Kerala High Court
Joy Xavier A.S. vs Labour Court And Anr. on 15 February, 1999
Equivalent citations: (1999)IILLJ1303KER
JUDGMENT Mohammed, J.
1. The central question involved in this writ appeal is whether the termination of service of the appellant-workman by the respondent-Management would amount to 'retrenchment' coming within the meaning of the said term defined in Section 2(oo) of the Industrial Disputes Act, 1947 (for short 'the Act').
2. By Ext. P 13 award passed by the Labour Court, Ernakulam on May 14, 1991 it was found that the termination of service of the workman did not amount to 'retrenchment' and hence he was not entitled to be reinstated with or without backwages or to any other relief. This award was challenged by the workman in O.P. No. 7153 of 1992. The learned single Judge after hearing found that the second respondent - Management had terminated the service of the workman under Clause 21(c) of the Certified Standing Orders for the reason that he unauthorisedly absented himself from duty and hence termination was not illegal. Challenging the above conclusion of the learned single Judge the present writ appeal has been filed by the workman.
3. The facts in brief are stated hereunder: The appellant-workman was employed as piece-worker in the Finishing Department of the Management with effect from August 20, 1982. He was confirmed by the Management on May 12, 1986. He absented himself from duty with effect from June 18, 1986. Therefore the Management sent a registered notice dated July 7, 1986 (M. 10) to the appellant calling upon him to show cause within three days why it would not be deemed that he left the service of the company as provided in Clause 21(c) of the Certified Standing Orders of the company. The said notice was returned with postal endorsement that "addressee out of India -returned to sender". Therefore the Management sent a copy of the show cause notice under Certificate of Posting (M 13) on August 7, 1986. By the said notice the appellant was also informed that by virtue of Clause 21 (c) of the Certified Standing Orders it would be deemed that he had left the service of the company. The cover containing this notice was also returned with acknowledgment slip with the same endorsement. Later the workman reported for duty on December 28, 1986 and produced a medical certificate (M3) showing that he was under treatment from June 18, 1986 to December 27, 1986 in the Mental Hospital, Trichur as he was suffering from "anxiety neurosis". His case was that because of the said ailment he was not able to apply for leave and therefore on June 26, 1986 his wife sent a letter to the Management informing that the workman was undergoing treatment. Ext. M1 is the copy of the said letter dated June 26, 1986 produced by the workman. This letter was not received by the Management. However, invoking the provision contained in Clause 21(c) of the Certified Standing Orders the respondent company terminated the service of the workman for unauthorised absence without leave. The workman therefore raised a dispute before the District Labour Officer, Trichur and on failure of the same the matter was referred by the Government for adjudication by the Labour Court. Consequently the dispute was adjudicated by the first respondent Labour Court as I.D. No. 3 of 1988. The appellant was examined as WW-1 and W1 was marked on his side. The Management did not adduce any oral evidence but produced documents marked as Exts. M1 to M15. After the enquiry the Labour Court passed Ext. P13 award confirming the termination of the workman and thus disallowed reinstatement with or without backwages.
4. The learned single Judge while dismissing the writ petition observed that the Certified Standing Orders were not challenged in the writ petition and that Clause 21(c) empowers the management to terminate the service of employee who unauthorisedly absented himself from duty. Therefore the Court further held that the termination of service of the workman by the Management was perfectly legal.
5. Section 2(oo) of the Act defines the term 'retrenchment' thus:
"(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) to (c)............."
The counsel for the appellant points out that Clauses (a) to (c) to Section 2(oo) do not apply to the facts of this case and that the main para of the clause alone is relevant. In other words it is a 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. In view of the wide language employed and particularly by the use of the words 'termination for any reason whatsoever' the expression termination included and covered in its fold all cases of termination of service except those mentioned in the definition. Therefore, what is pleaded by the workman is that the conditions precedent to retrenchment as provided in Section 25-F would apply. Section 25-F is thus:
"25-F. Conditions precedent to retrenchment of workmen-
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; and
(c) notice in the prescribed manner is served in the appropriate Government or such authority as may be specified by the appropriate Government by notification in the official gazette."
Inasmuch as the conditions prescribed in Section 25-F are not complied with by the employer, the termination is quite illegal, so argues the counsel. Therefore he contends that the workman is entitled to be reinstated with all benefits available to him.
6. On the other hand, counsel for the Management relies on Clause 21(c) of the Certified Standing Orders which is as follows:
"An employee absent without obtaining leave for 8 consecutive working days shall be deemed to have left the service of the company unless he produces evidence within the next 8 days to convince the management that he could neither be present at work nor apply for leave."
