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Monday, July 22, 2013

A Daily worker on termination of his service not entitled for re-employment as of right as the termination is not amounts to retrenchment of an employee = whether termination of services of the respondent on the expiry of the contract period would amount to retrenchment within the meaning of Section 2(oo) of the Industrial Disputes Act, 1948 (for short “the ID Act”). = Section 2(bb) says that if the termination of the service of workman is as a result of non-renewal of the contract between the employer and the workman on its expiry of such contract being terminated under a stipulation in that behalf contained therein, the same would not constitute retrenchment.= Facts would clearly indicate that the respondent’s service was terminated on the expiry of the fixed periods mentioned in the office orders and that he had worked only for 54 days. The mere fact that the appointment orders used the expression “daily wages” does not make the appointment “Casual” because it is the substance that matters, not the form. The contract of appointment consciously entered into by the employer and the employee would, over and above the specific terms of the written agreement, indicates that the employment is short-lived and the same is liable to termination, on the fixed period mentioned in the contract of appointment.= “25G. Procedure for retrenchment.- Where any workman in an industrial establishment, who is a citizen of India, is to be retrenched and he belongs to a particular category of workmen in that establishment, in the absence of any agreement between the employer and the workman in this behalf, the employer shall ordinarily retrench the workman who was the last person to be employed in that category, unless for reasons to be recorded the employer retrenches any other workman. 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 2[ to the retrenched workmen who are citizens of India to offer themselves for re- employment and such retrenched workman] who offer themselves for re- employment shall have preference over other persons.”= Section 25H will apply only if the respondent establishes that there had been retrenchment. Facts will clearly indicate that there was no retrenchment under Section 2(oo) read with Section 2(bb) of the ID Act. Consequently, Section 25H would not apply to the facts of the case. Similar is the factual and legal situation in the civil appeal arising out of SLP(C) No.5387 of 2012 as well. We are sorry to note that the Labour Court, learned Single Judge and the Division Bench have not properly appreciated the factual and legal position in this case. When rights of parties are being adjudicated, needless to say, serious thoughts have to be bestowed by the Labour Court as well as the High Court. For the above-mentioned reasons we allow both the appeals, set aside the award passed by the Labour Court and confirmed by the High Court. However, there will be no order as to costs.

                     published in http://judis.nic.in/supremecourt/imgst.aspx?filename=40563
                                             REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPEALLATE JURISDICTION

                       CIVIL APPEAL NO.  5498  OF 2013
                   (Arising out of SLP(C) No.5387 of 2012)


Bhavnagar Municipal Corporation                    Appellant

                                   Versus

Salimbhai Umarbhai Mansuri                         Respondent

                                    with

                      CIVIL APPEAL NO.  5510    OF 2013
                   (Arising out of SLP(C) No.5390 of 2012)


            J U D G M E N T


K.S. Radhakrishnan, J.


      Leave granted.

1.    We are concerned in this case with the  question  whether  termination
of services of the respondent on the expiry of  the  contract  period  would
amount  to  retrenchment  within  the  meaning  of  Section  2(oo)  of   the
Industrial Disputes Act, 1948 (for short “the ID Act”).   We  may  refer  to
the facts in Civil  Appeal  arising  out  of  SLP(C)  No.5390  of  2012  for
disposal of both the appeals, since the question of  law  involved  in  both
the appeals is the same.

2.    The respondent in Civil Appeal @ SLP(C) No.5390 of 2012 was  appointed
on daily wages as a helper in the Water Works Department  in  the  appellant
Corporation  for  two  fixed  periods  from  02.05.1988  to  30.06.1988  and
04.07.1988 to 15.07.1988, under two separate office orders dated  19.05.1988
and  01.07.1988.  
The  service  of  the  respondent  stood  terminated   on
15.07.1988 after serving a total period of 54 days.
The  respondent  raised
an industrial dispute on 07.12.1989 and the  same  was  referred  to  Labour
Court for adjudication which was registered as  Reference  (LCB)  No.606  of
1989.

