1 R IN THE HIGH COURT OF KARNATAKA CIRCUIT BENCH AT DHARWAD DATED THIS THE 30TH DAY OF JULY 2013 PRESENT THE HON'BLE MR.JUSTICE N.KUMAR AND THE HON'BLE MR.JUSTICE H.S.KEMPANNA W.A.No.30065/2012 (L-TER) BETWEEN: MANAGEMENT OF KIRLOSKAR INSTITUTE OF ADVANCED MANAGEMENT STUDIES, A SOCIETY REGISTERED UNDER THE KARNATAKA SOCIETIES REGISTERED ACT, HAVING ITS REGISTERED OFFICE AT P.O.YANTRAPURA, HARIHAR-577602, REP.BY SHRI.MAHESH REVANKAR, SECRETARY ANDTREASURER OF THE SOCIETY. APPELLANT (BY SRI.K.KASTURI, SENIOR COUNSEL AND SRI.SURESH S.GUNDI, ADV.) AND: 1. SRI.N.MANJUNATH, S/O LATE NINGAPPA, AGE: 25 YEARS, CLEANER-CUM-OFFICE BOY, C/O MADIWALAGANGAMMA BACKSIDE, ST.MARY SCHOOL, YANTRAPURA POST, HARIHARA. 2 2. SRI.K.AJJANNA S/O KOTRA BASAPPA, AGE: 28 YEARS, CLEANER-CUM-OFFICE BOY, C/OB.RUDRAPPA SOCIETY POST, GUTTUR POST, HARIHARA. 3. SRI.CHOWDAPPA S/O LATE CHOWDAPPA, AGE: 31 YEARS, CLEANER, C/O MADIWALAGANGAMMA BACKSIDE, ST.MARY SCHOOL, YANTRAPURA POST, HARIHARA. 4(a) SMT.RAZIYA W/O MUSTAFA, AGE: 30 YEARS, OCC: HOUSEHOLD WORK, R/O AGASARA BEEDI, SHIUMOGA ROAD, HARIHAR. 4(b) MANSOOR S/O MUSTAGA, AGE: 15 YEARS, OCC: STUDENT, R/O AGASARA BEEDI, SHIUMOGA ROAD, HARIHAR. SINCE MINOR, REP.BY HIS NATURAL GUARDIAN MOTHER. 4(c) NAGMA D/O MUSTAGA, AGE: 13 YEARS, OCC: STUDENT, R/O AGASARA BEEDI, SHIUMOGA ROAD, HARIHAR. SINCE MINOR, REP.BY HIS NATURAL GUARDIAN MOTHER. 5. SRI.NAZEER AHMED S/O LATE IBRAHIM KAJI, AGE: 44 YEARS, COOK, C/O K.ANWAR BASHA, NEAR JAMIA MASJID, HAIADAKERI, HARIHAR. 6. SRI.C.RAVIKUMAR S/O LATE CHOWDAPPA, AGE: 33 YEARS, WAITER/ATTENDER, C/O MADIWALAGANGAMMA BACKSIDE, 3 ST.MARY SCHOOL, YANTRAPURA POST, HARIHAR. 7. SRI.K.VEERANNA, S/O LATE KOTRA BASAPPA, AGED ABOUT 33 YEARS, WAITER/ATTENDER, C/O B.RUDRAPPA SOCIETY ROAD, GUTTUR POST, HARIHAR. 8. SRI.H.B.SIDDESHI, WAITER / COOK, HARIHARA. 9. SRI.K.RACHAIAH, S/O KEEEDAYYA, WAITER/ATTENDER, C/O SADANANDA, DOOR No.395, 1ST MAIN, 2ND CROSS, HARLAPURA, HARIHAR. 10. SRI.C.SURESH, S/O LATE CHOWDAPPA, AGED ABOUT 31 YEARS, CLEANER, C/O MADIWALAGANGAMMA BACKSIDE, ST.MARY SCHOOL, YANTRAPURA POST, HARIHAR. 11. SRI.KRISHNA N.M., S/O NAGAPPA MAKANURA, AGED ABOUT 33 YEARS, MALI, INDIRANAGAR, 6TH MAIN ROAD, 5TH CROSS, HARIHAR. 12. SRI.M.SUBRAMANIA BHAT, S/O MADHAVA BHAT, AGED ABOUT 54 YEARS, COOK, C/O A.V.KULKARNI, NEAR GANESHA TEMPLE, 1ST MAIN ROAD, VIJAYANAGAR LAYOUT, HARIHAR. 13. SMT.ANASUYAMMA, DECEASED BY HER LR's 4 13(a) SMT.A.M.RUDRAMMA, AGE: 68 YEARS, OCC: RETD. TEACHER, R/O SHANTINIVAS, ALOOR CHANDRASHEKAR HOSPITAL ROAD, NEAR HOTEL NANDINI, DAVANAGERE. 13(b) A.M.VEERAIAH S/O LATE A.M.SIDDIAH, AGE: 64 YEARS, OCC: RETIRED HEALTH INSPECTOR, R/O ANAJI POST, TALUK & DIST: DAVANAGERE. 13(c) SMT.PUTTAMMA W/O BASAVANAIAH, AGE: 60 YEARS, OCC: HOUSEWIFE, R/O VIDYANAGAR, HARIHAR. 13(d) SMT.KASTURI, W/O H.P.PRAKASH, AGE: 56 YEARS, OCC: STAFF NURSE, R/O BEHIND LAXMI FLOUR MILL, 4TH CROSS, S.S.LAYOUT, DAVANAGERE. 13(e) SMT.SOUBHAGYA W/O VEERABHADRASWAMY, AGE: 52 YEARS, OCC: NIL, R/O KADLEBALU, HAGARIBOMMANAHALLI. 14. SRI.P.MANJAPPA, S/O B.PARAMESHAPPA, DRIVER/XEROX ASSISTANT, HAMSAGARA COMPOUND, YANTRAPURA POST, HARIHARA. RESPONDENTS (BY SRI.S.S.YADRAMI, ADV. FOR R1, R5, R11, R12 AND C/R2, 3, 6-10 14, R4b & R4c ARE MINORS REP.BY R4(a). R13(a), R13(b) SERVED, R13(c) INSUFFICIENT ADDRESS, R13(d) & R13(e) AWAITED) 5 THIS APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT, 1961, PRAYING TO QUASH THE ORDER OF THE SINGLE JUDGE DATED 16.12.2011 IN [CASE NUMBER] (INDUSTRIAL DISPUTES). THIS APPEAL COMING ON FOR FINAL HEARING THIS DAY, N.KUMAR, J, DELIVERED THE FOLLOWING: JUDGMENT
This appeal is preferred by the management challenging the order passed by the learned single Judge who declined to interfere with the order passed by the labour Court where the relief of reinstatement with back wages was granted to the workman.
