# HINDUSTAN STEEL LTD v. THE PRESIDING OFFICER, LABOUR COURT, ORISSA AND ORS

- **Citation:** [1977] 1 S.C.R. 586
- **Court:** Supreme Court of India
- **Decided:** 1976-09-15
- **Case number:** Civil Appeal No. 1580 of 1970
- **Bench:** Y. V. Chandrachud, P. K. Goswami, A. C. Gupta
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/hindustan-steel-ltd-v-the-presiding-officer-labour-court-orissa-and-ors-6959
- **Pages:** 6

## Headnote

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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 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.
H
(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,
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
•
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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;
exC
"
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 mitigati

## Text

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.]
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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 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.
H
(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,
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;
exC
"
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]
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. Chatterjee 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
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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.
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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
(b) 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
A
B
c
( 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.
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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.
·
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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) .
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. 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
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(I) [1956) S.C.R. 872.
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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