PETITIONER:
HINDUSTAN STEEL LTD.
Vs.
RESPONDENT:
THE PRESIDING OFFICER, LABOUR COURT, ORISSA AND ORS.
DATE OF JUDGMENT15/09/1976
BENCH:
GUPTA, A.C.
CHANDRACHUD, Y.V.
GOSWAMI, P.K.
CITATION:
1977 AIR 31 1977 SCR (1) 586
1976 SCC (4) 222
ACT
Industrial Disputes Act 1947--Sec. 2(00)--Meaning of
retrenchment---Can termination of service by efflux of time
covered by the expression retrenchment.
HEADNOTE
The respondents were employed as Head Time Keepers for a
period of 3 years. Pursuant to an alleged policy to stream-
line the organisation and to affect economies wherever
possible, the appellant chose not to renew the contracts of
service of the Head Time Keepers. There was no order termi-
nating their services. According to the appellant the
termination was automatic on the expiry of the contractual
period of service. The respondents raised an industrial
disputs which was referred by the Government of Orissa to
the Labour Court. The Labour Court vacated the orders of
termination and held that they were entitled to reinstate-
ment with continuity of service and full back wages. The
Labour Court came to the conclusion:
(1) that the respondents were retrenched without
complying with the provisions of section 25F of the
Industrial Disputes Act and, therefore, retrench-
ment was contrary to law.
(2) The termination was as a result of unfair
labour practice adopted by the appellant employer
and was not bonafide.
(3) It was not proved that the respondents had
alternative employment after they were released
from service.
The appellant challenged the award by filing a Writ
Petition in the Orissa High Court and contended:
(1) That the services of the, respondents came
to an end by efflux of time and that it was not a
case of retrenchment.
(2) That it was for the workmen to prove that
they had tried to minimise their losses by obtain-
ing employment elsewhere.
(3) The Labour Court erred in awarding full
back wages to the respondents without
satisfying himself that they had been em-
ployed.
The High Court over-ruled the above contentions and
dismissed the Writ Petition.
In an appeal by Special Leave the appellant contended:
(1 ) that the services of the respondents came to an end by
efflux of time and that such termination of service did not
fall within the definition of retrenchment in section 2(00)
of the Industrial Disputes Act.
(2) That the present appeal is covered against the
appellant by the decision of this Court in the case of State
Bank of India v.N. Sundata Money but that the said decision
was contrary to an earlier decision of a larger Bench in the
case of Hari Prasad Shiv Shankar Shukla.
Dismissing the appeal,
HELD: 1. Section 2(00) which defines retrenchment makes
it clear that the retrenchment means the termination by the
employer of service of a workman for any reasons whatsoever.
Under 8. 25F(a) no workman who has been in continuous
587
service for not less than one year under an employer can be
retrenched unless he has been given one month’s notice or
wages in lieu thereof. A proviso to s. 25F(a) says that no
such notice shall be necessary if the retrenchment is under
an agreement which specifies a date for the termination of
service. The proviso would be quite unnecessary if the
retrenchment as defined by section 2(00) was intended not to
include termination of service by efflux of time in terms of
an agreement between the parties. [589B-H, 590A]
2. Hari Prasad Shukla’s case does not run counter to the
decision in the case of State Bank of India. In that case
what this Court held was that termination of service on
account of the cessation of the industry itself in a bona-
fide closure or discontinuance of his business by the em-
ployer does not amount to retrenchment- [590B-E]
State Bank of India v.N. Sundara Money; 1976(3) SCR and
Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor
Union [1956] S.C.R. 872 ; followed
Hariprasad Shivashankar Shukla v. A.D. Divikar, [1957]
S.C.R. 121; explained.
3. In the Writ petition filed by the appellant in the High
Court the finding that the respondents had no alternative
employment was not challenged. The question of mitigation
of loss was not raised before the Labour Court. The High
Court, therefore, rightly refrained from exercising its
discretionary jurisdiction in favour of the employer. [590
G-H, 591A-B]
JUDGMENT
CIVIL APPELLATE JURSDICTION: Civil Appeal No. 1580 of
1970.
Appeal by Special Leave from the Judgment and Order
dated 14-8-69 of the Orissa High Court in O.J.C. No. 21/65.
L.N. Sinha, Sol. Genl. of India, Santosh Chatterjee, G.S.
