# PUNJAB LAND DEVELOPMENT AND RECLAMATION CORPORATION LTD., CHANDIGARH ETC v. PRESIDING OFFICER, LABOUR COURT, CHANDIGARH ETC. :JAY 4, 1990

- **Citation:** [1990] 3 S.C.R. 111
- **Court:** Supreme Court of India
- **Decided:** 1990
- **Case number:** Civil Appeal Nos. B 3241-48of 1981
- **Bench:** Sabyasachi Mukharji, B.C. Ray, M.H. Kania, K.N. Saikia, S.C. Agarwal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/punjab-land-development-and-reclamation-corporation-ltd-chandigarh-etc-v-10826
- **Pages:** 46

## Headnote

Industrial Disputes Act 1947:
Section
2(00)-"Retrenchment"-lnterpretation of-Whether
termination by the employer of the services of a workman by employer
for any reason whatsoever or termination by the employer of the
~- ·services of a workman for any reason whatsoever otherwise than as a
punishment inflicted by way of disciplinary action-Whether to be
understood in its narrow, natural and contextual meaning or in its wider
literal meaning.
Precedent-Ratio decidendi of the earlier decision-How to
ascertain-Major premise, minor premise and decision in a cas~
Whether may be narrowed or widened by the subsequent decision.
Constitution of India, 1950--Article 141-Supreme Court is not
bound by its earlier decision-Stare decisis-doctrine of.
Decision per incuriam-meaning and effect of non reference to an
earlier larger bench decision of Supreme Court-Subsequent decision of
Supreme Court will be per incuriam only if the ratio of the earlier
;...
decision is in conflict with it.
-~
Interpretation of Statutes-Wider literal construction--When preferable to narrower, natural and contextual construction-Definition
clause using the word means 'instead' of 'includes'-Shows that no
other meaning can be assigned.
This batch· of eighteen appeals by special leave involves a common
.--1
question of law, regarding the scope and ambit of the word 'retrenchA
B
c
D
E
F
G
ment' as defined in Section 2(oo) of the Industrial Di~pute Act, 1947.
H
111
112
3UPREME COURT REPORTS
I 19901 3 S.C.R.
A
One of the appeals is by the workmen against the order of the
High Court affirming the award of the Labour Court refusing to
interfere with the order of termination of their services by the employer
for their trade union•activities, while the rest are by the employers/
managements against the orders of High Courts/Industrial Tribunal/
l:;abour Court setting aside the orders of termination of the services of
B the illegal for non-compliance of the provisions of Section 25F of the
Act.
.'J
While the employers' contention is that the word "retrenchment"
..,
as defined in Section 2(oo) of the Act means termination of service of a
workman only by way of surplus labour for any reason whatsoever, the
c workinen contend that "retrenchment" means termination of the
service of a workman for any reason whatsoever, other than those
expressly excluded by the definition in Section 2(oo) of the Act.
Disposing of the appeals, this Court,
D
HELD: (1) Definition of 'retrenchment' in Section 2(oo) means
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 and those expressly excluded by the definition. This is the
wider literal interpretation as distinguished from the narrow. natural
and contextual interpretation of the word to mean termination by the
E employer of the service of a workman as surplus labour for any reason
whatsoever. [156C; BIB]
B.N. Muttov. T.K. Nandi, [1979] 2SCR409;Juga/KishoreSaraf
v. Raw Cotton Co. Ltd., [1955] I SCR 1369; Sussex Peerage Case,
[1844] II CI & Fin 85: 8 ER 1034 (UL); Thompson v. Goold & Co., 26
F
TLR 526; Ea/sing L.B.C. v. Race Relations Board, [1972] I All ER 105;
Whiteley v. Chappell, [1868] LR 4; Prince Ernest of Hanoverv.Attorney
General, ll956] Ch D 188 and Muir v. Keay, 44 MJMC 143, referred
to.
(2) Difficulty was created by defining 'retrenchment' to mean
G something wider than what it naturally and ordinarily meant. Such a
definition created complexity as the draftsman himself in drafting the
other sections using the definition may slip into the ordinary meaning
instead of the defined meaning. However, a judge facing such a problem
of interpretation cannot simply fold his hands and blame the
draftsman. [149A-B; F]
H
P.L.D. CORPORATION LTD. v. PRESIDING OFFICER
113
(3) The definition has used the word 'means'. When a statute says
that a word or phrase shall 'mean'-not merely that it shall 'include'-
certain things or acts, "the definition

## Text

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r
PUNJAB LAND DEVELOPMENT AND
RECLAMATION CORPORATION LTD.,
CHANDIGARH ETC.
v.
PRESIDING OFFICER, LABOUR COURT,
CHANDIGARH ETC.
:JAY 4, 1990
[SABYASACHI MUKHARJI, CJ., B.C. RAY, M.H. KANIA,
K.N. SAIKIA AND S.C. AGARWAL, JJ.]
Industrial Disputes Act 1947:
Section
2(00)-"Retrenchment"-lnterpretation of-Whether
termination by the employer of the services of a workman by employer
for any reason whatsoever or termination by the employer of the
~- ·services of a workman for any reason whatsoever otherwise than as a
punishment inflicted by way of disciplinary action-Whether to be
understood in its narrow, natural and contextual meaning or in its wider
literal meaning.
