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PETITIONER: SANTOSH GUPTA

       Vs.

RESPONDENT: STATE BANK OF PATIALA

DATE OF JUDGMENT29/04/1980

BENCH: REDDY, O. CHINNAPPA (J) BENCH: REDDY, O. CHINNAPPA (J) KRISHNAIYER, V.R.

CITATION:  1980 AIR 1219            1980 SCR  (3) 884  1980 SCC  (3) 340  CITATOR INFO :  RF         1981 SC 422  (1,2,7,12)  RF         1981 SC1253  (8)  E          1982 SC 854  (5,6)  R          1983 SC1320  (9,11)  R          1984 SC 500  (2)  R          1984 SC1673  (3)  RF         1986 SC1680  (4)  R          1987 SC1478  (7)  F          1990 SC1808  (8)

ACT:      Industrial   Disputes   Act,   1947-Section   2   (OO)- "Retrenchment"-Termination.......    for     any     reason, whatsoever, meaning  of Section  25 FF  and Section  25  FFF object of.

HEADNOTE:      The  appellant  was  employed  in  the  State  Bank  of Patiala, The  Mall, Patiala  from July  13, 1973 till August 21, 1974,  when her  services were  terminated. Despite some breaks  in  service  for  a  few  days,  the  appellant  had admittedly worked  for 240 days in the year preceding August 21, 1974.  According to  the workman, the termination of her service  was  "retrenchment"  within  the  meaning  of  that expression in  Section 2(OO) of the Industrial Disputes Act, 1947, since it did not fall within any of the excepted cases mentioned in  Section 2(OO). Since there was "retrenchment", it was bad for non-compliance with the provisions of section 25 F  of the Industrial Disputes Act. On the other hand, the contention of  the management  was that  the termination  of services was  not due to discharge of surplus labour. It was due to  the failure  of the  workman to  pass the test which would have  enabled him  to be  confirmed  in  the  service. Therefore, it  was not  retrenchment within  the meaning  of section 2(OO)  of the Industrial Disputes Act. The Presiding Officer, Central  Government, Industrial Tribunal-cum-Labour Court, accepted  the  management’s  contention  and  decided against the  workman appellant.  Hence the appeal by special leave.      Allowing the appeal, the Court ^      HELD: (i)  The discharge  of the  workman on the ground

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that she  did not pass the test which would have enabled him to be  confirmed was  "retrenchment" within  the meaning  of section 2(OO)  and, therefore,  the requirements  of section 25F had to be complied with. [892 F-G]      (ii) Section  2(OO) of the Industrial Disputes Act uses a wide  language particularly  the words  "termination.. for any  reason   whatsoever".  The   definition  "retrenchment" expressly excludes  termination of  service as a "punishment inflicted by  way  of  disciplinary  action".  It  does  not include,  voluntary   retrenchment   of   the   workman   or retrenchment  of   the  workman   on  reaching  the  age  of superannuation or  termination of the service of the workman on the ground of continuous ill-health. The Legislature took special care  to mention that these were not included within the meaning  of "termination  by the employer of the service of a workman for any reason whatsoever". This emphasises the broad  interpretation   to  be   given  to   the  expression "retrenchment". [887 E-H, 888 A]      2. If due weight is given to the words "the termination by the  employer of  the service of a workman for any reason whatsoever" and if the words ’for any reason whatsoever" are understood to mean what they plainly say, it is difficult to escape the  conclusion that  the  expression  ’retrenchment’ must include  every termination  of the service of a workman by an  act of  the employer.  The underlying  assumption, of course, is that the undertaking is running as an under- 885 taking and  the employer  continues as an employer but where either on  account of  transfer of  the  undertaking  or  on account  of   the  closure  of  the  undertaking  the  basic assumption  disappears,   there  can   be  no   question  of ’retrenchment’  within   the  meaning   of  the   definition contained in s. 2(OO) of the Act. [888 A-C]      Hariprasad Shivshankar  Shukla v.  A.D. Divakar  [1957] SCR 121: applied.      By introducing  section  25  FF  and  Section  25  FFF, Parliament treated  the termination  of  the  service  of  a workman on  the transfer  or closure  of an  undertaking  as "deemed retrenchment".  The effect  was that  every case  of termination of  service by  act or  employer  even  if  such termination was  a consequence of transfer or closure of the undertaking was  to be  treated as  ’retrenchment’  for  the purposes  of   notice,  compensation  etc."  The  expression "termination of  service  for  any  reason  whatsoever"  now covers every kind of termination of service except those not expressly included in S. 25F or not expressly provided or by other provisions of the Act as 25 FF And 25 FFF. [888 C-F]      4. The  manifest object  of Section 25 FF and S. 25 FFF is to so compensate the workman for loss of employment as to provide him  the wherewithal to subsist until he finds fresh employment. The  non-inclusion of  ’voluntary retirement  of the workmen,  retirement of  workmen, on reaching the age of superannuation, termination  of the service of a workman, on the ground  af continued  ill-health’ in  the definition  of ’retrenchment’  clearly  indicate  and  emphasise  the  true object of  25F, 25  FF and  25 FFF  and the  nature  of  the compensation provided by those provisions." [888 F-H]      Indian Hume  Pipe Co.  Ltd. v. The Workman [1960] 2 SCR 32; followed.      5.   The    submission   that    notwithstanding    the comprehensive language of the definition of retrenchment’ in section  2(OO)   the  expression  continues  to  retain  its original meaning,  namely, discharge from service on account of surplus  age is  not correct.  It cannot  be assumed that Parliament was undertaking an exercise in futility to give a