2. The facts in brief is as under:
The appellant is an educational society registered under the [ACT]. Prior to the said registration, it was incorporated as a company under the provisions of [SECTION] of the [ACT]. It is an autonomous body and an independent legal entity.
The appellant was mainly involved in academic activities such as, teaching, training, research and consultancy. The other activities such as catering, hospitality, maintenance, security and gardening are peripheral in nature to render services to the students and sponsored participants who come from all over India. In the year 1998, the appellant took diversification activity by commencing two year fully residential PG Diploma in Management Programme. Thus the strength of the students and the visiting guests increased whereby it made a demand on the house services.
The appellant did not have expertise in extending the services in the field of catering, hospitality, maintenance, security and gardening. Therefore, the governing council decided to entrust these works to the contractors and to outsource the same to them. Accordingly, the management decided to retrench the services of the about 26 workers who were mainly working in the section of catering, hospitality, maintenance, security and gardening. A letter dated 30.09.2000 to the Government of Karnataka, Labour Department informing the authority about the retrenchment of 26 workers was issued. Individual notices were also issued to the 26 workers along with cheques towards their full and final settlement including retrenchment compensation. Out of the 26 workers, 2 workers received their cheques towards retrenchment compensation. The other workers refused to accept the cheques. Therefore, their cheques towards full and final settlement amount along with retrenchment compensation were sent to their addresses by registered post which were returned unclaimed. Further, on humanitarian grounds, the management recommended the services of the 24 ex-
employees to the contractor who was entrusted with the work of canteen and other allied activities. However, the respondents herein refused to work under the contractor.
3. The respondents initiated conciliation proceedings before the Assistant Labour Commissioner, Bellary Division at Davanagere. The management filed its reply. Conciliation failed. However, management paid compensation, which included wages for the month of September 2003, three months incentive and Ex-gratia payment for 1999-2000, which was accepted by the workers, except for the respondents herein. Thereafter, the respondents raised a dispute before the labour Court in [CASE NUMBER]. The said dispute came to be dismissed. The State Government referred the matter to the labour Court for adjudication. The case before the Principal Labour Court, Hubli was numbered as [CASE NUMBER]. The respondents herein filed their claim petition. The management filed its counter objection. Both the parties lead their respective evidence. After hearing both the parties, the Principal Labour Court, Hubli passed an award dated 30.10.2008 directing the management to reinstate the respondents into service in the post held by them before termination with back wages and consequential benefits. Aggrieved by the said award of the labour Court, the management preferred writ petition before this Court, in [CASE NUMBER]. After hearing, the learned single Judge dismissed the writ petition. Aggrieved by the said order, the present appeal is filed.
4. Sri [ENTITY], the learned senior counsel assailing the impugned orders passed by the Tribunal as well as the learned single Judge contended that, the finding of the Courts that the management has not complied with the statutory requirements as provided under [SECTION]
(i) of the [ACT] (for short hereinafter referred to as the 'Act') is contrary to the material on record. Secondly he contended that, the finding recorded by the Courts below that permission is required before retrenching the workman as contemplated under [SECTION] of the Act, is erroneous inasmuch as the said permission is not required for retrenchment as it does not amount to dismissal from service or change in condition of service. The several contentions which are urged on behalf of the workman before the labour Court as well as before the learned single Judge are not supported by the pleadings in the case. But still both the authorities have considered the said contention and have held against the management, which is per-se illegal. No permission under [SECTION] is required as the appellant is not an industrial establishment.
5. Per contra, the learned counsel appearing for the respondents supported the impugned order.
6. In the light of the aforesaid facts and rival contentions, the points that arise for our consideration in this appeal are as under:
i) Whether the retrenchment of employees by the management is in accordance with law or it is illegal and void as held by the Court below?
ii) Whether the permission of the Government under [SECTION] of the Act was required before retrenching the workman and whether said retrenchment is void for want of such permission?
iii) Whether the retrenchment is bad for non-
obtaining permission under [SECTION] of the Act?
iv) Whether the workman was justified in raising several grounds without laying proper foundation in the pleadings?
