SCA/5972/2002 1/30 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 5972 of 2002 For Approval and Signature: HONOURABLE MR.JUSTICE H.K.RATHOD ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= STATE OF GUJARAT - Petitioner(s) Versus DIPAK KUMAR MADHUSUDANBHAI GANDHI - Respondent(s) ========================================================= Appearance : MR KJ DWIVEDI AGP for Petitioner(s) : 1, MR MB GANDHI for Respondent(s) : 1, MRS TRUSHA M GANDHI for Respondent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE H.K.RATHOD Date : 25/04/2008 ORAL JUDGMENT 1. Heard learned AGP Mr.K.J.Dwivedi for the petitioner and learned advocate Mr.Gandhi for the respondent. SCA/5972/2002 2/30 JUDGMENT 2. In the present petition, the petitioner has challenged the award passed by the Labour Court, Anand in Reference No.1203 of 1992 dated 6.12.2001 whereby the Labour Court has set aside termination order and granted 40% back wages of interim period with cost of Rs.1000/-. 3. This Court has, on 10.7.2002, issued Rule and granted interim relief in terms of Para.14(C) subject to the right of the respondent under Section 17B of the I.D.Act,1947. 4. Learned AGP Mr.Dwivedi raised contention that respondent was appointed in a particular project and a moment project comes to an end, his service comes to an end and it cannot considered to be a termination and the workman is not entitled the benefit of Section 25F of the Industrial Disputes Act,1947 (for short "the Act"). He also raised contention that workman was not selected by due process of selection and therefore, he is not entitled the reinstatement in service. He also raised contention that there is no post is available and therefore, there is no question to reinstate the workman by the petitioner. Therefore, according to him, the award passed by the Labour court is bad and contrary to law laid down by the Supreme Court. 5. Learned advocate Mr.Gandhi submitted that there was no written order issued by the petitioner in SCA/5972/2002 3/30 JUDGMENT favour of respondent where his appointment was made in a particular project. He also submitted that respondent is covered by definition of 'workman' under Section 2(s) of the Act and he has completed continuous service of 240 days within the meaning of Section 2B(2) of the Act and these facts are not in dispute between the parties. He further submitted that non compliance of Section 25F of the Act render the order of termination ab-initio void. Therefore, the Labour Court has rightly granted the reinstatement in service with 40% back wages of interim period. For that, according to him, the Labour Court has not committed any error which requires interference by this Court while exercising the power under Article 227 of the Constitution of India. 6. I have considered the submissions made by both the learned advocates and perused the award passed by Labour Court, Anand. According to facts as narrated by Labour Court in Para.2, the respondent workman was appointed as an Agriculture Supervisor on 3.3.1991 on daily wage basis of Rs.60/-. The respondent is possessing educational qualification of B.Sc. (2nd class) graduate from Gujarat Agriculture University. His presence was marked in the muster roll and designation was given as of Supervisor. He remained in service upto 30.6.1992. During that period, he had completed 240 days continuous service with the petitioner. At the time of terminating the service of the workman, provision of Section 25F of the Act is SCA/5972/2002 4/30 JUDGMENT not followed by the petitioner. Therefore, the dispute which was raised, was referred for adjudication on 8.8.1992. Vide Exh.9, reply was submitted by petitioner before the Labour Court. The workman has not produced any evidence before the Labour Court. The workman has not produced any documentary evidence before the Labour Court but, petitioner establishment has produced certain documents vide Exh.11, 12 and 14 which have been exhibited as Exh.15 to 17, 18 to 21 and 22 to 25. The workman was examined vide Exh.27 and he was working as Agriculture Supervisor receiving basic salary of Rs.45/- and his service was terminated on 30.6.1992. So during the period from 3.3.1991 to 30.6.1992, he completed more than 240 days continuous service with the petitioner. Along with the workman, another 4 to 5 employees were working and the salary was paid on voucher and vide Exh.17, signature of the workman was there. The stand of the petitioner is that workman was appointed against Valmi Project, which has been denied by the workman in his evidence. Thereafter, witness Shri Raman H. Patel was examined vide Exh.34 who was Executive Engineer. According to his evidence, on 1.10.1991 to 31.8.1994, India Imi Collaboration Research Study Project was announced for a period of 2 years and on that basis, post was created and accordingly, respondent was appointed initially for a period of six months. Thereafter, further extension of six months, 1 month and 3 months. Ultimately, on 30.6.1992, he was terminated by petitioner because the project was over and SCA/5972/2002 5/30 JUDGMENT subsequently, the petitioner establishment has advertised the post of Garden Supervisor but, no procedure was initiated to fill up the post of Garden Supervisor. In cross-examination, the said witness has admitted that he was not aware that on what basis the workman was appointed by the petitioner and there is no appointment order issued in favour of respondent workman by the petitioner. There was no any terms and conditions was incorporated in appointment order. In reality, he was orally appointed and no terms and conditions agreed between both the parties and therefore, no order was produced by petitioner before the Labour Court that workman was appointed for a particular project. Therefore, the contention is raised by learned AGP Mr.Dwivedi that workman was appointed on project, meaning thereby that