Head Time Keepers whose fixed-term contracts expired without renewal were held retrenched under s.2(oo) and reinstated with full back wages by the Labour Court; High Court upheld the award. The Supreme Court dismissed the appeal, holding termination by efflux of time is retrenchment under s.2(oo) read with the proviso to s.25F(a).
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
586
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A
HINDUSTAN STEEL LTD.
v.
THE PRESIDING OFFICER, LABOUR COURT, ORISSA AND ORS.
September 15, 1976
8 [Y. V. CHANDRACHUD, P. K. GOSWAMI AND A. C. GUPTA, JJ.]
Industrial Dispute~ A.ct 1947-Sec. 2(00)-Mea11i111 of rtfrtnchmtllt--Ctm l•rmination of urvice by efflux of time covered by th~ ex,reMion r•trenchment.
The respondenta were employed as Head Time Keepers for a period of 3 yea.re. Pursuant to an alleged policy to streamline the organisation and to affect economies wherever possible, the appellant chose not to renevr the contracts of service of the Head Time Keepers. There was no order terminating their serc vices. According to the appellant the termination was auto:natic on the expiry of the contractual period of service. The respondents raised an industrial dispute which was referred by the Government of Orissa to the Labour Court. The Labour Court vacated the orders of tern1ination and held that they were entitled to reinstatement with continuity of service and full back wages. The Labour Court came to the conclusion :
D
The appellant challenged the award by filing a Writ Petition in the Oriss;i E High Court and contended :
The Hiih Court over-ruled the above contentions and dismissed the Writ Petition.
Jn an appeal by Special Leave the appellant contendCd: (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 ecction 2(oo) of G 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 o~ India .V: N. Sundara Mo11ey b~t that the said decision was contrary to an earlier dec1s1011 of a lar:er Bench m the case of Hari Prasad Shiv Shankar Shukla.
DismissinJ the appeal,
H HELD : 1. Section 2( oo) which defines retrenchment m,akct it clear that the· retrenchment means the termination by the employer of service of a :workm:in for a11y reasons whataoever. Under s. 25F(a) no workman who ha.s been m contmuous
HINDUSTAN STEEL v. P.O. LABOUR COURT (Gupta, J.) 587
"
service for not less than one year under an employer C<Ln 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(oo) was intended not to include termination . of service by efllux of time in terms of an !greement between the parties. [589B-H, 590A]
State Bank of India v. N. Sundara' Money; 1976(3) SCR and Pipraich Sui;w· Mills ltd. v. Pipraich Sug11r Mills Mazdoor Union [1956] S.C.R. 872; followed. Hariprasad ,\Nvshankar Shukla v. A. D. Dirikar, [195-i] S.C.R. 121; explained.
A
B
C
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1580 of 1970.
D
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.
E
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.
F
The Judgment of the Court was delivered by
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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 respondents 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 ecoqomies wherever possible'', the ·appellant chose not to renew the contracts of service of' the H!)ad Time Keepers who were eight in number including these three respondents. There was no order terminating their services; 6-l234SCT/76
H
588
[1977] I S.C.R.
SUPREME COURT REPORTS
• ;..
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A according to the appellant the termination was automatic on the expiry of the contractual period of service. The aforesaid 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 PresidB ing 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 servic~" and also to "full wages for the period between the date of their release from service ;md the date or dates of tl1cir reinstatement". The award is based on the following findings :
c
D
,...
..:
The appellant challenged the award by filing a writ petition in the E Orissa High Court. It was contended before the High Court that the services of thes~ 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 retrenchment. 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 F the writ petition. In this appeal by special leave the appellant questions the correctness of the decision of the High Court.
' t
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 G 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 teli!Ilination of service did not fall within the definition of retrenchment in section 2 ( oo) of the In du stria 1 Disputes Act. The Solicitor General appearing for the appellant frankly H conceded that this appeal was covered by a recent decision of this Court, State Bank of India v. N. Sundara Money,(') and the decision
(l) 1976(3) S. C. R.