POINT NO.1 - RETRENCHMENT
7. The claim put forth in the claim petition is that they are all permanent workers in the second party management. The management without any notice, memo or charge sheet, without conducting any domestic enquiry have terminated their services on 01-10-2000. The defence is it is not a case of termination on account of any misconduct but it is a case of retrenchment. Therefore, the point for consideration is, whether it is a retrenchment in accordance with law. What has been set out in the claim statement has been reiterated in the evidence of the claimant. In the cross- examination of one of the employee examined on behalf of all the employees as WW1, he gave his address as care of, of [ENTITY], Timmalapura, Kadur Taluk, Chickmagalur District. He admitted that, at the time of working in the establishment of the second party he was residing in the address given in the affidavit, Hamsasagar compound, Harihara; which is a rented house. However, he denied the suggestion that the notice sent by the management has been refused by him like others. At that stage the learned counsel appearing for the management sought permission of the Court to open Ex.M.8, an envelope said to have been sent by the Management to the said witness. He was permitted to open the envelope. After opening the cover, the contents of the cover was shown to the witness. In reply to the same, he answered by saying that it is incorrect to state that he has received Ex.M.8-1 along with the compensation before the A.L.C. during the course of conciliation proceedings. He also denied the suggestion that the retrenchment compensation offered by the management was refused by him. When a demand draft of Rs.38,440.44 was shown to him he admits that his name is correctly written in the demand draft which was marked as Ex.M.8-2. Further, he stated, though the Management has sent the entire legal dues and retrenchment compensation, he deliberately refused to receive the same. He denied the suggestion that as per Ex.M.8-3 the management has calculated his legitimate dues. They had sent his salary slip, he volunteered which was marked as Ex.M.8-4. He denied the suggestion that they have challenged the decision of the management to retrench before the Conciliation Officer. He deposed that he was not the signatory to the conciliation proceedings raised before the A.L.C. but admits that the other 13 workman had signed it. He admitted that at the time of conciliation proceedings he was issued with a letter Ex.M.9-1 and he has received the salary and bonus as per the endorsement made therein. He also admits that after going through the contents of that letter he has received the amount. Likewise, other 13 workers have also received the amount after making necessary endorsement in their respective letters. He also admitted, after retrenchment of these employees the management has taken the services of the contractor called RKHS. He has pleaded his ignorance whether the said RKHS contractor was informed to extract the same work from them as had been done earlier. He also denied the suggestion that The management had given an offer to him to work under the contractor if willing. He admits that one [ENTITY], [ENTITY], [ENTITY] and [ENTITY] were also working with him. He does not know whether those persons had agreed to work under the said contractor. He admits that [ENTITY] had agreed to work under the RKHS Contractor. He denied the suggestion that though the management had offered employment through the contractor with the same salary which was drawn by them, they have refused that offer.
8. After receiving Ex.9-1 he approached [ENTITY] for employment but he refused to give job security. The said [ENTITY] was also working as a worker under RKHS contractor. He denied the suggestion that the work which was carried out by them has been assigned to the contractor. The said [ENTITY] was also examined as a Management witness as MW2. He has filed his affidavit by way of examination in chief. He has deposed that he was working with other workers in the canteen of the management and he also received a letter dated 23.09.2000. Through the said letter his services were retrenched, the retrenchment compensation was offered to him along with the said letter. He accepted the compensation offered to him. Later on the management offered him alternative employment. Unlike other workers he was offered employment under the contractor who was assigned the work of catering. The name of the contractor is Radhakrishna Hospitality Services. He was looking after the catering and house keeping. As per the offer made by the management he joined the services of the said contractor, he was posted as Unit Manager with effect from 01.10.2000. He worked with the said contractor throughout the tenure. There was no change in the pay package under the RKHS as compared with his working in the management. The nature of work also remained the same. RKHS also granted all statutory benefits. To his knowledge the workers who were working along with him and who were retrenched like him were offered employment under RKHS, the service provider. Only 3 out of them accepted the offer. Apart from him they are [ENTITY] and [ENTITY]. From June 2001 he has taken up the work of canteen and house keeping under the name and style Sri Durga Hospitality Services where he is the proprietor. All those workers working under the RKHS are continued now also and the same set up remained.
9. From the aforesaid documentary and oral evidence on record it is clear, the Management when they took a decision to discontinue the canteen, house keeping and service rendering operations and to retrench the workmen who were employed in these wings they issued a retrenchment notice dated 30.09.2000. As the retrenchment was coming into effect from 01.10.2000 along with the said notice they also offered one month's wages as required u/[SECTION]. Similarly they also offered retrenchment compensation as contemplated u/[SECTION] along with the retrenchment notice. Those who refused to receive the personal notice to them notices were sent immediately by registered post acknowledgement due. All those notices which are not received by the respondents herein, were all returned with an endorsement. Then the matter was referred to conciliation. In the conciliation proceedings some of them have received the compensation amount. Out of 25 persons 11 persons have accepted the retrenchment compensation and some of them have also accepted alternative employment provided and it is only these remaining 14 persons who are agitating rights before this Court. Therefore, the oral and documentary evidence on record coupled with the admissions of the workmen clearly establishes the compliance with the mandatory requirement of [SECTION].
10. The retrenchment is provided under [SECTION], which reads as under:
"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;
(b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days' average pay (for every completed year of continuous service) or any part thereof in excess of six months; and
(c) notice in the prescribed manner is served on the appropriate Government (or such authority as may be specified by the appropriate Government by notification in the Official Gazette)."
11. It is clear from the opening words of the Section where it is stated that, no workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched until the conditions stipulated in [SECTION] of the Section are fulfilled. The command is in a negative form. Negative words are clearly prohibitory and are ordinarily used as a legislative device to make a statute imperative. Therefore, the said provision is mandatory. Unless the conditions contemplated therein are fulfilled, no employee shall be retrenched. The said conditions are:
i) A notice in writing indicating the reasons for retrenchment is a must.
ii) He should be given one month's notice or he should be paid wages for the period of notice in lieu of such notice.
iii) The workman should be paid at the time of the retrenchment, compensation which shall be equivalent to 15 days average pay for every completed year of an continuous service if he has put in more than six months service.
iv) Notice in the prescribed manner is to be served on appropriate government i.e,. in Form No.P under [SECTION] of the Rules.
Only if all these conditions are fulfilled, then the retrenchment would be valid.
