# MOHAN LAL v. MANAGEMENT OF M/S BHARAT ELECTRONICS LTD

- **Citation:** [1981] 3 S.C.R. 518
- **Court:** Supreme Court of India
- **Decided:** 1981-04-21
- **Case number:** Civil Appeal No. 364 of 1981
- **Bench:** A. C. Gupta, D.A. Desai
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/mohan-lal-v-management-of-m-s-bharat-electronics-ltd-8081
- **Pages:** 18

## Headnote

Retrenchment-Section 2(oo) of the Industrial Dispute Act-Whether termination of the services of a workman who has put in 240 working days within a period
of one year amounts ro retrenchment and whether for non-compliance with the provisions of section 25F the termination of service is ab initio void-Sections 25A and
25B, scope of-Effect of terminqtion of service which is ab initio void and inoperative, explained.
The appellant was employed with the respondent as Salesman at its Delhi
Sales Depot on a salary of Rs. 520/- per month from 8th December, J 973. His
service was abruptly terminated by letter dated 12th October, 1974 with effect
from 19th October, 1974.· Consequent upon his termination, an industrial dispute was raised and referred to the Labour Court, Delhi, on 24th April, 1976.
The Labour Court, on evaluation of evidence both oral and documentary, held
that the termination of the service was in accordance with the standing orders
justifying the removal of the employee on unsuccessful probation during the initial or extended period of probation and, therefore, .the termination would not
constitute retrenchment within the meaning of section 2(oo) read with section 25 F
of the Industrial Dispute Act. The Labour Court accordingly held that the termination was neither illegal nor improper nor unjustified and the claim of the
appellant was negatived. Hence the appeal by special leave.
Allowing the appeal, the Court
HELD : 1. The termination of service of the appellant was ab initio void
and inoperative. His case not being covered by any of the excepted or excluded
categories referred to under section 2(oo) and he has rendered continuous service
for one year, the termination of his service would constitute retrenchment. The
pre-condition for a valid retrenchment has not been satisfied in this case and
therefore he will be entitled to all benefits including back wages etc.
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(534F G, 535-C-D)
2. Where the termination is illegal especially where th~re is an ineffective
order of retrenchment, there is neither termination nor cessation of service and a
declaration follows that the workmen concerned continues to be in service with
all consequential benefits. It is no doubt true that the Supreme Court had held
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that before granting reinstatement the court must weigh all the facts and exercise
discretion properly whether to grant reinstatement or to award compesantion.
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MOHANLAL V. BHARAT ELECTRONICS
519
Here, no case has been made out for departure from the normally accepted
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approach of the courts in the field of social justice: (535A C)
Ruby General Insurance Co. Ltd. v. Chopra (P.P.), (1970) 2 Labour Law
Journal, 63 and Hindustan Steel Ltd., Rourke/av. A.K. Roy and Others, [1970] 3
S.C.R. 343, referred to.
3:1.
Niceties and semantics apart, termination by the employer of the
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service of a workman for any reason whatsoever in section 2(oo) of the Industrial
Dispute Act, would constitute retrenchment except in cases excepted in the section itself. The excepted or excluded cases are where termination is by way of
punishment inflicted by way of disciplinary action, voluntary retirement of the
workman, retirement of the workman on reaching the age of superannuation if
the contract of employment betw~en the employer and the workman concerned
contains a stipulation in that behalf, and termination of the service of a workman
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on the ground of continued illhealth. (524 E-F)
3:2. It was not open to the Labour Court to record a finding that the
service of the appellant was terminated during the period of probation on account
of his unsatisfactory work which did not improve in spite of repeated warnings
when there was not even a whisper of any period of probation in the appointment
order or in the rules. The termination of service being, for a reason other than
the excepted category, it would indisputably be retrenchment within .the meaning
of section 2(oo) of the Industrial Dispute Act. (523 G-H, 524A, 525Z)
Pipraich Sugar Mills Lt

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518
MOHAN LAL
v.
MANAGEMENT OF
M/S BHARAT ELECTRONICS LTD.
April 21, 1981
[ A. C. GUPTA AND D.A. DESAI, JJ. ]
Retrenchment-Section 2(oo) of the Industrial Dispute Act-Whether termination of the services of a workman who has put in 240 working days within a period
of one year amounts ro retrenchment and whether for non-compliance with the provisions of section 25F the termination of service is ab initio void-Sections 25A and
25B, scope of-Effect of terminqtion of service which is ab initio void and inoperative, explained.