He points out that the workman in this case absented himself without obtaining leave for eight consecutive working days and hence he shall be deemed to have left the service of the company. The counsel also draws our attention to the situation that the workman having left the employment on his own volition, this is a case of abandonment of employment by the employee and not a termination of employment by the employer. In other words the plea is that there is no 'retrenchment' as contemplated in Section 2(oo). When there is no retrenchment the conditions precedent to retrenchment provided in Section 25-F do not apply in which case the workman is not entitled to any benefits available under the said Section. That being the position, the termination of service of the workman cannot be said to be illegal or unreasonable.
7. What is retrenchment? It must be seen that the term 'retrenchment' was not defined either in the earlier Act namely, Trade Disputes Act, 1929 or in the Industrial Disputes Act, 1947 as originally enacted. The definition was incorporated by the Industrial Disputes (Amendment) Act, 1953. The definition of the term 'retrenchment' contained in Section 2(oo) contains two parts. The first part is exhaustive which lays down that retrenchment means the termination of the service of a workman by the employer 'for any reason whatsoever' otherwise than as a punishment inflicted by way of disciplinary action. That evidence that the main part itself excludes the termination of -service as a measure of punishment inflicted by way of disciplinary action from the ambit of the definition of retrenchment. The second part further excludes (i) voluntary retirement of the workman on reaching the age of superannuation or (ii) termination of the service of the workman as a result of non- renewal of the contract of employment or (iii) termination of the service of the workman on the ground of continued ill-health. In this case we are not concerned with the second part of the definition.
8. KRISHNA IYER, J. (as the learned Judge then was) speaking for the Bench in State Bank of India v. N. Sundara Money (1976-I-LLJ-478) (SC) observed (Para 9):
"Termination ..... for any reason whatsoever are the key words. Whatever the reason, every termination spells retrenchment. So the sole question is has the employee's service been terminated? Verbal apparel apart, the substance is decisive. A termination takes place where a term expires either by the active step of the master or the running out of the stipulated term; To protect the weak against the strong this policy of comprehensive definition has been effectuated. Termination embraces not merely the act of termination by the employer, but the fact of termination however produced."
The following observation of the Supreme Court in L. Robert D'Souza v. Executive Engineer, Southern Railway, (1982-I-LLJ-330) is very apt to the present context:
"Once the case does not fall in any of the except categories the termination of service even if it be according to automatic discharge from service under agreement would none the less be retrenchment within the meaning of the expression in Section 2(oo)."
A Division Bench of this Court placing reliance on the above decisions held in H.M.T. Ltd. v. Labour Court (1983-I-LJ-337):
"When the Standing Orders are so certified they bind the parties as terms and conditions governing the employment and cessation of service on the operation of such terms can in no way be different from the cessation of service under the terms and conditions of the contract of employment. That apart, even then there is termination for some reason. The narrow or restricted meaning sought to be given to the term 'termination' as calling for a positive voluntary act by the employer of passing an order putting an end to the service of the employee is not warranted. The term takes in all cases where there is the factum of termination."
9. In D.K. Yadav v. J.M.A. Industries Ltd. (1993-II-LLJ-696) the Supreme Court after examining Sundara Money's case (supra) and Robert D'Souza'a case (supra) and other relevant decisions expressed the view that there is force in the contention that the definition 'retrenchment' in Section 2(oo) is a comprehensive one intended to cover any action of the management to put an end to the employment of the employee for any reason whatsoever. The position as emerging from the different decisions was analysed by the Supreme Court in para 4 of the said decision and the same has been reproduced hereunder:
"In Punjab Land Development and Reclamation Corporation Ltd. v. Presiding Officer, Labour Court (1990-H-LLJ-70(SC) the Constitution Bench considered the scope of the word 'retrenchment' defined by Section 2(oo) and held in para 71 that analysing the definition of retrenchment in Section 2(oo) we find that termination by the employer of the service of a workman would not otherwise have covered the cases excluded in clauses (a) and (b) namely, voluntary retirement and retirement on reaching the stipulated age of retirement or on the grounds of continued ill health. There would be no violational element of the employer. Their express exclusion implies that those would otherwise have been included. In para 77 it was further held that right of the employer and the contract of employment has been effected by introducing Section 2(oo). The contention of the management to terminate the service of an employee under the certified Standing Orders and under the contracts of employment was negatived holding that the right of the management has been affected by introduction of Section 2(oo) and Section 25-F of the Act. The second view was that the right as such has not been affected or taken away, but only an additional social obligation has been imposed on the employer to abide by the mandate of Section 25-F of the Act to tide over the financial difficulty which subserves the social policy. This Court relied on the maxim stat pro ratione voluntas populi; the will of the people stands in place of a reason. In paragraph 82 this Court concluded that the definition in Section 2(oo) of the Act of retrenchment means "the termination by the employer of the service of a workman for any reason whatsoever except those: expressly excluded in the Section". Same view was taken by three Benches of three Judges of this Court in State Bank of India v. N. Sundara Money (1976-I-LLJ-478), Delhi Cloth & General Mills Ltd. v. Shambu Nath Mukherjee 1977 Lab IC 1695 and Hindustan Steel Ltd. v. Presiding Officer, Labour Court 1976 Lab IC 1766 and two Benches of two Judges in L. Robert D'Souza v. Executive Engineer, Southern Railway 1982 Lab IC 811 and H.D. Singh v. Reserve Bank of India 1985 Lab IC 1733 took the same view."