3.    The Labour Court on  18.10.2003  passed  an  award  holding  that  the
Corporation had violated Section 25G and H of the ID Act by not calling  the
respondent for work before appointing new workmen.  
The  Labour  Court  then
directed the Corporation to reinstate  the  respondent  with  continuity  in
service.  
Aggrieved by above-mentioned order the Corporation preferred  Writ
Petition SCA No.3290 of 2004 before the Gujarat High Court.
The High  Court
vide its judgment dated 12.08.2010 set aside the award of the  Labour  Court
and remanded the matter to the Labour Court for  fresh  consideration.  
The
Labour Court on 15.11.2010  held  that  the  Corporation  had  violated  the
provisions of Sections 25G and H of the ID Act and directed the  Corporation
to reinstate the respondent with continuity in  service  with  consequential
benefits.  
The Corporation then  preferred  Writ  Petition  SCA  No.7918  of
2011, which was dismissed by the learned Single Judge  vide  judgment  dated
29.06.2011 against which Corporation preferred LPA  No.1275  of  2011  which
was also dismissed.  
Aggrieved by the same  the  Corporation  has  preferred
this appeal.

4.    Shri Jatin Zaveri,  learned  counsel  appearing  for  the  Corporation
submitted that the Labour Court as well as the  High  Court  has  failed  to
appreciate the various terms and conditions of appointment and  committed  a
grave error in holding that the Corporation had violated the  provisions  of
Section 25G and H of the ID Act.  Learned counsel submitted  that  going  by
the terms and conditions of the appointment  order  would  clearly  indicate
that the provisions of Section 2(oo) and (bb) would apply to  the  facts  of
the  case,  consequently,  the  respondent  cannot  be  said  to  have  been
retrenched and hence the provisions of Section 25G  and  H  of  the  ID  Act
would not be attracted.

5.    Mr. O.P. Bhadani, learned counsel appearing  for  the  respondent,  on
the other hand, pointed out that there has been a  clear  violation  of  the
provisions of Section 25G and H  of  the  ID  Act  by  not  reinstating  the
respondent in service.  Learned counsel submitted that the Labour Court  has
elaborately considered the rival contentions of the parties and  rendered  a
reasoned award which has been affirmed by the learned Single Judge  as  well
as the Division Bench of  the  High  Court  and,  therefore,  calls  for  no
interference by this Court under Article 136 of the Constitution of India.

6.    We are of the view that the Labour Court as well  as  the  High  Court
have completely misunderstood the scope of Section 2(oo), (bb), as  well  as
Section 25G and H of the ID Act.  The contract of employment and  the  terms
and conditions contained therein are  crucial  in  the  application  of  the
above-mentioned  provisions.   Facts  would  clearly   indicate   that   the
respondent had worked only for 54 days in two fixed periods  and  on  expiry
of the second term his service stood automatically terminated on  the  basis
of the contract of appointment.   A  reference  to  the  contract  would  be
useful to understand the nature of appointment of  the  respondent.   Clause
1, 2 and 7 to 10 of the office order dated 19.05.1988  are  relevant,  which
are extracted herein below for ready reference:
      “1.   With reference to your application dated _____,  a  meeting  was
      held with us/the Commissioner and subject to the following  conditions
      arrived at with mutual consent you are  being  appointed  as  a  Daily
      Wager Helper in the Water Works Department from 1.5.88 to 30.6.88 at a
      daily minimum wages of Rs.12/13 and dearness allowance, daily  special
      allowance of Rs.10/20 aggregating to Rs.22/33 in accordance  with  the
      Approval No.Commi O/CPO/M.No.204 dated 16.5.88 and upon completion  of
      last  duty  on  30.6.88,  your  service  shall   stand   automatically
      terminated.
      2.    Since a definite date of termination of your  service  has  been
      specified, the Municipal Corporation shall not be liable and you shall
      not be entitled to any notice, wages in lieu of  notice,  retrenchment
      compensation etc.
      3.     x x x x
      4.     x x x x
      5.     x x x x
      6.    x x x x
      7.    If you are transferred as provided in Clause 6 above and if  you
      fail to  perform  you  duty  at  the  appointed  time  then  it  would
      tantamount to that you are not willing to work and  this  contract  of
      service shall automatically come to an end and as such  your  services
      shall stand terminated.
      8.    As per the aforesaid para no.1 of the Office Order you are being
      appointed as a daily wager from  2.5.88  to  30.6.66  subject  to  the
      condition that you have to come for work as and when required  by  the
      Municipal Corporation, that is, if the Municipal Corporation does  not
      require your service during the aforesaid period, then  the  Municipal
      Corporation is not bound to give you the work and  you  shall  not  be
      entitled to demand work for that day, of which you may take a  special
      note.
      9.    Upon termination of your contract on the date  specified  above,
      you are not entitled to claim any right of seniority  for  the  period
      for which you work nor are you entitled to be reinstated or make  such
      a claim on account of the new appointment of daily wagers.
      10.   the Corporation shall be entitled  to  relieve  you  before  the
      prescribed period if it no longer requires your services.”