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long winded  definition merely  to say  that the  expression means what it always meant. [889 D-E]      Hariprasad Shivshankar  Shukla v.  A.D. Divakar  [1957] SCR 121,  Hindustan Steel  Ltd. v.  The  Presiding  Officer, Labour Court  Orissa &  Ors. [1977] 1 SCR 585; State Bank of India v.  Shri N. Sundaramoney [1974] 3 SCR 160; Delhi Cloth and General Mills Ltd. v. Shambunath Mukherjee & Ors. [1978] 1 SCR 591; explained and followed.      Management of  M/s  Willcose  Buckwell  India  Ltd.  v. Jagannath &  Ors. AIR  1974 S.C. 1164; Employees in Relation v. Digmoden  Colliery v.  Their Workmen  [1965] 3  SCR  448; distinguished.      L.  Robert  D’Souza  v.  Executive  Engineer,  Southern Railway  and  Anr.  (1979)  KLJ  Kerala  211;  The  Managing Director, National  Garage v.  J. Gonsalves  (1962) KLJ  56. Goodlas Nerolac Paints v. Chief Commissioner, Delhi (1967) 1 LLJ 545;  Rajasthan State  Electricity Board v. Labour Court (1966) 1 LLJ. 381; over-ruled.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 3563 of 1979.      Appeal by  special leave  from the Award dated 9-7-1978 of the  Presiding  Officer  Central  Government.  Industrial Tribunal-Cum- 886 Labour Court,  New Delhi in I.D. No. 90 of 1977 published in Gazette of India on 11-8-1979.      M.K.  Ramamurthi,   and  Romesh   C.  Pathak   for  the Appellant.      Dr. Anand  Parkash,  Adarsh  Kumar,  Mrs.  Laxmi  Anand Parkash, and Jagat Arora for the Respondent.      The Judgment of the Court was delivered by      CHINNAPPA  REDDY,   J.-Santosh  Gupta,  the  appellant- Workman (a  woman),  was  employed  in  the  State  Bank  of Patiala, the  Mall, Patiala, from July 13, 1973, till August 21, 1974,  when her  services were  terminated. Though there were some breaks in service for a few days, those breaks are not relevant for the purpose of deciding this case though we may have  to advert  to them  in another connection. Despite the breaks,  the workman  had admittedly worked for 240 days in the  year preceding  August 21,  1974. According  to  the workman the  termination of  her services was ’retrenchment’ within the  meaning of  that expression  in s.  2(OO) of the Industrial Disputes  Act, 1947, since it did not fall within any of  the 3  excepted cases  mentioned in  s. 2(OO). Since there was ’retrenchment’, it was bad for non-compliance with the provisions of s. 25-F of the Industrial Disputes Act. On the other hand the contention of the management was that the termination of  services was not due to discharge of surplus labour. It was due to the failure of the workman to pass the test which  would have  enabled her  to be  confirmed in the service. Therefore,  it  was  not  retrenchment  within  the meaning of s. 2(OO) of the Industrial Disputes Act.      S. 25-F  prescribes that  no workman  employed  in  any industry who  has been  in continuous  service for  not less than one  year shall be retrenched by the 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; (b) the workman  has   been  paid   at  the  time  of  retrenchment, compensation which  shall  be  equivalent  to  fifteen  days