Precedent-Ratio decidendi of the earlier decision-How to
ascertain-Major premise, minor premise and decision in a cas~
Whether may be narrowed or widened by the subsequent decision.
Constitution of India, 1950--Article 141-Supreme Court is not
bound by its earlier decision-Stare decisis-doctrine of.
Decision per incuriam-meaning and effect of non reference to an
earlier larger bench decision of Supreme Court-Subsequent decision of
Supreme Court will be per incuriam only if the ratio of the earlier
;...
decision is in conflict with it.
-~
Interpretation of Statutes-Wider literal construction--When preferable to narrower, natural and contextual construction-Definition
clause using the word means 'instead' of 'includes'-Shows that no
other meaning can be assigned.
This batch· of eighteen appeals by special leave involves a common
.--1
question of law, regarding the scope and ambit of the word 'retrenchA
B
c
D
E
F
G
ment' as defined in Section 2(oo) of the Industrial Di~pute Act, 1947.
H
111
112
3UPREME COURT REPORTS
I 19901 3 S.C.R.
A
One of the appeals is by the workmen against the order of the
High Court affirming the award of the Labour Court refusing to
interfere with the order of termination of their services by the employer
for their trade union•activities, while the rest are by the employers/
managements against the orders of High Courts/Industrial Tribunal/
l:;abour Court setting aside the orders of termination of the services of
B the illegal for non-compliance of the provisions of Section 25F of the
Act.
.'J
While the employers' contention is that the word "retrenchment"
..,
as defined in Section 2(oo) of the Act means termination of service of a
workman only by way of surplus labour for any reason whatsoever, the
c workinen contend that "retrenchment" means termination of the
service of a workman for any reason whatsoever, other than those
expressly excluded by the definition in Section 2(oo) of the Act.
Disposing of the appeals, this Court,
D
HELD: (1) Definition of 'retrenchment' in Section 2(oo) means
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 and those expressly excluded by the definition. This is the
wider literal interpretation as distinguished from the narrow. natural
and contextual interpretation of the word to mean termination by the
E employer of the service of a workman as surplus labour for any reason
whatsoever. [156C; BIB]
B.N. Muttov. T.K. Nandi, [1979] 2SCR409;Juga/KishoreSaraf
v. Raw Cotton Co. Ltd., [1955] I SCR 1369; Sussex Peerage Case,
[1844] II CI & Fin 85: 8 ER 1034 (UL); Thompson v. Goold & Co., 26
F
TLR 526; Ea/sing L.B.C. v. Race Relations Board, [1972] I All ER 105;
Whiteley v. Chappell, [1868] LR 4; Prince Ernest of Hanoverv.Attorney
General, ll956] Ch D 188 and Muir v. Keay, 44 MJMC 143, referred
to.
(2) Difficulty was created by defining 'retrenchment' to mean
G something wider than what it naturally and ordinarily meant. Such a
definition created complexity as the draftsman himself in drafting the
other sections using the definition may slip into the ordinary meaning
instead of the defined meaning. However, a judge facing such a problem
of interpretation cannot simply fold his hands and blame the
draftsman. [149A-B; F]
H
P.L.D. CORPORATION LTD. v. PRESIDING OFFICER
113
(3) The definition has used the word 'means'. When a statute says
that a word or phrase shall 'mean'-not merely that it shall 'include'-
certain things or acts, "the definition is a hard-and-fast definition, and
no other meaning can be assigned to the expression than is put down in
definition." I 150F-G I
·
Queen v. Commissioners under the Boiler Explosions Act, 1882,
[1891) I QBO 703 and Gough v. Gough, [1891) 2 QB 665: 65 LT II;
relied on.
( 4) There are apparent incongruities when the definition Clause
Section 2(oo) is considered in the context of the main provisions viz.
Sections 25F, 25G and 25H but there is room for harmonious construction. The definitions contained in Section 2 are subject to there being
anything repugnant in the subject or context. [152C-D I
A
B
c
-~- -
Vishwamitra Press v. Workers, AIR 1953 SC 41; Presidency Jute
Mills Co. Ltd. v. Presidency Juite Mills Co. Employees Union, (1952) I
LLJ 796 (LAT) (Cal); Iron & Steel Mazdoor Union, Kanpurv. J.K. Iron
D
and Steel Co. Ltd., [1952) LAC 467; Halar Salt and Chemical Works,
Jamnagar v. Workmen, [1953] 2 LLJ 39; Prakriti Bhushan Gupta v.
Chief Mining Engineer, Railway Board, (1953] LAC 373; Sudarshan
Banerjee v. Mcleod and C. Ltd., [1953] LAC 702; Srinivasa Enterprises
v. Union of India, [1980] 4 SCC 507; Reserve Bank of India v. Peerless
,.
Central Finance and Investment Co. Ltd., [ 1987] 2 SCR I, referred to.
E
......,, .
