Rajasthan High Court - Jaipur
Nathu Ram Saini vs Hindustan Copper Ltd. And Anr. on 22 April, 1993
Equivalent citations: (1995)ILLJ421RAJ, 1994(3)WLC657
JUDGMENT G.S. Singhvi, J.
1. This petition involves a challenge to the termination of the service of the petitioner with effect from August 29, 1984 by way of striking off his name from the rolls. The petitioner has prayed for quashing of termination of his service and for reinstatement with all consequential benefits.
2. Briefly stated, the case of the petitioner is that he joined service of the Hindustan Copper Ltd., Khetri Nagar, District Jhunjhunu, with effect from September 1, 1967. At the relevant time, he was working as Machinist Grade B. On July 14, 1984 he had gone to Chirawa for meeting his ailing aunt. There he fell sick. July 15, 1984 was a Sunday and that was his off day. He got himself medically examined at Chirawa. The doctor at Chirawa declared him unfit for duty. He submitted an application on July 16, 1984 along with a medical certificate for grant of leave. He remained under treatment up to October 1, 1984 and after having been declared fit to resume duty he reported for duty on October 3, 1984. On that day, he submitted his fitness certificate also. He was, however, not allowed to join duty and was told that his name has been struck off from the rolls of the company. The petitioner submitted an application dated October 3, 1984 to the Deputy Personnel Manager/Deputy General Manager (Personnel), Hindustan Copper Ltd., for being allowed to join duty and finally served a notice for demand of justice. This notice for demand of justice was answered by the respondents on January 23, 1985. In their reply, the respondents claimed that the termination of service of the petitioner was brought about in accordance with para 15.5 of the Hindustan Copper Limited Workmen's Leave Rules and, therefore, he was not entitled to be taken back in service.
3. The petitioner has assailed the action of the employer on the ground that striking off his name from the rolls amounts to retrenchment under Section 2(oo) of the Industrial Disputes Act, 1947 (for short "the Act"), and since there has been non- compliance with Section 25F of the Act it is liable to be declared as void. The further case of the petitioner is that he could not have been treated as having remained absent unauthorisedly because he was ailing and he had submitted sickness certificate.
3a. In their reply, the respondents have pleaded that the workman had remained absent from duty since July 14, 1984. He did not send any intimation or information in relation to his absence. A letter dated August 7, 1984 (Annexure R-1) was sent to him and he was called upon to report for duty within ten days and to submit satisfactory explanation regarding unauthorised absence from duty. He was also informed that if he fails to comply with these requirements his name will be struck off from the rolls of the company on account of loss of lien. According to the respondents, the petitioner did not respond to this letter and therefore, the company ordered striking off his name from the rolls by letter dated August 29, 1984 (Annexure R-2). The respondents have denied the statement of the petitioner that he had sent application along with medical certificate. In substance, the case of the respondents is that termination of service of the petitioner on account of striking off his name from the rolls of the company does not amount to retrenchment. According to the respondents this action has been taken in accordance with para 15.5 of the Leave Rules, which are in turn based on the settlement dated March 27, 1980 arrived at between the employer and the representatives of the workmen.
4. From the rival pleadings of the parties it is clear that the petitioner joined the service of the respondent company on September 1, 1967 and served it for almost 17 years before his name was struck off from the rolls of the company. It is also borne out that the respondent company had given a notice to the petitioner on August 7, 1984 alleging therein that the petitioner was absenting from duty in an unauthorised manner since July 14, 1984. He was called upon to explain his absence with a warning that his name will be struck off from the rolls of the company on account of absence from duty and ultimately the company struck off the name of the petitioner from its rolls with immediate effect by letter dated August 29, 1984.
5. While Shri Prem Krishna Sharma, learned counsel for the petitioner, argued that the action of the respondent company in striking off the name of the petitioner from the rolls of the company amounts to retrenchment and this action of the company is liable to be declared void on account of violation of the mandatory conditions contained in Section 25F of the Act and, in any case, the action of the company is in violation of the principles of natural justice. Shri C.N. Sharma, senior advocate, argued that termination of service of the petitioner is covered by Section 2(oo)(bb) of the Act.