7.    The above order was signed by the respondent and, therefore, bound  by
the terms and conditions of the office order.  The question is,  termination
of the service of the respondent on the  expiry  of  the  periods  mentioned
above would amount to retrenchment?  Facts in this  case  clearly  show,  so
found by the  Labour  Court  itself  that  the  respondent  had  not  worked
continuously for 240 days in an year to claim the benefit of Section 25F,  G
and H of the ID Act.  Therefore, the  only  question  to  be  considered  is
whether termination of service  of  the  respondent  on  the  basis  of  the
contract of appointment would amount to retrenchment within the  meaning  of
Section 25H of the ID Act so as to claim reinstatement.

8.    A reference to Section 2(oo) and (bb) of the Act would be apposite.
      “2    Definitions:-


           (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-


                  xxx        xxx        xxx
                  xxx        xxx        xxx


                 (bb) termination of the service of the workman as a  result
                       of the non-renewal  of  the  contract  of  employment
                       between the employer and the workman concerned on its
                       expiry or of such contract being terminated  under  a
                       stipulation in that behalf contained therein."


9.    Section 2(bb) says that if the termination of the service  of  workman
is as a result of non-renewal of the contract between the employer  and  the
workman on its expiry of such contract being terminated under a  stipulation
in  that  behalf  contained  therein,  the   same   would   not   constitute
retrenchment.

10.   Facts  would  clearly  indicate  that  the  respondent’s  service  was
terminated on the expiry of  the  fixed  periods  mentioned  in  the  office
orders and that he had worked only for 54 days.    
The mere  fact  that  the
appointment orders used the expression  “daily  wages”  does  not  make  the
appointment “Casual” because it is  the  substance  that  matters,  not  the
form. 
The contract of appointment consciously entered into by  the  employer
and the employee would, over and above the specific  terms  of  the  written
agreement, indicates that the employment is  short-lived  and  the  same  is
liable to termination, on the fixed period  mentioned  in  the  contract  of
appointment.

11.   Learned counsel  appearing  for  the  respondent  submitted  that  the
respondent is entitled to the benefit of Section  25G  &  H,  the  same  are
extracted herein below:


    25G. Procedure for retrenchment.- Where any workman in  an  industrial
    establishment, who is a citizen of India, is to be  retrenched  and  he
    belongs to a particular category of workmen in that  establishment,  in
    the absence of any agreement between the employer and  the  workman  in
    this behalf, the employer shall ordinarily retrench the workman who was
    the last person to be employed in that category, unless for reasons  to
    be recorded the employer retrenches any other workman.


    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 2[ to the retrenched workmen who are citizens of  India  to
    offer themselves for re- employment and such  retrenched  workman]  who
    offer themselves for re- employment shall have  preference  over  other
    persons.”


12.   Section 25H will apply only if the respondent establishes  that  there
had been retrenchment. 
 Facts  will  clearly  indicate  that  there  was  no
retrenchment under Section 2(oo) read with Section  2(bb)  of  the  ID  Act.
Consequently, Section 25H  would  not  apply  to  the  facts  of  the  case.
Similar is the factual and legal situation in the civil appeal  arising  out
of SLP(C) No.5387 of 2012 as well.


13.   We are sorry to note that the Labour Court, learned Single  Judge  and
the Division Bench have not  properly  appreciated  the  factual  and  legal
position in this case.   When  rights  of  parties  are  being  adjudicated,
needless to say, serious thoughts have to be bestowed by  the  Labour  Court
as well as the High Court.    For the above-mentioned reasons we allow  both
the appeals, set aside the award passed by the Labour  Court  and  confirmed
by the High Court.  However, there will be no order as to costs.




                                                             ….…….…….……………J.
                                                (K.S. Radhakrishnan)






                                                             ………..………………….J.
                                                      (Pinaki Chandra Ghose)

New Delhi,
July 16, 2013

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