(5) The express exclusion of volitional element in cl. (a) and (b) of
Section 2(oo) namely, voluntary retirement, and retirement on superannuation age implies that those would otherwise have been included. If
such cases were to be included, termination on abandonment of service,
on efflux of lime and on failure to qualify, though only consequential or
resultant would be included as those have not been excluded. Then
>-· ·· there appears to be a gap between :he first part and the exclusion part.
When such a gap is disclosed, the remedy lies in an amending Act. The
Court has to interpret a statute and apply it to the facts. [150C-E]
Duport Steels v. Sirs, (1980] 1 All ER 529, referred to.
(6) Construing retrenchment in its wider sense, the rights of the
employer under the standing orders and under contracts of employment may have been affeded by Sections 2( oo) and 25F and other
relevant sections. Secondly, it may be said that the rights as such are
not affected or taken .away but only additional social obligation has been
F
G
H
A
B
c
D
E
F
114
SUPREME COURT REPORTS
[19't.0l 3 S.C.R
placed on the employer so as to give retrenchment benefit to affkted.
workmen perhaps for tiding over immediate imancial distress. Seen
from this angle, there is implicit a social policy. So goes the maximStat Pm ratione voluntes populi-the will of the people stands in place
of a reason. [153E-G]
(7) In Sundara Money and subsequent cases the Supreme Court
has adopted wider liberal meaning rejecting the narrow natural and
contextual meaning. The question of subsequent decisions of the
Supreme Court being per incuriam on grounds of failure to apply the
earlier law laid down by the Constitution Bench in Hariprasad Shukla
case could arise only if ratio in Sundara Money and subsequent
decisions was in conflict with the ratio in Hariprasad and Anakapalli.
Hariprasad case is not an authority for the proposition that Section
2( oo) only covers cases of discharge of surplus labour and staff.
Sundara Money and subsequent decisions in the line could not be held
to be per incuriam in as much as in Hindustan Steel and Santosh Gupta
cases the Division Benches of the Supreme Court had referred to
Hariprasad 'case, and rightly held that its ratio did not extend beyond
the case of termination on the ground of closure and as such it would not
be correct to say that subsequent decision overlooked a binding precedent. In a fast developing branch of Industrial and Labour Law it may
not be always of particular importance to rigidly stick to a precedent
and a precedent may need to be departed from if the basis of legislation
changes. [ 143B-C; 145El
L. Robert D' Souza v. Executive .ongineer, Southern Railway and
Anr., (1979] 1 LLJ 211; Rajasthan State Electricity Board v. Labour
Court, (1966] l LLJ 381 (Raj.); Good/as Nerolac Paints v. Chief Commissioner, Delhi, [1967] l LLJ 545 (Punj.) and The Managing Director,
National Garages v. J. Gonsalves, [1962] l LLJ 56 (Born.), overruled.
Delhi Cloth and General Mills Ltd. v. Shambhu Nath Mukherjee
and Ors., (1978] 1 SCR 591; Hindustan Steel Ltd. v. The Presiding
Officer, Labour Court, (1977] 1SCR586; Santosh Gupta v. State Bank
of Patiala, [1980] 3 SCR 884; Gammon India Ltd. v. Niranjan Das,
G
[1984] l SCC 509 and Reg v. Home Secretary, Ex P. Khawaja, [1984]
AC 74 (HL), relied on.
H
Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor
Union, (1956] SCR 872; Sub Nomine Barsi Light Railway Co. v. K.N.
Joglekar, [1957] 1 LLJ 243 (SC); Hariprasad Shivshankar Shukla v.
A.D. Divikar, [1957] SCR 121; Anakapalla Co-operative Agricultural
..,
l
·-
·"'"-
'
--
-;------
(
'
P.L.D. CORPORATION LTD. v. PRESIDING OFFICER
115
and Industrial Society Ltd. v. Workmen. 11963] Supp. 1 SCR 730 and
Workmen of Subong Tea Estate v. The Outgoing Management of
Subong Tea Estate and Anr., [1964] 5 SCR 602, distinguished.
Employees v. India Reconstitution Corporation Ltd., [1953] LAC
563; Indian Hume Pipe Co. Ltd. v. Workmen, [1960] 2 SCR 32; Benett
Coleman and Company Ltd. v. Employees, [1954] 1 LLJ 341 (LAT);
Mahan Lal v. Bharat Electronic Ltd., [1981] 3 SCR 518 and Surendra
Kumar Verma v. Central Government Industrial Tribunal-cum-Labour
Court, New Delhi, [1981] l SCR 789, referred to.
(8) Article 141 embodies, a rule of law, the doctrine of precedents
on which our judicial system is based. [136H]
(9) Per Incuriam means through inadvertance. A decision can he
said generally to be given per incuriam when the Supreme Court has
~ · acted in ignorance of its own previous decision or when a High Court
has acted in ignorance of a decisio11 of the Supreme Court. The problem
of judgment per incuriam when actually arises, should present no difficulty as the Supreme Court can lay down the law afresh 'if two or more
of its earlier judgments cannot stand together. Article 141, which embodies as a rule of law, the doctrine of precedents, was enacted to make
the law declared by the Supreme Court itself. [136G; 138G; 137F]
Re Dawson's Settlement Lloyds Bank Ltd. v. Dawson, [1966] 3
All ER 68 and Bengal Immunity Company Ltd. v. State of Bihar, I 1955]
2 SCR 603, relied upon.
(10) The doctrine of ratio decidendi has also to be interpreted in
the same line. To consider the ratio decidendi Court has to ascertain the
principle on which the case was decided. The ratio decidendi of a decision may be narrowed or widened by the judges before whom it is cited
as a precedent. I 139G-H]
State of Orissa v. Sudhansu Shikhar Misra, [1968] 2 SCR 154;
F:A. & AB Ltd. v. Lupton (lns[Jector of taxes), [1972] A.C. 634;
Osborne v. Rowlett, 13 Ch D 774 and Quinn. v. Leathern. [1901] AC495,
relied on.