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average pay  for every  completed year of continuous service or any part thereof in a excess of six months; and(c) notice in the  prescribed  manner  is  served  on  the  appropriate Government or  any such authority as may be specified by the appropriate  Government  by  notification  in  the  official Gazette. There  is a  proviso to  clause (a) which dispenses with the necessity for the notice contemplated by the clause if the  retrenchment is  under an  agreement which specifies the date for the termination of service. 887      The expression  retrenchment is specially defined by s. 2(OO) of the Act and is 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 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;"      In Hariprasad  Shivshankar Shukla v. A. D. Divikar, the Supreme Court  took the view that the word ’retrenchment’ as defined in  s. 2(OO) did not include termination of services of all  workmen on  a bonafide  closure of an industry or on change of  ownership or management of the industry. In order to provide  for the  situations which the Supreme Court held were  not  covered  by  the  definition  of  the  expression ’retrenchment’, the  Parliament added s. 25 FF and s. 25 FFF providing for  the payment of compensation to the workmen in case of  transfer of  undertakings and in case of closure of undertakings respectively.      If  the  definition  of  ’retrenchment’  is  looked  at unaided and  unhampered by  precedent, one is at once struck by the remarkably wide language employed and particularly by the  use   of  the   words  "termination..  for  any  reason whatsoever". The  definition expressly  excludes termination of service as a ’punishment inflicted by way of disciplinary action’. The  definition does  not include,  so it expressly says, voluntary  retrenchment of the workman or retrenchment of the  workman on  reaching the  age of  superannuation  or termination of  the service  of the workman on the ground of continuous ill-health.  Voluntary retrenchment  of a workman or retrenchment  of the  workman  on  reaching  the  age  of superannuation can  hardly be  described as  termination, by the  employer,  of  the  service  of  a  workman.  Yet,  the Legislature took  special care to mention that they were not included within  the meaning of "termination by the employer of the  service of  a workman  for any  reason  whatsoever:. This, in our opinion, emphasizes the broad interpretation to 888 be given  to the  expression ’retrenchment’.  In our view if due weight  is given  to the  words "the  termination by the employer  of  the  service  of  a  workman  for  any  reason whatsoever" and if the words ’for any reason whatsoever’ are understood to mean what they plainly say, it is difficult to escape the  conclusion that  the  expression  ’retrenchment’ must include  every termination  of the service of a workman by an  act of  the employer.  The underlying  assumption, of course, is that the undertaking is running as an undertaking and the  employer continues as an employer but. where either on account  of transfer  of the undertaking or on account of the  closure   of  the   undertaking  the  basic  assumption