The appellant was employed with the respondent as Salesman at its Delhi
Sales Depot on a salary of Rs. 520/- per month from 8th December, J 973. His
service was abruptly terminated by letter dated 12th October, 1974 with effect
from 19th October, 1974.· Consequent upon his termination, an industrial dispute was raised and referred to the Labour Court, Delhi, on 24th April, 1976.
The Labour Court, on evaluation of evidence both oral and documentary, held
that the termination of the service was in accordance with the standing orders
justifying the removal of the employee on unsuccessful probation during the initial or extended period of probation and, therefore, .the termination would not
constitute retrenchment within the meaning of section 2(oo) read with section 25 F
of the Industrial Dispute Act. The Labour Court accordingly held that the termination was neither illegal nor improper nor unjustified and the claim of the
appellant was negatived. Hence the appeal by special leave.
Allowing the appeal, the Court
HELD : 1. The termination of service of the appellant was ab initio void
and inoperative. His case not being covered by any of the excepted or excluded
categories referred to under section 2(oo) and he has rendered continuous service
for one year, the termination of his service would constitute retrenchment. The
pre-condition for a valid retrenchment has not been satisfied in this case and
therefore he will be entitled to all benefits including back wages etc.
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(534F G, 535-C-D)
2. Where the termination is illegal especially where th~re is an ineffective
order of retrenchment, there is neither termination nor cessation of service and a
declaration follows that the workmen concerned continues to be in service with
all consequential benefits. It is no doubt true that the Supreme Court had held
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that before granting reinstatement the court must weigh all the facts and exercise
discretion properly whether to grant reinstatement or to award compesantion.
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MOHANLAL V. BHARAT ELECTRONICS
519
Here, no case has been made out for departure from the normally accepted
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approach of the courts in the field of social justice: (535A C)
Ruby General Insurance Co. Ltd. v. Chopra (P.P.), (1970) 2 Labour Law
Journal, 63 and Hindustan Steel Ltd., Rourke/av. A.K. Roy and Others, [1970] 3
S.C.R. 343, referred to.
3:1.
Niceties and semantics apart, termination by the employer of the
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service of a workman for any reason whatsoever in section 2(oo) of the Industrial
Dispute Act, would constitute retrenchment except in cases excepted in the section itself. The excepted or excluded cases are where termination is by way of
punishment inflicted by way of disciplinary action, voluntary retirement of the
workman, retirement of the workman on reaching the age of superannuation if
the contract of employment betw~en the employer and the workman concerned
contains a stipulation in that behalf, and termination of the service of a workman
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on the ground of continued illhealth. (524 E-F)
3:2. It was not open to the Labour Court to record a finding that the
service of the appellant was terminated during the period of probation on account
of his unsatisfactory work which did not improve in spite of repeated warnings
when there was not even a whisper of any period of probation in the appointment
order or in the rules. The termination of service being, for a reason other than
the excepted category, it would indisputably be retrenchment within .the meaning
of section 2(oo) of the Industrial Dispute Act. (523 G-H, 524A, 525Z)
Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor Union, [1956]
S.C.R. 172; Hariprasad Shivshankar :Jhukla v, A. D. Divikar, [1957] S.C.R. 121;
State of Bombay and Ors. v. The Hospital Mazdoor Sabha and Ors. [1960] 2
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S.C.R. 866 at 872; State Bank of India v. N. Sundara Money, [1976] 3 S.C.R.
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160; Hindustan Steet Ltd. v. The Presiding Officer, Labour Court, Orissa and
Ors., [ 1977] S.C.R. 586; Santosh Gupta v. State Bank of Patiala, [ 1980] 3 S.C.R.
340 and Delhi Cloth and General Mills Ltd. v. Shambhu Nath Mukerjee, [1978] 1
S.C.R. 591, explained and followed.
4. Before a workman can complain of retrenchment being not in consonance with section 25F of the Industrial Dispute Act, he has to show that he
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has been in continuous service for not less than one year under that employer
who has retrenched him from service. (529 C)
5:1. The language employed in sub-sections (I) and (2) of section 25B does
not admit of any dichotomy, namely, (a) sub-section (1) providing for uninterrupted service and (b) sub-section (2) comprehending a case where the workman is
in continuous service.
Sub-sections (I) and (2) introduce a deeming fiction as to
in what circumstances a workman could be said to be in continuous service for
the purposes of Chapter V-A. (530 G H)
·
5:2.