12. The Apex Court has repeatedly held that, [SECTION] of the Act is mandatory and non- compliance thereof renders the retrenchment of an employee as nullity. The termination of service of a workman by way of retrenchment without complying the requirements of giving one month's notice or pay in lieu thereof and compensation in terms of [SECTION] has the effect of rendering the action of the employer nullity and the employee is entitled to continue in employment as if his services was not terminated.
13. The Apex Court in the case of [PRECEDENT], it is held as under:
"If a scheme or reorganization has been adopted by an employer for reasons of economy or convenience and it has been introduced in all the areas of its business, the fact that its implementation would lead to the discharge of some of the employees would have no material bearing on the question as to whether the scheme was adopted by the employer bona fide or not and so the learned Judge was clearly in error in attaching importance to the consequences of reorganization, in regard to the 14 salesmen in the present case. The discharge and retrenchment would have to be considered as an inevitable, though unfortunate, consequence of such a scheme."
14. The Apex Court in the case of [PRECEDENT], has laid down the following proposition:
"i) that the management can retrench its employees only for proper reasons which means that it must not be actuated by any motive of victimization or any unfair labour practice,
ii) that it is for the management to decide the strength of its labour force, for the number of workmen required to carry out efficiently the work in his industrial undertaking must always be left to be determined by the management in its discretion,
iii) if the number of employees exceeded the reasonable and legitimate needs of the undertaking it is open to the management to retrench them,
iv) workmen may become surplus on the ground of rationalisation or economy reasonably or bona fide adopted by the management or on the ground of other industrial or trade reasons, and
v) the right to effect retrenchment cannot normally be challenged but when there is a dispute about the validity of retrenchment the impugned retrenchment must be shown as justified on proper reasons i.e., that it was not capricious or without rhyme or reason."
15. The Apex Court in the case of [PRECEDENT], dealing with the scope of interference by the Tribunal or this Court regarding decision of the management to retrench its employees has held as under:
"14. It is well established that it is within the managerial discretion of an employer to organise and arrange his business in the manner he considers best. So long as that is done bona fide it is not competent for a tribunal to question its propriety. If a scheme for which reorganization results in surplus age of employees no employer is expected to carry the burden of such economic dead-weight and retrenchment has to be accepted as inevitable, however unfortunate it is. The Legislature realised this position and therefore provided by [SECTION] compensation to soften the blow of hardship resulting from an employee being thrown out of employment through no fault of his. It is not the function of the Tribunal, therefore, to go into the question whether such a scheme is profitable or not and whether it should have adopted by the employer."
16. The Apex Court had occasion to consider this provision in the case of [PRECEDENT], where it was held as under:
"10. The underlying object of [SECTION] is twofold. Firstly, a retrenched employee must have one month's time available at his disposal to search for alternate employment, and so, either he should be given one month's notice of the proposed termination or he should be paid wages for the notice period. Secondly, the workman must be paid retrenchment compensation at the time of retrenchment, or before, so that once having been retrenched there should be no need for him to go to his employer demanding retrenchment compensation and the compensation so paid is not only a reward earned for his previous services rendered to the employer but is also a sustenance to the worker for the period which may be spent in searching for another employment. [SECTION] nowhere speaks of the retrenchment compensation being paid or tendered to the worker along with one month's notice; on the contrary, clause (b) expressly provides for the payment of compensation being made at the time of retrenchment and by implication it would be permissible to pay the same before retrenchment. Payment or tender of compensation after the time when the retrenchment has taken effect would vitiate the retrenchment and non-compliance with the mandatory provision which has a beneficial purpose and a public policy behind it would result in nullifying the retrenchment.
11. Compliance with [SECTION] strictly as per the requirement of the provision is mandatory. However, compliance with clause (c) is directory, as held in [PRECEDENT] and a substantial compliance would be enough."
17. From the aforesaid judgments it is clear that, that it is for the management to decide the strength of its labour force, for the number of workmen required to carry out efficiently the work in his industrial undertaking must always be left to be determined by the management in its discretion. If the number of employees exceeded the reasonable and legitimate needs of the undertaking it is open to the management to retrench them. It is well established that it is within the managerial discretion of an employer to organise and arrange his business in the manner he considers best. So long as that is done bona fide it is not competent for a tribunal to question its propriety. When there is a dispute about the validity of retrenchment the impugned retrenchment must be shown as justified on proper reasons i.e., that it was not capricious or without rhyme or reason.
18. The underlying object of [SECTION] is twofold. Firstly, a retrenched employee must have one month's time available at his disposal to search for alternate employment, and so, either he should be given one month's notice of the proposed termination or he should be paid wages for the notice period. Secondly, the workman must be paid retrenchment compensation at the time of retrenchment, or before, so that once having been retrenched there should be no need for him to go to his employer demanding retrenchment compensation and the compensation so paid is not only a reward earned for his previous services rendered to the employer but is also a sustenance to the worker for the period which may be spent in searching for another employment. Compliance with [SECTION] strictly as per the requirement of the provision is mandatory. However, compliance with clause (c) is directory, as held in [PRECEDENT] and a substantial compliance would be enough.
NOTICE PERIOD
19. The argument of the workmen is under the terms of the contract, in Ex.W1 the letters of appointment issued to the respondents, Clause 12 reads as under:
"Your employment is terminable by either side by giving three months (90 days) notice to the other. Unless otherwise your employment is determined earlier, you will retire from the service of the institute from the close of the month following the month in which you will complete the age of 58 years."
