http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 9  

PETITIONER: MANAGEMENT OF KARNATAKA STATE ROAD TRANSPORT CORPORATION,BAN

       Vs.

RESPONDENT: M. BORAIAH & ORS.

DATE OF JUDGMENT01/11/1983

BENCH: MISRA RANGNATH BENCH: MISRA RANGNATH SEN, AMARENDRA NATH (J)

CITATION:  1983 AIR 1320            1984 SCR  (1) 783  1984 SCC  (1) 244        1983 SCALE  (2)652  CITATOR INFO :  RF         1986 SC1680  (4)

ACT:      Industrial  Disputes   Act  1947,  Ss.  2  (oo)  &  25F "Retrenchment"--What is--Termination of services of employee during probation-Whether "retrenchment".

HEADNOTE:      The appellant-Corporation  terminated the employment of some of  its employee-respondents  who were  probationers on the ground of unsatisfactory service, some during the period of their  probation and others during the extended period of probation.      The Labour  Court, to  which the  dispute was referred, held that  s. 25F  of the  Industrial Disputes  Act  had  no application, and  that for  this reason  the  discharge  was invalid.      Dismissing the  employer’s writ petition a Single Judge held that  the orders  of discharge amounted to retrenchment as defined  in S.2  (oo) of  the Act  and were  bad for non- compliance of  s.25F. A  Division Bench  of the  High  Court upheld this decision.      In the  appeal to this court it was contended on behalf of the  appellant that  the services  of the respondents had been terminated  on the ground of their unsuitability and it was not  a case  of disbanding  surplus  labour  force  and, therefore, such termination did not amount to retrenchment.      Dismissing the appeal, ^      HELD:  1.   Once  the   conclusion  is   reached   that retrenchment as  defined in  s. 2  (oo)  of  the  Industrial Disputes Act  covers every  case of  termination of  service except those  which have  been embodied  in the  definition, discharge from  employment or  termination of  service of  a probationer would also amount to retrenchment. [794 E]      In the  instant case the requirements of s. 25F had not been complied with.[794 F] 784      2. The stage has come when the views indicated in State Bank of  India v. N. Sundara Money [1976] 3 SCR 160 has been "absorbed into  the consensus"  and there  is no  scope  for putting the  clock back  or for an anti-clockwise operation.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 9  

[794 D]      Hariprasad Shivshanker  Shukla v.  A.D.  Divikar,  1957 S.C.R. 121;  Hindustan Steel  Ltd. v. The Presiding Officer, Labour Court;  Orissa &  Ors. [1977]  1 S.C.R.  586; Santosh Gupta v.  State Bank of Patiala, [1980] 3 S.C.R. 884; Indian Hume Pipe co. Ltd. v. The Workmen, [1960] 2 S.C.R. 32; Mohan Lal v.  Management of  M/s. Bharat Electronics Ltd. [1981] 3 S.C.R.  518;  Surendra  Kumar  Verma  etc.  v.  The  Central Government Industrial Tribunal--cum--Labour Court, New Delhi and Anr.[1981] 1  S.C.R. 789;  L. Robert  D’  Souza  v.  The Executive Engineer,  Southern Railway & Anr. [1982] 3 S.C.R. 251 referred to.