Sub-section (1) provides deetning fiction in that where a workman
is in service for a certain period for that period even if service is interrupted on
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account of sickness or authorised leave or an accident
or a strike which is not
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illegal or a lockout or a cessation of work which is not due to any fault on the
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part of the workman. Sub-section (I) mandates that interruptions therein indicated are to be ignored meaning thereby that on account of such cessation an
interrupted service shall be deemed to be uninterrupted and such uninterrupted
service shall for the purposes of Chapter V-A be deemed to be continuous
service. (530H, 531A, C-D)
5:3. Sub-section (2) incorporates another deeming fiction for an entirely
different situation. It is not necessary for the purposes of sub-section (2) (a) that
the workman should be in service for a period of one year. If he is in service
for a period of one year and that if that service is continuous service within the
meaning of sub-section (1) his case would be governed by sub-section (1) and his
case need not be covered by sub-section (2). Sub-section (2) envisages a situation
not governed by sub-section (1). And sub-section (2) provides for a fiction to treat
a workman in continuous service for a period of one year despite the fact that he
has not rendered uninterrupted service for a period of one year but he has rendered
service for a period of 240 days during the period of 12 calendar months counting
backwards and just proceeding the relevant date beini: date of retrenchment.
.
(531D-E. 532A-B)
Both on principle and on precedent section 25B(2) comprehends the
situation where workman is not in employment for a period of 12 calendar·
months but has rendered service for a period of 240 days within the period of 12
calendar months commencing and counting backwards from the relevant date
that is the date of retrenchment, if he has, he would be deemed to be in continuous service for a period of one year for the purpose of section 25B and Chapter
V-A. ·In the instant case, the appellant's case indisputably falls within section
25 B(2) (a) and he shall be deemed to be in continuous service for a period of one
year for the purpose of Chapter V-A. (534B-D)
Sur Enamel and Stamping Works ( P) Ltd. v. Their Workmen, [1964] 3
S.C.R. 616. explained and distinguished.
Surendra Kumar and Ors. v. Central Government Industrial-cum Labour
Court, New Delhi and Another, [1981] l S.C.R. 789 followed.
CivIL APPELLATE JURISDICTION : Civil Appeal No. 364 of
1981.
Appeal by special leave from the Award dated the 31st May,
J 980 of the Additional Labour Court, Delhi in Industrial l.D. No.
62 of 1976.
V. M. Tarku11de, Hemani Sharma and P. H. Parekh for the
Appellant.
S. Markendaya for the Respondent.
The Judgment of the Court was delivered by
DESAI, J.
The appellant Mohan Lal was employed with the
respondent M/s .Bharat Electronics Limited as Salesman at its Delhi
MOHANLAL v. BHARAT ELECTRONICS (Desai, J.)
521
Sales Depot on a salary of Rs. 520 per month from 8th December,
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1973.
His service was abruptly terminated by letter dated 12th
October 1974 with effect from 19th October, 1974. Consequent upon
this termination, an industrial dispute was raised and the Delhi
Administration, by its order dated 24th April, 1976 referred the
following dispute to the Labour Court, Delhi for adjudication :
"Whether the terminaticn of services of Shri Mohan Lal
is illegal and/or unjustified and if so, to what relief is he
entitled and what directions are necessary in this respect?"
'
As the respondent management at one stage failed to participate in the proceedings, the ·reference was heard ex-parte and the
Labour Court made an award on 2nd May, 1977 directing re-instatement of the appellant with continuity of service and full back wages
at the rate of Rs. 520 per month from the date of termination till
re-instatement. Subsequently, respondent moved for setting aside the
ex-parte award and seeking permission to participate in the proceedings, which motion was granted. The respondent inter alia contended
that the appellant was a salesman appointed on probation for six
months and subsequently on the expiry of the initial period, the
period of probation was extended upto 8th Sept., 1974 and on the
expiry of this extended period of probation, his service was terminated
by letter dated 12th October, 1974, as he was not found suitable
for the post to which he was appointed.
The Labour Court, on evaluation of evidence both oral and
documentary, held that the termination of the service was in accordance with the standing orders justifying the removal of the employee on unsuccessful probation during the initial or extended
period of probation; and therefore the termination in this case,
according to the Labour Court, would not constitute retrenchment
within the meaning of section 2( oo) read with section 25F of the
Industrial Dispute Act.
Accordingly it was held that the termination was neither illegal nor improperno r unjustified and the claim
of the appellant was negatived.
Hence, this appeal by special leave.
