PETITIONER:
SANTOSH GUPTA
Vs.
RESPONDENT:
STATE BANK OF PATIALA
DATE OF JUDGMENT29/04/1980
BENCH:
REDDY, O. CHINNAPPA (J)
BENCH:
REDDY, O. CHINNAPPA (J)
KRISHNAIYER, V.R.
CITATION:
1980 AIR 1219 1980 SCR (3) 884
1980 SCC (3) 340
CITATOR INFO :
RF 1981 SC 422 (1,2,7,12)
RF 1981 SC1253 (8)
E 1982 SC 854 (5,6)
R 1983 SC1320 (9,11)
R 1984 SC 500 (2)
R 1984 SC1673 (3)
RF 1986 SC1680 (4)
R 1987 SC1478 (7)
F 1990 SC1808 (8)
ACT:
Industrial Disputes Act, 1947-Section 2 (OO)-
"Retrenchment"-Termination....... for any reason,
whatsoever, meaning of Section 25 FF and Section 25 FFF
object of.
HEADNOTE:
The appellant was employed in the State Bank of
Patiala, The Mall, Patiala from July 13, 1973 till August
21, 1974, when her services were terminated. Despite some
breaks in service for a few days, the appellant had
admittedly worked for 240 days in the year preceding August
21, 1974. According to the workman, the termination of her
service was "retrenchment" within the meaning of that
expression in Section 2(OO) of the Industrial Disputes Act,
1947, since it did not fall within any of the excepted cases
mentioned in Section 2(OO). Since there was "retrenchment",
it was bad for non-compliance with the provisions of section
25 F of the Industrial Disputes Act. On the other hand, the
contention of the management was that the termination of
services was not due to discharge of surplus labour. It was
due to the failure of the workman to pass the test which
would have enabled him to be confirmed in the service.
Therefore, it was not retrenchment within the meaning of
section 2(OO) of the Industrial Disputes Act. The Presiding
Officer, Central Government, Industrial Tribunal-cum-Labour
Court, accepted the management's contention and decided
against the workman appellant. Hence the appeal by special
leave.
Allowing the appeal, the Court
^
HELD: (i) The discharge of the workman on the ground
that she did not pass the test which would have enabled him
to be confirmed was "retrenchment" within the meaning of
section 2(OO) and, therefore, the requirements of section
25F had to be complied with. [892 F-G]
(ii) Section 2(OO) of the Industrial Disputes Act uses
a wide language particularly the words "termination.. for
any reason whatsoever". The definition "retrenchment"
expressly excludes termination of service as a "punishment
inflicted by way of disciplinary action". It does not
include, voluntary retrenchment of the workman or
retrenchment of the workman on reaching the age of
superannuation or termination of the service of the workman
on the ground of continuous ill-health. The Legislature took
special care to mention that these were not included within
the meaning of "termination by the employer of the service
of a workman for any reason whatsoever". This emphasises the
broad interpretation to be given to the expression
"retrenchment". [887 E-H, 888 A]
2. If due weight is given to the words "the termination
by the employer of the service of a workman for any reason
whatsoever" and if the words 'for any reason whatsoever" are
understood to mean what they plainly say, it is difficult to
escape the conclusion that the expression 'retrenchment'
must include every termination of the service of a workman
by an act of the employer. The underlying assumption, of
course, is that the undertaking is running as an under-
885
taking and the employer continues as an employer but where
either on account of transfer of the undertaking or on
account of the closure of the undertaking the basic
assumption disappears, there can be no question of
'retrenchment' within the meaning of the definition
contained in s. 2(OO) of the Act. [888 A-C]
Hariprasad Shivshankar Shukla v. A.D. Divakar [1957]
SCR 121: applied.
By introducing section 25 FF and Section 25 FFF,
Parliament treated the termination of the service of a
workman on the transfer or closure of an undertaking as
"deemed retrenchment". The effect was that every case of
termination of service by act or employer even if such
termination was a consequence of transfer or closure of the
undertaking was to be treated as 'retrenchment' for the
purposes of notice, compensation etc." The expression
"termination of service for any reason whatsoever" now
covers every kind of termination of service except those not
expressly included in S. 25F or not expressly provided or by
other provisions of the Act as 25 FF And 25 FFF. [888 C-F]
4. The manifest object of Section 25 FF and S. 25 FFF
is to so compensate the workman 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 workmen, on reaching the age of
superannuation, termination of the service of a workman, on
the ground af continued ill-health' in the definition of
'retrenchment' clearly indicate and emphasise the true
object of 25F, 25 FF and 25 FFF and the nature of the
compensation provided by those provisions." [888 F-H]
Indian Hume Pipe Co. Ltd. v. The Workman [1960] 2 SCR
32; followed.