Griffiths v. J.P. Harrison (Watford) Ltd., [1963] AC I; Finsbury
Securities Ltd. v. Inland Revenue Commissioners, [1966] I WLR 1402,
referred to.
.
A
B
c
v
E
F
G
H
116
SUPREME COURT REPORTS
I 1990) 3 S.C.R.
A
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.
B
3241-48of 1981Etc.
·'
From the Jud~ment and Order dated 20.7.1983 of the Punjab &
Haryana High Court in C.W.P. Nos. 469, 748, 750, 75 I, 752 and 753 of
1981
B.N. Shinghvi, V.A. Bobde, M.K. Ramamurthy, N.B. Shetty,
K.K. Venugopal, Dr. Anand Prakash, S.S. Javali, H.S. Gill. Brij
J
Bhushan, M.G. Ramachandran, M.C. Dhingra, A.K. Sanghi, U.A.
-'
Rana, B.R. Agarwala, R.C. Pathak, Naresh Mathur, S.K. Sajwan.
Baby Lal, Praveen Kumar, B.B. Singh, Vineet Kumar, B.D. Ahmed.
C
R.S. Hegde, Parijat Singh, Mrs. Jayshree Wad, S. Balakrishnan, Ms.
-..
Janani, Mrs. Urmila Kapoor. T.T. Kunhikanna_n, H.K. Puri, S.
Srinivasan, Mrs. M. Karanjawala, Vijay Kumar Verma. Ashok
Grover, V.N. Ganpule, M.A. Gagrat, Mrs. P.S. Shroff, Anil Gupta, .,..
R.A. Gupta, A.K. Ghosh, S. Manda!, Ranjit Kumar, M. Veerappa,
· Girish Chandra, Dr. Meera Aggarwal, A.K. Srivastava, K.R.
D Nambiar, A,G. Ratnaparkhi, R. Satish. P.H. Parekh, S.A. Shroff and
K.V. Sree Kumar for the appearing parties.
The Judgment of the Court was delivered by
K.N. SAIKIA, J. This analogous cluster of seventeen appeals
E by special leave, and a special leave petition involves a common question of law though they arise out of the following respective facts:
C.A. Nos. 324 J-3248 of 198 I
These eight appeals by the Land Development and Reclamation
F
Corporation, Chandigarh are from the Judgment and Order of the
Punjab and Haryana High Court dismissing its writ petitions challenging the Award dated 2.8.1980 of the Labour Court, Chandigarh holding that the respondents were entitled to reinstatement with back
wages except Yaspal (C.A. No. 3242 of 1981) who was to get wages up
to 10.10.1979, with benefits of continuity of service. The respondents
G were workmen under the management of the Corporation and their
services were terminated on the ground that the Chairman had no
power to appoint them. The Labour Court in its Award held that their
services were terminated illegally without payment of retrenchment
compensation under the Industrial Disputes Act, 1947, hereinafter
referred to as 'the Act', and that they were entitled to reinstatement.
H
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':
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,.
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~
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__.(
P.L.D. CORPORATION LTD. v. PRESIDING OFFICER [SAIKIA, J.]
: 17
..
C.A. No. 686(NL) of 1982
A
This appeal is from the Judgment dated 9.11.1981 of the High
Court of Bombay (Nagpur Bench). The first respondent was an
employee of the appellant's corporation since 1972. He was taken on
probation in 1975 for one year which was extended from time to time,
lastely from 1. 9. 1977 to 31.10.1977, whereafter his services being not
B
found satisfactory were terminated with effect from 1.11.1977 under
Regulation 44(b) of the State Transport Employees Service Regulations of the Corporation. The Labour Court took the view that it
amounted to retrenchment and the provisions of s. 25F of the Act
having not been complied with the termination was illegal. The appel-
!ant's writ petition therefrom was dismissed.
c
C.A. No. 1817 of 1982
The respondent workman was employed by the appellant Bank
on 3.10.1962 as a clerk and he was put on probation for six months. As
allegedly there was total lack of confidence of the bank in the empD
loyee it terminated his service on 27.7.1974 on payment of three
month's salary. The industrial tribunal by its award dated 3.12.1981
directed reinstatement of the workman with full back wages on the
ground of non-compliance with the provisions of s. 25F of the Industrial Disputes Act. The employer Bank now appeals from that Award.
