GAMON INDIA LIMITED v. NIRANJAN DASS

Citation: [1984] 1 S.C.R. 959

Court: Supreme Court of India

Bench: D.A. DESAI, R.B. MISRA, RANGANATH MISRA

Case summary

Judgment text

• · GAMON INDIA LIMITED v. NIRANJAN DASS December 5, 1983. . · [0. A. DESAI, R. B. MISRA AND RANGANATH MISRA, JJ,J Industrial Disputes Act 1947, Section 2 (oo) retrenchmetJt-What is- Services terminated on account ofrecession in work':'"·Termiliation whether O! flOUnts to retrenchment. The respondent was employed by the appellant! Company as a Senior Clerk till he received a notice terminating his services. The notice stated that on account of reduction in volume of the business of the Company as a result of recession, his serviceS were being terminated. On a reference by the Government, whether_ the retrenchment of the respondent was unjuStified or illegal the Industrial Tribunal held that since the conditions for a villid retrenchment have not been complied with, the respon· dent continued to be in service.

·Jn a petition undei Acticle 226, a Single Judge held that since the termination OT the services was consequent upon the closure of the Delhi office, the case would be governed by Section 25 FFF of the Industrial Disputes Act 1947 which does not prescribe payment of co1npensation as a cOndition precedent to a valid termination of service by way of retrenchment. In the Letters Patent Appeal, the Division Bench set aside the judgment of the SingJc Judge on the ground that the reference to the Industriat Tribunal was to consider whether the retrenchment was illegal or unjustified and there- . ·fore it was not open to the Single Judge to come to the conclusion that the case waS one of closure governed by Section 25 FFF. The Division Bench therefore restored the Tribunal's award. Dismissing the Appeal of the Company, · HELD: 1. The award of the Tribunal was correct and unassailable.

The respondent had become surplus on account of reduction in volume of work and that constitutes retrenchment·even in the traditional sense of the term [963 HJ Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor Union, [1956) SCR 172; State Bank ofIndia v. N. Sundara Money, [1976] 3 SCR 160; Hindustan Steel Ltd. v. The Presiding Officer, Labour Court. Orjssa and others, [1977] 1 SCR S86; Santosh Gupta v. State Bank ofPatiala, (1980] 3 SCR 340; Delhi Cloth and Genrol Mills Ltd. v. Shambu Nath Mukerjee, [1978] l SCR 591; Mohah. Lal v. Manaffement ofM/s Bharat Electronict Ltd. [1981] 3 SCR 518; L. Robert D'suoza . ·~ v. The Executive Engineer, Southirn Railway & Anr. [1982] 3 SCR 251, referred ' • t. o. 2. Tho pre-requisite for a_ valid retrenchm. ent as laid down in Section '25 F has not been complied with, and therefore the retr"nchmeot bringing about termination. of service ia ab ~nitio :void.

[964 E] in the instant _case, the n·otice fecites that as a result of the recession in the volum_e of the work of the company, the services of the respondent would not be required by tho company after October 14, 1967 and that this notice contemplated by section 25F ca). Not even on~ word is Stated in the notice that the_ office·to which the reS:pondent was attached was -in the process of being closed down, so his seri he Industrial . Disputes Act. Approaching the matter from this angle, the Divison Bench set aside the decision of the learned Single Judge and . restored the award made by the Industrial, Tribunal. Hence this appeal by the company by special leave. • The Industrial Tribunal held that respondent was retrenched from service by the appellant and the pre-conditions for a va(id retrenchment were not complied with and therefore the respondent was entitled to a· declaration that he contines ro· be in service with all the benefits flowing from the said declaration.

· A· learned Single Judge of the High Court interfered with this award ~olding that the appellant-company had closed its Delhi· office and therefore the termination of service was consequent upon the closure and even if it constitutes retrenchment, the case would be governed by Sec. ;! SFFF whfoh does not prescribe payment of compensation as a •· GAMMON INDlA LTD. v. NIRANJAN DASS (Desai, J. ) . 9~3 condition-precedent to a valid termination of service by way of 't . teterncbment. In the Letters Patent Appeal at the inst. ance of the respond~nt, the Division Bench set aside tlie judgment of the . learned i Single Judge holding that it was not open to the learned Single Judge to bold that it was a case of closure covered by Sec. 25FFF because it was implicit in the reference that the . case was one of retrenchment and the only question with the Industrial Tribunal was called upon to.. deci. de. was whether the retrenchment was unjustified ;.. · or illegal.

It is not necessary to examine the view expressed·. by the ·Divison Bench of tlie High Court whether the assumption underlying ·an order of reference is unquestionable at the hearing of the reference. The question, however, is wheth~r the learned Single Judge, who . interfered with the award of the Tribunal was justified in coming to the conclusion that the case was one of closure covered by Sec. 25FFF or the Industrial Tribunal was right in holding that ·it i~ a case of retrenchment covered by Sec. 25F of Industrial ~ I ·Disputes Act. This point can be answered by mere refrrence to the notice ser~ed by the appe! lant·company on the respondent intimating to him that his services will no more be required effective from October 14, 1967. The. notice as a whole ltas been extracted hereinbefore.

