PETITIONER:
STATE OF TAMIL NADU AND ORS.
Vs.
RESPONDENT:
NELLAI COTTON MILLS LTD. AND ORS.
DATE OF JUDGMENT20/03/1990
BENCH:
SHETTY, K.J. (J)
BENCH:
SHETTY, K.J. (J)
FATHIMA BEEVI, M. (J)
CITATION:
1990 SCR (2) 33 1990 SCC (2) 518
JT 1990 (2) 19 1990 SCALE (1)633
ACT:
Labour and Services: Tamil Nadu Industrial Establish-
ments (Conferment of permanent status to workmen) Act, 1981:
Sections 2 and 3--Permanent status as workmen--Con ferment
of--Judicial interpretation-Acceptance of by Legislature.
Practice and Procedure: Statutes--Judicial interpreta-
tion of-Legislative approval or disapproval--Court to study
the subsequent action or inaction of the Legislature.
HEADNOTE:
In order to confer permanent status to workmen in var-
ious industrial establishments, who have put in a continuous
service for a period of 480 days in a period of 24 calendar
months, the Tamil Nadu Industrial Establishments (Conferment
of Permanent Status to Workmen) Act, 1981 was passed by the
State Government. The constitutional validity of the Act was
challenged before the High Court by various industrial
establishments by way of writ petitions. The High Court
allowed the writ petitions in part, striking down some
portions of section 3 of the Act.
The State Government preferred appeals against the
judgment of the High Court. Meanwhile, the Appellant-State
amended the Act in the light of the High Court's judgment.
On behalf of the appellant, it was contended that the
view taken by the High Court as to the scope of section 3(2)
has to be determined notwithstanding the,amendments made.
The contention of the respondents was that the legisla-
ture while amending the Act with retrospective effect has
accepted the judgment of the High Court, since the amendment
has not given a different meaning to section 3(2) from the
one asserted by the High Court.
Dismissing the appeals, this Court,
HELD: 1. When an Act has been judicially interpreted, Courts
34
may study the subsequent action or inaction of the legisla-
ture for clues as to legislative approval or disapproval of
the judicial interpretation. After the statute has been
judicially interpreted in a certain way and if the legisla-
ture by taking note of the judgment amended the statute
appropriately so as to give it a different meaning from the
one asserted by the Courts, or not giving any different
meaning from the view taken by the Court, it may be argued
with some justification that the legislature has expressly
or by implication ratified the judicial interpretation.
[38G-H; 39A]
2. In the instant case, the legislature has expressly
taken note of the High Court verdict and removed the practi-
cal difficulties caused thereby in implementing the provi-
sions of the Act, by appropriate amendments. No provision,
however, was inserted to re-write and validate the portion
which was struck down by the High Court. It could, there-
fore, be reasonably held that the legislature has accepted
the judgment of the High Court to the extent indicated.
[39A-B]
3. The view taken by the High Court in striking down a
portion of sub-section 2 of section 3 of the Act cannot be
found fault with. The word 'non-employment' would include
retrenchment as well and a person whose services have been
terminated or discharged albeit illegal cannot at all be
said to be a person in service, much less in continuous
service. Therefore, the period of non-employment or the
period after discharge cannot be accounted for the purpose
of giving continuity of service. If the discharge is set
aside and workmen is reinstated by process known to law the
workman automatically gets continuity of service. No special
provision is necessary for such purposes. [39C; E-F]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 3222-
3241 of 1988.
From the Judgment and Order dated 5.2.1981 of the Madras
High Court in W.P. Nos. 59 18, 67 12, 7495, 7496, 7591,
8623, 8624 and 9088 of 1982, 502, 503, 1336, 2433, 3460,
3596, 3846, 6797, 8859, 104 18, 104 19 of 1983 and 5888 of
1984.
V. Krishnamurthy for the Appellants.
P. Chidambaram, A.S. Nambiar, Smt. Shanta Vasudevan,
P.K. Manohar, M.N. Krishnamani, Sunder Rao, Diwan Balak Ram,
C.S. Vaidyanathan, S.R. Setia and K.V. Mohan for the Re-
spondents.
