Madras High Court
The President, Srirangam Co-Operative ... vs The Presiding Officer, Labour Court And ... on 15 March, 1996
Equivalent citations: (1996)IILLJ216MAD
JUDGMENT K.A. Swami, C.J.
1. This appeal is preferred by the Srirangam, Co-operative Urban Bank Limited, Srirangam, Tiruchy (hereinafter referred to as 'the Bank') against the order dated October 28, 1995 passed by the learned single Judge in W.P.No. 7321 of 1995. In the writ Petition, the petitioner sought for quashing the award dated February 26, 1985 passed by the Labour Court in I.D. No. 248 of 1993. That award came to be passed in the dispute raised on the following points:
(1) Whether the non employment of Thiru K. Nagarajn is justified, if not to what relief he is entitled?
(2) To compute the relief, if any awarded in terms of money if it can be so computed.
The facts which lead to the above said dispute are as follows: The petitioner, thiru K. Nagara-jan was appointed in the bank as Clerk, from April 1, 1974 and he was paid a total salary of Rs. 261/- per month. He continued as such till May 31, 1975 when his services were terminated. He did not take any action with regard to his termination of services. However, he was re- employed on daily wages basis at the rate of Rs. 13/- per day and paid monthly salary of Rs 336/- with effect from August 1, 1980. He continued in that position till April 27, 1982 on which date, he was removed from the services by the office communication dated April 27, 1982 which reads as follows:
"Proceedings of the President, Srirangam Co-operative Urban Bank Limited, Srirangam, Present: Thiru K. Padmanaban Sub: Urban Bank - Srirangam Co-operative Urban Bank-Removal of Thiru K. Nagara-jan and C. Mani from their services - Orders issued -
Ref : Review of the Joint Registrar of Co-op Societies, Tiruchy RC. 14755/81-B5 (i) dated April 9, 1982.
As per Joint Registrar's review in the ref.cited, the following two employees who are working as daily wages in Srirangam Co-op. Urban Bank are hereby removed from their services of the Bank.
1. Thiru K. Nagarajan
2. Thiru C. Mani It is also hereby noted that Thiru K. Nagarajan and Thiru C. Mani are not to be allowed to report to the bank for any duty.
Sd/-
President Therefore, the writ petitioner raised the dispute which was referred to the Labour Court, which by award dated February 26, 1985 found that Registrar of Co-operative Societies alone was competent to make appointment and the bank in defiance of the rules and regulations, appointed the petitioner as temporary clerk as the Board of Directors of the Bank was very much interested in the petitioner and initiative was taken by the Board to get the appointment ratified. Hence, the Petitioner's contention that the bank had adopted unfair labour practice was rejected by the Labour Court as fallacious. Accordingly, the Labour Court held that the petitioner was not entitled to any relief. Aggrieved by the aforesaid award, the petitioner preferred W.P.No. 7321 of 1985, challenging the award and further sought for a direction to reinstate him as clerk with continuity of service, back-wages and all other attendant benefits with costs. Learned Single Judge has allowed the writ petition as prayed for on the ground that Section 25F of the Industrial Disputes Act, 1947 (hereinafter referred to as 'the Act') was attracted to the case and as the condition precedent to retrenchment of a workman was not complied with removal of the petitioner from the services was bad in law. The relevant portion of the order of the learned single Judge is as follows:
"It is admitted fact by both sides that the writ petitioner was initially appointed by the 2nd respondent management and subsequently for want of vacancy his services were terminated. It is evident that as and when the retrenchment is going to be effected under the Industrial Law, the last entrant has to go. Applying the above said principle, the 2nd respondent rightly terminated the services of the writ petitioner for want of vacancy. Thereafter, when once another vacancy arose, the Management took a right decision in reappointing the writ petitioner and he was allowed to continue in service for a period of two years. This fact has not been disputed by the respondents. It is not a case where the workman did not work to the satisfaction of the management and it is not a case where the workman was appointed on daily wages and it is not a case where his services were terminated on a proof of misconduct. The writ petitioner was allowed to continue to work for a period of two years. No doubt the 2nd respondent is at liberty to terminate the services as and when retrenchment is going to be effected. But it is the duty of the Management to satisfy the ingredients of Section 25F of the I.D.Act. According to Section 25F of the I.D.Act it is mandatory on the part of the appointing authority, viz, the 2nd respondent herein to pay wages and also to pay the terminal benefits and it is the case where the 2nd respondent has not even paid the terminal benefits. It is clear that the 2nd respondent has not followed the ingredients of Section 25F of I.D.Act. As such, the order of termination passed by the 2nd respondent, without applying the conditions bid down under Section 25F of I.D.Act cannot sustain under law and it is liable to be set aside."
