the period of one year preceding the date of the termination of his services and that the procedure prescribed by Section 25-F had not been followed, made an Award directing the reinstatement of the concerned workman with full back wages and incidental benefits.
8. Aggrieved of the Award, the Management filed W.P. No. 6255 of 1982 which came to be dismissed by a learned single Judge, vide judgment dated 5th March, 1986. The learned single Judge, after referring to the material on the record and noticing various judgments produced before him in support of the respective contentions raised by learned Counsel for the parties also held that the workman concerned, during the period of twelve months preceding the date from which calculation had to be made, had actually worked under the same employer for not less than 240 days and that the Award, therefore, was fully justified and did not suffer from any error of law or fact apparent on the fact of it. The award was accordingly upheld by the learned single judge and while doing so, the learned single Judge also did not place any reliance on the so-called declare at on dated 10th January, 1979, which had been pressed into aid by the Management, once again, to resist the claim of the workman before the learned single Judge. This appeal is directed against the judgment of the learned single Judge.
9. Appearing for the appellant, Mr. M.R. Narayanaswami, Senior Advocate, very fairly conceded that he was not supporting the stand of the Management, as reflected in the counter statement filed by it before the Tribunal to the effect that the employment given to the workman by different Branches of the Management were not services under one establishment or employer. He, however, argued that keeping in view the facts and circumstances of the case and particularly the fact that at the time of the initial appointment of the workman, he was specifically informed, vide communication dated 9th May, 1978, that he would not be eligible for permanent employment in the bank and that his services will be terminated as soon as he completes that temporary service for an aggregate period of 180 days in a year or earlier and that he would not be given any further appointment in the Bank under any circumstances whatsoever after his services were terminated unmistakably shows that the two subsequent appointments of the workman thereafter, without any fresh appointment orders, could not be clubbed with the services rendered by the workman at the Guindy Branch to test the validity of his claim petition. He submitted that the settlement of accounts at the Guindy Branch was only done for the purpose of paying to him whatever amount was due to him by way of wages, etc., till 22nd December, 1978 and nothing more than that. Learned Counsel for the second respondent submitted that for calculating whether or not the workman had actually worked for 240 days within the period of twelve calendar months preceding the termination of his services, the days actually worked by him at Guindy, Adyar and local Head Office branches had to be clubbed together as the services rendered were under the same employer, Mr. Prasad vehemently argued that since it had been found by the Industrial Tribunal that the Management had tried to create false evidence by producing the so-called declaration, Ex. M-10 which finding was accepted by the learned single Judge also, it was not entitled to seek any relief through the writ jurisdiction of this Court and this appeal merits dismissal even on that score with exemplary costs.
10. With a view to appreciate the rival contentions raised at the Bar and to decide the ambit and scope of Section 25-F read with Section 25-B of the Act, it would be relevant to refer to some of the provisions of the Act.
11. Section 25-F of the Act reads as follows:
25-F. Conditions precedent to retrenchment of workman : - 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 k 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.
(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 of any part there of 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.
On a plain reading of Section 25-F(a) and (b), it follows that 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 without notice and recording reasons for retrenchment, until he has been paid at the time of retrenchment compensation which shall be equivalent to 15 days average pay for every completed year of service or any part there of in excess of six months.
12. What is "retrenchment" does not require any speculation on our part as Section 2(oo) of the Act defines it in the following terms.:
(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;
The use of the expression "for any reason whatsoever" occurring in the same section unmistakably shows that every termination of service spells retrenchment and, therefore, if there has been termination of services of an employed by an employer, otherwise than by way of punishment, it shall be deemed to be retrenchment, except of course in the cases falling in the exceptions contained in Clauses (a) to (c) of Section 2(oo) (supra).
13. Termination, as observed by their Lordships of the Supreme Court in State Bank of India v. Sundaramoney (1976) 1 L.L.J. 478, embraces not merely the Act of termination by the employer, but "the fact of termination, howsoever produced."
14. However, if the services of a workman have been terminated, he would be entitled to the "retrenchment benefits" under Section 25-F of the Act only if he had been in "continuous service" for not less than one year, under an employer in accordance with the conditions prescribed under Clauses (a) to (c) of Section 25-F.
15. What then does "continuous service" for not less titan one year mean? Section 25-B provides the answer. For our purposes, we need to notice the provisions of Section 25-B(1) and (2)(a)(i) and (ii), which read thus:
25-B : Definition of continuous service : - For the purpose of this chapter,-
(1) a workman shall be said 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 legal, or a lock-out 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 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 cases;
16. It would thus be seen that the definition of the expression "continuous service" is prefaced with the words "for the purposes of this Chapter", which means that the effect of continuous or uninterrupted service in terms of this definition is to be limited only for the purposes of Chapter V-A, i.e., for the purpose of calculating, quantifying and making payment of compensation under provisions contained in Chapter V.A. The definition of "continuous service", therefore, is of limited and not universal application but for the purposes of the instant case, that makes no difference.
