JUDGMENT
1. By this writ petition under Articles 226 and 227 of the Constitution of India is impugned an Award of the Industrial Court, Nasik, dated March 1, 1989 made in Revision Application (ULP) No. 141 of 1988 under Section 44 of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (hereinafter referred to as the Act’)
2. The Respondent was employed in the Health Department and working as Auxilliary Nurse and Midwife at Dhule. She retired from service on March 6, 1978 on the medical ground that she was unfit to continue to work. She was also paid invalid pension by the Dhule Zilla Parishad, Dhule. In July, 1986 the respondent was given reappointment with effect from October 19, 1985 as by that time she had taken medical treatment and was cured of the reason which had made her invalid for further service.
3. By a letter of appointment dated July 18/21, 1986 the Respondent was appointed as Auxilliary Nurse and Midwife on temporary, basis. Strangely, the letter of appointment also informs her that she would be on probation for a period of one year and her further continuation in service would depend on the assessment of her work. On May 27, 1987 she was served with an order of the said date which informed her that her services were terminated with effect from June 30, 1987, as her service was no longer required. The Respondent by her Complaint (ULP) No. 106 of 1987 challenged the order of termination of her service before the Labour Court, Dhule, as an Unfair Labour Practice within the meaning of Item 1 of Schedule IV of the Act. By an order, dated May 19, 1988 the Labour Court, Dhule, held that since the Respondent had been appointed under the Maharashtra Civil Service Rules, which were the Rules framed wider the provisions to Article 309 of the Constitution, the provisions of Chapter V-A of the Industrial Disputes Act would not be applicable to her case and, therefore, she was not entitled to the benefit of Section 25F of the Industrial Disputes Act. The Labour Court also held that her service had been terminated in accordance with the provisions of the Maharashtra Civil Services Rules and, therefore, there was nothing illegal in the termination of her service and it did not amount to an Unfair Labour Practice. In this view of the matter, the Labour Court dismissed the complaint. The Respondent moved the Industrial Court under Section 44 of the Act. The Industrial Court by the impugned order took the view that the activities, of the petitioners were included within the meaning of industry as defined in Section 2(j) of the Industrial Disputes Act, 1947 and that the Respondent was a workman’ within the meaning of Section 2(s) of the said Act. After considering the circumstances leading to the termination of her service, the Industrial Court recorded a clear finding that it amounted to retrenchment within the meaning of Section 2(oo) of the Industrial Disputes Act and, as the mandatory provision of Section 25F of the said Act has not been complied with, the termination of the Respondent’s service was void and ineffective. The Industrial Court also took the view that the termination of service of the Respondent, without complying the provisions of Section 25F, also amounted to unfair Labour practice under Item 1 of Schedule IV of the Act. In this view of the matter, the Industrial Court set aside the order of termination of Respondent’s service and directed her reinstatement with continuity and full back wages. Hence this writ petition.
4. Mr. Pai, learned Advocate appearing for the Petitioner, contends that the impugned order of the Industrial Court is erroneous in law. Although on the date on which the service of the Respondent was terminated (i.e. May 27, 1987) the definition of retrenchment contained in Section 2(oo) of the Act had been amended by, Clause (bb) inserted by, Central Act 49 of 1984, with effect from August 18, 1984, the Industrial Court has misread the provisions of law and proceeded to decide the First Respondent’s case on the erroneous assumption that the definition of retrenchment, as it stood earlier to August 18, 1984, would still govern the case. In the submission of the learned Advocate, this misdirection in the law is patent in the reasoning of the Industrial Court contained in the impugned order and needs to be interfered with. He has also brought to my attention the judgment of the Supreme Court in M. Venugopal v. LIC of India A, P and another, (1994-I-LLJ-597). A careful perusal of the Supreme Court in Venugopal case (supra) would show that the controversy in the present writ petition is covered by the ratio of the said Judgment and the contention raised by the Petitioners would have to be upheld, for reasons to follow.