The only point for determination is whether even in the circumstances, as pleaded by the respondent termination of service of
the appellant would amount to retrenchment within the meaning of
the expression as defined in section 2(oo) of the Industrial Dispute
Act, 1947 ('Act' for short) ? If the answer is in affirmative, the
consequential question will have to be answered whether in view of
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the admitted position that the mandatory pre-condition prescribed
by section 25F for a valid retrenchment having not been satisfied, the
appellant would be entitled to re-instatement with' back wages or as
contended by Mr. Markandey in the special facts of this case, the
Court should not direct re-instatement but award compensation in
lieu of re-instatement.
An apparent contradiction which stares in the eye on the
stand taken by the respondent is overlooked by ·the Labour Court
which has resulted in the' miscarriage of justice.
In this context the
facts as alleged by the respondent may be taken as true.
Says the
respondent, that the appellant was appointed by order dated July 21,
1973.
The relevant portion of 1 he order of which notice may be
taken is paragraph 2.
It reads as under :
"This appointment will be temporary in the first instance but is likely to be made permanent."
Paragraph 4 refers to the consequences of a temorary appointment,
namely, that the service would be terminable without notice and
without any compensation in lieu of notice on either side. Paragraph
6 provides that the employment of the appellant shall be governed
by rules, regulations and standing orders of the company then in
force and which may be amended, altered or extended from time to
time and the acceptance of the offer carries with it the necessary
agreement to obey all such rules, regulations and standing orders.
There is not even a whisper of any period of probation prescribed
for the appointment nor any suggestion that there are some rules
which govern appointment of the appellant which would initially be
on probation.
Thus, the appointment was temporary in the first
instance and there was an in!ler indication that it was likely to be
made permanent.
Even if this promise of likely to be made permanent is ignored, indubitably the appointment was temporary.
The
respondent, however, says that note 3 at the foot of the appointment
order intimates to the appellant that in the event of his permanent
appointment the temporary service put in by him will be counted as
part of probationary period of service as required under the rules.
This consequence would follow in the event of permanent appointment being offered and this is clear from the language employed in
note 3.
In this case no permanent appointment having been offered,
the consequence set out in note 3 could not have emerged. Assuming,
however, that this note incorporates all the necessary rules and
regulations in the contract of employment, it was incumbent upon
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MOHANLAL v. BHARAT ELECTRONICS (Desai, J.)
523 .
the respondent to show that even when appointment is not shown
to be on probation in the order of appointment, in view of the rules
governing the contract of employment there shall always be a period
of probation for every appointee. Witness Bawdekar who appeared
on behalf of the respondent stated in his evidence that the appellant
was appointed as a probationary salesman.
Even according to him
prescribed period of probation was six months. He then stated that
by the letter dated July JO, 1974, respondent informed the appellant
that his service should have been terminated on the expiry of initial
period of probation, i.e. on June 8, 1974. However, as a special
case the probation period was extended upto September 8, 1974.
No rule was pointed out to us enabling the respondent to extend
the initial period of probation. Assuming even then that such was
the power of the respondent, on September 9, 1974, the period of
probation having not been further extended nor termination of
service having been ordered during or at the end of the probationary
period on the ground of unsuitability, the consequence in law is
that either he would be a temporary employee or a permanent employee as per the rules governing the contract of employment
between the appellant and the respondent.
Admittedly his service
was terminated by letter dated October 12, 1974, with effect from
October 19, 1974. It is not the case of the respondent that there
was any further extention of the probationary period.
Thus, if the
initial appointment which was described as temporary is treated on
probation, even according to the respondent the period of probation
was six months, it expired on June 8, 1974. Even if by the letter
dated July 10, 1974, the period of probation was said to have been
extended, on its own terms it expired on September 8, 1974.
The
service of the appellant was terminated with effect from October 19,
1974. What was the nature and character of service of the appellant
from September 8, 1974 when the extended period of probation
expired and termination of his service on October 19, 1974? He
was unquestionably not on probation. He was either temporary or
permanent but not a probationer. How is it open then to the
Labour Court to record a finding that the service of the appellant
was terminated during the period of probation on account of his
unsatisfactory work which did not improve in spite of repeated
warnings? The Labour Court concluded that notwithstanding the
fact that the appellant was not shown to have been placed on probation in the initial appointment letter but in view of the subsequent
orders there was a period of probation prescribed for the appellant
and that his service was terminated during the extended period of
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probation. This is gross error apparent on the face of the record
which, if not interfered with, would result in miscarriage of justice.
If on October 19, 1974, the appellant was not on probation
and assuming maximum in favour of the respondent that he was
a temporary employee, could termination of his service, even according to the respondent, not as and by way of punishment but a
discharge of a temporary servant, constitute retrenchment within the
meaning of section 2(00), is the core question.