5. The submission that notwithstanding the
comprehensive language of the definition of retrenchment' in
section 2(OO) the expression continues to retain its
original meaning, namely, discharge from service on account
of surplus age is not correct. It cannot be assumed that
Parliament was undertaking an exercise in futility to give a
long winded definition merely to say that the expression
means what it always meant. [889 D-E]
Hariprasad Shivshankar Shukla v. A.D. Divakar [1957]
SCR 121, Hindustan Steel Ltd. v. The Presiding Officer,
Labour Court Orissa & Ors. [1977] 1 SCR 585; State Bank of
India v. Shri N. Sundaramoney [1974] 3 SCR 160; Delhi Cloth
and General Mills Ltd. v. Shambunath Mukherjee & Ors. [1978]
1 SCR 591; explained and followed.
Management of M/s Willcose Buckwell India Ltd. v.
Jagannath & Ors. AIR 1974 S.C. 1164; Employees in Relation
v. Digmoden Colliery v. Their Workmen [1965] 3 SCR 448;
distinguished.
L. Robert D'Souza v. Executive Engineer, Southern
Railway and Anr. (1979) KLJ Kerala 211; The Managing
Director, National Garage v. J. Gonsalves (1962) KLJ 56.
Goodlas Nerolac Paints v. Chief Commissioner, Delhi (1967) 1
LLJ 545; Rajasthan State Electricity Board v. Labour Court
(1966) 1 LLJ. 381; over-ruled.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3563 of
1979.
Appeal by special leave from the Award dated 9-7-1978
of the Presiding Officer Central Government. Industrial
Tribunal-Cum-
886
Labour Court, New Delhi in I.D. No. 90 of 1977 published in
Gazette of India on 11-8-1979.
M.K. Ramamurthi, and Romesh C. Pathak for the
Appellant.
Dr. Anand Parkash, Adarsh Kumar, Mrs. Laxmi Anand
Parkash, and Jagat Arora for the Respondent.
The Judgment of the Court was delivered by
CHINNAPPA REDDY, J.-Santosh Gupta, the appellant-
Workman (a woman), was employed in the State Bank of
Patiala, the Mall, Patiala, from July 13, 1973, till August
21, 1974, when her services were terminated. Though there
were some breaks in service for a few days, those breaks are
not relevant for the purpose of deciding this case though we
may have to advert to them in another connection. Despite
the breaks, the workman had admittedly worked for 240 days
in the year preceding August 21, 1974. According to the
workman the termination of her services was ‘retrenchment’
within the meaning of that expression in s. 2(OO) of the
Industrial Disputes Act, 1947, since it did not fall within
any of the 3 excepted cases mentioned in s. 2(OO). Since
there was ‘retrenchment’, it was bad for non-compliance with
the provisions of s. 25-F of the Industrial Disputes Act. On
the other hand the contention of the management was that the
termination of services was not due to discharge of surplus
labour. It was due to the failure of the workman to pass the
test which would have enabled her to be confirmed in the
service. Therefore, it was not retrenchment within the
meaning of s. 2(OO) of the Industrial Disputes Act.
S. 25-F prescribes that no workman employed in any
industry who has been in continuous service for not less
than one year shall be retrenched by the 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 a excess of six months; and(c) notice
in the prescribed manner is served on the appropriate
Government or any such authority as may be specified by the
appropriate Government by notification in the official
Gazette. There is a proviso to clause (a) which dispenses
with the necessity for the notice contemplated by the clause
if the retrenchment is under an agreement which specifies
the date for the termination of service.
887
The expression retrenchment is specially defined by s.
2(OO) of the Act and is as follows:
“2(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) 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;”
In Hariprasad Shivshankar Shukla v. A. D. Divikar, the
Supreme Court took the view that the word ‘retrenchment’ as
defined in s. 2(OO) did not include termination of services
of all workmen on a bonafide closure of an industry or on
change of ownership or management of the industry. In order
to provide for the situations which the Supreme Court held
were not covered by the definition of the expression
‘retrenchment’, the Parliament added s. 25 FF and s. 25 FFF
providing for the payment of compensation to the workmen in
case of transfer of undertakings and in case of closure of
undertakings respectively.
If the definition of ‘retrenchment’ is looked at
unaided and unhampered by precedent, one is at once struck
by the remarkably wide language employed and particularly by
the use of the words “termination.. for any reason
whatsoever”. The definition expressly excludes termination
of service as a ‘punishment inflicted by way of disciplinary
action’. The definition does not include, so it expressly
says, voluntary retrenchment of the workman or retrenchment
of the workman on reaching the age of superannuation or
termination of the service of the workman on the ground of
continuous ill-health. Voluntary retrenchment of a workman
or retrenchment of the workman on reaching the age of
superannuation can hardly be described as termination, by
the employer, of the service of a workman. Yet, the
Legislature took special care to mention that they were not
included within the meaning of “termination by the employer
of the service of a workman for any reason whatsoever:.
