IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.13014 of 2005 1.The Chairman, Central Silk Board, Central Silk Complex, IV-Floor, BTM Layout, House Road, Bangalore-560 068 2.The Deputy Director, National Sericulture Project, Central Silk Board, Bheria Dangi, Kishanganj, District Kishanganj-------------------------Petitioners Versus 1.The Presiding Officer, Industrial Tribunal, Patna, Shram Bhawan, near Income Tax Building, Patna 2.Nawal Kumar Gupta, son of Ram Kishore Gupta, Sharda Nagar, New Bus Stand, Purnea, District Purnea-respondents ----------- For the petitioners:M/S S.N.Pathak,Advocate Prashant Kumar, Advocate For respondent No.2:M/S V.N.Sahay,Advocate Arun Srivastava & Abha Kumari, Advocates ----- 18. 28.4.2010 Heard learned counsel for the petitioners and learned counsel for the respondent No.2. The writ application has been filed for quashing the award dated 27.5.2005 passed by the Industrial Tribunal, Patna in Reference Case No. 17 of 2004/4(C) of 2004 by which the retrenchment of respondent No.2 was held to be bad, illegal, inoperative and void ab initio and it was directed to reinstate him with full back wages and also to make payment of the unpaid salary for the month of December, 1996. Briefly stated the facts of this case are that the respondent No.2 was engaged as a casual labourer in Technical Service Centre (TSC), Purnea under the National Sericulture Project (NSP) of the Central Silk Board on 16.5.1991. He continued as a daily wager for 2 five years and thereafter by an office memorandum dated 9/10.9.1996 issued under the signature of the Deputy Director (PAI), National Sericulture Project, Central Silk Board, Kishanganj, Bihar he was converted as a Time Scale Labourer w.e.f. 16.5.1996 in the pay scale of Rs.500-10-700 as per the terms and conditions mentioned in the said order. By the said memorandum he became entitled to dearness allowance at the rate sanctioned to the Central Government employees from time to time, annual increment, medical allowance, house rent allowance, gratuity at the rate of one month’s pay for each completed year of service subject to maximum 15 months pay and his age of superannuation was stated to be 55 years. He was also held to be entitled to other benefits such as leave, festival advance, etc. Thereafter by the office order dated 31.12.1996 issued under the signature of the Deputy Director (PAI) it was stated that as directed by the competent authority of Central Silk Board, Bangalore it is hereby informed that in view of closure of CSB Unit of Project Area, N.S.P., Kishanganj (Bihar) the services of Time Scale Labourers/Casual 3 Labourers of units mentioned in the said order including that of the respondent No.2 were no longer required w.e.f. 31.12.1996(A/N). It was further stated that the said labourers would be paid terminal benefit in lieu of notice as per clause(a) of section 25F of the Industrial Disputes Act, 1947. The admitted fact is that while the other labourers received the office order the same could not be served upon the respondent No.2. Ultimately the said termination order was sent to him by registered post along with the office memorandum dated 25.1.1997 along with copy of letter dated 11.1.1997 in which it was stated that he should receive the arrear of wage for the period from 1.4.1995 to 30.11.1996, wage for the month of December, 1996 and one month’s wage/pay in lieu of one month’s notice for termination from the Assistant Director, P2 Basic Seed Farm, Purnea. Aggrieved by the aforesaid action of the petitioners the respondent No.2 raised an industrial dispute but initially the reference was refused. He then filed a writ petition in the High Court and on the basis of the order passed by the High Court the Government of 4 India, Ministry of Labour, New Delhi by order dated 15.1.2004 under Section 10(1)(d) of the Industrial Disputes Act, 1947 made the following reference before the Presiding Officer, Industrial Tribunal, Patna : “Whether the action of the management of Central Silk Board in terminating the services of Sh.Nawal Kumar Gupta as Class IV employee is justified? If not to what relief the workman is entitled to?” After hearing the parties the Presiding Officer, Industrial Tribunal, Patna passed the aforesaid award, aggrieved by which the petitioners have come to this Court. The respondent No.2 has also filed an interlocutory application, I.A.No.2254 of 2007 under Section 17B of the Industrial Disputes Act, 1947 praying that in view of the status quo order passed by this Court on 8.9.2006, to direct the petitioners to pay the respondent the last wage drawn during the pendency of the writ application. In view of Section 17B of the Industrial Disputes Act, the said prayer must be allowed irrespective of the fate of the main writ application. It is, accordingly, directed that the petitioners shall pay the respondent No.2 the last wage drawn for the 5 period from 17.10.2005 till date. I.A.No. 2254 of 2007 is, accordingly, disposed of. Learned counsel for the petitioners submits that the award of the Industrial Tribunal is fit to be set aside since it has not taken into consideration the fact that the unit of Purnea had been established under the National Sericulture Project for a limited period and the respondent No.2 was taken into service on a casual basis for the particular time during which the unit was in existence. Thus, on the closure of the said unit the services of the respondent No.2 were no longer required and, accordingly, it was brought to an end in accordance with