20. Though [SECTION] provides for one month's notice or in lieu one month's notice, wages for one month, in the contract, three months notice is prescribed. When admittedly three months wages is not paid at the time of retrenchment, the retrenchment is void. In interpreting the words used in [SECTION], the Apex Court has repeatedly held that, if the conditions stipulated therein are not complied with, it would vitiate the retrenchment and renders the retrenchment void. Therefore, these provisions have to be strictly considered. The parties cannot add or subtract the word used in the said Section. If the management complies with the mandatory requirements prescribed under the Statute, then it cannot be said it is illegal or void, because a provision in the contract between the parties which is more beneficial to the workmen is not complied with. If a termination in the contract is more beneficial than what is provided in the statutory provision, certainly the workmen would be entitled to the benefit of the said provision. But non-compliance with the terms of the contract would not render the retrenchment void or illegal. When the workman is agitating his rights based on a statutory provision, it is the compliance of the requirements of the statutory provision, which has to be looked into by the Courts. If the additional benefits are conferred on such workman over and above what the Statute prescribes, the workman would be entitled to enforce the same and realize the said benefit. But when that additional benefit is not part of a statutory provision, non-compliance of such additional benefits would not render a statutory act void. REASONS FOR RETRENCHMENT
21. It was next contended that, one of the requirement of valid termination is the notice of termination which should indicate the reasons for retrenchment. If it is not forthcoming from the notice, it cannot be supplied subsequently. In the instant case, notice of retrenchment does not indicate the reasons for retrenchment. In order to appreciate this contention, it is necessary to look into the notice dated 30.09.2000, which is marked as Ex.M8, it reads as under:
"The Management has decided to discontinue the canteen, house keeping and service rendering operations and therefore all employees in the workmen category working in the canteen, residential hostel, maintenance service, security service and other service providers are retrenched.
You are therefore hereby informed that your services are retrenched with effect from the close of your working hours today i.e., 30th September 2000.
Notice pay and Retrenchment Compensation as per [SECTION] of the [ACT] and all your legal dues are paid herewith as per enclosed statement, which you may accept in full and final settlement of your accounts.
Management regrets for the inconvenience caused due to this situation."
22. A reading of the notice makes it clear that the reasons for retrenchment is, the discontinuance of the canteen, house keeping and service rendering operations. Therefore, it cannot be said that no reason is given. In fact, as required under law simultaneously with the issue of notice to the workman in compliance of [SECTION] the Management had also sent a notice in the prescribed manner to the appropriate Government. Such notice is at Annexure-F which is styled as Form "P" which is issued under [SECTION]. They have attached an Annexure to the form giving the reasons for retrenchment. It reads as under.
"Kirloskar Institute of Advanced Management Studies has been set up in the year 1991 to impart Advanced Management Training to experienced Managers in Industry and Business. For facilitating such a training, the institute has set up various service facilities like Executive Residential Centre, Kitchen, Dining, Generating set, Xeroxing service, Security service, Assistance rendering service, Communication system, etc. Over the years, such training activities tapered off with the result, there was a sharp decline in the executives visiting our institute for training and the operations became uneconomical to continue. The Institute maintenance, security, cleaning and gardening were established as an integral part of Executive Development Programs and Management Development Programs. All services rendering therefore had a personal touch in as much as the clients (customers) demanding such services were few in number and not on a continuing basis. Therefore, scope to developing such service providers on a professional level was limited.
In the year 1998, the Institute took a major diversification activity by starting the 2-year fully residential Post Graduate Diploma in Management (PGDM) programme by utilising and stretching the infrastructure facilities to their limits. As the diverse student population and the visiting guests increased, the in-house capacity was found to be inadequate thereby demanding not only further investment, more importantly, even more professionalism in service rendering. This is likely to increase further as the institute's intake of students increases in the years to come. The locational constraints of the institute also puts serious limitation on recruitment and retention of trained, capable talents to provide efficient services to the customers consistently.
Taking these and all other relevant factors into consideration, the management of the institute which is now an educational society and no more a corporate entity, has decided to concentrate more and more on academic activity which is its core competency and withdraw from service rendering activities for which well established, time tested, efficient service providers are available at an affordable cost. This move is expected to underwrite uninterrupted customer satisfaction on a professional level.
Management therefore decided to close down service rendering functions in the areas like catering, hospitality providing and other services listed above and entrust them to a more professional body who has technical competency, expertise and skill. Hence, the retrenchment of 26 workmen. The new service provider may pick up many of the retrenched workmen to continue the service rendering but according to his norms, rules and discipline. At the time of retrenchment, we have paid to the affected workmen, their legal dues in full. In case we do not segregate the service rendering functions in the institute, the very survival of the institute may become very vulnerable."
23. Therefore the reasons for discontinuance is elaborately set out in the said statutory notice issued to the Government. After the service of notice, when the workman did not accept the notice and retrenchment compensation and raised a dispute, the dispute was referred to conciliation. In the conciliation the reasons for retrenchment was clearly made known to them. Being convinced about the reason for retrenchment 11 workmen out of 25 workmen received compensation. Therefore, the claimants did not raise the plea of want of reasons for retrenchment. Though such a contention was not taken before the Labour Court and the Labour Court did not consider the same, the learned Single Judge has held that, in the notice of discontinuance the petitioner has not stated any reasons as to why they are discontinuing the respondents-workmen. What the Section requires is, what the Management has to do, is to indicate the reasons for retrenchment and the reason given is, as is clear from the notice they want to discontinue the canteen, house keeping and service rendering operations and detailed reasons are given to the Government as set out above. Therefore, the learned Single Judge erred in interfering with the order of retrenchment on the ground of want of reasons for discontinuance. The finding recorded by the Labour Court as well as the learned Single Judge that the retrenchment is illegal or void, is not supported by the legal evidence on record. Therefore, the said findings are hereby set aside. POINT NO.2: PERMISSION UNDER [SECTION] REQUIRED
24. The next argument is, as the retrenchment amounts to termination and change of service conditions, as an industrial dispute was pending before the Conciliation Officer, prior permission u/[SECTION] and [SECTION] of the Act.