E
C.A. No. 1898 of 1982
Respondent Nos. 2-6 were employed on probation by the appel-
!ant a partnership firm on 12.6.1975. Respondent Nos. 2-5 assaulted a
supervisor and being afraid of police remained absent from 29.3.1976
and abandoned their jobs and their services were terminated. ResponF
dent No. 6 stopped attending duties from 9.8.1975 and he left the
service of his own accord. The Labour Court by its Award dated
16.9.1980 held that their termination amounted to retrenchment and was
illegal for non-compliance with the provisions of s. 25F ot the Act and
they were entitled to reinstatement with full back wages. The Management's writ petition challenging the Award having been unsuccessful,
G
it has appealed.
C.A. No. 3261of1982
Respondent N amdeo was a clerk under the appellant Maharashtra State Road Transport Corporation. Pursuant to a disciplinary
H
118
SUPREME COURT REPORTS
(1990] 3 S.C.R.
A
proceeding his service was terminated with effect from 23.4.1963 by
giving him one month's salary in lieu of notice. Moved by the respondent, the Assistant Commissioner under s. 16 of the C.P. & Berar f
Industrial Disputes Settlement Act, 1947 held the Inquiry Proceeding
B
c
D
to be an empty paper formality and the termination amounted to dismissal and accordingly he set aside the order and directed the corporation to reinstate and pay him his back wages amounting to Rs.15,971.66
within one month. The Corporation having moved the State Industrial
Court at Nagpur under s. 16(5) of the Settlement Act, that Court by its "(_
order dated 29. 9 .1973 allowed the application and set aside the As- J
sistant Labour Commissioner's judgrnent and dismissed the workman's application holding that thi acts of misconduct fairly stood
proved and he deserved to be dismissed from service. The High Court
on being moved by the workman set aside the Labour Court's order
and restored that of the Assistant Labour Commissioner. Hence this
appeal.
CIVIL APPEAL NO. 3025 .......... OF 199o
The services of the workman Sri Pratap Singh, driver respondent
No. 3 were terminated with effect from 18.10.1974 under clause 9(a)(i)
. of the DRTA (Q:mditions of Appointment and Service) Regulations
1952. As the conciliation efforts failed, the order was placed before the
E
Labour Court, Delhi, who set aside the order on the ground of non-
,
compliance with the provisions of s. 25F of the Act and ordered reinstatement with full back wages and continuity of service. The High
Court having dismissed the writ petition therefrom, the appellant
seeks special leave. We grant special leave and hear the appeal.
F
C.A. No. 885 of 1980
G
The workmen appellants Nos. 2 and 3 were discharged on ""
11.11.1972 for their trade union activities. The Labour Court, Bombay by
its Award dated 25.8.1977 refused to interfere. Challenge to the Award
in the High Court having failed, the workmen appealed to this Court.
C.A. No. 1866 of 1982
The workman respondent No. 2 reported for artisan training on ,__
25.9.1963 and was absorbed as artisan trainee on 16.3.1964. He was
made a skilled machine operator, under the appellant company and
H was discharged with effect from 23.7.1970. The Labour Court by its
P.L.D. CORPORATION LTD. v. PRESIDING OFFICER [SAIKIA, J.)
119
Award dated 1.8.1980 held the termination to be illegal on ground of
A
..,
non-compliance of s. 25F of the Act, though the order of discharge was
issued under Standing Order 18(1). The Company has appealed
against the said order.
C.A. No. 1868 of 1984
B
The respondent was an employee in the appellant's factory as
.£
welder and his services were terminated with effect from 21.11.1972
r
under Standing Order No. 28. The Labour Court by its Award dated
30.12.1980 held the order of termination amounted to retrenchment
and bad for non-compliance with s. 25F and hence set it aside and
.-
ordered reinstatement .with full back wages. Hence this appeal.
c
C.A. No. 8456 of 1983
~-·
The respondent was dismissed by the appellant-Corporation
..
after disciplinary inquiry by order dated 28.5.1971 paying one month's
wages in advance. The workman having raised an industrial dispute,
D
the Labour Court, Aurangabad by its Award daed 9.11.1979 held the
order of termination to be legal and proper. The respondent's writ
petition therefrom was allowed and the Award was quashed and the
workman was declared entitled to reinstatement. Hence this appeal.
C.A. No. 10828 of 1983
E
T
~ respondent was a store keeper of Rungta· Colliery. His name
-
was struck off the rolls of the Colliery with effect from 8.7.1975. He
..._,.
having raised an industrial dispute, the Industrial Tribunal, Jabalpur
by its Award pated 22.8.1977 held the striking off to be unjustified and
that the terminution amounted to retrenchment and bad for non payF
~-
meat of retrenchment compensation. In the workman's Letters Patent
Appeal the Division Bench of the High. Court also held that the termination amounted to retrenchment. Hence this Management's appeal.
The respective cases were argued with some dexterity by the
learned counsel Mr. B.N. Singhvi, Mr. N.B. Shetye, Mr. S.S. Javali,
G
Mr. K.K. Venugopal, Mr. V.A. Bobde, Mr. M.K. Ramamurthy, Mr.
M.G. Ramachandran & Mr. R.S. Hegde .