the provisions of Section 25F of the Industrial Disputes Act. It is urged by learned counsel for the petitioners that all the other Time Scale Labourers and Casual Labourers of the concerned units duly received the office order dated 31.12.1996 served upon them but the respondent No.2 deliberately avoided the service of the same and, thus, the petitioners were left with no option but to send the same by registered post on 25.1.1997. It is further submitted that earlier by a registered letter 6 dated 11.1.1997 the application for leave dated 2.1.1997 filed by the respondent No.2 was rejected and information regarding his termination had been sent to him by registered post and, thus, according to learned counsel there has been sufficient compliance of the provision. Learned counsel further submits that the respondent No.2 was employed as a mere casual labourer after obtaining his name from the employment exchange and his services were to last till the continuance of the unit and once the same was closed there was no occasion for his service to continue. It is submitted that even on his being converted into a Time Scale Labourer on completion of five years service, did not make him an employee of the Central Silk Board, and he continued to be an employee of the unit for which he had been appointed and his services would naturally come to an end with the closure of the unit. On the basis of the aforesaid facts it is submitted by learned counsel that the Industrial Tribunal was not right in holding that the termination of services of the respondent No.2 was unjustified and directing 7 his reinstatement, that too, with full back wages. In support of his aforesaid stand, learned counsel relies upon a decision of the Supreme Court in the case of State of M.P. & Ors. Vs. Arjunlal Rajak :2006 AIR SCW 1128 in paragraphs 7 to 9 of which it has been held as follows : “7. The question came up for consideration before a Division Bench of this Court in Mahendra L.Jain & Ors. V. Indore Development Authority & Ors.[(2005(1) SCC 639] wherein it was categorically held : “This case involves 31 employees. A distinction is sought to be made by Dr.Dhavan that out of them 27 had been appointed to a project and not in a project. The distinction although appears to be attractive at the first blush but does not stand a moment’s scrutiny. As noticed hereinbefore, the High Court’s observation remained unchallenged, that the project was to be financed by ODA. The project was indisputably to be executed by the Indore Development Authority; and for the implementation thereof, the appointments had to be made by it. If the appellants were appointed for the purpose of the project, they would be deemed to have been appointed therefor and only because such appointments had been made by the respondent would by itself not entitle them to claim permanency. The life of the project came to an end on 30.6.1997. The maintenance job upon completion thereof had been taken over by the Indore Municipal Corporation. The appellants were aware of the said fact and, thus, 8 raised an alternative plea in their statements of claims. The Labour Court could not have granted any relief to them as prayed for, as the Indore Municipal Corporation is a separate juristic person having been created under a statute. Such a relief would have been beyond the scope and purport of the reference made to the Labour Court by the State Government. Furthermore, the Indore Municipal Corporation was not a party and, thus, no employee could be thrust upon it without its consent. In A.Umarani this Court held that once the employees are employed for the purpose of scheme, they do not acquire any vested right to continue after the project is over (see paras 41 and 43 :SCC paras 55 and 57). (See also Karnataka State Co-op. Apex Bank Ltd. v. Y.S.Shetty and M.D., U.P. Land Development Corpn. V. Amar Singh.) It is furthermore evident that the persons appointed as daily- wagers held no posts. The appointments, thus, had been made for the purpose of the project which, as indicated hereinbefore, came to an end. The plea of Dr.Dhavan to the effect that the appellants in Civil Appeal No. 337 of 2002 were asked to perform other duties also may not be of much significance having regard to our foregoing findings. However, it has been seen that even services of one of them had been requisitioned only for the project work. The High Court, in our opinion, was right in arriving at the conclusion that the appellants were not entitled to be regularised in service.” 8. It is also trite that even for grant of back-wages, application of mind on the part of the Industrial Court is imperative, as a relief of full back-wages may not be granted 9 automatically. In U.P. State Brassware Corpn. Ltd. & Anr. V. Uday Narain Pandey [(2006) 1 SCC 479] this Court opined: “No precise formula can be laid down as to under what circumstances payment of entire back-wages should be allowed. Indisputably, it depends upon the facts and circumstances of each case. It would, however, not be correct to contend that it is automatic. It should not be granted mechanically only because on technical grounds or otherwise an order of termination is found to be in contravention of the provisions of Section 6-N of the U.P. Industrial Disputes Act.” 9. It was further held that while a decision to close down the establishment has been taken, ordinarily, back-wages to a limited extent should be granted.” He also relies upon other decisions of the Apex Court to the same effect. Learned counsel