Chatterjee and D.P. Mukherjee; for the Appellant.
P.S. Khera; for Respondent No. 4.
Gobind Das, (Mrs.) S. Bhandare, M.S. Narasimhan, A.K.
Mathur and A.K. Sharma; for Respondent No. 5.
B.P. Singh and A.K. Srivastava; for Respondent No. 6.
The Judgment of the Court was delivered by
GUPTA, J. Respondents Nos. 3, 4 and 5 had been employed as
Head Time Keepers in the Rourkela Unit of Hindustan Steel
Limited, appellant herein. The third and the fourth re-
spondents were appointed on September 24, 1959 and September
14, 1959 respectively, each for a period of three years.
The fifth respondent was also appointed for a period of
three years from July 15, 1957 but as Time Keeper, not Head
Time Keeper. In his case the period was extended after the
expiry of three years from time to time till October
15,1962. In the meantime he had been promoted from Time
Keeper to Head Time Keeper with effect from November 3,
1960. Pursuant to an alleged policy to "streamline the
organisation and to effect economies wherever possible",
the appellant chose not to renew the contracts of service
the Head Time Keepers who were eight in number including
these three respondents. There was no order terminating
their services;
6---1234SCI/76
588
according to the appellant the termination was automatic on
the expiry of the contractual period of service. The afore-
said three respondents raised an industrial dispute through
their Union, respondent No. 6, Rourkela Mazdoor Sabha. The
dispute whether the termination of the services of the three
respondents was justified and, if not, to what relief they
were entitled, was referred by the Government of Orissa for
adjudication to the Labour Court of Orissa, Bhubaneswar.
The Presiding Officer of the Labour Court by his award dated
December 12, 1964 vacated the orders of termination passed
against these three respondents and held that they were
entitled to "reinstatement with continuity of service" and
also to "full wages for the period between the date of their
release from service and the date or dates of their rein-
statement". The award is based on the following findings:
(i) the three respondents had been retrenched
from employment, and the requirements of section
25F of the Industrial Disputes Act not having been
satisfied, the retrenchment was contrary to law;
(ii) in terminating the services of these
employees the management had adopted unfair labour
practice and the action of the employer was not
bonafide; and that.
(iii) it had not been proved that they had any
alternative employment after they were released
from service.
The appellant challenged the award by filing a writ petition
in the Orissa High Court. It was contended before the High
Court that the services of these employees had come to end
by efflux of time, that the management had not terminated
their services and as such these were not cases of retrench-
ment. Another submission made on behalf of the management
was that the employees not having proved that they had made
efforts to minimize their losses during the period of
unemployment, the award for payment of full back wages was
erroneous, The High Court overruled both the contentions
and dismissed the writ petition. In this appeal by special
leave the appellant questions the correctness of the deci-
sion of the High Court.
The main question in this appeal is whether the three
respondents had been retrenched by their employer as found
by the Labour Court. If these were cases of retrenchment,
the order of reinstatement made by the Labour Court was
obviously a valid order as, admittedly, the condition
precedent to the retrenchment of workmen laid down in
section 25F of the Industrial Disputes Act had not been
satisfied. The contention raised on behalf of the appellant
both here and in the High Court was that the services of the
three respondents came to an end by efflux of time and that
such termination of service did not fall within the defini-
tion of retrenchment in section 2(00) of the Industrial
Disputes Act. The Solicitor General appearing for the
appellant frankly conceded that this appeal was covered by a
recent decision of this Court, State Bank of India v.N.
Sundara Money,(1) and the decision
1976(3) S.C.R.
589
was against the contention of the appellant. He however
submitted that this decision which was rendered by a Bench
of three Judges was in apparent conflict with an earlier
decision of this Court, Hariprasad Shivshankar Shukla v.A.D.
Divikar, (1) which was by a larger Bench and that Sundarn
Money’s case therefore required reconsideration.
Retrenchment has, been defined in section 2(00) of the
Industrial Disputes Act as follows:
"2. (00). "retrenchment" means the termina-
tion by the employer of the service of a workman
for any reason whatsoever, otherwise than as a
punishment inflicted by away of disciplinary ac-
tion, 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;"
Analysing this definition in State Bank of India v.N. Sun-
darn Money, (supra) this Court held:
"Termination.. for any reason whatsoever are
the key words. Whatever the reason, every termina-
tion spells retrenchment. So the sole question is
has the employee’s service been terminated ? .. A
termination takes place where a term expires either
by the active step of the master or the running out
of the stipulated term ..... Termination embraces
not merely the act of termination by the employer,
but the fact of termination howsoever produced.