..._
On the above diverse facts two rival contentions are raised by the
parties. The learned counsel for the employers contend that the word
'retrenchment' as defined in s. 2( oo) of the .Act means termination of
H
120
SUPREME COURT REPORTS
[1990) 3 S.C.R.
service of a workman only by way of surplus labour for any reason
A whatsoever. The learned counsel representing the workmen counted
that 'retrenchment' means termination of the service of a workman for
any reason whatsoever, other than those expressly excluded by the
definition ins. 2(oo) of the Act.
B
c
The precise q~estion to be dcided, thetefofe, Is whether on a
proper construction of the definition or "retrenchment" ins. 2(oo) of
the Act, it means termination by the employer of the service of a
workman as surplus labour for any reason whatsoever, or it means
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, and those expressly excluded by the definition. In
other words, the question to be decided is whether the word
"retrenchment" in the definition has to be understood in its narrow,
natural and contextual meaning or in its wider literal meaning.
Mr. N.B. Shetye, Mr. K.K. Venugopal, and the learned counsel
D adopting their arguments refer to the introduction of the provision of
"retrenchment" in the Act. Retrenchment was not defined either in
the repealed Trade Disputes Act, 1929, or in the Industrial Disputes
Act, 1947, as originally enacted. Owing to a crisis in the textile industry in Bombay, apprehending large scale termination of services of
workmen, the Government of India issued an Ordinance which later
E became the Industrial Disputes (Amendment) Act, 1953 (Act 43 of
1953) which was deemed to have come into force on the 24th day of
October, 1953. Besides introducing the definitions of "lay-off"
[Clause 2 (kkk)] and "Retrenchment" [Clause 2(oo) I this Amendment Act of 1953 also inserted Chapter VA in the Act which dealt with
''lay-off" and "Retrenchment". That Chapter contained sections 25A
F
to 25J. Section 25A provided that sections 25C to 25E inclusive shall
not apply to certain categories of industrial establishments. Section
25C dealt with right of workmen laid-off compensation. Section 25D
provided for maintenance of muster rolls of workmen by employers
and section 25E stated the cases in which the workmen were not entitled to lay-off compensation. Section 25F dealt with conditions preceG
dent to retrenchment of workmen. Section 25G dealt with procedure
for retrenchment and section 25H dealt with re-employment of retrenched workmen; and section 25J dealing with the effect of laws
inconsistent with this Chapter said that the provisions of this Chapter
shall have effect notwithstanding anything inconsistent therewith contained in any other law (including standing orders made under the
1 H Industrial Employment (Standing Orders) Act. 1946 (XX of 1946);
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P.L.D. CORPORATION LTD. v. PRESIDING OFFICER [SAIKIA, J.J
121
provided that nothing contained in this Act shall have effect to derogate from any right which a workman has under any award for the time
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being in operation or any contract witb the employer.
The Statement of Objects and Reasons of the Amendment Act,
1953 was as under:
"The Industrial Disputes (Amendment) Bill, 1953 seeks to
provide for payment of compensation to workmen in the
event of their lay-off or retrenchment. The provisions included in the Bill are not new and were discussed at various
tripartite meetings. Those relating to lay-off are based on
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an agreement entered into between the representatives of
employers and workers who attended the 13th session of C
the Standing Labour Committee. In regard to retrenchment, the Bill provides that a workman who has been in
continuous employment for not less than one year under an
employer shall not be retrenched until he has been given
one month's notice in writing or one month's .wages in lieu D
of such notice and also a gratuity calculated at 15 days'
average pay for every completed year of service or any part
thereof in excess of six months. A similar provision was
included in the Labour Relations Bill, 1950, which has
since lapsed. Though compensation on the lines provided
for in the Bill is given by all progressive employers, it is felt E
that a common standard should be set for all employers"
Clause 2(oo) as inserted read.as under:
" 'Retrenchment' means the termination by the employer
of the service of a workman for any reason whatsoever, F
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 G
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 i!J,health."
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We are referred to contemporaneous interpretation of the word "re
trenchment'. In Employees of Messrs India Reconstruction Corporation Ltd., Calcutta v. Messers. India Reconstruction Corporation Ltd.,
reported in 1953 LAC 563 it was observed by the Calcutta High Court:
"Ordinarily retrenchment means discharge from service of
only the surplus part of the. labour force but in the case of
closure the whole labour force is dispensed with. In substance the difference between closure and normal retrenchment is one of degree only. As in the case ofretrenchment
so in the case of closure the workmen are not responsible
for closing their jobs. In both the cases, what is called
compensation by way of retrenchment relief should be
admissible."
In Messrs Benett Coleman and Company Ltd. v. Their Employees, reported in 1954 LAC 24 it was observed by Calcutta High
Court:
"Thus whether the closure was justified or not, the workmen who have lost their jobs would in any event get compensation. If it was not bona fide or not justified, it may be
that the measure of compensation would be larger than if it
was otherwise.,,
The above almost contemporaneous exposition is worth consideration, Contemporanea expositio est optima et fortiosima in lege, (2
Inst. 11). Contemporaneous exposition is the best and strongest in the
law. A statute is best explained by following the construction put upon
it by judges who lived at the time it was made.
In Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor
Union, [1956] SCR 872, the appellant company could not work its mills
to full capacity owing to short supply of sugar-cane and got the permission of the Government to sell its machinery but continued crushing
cane under a lease from the purchaser. The workmen's union in order
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to frustrate the transaction resolved to go on strike and serving a strike
notice did not cooperate with the management with the result that it
lost heavily. On the expiry of the lease and closure of the industry,
the services of the workmen were duly terminated by the company.
The workmen claimed the share of profits on the basis of the offer
earlier made by the company and accepted by the workers. The comH
pany having declined to pay and the dispute having been referred,
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P.L.D. CORPORATION LTD. v. PRESIDING OFFICER (SAIKIA, J.]
123
the Industrial Tribunal held that the company was bound to pay and
accordingly awarded a sum of Rs.45,000 representing their share of
the profits and the award was affirmed by the Labour Appellate Tribunal. ·Question before this Court in appeal was whether the termination of the workmen on the closure of the industry amounted to retrenchment. It was held that the award was not one for compensation
for tenrt/nation of the services of the workmen on closure of the
industry, as such discharge was different from the discharge on retrenchment, which implied the continuance of the industry and discharge only of the surplusage, and the workmen were not entitled
either under the law as it stood on the day of their discharge or even on
merits to any compensation.
The contention of the workmen was that even before the enactment of Industrial Disputes (Amendment) Act, 1953, the tribunal had
acted on the view that the retrenchment included discharge on closure
of business and had awarded compensation on that footing and that
the. award of the tribunal in Pipraich's case could be supported in that
view and should not be disturbed. This was based on the decision in
Employees of Messrs India Reconstruction Corporation Ltd. Calcutta
v. Messrs India Reconstruction Corporation Ltd., (supra); and Messrs
Benett Coleman and Company Ltd. v. Their Employees, (supra). But
their Lordship did not agree. Venkatarama Ayyar, J. speaking for the
four Judge Bench said:
"Though there is discharge of workmen both when there is
retrenchment and closure of busi11ess, the compensation is
to be awarded under the law, not for discharge as such but
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for discharge on retrenchment, and if, as is conceded,
retrenchment means in ordinary parlance, discharge of the
surplus, it cannot include discharge on closure of
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business."
As a result it was held that the Award in Pipraichwas against the
agreement and could not be supported as one of compensation to the
workmen.
Thus this Court in Pipraich (supra) was dealing with the question whether the discharge of the workmen on closure of the undertaking would constitute retrenchment and whether the workmen were
~ntitled on that account to retrenchment compensation; and it was
observed that retrenchment connoted in its ordinary acceptation that
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the business itself was being continued but that a portion of the staff or
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SUPREME COURT REPORTS
[ 1990] 3 S.C.R.
the labour force was discharged as surplusage and the termination of
services of all the workmen as a result of the closure of the business
could not, therefore, be properly described as retrenchment, which in
the ordinary parlance meant discharge from the service and did not
include discharge on closure of business.
The same view was expressed in Hariprasad Shivshankar Shukla
v. A.D. Divikar, [1957] SCR 121; also reported sub nomme Barsi
Light Railway Co. v. K.N. Joglekar, [1957] 1 L.L.J. 243 (SC), wherein
the Constitution Bench heard two appeals; namely, Civil Appeal Nos.
103 and 105 of 1956. In Civil Appeal No. 105 of 1956 the main appellant was the Barsi Light Railway Company Ltd., and the principal
respondent was the President of the Barsi Light Railwaymen's Union.
Under an agreement dated August 1, 1895 between the Secretary of
State for India in Council and the Railway Company, the Secretary
of State could purchase and take over the undertaking after giving
Railway Company a notice. On December 19, 1952 a notice was given
to the Railway Company for and on behalf of the President of India
that the undertaking of the Railway Company would be purchased and
taken over as from January 1, 1954. On November 11, 1953, the Railway Company served a notice on its workmen intimating that as a
result of the talking over, the services of all the workmen of the Railway
Company would be terminated with effect from December 31, 1953.
The notice further stated that the Government of India intended to
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employ such of the staff of the company as would be willing to serve on
the railway on terms and conditions which were to be notified later.
About 77 per cent of the staff of the Railway Company were reemployed on the same scales of pay, about 23 per cent were reemployed on somewhat lower scales of pay and only about 24 per cent
of the former employees of the Railway Company declined service
f
under the Government. Applications for compensation having been
filed on behalf of the erstwhile workmen of the Railway Company
under s. 15 of the Payment of Wages Act, 1936, for payment of retrenchment compensation to the said workmen under clause (b) of s.
25F of the Act, the question was whether the erstwhile workmen were
entitled to claim compensation under clause (b) of s. 25F of the Act;
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and whether they had been retrenched by their former employer within the meaning of the expression 'retrenchment' in the Act. In Civil
Appeal No. 103 of 1956, the main appellant was Sri Dinesh Mills Ltd.
Baroda and the principal respondent was District Labour Officer and
Inspector under the Payment of Wages Act. The appellant company
was running a woollen mill at Baroda and had abut 450 workmen and
H 20 clerks who worked in shifts day a!'d _nighL On or about October 31,
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P.L.D. CORPORATION LTD. v. PRESIDING OFFICER ISAIKIA. J.J
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195.:S, the appellant put up a notice declaring its intention to close
down the entire mill. As a result of the closure, the services of 2'.l 450
workmen and 20 clerks were terminated and the appellant company
claimed that the closure was bona fide being due to heavy losses sustained by the company. The principal respondent claimed retrenchment compensation for the workmen of the appellant under clause (b)
of s. 25F of the Act.