JUDGMENT:      CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 3085 of 1981 and 3628-3649 of 1982.      From the  judgment and  Order dated  the 6th July, 1981 and 5th  August, 1982  of the  High Court  of  Karnataka  at Bangalore in  Writ Appeal  Nos. 724/81  and  1324/80,  1470, 1788, 1894/81,  55, 94,  368/82, 475/81,  1133/82, 21310/80, 22158, 21822/80,  10531,  10612/82,  1086,  1778/80,  12332, 12890/78, 19550/79, 11089/82, 11228 & 19410/82.      N. K.  Sharma, Ms.  Depika Saxena  and Vineet Kumar for the appellants.      R. K. Garg, D. K. Garg, P. R. Ramasesh and Ms. R. Bagai for the respondents.      The Judgment of the Court was delivered by      RANGANATH MISRA,  J. The  employer-Karnataka State Road Transport Corporation--created  under a  State Act  entitled the Transport Corporation Act of 1950 (’Corporation Act’ for short) is in appeal by special leave and the common decision of a  Division Bench  of the  High  Court  which  held  that termination of  employees while  on probation  on ground  of unsuitability  amounted   to  retrenchment   and  for   non- compliance with  the provisions  of s. 25F of the Industrial Disputes  Act,   1947  (’Disputes   Act’  for   short),  the termination is bad, is challenged.      As per  Rule 7 made under s. 45 of the Corporation Act, direct recruits  are to  be on  probation for  two years and such probation  can be extended. The employer terminated the employment 785 of some  of the  employees  during  the  initial  period  of probation and  of some  others during the extended period on the  ground   of  unsatisfactory   service.   Thereupon   an industrial dispute  was raised  questioning the  legality of their termination  and the  State  Government  referred  the dispute to  the Labour Court for adjudication under s. 10 of the Disputes  Act. The  Labour Court  held,  overruling  the stand of the employer that s. 25F of the Disputes Act had no application, to  the effect  that the discharge was invalid. The  employer   Corporation  came   before  the  High  Court challenging the  Award. A learned single Judge dismissed the writ petition  holding that  the order of discharge amounted to retrenchment  as defined  in s. 2(oo) of the Disputes Act and those  orders were  bad for noncompliance of s. 25F. The employer Corporation  challenged the  decision of the single Judge before  a Division Bench and the Division Bench by the impugned judgment  upheld the decision of the learned single Judge.      Admittedly the  employees were probationers at the time of discharge  from service.  There is  no dispute  that as a condition precedent  to discharge the requirements of s. 25F

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 9  

of the  Disputes Act  had not  been complied  with.  If  the discharge of  the employees  would amount  to  retrenchment, appellant’s counsel  does not  dispute  that  the  order  of discharge would  be bad  for non-compliance of s. 25F of the Disputes Act.  The only  question for consideration in these appeals,  therefore,   is  whether   the  discharge  of  the employees from service amounted to retrenchment.      It is  the stand  of the  employer Corporation that the employees were  probationers and  the order  of discharge in every case  was on  account of unsatisfactory service. Since the order of discharge has been grounded upon unsatisfactory service during  the period  of probation, it has been argued that such termination of service is not retrenchment.      Section 2(oo)  of the Disputes Act defines retrenchment to  mean:  "’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 786 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."      A  Constitution  Bench  of  this  Court  in  Hariprasad Shivshanker  Shukla  v.  A.D.  Divikar,  examined  the  true meaning of  the  expression  ’retrenchment’  and  posed  the following question:           "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  services 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." It went on to say:           "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 for      the words used in the statue. We are not concerned with      any presumed  intention of the legislature; our task is      to get  at 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. What is the ordinary, accepted notion of      retrenchment in an industry.      Let us  now see  how far  that meaning fits in with the      language used.  We have  referred earlier  to the  four      essential  requirements  of  the  definition,  and  the      question is,  does the ordinary meaning of retrenchment      fulfil those  requirements !  In our  opinion it  does.      When  a  portion  of  the  staff  or  labour  force  is      discharged as  surplusage  in  a  continuing  business,      there are  (a) termination of the service of a workman;      (b) by the employer; (c) for 787      any reason  whatsoever; and  (d) otherwise  than  as  a      punishment inflicted by way of disciplinary action." The Constitution Bench further said:           "The legislature  is using the expression ’for any

