1. By a common order on three applications under Section 33-C(2) of the Industrial Disputes Act, filed by three different workmen of the same management, the Labour Court computed the benefit of retrenchment compensation, notice pay and leave wages. The case for the employees was that their services were terminated with effect from 14th May, 1960, without payment of compensation and notice pay they were entitled to under Section 25-F of the Act. Though the management pleaded that this was not a case of termination but the workmen themselves voluntarily stopped from work, the Labour Court, on the evidence before it, found that the services of the three workmen were terminated by the management. Having stated that, the Labour Court proceeded:
and they were thus retrenched and they are entitled to be paid notice pay, retrenchment compensation and other benefits payable to them.
On that view, the Labour Court computed the benefits and allowed the claims except leave wages. These petitions are to quash the common order of the Labour Court.
2. On behalf of the management Sri M.R. Narayanaswami contends that the order of the Labour Court is vitiated, because it proceeded on the erroneous assumption that as the services of the three workmen were terminated, it automatically followed that they were retrenched. The learned Counsel argues that ‘ retrenchment ” is not to be equated to any kind of termination, but will be so only when surplus labour is dispensed with by a continuing concern. In making this submission he appears to be supported by authority. Before referring to it, I shall first notice the definition of ” retrenchment. ” Section 2(00) states that ” 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
(A) 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 illhealth.
Prima facie, it may appear that the definition as worded would include every kind of termination. In fact the exclusion of the cases falling within the purview of (b) and (c) in the definition would suggest that surplusage of labour is not the test of retrenchment. If the matter were res Integra, I must confess I should have had considerable difficulty in reading the definition of ” retrenchment ” in a narrower sense. The precise question was, however, considered by the Supreme Court in Hariprasad v. A.D. Divelkar (1957) S.C.J. 83 : 1957 S.C.R. 121 : A.I.R. 1957 S.G. 121. That was a case of closure and the question was whether the non-employment of the workmen as a result of that could be regarded as retrenchment for purpose of the Act. Differing from the Bombay High Court, the Supreme Court held:
retrenchment as defined in Section 2(00) and as used in Section 2g-F has ho wider meaning than the ordinary, accepted connotation of the word; it means the discharge of surplus labour or staff by the employer for any reasons whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, and it has no application where the services of all workmen have been terminated by the employer on a real and bona fide closure of business as in the case of Shri Dinesh Mills, Ltd., or where the services of all workmen have been terminated by the employer on the business or undertaking being taken over by another employer in circumstances like those of the Railway Company…. There is in fact a distinction between transfer of business and closure of business; but so far as the definition clause is concerned, both stand on the same footing if they involve termination of service of the workmen by the employer for any reason whatsoever, otherwise than as a punishment by way of disciplinary action. On our interpretation, in no case is there any retrenchment, unless there is discharge of surplus labour or staff in a continuing or running industry.
This decision, therefore, laid down that “retrenchment” should be understood in the ordinary sense, that it is not every termination that can be retrenchment but the termination in order to be retrenchment should be of surplus labour or staff and in an industry which is continuing and not closed or transferred. So far as the cases of closure and transfer are concerned, subsequent legislation have provided for compensation subject to certain conditions, factors and circumstances. A Full Bench of the Bombay High Court in National Garage v. Gonsalves (1962) I.L.L.J. 56 F.B.) considered the question whether termination of service simpliciter amounted to retrenchment attracting Section 25-F and answered it in the negative. The Full Bench followed the interpretation placed by the Supreme Court on Section 2(00), which I have referred to. In Desikachari, P.S. and Ors. v. The ” Mail ” (1962) I M.L.J. 385 : (1961) 2 L.L.J. 771 the scope of Section 2(00) was raised but was expressly left undecided, though the learned Judges noticed the argument of the learned Advocate-General that the decision of the Supreme Court in Hariprasad v. A.D. Divelkar (1957) S.C.J. 83 : 1957 S.C.R. 121 : A.I.R. 1957 S.C. 121 should be confined to the case of discharged workers where the industry itself had ceased to exist by closure. It is no doubt true that the Supreme Court was concerned with employees who had been discharged consequent upon a closure of the industry. But it has to be noticed that the Supreme Court was concerned with the precise scope and ambit of “retrenchment” as defined in Section 2(00), The Supreme Court ruled what its scope was, how it should be ordinarily understood, and how the definition so understood would not cover cases of discharge consequent upon closure or transfer of an industry. It seems to me that the ambit of the section was, therefore, clearly delimited by the Supreme Court in that decision.
3. Sri K.V. Sankaran invites my attention to State of Bombay v. Hospital Mazdoor Sabha . The termination of the employment of the workmen concerned there was by the management of a running concern, namely, a group of hospitals known as ” J.J. Hospitals ” and the Bombay High Court was of the view that the termination was not invalidated by reason of non-compliance with the provisions of Section 25-F. On this question the Supreme Court agreed with the Bombay High Court. But it appears from the judgment of the Supreme Court itself that the termination of the services of the workmen was conceded to be a retrenchment. In fact the Supreme Court said:
It is conceded that the services of respondents 2 and 3 have been retrenched….
The question whether the termination in that case of the services of the two workmen amounted to retrenchment within statutory definition of the word did not, therefore A.I.e and was not decided by the Supreme Court.
4. I hold that the Labour Court misdirected itself in assuming that it automatically followed from its finding that the services of the workmen had been terminated, they were retrenched from service. The common order of the Labour Court is quashed and the petitions are allowed. But it is made clear that the finding of the Labour Court that the services were terminated would remain and the applications will be disposed of upon a consideration as to whether the termination, in the circumstances, amounted to retrenchment. No costs.