Hence, the bank has come up in appeal.
2. In the light of the contentions urged on both sides, the following points arise for consideration;
(i) Whether the provisions of Section 25F of the I.D. Act are attracted to the case having regard to the contention that the termination was due to the fact that the Registrar of Cooperative Societies had not approved the appointment as the Petitioner was not qualified.
(ii) Whether there was no termination of the services of the petitioner in the eye of law as the very appointment itself was void.
(iii) That the question of termination of services of the petitioner did not arise as the services of the petitioner was not capable of continuation having regard to the fact that the petitioner did not possess the requisite qualification for appointment as clerk.
We may point out at the outset that all these contentions, on the basis of which the aforesaid points are raised are urged for the first time before this Court. There was no such plea whatsoever raised before the Labour Court. However, we have allowed them to be urged. As the facts and contentions relating to all three points overlap, we consider all the three points together.
3. It is not in dispute that the petitioner was re-employed in the Bank on August 1, 1980 as clerk on daily wage basis. However, his wages were paid monthly, in a sum of Rs. 336/-. He continued to work as such till April 27, 1982 on which date his services were terminated. Clause 2(II) of the Special by- laws relating to the service conditions of the employees of the bank specifically provides that a clerk should possess the qualification of S.S.L.C. and must have undergone a full course training in the Central Co-operative Institute, Madras or in any of the mofussil Co-operative Training Institutes or in any of the Co-operative Training Colleges for Intermediate or Senior personnel conducted by the National Council for Co-operative Training and a pass in the Government Technical Examinations Book-keeping, Banking and Auditing or the examination on these subjects conducted by the Tamil Nadu Public Service Commission or the Examinations for Co-operative Supervisor's Training course conducted by the Tamil nadu Co-operative Union or the examination for Higher Diploma in Co-operation conducted by the Co-operative Training Colleges. Admittedly the petitioner did not possess the qualifications laid down in aforesaid by-law.
The Registrar of Co-operative Societies had issued a circular directing that no appointment of any ineligible persons and no appointment in excess of the requirement should be made. If such appointment be made, it shall be subject to the approval of the Registrar. It is contended that as the petitioner did not possess the requisite qualifications and as he was appointed without the approval of the Registrar, the appointment itself was void and it did not confer any right upon the petitioner, therefore, his services did not even require to be terminated. The fact that his services were terminated could not by itself confer any right upon him to claim that termination of his services amounted to retrenchment. It is also further contended that the appointment being void, the petitioner could not have been continued therefore, there was no question of termination of services and the impugned order dated April 27, 1982 issued by the President of the bank, removing the petitioner from service had no effect in the eye of law except indicating that his appointment was void.