Section 2(oo) reads
as under:
"2(oo) "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
(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
(c) termination of the service of a workman on the
ground of continued ill-health."
Niceties and semantics apart, ter~ination by the employer of
the service of a workman for any reason whatsoever would constitute
retrenchment except in cases excepted in the section itself. The
excepted or excluded cases are where termination is by way of
punishment inflicted by way of disciplinary action, voluntary retirement of the workman, 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, and termination of the service of a workman on the ground
of continued ill-health. It is not the case of the respondent that
termination in the instant case was a punishment inflicted by way of
disciplinary action. If such a position were adopted, the termination
would be ab initio void for violation of principle of natural justice
or for not following the procedure prescribed for imposing punishment. It is not even suggested that this was a case of voluntary
retirement or retirement on reaching the age of superannuation or
absence on account of continued ill-health. The case does not fall
under any of the excepted categories. There is thus termination of
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MOHANLAL v. BHARAT ELECTRONICS (Desai, J.)
525
service for a reason other than the excepted category. It would
indisputably be retrenchment within the meaning of the word as
defined in the Act. It is not necessary to dilate on the point nor to
refer to the earlier decisions of this Court in vit:w of the later two
pronouncements of this Court to both of which one of us was a
party. A passing reference to the earliest judgment which was the
sheet an ch cir till the later pronouncements may not be out of place.
In Hariprasad Shivshankar Shukla v. A. D. Divikar(1), after referring
to Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor Union("),
a Constitution Bench of this Court quoted with approval the following passage from the aforementioned case :
"But retrenchment connotes in its ordinary acceptation
that the business itself is being continued but that a portion
of the staff or the labour force is discharged as surplusage
and the termination of services of all the workmen as a
result of the closure of the business cannot therefore be
properly described as retrenchment."
This observation was made in the context of the closure of an undertaking and being conscious of this position, the question of the
correct interpretation of the definition of the expression 'retrenchment' in section 2(oo) of the Act was left open. Reverting to that
question, the view was reaffirmed but let it be remembered that the
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two appeals which were heard together in Shukla's case were cases
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of closure, one Barsi Light Railway Company Ltd., and another Shri
Dinesh Mills Ltd. Baroda With specific reference
to those cases,
in State Bank of India v.
N. Sundara Money,(3) Krishna Iyer J.
speaking for a three judges bench, interpreted the expression 'termination ...... for any reason whatsover' as under:
"A break-down of s. 2(oo) unmisrakably expands the
semantics of retrenchment. 'Termination ... for any reason
whatsoever' are the key words. Whatever the reason, every
termination spells retrenchment. So, the sole question is--
has the employee's service been terminated? Verbal apparel apart, the substance is decisive.
A termination takes
place where a term expires either by the active step of the
master of the running out of the stipulated term.
To pro-
(I) [1957] S.C.R. 121.
(2) [1956] S.C.R. 872.
(3) [1976] 3 S.C.R. 160
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tect the weak against the strong this policy of comprehensive definition has
been
effectuated. Termination embraces not merely the act of terminatiOn by the employer,
but the fact of termination howsoever produced.
May be,
the present may be a hard case, but we can visualise abuses
by employers, by suitable verbal devices, circumventing the
armour of section 25F and section 2(00) .. Without speculating on possibilities, we may agree that 'retrenchment' is
no longer terra incognito but area covered by an expansive
definition. It means 'to end, conclude, cease'. In the present case the employment ceased, concluded, ended on the
expiration of nine days-automatically may be, but cessation
all the same. That to write into the order of appointment
the date of termination confers no moksha from section
25F(b) is inferable from the proviso to section 25F(l).
True,
the
section
speaks
of
retrenchment by the
employer and it is urged that some act of volition by
the employer to bring about the termination is essential to
attract section 25F and automatic extinguishment of service
by effluxion of time cannot be sufficient."
It would be advantageous to refer to the facts of that case to
appreciate the interpretation placed by this Court on the relevant
section. State Bank of India appointed the· respondent by an
order of appointment which
incorporated the
two
relevant
terms relied upon by the Bank at the hearing of the case.
They
were : (i) the appointment is purely a temporary one for a period
of 9 days but may be terminated earlier, without assigning any
reason therefor at the Bank's discretion; (ii) the employment, unless
terminated earlier, will automatically cease at the expiry of. the
period i.e. 18.I 1.1972. It is in the context of these facts that the
Court held that where the termination was to be automatically
effective by a certain date as· set out in the order of appointment it
would nontheless be a retrenchment within the meaning section 2(oo)
and in the absence of strict compliance with the requirements of
section 25F, termination was held to be invalid.