17. Section 25-B(1) talks of an uninterrupted service, to include service which may be interrupted on account of sickness or authorised leave Or an accident or a strike which has not been declared illegal or a lock-out or cessation of work which is not due to any fault on the part of the workman, but that is an independent clause which neither governs nor controls the immediately succeeding clause. Sub-section (2) of Section 25-B of the Act governs the situation where a workman is not in continuous service within the meaning of Sub-section (1) of Section 25-B. It is laid down in Sub-clause (a)(i) and (ii) of Section 25-B (2) that where a workman has not been in uninterrupted service for a period of one year or six months, as provided in Clause (1) of Section 25-B, he shall still be deemed to be in continuous service under the employer for a period of one year if, during the period of 12 calendar months preceding the date with reference to which calculation is to be made, the said workman has actually worked under that Employer for not less than 190 days in the case of workman employed below ground in a mine and for not less than 240 days in any other case as per Sub-clause (a)(ii). Thus, the conclusion follows that where as workman has not been in "continuous service" within the meaning of Sub-section (1) for the entire period of one year or six months, he shall still be deemed to be in continuous service under the employer for a period of one year or six months, as the case may be, if he, during the period of 12 calendar months, just preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than 240 days. The arguments of Mr. Narayanaswami, that there should have been a subsisting contract of employment during the entire period of 12 months for calculating 240 working days may have reference to Section 25-B(1) but is not supported by the plain phraseology of Section 25-B (2)(a)(ii) of the Act (supra). It appears to us that the thrust of the above provisions is the existence of the relationship of master and servant for the period during which a workman has actually worked during the preceding 12 months from the relevant date and not the existence of a contract of employment during the entire period of 12 months. To hold otherwise would amount to making Section 25-B(2)(a)(i) and (ii) of the Act redundant and defeating the intention of the legislature. The deeming provision in Section 25-B (2) of the Act by fictionally treating interrupted service under certain conditions also as continuous service was introduced by the legislature, apparently to mitigate the hardships of a workman who is made to actually serve under an employer, intermittently, but actually serves him for a period of not less than 240 days in the preceding twelve months from the date his services are terminated.
18. While dealing with the concept of continuous service under the Payment of Gratuity Act, 1972, which provisions are in pari materia almost the same as the provisions under consideration under the Industrial Disputes Act, a Division Bench of the Bombay High Court in Bombay Union Dyeing and Bleaching Mills v. Narayan Tukaram More 1981 Lab. I.C. 1445 : (1980) 2 L.L.J. 424, held that the emphasis therein is not on a subsisting contract of employment, but on rendering continuous service. The Bench observed that notwithstanding the position that in the definition of continuous service, interrupted service has been fictionally treated as part of continuous service, the fact remains that the concept of continuous service contemplates that the employee is in fact rendering service as distinguished from a mere subsistence of a contract of employment. The definition of continuous service under the Payment of Gratuity Act provides in Ex. I to Section 2(c) that in the case of an employee, who is not in uninterrupted service for one year, he shall still be deemed to be in continuous service, if he has been actually employed by an employer during the 12 months immediately preceding the year for not less than 240 days, except where he is employed in a seasonal establishment. The emphasis therein is on the expression "actually employed" in contradistinction to the expression under subsisting contract of employment throughout. The judgment of the Bombay High Court came up for consideration before the apex Court in Lalappa Lingappa v. Laxmi Vishnu Textile Mills , and it would be advantageous to extract the following observations of their Lordship:
In our judgment, the High Court rightly observed : It is important to bear in mind that in Explanation the Legislature has used the words 'actually employed'. If it was contemplated by Ex. I that it was sufficient that there should be a subsisting contract of employment, then it was not necessary for the Legislature to use the words 'actually employed'. It is not permissible to attribute redundancy to the Legislature to defeat the purpose of enacting the Explanation. The expression 'actually employed' in Ex. I to Section 2(c) of the Act must, in the context in which it appears, mean 'actually worked'. It must accordingly be held that the High Court was right in holding that the permanent employees were not entitled to payment of gratuity under Sub-section (1) of Section 4 of the Act for the years in which they remained absent without leave and had actually worked for less than 240 days in a year.