5. In Venugopal’s case (supra), a Development Officer appointed by the Life Insurance Corporation was put on probation for a period of one year from May 23, 1984 and the said period of probation was extended for a further period of one year from May 23, 1985. Under the terms of employment, he was required to turn out a certain amount of minimum business which he failed to achieve. Despite advisory memos given to him to achieve the minimum target level, he failed to come up to expectation and, therefore, by an order dated May 9, 1986 his service was terminated even before expiry of the extended period of probation. The said order of termination was challenged in writ proceedings. A Single Judge of the High Court took the view that the termination of the services amounted to ‘retrenchment’ within the meaning of Section 2(oo) and admittedly since section 25F of the Industrial Disputes Act had not been complied with the retrenchment was illegal, null and void. On appeal to the Division Bench the Division Bench was of the view that the case would be covered by the newly introduced Clause (bb), which was an exception to the general rule in the main body of the definition of ‘retrenchment’ in Section 2(oo) of the Industrial Disputes Act. On appeal to the Supreme Court, the Supreme Court dismissed the appeal of the workman on two grounds. Firstly, the Supreme Court took the view that the service of the workman under the Life Insurance Corporation was governed by the provisions of the Regulation 14 of the LIC of India (Staff) Regulations, 1960, which were deemed to be Rules framed under Section 48(2) (cc) of the Life Insurance Corporation Act and, therefore, Regulation 14 had to be read as a statutory term of the contract of employment have been the Corporation and the workman. Since the order of appointment had fixed a probationary period and fixed a target which the workman failed to achieve by his performance, the Corporation was entitled not to confirm his service in terms of the order of appointment and to terminate his service during the period of probation without notice in term of Section 14(4) and that such termination would not amount to ‘retrenchment’ within the meaning of Section 2(oo) of the Industrial Disputes Act, as it would be squarely covered by the exception in clause (bb) of Section 2(oo). The other ground on which the Supreme Court held against the workman is not material to us, though it may be mentioned, on passant, that by virtue of the provisions of the Life Insurance Corporation (Amendment) Act, 1981 (Act of 1981), particularly Section 2-C thereof, the Supreme Court was of the view that the provision of the Industrial Disputes Act was over-ridden by the Rules validly framed in exercise of the statutory authority,. Since the latter situation does not exist in our case, we may concentrate on the first ground which is completely relevant to the discussed at hand.
6. While dealing with the first ground, the Supreme Court observed in paragraph 9 of Venugopal (supra)
“9. Regulation 14 aforesaid has to be read as a statutory term of the contract of employment between the Corporation and the appellant. The order of appointment had fixed a target in respect of the performance of the appellant, which admitted the appellant failed to achieve within, the period of probation which was extended upto two years. As such the Corporation was entitled not to confirm the appellant in terms of the order of appointment and to terminate his service during the period of probation without any notice in terms of Regulation 14(4) aforesaid. Clauses 10 and 11 of the order of appointment along with Regulation 14 shall be deemed to the stipulation of the contract of employment, under which the service of the appellant has been terminated. Any such termination, even if the provisions of the Industrial Disputes Act were applicable in the case of the appellant shall not be deemed to be “retrenchment” within the meaning of Section 2(oo), having been covered by exception (bb). Before the introduction of Clause (bb) in Section 2(oo), there were only three exceptions so for termination of the service of the workman was concerned. Which had been excluded from the ambit of retrenchment – (a) voluntary retirement; (b) retirement on reaching age of superannuation; and (c) on ground of continued ill-health. This Court from time to time held that the definition of “retrenchment” being very wide and comprehensive in nature shall cover within its ambit termination of service in any manner and for any reasons, otherwise than as a punishment inflicted by way of disciplinary action. The result was that even discharge simplicter, was held to fall within the purview of the definition of “retrenchments” State Bank of India v. N. Sundara Money, [1976-I-LLJ-478], Santosh Gupta v. State Bank of Patiala, [1980-II-LLJ-72]. Now with introduction of one more exception to Section 2(oo) under Clause (bb), the Legislature has excluded from the purview of the retrenchment” (i) 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; (ii) such contract being terminated under a stipulation in that behalf contained in contract of employment. It need not be impressed that if in the contract of employment no such stipulation is provided or prescribed then such contract shall not be covered by Clause (bb) of Section 2(oo). In the present case, the termination of service of the appellant as a result of the contract of employment having been terminated under the stipulations specifically provided under Regulation 14 and the order of the appointment of the appellant. In this background, the non-compliance of the requirement of Section 25F shall not vitiate or nullify the order of termination of the appellant”.
