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CASE NO.: Appeal (civil)  7 of 2006

PETITIONER: Regional Manager, S.B.I.

RESPONDENT: Rakesh Kumar Tewari

DATE OF JUDGMENT: 03/01/2006

BENCH: Ruma Pal & Dr.AR.Lakshmanan

JUDGMENT: J U D G E M E N T

(Arising out of Special Leave Petition (Civil) No.20653 of 2003) WITH C.A.Nos.8-9 of 2006 (Arising out of SLP (C) Nos.20003-20004 of 2004)

RUMA PAL, J.

       Leave granted.

       The respondent was employed as a messenger  on a daily wage in a branch of the appellant Bank.  No appointment letter was issued to him but he  worked for 87 days in that capacity.  The question in  this appeal is whether the Labour Court had correctly  found that the termination of the respondent’s  service in 1982 was violative of Section 25G of the  Industrial Disputes Act, 1947 (referred to as the  ’Act’). After the respondent ceased to serve with the  appellant on 5th October, 1982, the respondent  raised a demand under Section 33-C (2) of the Act  before the Labour Court praying for an amount of Rs.  148.74 towards his wages for 8 days holidays  (including Sundays) which occurred during the  period of his employment. The appellant accepted  the demand and paid an amount of Rs. 155.23 to the  respondent which was accepted by the respondent in  full and final satisfaction of his claim.  About one  year later, in 1984, the  respondent raised an  industrial dispute claiming  that his services had  been wrongfully terminated by the appellant. The  Central Government referred the following disputes  to the Industrial Tribunal:  "Whether the action of the management of  State Bank of India, Region-III, Lucknow, in relation  to their Gonda Main Branch in terminating the  services of Shri Rakesh Kumar Tewari, subordinate  staff with effect from 6.10.1982 and not considering  him for further employment under Section 25H of  the Industrial Disputes Act is justified? If not, to  what relief is the concerned workman entitled?" The respondent filed a statement before the  Tribunal in which he claimed that he had been  appointed by the appellant as a whole time employee  against a vacancy in a permanent post.  He said that  after his discharge other employees were taken in  service against the same post, but he was not given

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a chance to continue. He challenged the non-issue of  appointment and termination letters as being in  violation of "service conditions provided in different  bank awards as well as bipartite settlement". It was  alleged that the bank had violated the provisions of  Section 25H of the Act and also paragraph 497 of the  Shastri Award which was applicable to the Bank. The appellant filed a written statement opposing  the claim of the respondent.  A preliminary objection  raised was that after recording  of full satisfaction of  his claim against the appellant, the respondent was  barred by the principles of res judicata from raising  an industrial dispute.  On the merits of the case it  was contended that the services of the respondent  had been validly terminated upon the payment of all  his dues. It was denied that the respondent had  been appointed against any vacancy.  It was stated  that he was engaged against a purely "temporary/ad  hoc requirement of the said branch of the bank". The Labour Court found that two employees,  namely, Shri Pawan Kumar and Rakesh Kumar  Tewari had been appointed as temporary workmen,  the first between August, 1982 to December, 1982  and the second from January, 1983 to April, 1983.   It was held that therefore the service of Pawan  Kumar should have been dispensed with and not the  respondent’s.  Furthermore, according to the  Tribunal, there was a clear violation of Sections 25G  and 25H of the Act. It was also held that the  respondent was not a casual but a temporary  workman in terms of paragraph 207 of the bipartite  settlement. It was held that in terms of the  settlement, the bank should have maintained a  register of all temporary employees and a service  book and should have issued an appointment and  termination letter to the respondent. According to  the Tribunal 14 days notice of retrenchment was also  required to be given which had not been complied  with.  Section 25G of the Act and Rule 78 of the  Industrial Disputes Act Central Rules was held to  have been violated. Circulars issued by the  Management being circulars Nos. 168/76 and 69/81  which prohibited the employment of temporary  employees beyond 90 days and the termination of  service of temporary employees after 89 or 90 days   was held to be unfair labour practice. In conclusion it  was held that the termination of the services of the  respondent was illegal and inoperative and that the  respondent was entitled to be reinstated with full  back wages. The appellant challenged the award under Article  226 of the Constitution before the High Court.  The  High Court upheld the view expressed by the Labour  Court and said that the Labour Court was right and  that the appellant’s appointment amounted to unfair  labour practice and was against the mandate of  Section 25H of the Act. The appellant challenged the decision of the  High Court by way of a Special Leave Petition under  Article 136 of the Constitution.  While issuing notice  on 17th November, 2003, this Court stayed the  operation of the High Court’s order.  In the  meantime and during the pendency of the  proceedings before the High Court the appellant has  paid the respondent a sum of approximately Rs. 3.80

