Hindustan Steel Ltd. v. The Presiding Officer, Labour Court, Orissa and Ors.

A 586 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._ ## c D E F 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 services. 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 : (1) that the respondents were retrenched without complying with the provisions of section 25F of the Industrial Disputes Act and, therefore, retrenchment was contrary to law. (2) The termination was as a result of unfair labour practice adopted by the appellant employer and was not bonafide. ( 3) It Wllll not proved that the respondents bad alternative employment after they were released from service. The appellant challenged the award by filing a Writ Petition in the Oriss;i High Court and contended : ( 1) That the services of thL respondents came to an end by efflux of time and that it was not .a case of retrenchment. #### • (2) (3) That it was for the workmen to prove that they had tried to minimise their losses by obtaining employment elsewhere. The Labour Court erred in awarding full back wages to the respondenl8 without satisfyini himself that they bad been unemployed. 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] A ..... 2. _Hari Prasad Shuk/a's_ case does not run counter to the decision in the B case of _State_ _Bank_ _of_ _India._ In that case what this Court held was that the termination of service on account of the cessation of the industry itself and in a bonafide closure or discontinuance of his business by the employer does not amount to retrenchment. f590B-El _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; ex- C " plained. 3. In the Writ Petition filed by the appellant in the High Court the finding that the respondents had no alternative employment was not challenged. The question of mitigation of loss was not raised before the Labour Court. The High Court, therefore, rightly refrained from exercising its ·discretionary jurisdiction in favour of _the_ employer. [590 G-H, 591A-B] D E F H ### •• CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1580 of 1970. 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. _Chatter-_ _jee_ and _D._ _P._ _Mukherjee;_ for the Appellant. _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. The Judgment of the Court was delivered by 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 A B #### c D E F G H 588 SUPREME COURT REPORTS [1977] I S.C.R. 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 Presiding 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 : (i) the three respondents had been retrenched from employment, and the requirements of section 25F of the Industrial Disputes Act not having been satisfied, the retrenchment was contrary to law; (ii) in terminating the services of these employees the management had adopted unfair labour practice and the action of the employer was not bonafide; and that (iii) it had not been proved that they had any alternative employment after they were released from service. The appellant challenged the award by filing a writ petition in the 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 the writ petition. In this appeal by special leave the appellant questions the correctness of the decision of the High Court. 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 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 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. ,... '" ' # ;.. ..: ' t 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 ea~li~r 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 punish~ent inflicted by away of disdplinary action, but does not rnclude ( a) voluntary retirement of the workman; or A B ## c (b) [retirement of the workman ] [on ] [reaching the age of ] superannuation if the contract of employment between the employer and the workman concerned con tains a stipulation in that behalf; or ( c) termination of the service of a workman on the ground of continued ill-health;" D 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 provi~ion." 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". (1) [1957] S.C.R. 121. E F G H 590 **SUPREME COURT REPORTS** [1977] 1 s.c.R. 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) . ·~ ' **.lo** /' # ' • F G . 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 employment. 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. The appeal fails and is dismissed with costs. **A** B **P.H.P.** _Appeal_ _dismissed._ C » I