4. We find it very difficult to accept these contentions. Firstly, the bank, which had appointed the petitioner, had taken his services, and paid wages during the period he worked, cannot now be permitted to say that the appointment was bad in law, therefore it was entitled to terminate the services without following the procedure prescribed under the I.D.Act. The bye-law referred to above, does not require that the appointment to be approved by the Registrar of Co-operative Societies. Further the petitioner was not appointed as regular employee. He was appointed only on daily wage basis. The services contemplated under the bye-laws are the regular appointments and not the appointments on daily wage basis, therefore, the contentions based upon the special bye-law and the circular of the Registrar, which cannot be applied to the present case, as it is a pure and simple case of appointment on daily wage basis, cannot be accepted. When once the workman is appointed on daily wage basis and if he works for 240 days in a year, he must be said to be in continuous service as per Section 25B of the Act, as such he is entitled to be made permanent. However, we do not propose to enter into this aspect of the matter and record any finding on this because it is not one of the points raised in the dispute referred to the Labour Court. The dispute referred to the Labour Court was only with regard to the non- employment of the petitioner and the computation of relief in term of money if it is held that the petitioner is entitled to reinstatement with back wages. For the purpose of this case it is sufficient to point out that the writ petitioner worked for over two years. Thus, he was incon-tinuous service for more than one year as such he was entitled to the benefit of Section 25F of the Act. The expression 'retrenchment' as per Section 2(oo) of the I.D. Act means the termination by the employer of service of a workman for any reason whatsoever otherwise than as a punishment inflicted by way of disciplinary action as long as such termination does not fail within the category of the voluntary retirement of a workmen or 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. Thus, Section 2(oo) does not make any difference between regular appointment or temporary appointment or appointment on daily wage basis or appointment of a person not possessing requisite qualification. Clause (bb) in Section 2(oo) came to be inserted only with effect from August 18, 1984, therefore the said provision is not applicable to the present case. The present case also does not fall under Clause (c) because the services of the petitioner have not been terminated on the ground of continued ill-health. Similarly, Section 25F of the Act specifically provides 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 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. This is a case in which the petitioner was in continuous service for more than one year under the bank irrespective of the fact whether the appointment made by the bank was valid one or not. It is not in dispute that the petitioner was temporarily appointed by the Board of the Bank on August 1, 1980 as it is specifically stated in the counter filed by the bank before the Labour Court, Madurai which reads thus:
"The Board of respondent bank decided on July 25, 1980 to appoint the petitioner temporarily with effect from August 1, 1980 on wages at Rs. 5/- per day and to request the Deputy Registrar of Co-operative Societies to exempt the case of appointment of the petitioner from the circular of the Registrar dated September 17, 1977 as the appointment would be against that circular".
It is also further stated in paragraph 13 of the center that the petitioner was to be confirmed on the date of termination of the employment, but the bank could not help terminating his employment instead of confirming him.
5. From the impugned order of termination of the petitioner, it is clear that the same has been done pursuant to the direction issued by the Joint Registrar of Co-operative Societies, Tiruchy in the report made by him in RC. No. 14755/81-B5 (i) dated April 9, 1982. It may be pointed out here that even though the termination was made pursuant to the direction of the Joint Registrar, nevertheless such a termination was required to be made in accordance with the provisions contained in Section 25F of the Act in as much as the said section does not make any difference whether the appointment has beer made in accordance with law or not. The expression used in that section is, 'workman employed in any industry who has been in continuous service for not less than one year under an employer', therefore the factum of employment is relevant and not the legality or otherwise of it.
6. In Santosh Gupta v. State Bank of India (1980-II-LLJ-72) the Supreme Court considered the case of retrenchment of a workman and also considered the definition of the expression 'retrenchment' in Section 25F of the Act and held thus: (at Page 75) "In Interpreting these provisions, i.e. Sections 25F, 25FF and 25FFF one must not ignore their object. The manifest object of these provisions is to so compensate the workmen for loss of employment as to provide him the wherewithal to subsist until he finds fresh employment. The non inclusion of "voluntary retirement of the workmen" "retirement of workman on reaching the age of superannuation termination of service of a workmen on the ground of continued ill-health" in the definition of "retrenchment" clearly indicate and emphasise what we have said about the true object of Sections 25F, 25FF and 25FFF and the nature of the compensation provided by those provisions. The nature of retrenchment compensation has been explained in Indian Humepipe Co.Ltd. v. The workmen (1959-II-LLJ-830) as follows:
"As the expression "retrenchment" compensation indicates it is compensation paid to a workman on his retrenchment and it is intended to give him some relief and to soften the rigour of hardship which retrenchment inevitably causes. The retrenched workman is suddenly and without his fault, thrown on the street and has to face the grim problem of unemployment. At the commencement of his employment a workman naturally expects and looks forward to security of service spread over a long period; but retrenchment destroys his hopes and expectations. The object of retrenchment compensation is to give partial protection to the retrenched employee and his family to enable them to tide over the hard period of unemployment."