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disappears, there  can  be  no  question  of  ’retrenchment’ within the meaning of the definition contained in, S. 2(OO). This came to be realised as a result of the decision of this Court in  Hariprasad  Shivshanker  Shukla  v.  A.D.  Divikar (Supra). The Parliament then stepped in and introduced 25 FF and 25FFF by providing that compensation shall be payable to workmen in  case of  transfer or  undertaking or  closure of undertaking as  if the  workmen had  been retrenched. We may rightly say that the termination of the service of a workman on the  transfer or closure of an undertaking was treated by Parliament as  ’deemed retrenchment’.  The effect  was  that every case of termination of service by act cf employer even if such  termination involved  was a consequence of transfer or  closure   of  the  undertaking  was  to  be  treated  as ’retrenchment’ for the purposes of notice, compensation etc. Whatever doubts might have existed before Parliament enacted 25FF and  25FFF about  the width  of 25F there cannot now be any doubt  that the  expression ’termination’ of service for any reason  whatsoever now  covers every kind of termination of service  except those not expressly included in S. 25F or not expressly  provided for  by other  provisions of the Act such as Ss. 25FF and 25FFF.      In interpreting  these provisions  i.e. 25F,  25FF  and 25FFF one  must not ignore their object. The manifest object of these provisions is to so compensate the workman for loss of employment  as to  provide him the wherewithal to subsist until  he  finds  fresh  employment.  The  non-inclusion  of ’voluntary  retrenchment   of  the  workmen,  retirement  of workmen on  reaching the  age of superannuation, termination or the  service of a workman on the ground of continued ill- health’ in  the definition of ’retrenchment clearly indicate and emphasise  what we  have said  about the  true object of 25F, 25FF  and 25FFF  and the  nature  of  the  compensation provided by  those provisions.  The nature  of  retrenchment compensation has been explained in Indian Hume Pipe Co. Ltd. v. the Workmen as follows : 889           "As  the   expression  ’retrenchment  compensation      indicates it  is compensation  paid to a workman on his      retrenchment and it is intended to give him some relief      and to soften the rigour of hardship which retrenchment      inevitably causes.  The retrenched  workmens,  suddenly      and without  his fault, thrown on the street and has to      face  the   grim  problem   of  unemployment.   At  the      commencement of  his  employment  a  workmen  naturally      expects and looks forward to security of service spread      over a  long period but retrenchment destroys his hopes      and   expectations.    The   object   of   retrenchment      compensation is  to  give  partial  protection  to  the      retrenched employee  and his  family to  enable them to      tide over the hard period of unemployment".      Once the  object of  25F, 25FF  and 25FFF is understood and  the   true  nature  of  the  compensation  which  those provisions provide  is realised, it is difficult to make any distinction between  termination of  service for  one reason and termination of service for another.      Dr. Anand Prakash wants us to hold that notwithstanding the   comprehensive    language   of   the   definition   of "retrenchment" in  s. 2  (OO) the  expression  continues  to retain its  original meaning  which was,  according  to  the counsel, discharged from service on account of ’surplusage’. It is impossible to accept his submission. If the submission is right,  there  was  no  need  to  define  the  expression ’retrenchment’, and  in such  wide terms.  We cannot  assume that the  Parliament was undertaking an exercise in futility

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to give  a long  winded definition  merely to  say that  the expression means what it always meant.      Let us  now examine  the precedents  of this  Court  to discover whether  the true  position in law is what has been stated by us in the previous paragraphs. The earliest of the cases of  this Court  to which our attention was invited was Harprasad Shivashankar Shukla v. A. D. Divikar (supra). That was a  case which was decided before Ss. 25FF and 25FFF were brought on the statute book. In fact it was as a consequence of that  decision that the Industrial Disputes Act had to be amended and  these two provisions came to be introduced into the Act.  The question which arose for decision in that case was stated by the learned judges themselves as follows:           "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 890      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      services  of  all  workmen  in  an  industry  when  the      industry itself  ceases to  exist on a bonafide closure      or discontinuance of his business by the employer" The question so stated was answered by the learned judges in the following way :      "In the  absence of  any compelling  words to  indicate that the intention was even to include a bonafide closure of the whole  business, it  would, we  think, be  divorcing the expression altogether  from the  context to  give it  such a wide meaning  as is contended for by learned counsel for the respondents.. it  would be  against the entire scheme of the Act to  give the  definition clause relating to retrenchment such a  meaning  as  would  include  within  the  definition termination of  service of  all workmen by the employer when the business itself ceases to exist".      It is  true that  there are some observations which, if not properly  understood with  reference to  the question at issued seemingly support the submission of Dr. Anand Prakash that ’termination  of service  for  any  reason  whatsoever’ means no  more and  no less than discharge of a labour force which  is   a  surplus  age.  The  misunderstanding  of  the observations and  the  resulting  confusion  stem  from  not appreciating (1)  the lead  question  which  was  posed  and answered by the learned judges and (2) that the reference to ’discharge on  account of  surplus age’ was illustrative and not exhaustive  and by  way of  contrast with  discharge  on account of transfer or closure of business.      Management  of  M/s  Willcox  Buckwell  India  Ltd.  v. Jagannath and  Ors. and  Employers in  Relation to  Digwadih Colliery  v.   Their  Workmen  were  both  cases  where  the termination of  the Workman  from service  was on account of "surplusage" and,  therefore, the  cases were clear cases of retrenchment. They  do not  throw any  light on the question now at issue.      In State  Bank of India v. Shri N. Sundaramoney a Bench of three  judges of  this Court consisting of Chandrachud J. (as  be   then  was),  Krishna  Iyer,  J.,  and  Gupta,  J., considered the  question whether  s. 25F  of the  Industrial Disputes Act  was attracted  to a  case where  the order  of appointment carried an automatic cessation of service, 891 the period  of employment  working itself  out by  efflux of time and  not   by an  act of employer, Krishna Iyer, J. who spoke for the Court observed.