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lakhs under Section 17-B of the Act. Mr. V.A.Bobde, learned counsel appearing on  behalf of the appellant, has contended that there  was no unfair labour practice indulged in by the  appellant as defined in Section 2(ra) read with the  5th  Schedule item 10 of the Act.  It was also  contended that the case for violation under Section  25G had never been pleaded by the respondent in  his statement of claim nor was any such alleged  violation referred to the Industrial Tribunal for  adjudication. It was submitted that Section 25G did  not in any event apply as the procedure for  retrenchment as defined in section 2(oo) of the Act  did not apply to persons on a daily-wage. Reliance  has been placed on the decision of Regional  Manager, State Bank of India Vs. Raja Ram,  (2004) 8 SCC 164, and Himanshu Kumar  Vidyarthi  & Ors. Vs. State of Bihar & Ors.  (1997) 4 SCC 391. It was contended that Section  25H which requires an employer to give re- employment to a  retrenched workman in preference  over other persons did not for that reason apply.  In  any event it had been complied with.  Three  advertisements had been issued by the appellant  calling upon retrenched employee to offer  themselves for reemployment but the respondent did  not apply. Mr Nagendra Rao appearing in SLP (C) Nos.  20003-20004 of 2004, State Bank of India Vs.  Kanhaiya Lal Sahu has also supported the  submissions of Mr. Bobde and has adopted his  submissions.  In his case however, the period of  service was 98 days between July,1980 to March,  1981 on daily wages. In that case also the Labour  Court had held that the termination of the  workman’s services was not justified and directed  the reinstatement of the workman with full back  wages.  The application filed by the appellant before  the High Court under Article 226 was  dismissed on  the ground that in compliance with an interim order  passed by the High Court the appellant had  reinstated the workman and the workman had been  continuing in service for the last 16 years.  The High  Court however allowed the writ petition to the extent  that the Labour Court had  directed the payment of  back wages.  It needs to be mentioned here that  until the order was passed by the High Court  disposing of the writ petition, the respondent had  been paid approximately Rs.200902/-on account of  salary.  The appellant filed a review application  stating that the  respondent had in fact not been  reinstated but had been paid idle wages without  taking any work from him in terms of the liberty  granted to the appellant by an interim order of the  High Court.  However, the review petition was  dismissed by merely recording that there was no  ground for review.  Apart from this factual error, Mr.  Rao has emphasized that Section 25H could not be  said to have been violated.  It was further argued  that the employees who would be affected by the   award of the Labour Court had not been made  parties in violation of Rule 3 of the Industrial Dispute  (Central) Rules 1957. Learned counsel appearing on behalf of the  respondents in both the appeals has submitted that

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the definition of retrenchment had undergone an  amendment in 1984, whereas both the terminations  in question had taken place prior thereto.  In terms  of the unamended definition, daily wage employees  whose services were terminated were also  retrenched. Reliance has been placed on the  decisions in Central Bank of India Vs. S. Satyam  & Ors. (1996) 5 SCC 419 ;  Workmen of Subong  Tea Estate Vs. The Outgoing Management of  Subong Tea Estate & Anr. (1964) 5 SCR 602;   Punjab Land Devl. & Reclamation Corpn. Ltd.  Vs. Presiding Officer, Labour Court (1990) 3  SCC 682, L.Robert D’Souza Vs. The Executive  Engineer, Southern Railway & Anr. (1982) 3  SCR 251 and S.M. Nilajkar & Ors. Vs. Telecom  District Manager, Karnataka, (2003) 4 SCC 27,  to contend that in the circumstances of the case the  finding of the Tribunal that the services of the  workmen had been illegally retrenched and that they  were entitled to reinstatement and backwages was  correct. Both civil appeals arising out SLP(Civil) No.  20653 of 2003 and SLP(Civil) Nos.20003-20004 of  2004 which are referred to respectively as the first  and second appeal, are disposed of by this  judgment.  Section 25G provides for the procedure for  retrenchment of a workman.  The respondents have  correctly submitted that the provisions of Sections  25G and 25H of the Act do not require that the  workman should have been in continuous  employment within the meaning of Section 25B  before he could said to have been retrenched.  The  decision in Central Bank of India v. S. Satyam  (1996) 5 SCC 419  is clear authority on the issue.   We see no reason to take a contrary view.   Section 25G requires the employer to "ordinarily  retrench the workman who was the last person to be  employed in a particular category of workman unless  for reasons to be recorded the employer retrenches  any other workman".  This "last come first go", rule  predicates. 1) that the workman retrenched belongs  to a particular category; 2) that there was no  agreement to the contrary;3) that the employer had  not recorded any reasons for not following the  principle. These are all questions of fact in respect of  which evidence would have to be led,  the onus to  prove the first requirement being on the workman  and the second and third requirements on the  employer.  Necessarily a fair opportunity of leading  such evidence must be available to both parties.   This would in turn entail laying of a foundation for  the case in the pleadings.  If the plea is not put  forward such an opportunity is denied, quite apart  from the principle that no amount of evidence can be  looked into unless such a plea is raised. [See Siddik  Mahomed Shah  vs. Mt. Saran  AIR 1930 PC 57  (1); Bondar Singh & Or.  Vs.Nihal Singh and  Ors.  (2003) 4 SCC 161].   In J.K.Iron and Steel Company Ltd. vs. The  Iron and Steel Mazdoor Union Kanpur  (1955) 2  SCR 1315, the court noted that even though  industrial tribunals are not bound by all technicalities  of civil courts: "\005\005.they must nevertheless follow