6. Section 2(oo) of the Act, as it stood prior to its amendment by the Industrial Disputes (Amendment) Act, 1984 (49 of 1984), and as it stands after coming into force of the Amendment Act of 1984 with effect from August 18, 1984 is quoted below:
Section 2(oo) prior to amendment:
"2(oo). "'retrenchment' means the termination by the employer of the service of the 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." Section 2(oo) after amendment:
"'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 (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 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;"
7. The definition of the term "retrenchment" as contained in the unamended Section 2(oo) became the subject-matter of decisions by the Supreme Court in a large number of cases. In Hariprasad Shivshankar Shukla v. A.D. Divelkar, (1956-57) 11 FJR 317 a Constitution Bench of the Supreme Court was considering a case relating to closure. While deciding that case their Lordships made the observation that only a case of termination of service as a result of surplusage can be treated as "retrenchment" under the Act. However, in State Bank of India v. N. Sundara Money, (1976-I-LLJ-478), the apex court gave a wider meaning to the term "retrenchment". Their Lordships declared that termination of service of an employee for any reason whatsoever will amount to retrenchment unless the termination of service can be held to be covered by any of the exceptions contained in the substantive part of Section 2(oo) or any of its clauses. This wider meaning given to the term "retrenchment" was accepted as correct in Santosh Gupta v. State Bank of Patiala (1980-II-LLJ-72); Hindustan Steel v. Labour Court, 1976 4 SCC 222; Delhi Cloth and General Mills Co. Ltd. v. Shambhu Nath Mukherji (1978-I-LLJ-1); Mohan Lal v. Bharat Electronics Ltd., (1981-II-LLJ-70); Surendra Kumar Verma v. Central Government Industrial Tribunal-cum-Labour Court, (1981-I-LLJ-386), L. Robert D'Souza v. Executive Engineer, Southern Railway, (1982-I-LLJ-330).
8. Despite these decisions, doubts were again expressed about the meaning and scope of the term "retrenchment" and, therefore, the matter was referred to a Constitution Bench once again. In Punjab Land Development and Reclamation Corporation Ltd. v. Presiding Officer, (1990-I-LLJ-70), their Lordships accepted the wider literal meaning adopted in Sundara Money's case, (1976) 49 FJR, and held that Hariprasad's case, is not an authority for the proposition that Section 2(oo) only covers cases of discharge of surplus labour and staff. After examining various cases previously decided, their Lordships of the Supreme Court observed 93-94.
77. "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 Sections 2(oo), 25F and 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 so 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 stat pro ratione voluntas populi; the will of the people stands in place of a reason...
10. The wider literal meaning has since been adopted by the Supreme Court in Sundara Money's case, supra 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's case, supra could arise only if the ratio in Sundara Money's case supra, and subsequent decisions in the line was in conflict with the ratio in Hariprasad's case, and Anakapalle 's case supra, Analysing the complex syllogism of Hariprasad's 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's case, is not an authority for the proposition that section 2(oo) only covers cases of discharge of suplus labour and staff. The judgments in Sundara Money's case, 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 Bench of the Supreme Court had referred to Hariprasad's case, supra 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."
This decision of the Constitution Bench sets at rest all doubts regarding the ambit and scope of the term "retrenchment", as it stood prior to the coming into force of the Amendment Act No. 49 of 1984. What has been done by the amendment is to exclude from the ambit of the term "retrenchment" those cases where termination of the service of the "workman" is on account of non-renewal of contract of employment or on termination of such contract under a stipulation contained in the contract itself.
Action of the employer in striking off the name of the employee from its rolls has been treated as "retrenchment" in Delhi Cloth and General Mills Ltd. v. Shambhu Nath Mukherji, (supra). In that case, service of the workman had been terminated by way of striking off his name from rolls in accordance with the clause contained in the standing order which provided for automatic cessation of service. In paras 13 and 14 of that judgment their Lordships observed (at page 215):
"On the face of it, the order striking off the name of the workman from the rolls on August 24, 1965 is clearly erroneous. No order, even under Section 27(c) of the Standing Orders, could have been passed on that date. The clause in the standing orders reads as follows:
'If any workman absents for more than eight consecutive days his services shall be terminated and shall be treated as having left the service without notice.'