The notice recites that as a result of recession in the volume ofwork oi'the company, services of the respondent would nO" more be required by the company after October 14, 1967 and this notice n\ay be treated as a statutory notice as contemplated by Sec. 25F(a). There is not even a whisper in the notice that as the Delhi office is being closed down, the services of the respondent would not be required. An attempt was made while. leading evidence before. the Industrial Tribunal to show that the Zonal office at Delhi was closed on January 31, 1968 whil. e the Central Zone' office was closed somewhere in October, 1967. If by September, 1967, the appellantcompany had resolved to close the office at Delhi to which the respondent was attached, it is unthinkable that ·that aspect would noi be recited in the notice. The necessity for termination of service of the respondent recited in the notice was recession in the work handled by the company.

'Not even one word is stated in the notice that the office to which the respondent was attached was in the process of being closed down, so his services would no more be required. On a true construction of the notice, it would appear that the respondent . had become surplus on account of reduction in volume of work and that constitutes retrenchment even in the traditional sense of the term as interpreted in Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor Union(') though that view does not'hold the field. in view · of the recent decisions of this Court in State ·Bank of India v. N. Sundara Money(') Hindustan Steel Ltd. · v. The Presiding Officer, Labour Co1,1rt, Orissa and Others;(') Santosh Gupta v. State Bank of Pat/a/a;(') Delhi Cloth and General Mills Ltd. v. Shambu Nath • 5 Mukerjee;( ) Mohan Lal v. 'Management of M/s Bharat Electronics Ltd(') and L. Robert D'souza ·v. The Executive Engineer, Southern· 1 Railway & Anr.

( ) The recitals and averments in the notice leave no• room for doubt that the service of . the respondent was terminated for the reason that on account of . recession and reduction in the volume of work of the company, respondent has become surplus. Even apart from this, the termination of service 'for the reasons mentioned in the notice is not covered by any of the clauses (a), (b) and (c) of Sec. 2(oo) which defines retrenchment and it' is by now well-settled that where the termination of service does not fall within any of the excluded categories, the termination would be ipso facto reternchment. It was not even. attempted to be urged that the case of the respondent would fall in any of the excluded categories. It is there indisputably a case of retrenchment. It is not disputed that the pre-requisite for a valid retrenchment as laid down in Sec. 25F has not been complied with and therefore the. retrenchmenLbringing about termination of service is a/1 initio '· void.

Viewed from this angle, the award of the Industrial Tribunal was· correct and unassialable and the learned Single Judge was in errodn interfering with the same. ' Undoubtedly, the Division Bench of the High Court has set aside the order of the learned Single Judge and restored the award for reasons ·of its own. However, for the reasons herein indicated, the decision of the Division Bench in Letters. Patent Appeal No. 25 of 1970 is. upheld and ·confirmed and this appeal must therefore fail and accordingly it is dismissed. · ' In the course of hearing of this appeal, it was stated that the respondent has reached the age of superannuation therefore physical re-instatement in service is. not possible. . Appellant will have to (lY [19561 SCR I72 . (2) {1976] 3 SCR 160 (3) [1977] 1 SCR 586 ·e (4) [1980] 3 SCR·340 (5) 1197811 SCR 591 • (6) (1981] 3 SCR, 518 (7) . [1982) 3 SCR 251 dAMMON INDIA tTo. f, NiRANJAN DASS (Desai, /. ) 96~ .

establish that fact but in the event, the appellant shows that under valid rule, respondent. ,has reached the stage of superannuation and therefore physical re•instatement is not possible, it is hereby declared that the respondent shall continue to )le in service un·interruptedly from the date of the attempted termination of seruice till the date of sup~rannuation. - Resp~ndent won. Id be entitled to all back wages including the benefit o~ revised wages or salaiy if during the period there is revision of p_ay'scales with yearly focrement, revised dearness allowance or variable dearness allowance and. all terminal b"enefits if . he . has reached the age . of superannuation such as Provident Fund, Gratuity etc. Back wages should be calculated as. if the respondent . · continued in service uninterrupted_ He is also entitled to "leave encashment and bonus if other workmen-in the same category were paid the same. It appears that the respondent h.

as been unlawfully kept out o[ service, therefore it is but just that the appellant-company shall pay all the ·arrears as calculated according to the directions here· in given with 12% interest from the date the amount became due and ~ payable till realisation. Appellant shall also pay costs - to the i respondent quantified at Rs. 5,000. · The appellant is directed to ·pay ! the amount as herein directed to be paid within 3 months. from today. '. ' Mr: Jitendra Sharma, learned counsel for the respondent stated that the costs awarded to the respondent be paid to the legal Aid Cell set up by Indian Association of Lawyers in colloboration ·with Woinens' Council. · Order accordingly. ·Ns. K. Appeal dismused. ' • •