Once the object of Sections 25F, 25FF and 25FFF is understood and the true nature of the compensation which those provisions provide is realised, it is difficult to make any distinction between termination of service for one reason and termination of service for another"
In the above case, the discharge of the workman was made on the ground that she did not pass the test which would have enabled her to be confirmed. It was held that the fact that the workman was not entitled to be confirmed was not a ground to overcome the provisions contained in Section 25F and Section 2(oo) of the Act.
7. In Punjab Land Development & Reclamation Corporation Ltd. Etc. v. Presiding Officer, Labour Court Chandigarh and Ors. (1990-II-LLJ-70) the question of termination of the workmen without following Section 2(oo) and Section 25F of the Act was considered. In that case the services of the workmen were terminated on the ground that the Chairman had no power to appoint them. The Labour Court held that services of the workmen were terminated illegally without payment of retrenchment compensation under the Act and that they were entitled to reinstatement. The Supreme Court held that the termination by the employer of the services of the workmen for any reason whatsoever, other than those expressly excluded by the definition in Section 2(oo) of the Act would attract Section 25F of the Act. The relevant portion of the judgment is as follows: (at Page 95) "Applying the above reasoning, principles and precedents, to the definition in Section 2(oo) of the Act, we hold that "retrenchment" means the termination by the employer of the service of a workman for any reason whatosover except those expressly excluded in the Section"
The result is that C.A. Nos. 3241 - 48 of 1981, 686 (NL) of 1982, 1817 of 1982, 1898 of 1982, 3261 of 1982, 1866 of 1982, 1868 of 1982, 8456 of 1983, 10828 of 1983 and the appeal arising out of S.L.P. (C) No. 3149 of 1983 are dismissed with costs quantified at Rs. 3000/- in each appeal. It is stated that in C.A, No. 686 of 1982 the respondent has already been reinstated pursuant to the order dated October 24, 1983 passed by this Court, having regard to the fact that he has served since 1983 he shall be considered for confirmation with effect from his due date according to Rules, if he is not already confirmed by the Corporation".
8. Similarly in P.D. Jat v. Alwar Sahakar Bhumi Vikas Bank Ltd. and Ors. (1991-II-LLJ-130), a Division Bench of the Rajasthan High Court considered the case of termination of the services of the workman on the ground that the appointment was irregular and as such the Registrar of Co-operative Societies, Government of Rajasthan, Jaipur issued the direction to terminate his services and in compliance of that direction, the bank terminated the services without following Section 25F of the Act and held that Section 25F of the Act was attracted. The relevant portion of the judgment is as follows: (at Page 132) "Admittedly, the provisions of Section 25F of the Act were not complied with. Any retrenchment in violation of the provisions of Section 25F of the Act is bad and non-est. Such a retrenchment is invalid.
In the result, we allow the writ petition and quash the impugned order dated October 12, 1987 Annexure - 6. The respondents are directed to forthwith reinstate the petitioner on the post he was working on October 12, 1987. As regards the backwages, the petitioner is advised to initiate the legal proceedings under Section 33-C(2) of the Act, because it is a disputed question whether he remained in gainful employment or not for the period from October 13, 1987 till today".