25. [SECTION] of the Act reads as under:
"Conditions of service, etc., to remain unchanged under certain circumstances during pendency of proceedings. - (1) During the pendency of any conciliation proceeding before a conciliation officer or a Board or of any proceeding before (an arbitrator or) a Labour Court or Tribunal or National Tribunal in respect of an industrial dispute, no employer shall, -
a) in regard to any matter connected with the dispute, alter, to the prejudice of the workmen concerned in such dispute, the conditions of service applicable to them immediately before the commencement of such proceeding; or
b) for any misconduct connected with the dispute, discharge or punish, whether by dismissal or otherwise, any workman concerned in such dispute, save with the express permission in writing of the authority before which the proceeding is pending.
(2) During the pendency of any such proceeding in respect of an industrial dispute, the employer may, in accordance with standing orders applicable to a workman concerned in such dispute (or, where there are no such standing orders, in accordance with the terms of the contract, whether express or implied, between him and the workman) -
(a) alter, in regard to any matter not connected with the dispute, the conditions of service applicable to that workman immediately before the commencement of such proceeding; or
(b) for any misconduct not connected with the dispute, discharge or punish, whether by dismissal or otherwise, that workman;"
26. From the aforesaid provision it is clear that, during the pendency of any Conciliation Proceedings no employee shall, in regard to any matter connected with the dispute alter to the prejudice of the workmen concerned in such dispute, the conditions of service applicable to them immediately before the commencement of such proceeding, save with the express permission in writing of the authority before which the proceeding is pending. Therefore it was contended that, on the day the retrenchment took place, a dispute was pending before the Conciliation Officer and without the express permission in writing of the Conciliation Officer this retrenchment could not have been done. Therefore, the question that arises for our consideration is:
Whether [SECTION] of the Act has any application to retrenchment proceedings?
27. What is prohibited under [SECTION] is alteration of the conditions of service to the prejudice of the workmen. The question is, whether retrenchment amounts to alteration in the conditions of service.
28. The Apex Court in the case of [PRECEDENT] at para no.9 it is held as under:
"It was obligatory upon the employer, who wants to retrench the workmen to give notice as contemplated by [SECTION]. When a workman is retrenched it cannot be said that change in his conditions of service is effected. The conditions of service are set out in the [SECTION]. No item in [SECTION] covers the case of retrenchment. In fact, the retrenchment is specifically covered by [SECTION]. Now, if retrenchment which connotes termination of service, cannot constitute change in conditions of service in respect of any item mentioned in [SECTION]. S.9-A would not be attracted. In order to attract S.9-A, the employer must be desirous of effecting a change in conditions of service in respect of any matter specified in [SECTION]. If the change proposed does not cover any matter in [SECTION] is not attracted and no notice is necessary. Thus, if [SECTION] is not attracted, the question of seeking exemption from it in the case falling under the proviso would hardly arise. Therefore, neither Sec.
9-A nor the proviso was attracted to this case. The basic fallacy in the submission is, that notice of change contemplated by [SECTION] and notice for a valid retrenchment u/[SECTION] are two different aspects of notice, one having no correlation with the other. It is therefore futile to urge that even if termination of services of the petitioner constitute retrenchment, it would nevertheless be valid because the notice contemplated by [SECTION] would be dispensed with in view of the provision contained in [SECTION]. That apart, it is an indisputable position that none of the other 3 conditions of a valid retrenchment have been complied with in this case. Because the very termination of service shows that services were deemed to have been terminated from a back date, which clearly indicate that no notice being given, no compensation being paid and no notice being given to the prescribed authority. Therefore, termination of service being retrenchment for failure to comply with [SECTION] would be void ab initio."
29. From the aforesaid judgments of the Apex Court it is clear that, whenever the employer wants to alter the conditions of service of an employee a notice u/[SECTION] is mandatory. Similarly, the express permission in writing u/[SECTION] is also mandatory. Similarly, u/[SECTION] for any misconduct connected with the dispute discharge or punishment whether by dismissal or otherwise, such express permission in writing is required. In the instant case admittedly this is not a case which falls u/[SECTION]. There is no discharge or termination or dismissal involved. The question is, whether there is any alteration of the conditions of service. The Apex Court has categorically held that retrenchment does not amount to alteration in the conditions of service. If retrenchment does not fall within the mischief of alteration of conditions of service, there was no obligation cast on the management to obtain any express permission in writing from the authority before retrenching the workmen. Therefore, both the Labour Court as well as the learned Single Judge were in error in holding that the retrenchment is vitiated for not obtaining express permission from the authority concerned before retrenching the workman.
POINT NO.3: PERMISSION UNDER SECTION 25N
30. In so far as the non-compliance of [SECTION] of the Act is concerned, the said Section reads as under:
25N. Conditions precedent to retrenchment of workmen - (1) No workman employed in any industrial establishment to which this Chapter applies, 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 three months' 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; and
(b) the prior permission of the appropriate Government or such authority as may be specified by that Government by notification in the Official Gazette (hereafter in this section referred to as the specified authority) has been obtained on an application made in this behalf.