These observations of the Supreme Court are clear, clinching and leave no manner of doubt, whatsoever that the termination of service of a probationary, employee in exercise of the power reserved in the contract of employment in that behalf would clearly fall within and be covered by the exception Clause (bb) of Section 2(oo) of the Industrial Disputes Act.
7. Mr. Kochar, learned Advocate appearing for the Respondent, however, contends that the newly added Clause (bb) in Section 2(oo) of the Industrial disputes Act has been judicially interpreted and the consensus of judicial opinion is in favour of reading down the provision so as to nip in the bud the potential for mischief contained in the proviso for misdeeds of unserupulous and dishonest employers. Though the newly introduced Clause (bb) does not contain any words of limitation, that the clause has been read in the manner suggested by Mr. Kochar, is obvious from the view taken in judgment of several High Courts to which Mr. Kochar has drawn my attention.
8. Since the matter is one of importance, it would be worthwhile reproducing the provisions of law around which the case of the petitioner workman hinges. Section 29(oo), as originally contained in the statute prior to August 18, 1984, had only three Clauses (a), (b) and (c) which laid down the contingencies not amounting to ‘retrenchment’. The section as it stood prior to August 18, 1984 as :
“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 concerted contains a stipulation in that behalf; or
(c) termination of the service of a workman on the ground of the continued ill health”.
This section was the subject matter of several judgments starting from the Locus Classicus, State Bank of India v. N. Sundara Money (supra) and ending within Punjab Land Development and Reclamation Corporation Limited, Chandigarh etc. and several others v. Presiding Officer, Labour Court Limited, Chandigarh etc and several other, (1990-II-LLJ-70). The catena of the Supreme Court judgments between Sundara Money to Punjab Land Development have reiterated the interpretation that the scope of the definition of the expression “retrenchment” in Section 2(oo) was unrestricted in amplitude and, therefore, full import has to be given to the words in the section “for any reason whatsoever” and that termination of service, for any reason whatsoever, other than those contained in Clauses (a), (b) and (c), amounted to ‘retrenchment’. The settled position of law as laid down in Sundara Money and reiterated all the way upto and in Punjab Land Development (supra), was radically departed from by the amendment introduced Section 2(oo) by Act 49 of 1984. Act 19 of 1984 introduced Clause (bb) as one further exception to the definition of retrenchment. Clause (bb) to Section 2(oo) reads as under :
“(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 stipulation in that behalf contained therein”.
It will at once be seen that, just as there are no words of limitation in the main body of the definition, equally, there are no words of limitation in the exception Clause (bb). As long as either of the two contingencies contemplated by the clause is fulfilled, the situation would not amount to ‘retrenchment’ within the main body of the definition in Section 2(oo). However, by a series of judgments of our High Court and of other High Courts import of the words used and the amplitude of this have been whittled down and the judicial consensus on the construction of this clause appears to be that the sweep of Clause (bb) of Section 2(oo) cannot be extended to such cases where the job continues and the employee’s work is also satisfactory, and yet periodical renewals are made to avoid regular status to the employee, where the circumstances indicate that the letter of appointment is a camouflage to circumvent the provisions of the Industrial Disputes Act or the benefit of permanency on workers who have worked continuously for a period of more than 240 days.
9. In the judgment of a learned Single Judge of this Court (Pate] J.) in Dilip Hanumantrao Shirke and others v. Zilla Parishad, Yavatmal and others (1990-I-LLJ-445), the learned Judge observes : P. 448
“The amended sub-clause (bb) would apply only to such cases where the work ceases with the employment or the post itself cases to exist or such other analogous cases where the contract of employment is found to be fair, proper and bona fide”.