for the respondent No.2, on the other hand, submits that it is clear from the admitted facts of the case that the provisions of Section 25F of the Industrial Disputes Act had not been complied with. Learned counsel submits that neither the notice of retrenchment dated 31.12.1996 was handed over to the respondent No.2 nor was one month’s pay in lieu of notice either paid to the respondent No.2 or tendered to him. The issuance of the copy of the order by 10 registered post along with the another office order dated 25.1.1997 cannot be considered as a valid compliance of the requirement of Section 25F and, thus, it is urged that the Labour Court had rightly held that the said provision has not been complied by the employer petitioners. Learned counsel further submits that once the retrenchment has been found to be violative of Section 25F of the Act then the reinstatement shall follow as a matter of course and the same has rightly been directed by the Industrial Tribunal. It is urged that the respondent No.2 was not at all at fault in the matter and, thus, he has rightly been awarded full back wages for the period. Learned counsel for the respondent No.2 also contests the stand of the petitioners regarding the employment being in a unit liable to closure. It is submitted by learned counsel that it is the Central Silk Board which from time to time under its National Sericulture Project used to shift the units of a particular area from one place to another but the casual labourers at the same time were being shifted and engaged therein to the place 11 where the unit is set up. In support of the same he relies upon a letter dated 17.8.1994(Ext.W/9) issued by the Deputy Secretary(Administration) to the Deputy Director & PIA, Basic Seed Farm, Kishanganj in which it was stated that some time the said office was issuing order of shifting of SSPC/BSF/TSC etc. from one place to another or handing over the same from NSSP to concerned State Sericulture Department; under such circumstances they had to adjust the Casual/Time Scale labourers to some other units and in such case they had to issue notice to the concerned Time Scale/Casual Labourers in the enclosed proforma for offering the alternative place of working. It was accordingly requested in the said letter for taking action as suggested therein as and when any unit is ordered to be shifted or for handing over the same to concerned State. Learned counsel submits that pursuant to the said and similar letters employees of the different units have been adjusted in the other units as a matter of practice by the Central Silk Board and the same has also been considered in the award of the Tribunal in 12 which as many as six Exts., 15 to 20, being transfer orders of such labourers, in view of the letter of the Deputy Secretary (Administration), were taken into consideration. It is, thus, submitted that the Tribunal had rightly directed reinstatement of the workman. It is also contended by learned counsel that at all times the respondent No.2 had clearly stated on affidavit that he did not have any alternative employment and thus his case of retrenchment being illegal he was held to be entitled for full back wages. In support of the said stand learned counsel relies upon two decisions of the Supreme Court, the first being the case of Rajasthan Lalit Kala Academy vs. Radhey Shyam : (2009) 1 SCC (L & S) 287, in paragraphs 15, 19 & 21 of which it has been held as follows : “15. It is trite that in the event of retrenchment of a workman, employed in any industry, continuously for not less than one year under an employer, compliance with the provisions of Section 25- F of the Act, in particular clauses (a) and (b) thereof is mandatory. A bare reading of Section 25-F of the Act shows that retrenchment within the meaning of Section 2(oo) of the Act, which 13 admittedly is the case here, must satisfy the following conditions : (i) the workman is given one month’s notice, (a) in writing, (b) indicating the reasons for retrenchment; (ii) the retrenchment must take effect after the expiry of the period of notice i.e. one month or else, the workman should be paid in lieu of such notice, wages for the period of the notice; (iii) at the time of retrenchment, the workman has been paid compensation, equivalent to fifteen days’ average pay for every completed year of continuous service or any part thereof in excess of six months; and (iv) the notice in the prescribed manner is served on the appropriate Government or such authority as may be specified. 19. Once the termination of service of an employee is held to be illegal, the relief of reinstatement is ordinarily available to the employee. But the relief of reinstatement with full back wages need not be granted automatically in every case where the Labour Court/Industrial Tribunal records the finding that the termination of services of a workman was in violation of the provisions of the Act. For this purpose, several factors, like the manner and method of selection; nature of appointment- ad hoc, daily wage, temporary or permanent, etc., period for which the workman had worked and the delay in raising industrial dispute, are required to be taken into consideration. 