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the same general pattern.  Now the  only point of requiring pleadings and  issues is to ascertain the real dispute  between the parties, to narrow the area  of conflict and to see just where the  two sides differ.  It is not open to the  Tribunals to fly off at a tangent and  disregarding the pleadings, to reach  any conclusions that they think are just  and proper".  

       In the first appeal, the respondent had raised no  allegation of violation of Section 25G in his  statement of claim before the Industrial Tribunal.   His only case was that Section 25H of the Act had  been violated.  Section 25H unlike Section 25G deals  with a situation  where the retrenchment is  assumed  to have been validly made.  In the circumstances, if  the employer wishes to re employ any employee, he  must offer to employ retrenched workman first and  give them preference over others.  The two sections   viz 25G and 25H therefore operate in different fields  and deal with two contradictory fact situations.  The  Tribunal ignored the fact that there was no pleading  by the respondent in support of an alleged violation  of Section 25G.  Indeed the order of reference by the  Central Government did not also refer to Section 25G  but only to Section 25H.  In the circumstances it was  not open to the Tribunal to "go off on a tangent"   and conclude that the termination of service of the  respondent was invalid because of any violation of  Section 25G by the appellant.           Besides the Tribunal in both appeals did not  consider the plea of the appellant that there was no  vacancy against which the respondent had been  appointed and that it was merely an ad hoc  arrangement.  In taking into consideration the  names of the two employees who were appointed  temporarily after the termination of services of the  respondent, the Tribunal did not also consider in  what capacity these persons had been appointed  namely whether they were actually appointed as  messenger  in place of the respondent.   The respondent’s case in the first appeal of  violation of paragraph 497 of the Shastri Award was  also wholly misconceived.  That paragraph deals with  the rights of apprentices and has no application to  temporary employees like the respondent. Assuming  that there was a violation of the Shastri Award by  the appellant in both cases either in not issuing  appointment letters or not maintaining a seniority  list, service book in respect of temporary employees  etc., this would not mean that therefore the  respondents had been properly appointed and their  services wrongly terminated.  Admittedly no  procedure whether in law or under any award or  settlement was followed in appointing either of the  respondents in both appeals. No condition of services  were agreed to and no letter of appointment was  given.  The nature of the respondents’ employment  was entirely ad hoc.  They had been appointed  without considering any rule.  It would be ironical if  the person who have benefited by the flouting of the  rules of appointment can rely upon those rules when

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their services are dispensed with. The Tribunal also failed to deal with the issue  raised by the appellant in the first appeal that no  grievance had been made nor any demand raised by  the respondent either in his application under  Section 33 C (2) or otherwise that his services had  been illegally terminated. It may be that the  principles of res judicata may not disqualify the  respondent from contending that his termination was  invalid, nevertheless non raising of the issue earlier  was a factor which the Tribunal should have taken  into consideration in weighing the evidence.   Significantly the High Court upheld the decision of  the Tribunal as if the Tribunal had proceeded under  Section 25H. As we have said Section 25H proceeds  on the assumption that the retrenchment has been  validly made.  Therefore, the High Court’s view that  the termination was invalid under Section 25H  cannot in any event be sustained. Section 25H says: "25H. Re-employment of  retrenched workmen.- Where  any workmen are retrenched, and  the employer proposes to take into  his employ any persons, he shall,  in such manner as may be  prescribed, give an opportunity to  the retrenched workmen who are  citizens of India to offer  themselves for re-employment,  and such retrenched workmen who  offer themselves for re- employment shall have preference  over other persons".  