This, in our opinion, emphasizes the broad interpretation to
888
be given to the expression ‘retrenchment’. In our view if
due weight is given to the words “the termination by the
employer of the service of a workman for any reason
whatsoever” and if the words ‘for any reason whatsoever’ are
understood to mean what they plainly say, it is difficult to
escape the conclusion that the expression ‘retrenchment’
must include every termination of the service of a workman
by an act of the employer. The underlying assumption, of
course, is that the undertaking is running as an undertaking
and the employer continues as an employer but. where either
on account of transfer of the undertaking or on account of
the closure of the undertaking the basic assumption
disappears, there can be no question of ‘retrenchment’
within the meaning of the definition contained in, S. 2(OO).
This came to be realised as a result of the decision of this
Court in Hariprasad Shivshanker Shukla v. A.D. Divikar
(Supra). The Parliament then stepped in and introduced 25 FF
and 25FFF by providing that compensation shall be payable to
workmen in case of transfer or undertaking or closure of
undertaking as if the workmen had been retrenched. We may
rightly say that the termination of the service of a workman
on the transfer or closure of an undertaking was treated by
Parliament as ‘deemed retrenchment’. The effect was that
every case of termination of service by act cf employer even
if such termination involved was a consequence of transfer
or closure of the undertaking was to be treated as
‘retrenchment’ for the purposes of notice, compensation etc.
Whatever doubts might have existed before Parliament enacted
25FF and 25FFF about the width of 25F there cannot now be
any doubt that the expression ‘termination’ of service for
any reason whatsoever now covers every kind of termination
of service except those not expressly included in S. 25F or
not expressly provided for by other provisions of the Act
such as Ss. 25FF and 25FFF.
In interpreting these provisions i.e. 25F, 25FF and
25FFF one must not ignore their object. The manifest object
of these provisions is to so compensate the workman for loss
of employment as to provide him the wherewithal to subsist
until he finds fresh employment. The non-inclusion of
‘voluntary retrenchment of the workmen, retirement of
workmen on reaching the age of superannuation, termination
or the service of a workman 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
25F, 25FF and 25FFF and the nature of the compensation
provided by those provisions. The nature of retrenchment
compensation has been explained in Indian Hume Pipe Co. Ltd.
v. the Workmen as follows :
889
“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 workmens, 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 workmen 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 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.
Dr. Anand Prakash wants us to hold that notwithstanding
the comprehensive language of the definition of
“retrenchment” in s. 2 (OO) the expression continues to
retain its original meaning which was, according to the
counsel, discharged from service on account of ‘surplusage’.
It is impossible to accept his submission. If the submission
is right, there was no need to define the expression
‘retrenchment’, and in such wide terms. We cannot assume
that the Parliament was undertaking an exercise in futility
to give a long winded definition merely to say that the
expression means what it always meant.
Let us now examine the precedents of this Court to
discover whether the true position in law is what has been
stated by us in the previous paragraphs. The earliest of the
cases of this Court to which our attention was invited was
Harprasad Shivashankar Shukla v. A. D. Divikar (supra). That
was a case which was decided before Ss. 25FF and 25FFF were
brought on the statute book. In fact it was as a consequence
of that decision that the Industrial Disputes Act had to be
amended and these two provisions came to be introduced into
the Act. The question which arose for decision in that case
was stated by the learned judges themselves as follows:
“The question, however, before us is-does this
definition merely give effect to the ordinary, accepted
notion of retrenchment in an existing or running
industry by
890
embodying the notion in apt and readily intelligible
words or does it go so far beyond the accepted notion
of retrenchment as to include the termination of
services of all workmen in an industry when the
industry itself ceases to exist on a bonafide closure
or discontinuance of his business by the employer”
The question so stated was answered by the learned judges in
the following way :
“In the absence of any compelling words to indicate
that the intention was even to include a bonafide closure of
the whole business, it would, we think, be divorcing the
expression altogether from the context to give it such a
wide meaning as is contended for by learned counsel for the
respondents.. it would be against the entire scheme of the
Act to give the definition clause relating to retrenchment
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”.
It is true that there are some observations which, if
not properly understood with reference to the question at
issued seemingly support the submission of Dr. Anand Prakash
that ‘termination of service for any reason whatsoever’
means no more and no less than discharge of a labour force
which is a surplus age. The misunderstanding of the
observations and the resulting confusion stem from not
appreciating (1) the lead question which was posed and
answered by the learned judges and (2) that the reference to
‘discharge on account of surplus age’ was illustrative and
not exhaustive and by way of contrast with discharge on
account of transfer or closure of business.
Management of M/s Willcox Buckwell India Ltd. v.