11. The workman last attended work on August 14, 1965. August 15 was a public holiday. He was, therefore, absent from work only from August 16. So, even under the standing orders the workman was not absent for 'more than eight consecutive days' on August 24, 1965. The order is, therefore, clearly untenable even on the basis of the standing orders. It is not necessary to express any opinion in this appeal whether 'eight consecutive days' in the standing orders mean eight consecutive working days.
12. Striking off the name of the workman from the rolls by the management is termination of his service. Such termination of service is retrenchment within the meaning of Section 2(oo) of the Act. There is nothing to show that the provisions of Section 25F(a) and (b) were complied with by the management in this case. The provisions of Section 25F(a), the proviso apart, and (b) are mandatory and any order of retrenchment, in violation of these two peremptory conditions precedent, is invalid."
13. In Syed Bin Ali v. Superintending Engineer, (1986) Lab IC 848, a learned single judge (Shri B.P. Jeevan Reddy, as he then was) of the Andhra Pradesh High Court examined a similar provision contained in Regulation 28(3) of the Andhra Pradesh Electricity Board Service Regulations which contemplated automatic termination of service on account of absence from duty and held as under:
"An order under regulation 28(3) declaring that the employee of the Board had ceased to be in service for absenting himself from duty without leave for over a year amounts to retrenchment as the employee is a workman within the meaning of Section 2(s) and the order would be invalid for having been passed without complying with the provisions of Section 25F."
14. In M.S. Aboobacker v. H.M.T. Ltd., (1988-II-LLJ-323), a Division Bench of the Kerala High Court examined a similar provision and observed at (p. 325) "Where a standing order provides that a workman would lose his lien on his appointment if he does not join his duty within a certain time after his leave expires, it can only mean that his service stands automatically terminated when that contingency happens."
15. In Bharat Heavy Electricals Ltd. v. R.V. Krishna Rao, (1990-I-LLJ-87), a Division Bench of the Gujarat High Court held that action of the employer in striking off the name of the employee from the muster rolls on account of absence from duty amounts to retrenchment pure and simple and if there is a violation of Section 25F the action of the employer is liable to be declared as void.
16. Section 2(oo)(bb) deals with cases of termination of service brought about as a result of non-renewal of the contract of employment. This clause has been added by Amendment Act No. 49 of 1984 in order to make an inroad into the proposition of law laid down in Sundara Money's case, (supra) and similar cases that termination of service even by efflux of time or in accordance with the conditions stipulated in the terms of employment will be covered by the definition of "retrenchment". The effect of insertion of Section 2(oo)(bb) is that now the termination of service which takes place on account of conditions contained in the contract of employment or expiry of the contract of employment are not covered by the definition of "retrenchment" as given in the substantive part of Section 2(oo). An employee appointed on fixed term cannot now claim that his service has been terminated by way of retrenchment merely because the employer has not extended the term of the contractor employment. This clause, how ever, cannot be stretched to cover cases where termination of service is brought about on ac count of the happening of an event which falls within the ambit of misconduct or where an action is taken by the employer for termination of service by way of striking off the name on ac count of alleged unauthorised absence of the employee from service.
17. In the case on hand, termination of the service of the workman has been brought about by a specific order of the employer issued on August 29, 1984. This termination has been made effective from August 29, 1984, itself. As is evident from the language of para 3 of an-nexure R-2, the workman had allegedly remained absent from duty from July 14, 1984 for a period of three weeks. The employer did not take any action invoking para 15.5 of the Hindustan Copper Limited Workmen's Leave Rules. It gave a specific notice to the petitioner on August 7, 1984 and after another three weeks it terminated the service of the petitioner by striking off his name from the rolls of the company. Although the respondents have taken this action in accordance with para 15.5 of the Leave Rules, termination of service with effect from August 29, 1984 cannot be treated as a case of automatic cessation of service. It is also not possible to accept the submission that it is a case of termination of service by way of termination of contract of employment in accordance with the conditions contained in the contract itself. Even though the Leave Rules may govern the service conditions of the petitioner, the positive action taken by the respondents for termination of service of the petitioner by striking off his name cannot be equated with termination of contract of employment itself. This position holds good notwithstanding that para 15.5 has been incorporated in the rules as a result of settlement dated April 15, 1980.