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 9  

    reason whatsoever’  says in effect : It does not matter      why you  are discharging  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  even  to      include a  bona fide  closure of the whole business, it      would, we think, be divorcing the expression altogether      from its  context to  give it such a wide meaning as is      contended for  by learned  counsel for the respondents.      What is  being defined is retrenchment, and that is the      context  of   the  definition;   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      meaning different  from or  in excess  of the  ordinary      meaning is 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." After referring  to certain decisions the Constitution Bench concluded by saying:           "For the reasons given above, we hold, contrary to      the view  expressed by  the  Bombay  High  Court,  that      retrenchment as  defined in  s. 2(oo) and as used in s.      25F has  no wider  meaning than  the ordinary, accepted      connotation of  the word;  it means  the  discharge  of      surplus labour  or staff by the employer for any reason      whatsoever otherwise  than as a punishment inflicted by      way of disciplinary action,"      The ratio  of  this  decision  has  been  pressed  into service by  the appellant  Corporation for its stand that in the instant  case the  services have  been terminated on the ground of  unsuitability and it was not a case of disbanding surplus labour force and, therefore, did 788 not amount  to retrenchment.  On the other hand, counsel for the employees  have contended that the consensus of judicial opinion in  later decisions  of this  Court is  against  the appellant’s stand.  The first  decision is the case of State Bank of  India v. N. Sundara Money. A Bench of three learned Judges of  this Court  referred to the definition in section 2(oo) of the Disputes Act and observed :           "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."      Then came  the decision  in Hindustan Steel Ltd. v. The Presiding Officer,  Labour Court, Orissa & Ors, when a three Judge Bench of this Court again examined the true meaning of the definition  of the  expression ’retrenchment’.  On  this occasion  reference  was  made  to  the  Constitution  Bench decision and  as would  appear from  page 589 of the Report, counsel had  submitted that the three Judge decision of this Court in  Sundara  Money’s  case  (supra)  was  in  apparent conflict with  the Constitution  Bench decision and required reconsideration. This  submission of  counsel was considered and facts  of the  Constitution Bench case were analysed and Gupta, J, who spoke for the Court, stated:           "On the  facts of  the case before us, giving full      effect to  the words  ’for any reason whatsoever, would      be consistent with the scope and purpose of section 25F      of the Industrial Disputes Act, and not contrary to the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 9  

    scheme  of   the  Act.  We  do  not  find  anything  in      Hariprasad’s case  which is  inconsistent with what has      been held  in State  Bank of  India v. N. Sundara Money      (supra)."      The same  question came  up for  consideration before a two Judge Bench of this Court in Santosh Gupta v. State Bank of Patiala. The facts of the case were more or less the same as  in  the  present  dispute.  Employment  there  had  been terminated upon  failure of  the workman  to pass  the  test which would  have enabled her to be confirmed in service and it was contended on behalf of the 789 management that  termination  of  service  was  not  due  to discharge of surplus labour force and, therefore, it did not amount to  retrenchment. The  Division Bench referred to the Constitution Bench decision and observed:           "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  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’  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      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 25F  and  25FFF  by  providing  that      compensation shall  be payable  to workmen  in case  of      transfer of 790      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 of employer even      if such  termination  involved  was  a  consequence  of      transfer or  closure  of  the  undertaking  was  to  be

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 9  

    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." The learned  Judges drew support from what had been observed in Indian  Hume Pipe Co. Ltd. v. The Workmen, "The object of retrenchment compensation  is  to  give  protection  to  the retrenched employee  and his  family to  enable them to tide over the hard period of unemployment," and observed:           "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." Chinnappa Reddy,  J. thereafter referred to the Constitution Bench decision and said:           "It is  true  that  there  are  some  observations      which, if not properly understood with reference to the      question at  issue, 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 surplusage. The      misunderstanding of  the observations and the resulting      confusion stem  from  not  appreciating  (1)  the  lead      question which 791      was posed  and answered  by the  learned judges and (2)      that  the   reference  to   ’discharge  on  account  of      surplusage’ was  illustrative and not exhaustive and by      way of  contrast with  discharge on account of transfer      or closure of business.’ It was further observed:           "The ratio  of Shukla’s  case in  fact has already      been  explained,   in  Hindustan   Steel  Ltd.  v.  The      Presiding Officer,  Labour  Court  Orissa  &  Ors.  The      decisions in  Hindustan Steel  Ltd.  v.  The  Presiding      Officer, Labour  Court, Orissa & Ors. and State Bank of      India v.  N. Sundara  Money have, in our view, properly      explained Shukla’s  case and have laid down the correct      law."      The  same   question  arose  for  consideration  before another two  Judge Bench  in Mohan Lal v. Management of M/s. Bharat Electronics Ltd. Desai, J. spoke for the Court thus:           "Niceties and  semantics apart, termination 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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 9  