The judgment of the learned Single Judge in Dilip Shirke was expressly approved of a Division Bench of this Court in S. S. Sambre v. Chief Regional Manager, State Bank of India, Nagpur and another, (1992-I-LLJ-684). In the judgment of a learned Single Judge of the Punjab High Court in Balbir Singh v. Kurukshetra Central Co-operative Bank Ltd, and another, (1990-I-LLJ-443), p. 445
it was observed :
“In fact clause (bb), which is an exception, is to be so interpreted as to limit it to cases where there the work itself has been accomplished and the agreement of hiring for a specific period was genuine. If the work continues. The non-renewal of the contract on the face of it has to he dubbed as mala fide. It would be fraud in law if it interpreted otherwise”.
Another learned Single Judge of the Madras High Court in K. Rajendran v. Director (Personnel), Project and Equipment Corporation of India Ltd., New Delhi and another, 1992 (I) CLR 462, cited with approval the observations in Dilip Shirke (supra) and Balbir Singh (supra) and followed the same as having correctly laid down the law. A learned Single Judge of the Kerala High Court in Jaybharati Printers and Publishers P. Ltd. v. Labour Court Kozchikode, and another, (Vol. 82 FJR 622) also cited with approval the observations of this Court in Dilip Shirke’s case as the correct position in law. However, the observations of the Kerala High Court are material and strike slightly variant note. The Kerala High Court says :
“In similar situation, a Division Bench of the Allahabad High Court examined the scope of Section 2(oo)(bb). In the course of judgment, the Court observed that the nature of employment must be judged by the nature of duties performed and not on the letter issued by the employer, that if contractual employment is resorted to as a mechanism to frustrate the claim of the employee to become regular or permanent against a job which continues or the nature of duties is such that colour of contractual agreements is given to take it out from Section 2(oo), then such agreement cannot be regarded as fair or bonafide and that Section 2(oo)(bb) cannot be extended to such cases where the job continues and the employee’s work is also satisfactory but periodical renew also are made to avoid regular status to employees. I am in respectful agreement with the view expressed in these decisions. Section 2(oo)(bb) has to be strictly interpreted and it is necessary to find out whether the letter of appointment is a camouflage to circumvent the provisions of the Industrial Disputes Act which confers the benefit of permanency on workers who worked continuously for a period of more than 240 days”.
10. The above quoted observations of the Kerala High Court, echo the view of the Division Bench of the Allahabad High Court and hold that the termination for an unsatisfactory service may not amount to retrenchment as it would fall within the exceptional Clause (bb).
11. A conspectus of the authorities cited by Mr. Kochar no doubt indicates that considerable judicial ingenuity has been bestowed on ensuring that the potential for mischief in the newly added Clause (bb) is contained within manageable limits and to ensure that the newly added exception to the definition of ‘retrenchment’ is not used as ‘magna carta’ by dishonest and unscrupulous employers to circumvent the provisions of the Industrial Disputes Act and jettison workmen at will. Perhaps the haunting fear of resurrection of the ghost of ‘hire and fire’ doctrine long laid to rest was too strong to permit judicial passivism.
12. Mr. Kochar contended that in a situation like the present, where the service of the Respondent was abruptly dispensed with on the ground that the establishment no longer needs her service, the Court should impute mala fides to the Employer and hold that the situation was one which fell outside the newly incorporated exception in Clause (bb). The argument, doubtless, is very inviting and, but for the crystallization of the legal position by the Supreme Court in Venugopal’s case (supra) I might have yielded to the temptation of examining the argument’s validity. However, I find that the decision of the Supreme Court in Venugopal (supra) forecloses such an option, the observations of the Supreme Court in paragraph 9, extracted above, making combined reference to the judgments in Sundara Money (supra) and Santosh Gupta indicate in no uncertain terms that, if the termination of service takes place as a result of the determination of the contract of employment under stipulation specifically provided under the applicable Service Rules/Regulations and/or the order of appointment, then the requirements of Section 25F are not sine-qua-non.