...... an employer terminates employment not
merely by passing an order as the service runs. He
can, .do so by writing a composite order, one
giving employment and the other ending or limiting
it. A separate, subsequent determination is not
the sole magnetic pull of the provision. A preemp-
tive provision to terminate is struck by the same
vice as the post-appointment termination."
This decision, as conceded by the Solicitor General, goes
against the contention of the appellant and is conclusive on
the main question that arises for consideration in this
appeal. It may also be noted that section 25F(a) which lays
down that no workman who has been in continuous service for
not less than one year under an employer shall be retrenched
by that employer unless he has been given one month’s notice
or wages in lieu of such notice, has a proviso which says
that "no such notice shall be necessary if the retrenchment
is under an agreement which specifies a date for the termi-
nation of service".
(1) [1957] S.C.R. 121.
590
Clearly, the proviso would have been quite necessary if
retrenchment as defined in section 2(00) was intended not to
include termination of service by efflux of time in terms of
an agreement between the parties. This is one more reason
why it must be held that the Labour Court was right in
taking the view that the respondents were retrenched con-
trary to the provisions of section 25F.
In Hariprasad Shivshankar Shukla v.A.D. Divikar, (supra)
to which the Solicitor General referred, one of the ques-
tions that arose for decision was whether the definition of
retrenchment in section 2(00) goes "so far beyond the ac-
cepted notion of retrenchment as to include the termination
of service of all workmen in an industry when the industry
itself ceases to exist on a bonafide closure or discontinu-
ance of his business by the employer ?" The question was
answered in the negative on the authority of an even earlier
case, Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills
Mazdoor Union,(1) which held that "retrenchment connotes
in its ordinary acceptation that the business itself is
being continued but that a portion of the stall or the force
is discharged as surplusage and the termination of services
of all the workmen as a result of the closure of the busi-
ness cannot therefore be properly described as retrench-
ment". Following Pipraich Sugar Mills’ case it was held
in Hariprasad Shivshankar Shukla v. A. D. Divikar (supra)
that the words "for any reason whatsoever" used in the
definition would not include a bonafide closure of the whole
business because "it would be against the entire scheme of
the Act to give the definition clause relating to retrench-
ment such a meaning as would include within the definition
termination of service of all workmen by the employer when
the business itself ceases to exist". On the facts of the
case before us, giving full effect to the words "for any
reason whatsoever" would be consistent with the scope and
purpose of section 25F of the Industrial Disputes Act, and
not contrary to the scheme of the Act. We do not find
anything in Hariprasad’s case which is inconsistent with
what has been held in State Bank of India v.N. Sundara Money
(supra).
Another point made on behalf of the appellant was that
the Presiding Officer of the Labour Court was wrong in
awarding full back wages to the respondents without satisfy-
ing himself that they had been unemployed after they were
released from service by the appellant and, further, that
they had taken all reasonable steps to mitigate their losses
consequent on their retrenchment. The Labour Court has
found that it had not been proved that the respondents had
any alternative employment. In the writ petition filed by
the appellant in the High Court, the finding that the re-
spondents had no alternative employment was not challenged.
From the judgment of the High Court it appears that the
submission on the propriety of awarding full back wages to
the respondents was confined to the ground that the respond-
ents had not proved that they had tried to mitigate their
losses during the period of unemployment. In the special
leave petition also what has been urged is that the High
Court should have held that the respondents were not enti-
tled to full back wages unless they succeeded in proving
that they
(1) [1956] S.C.R. 872.
591
tried to secure alternative employment but failed. The
Labour Court awarded full back wages to the respondents on
the finding that they had been illegally retrenched. It
does not appear that the question of mitigation of loss for
deprivation of employment had at all been raised before the
Labour Court. The High Court therefore refrained from
exercising its "discretionary jurisdiction in favour of the
employer" and proposed not to "deprive the workmen of the
benefit they had been found entitled to by the Presiding
Officer". That the respondents were unemployed cannot now
be disputed. In these circumstances the High Court was
justified, in our opinion, in refusing to interfere on this
point.
The appeal fails and is dismissed with costs.
P.H.P. Appeal dismissed.
592