18. On the basis of the above discussion, I have no hesitation in holding that termination of service of the petition brought about with effect from August 29, 1984 by way of striking off his name from the rolls of the company amounts to retrenchment under Section 2(oo) of the Act and it is not a case covered by Section 2(oo)(bb) of the 1947 Act.
19. The decision of the Gujarat High Court in J.J. Shrimali v. District Development Officer, Zila Panchayat, (1990-I-LLJ-451), as well as the decision of the Supreme Court in Surendra Kumar Gyani v. State of Rajasthan, (1993-II-LLJ-903), on which reliance has been placed by Shri C.N. Sharma are of little assistance to his case. In the Gujarat case, the employees were engaged in relief work started by the State to provide relief to the drought-affected people. They were engaged as muster Karkoons on purely temporary basis for supervising scarcity relief work started by the Government. These works were administered through the district panchayats. In the orders of appointment it was clearly stipulated that their employment will be terminated on the winding up of scarcity relief works. The Division Bench of the Gujarat High Court declared that drought relief work undertaken by the Government is not an "industry" and since the termination of service took place on account of the winding up of the drought relief work, it cannot be treated as a case of "retrenchment". In Surendra Kumar Gyani's case, (supra) the employees were ad hoc lower division clerks employed in the Employees' State Insurance and Provident Fund Departments and they were to be replaced by regularly selected candidates. What their Lordships have held in that case is that termination of service of lower division clerks on availability of selected candidates cannot be treated as illegal. In fact, Surendra Kumar Gyani's case, (supra), does, deal with the question relating to interpretation of Section 2(oo) or applicability of Section 25F.
20. So far as the present case is concerned, it is clearly established from the record that the petitioner had rendered over 17 years of service before being removed from service by way of striking off his name from the rolls. The respondents have not come forward with the case that the petitioner was a casual or an ad hoc or a temporary employee appointed for fixed term. After having rendered 17 years of service the petitioner has been thrown out of employment without compliance with the requirements of Section 25F. The provisions of Section 25F have been held to be mandatory in Hospital Mazdoor Sabha v. State of Bombay, (1959- 60) 17 FJR 423; AIR 1960 SC 610. It has also been held that consequence of termination of service brought about in violation of Section 25F is that the employee continues to be in service as if his service had never been terminated. In a large number of cases it has been held that effect of violation of Section 25F is that the order of termination is rendered void, non est and inoperative. A lucid exposition of law on the subject can be found in a Division Bench decision of this Court in Udaipur Mineral Development Syndicate Pvt. Ltd. v. M.P. Dave (1975-II-LLJ-499).
21. Even otherwise, the termination of the service of the petitioner is unsustainable. The petitioner has been removed from service on the charge of having remained unauthorisedly absent from duty. Absence from duty is by itself a misconduct. Therefore, before the termination of service of the petitioner could have been brought about on the allegation of unauthorised absence from duty, it was incumbent on the respondents to have made an inquiry by giving a charge sheet to the petitioner and by holding an enquiry into the allegations of misconduct. Simple notice given to the petitioner that if he does not specifically explain his absence, he will lose his lien cannot be equated with an enquiry held in accordance with the principles of natural justice. Giving of a specific charge-sheet and recording of finding of guilt ought to have preceded the valid termination of service of the petitioner for his alleged absence. In L. Robert De Souza's case (supra), their Lordships of the Supreme Court declared that termination of service of the petitioner for absence without leave amounts to misconduct and since no inquiry was held, termination of the workman was liable to be quashed on the ground of violation of the principles of natural justice.
As a result of the above discussion, it is held that:
(i) termination of service of the petitioner with effect from August 29, 1984 by way of striking off his name from the rolls of the company amounts to "retrenchment" under Section 2(oo);
(ii) the provisions of Section 25F have not been complied with and, therefore, the termination of the service of the petitioner is void ab initio.
In the result, the writ petition is allowed. Termination of the service of the petitioner with effect from August 29, 1984 is declared as void. The respondents are directed to reinstate the petitioner in service with all consequential benefits except actual wages. The petitioner shall be free to avail of the remedy under Section 33C(2) for backwages. In such proceedings the respondents will be free to plead and prove that the petitioner was gainfully employed in the intervening period and is, therefore, not entitled to the whole or part of the backwages. Costs made easy.