Continuing this line of approach, in Hindustan Steel Ltd. v.
The Presiding officer, Labour Court, Orissa and Ors.,_(1) a bench of
three judges examined the specific contention that the decision in
Sundara Money's case runs counter to the construction placed on
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that section by a Constitution Bench and, therefore, the decision is
(I) [1977] S.C.R. 586.
MOHANLAL v. BHARAT ELECTRONICS (Desai, J.)
527
per incuriam. This Court analysed in detail Shukla' s case and Sundara
Money's case and ultimately held that the Court did not find anything in Shukla' s case which is inconsistent with what has been held
in Sundara Money's case.
In reaching this conclusion it was observed that in Shukla' s case the question arose in the context of closure
of the whole of the undertaking while in Hindustan Steel's case and
Sundara ltfoney's case the question was not examined in the context
of closure of whole undertaking but individual termination of service
of some employees and it was held to constitute retrenchment ·within the meaning of the expression.
This question again cropped up
in Santosh Gupta v. State Bank of Patiala(1).
Rejecting the contention for reconsideration of Sundara Money's case on the ground that
it conflicted with a Constitution Bench decision in Shukla' s case and
adopting the ratio in Hindustan Steel's case that there was nothing
in the two aforementioned decisions which is inconsistent with each
other and taking note of the decision in Ddhi Cloth and General
Mills Ltd. v. Shambu Nath Mukerjee(') wherein this Court had held
that striking off the name of a workman from the rolls by the
management was termination of service which was retrenchment
within the meaning of section 2(00), the Court held that discharge
of the workman on the ground that she had ·not passed the test
which would enable her to obtain confirmation was retrenchment
within the meaning of section 2(oo) and, therefore, the requirements
of section 25F had to be complied with. It was pointed out that
since the decision in Shukla' s case, the Parliament stepped in and
introduced section 25FF and section 25FFF by providing that compensation shall be payable to workman in case of transfer or closure of the undertaking, as if the workmen had been retrenched.
The effect of the amendment was noticed as that every case of
termination of service by act of employer even if such termination
was as a consequence of transfer or closure of the undertaking was
to be treated as 'retrenchment' for the purposes of notice, compensation, etc.
The Court concluded as under :
"Whatever doubts might have existed before Parliament enacted sections 25FF and 25FFF about the width of
section 25F there cannot be any doubt that the expression
'termination of service for any reason whatsoever' now
covers every kind of termination of service except those not
(I) [1980] 3 S.C.R. 340.
(2) [1978] 1.S.C.R. 591
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[1981) 3 S.C.R.
expressly provided for by other provisions of the Act such
as sections 25FF and 25FFF."
Reverting to the facts of this case, termination of service of
the appellant does not fall within any of the excepted, or to be
precise, excluded categories.
Undoubtedly therefore the termination
would constitute retrenchment and by a catena of decisions it is well
settled that where pre-requisite for valid retrenchment as laid down
in section 25F has not been complied with, retrenchment bringing
about termination of service is ab initio void. In State of Bombay and
Ors. v. The Hospital Mazdoor Sabha and Ors.,(1) this Court held that
failure to comply with the requirement of section 25F which prescribes a condition precedent for a valid retrenchment renders the
order of retrenchment invalid and inoperative.
In other words, it
does not bring about a cessation of service of the workman and the
workman continues to be in service. This was not even seriously
controverted before us.
It was, however, urged that section 25F is not attracted in
this case for an entirely different reason. Mr. Markendaya contended
that before section 25F is invoked, the condition of eligibility for a
workman to complain of invalid retrenchment must be satisfied.
According to him unless the workman has put in continuous service
for not less than one year his case would not be govern(;!d by section
25F. That is substantially correct because the relevant provision
of section 25F provides as under :
"25F. "No workman employed in any industry who
has been in continuous service for not less than one year
under an employer shall be retrenched by that employer
until:-
(a) the workman has been given one month's notice
in writing indicating the reasons for retrenchment
and the period of notice has expired, or the workman has been paid in lieu of such notice, wages
for the period of the notice;
Provided that no such notice shall be necessary if the retrenchment is under an agreement which specifies a date for the terminal ion
of service;
(1) [1960) 2 S.C.R. 866 at 872,
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MOHANLAL v. BHARAT ELECTRONICS (Desai, J.)
529
(b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent of fifteen days' average pay (for every completed year of continuous service) or any part thereof in excess of six months; and
(c) notice in the prescribed manner is served ~on the
appropriate Government (or such authority as
may be specified by the appropriate government
by notification in the Official Gazette)."