HINDUSTAN STEE!~ 11. P.O. LABOUR COURT (Gupta, J.) 589
•
was against the contention of the appellant. He however submitt_cd that this decisiolll. which was rendered by a Bench of three Judges was in apparent confli.ct with an ealir dedsion .of this Court, Hariprasad Slzivshankar Shukla v. A. D. D1v1kar,( 1) which was by a ~arger. Bench and that Sundara Money's case therefore required recons1derat1on.
Retrenchment has, been defined in section 2(oo) of the Industrial Pisputes Act 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 punishent inflicted by away of disdplinary action, but does not rnclude( a) voluntary retirement of the workman; or (b)retirement of the workmanonreaching 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 Indi<:1 v. N. Sundara Money, '(supra) this Court held : " 'Termination. . for any reason whatsoever' arc the key .words. Whatever the reason, every terri:iination spells retrenchn;ient. 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 proviion." A preemptive provision to terminate is struck by the same vice as the post-appoi!Jtmcnt 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 lias 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 !lgreement which specifies a date for the termination of service".
A
B
c
D
E
F
G
H
(1) [1957] S.C.R. 121.
[1977] 1 s.c.R.
SUPREME COURT REPORTS
·~
590
• ' .lo /'•
Clearly, the proviso would have been quite unncessary if retrenchment as defined in section 2(oo) was intended not to include termination of · service by efflux of time in terms of an agreement b.etween 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 contrary to the provisions of section 25F. · · · · '
ll In Hariprasad · Shivshankar Shukla v. A. D. Divikar, (supra) to· which the Solicitor General referred, one of the questions that arose for decision was whether the definition of retrenchment in section 2 ( oo) goes "so far beyond the accepted 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 closUie or discontinuance of his business by the employer ?" The question was answered in the c negative on the authority of an even earlier case, Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor Union,(') which held that "retrenchment connotes in its ordinary acceptation that tile business itself is being continued but that a portion of the sta!f or the lol:>cl!r force is discharged as surplusage and the termination c•f services of all the workmen '1S a result of the closure of the business· cannot therefore be properly described as retrenchment". Following Pipraich Sugar U · 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 inclirde a bonafide closure of the whole lmsi. ncss because "it would be against the entire scheme of the Act to give the definition clause relating to retrenchment such a meaning as would includ<!iwithin the definition termination of service of all workmen by the employer when the business itself ceases to exist". On the facts E of the case before us, giving full effect to the words ''for any reason whatsoever" would be consistent with the scope and purpos~ 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 Stat~ Bank of India 'v. N. Surulara Money (supra) .
F . 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. satisfying 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 emG ployment. In the writ petition filed by the appellant in the High Court, . the finding.that the respondents 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 respon-. · dents was confined to the ground. that the respondents had not proved ·that they had tried to mitigate their lcisses during the period of unem. 'ployment. ' In the special leave petition also what has been· urged ·is .. H · that· the High Court should have held. thaf the ·respondents were not ·'entitled to full back wages •··. ' ... . u.nless· they . succe~ded - .. in proving, that they ,, .
'
•
(I) [1956) S.C.R. 872.
'
HINDUSTAN STEEL v. P.O. LABOUR COURT (Gupta, J.)
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.
A
B
The appeal fails and is dismissed with costs.
P.H.P.
Appeal dismissed. C
» I
3 issues framed by the court
Does termination of service by efflux of the contractual term fall within the definition of retrenchment under section 2(oo) of the Industrial Disputes Act?
Was Hariprasad Shivshankar Shukla inconsistent with State Bank of India v. N. Sundara Money on retrenchment?
Was the award of full back wages justified without proof of mitigation efforts by the workmen?
Colour shows how this judgement treated each authority
State Bank of India v. N. Sundara MoneyFollowed
1976(3) SCR · Who else cites this
Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor UnionRelied on
[1956] S.C.R. 872 · Who else cites this
Hariprasad Shivshankar Shukla v. A. D. DivikarExplained
[1957] S.C.R. 121 · Who else cites this
3 provisions across 1 enactments
Hindustan Steel Ltd.
The Presiding Officer, Labour Court, Orissa
Respondents Nos. 3, 4 and 5 (Head Time Keepers)
Rourkela Mazdoor Sabha
Y. V. Chandrachud
P. K. Goswami
A. C. Gupta
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