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         ’Termination .. for any reason whatsoever’ are the      key  words.  Whatever  the  reasons  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 protect  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. 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   s.    25F   and   automatic      extinguishment of  service be  effluxion of time cannot      be sufficient.  Words of  multiple import  have  to  be      winnowed judicially  to suit  the social  philosophy of      the statute.  So screened  we hold  that the transitive      and intransitive  senses are  covered  in  the  current      context. Moreover,  an employer  terminates  employment      not merely  by passing an order as the service runs. He      can do  so by  writing a  composite orders  one  giving      employment and  the other  ending  or  limiting  it.  A      separate, subsequent  determination  is  not  the  sole      magnetic pull  of the provision. A preemptive provision      to terminate  is struck  by the  same vice as the post-      appointment termination.  Dexterity of  diction  cannot      defeat the articulated conscience of the provision".      In Hindustan  Steel  Ltd.  v.  the  Presiding  Officer, Labour Court,  Orissa and  Ors.  the  question  again  arose whether  termination  of  service  by  efflux  of  time  was termination of service within the definition of retrenchment in s.  2 (OO)  of the  Industrial  Disputes  Act.  Both  the earlier decisions  of the  Court in  Hariprasad  Shivshankar Shukla v.  A.D. Divikar  and  State  Bank  of  India  v.  S. Sundaramoney (supra)  were  considered.  There  was  also  a request that  N. Sundaramoney’s  case  conflicted  with  the decision in  Hariprasad Shivshankar  Shukla v. A. D. Divikar and therefore  required reconsideration.  A Bench  of  three judges of this Court consisting of Chandrachud J (as he then was), Goswami  J and  Gupta J held that there was nothing in Huriparsad Shivshankar  Shukla v.  A.D.  Divikar  which  was inconsistent with  the decision  in N.  Sundaramoney’s case. They held that the decision in 892 Hariparsad Shivshankar’s case that the words "for any reason whatsoever" used in the definition of retrenchment would not include a  bonafide closure of the whole business because it would be  against the  entire scheme of the Act. The learned judges then  observed that, on the facts before them to give full effect  to the  words "for any reason whatsoever" would be consistent  with the  scope and  purpose of  s. 25 of the Industrial Disputes  Act and  not contrary  to the scheme of the  Act.   In  Delhi   Cloth  and  General  Mills  Ltd.  v. Shambhunath Mukharjee and Ors. Goswami, Shinghal and Jaswant Singh JJ,  held that striking off the name of a workman from the rolls  by the  management was termination of the service which was retrenchment within the meaning of s. 2(OO) of the Industrial Disputes Act.      Dr. Anand  Prakash, cited  before us  the decision of a Full Bench  of the  Kerala High Court in L. Rober D’Souza v. Executive Engineer, Southern Railway and Anr. and some other cases decided  by other High Courts purporting to follow the decision of  this Court  in Hariparsad Shivshankar Shukla v.

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A.D. Divikar’s  case, Shukla’s  case, we have explained. The ratio of  Shukla’s case  in fact, has already been explained in Hindustan  Steel Ltd.,  v. the  Presiding Officer, Labour Court Orissa  and Ors. The decisions in Hindustan Steel Ltd. v. the  Presiding Officer, Labour Court Orissa and Ors., and State Bank  of India  v. N.  Sundaramoney have, in our view, properly explained  Shukla’s case  and have  laid  down  the correct law.  The decision  of the  Kerala High  Court in L. Robert D’Souza v. Executive Engineer Southern Railway & Anr. and the  other decisions of the other High Courts to similar effect viz.  The ’Managing  Director, National Garages v. J. Gonsalve, Goodlas  Nerolac  Paints  v.  Chief  Commissioner, Delhi and  Rajasthan  State  Electricity  Board.  v.  Labour Court, are,  therefore, over-ruled.  We hold, as a result of our discussion,  that the  discharge of  the workman  on the ground-she did  not pass  the test  which would have enabled her to be confirmed was ’retrenchment’ within the meaning of s. 2(OO)  and, therefore,  the requirements of s. 25F had to be complied  with.   The order  of  the  Presiding  Officer, Central  Govt.  Industrial  Tribunal-cum-Labour  Court,  new Delhi, is  set aside  and the  appellant is  directed to  be reinstated with  full back  wages. The appellant is entitled to her cost. S.R.                                         Appeal allowed. 893