9. A Division Bench of Madhya Pradesh High Court in Rajesh Kumar and Ors. v. State of M.P. (1994-II-LLJ-320) has considered thecase of termination of services of a workman on the ground that the appointment was invalid. The contention raised in that case, similar to the one raised before us, was that as the appointment itself was invalid, the services of workman could be terminated without complying with the provisions of Section 25F of the Act. It was held that an invalid appointment was not one of the exceptions found in Section 2(oo) of the Act; that any retrenchment not failing under in any one of the exceptions mentioned in Section 2(oo) of the Act would amount to retrenchment and for such termination conditions prescribed in Section 25F of the Act were to be complied with, therefore the order of termination was held to be illegal and the workman was directed to be continued in the employment with all the benefits.
10. A learned single Judge of the Patna High Court in Mithilesh Kumar Singh v. State of Bihar and Ors. (1995-I-LLJ-973) has considered the case of termination of the services of a workman on the ground that he was appointed illegally. The learned single Judge has held that, "the idea of illegal and invalid appointments is quite foreign to the scheme of the I.D.Act. The termination of employment of a workman on the ground that his initial appointment was not legal and valid itself qualifies as retrenchment within the meaning of Section 2(oo) as termination for illegal and invalid appointment has not been made an exception to the definition of retrenchment."
11. Thus it is clear from the aforesaid decisions and more specially the two decisions of the Supreme Court referred to above that the nature of employment, viz whether legally made or not or an irregular appointment or an appointment by a person not competent to appoint, would not be a ground to refuse to follow the provisions contained in Section 25F of the Act. However, learned counsel for the appellant has placed reliance on a judgment of the Kerala High Court in Eranalloor Service Co-operative Bank Ltd. v. Labour Court and Ors. (1986-II-LLJ-492). That was a case wherein the workman while working as commission agent was appointed as salesman on a temporary basis, subject to the approval of the Registrar of the Co-operative Societies. At that time when he was appointed as salesman, he did not have the requisite qualification prescribed under the Rules. His request for appointment as salesman was turned down by the Registrar of Co-operative Societies, therefore, the bank resolved to terminate his services and accordingly terminated the services. The learned single Judge held that the fact that the appointment was contrary to the rules the award passed by the Labour Court directing reinstatement on applying Section 25F of the Act was not warranted as Section 25F of the Act did not apply to such a case. The relevant portion of the judgment of the learned single Judge is as follows: (at Page 495) "In order to appreciate this line of approach to the issue it is necessary to consider the scope of Sections 25F and 2(oo) of the I.D.Act. Section 2(oo) suggests that the person who claims the benefit of Section 25F must be one, validly appointed in the service of the employer. The service must be capable of being continued until any of the events envisaged under Clauses (a), (b) and (c) of Section 2(oo) happens. In short the person who claims the benefit of Section 25F shall establish that he is in the service of the employer having been appointed validly. It should be remembered that it is the contract of service that is terminated. A service cannot be terminated unless it is capable of being continued. The Supreme Court has held so in the Workmen of the Bangalore Woolen, Cotton, and Silk Mills Co. Ltd. v. The Management of the Bangalore Woolen Cotton and Silk Mills Co. Ltd. (1962-I-LLJ-213).
Having understood the law, thus, we will consider the scope of the expression capable of being continued in service in Section 2(oo). "Capable of being continued" suggests that the employee should have entered the service under a valid contract of service which cannot be terminated without complying with the provisions of Section 25F. The Workman in order to avail of the benefits of Section 25F should therefore establish that he has the right to continue in service and that the said service has been terminated without complying with the provisions of Section 25F.
It is in this backdrop the scope of the dictum of the Supreme Court in Santhosh Gupta 's case has to be considered. In the said decision the Supreme Court has referred to an earlier decision, in State Bank of India v. N. Sundara Money (1976-I-LLJ-478) where the Supreme Court while considering the scope of Section 2(oo) has indicated that the order of termination which would attract the provisions of the I.D.Act is the result of the exercise of violation by the employer. This is what the Supreme Court has said:
"True, the section speaks of retrenchment by the employer and it is urged that some act of violation by the employer to bring about the termination is essential to attract Section 25F and automatic extinguishment of service by efflux of time cannot be sufficient."