31. The said provision finds a place in [SECTION] which deals with special provisions relating to layoff, retrenchment and closure in certain establishments. The application of the Chapter is restricted to industrial establishments in which not less than 100 workmen were employed on an average per working day for the preceding 12 months. Though the word industrial establishment has been defined under [SECTION] again the industrial establishment is defined u/[SECTION] for the purpose of [SECTION]. Therefore, what is relevant is the definition contained in [SECTION] where the industrial establishment has been defined which reads as under:
25L. Definitions - For the purpose of this Chapter,-
(a) "Industrial establishment" means -
(i) a factory as defined in [SECTION] of the [ACT];
(ii) a mine as defined in clause (j) of sub-
section (1) of Section 2 of the [ACT]); or
(iii) a plantation as defined in [SECTION] of the [ACT];
32. It is not in dispute that the appellant does not fall within the definition of "industrial establishment" as defined as aforesaid. In fact that is not the ground taken by the workmen at all. On the ground that it is purely a question of law both the Labour Court and the learned Single Judge without any factual foundation, on surmises has recorded a finding in order to set at naught a valid order of retrenchment. Therefore, the permission which is contemplated u/[SECTION] of the Act was not required to be taken by the appellant as they do not all within the definition of industrial establishment as defined u/[SECTION] Therefore, ex-facie the orders passed by the Labour Court as well as the learned Single Judge cannot be sustained. POINT NO.4: PLEADINGS
33. It is further contended that the Labour Court as well as the learned single Judge have proceeded to decide the dispute on issues which are neither pleaded nor raised ignoring the pleadings in the case. In order to appreciate this contention we have to look at the pleadings which are extracted in paragraphs 2 and 3 of this judgment. On the basis of the pleadings the Labour Court framed the following issues:
1. Whether the claimants are 'workman' under [SECTION] of the [ACT]?
2. Whether the management is justified in dismissing service of the claimants w.e.f. 1.10.2000?
3. If not, to what reliefs the said claimants are entitled?
34. Therefore, the claim of the workmen is that they have been illegally dismissed from service. It is not a case of retrenchment without complying with the statutory requirements of [SECTION] However, the finding recorded by the Labour Court is that, the discharge of workmen on 30.9.2000 speaks volumes about the evil intention of the respondent. There is no plea in the claim statement regarding the invalidity of the retrenchment does not also affect the case of the claimants as it is a pure matter of law. Without a plea, without any evidence. It is settled law that termination in contravention of [SECTION] of the [ACT] without the approval is bad and the plea of retrenchment is not established. The respondent has failed to show that the partial closure or transfer was bona fide. Hence, the requirements of [SECTION] of the Act are not satisfied. There is non-compliance with the requirements of [SECTION] Retrenchment should take place according to seniority. If there is no seniority list maintained and the principle "last come first go" is not followed, the same amounts to illegal retrenchment.
35. Therefore, the findings recorded by the Labour Court are not purely questions of law, it is a question of fact and a mixed question of fact and law. Without plea, without issues, they have recorded findings of these factual aspects.
36. The learned single Judge also proceeds on the basis that termination of the workmen is illegal, notice of discontinuance is bad. It is purely a question of law, which could be decided on the basis of admitted facts. In the notice of discontinuance, reasons for discontinuance is not given and therefore he was of the view that no case for interference with the order of the Labour Court is made out. Therefore, both the Labour Court and the learned single Judge have recorded findings on matters which are not the subject matter of pleadings and evidence on record. The law on the point is well settled.
37. In this regard, it is useful to refer the judgment of the Apex Court in the case of [PRECEDENT] where the Apex Court has held that the Tribunal had to confine itself to the pleadings and the issue arising therefrom and it is not open to it to fly of a tangent disregarding the pleadings and reach any conclusion that it thought was just and proper.
38. The Apex Court again in the case of [PRECEDENT], at para no. 14 held as under:
"The rules of fair play demand that where a party seeks to establish a contention which if proved would be sufficient to deny relief to the opposite side, such a contention has to be specifically pleaded and then proved. But if there is no pleading there is no question to proving something which is not pleaded. This is very elementary."
39. Further, in the aforesaid judgment at para no.31 it has been held as under:
"If such be duties and functions of the Industrial Tribunal or the Labour Court, any party appearing before it must take a claim or demur the claim of the other side and when there is a burden upon it to prove or establish the fact so as to invite a decision in its favour, it has to lead the evidence. The quasi-judicial tribunal is not required to advice the party either about its rights or what it should do or omit to do. Obligation to lead evidence to establish an allegation made by the party is on the party making the allegation. The test would be who would fail if no evidence is led. It must seek an opportunity to lead evidence and lead evidence. A contention to substantiate which evidence is necessary has to be pleaded. If there is no pleading raising a contention there is no question of substantiating such a non-existing contention by evidence. It is well settled that allegation which is not pleaded, even if there is evidence in support of it, cannot be examined because the other side has no notice of ti and if entertained it would tantamount to granting an unfair advantage to the first mentioned party. We are not unmindful of the fact that pleadings before such bodies have not to be read strictly, but it is equally true that the pleadings must be such as to give sufficient notice to the other party of the case it is called upon to meet."
40. From the aforesaid judgments of the Apex Court it is clear that, Tribunals and Labour Courts have to confine themselves to the pleadings and the issue arising there from. It is not open to them to fly of a tangent disregarding the pleadings and reach any conclusion that they may think is just and proper. The principle underlying the pleadings equally apply to adjudication before Labour Courts and Tribunals. The reason being the object and purpose of pleading is to enable the adversary party to know the case it has to meet. Provisions relating to pleadings are meant to give each side intimation of the case of the other so that it may be met, to enable the court to determine what is the real issue between parties and to prevent deviation from the course which litigation, on particular of causes of action, must take. It is imperative that the party should state the essential material facts so that other party may not be taken by surprise. When the facts necessary to make out a particular claim, or to seek particular relief, are not found in the pleadings, the Court cannot focus the attention of the parties, or its own attention on that claim or relief, by framing an appropriate issue. The general rule, is that the relief should be founded on pleadings made by the parties. If there is no pleading there is no question of proving something which is not pleaded. This is very elementary. It is equally well settled that in the absence of pleadings, evidence if any produced by the parties cannot be considered. It is also equally settled that no party should be permitted to travel beyond its pleading and that all necessary and material facts should be pleaded by the party in support of the case set up by it.