13. In the present case, though the Labour Court did not have the benefit of the observations of the Supreme Court in Venugopal (supra), it seems to have intuitively decided on the same lines. It is not in dispute that the Respondent’s service was governed by the provisions of the Maharashtra Civil Service Regulations which have been enacted in exercise of the powers under the proviso to Article 309 of the Constitution. Such rules continues to govern the conditions of service of persons appointed to civil service/and or post until separate provisions are made in that behalf by an Act of appropriate Legislature or by Rules validly made under the provisions of such Act. The letter of re-appointment of the Petitioner, in terms, makes reference to the Maharashtra Civil Service Rules 1982 and itself provides for two things : (a) That the service was of a temporary nature, liable to be terminated without any advance notice and (b) that the continuation of the Respondent depended on the assessment of her work during the period of probation of one year. The letter of termination of service dated May 27, 1987 makes reference to the letter of re-appointment and expressly says that the services of the Respondent would not be continued after June 30, 1987, as they were found not necessary. Even the Industrial Court came to the conclusion that the order of termination of service did not impute any misconduct or stigma to the Respondent and that the employment of the Respondent had been terminated because of unsatisfactory performances during the probationary period. Neither Court below has made any finding that the termination of the service of the Respondent was for any reasons other than what the Petitioners were contending, namely, for unsatisfactory service during probation. The Industrial Court, however, accepted the alternative contention raised on behalf of the Respondent that such termination would amount to retrenchment and, as the Respondent had admittedly continued for more than 240 days service and the provisions of Section 25F of the Industrial Disputes Act had not been complied with, the order of termination was held to be bad. It is not possible to accede to the contention of Mr. Kochar that the termination of service must be held to be mala fide merely because the establishment, the post and the job continued. Mr. Kochar placed emphasis on the observations of the judgment of this Court in Dilip Shirke (supra) and the other judgments referred to earlier and contended that the case on hand typifies precisely the situation which the Courts were at great pains to avoid. In the absence of any finding as to mala fides by the two Courts below, it is not possible to agree with the contention of Mr. Kochar. The only ground held in favour of the Respondent was that the termination of service amounted to retrenchment in contravention of Section 25F and this finding is erroneous in view of the decision of the Supreme Court in Venugopal (supra).
14. Mr. Kochar then made what appears to me to be last ditch argument. He contended that both the Court below erred in not giving a finding as a mala fides of the action of the petitioners. In this submission, the order of termination, though couched in in innocuous terms and under such circumstances as to raise a probable presumption of termination on the grounds of unsatisfactory probationary service was really one for oblique motive, being colourable exercise of the Employer’s powers. He also submits that evidence had been led by the Respondent to this effect before the Labour Court, but unfortunately neither the Labour nor the Industrial Courts adverted mind to the crucial evidence on this evidence. I am afraid, it is not possible to accept this contention. Ex facie, neither judgment of the two Courts below indicates that there was any material placed on record from which the Courts below could have taken the view that the reason for termination of service of the Respondent was anything other than what was contended by the Petitioners. A careful reading of the complaint filed by the Respondent in the Labour Court also does not give any material particulars of such an alternate case. On the strength of the fact that, about a year after the respondent was removed from service one Mrs. B. R. Chavan was brought to Dhule from Bhadgaon on September 7, 1988 coupled with the fact that in her deposition before the Industrial Court the Respondent had vaguely stated that she had been removed as the Petitioners wanted to give employment to their person, Mr. Kochar faintly contended this was a case of mala fides. Even after careful appraisal of the material pointed out by Mr. Kochar, I am unable to accept the contention that removal of the Respondent from service was mala fide. There is neither clear cut and clinching evidence, not any antecedent or contemporaneous circumstances indicating mala fides.
15. In the result, the writ petition is allowed. The order of the Industrial Court impugned in Revision Application (ULP) No. 141 of 1988 is hereby quashed and set aside. Rule made absolute accordingly.
16. However, there shall be no order as to costs.