Before a workman can complain of retrenchment being not in conso·
nance with section 25F, he has to show that he has been in continuous service for not less than one year under that employer who
has retrl':nched him from service.
Section 25B is the dictionary
clause for the expression 'continuous'. It reads as under ;
"25B (I) a workman shall
be paid to be in
continuous service for a period if he is, for that period in
uninterrupted service, including service which may be
interrupted on account of sickness or authorised leave
or an accident or a strike which is not illegal, or a lockout or a cessation of work which is not due to any fault
on the part of the workman;
(2) where a workman is not in continuous service within
the meaning of clause (I) for a period of one year or
six months, he shall be deemed to be in continuous
service under an employer-
(a) for a period of of one year, if the workman, during
a period of twelve calendar months preceding the
date with reference to which calculation is to he
·made, has actually worked under the employer
for not less than-
(i)
one hundred and ninety days in the case of
a workman employed
below ground in a
mine; and
(ii)
two hundred and forty days. in any other
case;
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SU~REME COURT REPORTS
[ 1981] 3 s.c.R.
(b) for a period of six months, if the workman, during
a period of six calendar months preceding the date
with reference to which calculation is to be made
has actually worked under the employer for not
less than-
(i)
ninety-five days, in the case of a workman
employed below ground in a mine; and
(ii)
one hundred and twenty days, in any other
case.
Explanation-J<'or the purposes of clause (2), the number of days on
which a workman has actually
worked under an
employer shall include the days on which·-
(i)
he has been laid-off under an agreement <'r
as permitted by standing orders made under
the Industrial Employment (Standing Orders)
Act, 1946, or under this Act or under any
other law applicable to the industrial establishment;
(ii)
he has been on leave with full wages, earned
in the previous years;
. (iii)
he has been absent due to temporary disablement caused by accident arising out of and in
the course of his employment; and
(iv)
in the case of a female, she has been on maternity leave; so, however, that the total period
of such maternity leave
does not exceed
twelve weeks.
Mr. Markendaya contended that clauses (I) and (2) of section
25B provide for two different contingencies and that none of the
G
clauses is satisfied by the appellant.
He contended that sub. section
(I) provides for uninterrupted service and sub-section (2) comprehends a case where 'the workman is not in continuous service.
The
language employed in sub-sections (I) and (2) does not admit of
this dichotomy.
Sub-seciions (I) and (2) introduce a deeming
H
fiction .as to in what circumstances a workman could be said to be
in continuous service for the purposes of Chapter VA.
Sub-section
(1) provides a deeming fiction in that where a workman is in service
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MOHANLAL v. BHARAT ELECTRONICS (Desai, J.)
531
for a certain period he shall be deem.ed to be' in continuous service
for that period even if service is interrupted on account of sickness
or authorised leave or an accident or a strike which is not illegal
or a l0ckout or a cessation of work which is not due to any fault
on the part of the workman.
Situations such as sickness, autho·
rised leave, an accident, a strike not illegal, a lockout or a cessation
of work would ipso facto interrupt a service.
These interruptions
have to be ignored to treat the workman in uninterrupted service
and such service interrupted on account of the aforementioned causes
which would be deemed to be uninterrupted would be continuous
service for the period for which the workman has been in service.
In industrial employment or for that matter in any service, sickness,
authorised leave, an accident, a strike which is not illegal, a lockout
and a cessation of work not due to any fault on th·e part of the
workman, are known hazards and there are bound to be interrup·
tions on that account.
Sub-section (I) mandates that interruptions
therein indicated are to be ignored meaning thereby that on account
of such cessation an interrupted service shall be deemed to be un·
interrupted and such uninterrupted service shall for the purposes of
Chapter VA be deemed to be continuous service. That is only one
part of the fiction.
Sub-section (2) incorporates . another deeming fiction for an
entirely different situation. It comprehends a situation where a
workman is not in continuous service within the meaning of subsection (!) for a period of one year or six months, he shall be
deemed to be in continuous service under an employer for a period
of one year or six months, as the case may be, if the .workman
during the period of 12 calendar months just preceding the date
with reference to which calculation is to be made, has actually
worked under that employer for not less than 240 days. Sub-section
(2) specifically comprehends a situation where a workman is not in
continuous service as per the deeming fiction indicating in subsection (I) for a period of one year or six months. In such a case
he is deemed to be in continuous service for a period of one year
if he satisfies the conditions in clause (a) of sub-section (2).