35
The Judgment of the Court was delivered by
K. JAGANNATHA SHETTY, J. The Tamil Nadu Government
passed an Act called the Tamil Nadu Industrial Establish-
ments (Conferment of Permanent Status to Workmen) Act, 1981
(“The Act”) which came into force on 1st January, 1982. The
Act was to confer permanent status to workmen in various
industrial establishments who have put in continuous service
for a period of 480 days in a period of 24 calendar months
in an industrial establishment. Section 3 is a crucial
provision in the Act. It reads as under:
“Sec. 3. Conferment of permanent status to workmen–
(1) Notwithstanding anything contained in any law for the
time being in force every workman who is in continuous
service for a period of four hundred and eighty days in a
period of twenty-four calendar months in an industrial
establishment shall be made permanent.
(2) A workman shall be said to be in continuous
service for a period if he is, for that period, in uninter-
rupted service, including service which may be interrupted
on account of sickness or authorised leave or an accident or
a strike, which is not illegal, or a lockout or on account
of non-employment or discharge of such workman for a period
which does not exceed three months and during which period a
substitute has been employed in his place by the employer,
or a cessation of work which is not due to any fault on the
part of the workman.
Explanation For the purposes of this section the
number of days on which a workman has worked in an industri-
al establishment shall include the days on which
(i) he has been laid-off under an agreement or as permitted
by standing orders made under the Industrial Employment
(Standing Orders) Act, 1946 (Central Act XX of 1946) or
under any other laws applicable to the industrial establish-
ment;
(ii) he has been on leave with full wages, earned in the
previous years;
36
(iii) he has been absent due to temporary disablement caused
by accident arising out of and in the course of his employ-
ment; and
(iv) in the case of a female, she has been on maternity
leave, so, however, that the total period of such maternity
leave does not exceed twelve weeks.”‘
The constitutional validity of the Act was challenged in
a batch of writ petitions by various industrial establish-
ments before the High Court of Madras. The High Court has
allowed the writ petitions in part holding, inter alia, as
follows:
“The Explanation to section 3 is incapable of enforcement
and must therefore be held to be redundant.
(2) The provisions of Section 3(2) of the Act are valid
except that the ‘clause or on account of non-employment or
discharge of such workman for a period which does not exceed
three months and during which period a substitute has been
employed in his place by the employer’ is void on the ground
that it amounts to an unreasonable restriction on the right
of the employer.
(3) An apprentice or a badli worker could not be included in
the ‘workman’ referred to in section 3(1) and (2) of the
Act, and they will, therefore, be not entitled to the bene-
fit of section 3.
(4) The Act will not supersede a settlement between the
workers and the employer in so far as it deals with the
subject of conferment of permanent status to workman.
(5) The Act cannot be held to be retrospective in
character.”
On 7th July 1985, the State of Tamil Nadu preferred this
appeal challenging the judgment of the High Court. During
the pendency of the appeal, the State also amended the
principal Act in order to obviate the practical difficulties
in implementing the provisions of the Act by reason of the
judgment of the High Court.
The relevant portion of the Amending Act 44 of 1985
reads as under:
37
“2. Amendment of section 3, Tamil Nadu Act 46 of 1981-In
section 3 of the Tamil Nadu industrial Establishments
(Conferment of Permanent Status to Workmen) Act, 1981 (Tamil
Nadu Act 46 of 1981) (hereinafter referred to as the princi-
pal Act)–
(1) in the Explanation, for the opening portion beginning
with the words “for the purposes of this section” and ending
with the words “include the days on which”, the following
shall be substituted, namely–
“For the purposes of computing the continuous service re-
ferred to in sub-sections (1) and (2), a workman shall be
deemed to be in continuous service during the days on
which–“;
(2) the Explanation shall be numbered as Explanation I and
after Explanation I as so numbered, the following Explana-
tion shah be added, namely:–
“Explanation II–For the purposes of this section, ‘law’
includes any award, agreement, settlement, instrument or
contract of service whether made before or after the com-
mencement of this Act.
The Amending Act also contains provision for validation
in the following terms:
“3. Validation–Notwithstanding anything contained in any
judgment, decree or order of any court or other authority,
all acts done or proceedings taken in pursuance of section 3
(including the Explanation) of the principal Act at any time
on or after the 1st day of January 1982 and before the date
of publication of this Act in the Tamil Nadu Government
Gazette in relation to every workman in an industrial estab-
lishment for the purpose of conferment of permanent status
to such workman by any officer or authority shall, for all
purposes, be deemed to be, and to have always been, validly
done or taken in accordance with law as if section 3 of the
principal Act as amended by this Act had been in force at
all material times when such acts or proceedings were done
or taken”.