21. It appears to us that in the present case there has not been due application of mind either by the Labour Court or by the High Court on 14 the question of reinstatement and payment of 25% back wages. The only ground on which reinstatement and continuity of service has been ordered is because the order of termination has been held to be unlawful. Similarly, 25% back wages have been awarded for the reason that the services of the petitioner were terminated with immediate effect but no specific reason as such has been assigned for the award of the said back wages. In our opinion, though, illegality of the order of termination is one of the prime considerations for determining the question and quantum of back wages, but it cannot be the sole criterion therefor. A host of other factors, a few enumerated above, are required to be taken into consideration before issuing directions in that behalf. Therefore, the award of the Labour Court to that extent cannot be sustained. However, we feel that at this distant time, it would not be fair to the respondent workman to remit the matter back to the Labour Court or the High Court for fresh consideration of the issue.” The other decision on which he relies upon is in the case of Senior Regional Manager, ASMAC Ltd. & Anr. v. M.Raviselvam :2009 LAB. I.C.940(S.C.) in which it was laid down as follows : “On 14th of September, 2007, this Court issued notice in this SLP limited to the question of payment of back wages only. 2. We have heard the learned counsel for the parties and examined the 15 record including the impugned order. We modify the order of the High Court only to the extent that the respondent shall be entitled to 50% of the back wages from the petitioners. Such back wages shall be paid to the respondent, if not already paid in the meantime within three months from the date of supply of a copy of this order to the High Court. 3. With these directions, this Special Leave Petition is disposed of with no order as to costs. Order accordingly.” On a consideration of the materials on the record and the submissions of learned counsels for the parties, it is evident that the requirement of Section 25-F of the Industrial Disputes Act, namely, service of the order with one month’s notice or one month’s wages in lieu of one month’s notice has not been complied with in the present case. It may be that the respondent No.2 had made himself unavailable for the same but several guidelines have been laid down in the decisions of the Courts even in such circumstances for a valid notice and tender of one month’s wages. Evidently, the same has not been done in the present case and for the said reason the finding of the Tribunal regarding 16 non-compliance of Section 25-F cannot be interfered with. The other question is whether the order of reinstatement was justified and, that too, with full back wages. In Rajasthan Lalit Kala Academy (supra) and various other decisions it has been held that in a case of non-compliance of Section 25-F relief of reinstatement should ordinarily be given. The question raised in the instant matter is that the unit concerned had been set up for a limited period and, thus, there could be no reinstatement to such unit which itself had been closed w.e.f. 31.12.1996. However, it is evident that not only there was specific direction from the Central Silk Board to adjust such workmen in another unit but the same has been followed in the case of many workmen with respect to which sufficient material has been brought on the record by the respondent No.2 before the Industrial Tribunal. In the said circumstances, it cannot be held that the relief regarding grant of reinstatement was unjustified. This Court, therefore, refuses to interfere with the same. 17 Moreover, learned counsel for the petitioners failed to satisfy this Court on the basis of any material that when services of the respondent No.2 and others were requisitioned from the employment exchange or while engaging them they had been informed that they would be employed in a project which would close down in a few years. In that situation the services of respondent No.2 could not have been dispensed with without complying with the requirement of Section 25F, which the petitioners failed to do. Hence reinstatement was justified for this reason also. The only remaining issue is whether the full back wages ought to have been ordered. It is evident that the retrenchment was made by order dated 31.12.1996 whereas the reference to the Industrial Tribunal itself was made on 15.1.2004, i.e., more than seven years after the same. Considering the fact that the respondent No.2 was a daily wager whose services had been engaged after inviting application from the employment exchange and further considering the fact that after working continuously for five years he had been converted into a Time Scale 18 Labourer entitling him practically to most of the benefits that are available to other regular employees of the Central Silk Board, including the fact that his age of superannuation was mentioned as 55 years, this Court is of the view that taking into account the said factors it would be just and fair if the respondent No.2 is granted 50% back wages for the period he was kept out of the service, i.e., from 1.1.1997 onwards. He has already been ordered earlier in this order to be paid full wages in terms of Section 17B of the Act w.e.f. 17.10.2005, i.e., the date of filing of the writ petition. The aforesaid amounts must be paid to the respondent No.2 within a period of two months from the date of receipt/production of a copy of this order, failing which the petitioners shall be liable to pay interest at the rate of 8% per annum from the date of this order. The writ application is, accordingly, partly allowed in terms of the aforesaid observations and directions. (Ramesh Kumar Datta,J.) spal/