periodical work was taken. Therefore, provision of Section 2(oo)(bb) of the Act is applicable and such termination does not amount to retrenchment within the meaning of Section 2(oo) of the Act, cannot be accepted in light of undisputed facts that no written appointment order was issued in favour of respondent workman by the petitioner. In Para.9 of the award, the Labour Court has examined the submissions made by both the parties and also examined the evidence on record and come to the conclusion that there is no appointment order produced by petitioner on record which suggests that workman was appointed against the special project. Therefore, the Labour Court has come to the conclusion that looking to the documentary evidence SCA/5972/2002 6/30 JUDGMENT vide Exh.18, initially the workman was appointed on 3.3.1991 and thereafter, his service was terminated on 3.3.1992 and again, he was appointed on 3.4.1992 and remained continued upto 30.6.1992. The project was continued upto 31.3.1992 but, thereafter, no order was produced on record or letter was produced that project can be extended for a further period w.e.f. 1.4.1992. That fact was admitted by the witness of the petitioner vide Exh.34. But it is necessary to note that respondent remained in service after completion of the project for a further period upto 30.6.1992. That was also on the basis of oral order passed by petitioner. Ultimately, the Labour Court has come to the conclusion that Section 2(oo) (bb) of the Act is not applicable because there is no appointment order issued in favour of respondent by the petitioner giving appointment on project. Therefore, the Labour Court has come to the conclusion that such termination amounts to retrenchment within the meaning of Section 2(oo) of the Act and undisputedly, non-compliance of Section 25F of the Act render the order of termination ab- initio void as per decision of Apex Court reported in AIR 1981 SC 1253. Therefore, the Labour Court has granted reinstatement in favour of workman and considering that workman remained without service about more than 9 years, therefore, the labour Court has granted 40% back wages of interim period on the presumption that workman may not remain without work for a pretty long time as the petitioner has not proved gainful employment of the respondent workman. SCA/5972/2002 7/30 JUDGMENT Therefore, the Labour Court has granted relief in favour of respondent workman. 7. Recently, the Apex Court has taken the view in the case of Hindustan Petroleum Corporation Ltd. v. Ashok Ranghba Ambre reported in 2008 (1) Supreme Today 257. Relevant observation are in 11, 18 and 19 which are quoted as under : "11. To us, however, the learned counsel for the appellant-Corporation is right in submitting that setting aside an action of termination of services being violative of Section 25F of the Act does not necessarily follow that the workman must be held entitled to the benefits claimed by him in the writ petition, namely, status of permanency and claim of regular pay scales and other benefits based on permanency. In our judgment, two things are distinct, different and operate in different areas. In Reference proceedings, the question before the Industrial Tribunal as also before the High Court was whether termination of services of the workman was in consonance with law. Once it was held that there was breach of Section 25F of the Act, it necessarily followed that the order of termination was in violation of law and direction was required to be issued in the form of reinstatement of the workman. The said order was, therefore, confirmed by the High Court. But in our considered opinion, in the proceedings before the High Court under Article 226 of the Constitution as to permanency and other benefits on that basis, the writ petitioner could not contend that since the action of termination of his services was held to be illegal and he was ordered to be reinstated by Industrial Tribunal and the said Award was confirmed by the High Court, ipso facto, he ought to be SCA/5972/2002 8/30 JUDGMENT treated as permanent employee of the Corporation and must be held entitled to the benefits claimed in the writ petition. To that extent, therefore, the order passed by the High Court is not in consonance with law. 18. In the case on hand, according to the appellant-Corporation, the workman was appointed on a purely ad hoc and temporary basis, without following due process of law. His name was never sponsored by the Employment Exchange nor an advertisement was issued for the purpose of filling the post to which the writ petitioner was appointed. Cases of other similarly situated persons were not considered and the appointment was not legal and lawful. In industrial adjudication, an order of termination was quashed as it was not in accordance with law. But that did not mean that the workman had substantive right to hold the post. The High Court was, therefore, wrong in directing the Corporation to make the writ petitioner permanent and to extend him all benefits on that basis from 1992. The said direction, therefore, has to go. 19. For the foregoing reasons, the appeal is allowed by setting aside the direction issued by the High Court ordering the appellant-Corporation to make the writ- petitioner (respondent herein) permanent employee of the Corporation and to grant all benefits on that basis with effect from the date of filing of writ petition." 