A statutory obligation is thus cast on the  employer to give an opportunity to the retrenched  workman to offer himself for re-employment.           In fact pursuant to settlements entered into  between the appellant and the employees’ union,  several advertisements had been issued by the  appellant offering re-employment to retrenched  workers.  It may be that these facts were not raised  by the appellant either before the Tribunal or the  High Court, but as was said in Regional Manager  SBI vs. Raja Ram (2004) 8 SCC 164 at p. 168: "However the respondent’s counsel  is incorrect in his submission that  the benefit of the Scheme could  not have been availed of by the  respondent because no offer was  made to the respondent by the  appellant.  The settlements were  advertised and it was for the  respondent to have taken  advantage of the Scheme.   Although the settlements are,  strictly speaking, not relevant to  the question of the correctness of  award, nevertheless their terms  are necessary to be considered for  the purpose of deciding whether,  assuming everything in favour of  the respondent and against the  appellant, the respondent should

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be reinstated as a casual employee  since the Scheme had been  propounded by the employer with  workmen with a view to granting  benefit to persons whose services  had been terminated as casual  employees".  

       Neither of the respondents in the appeals had  offered themselves for re-employment. The conclusion of the Tribunal in both appeals  that the circulars endorsed an unfair labour practice  being followed by the appellant or that the appellant  had indulged in unfair labour practice was also  incorrect.  Unfair labour practice has been defined in  Clause (ra) of Section 2 of the Act as a meaning any  of the practices specified in the Fifth  Schedule.  The  Fifth Schedule to the Act contains several items of  unfair labour practices on the part of the employer  on the one hand and on the part of workmen on the  other.  The relevant item is Item 10 which reads as  follows: "To employ workmen as ’badlis’,  casuals or temporaries and to  continue them as such for years,  with the object of depriving them of  the status and privileges of  permanent workmen".  

       We have already dealt with this issue in Raja  Ram’s case (supra) where we had said: "before an action can be termed as  an unfair labour practice it would  be necessary for the Labour Court  to come to a conclusion that the  badlis, casuals and temporary  workmen had been continued for  years, as badlis, casuals or  temporary workmen, with the  object of depriving them of the  status and privileges of permanent  workmen.  To this has been added  the judicial gloss that artificial  breaks in the service of such  workmen would not allow the  employer to avoid a charge of  unfair labour practice.  However, it  is the continuity of service of  workmen over a period of years  which is frowned upon.  Besides, it  needs to be emphasized that for  the practice to amount to unfair  labour practice it must be found  that the workman had been  retained on a casual or temporary  basis with the object of depriving  the workman of the status and  privileges of a permanent  workman. There is no such finding  in this case.  Therefore, Item 10 in  List I of the Fifth Schedule to the  Act cannot be said to apply at all to  the respondent’s case and the  Labour Court erred in coming to  the conclusion that the respondent

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was in the circumstances, likely to  acquire the status of a permanent  employee".  

       We see no reason to take a contrary view   particularly when the facts in Raja Ram’s case are  materially indistinguishable from those in the  appeals now before us.         In directing reinstatement, neither the High  Court nor the Tribunal had considered that the order  might affect the interest of those others who were  employed after the respondent.  As was said in  Central Bank of India vs. S. Satyam (supra): "The other persons employed in   the industry during the intervening  period of several years have not  been impleaded.  Third party  interests have arisen during the  interregnum.  These third parties  are also workmen employed in the  industry during the intervening  period of several years.  Grant of  relief to the writ petitioners  (respondent herein) may result in  displacement of those other  workmen who have not been  impleaded in these proceedings, if  the respondents have any claim for  re-employment".

Besides in the second appeal admittedly  several persons had been appointed prior to the  respondent on a temporary basis.  They would have  prior rights to reemployment over the respondent  on the basis of the principles contained in Sections  25G or 25H. In the circumstances, the award of the Tribunal  and the decision of the High Court holding that the  respondent’s services were wrongfully terminated  were both incorrect.  They are accordingly set  aside. There is as such no question of payment of  any back wages. Additionally the only other reason  given by the High Court for directing reinstatement  of the respondent in the second appeal was based  on an equitable consideration of the respondent  having allegedly been reinstated.  The factual basis  for this conclusion was erroneous.  Both appeals are  accordingly allowed. However the appellant has  paid sums to the respondents in both the cases  which  sums    shall  not be  recoverable  from   the  

respondents by reason of the allowing of these  appeals.   There will be no order as to costs.