38
Mr. Chidambaram learned counsel for the respondents
argued that the Legislature while amending the principal Act
with retrospective effect and also validating the acts done
and proceedings taken under the principal Act appears to
have accepted the judgment of the High Court so far as it
relates to the offending portion in sub-section (2) of
section 3, since no different meaning has been given to that
portion from the one asserted by the High Court. But counsel
for the appellant argued that the view taken by the High
Court as to the scope of sub-section (2) of section 3 has to
be determined notwithstanding the foregoing amendments. He
claimed that non-employment or discharge of any workman for
a period which does not exceed three months, and during
which period a substitute has been employed in his place by
the employer was intended to cover such cases where the
employer deliberately discharges a workman in order to
effect a break in service and again re-employs him as a
fresh candidate without continuity of service.
We may first examine whether there is legislative ap-
proval of the High Court decision to the extent indicated by
Mr. Chidambaram for the respondent. The Statement of Objects
and Reasons accompanying the Amending Act 44 of 1985 reads
as follows:
“STATEMENT TO OBJECTS AND REASONS
The Tamil Nadu Industrial Establishments (Conferment of
Permanent Status to Workmen) Act, 1981 (Tamil Nadu Act 46 of
1981) has been enacted with a view to provide for the con-
ferment of permanent status to workmen in the industrial
establishments in the State of Tamil Nadu. The judgment of
the Madras High Court rendered in a batch of Writ Petitions
(Nellai Cotton Mills Ltd. Tirunelveli v. State of Tamil
Nadu, (Writ Petition No. 5910 of 1982 etc.) had given rise
to certain practical difficulties in implementing the provi-
sions of the said Act. It has, therefore, been decided to
amend section 3 of the said Act to remove the difficulties
caused by the said judgment and confer the intended benefits
on workmen.
2. The Bill seeks to achieve the above object.”
When the Act has been judicially interpreted, Courts may
study the _subsequent action or inaction of the legislature
for clues as to legislative approval or disapproval of
judicial interpretation. After the statute has been judi-
cially interpreted in a certain way and if the legislature
by taking note of the judgment amended the statute appro-
39
priately so as to give it a different meaning from the one
asserted by the courts, or not giving any different meaning
from the view taken by the court, it may be argued with some
justification that the legislature has expressly or by
implication ratified the judicial interpretation. In the
instant case, the legislature has expressly taken note of
the High Court verdict and removed the practical difficul-
ties caused thereby in implementing the provisions of the
Act, by appropriate amendments. No provision, however, was
inserted to re-write and validate the portion which was
struck down by the High Court. It could therefore, be rea-
sonably held that the legislature has accepted the judgment
of the High Court to the extent indicated.
That apart, the view taken by the High Court, in strik-
ing down a portion of sub-section (2), in our opinion,
cannot be found fault with. Sub-section (2) of section 3
consists of three parts. The first part refers to interrup-
tion of service including service which may be interruption
on account of sickness or authorised leave or an accident or
a strike which is not illegal or a lockout. The second part
Consists of the portion which has been struck down by the
High Court as unreasonable restriction on the right of the
employer. The third part refers to cessation of work which
is not due to any fault on the part of the workmen. The
provisions under the first and the third parts seem to be
similar to the terms of section 25B of the Industrial Dis-
putes Act which also provides for continuous service of the
workman. The second part dealing with non-employment and
discharge of a workman is distinct from the first and the
third parts. It refers to the period during which there is
no subsisting relationship of master and servant. We agree
with the High Court that the word ‘non-employment’ would
include retrenchment as well and a person whose services
have been terminated or discharged albeit illegal cannot at
all be said to be a person in service. much less in continu-
ous service. Therefore, the period of non-employment or the
period after discharge cannot be counted for the purpose of
giving continuity of service. If the discharge is set aside
and workman is reinstated by process known to law the work-
man automatically gets continuity of service. No special
provision is necessary for such purposes.
In any view of the matter we cannot therefore, accept
this appeal and is accordingly dismissed.
In the circumstances of the case, however, we make no order
as to costs.
G.N. Appeal dismissed.
40