Jagannath and Ors. and Employers in Relation to Digwadih
Colliery v. Their Workmen were both cases where the
termination of the Workman from service was on account of
“surplusage” and, therefore, the cases were clear cases of
retrenchment. They do not throw any light on the question
now at issue.
In State Bank of India v. Shri N. Sundaramoney a Bench
of three judges of this Court consisting of Chandrachud J.
(as be then was), Krishna Iyer, J., and Gupta, J.,
considered the question whether s. 25F of the Industrial
Disputes Act was attracted to a case where the order of
appointment carried an automatic cessation of service,
891
the period of employment working itself out by efflux of
time and not by an act of employer, Krishna Iyer, J. who
spoke for the Court observed.
‘Termination .. for any reason whatsoever’ are the
key words. Whatever the reasons 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 of 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 howsoever
produced. True, the section speaks of retrenchment by
the employer and it is urged that some act of volition
by the employer to bring about the termination is
essential to attract s. 25F and automatic
extinguishment of service be effluxion of time cannot
be sufficient. Words of multiple import have to be
winnowed judicially to suit the social philosophy of
the statute. So screened we hold that the transitive
and intransitive senses are covered in the current
context. Moreover, an employer terminates employment
not merely by passing an order as the service runs. He
can do so by writing a composite orders one giving
employment and the other ending or limiting it. A
separate, subsequent determination is not the sole
magnetic pull of the provision. A preemptive provision
to terminate is struck by the same vice as the post-
appointment termination. Dexterity of diction cannot
defeat the articulated conscience of the provision”.
In Hindustan Steel Ltd. v. the Presiding Officer,
Labour Court, Orissa and Ors. the question again arose
whether termination of service by efflux of time was
termination of service within the definition of retrenchment
in s. 2 (OO) of the Industrial Disputes Act. Both the
earlier decisions of the Court in Hariprasad Shivshankar
Shukla v. A.D. Divikar and State Bank of India v. S.
Sundaramoney (supra) were considered. There was also a
request that N. Sundaramoney’s case conflicted with the
decision in Hariprasad Shivshankar Shukla v. A. D. Divikar
and therefore required reconsideration. A Bench of three
judges of this Court consisting of Chandrachud J (as he then
was), Goswami J and Gupta J held that there was nothing in
Huriparsad Shivshankar Shukla v. A.D. Divikar which was
inconsistent with the decision in N. Sundaramoney’s case.
They held that the decision in
892
Hariparsad Shivshankar’s case that the words “for any reason
whatsoever” used in the definition of retrenchment would not
include a bonafide closure of the whole business because it
would be against the entire scheme of the Act. The learned
judges then observed that, on the facts before them to give
full effect to the words “for any reason whatsoever” would
be consistent with the scope and purpose of s. 25 of the
Industrial Disputes Act and not contrary to the scheme of
the Act. In Delhi Cloth and General Mills Ltd. v.
Shambhunath Mukharjee and Ors. Goswami, Shinghal and Jaswant
Singh JJ, held that striking off the name of a workman from
the rolls by the management was termination of the service
which was retrenchment within the meaning of s. 2(OO) of the
Industrial Disputes Act.
Dr. Anand Prakash, cited before us the decision of a
Full Bench of the Kerala High Court in L. Rober D’Souza v.
Executive Engineer, Southern Railway and Anr. and some other
cases decided by other High Courts purporting to follow the
decision of this Court in Hariparsad Shivshankar Shukla v.
A.D. Divikar‘s case, Shukla’s case, we have explained. The
ratio of Shukla’s case in fact, has already been explained
in Hindustan Steel Ltd., v. the Presiding Officer, Labour
Court Orissa and Ors. The decisions in Hindustan Steel Ltd.
v. the Presiding Officer, Labour Court Orissa and Ors., and
State Bank of India v. N. Sundaramoney have, in our view,
properly explained Shukla’s case and have laid down the
correct law. The decision of the Kerala High Court in L.
Robert D’Souza v. Executive Engineer Southern Railway & Anr.
and the other decisions of the other High Courts to similar
effect viz. The ‘Managing Director, National Garages v. J.
Gonsalve, Goodlas Nerolac Paints v. Chief Commissioner,
Delhi and Rajasthan State Electricity Board. v. Labour
Court, are, therefore, over-ruled. We hold, as a result of
our discussion, that the discharge of the workman on the
ground-she did not pass the test which would have enabled
her to be confirmed was ‘retrenchment’ within the meaning of
s. 2(OO) and, therefore, the requirements of s. 25F had to
be complied with. The order of the Presiding Officer,
Central Govt. Industrial Tribunal-cum-Labour Court, new
Delhi, is set aside and the appellant is directed to be
reinstated with full back wages. The appellant is entitled
to her cost.
S.R. Appeal allowed.
893