Section 25F at the relevant time stood as follows:
"25F. Conditions precedent to retrenchment of workmen.-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 termination of service;
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(b) the workman has been paid, at the time of retrenchE
ment, compensation which shall be equivalent to fifteen
days' average pay for every completed year of service or
any part thereof in excess of six months; and
( c) notice in the prescribed manner is served on the
appropriate Government."
F
In both the appeals the question before the Constitution Bench
was whether the claim of the erstwhile workmen both of the Railway
Company and of Shri Dinesh Mills Ltd., to the compensation under
clause'(b) of s. 25F of the Act was a valid claim in law. Observing that
the Act had a 'plexus of amendments', and some of the recent amendG
men ts had been quite extensive in nature and that s. 25F occurred in
Ch. VA of the Act which dealt with 'lay off and retrenchment' in the
Amending Act, and analysing s. 25F as it then stood, .S.K. Das, J.
speaking for the Constitution Bench observed that in the first part of
the section both the words 'retrenched' and 'retrenchment' were used
and obviously thev had the same meaning except that one was verb
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and the other was a noun and that to appreciate the true scope and
effect of s. 25F one must first understand what was meant by the
expression 'retrenched' or 'retrenchment'.
Analysing the definition of 'retrenchment' in s. 2( oo) the Court
found in it the following four essential requirements: (a)termination
of the service of a workman;· (b) by the employer; (c) for any reason
whatsoever; and ( d) otherwise than as a punishment inflicted by way of
disciplinary action. The Court then said:
"It must be conceded that the definition is in very wide
terms. The question, however, before us is does this definition merely give effect to the ordinary, accepted notion of
retrenchment in an existing or running industry by embodying the notion in apt and readily intelligible words or
does it go so far beyond the accepted notion of retrenchment as to include the termination of sservices of all workmen in an industry when the industry itself ceases to exist
on a bona fide closure or discontinuance of his business by
the employer?"
The Court further said:
"There is no doubt that when the act itself provides a
dictionary for the words used, we must look into that
dictionary first for an interpretation of the words used in
the statute. We are not concerned with any presumed intention of the legislature; our task is to get the intention
as expressed in the statute. Therefore, we propose first to
examine the language of the definition and see if the ordinary, accepted notion-of retrenchment fits in, squarely and
fairly, with the language used."
The Court reiterated the following observations in Pipraich
(supra):
"But retrenchment connotes in its ordinary acceptation
that the business itself is being continued but that a portion
of the staff of 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."
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P.L.D. CORPORATION LTD. v. PRESIDING OFFICER [SA!K!A. J.J
127
This was the ordinary accepted notion of 'retrenchment' in an industry
before addition of s. 2(oo) to the Act, as retrenchment in that case
took place in 1951. Replying to the argument that by excluding the
bona fide closnre of business as one of the reasons for termination of
the service of workmen by the employer, one would be cutting down
the amplitude of the expression 'for any reason whatsoever' and reading into the definition the words which did not occur there, the Court
agreed that the adoption of the ordinary meaning would give to the
expression 'for any reason whatsoever' a som( what narrower scope;
one might say that it would get a colour in the context in which expression occurred; but the Court did not agree that it amounted to importing new words in the definition and said that the legislatnre in using
that expression said in effect: "It does not matter why you are disFhargi.ng the surplus; if the other requirements of the definition are
fulfilled, then it is retrenchment". In the absence of any compelling
words to indicate that the intention was to include bona fide closure of
the whole business, it would be divorcing the expression altogether
from its context to give it such a wide meaning as was contended.
About the nature of the definition it wa; 'aid:
"It is true that an artificial definition may include a meaning different from or in excess of the ordinary acceptation
of the word which is the subject of definition; but there
must then be compelling words to show that such a meanA
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ing different from or in excess of the ordinary meaning is
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intended. Where, within the framework of the ordinary
acceptation of the word, every single requirement of the
definition clause is fulfilled, it would be wrong to take the
definition as destroying the essential meaning of the word
defined."
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The Court in Hariprasad dealt with two other contentions;
one was that before the amending Act of 1953 the retrenchment had
acquired a special meaning which included the payment of compensation on a closure of business and the legislature gave effect to that
meaning in the definition clause and by inserting section 25F. The
second was that section 25FF inserted in 1956 by Act 41 of 1956 was
G
'Parliamentary exposition' of the meaning of the definition clause and
of section 25F. Rejecting the contentions the Court held that retrenchment meant the discharge of surplus workmen in an existing or con~
tinuing business; it had acquired no special meaning so as to include
discharge of workmen on bona fide closure of business, though a
number of Labonr Appellate Tribunals awarded compensation to
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workmen on closure of business as an eqmtable relief for variety of
reasons. The Court accordingly held:
" ... that retrenchment as defined ins. 2(oo) and as used in
s.