When I refer to this passage I shall not be understood to have said that the Supreme Court has finally spoken on this aspect. Whatever that be, it can be seen from San-tosh Gupta's case that the Supreme Court had no occasion to consider the case of a workman whose appointment indisputably was void ab-initio. The content of the relevant provisions of the I.D. Act positively indicate that the workman who is entitled to the benefits of the said enactment, must be one who came into the service under a valid order of appointment . His service must be capable of being continued unless any of the events contemplated under Clauses (a) to (c) of Section 2(oo) exists.
The facts available on record would show that the order appointing the petitioner as salesman was ab-initio void and if that be so it cannot be said that the second respondent is a workman entitled to the benefits of Section 25F of the I.D.Act. The award directing reinstatement of the second respondent into service with backwages therefore is not sus-tainable in law. Ext. P6 therefore is liable to be quashed. I accordingly quash Ext. P 6"
The learned single Judge has tried to distinguish the decision of the Supreme Court in San-tosh Gupta's case which in our view is not correct, therefore we find it difficult to agree with the view expressed in Eranalloor Co-operative, Society's case (supra) which is quite opposed to the ratio of the decisions in Santosh Gupta 's case (supra) and Punjab Land Development Bank's case (supra).
12. Thus for the reasons stated above, ail the three points raised for determination are to be answered against the appellant. Consequently, the writ appeal has to be dismissed . However it is noticed that the petitioner had prayed for quashing the award and further directing the 2nd respondent to reinstate him as clerk with continuity of service, backwages and all other attendant benefits. The learned single Judge, on quashing the award, has allowed the writ petition as prayed for. We are of the view that it is necessary to modify the order of the learned single judge in so far as the said order grants the reliefs.
13. It is not in dispute that the writ petitioner was working on daily wage basis and he was being paid a sum of Rs. 13/- per day, excludings, Sundays, at the time when his services were terminated. In such a case when the termination has been made in violation of Section 25F of the Act, the direction for reinstatement should be only to the effect that the workman should be reinstated in the same position and the same nature of employment which he was enjoying on the date of termination. The order passed by the learned single Judge does not make that point clear, therefore we modify the order of the learned single Judge insofar as it directs reinstatement of the writ petitioner with continuity of service, backwages and all other attendant benefits in the following terms:
The 2nd respondent workman be reinstated as daily wage workman at the rate of Rs. 13/-per day. However, we make it clear that if on the date of reinstatement there is an increase in the daily wages, he would be entitled to such increase. As far as the arrears of wages from the date of termination till March 31, 1996 is concerned it has been calculated at the rate of Rs. 13/- per day, excluding Sundays, by the appellant bank, amounting to Rs. 54, 275/-. Shri K. Chandru learned counsel appearing for the 2nd respondent workman submits that the workman accepts the said amount as arrears of wages subject to any statutory benefits, if available to the daily wage workmen and subject to payment of daily wages as may be obtaining on the date of reinstatement. Learned counsel for the appellant bank also submits that the bank has no objection for payment of Rs. 54, 275/- as arrears of wages from the date of termination till the end of March, 1996. We place these submissions on record and on the basis of those submissions, we issue further directions in addition to the one issued above:
(1) The 2nd respondent workman shall report to duty on May 15, 1996. On the date of reporting to duty the appellant bank shall pay the arrears of wages upto March 31, 1996 amounting to Rs. 54,275/- plus the wages for the month of April 1996 on or before the end of May, 1996.
(2) The 2nd respondent workman is entitled to wages that are payable to a daily wage worker as obtaining on the date he reports to duty.
(3) The 2nd respondent will be entitled to other statutory benefits, if any, available to a daily wage worker.
14. In the result, subject to aforesaid modification and directions, the writ appeal is dismissed. Connected C.M.P. No. 2734 of 1996 is rejected. No costs.