8. The Apex Court has taken the view in the case of S.M.Nilajkar and Others v. Telecom District Manager, Karnataka reported in 2003-II-LLJ-359. Relevant observation are in 11, 12, 13 and 14 which are quoted as under : SCA/5972/2002 9/30 JUDGMENT "11. It is common knowledge that the Government as a welfare State floats several schemes and projects generating employment opportunities, though they are short lived. The objective is to meet the need of the moment. The benefit of such schemes and projects is that for the duration they exist, they provide employment and livelihood to such persons as would not have been able to secure the same but for such schemes or projects. If the workmen employed for fulfilling the need of such passing-phase- projects or schemes were to become a liability on the employer State by too liberally interpreting the labour laws in favour of the workmen, then the same may well act as a disincentive to the State for floating such schemes and the State may opt to keep away from initiating such schemes and projects even in times of dire need, because it may feel that by opening the gates of welfare it would be letting in onerous obligations entailed upon it by extended application of the labour laws. Sub-clause (bb) in the definition of retrenchment was introduced to take care of such like situations by Industrial Disputes (Amendment) Act, 1984 with effect from 18-8-1984. 12. "Retrenchment" in its ordinary connotation is discharge of labour as surplus though the business or work itself is continued. It is well settled by a catena of decisions that labour laws being beneficial pieces of legislation are to be interpreted in favour of the beneficiaries in case of doubt or where it is possible to take two views of a provision. It is also well settled that the Parliament has employed the expression "the termination by the employer of the service of a workman for any reason whatsoever" while defining the term "retrenchment", which is suggestive of the legislative intent to assign the term 'retrenchment' a meaning wider than what it is understood to have in common parlance. SCA/5972/2002 10/30 JUDGMENT There are four exceptions carved out of the artificially extended meaning of the term 'retrenchment', and therefore, termination of service of a workman so long as it is attributable to the act of the employer would fall within the meaning of 'retrenchment' dehors the reason for termination. To be excepted from within the meaning of 'retrenchment' the termination of service must fall within one of the four excepted categories. A termination of service which does not fall within the categories (a), (b), (bb) and (c) would fall within the meaning of 'retrenchment'. 13. The termination of service of a workman engaged in a scheme or project may not amount to retrenchment within the meaning of sub- clause (bb) subject to the following conditions being satisfied:- (i) that the workman was employed in a project or scheme of temporary duration; (ii) the employment was on a contract, and not as a daily wager simpliciter, which provided inter alia that the employment shall come to an end on the expiry of the scheme or project ; and (iii) the employment came to an end simultaneously with the termination of the scheme or project and consistently with the terms of the contract. (iv) the workman ought to have been apprised or made aware of the abovesaid terms by the employer at the commencement of employment. 14. The engagement of a workman as a daily wager does not by itself amount to putting the workman on notice that he was being engaged in a scheme or project which was to last only for a particular length of time or upto to the occurrence of some event, and therefore, the workman ought to know that his SCA/5972/2002 11/30 JUDGMENT employment was short lived. The contract of employment consciously entered into by the workman with the employer would result in a notice to the workman on the date of the commencement of the employment itself that his employment was short lived and as per the terms of the contract the same was liable to termination on the expiry of the contract and the scheme or project coming to an end. The workman may not therefore, complain that by the act of employer his employment was coming to an abrupt termination. To exclude the termination of a scheme or project employee from the definition of retrenchment it is for the employer to prove the abovesaid ingredients so as to attract the applicability of sub clause (bb) abovesaid. In the case at hand, the respondent-employer has failed in alleging and proving the ingredients of sub-clause (bb), as stated hereinabove. All that has been proved is that the appellants were engaged as casual workers or daily wagers in a project. For want of proof attracting applicability of sub-clause (bb), it has to be held that the termination of the services of the appellants amounted to retrenchment." 9. The Patna High Court has taken the view in the case of Bennett Coleman and Co. Ltd. v. Presiding Officer, Labour Court, Patna and Others reported in 2003-III-LLJ-981. Relevant observation are in 16, 17, 19 and 29 which are quoted as under : "16. This takes us to the moot question as to whether the termination amounted to retrenchment within the meaning of Section 2(oo) of the I.D.Act. The protection under Section 25F of the Act is against retrenchment and therefore, the workman is required to prove that his dismissal etc. amounted to retrenchment. The argument of the SCA/5972/2002 12/30 JUDGMENT counsel for the management is that as the respondent held a tenure employment her case would fall under exception (bb) appended to Section 2(oo) and therefore, the termination of her service did not amount to retrenchment. In order to appreciate this submission the definition of 'retrenchment' under Section 2(oo) may be noticed as under: "(a) ......... (b) ......... (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; or (c) ......." According to learned counsel for the management, the latter part of clause (vv) i.e. "contract being terminated under a stipulation" covers the case of the respondents. I do not find any merits in this submission. The first part of clause (bb) governs cases where the termination results from non-renewal of the contract such as where appointment is for a particular tenure and on expiry whereof his appointment comes to an end. The latter part of the clause refers to a situation where the contract is terminated on the happening of certain events in accordance with the stipulation as indicated in the appointment order i.e. contract of service. 