However, the Supreme Court observed that they did not rest their conclusion on this point as it could be decided on the other contention that the order is violative of principles of natural justice.
10. In Uptron India Ltd. v. Shammi Bhan (1998-I-LLJ-1165) the Supreme Court was considering a case of automatic termination of an employee on account of overstayal of leave without permission for more than seven days in view of the Certified Standing Orders. In this context the Supreme Court observed that any clause in the Certified Standing Orders providing for automatic termination of service of a permanent employee, not directly related to 'production' in a factory or industrial establishment, would be bad if it does not purport to provide an opportunity of hearing to the employee whose services are treated to have come to an end automatically. The Court further observed:
"There is another angle of looking at the problem. Clause 17(g), which has been extracted above, significantly does not say that the services of a workman who overstays the leave for more than seven days shall stand automatically terminated. What is says is that 'the services are liable to automatic termination'. This provision, therefore, confers a discretion upon the management to terminate or not to terminate the services of an employee who overstays the leave. It is obvious that this discretion cannot be exercised, or permitted to be exercised, capriciously. The discretion has to be based on an objective consideration of all the circumstances and material which may be available on record. What are the circumstances which compelled the employee to proceed on leave; why he overstayed the leave; was there any just and reasonable cause for overstaying the leave, whether he gave any further application for extension of leave; whether any medical certificate was sent if he had, in the meantime, fallen ill? These are questions which would naturally arise while deciding to terminate the services of the employee for overstaying the leave. Who would answer these questions and who would furnish the material to enable the management to decide whether to terminate or not to terminate the services are again questions which have an answer inherent in the provision itself, namely, that the employee against whom action on the basis of this provision is proposed to be taken must be given an opportunity of hearing. The principles of natural justice, which have to be read into the offending clause, must be complied with and the employee must be informed of the grounds for which action was proposed to be taken against him for overstaying the leave."
11. When the principles of natural justice have to be read into the offending clause it is essential for us to examine whether they are complied with in the present case by the management while terminating the service of the workman in view of the deeming provision contained in Clause 21(c) of the Certified Standing Orders. The medical certificate (M3) dated December 27, 1986 issued by the doctor reveals the following:
"This is to certify that Sri A.S. Joy Xavier 35 years of Ambattu House, Varapuzha was under my treatment for anxiety neurosis from June 8, 1986 of December 27, 1986."
The certificate of fitness to return to duty dated December 28, 1986 (M2) issued by the doctor reveals that the workman had recovered from his illness and is not fit to resume duties. The case of the workman is that his wife Ms. Raji Joy sent a letter (M1) dated June 26, 1986 to the management intimating that her husband has been undergoing treatment for mental illness from Mental Hospital, Trichur. However the management had denied receipt of such letter from the wife of the workman. Though the workman filed representation explaining the reasons for his absence supported by the medical certificate and fitness certificate referred to above the management refused to allow him to join duty. This is evident from the letter dated February 5, 1987 (M4) issued by management to the workman. The said letter reveals, the management had assumed that the workman had deemed to have left the service of the company in view of the operation of Clause 21(c) of the Standing Orders. Is it possible to assume such conclusion on the basis of a deeming provision without affording an opportunity of being heard to the workman? No. The opportunity of being heard is a primary requirement in the observance of principles of natural justice which has to be read into the operational ambit of the Standing Orders. In this premise it is inessential to challenge the Standing Orders specifically in the writ petition but the Court can investigate whether the principles of natural justice have been complied with by the management in terminating the service of workman. We have seen show cause notice dated July 7, 1986 and August 7, 1986 (Exts. M10 and M13). Those notices according to us appear to have served the management to make the procedure as empty formality.