    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. 792      There is thus termination of 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      view 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      anchor till  the later pronouncements may not be out of      place.  In  Hariprasad  Shivshanker  Shukla  v.  A.  D.      Divikar, 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 s.      2(oo) of  the Act  was left  open.  Reverting  to  that      question, the  view  was  re-affirmed  but  let  it  be      remembered  that  the  two  appeals  which  were  heard      together   in    Shukla’s   case    were    cases    of      closure,............"      In the  majority judgment  in Surendra Kumar Verma etc. v. The  Central  Government  Industrial  Tribunal-cum-Labour Court, New  Delhi &  Anr., the  ratio of the latter case has been followed.  A Bench of two learned Judges in the case of L.  Robert  D’Souza  v.  The  Executive  Engineer,  Southern Railway &  Anr., re-examined  the entire position. Desai, J. who again spoke for the Court indicated: 793           "At the outset it must at once be pointed out that      the construction  put by  the Full  Bench of the Kerala      High Court on the expression ’retrenchment’ in s. 2(oo)      of the  Act that it means only the discharge of surplus      labour  or   staff  by  the  employer  for  any  reason      whatsoever is no more good law and in fact the decision      of the  full Bench  of Kerala  High Court  in L. Robert      D’Souza v. Executive Engineer, Southern Railway & Anr.,      [(1970) 1  LLJ 2111] has been specifically overruled by      this Court  in Santosh  Gupta v. State Bank of Patiala.      This Court has consistently held in State Bank of India      v. N.  Sundara Money, Hindustan Steel Ltd. v. Presiding      Officer, Labour  Court, and Delhi Cloth & General Mills      Ltd. v. Shambhu Nath Mukherjee, [(1971) 1 SCR 591] 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. It was attempted to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 9  

    urge that  in view  of the  decision of  this Court  in      Pipraich Sugar  Mills  Ltd.  v.  Pipraich  Sugar  Mills      Mazdoor Union,  the ratio of which was re-affirmed by a      Constitution  Bench   of  this   Court  in   Hariprasad      Shivshanker Shukla  v. A.  D. Divikar,  all  the  later      decisions run  counter to  the Constitution  Bench  and      must be treated per in curium. This contention need not      detain us  because first  in Hindustan Steel Ltd. case’      than in  Santosh Gupta’s  case, (supra)  and lastly  in      Mohan Lal  v. Bharat  Electronics Ltd., it was in terms      held that  the decision in Sundara Money’s case was not      at  all   inconsistent  with   the  decision   of   the      Constitution Bench  in Hariprasad Shukla’s case and not      only required  no reconsideration  but the  decision in      Sundara Money’s case was approved in the aforementioned      three cases.  ’This position  is further  buttressed by      the decision  in Delhi  Cloth & General Mills Ltd. case      wherein striking  off the  name of  a workman  from the      roll was held to be retrenchment."      In the  series  of  cases  that  have  come  later  the Constitution Bench  decision has been examined and the ratio indicated therein  has been  confined to  its own facts. The view indicated  by this Court in that case obviously did not meet with the approval of Parliament and, 794 therefore, the  law has been subsequently amended as already indicated. Lord Devlin once observed:           "I am  not one  of those who believe that the only      function of  law is to preserve the status quo. Rather,      I should  say that law is the gate-keeper of the status      quo. There  is always  a host  of new  ideas  galloping      around the  outskirts of society’s thought. All of them      seek admission  but each  must first win its spurs; the      law at  first resists,  but will  submit to a conqueror      and become  his servant.  In a changing society the law      acts a  valve. New policies must gather strength before      they can  force an  entry; when  they are  admitted and      absorbed into  the consensus,  the legal  system should      expand to  hold them,  as also  it should  contract  to      squeeze out  old policies which have lost the consensus      they once obtained." We are  inclined to  hold that  the stage  has come when the view indicated  in Money’s  case (supra)  has been "absorbed into the  consensus" and  there is  no scope for putting the clock back or for an anti-clockwise operation.      Once the  conclusion is  reached that  retrenchment  as defined in  s.2(oo) of the Disputes Act covers every case of termination of service except those which have been embodied in the  definition, discharge from employment or termination of  service   of  a   probationer  would   also  amount   to retrenchment. Admittedly  the requirements  of s. 25F of the Disputes Act  had not  been complied  with in  these  cases. Counsel for the appellant did not very appropriately dispute before us  that the  necessary consequence of non-compliance of s.  25F of  the Disputes  Act in  a case where it applied made the  order of  termination void. The High Court, in our opinion, has, therefore, rightly come to the conclusion that in these  cases  the  order  of  retrenchment  was  bad  and consequently it  upheld the  Award of the Labour Court which set aside  those orders  and gave  appropriate relief. These appeals are  dismissed. There  would be  one set  of  costs. Consolidated hearing fee is assessed at Rs. 5,000. N.V.K.                                     Appeal dismissed. 795

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 9