19. Under the Industrial Disputes Act, the emphasis in Section 25-B(2)(a)(ii) is on the days "actually worked". Where a workman can establish, as indeed the onus is on him to so establish, that working backwards to a period of 12 months, just preceding the date of his retrenchment, he had actually worked for a period of 240 days during those 12 months under the same employer, then notwithstanding any number of interruptions in his service on account of reasons other than those which disqualify him for getting the benefit of the fictional service, he would be deemed to have been in continuous service for a period of one year and would satisfy the eligibility qualification enacted by the Legislature in Section 25-F of the Act.
20. In Workmen of American Express v. Management of American Express (1985) 2 L.L.J. 539, the apex Court opined that for interpreting the expression "continuous service", the words actually worked have utmost importance and the Legislature had laid emphasis to these words and there was, therefore, no scope for the argument that irrespective of the period when a workman has actually worked, he must also establish that he was in service for the entire period of 12 months to claim the protection and benefit of Section 25F of the Act.
21. Again, in State Bank of India v. Sundaramoney (1976) 1 L.L.J. 478, while dealing with the right to retrenchment benefit of a workman in a dispute between the State Bank of India and one of its workmen, the apex Court found that for computing "continuous service" for purposes of entitlement to retrenchment benefits, what was relevant was to consider the days on which the workman had actually worked under an employer, during the preceding 12 months, calculated backwards from the date of retrenchment and went on to observe that the provisions of Section 25-F could not be allowed to be defeated by reading something non-existent into Section 2(oo) or Section 25-B(2) of the Act.
22. The position, therefore, which emerges from the above discussion as regards the ambit and scope of Section 25 - Freadwilh Section 25-B(2)(a)(ii)and Section 2(oo) of the Act is that no workman employed in any industry who has actually worked under an employer continuously for not less than one year shall be retrenched except by following the procedure laid down in Section 25-F of the Act, that the termination of services of an employee by the employer, otherwise than on account of punishment or for grounds stipulated by Clauses (a) to (c) of Section 2(oo) would amount to retrenchment of the employee, entitling him to the protection of Section 25-F, a workman would be deemed to have been in continuous service for a period of one year in the preceding 12 months, calculated backwards from the date of termination of the services, if he has actually worked during the preceding 12 months under the employer for not less than 240 days, despite interruptions of his services during the said period of 12 preceding months, except in the cases specified in Section 25-B(2)(a)(ii) itself.
23. We are unable to agree with the submission of Mr. Narayanaswami, that in the instant case the three periodic appointments given to the workman by the State Bank of India at Guindy, Adyar and the local Head Office were separate and distinct. He was unable to produce any letter of appointment, other than the initial letter appointing the workman to the Guindy branch, with regard to his appointment at Adyar and the local Head Office of course, the Management had informed the workman at the time of his appointment at the Guindy branch that he would not be allowed to work for more than 180 days, apparently to avoid the operation of Section 25-F, but the fact remains that the workman was allowed to actually work beyond 180 days and, therefore, he cannot be denied the benefit of Section 25-F. We cannot lose sight of an important aspect that the Management had itself, in Ex. M-7, recognised this factual as well as legal position. That apart, in our view, the argument of Mr. Narayanaswami, referred to above, if accepted would do violence to the plain provisions of Section 25-B(2) of the Act besides making it redundant. It would amount to legitimising the mischief which the Legislature wanted to do away with by providing the "deeming" provision in the said section, so that employers do not resort to the "interrupting" tactics, to avoid their liability under Section 25-F of the Act, where the workman established that during the preceding 12 months, he had, despite interruptions, the employer for at least 240 days.
24. We, therefore, hold that in the instant case the workman has satisfied the requirements of the law to be entitled to the benefit given to him by the Industrial Tribunal through its award which was rightly upheld by the learned single Judge. It was indeed a futile attempt on the part of the Management to press into aid the "false" declaration, Ex. M-10, to defeat the legitimate claim of the workman. We note it with anguish that a nationalised Bank of the status of the State Bank of India, should have taken recourse to such a design to defeat the claim of an ex-soldier who served the Bank as a petty watchman, after having served the Nation for a long period. The Bank Management after stoutly resisting the claim of the workman before the tribunal by pressing into aid the "false" declaration, remained undeterred and while invoking the writ jurisdiction to question the award of the Tribunal, once again sought aid of the same "false" declaration, both before the learned single Judge as well as before this Court. To say the least, we find that the Management did not come to the court with clean hands while invoking the equitable jurisdiction.
25. Thus, for what we have said above, we hold that the award of the Tribunal is perfectly sound and just. It does not suffer from any error whatsoever. The learned single Judge rightly upheld the same and we have not been persuaded to take a contrary view. The writ appeal, therefore, fails and is hereby dismissed with costs, which are assessed at Rs. 1,000.