12. It is the case of the management that the cover containing the show cause notice dated July 7, 1986 (M14) was returned with the postal endorsement 'addressee out of India -returned to sender'. When the workman was stated to be out of India what purpose it would serve by sending the notice (M13) in the same address except to show that the management has issued a second notice? No attempt has been made by the management to adopt a different mode of service. When whereabouts of an absenting workman are unknown, why not it be published in newspapers in which case at least his near relatives would be able to know about the steps that are being taken against the erring workman by the management. It also appears to us that the Labour Court while passing Ext. P13 award has committed an illegality in that it failed to enquire into the question whether the workman had been given sufficient opportunity to explain his case before termination was ordered by the management. This is not a case of automatic termination; but a termination on assumption on the basis of a deeming provision. Clause 21(c) of the Standing Orders envisages a situation where a workman absents without obtaining leave for eight consecutive working days in which case he shall be deemed to have left the service of the company. But this can be avoided if he produces evidence within the next eight days to convince the management that he could neither be present at work nor apply for leave. The case of the workman is that he was suffering from 'anxiety neurosis' from June 8, 1986 to December 27, 1986. If this case of workman is true then there would not have been any occasion for him to apply for leave or to adopt some measure to satisfy the management. 'Anxiety neurosis' is a neurosis characterised by recurrent acute anxiety attacks (panics). The attacks consist of all the signs and symptoms of fear, leading up to fear of impending collapse and sometimes death. An aggravated form of this illness may sometimes result in total forgetfulness of regular functions, duties and obligations. It cannot be said that the Labour Court has totally disbelieved the medical certificate and fitness certificate. What is pointed out is that the medical certificate did not show as to when the workman was hospitalised or was an inpatient. For that reason it cannot be said that the medical certificate is unreliable. Without properly evaluating the impact of the medical certificate the Labour Court assumed that the workman had violated Clause 21 (c) of the Standing Orders. This is not an 'admitted case' as observed by the Labour Court. It was sufficiently disputed and there was no proper examination of this question by the Labour Court in a manner as it ought to be done in view of the fact that principles of natural justice have to be read into the provisions of Clause 21(c) of the Standing Orders.
13. In this context it is apt to note what the Supreme Court said in Central Inland Water Transport Corporation Limited v. Brojo Nath Ganguly (1986-II-LLJ-171) (SC). The Court was dealing with the legality of Clause (i) of Rule 9 of the Service, Discipline and Appeal Rules, 1979. It observed thus:
"Thus, even where the Corporation could proceed under Rule 36 and dismiss an employee on the ground of misconduct after holding a regular disciplinary inquiry, it is free to resort instead to Rule 9(i) in order to avoid the hassle of an inquiry. Rule 9(i) thus confers an absolute, arbitrary and unguided power upon the Corporation. It violates one of the two great rules of natural justice - the audi alteram partem rule. It is not only in cases to which Article 14 applies that the rules of natural justice come into play."
In Swadeshi Cotton Mills v. Union of India AIR 1981 SC 818 the Supreme Court said that the observance of principles of natural justice is implied in every decision making function whether judicial or quasi-judicial or administrative. The observance of this principle cannot therefore be avoided on the ground that the management has terminated the service of the employee invoking the Standing Orders, which do not provide for a regular enquiry and investigation. The question still remains why the management had adopted this course of action instead of initiating the regular disciplinary proceedings against the workman on the ground of misconduct. That evidences the management had adopted a procedure which would practically deny the safeguards available to the workman against any arbitrary action of the management.
14. We have no hesitation to record that the Labour Court while passing Ext. P 1(sic) award, has not examined the question refered to it by the Government namely 'termination of service' of the workman by the management invoking the provisions contained in Clause 21(c) of the Certified Standing Orders in the aforesaid legal premises. When it is settled that principles of natural justice shall be read into the provisions of Standing Orders authorising the termination of the workman it is imperative for the Labour Court or Industrial Tribunal to examine the question in that perspective. In the present ease the Labour Court has failed to do so. It appears that the Labour Court was unaware of its enormous strength in preserving social justice based on socio-economic equality in industrial adjudications. When there are conflicting claims between the management and the workman the Labour Court will have to take a fair and just decision without forsaking the salient principles of natural justice.
15. In view of the reasons set out above, we cannot approve the conclusions recorded by the learned single Judge. Hence the impugned judgment is set aside. In view of the infirmities discussed hereinabove Ext. P13 award passed by the Labour Court is also set aside. The Labour Court, is directed to decide the reference afresh on merits and also in accordance with the observations made by us above as expeditiously as possible. The appeal is thus allowed. No order as to costs.