41. Therefore, when a reference is made to the Labour Court, the workman is given an opportunity to put forth his claim by specifically pleading the material facts and the relief which he wants. After such a claim is made, the management is given an opportunity to traverse those allegations made by the workman in his claim statement and also put forth their case. It is on the said pleading, the Labour Court frames issues, keeping in mind the questions which are referred to the Labour Court for adjudication by the Labour Court. Therefore, when there is no plea, when there is no evidence, the Labour Court nor this Court can record findings of fact on the ground the said questions are questions of fact and they could be raised and adjudicated in the proceedings without there being any plea or any evidence.
42. The Labour Court as well as the learned Single Judge have disregarded the pleadings and issues arising in the case and have recorded findings of facts which are neither pleaded nor any evidence adduced in the case and thus the impugned orders are liable to be set aside even on that ground.
43. Before the Labour Court the workmen filed their claim petition. In the claim petition what is averred is that the first party workers have served as permanent workers in the second party management. The second party management without issuing notice, memo or charge sheet, without conducting domestic enquiry, have terminated the first party workers on 01.10.2000. Even after the enquiry by the workers, the management has not given in writing regarding reasons for terminating them from work. The first party workers are members of a trade union. The dispute was raised through Chitradurga District Mazdoor Sangha, i.e., trade union, before the Labour Commissioner, Bellary Division, Davanagere. The second party management appeared in the dispute and have declined to take back the first party workers into work as they have appointed workman on contract basis through Radhakrishna Hospitality Services, Bangalore. After conducting several conciliation meetings the Assistant Labour Commissioner and Conciliation Officer concluded that the conciliation meeting failed and failure report was sent to the Government. That is how the reference was made to the Labour Court. After referring to the points of reference it is contended that, the second party Management which is a part of Kirloskar Company initially was a training institute for industrial management. This institution is neither under any University nor under All India Council for Technical Education. The second party management is functioning independently as a part of [ENTITY] as a training institute. The second party institute is a residential institute and it is providing food and accommodation to the students admitted and it is collecting donation from those students. Some of the workmen are serving as room boys, some as receptionists and some as attenders. Though the second party respondents have issued permanent appointment order they have terminated the first party without notice, the memo, charge sheet and domestic enquiry which are illegal and amounts to unfair practice. Nowhere in the claim petition, they have aired their grievance that reasons are not given for retrenchment. It is also not contended that under the terms of the contract they are entitled to three months wages in lieu of notice and therefore the retrenchment notice is invalid. They have also contended that the decision taken by the management on 30.09.2000 to discharge the workmen on that very day show the evil intention of the respondent which is the finding recorded by the Labour Court without plea and evidence. In fact, before the claim statement was filed before the Labour Court there was a conciliation. The management had produced the notice in the prescribed form in detail giving the reasons for the retrenchment. These workmen participated in the conciliation proceedings and are fully aware of the reasons. That is the reason why in their claim statement they did not complain of want of reasons. Both the Labour Court as well as the learned Single Judge were of the view that all these questions are questions of law and they could be raised and adjudicated in the proceedings without there being any plea or evidence.
[ENTITY]
44. This is the legal aspect of the case, but beyond legal aspect there is a human aspect which this Court cannot ignore.
45. Though the Management was justified in reorganizing their strategy, in the process these workmen have become victims and are out of employment. Having regard to the nature of work they were doing it may not be possible to get a suitable employment on the same terms and conditions. No doubt the evidence on record shows three of them have accepted the offer and they were continued in service under the contractors extending the same benefit. But these workmen have chosen not to work under any other persons and they were agitating their rights in a Court of law and at the end of the day when they are told they have no sustainable legal right, they are certainly put to great inconvenience, prejudice and hardship. The evidence on record shows, though the management offered the retrenchment compensation they have refused to receive it. Today when the very same amount is paid having regard to the passage of time, the value of money having considerably decreased, what they are getting is a pittance. This is a litigation which is going on for more than 12 years and probably most of them have reached the age of superannuation or at any rate with the advanced age, it will not be easy for them to secure an alternative job. In the meanwhile, the Management after restructuring their establishment are doing very well. Therefore, we feel justice of the case would be met by passing the following order which would take care of the interest of the workmen to some extent even though legally they are not entitled to any such right.
(a) As per [SECTION] the workmen are entitled to wages for one month in lieu of notice. The same is liable to be paid. As per the terms of the appointment order they have prescribed three months' notice. In addition to that one month's notice the workmen are entitled to two months' wages. In other words, the workmen-respondents would be entitled to three months' wages. The said wages ought to have been paid on 30.09.2000. Therefore, the said amount shall be paid with interest at 10% from the day the amount is due, i.e., 30.09.2000, till the date of payment.
(b) In terms of [SECTION] the workmen is entitled to 15 days' salary for every completed years of service. The said amount also ought to have been paid on 30.09.2000. The said amount is offered but not received by the workmen. Therefore, the management continues to have the benefit of the said amount. Therefore, it would be appropriate that the Management shall pay the amount so calculated with interest at 10% from 30.09.2000 till the date of payment.
(c) During the pendency of the writ petition a sum of Rs.50,000/- was deposited by the management to be paid to each of the workman. The amount was deposited and workmen have withdrawn the said amount. The said amount would be in addition to the amount which we have directed them to pay.
(d) To put an end to this controversy at rest once and for all, if the workmen were to accept this order then as an incentive to such acceptance the Management shall pay one year's last drawn salary to each of the workman as a measure of goodwill. It is made clear this payment is subject to the condition that the workmen should accept this judgment and not to challenge this order after accepting the amount.
Ordered accordingly.
Parties to bear their own costs.
JUDGE Sd/-
JUDGE MBS/BVV