17. In the instant case, as seen above, the services were terminated on the ground of performance not being found satisfactory during her training period. The termination being on the ground of unsatisfactory performance cannot be said to be "under a stipulation" contained in the appointment SCA/5972/2002 13/30 JUDGMENT order. The appointment order simply stipulated that the appointment was termination at any time without notice and without assigning any reason and, further, the appointment would stand terminated on expiry of six months from the date of joining. As the appointment was not terminated after expiry of the six months' period from the date of joining, clearly, that pat of the appointment order was not attracted. So far as the other part is concerned, if I may say so, the stipulation was general; it merely incorporated what is implicit in every case of temporary appointment. Every case of temporary appointment is terminable at any time without notice and if such termination were to come within the ambit of second part of clause (bb) it would mean that all such cases of termination would be covered by the exception and stand out of pale of retrenchment. Such interpretation would not be in the interest of labour for whose benefit the I.D.Act has been enacted. Every retrenchment has an element of termination and vice versa, unless it is by way of punishment in a departmental proceeding or is covered by any of the exceptions. I accordingly hold that termination of the respondent's service amounted to retrenchment within the meaning of Section 2(oo) of the I.D.Act. 19. On a plain reading of the section it would appear that any workman who has been in continuous service for not less than one year under an employer cannot be retrenched without one month's notice in writing, indicating reasons for retrenchment or wages in lieu of such notice and, further, without retrenchment compensation equivalent to fifteen days' pay for every completed year of service or any part thereof in excess of six months, and lastly, without serving notice in the prescribed manner on the appropriate Government. Law is well-settled on the point that for valid retrenchment it is necessary SCA/5972/2002 14/30 JUDGMENT that all the three conditions precedent must be satisfied failing which the retrenchment becomes void ab initio. 29. The question which then arises for consideration is whether the award of the Labour Court directing reinstatement without full back wages and other service benefits is correct. In Surendra Kumar Verma and others v. Central Government Industrial Tribunal- cum- Labour Court, New Delhi and another, AIR 1981 SC 422 : 1980 (4) SCC 443 : 1981-I-LLJ- 386, the Court observed that removal of an order terminating the services of workmen must ordinarily lead to the reinstatement of the services of the workmen. It is as if the order has never been and so it must ordinarily lead to back wages too. But there may be exceptional circumstances which make it impossible or wholly inequitable vis-a-vis the employer and workmen to direct reinstatement with full back wages. For instance, the industry might have closed down or might be in severe financial doldrums; the workmen concerned might have secured better or other employment elsewhere and so on. In such situations, there is a vestige of discretion left in the Court to make appropriate consequential orders. The Court may deny the relief of reinstatement where reinstatement is impossible because the industry has closed own. The Court may deny the relief of award of full back wages where that would place an impossible burden on the employer. In such and other exceptional cases the Court may mold the relief but, ordinarily the relief to be awarded must be reinstatement with full back wages." 10. Recently, this Court has considered identical issue in case of Gujarat Agro Industries Corporation Limited v. Pravinsinh Babubhai Chauhan reported in 2008 (1) GCD 346. Relevant observations are made in SCA/5972/2002 15/30 JUDGMENT Para.9 to 13, which are quoted as under : “9. Findings given by the labour court are based on legal evidence and labour court has given cogent reasons in support of its conclusions. Looking to the appointment order, why such type of appointment orders were issued periodically and on temporary basis, for that, there is no justification coming forward from the side of the petitioner. If the requirement is continuing from the date of appointment till the date of termination, then, why management is issuing such orders on periodical basis, on temporary basis. Reason is apparent that this is done only with a view to get rid of the mandatory provisions of section 25F of the ID Act, 1947 and to deprive the workman from claiming protection of the said mandatory provisions. Such type of efforts on the part of the petitioner are arbitrary and same amounts to unfair labour practice adopted by the petitioner. Looking to all the orders of appointment periodically given to the petitoner from time to time on temporary basis, there is no reason or justification given by the petitioner for issuance of such orders. Last order is dated 15th July, 1994. Why service period was extended and for that, no appointment order has been issued which suggests periodical or temporary. Looking to the last order dated 15th July, 1994, services of the respondent workman came to an end on 20th July, 1994. For that, periodical order was not given to the respondent by the petitioner. This being an undisputed position, upto 30th September, 1993, periodical appointment orders were there but beyond that from 1st October, 1993 to 20th July, 1994, no such