The
conditions are that commencing the date with reference to which
calculation is to be made, in case of retrenchment the date of retrenchment, if in a period of 12 calendar months just preceding such
date the workman has rendered service for a period of 240 days, he
shall be deemed to be in continuous service for a period of one year
for the purposes of Chapter VA. It is not necessary for the purposes of sub-section (2) (a) that the workman should be in service
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532
SUPREME COURT REPORTS
[1981] 3 S.C.R.
for a period of one year. If he is in service for a period of one
year and that if that service is continous service within the meaning
of sub-section (1) his case would be governed by sub-section (I) and
his case need not be covered by sub-section (2).
Sub-section (2)
envisages a situation not governed
by sub-section (!). And
sub-section (2) provides for a fiction to treat a workman in
continuous service for a period of one year despite the fact that he
has not rendered uninterrupted service for a period of one year but
he has rendered service for a period of 240 days during the period
of 12 calendar months counting backwards and just preceding the
relevant date being the date of retrenchment.
In other words, in
order to invoke the fiction enacted in sub-section 2(a) it is necessary
to determine first the relevant date, i.e.,
the date of termination of service which is complained of as retrenchment. After
that date is
ascertained, move
backward to a period of 12
months just
preceding the date of retrenchment and then
ascertain whether within the period of 12 months, the workman
has rendered service for a period of 240 days. If these three facts
are affirmatively answered in favour of the workman pursuant to
the deeming fiction enacted in sub-section 2(a) it will have to be
assumed that the workman is in continuous service for a period of
one year and he will satisfy the eligibility qualification enacted in
section 25F. On a pure grammatical construction the contention
that even for invoking sub-section (2) of section 25B the workman
must be shown to be in continuous service for a period of one year
would render sub-section (2) otiose and socially beneficial legislation
would receive a set back by this impermissible assumption. The contention must first be negatived on a pure grammatical construction
of sub-section (2). And in any event, even if there be any such thing in
favour of the construction, it must be negatived on the ground that
it would render sub-section (2) otiose. The language of sub-section
(2) is so clear and unambiguous that no precedent is necessary to
justify the interpretation we have placed on it. But as Mr.Markandaya
referred to some authorities, we will briefly notice them.
In Sur Enamel and Stamping Works (P) Ltd. v. Their Workmen(1), referring to section 25B as it then stood read with section
2(eee) which
defined continuous service, this
Court held as
under:
"The position therefore is that during a period of
employment for less than 11 calendar months these two
(!) [1964] 3 S.C.R. 616.
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MOHANLAL V; BHARAT ELECTRONICS (Desai, J.)
533
persons worked for more than 240 days. In our opinion
that would not satisfy the requirement of section 25B.
Before a workman can be considered to have completed
one year of continuous service in an industry it must be
shown first that he was employed for a period of not less
than 12 calendar months and, next that during those 12
calendar months had worked for not less than 240
days. Where, as in the present case, the workmen have
not at all been employed for a period of 12 calendar months
it becomes unnecessary to examine whether the actual days
of work numbered 240 days or ·more. For, in any case,
the requirements of section 25B would not be satisfied by
the mere fact of the number of working days being not less
than 240 days.''
If section 25B had not been amended, the interpretation which it
received in the aforementioned case would be binding on us. However, section 25B and section 2(eee) have been the subject-matter of
amendment by the Industrial Disputes (Amendment) Act, 1964.
Section 2(eee) was deleted and section 25B was amended. Prior to
its amendment by the 1964 amendment Act, section 25B read as
under:
"For the purposes of ss. 25C and 25F a workman who
during the period of 12 calendar months has actually
worked in an industry for not less than 240 days, shall be
deemed to have completed one year of continuous service
in the industry."
We have already extracted section 25B since its amendment
and the change in language is the legislative exposition of which note
must be taken. In fact, we need not further dilate upon this aspect
because in Surendra Kumar Verma and Ors. v. Central Government
Industrial-cum-Labour Court, New Delhi and Anr.(1), Chinnappa
Reddy. J., after noticing the amendment and referring to the decision
in Sur Enamel and Stomping Works (P) Ltd. case, held as under :
"These changes brought about by Act 36 of 1964
appear to be clearly designed to provide that a workman
who has actually worked under the employer for not less
(1) [1981] I S.C.R. 789.
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SUPREME COURT REPORTS
[1981] 3 S.C.R.
than 240 days during a period of twelve months shall be
deemed to have been in continuous service for a period of
one year whether. or not he has in fact been in such
continuous service for a period of one year. It is enough
that he has
worked for 240 days in a period of 12
months, it is not necessary that he should have been in
the service of the employer for one whole year."
In a concurring judgment Pathak J.