1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. WRIT PEITION NO.2512 OF 2003 Infomedia India Ltd. ...Petitioner. Versus Suhas Shripad Gadre & Anr. ...Respondents. ....... Mr. K.M. Naik with Mr.S. P. Dhulapkar for the Petitioner. Mr. S. N. Deshpande for Respondent No.1. ...... CORAM : DR. D.Y. CHANDRACHUD, J. August 3, 2006. ORAL JUDGMENT : The First Respondent was engaged as a machine operator by the Petitioner at its establishment at Prabhadevi, Mumbai. The Petitioner was, at the material time, engaged in the business of printing. On 22nd June 1992, the First Respondent applied for leave from 1st July 1992 to 29th August 1992 on the ground that he was going on a tour to the southern part of India. The application for leave was sanctioned by the management and the First Respondent accordingly proceeded on leave. Upon the expiry of leave, the First Respondent did not report for duty. The evidence that has emerged 2 from the record shows that it is now an undisputed position that the First Respondent never proceeded on any tour within the territory of India but instead, took up employment in South Africa with a Company by the name of Golden Era which carried on the business of printing. The First Respondent was drawing wages at the material time, in the amount of Rs.4,000/- per month with the Petitioner. In the course of his deposition, the First Respondent stated that the ticket for his travel to and accommodation in South Africa was arranged by the South African employer. The salary which the First Respondent received in South Africa during the tenure of his employment was Rs.15,000/- per month, at the material time, in September 1992. 2. On 15th September 1992, the Petitioner addressed a communication to the First Respondent and intimated to him that in terms of Clause 13.4 of the Certified Standing Orders, the First Respondent had lost his lien on the job and that his name had been removed from the muster roll with effect from that date. The case of the First Respondent is that he learnt of the communication dated 15th September 1992 while he was in South Africa and that he eventually 3 returned to India in the month of December 1992; the cause for return being that he was unable to tolerate the atmosphere and the food in a foreign country. 3. The First Respondent moved the Conciliation Officer on 18th March 1993. On the conciliation proceedings having ended in failure, a reference was made for adjudication before the Industrial Court under Section 10 of the Industrial Disputes Act, 1947. The case of the First Respondent was that he proceeded to South Africa at the behest of the General Manager of the Petitioner, a person by the name of Mr. V.V. Kanuga. According to the First Respondent, the General Manager informed him that the Company was facing a recession and that if he found a job elsewhere, the Company would extend all possible co-operation. The Petitioner filed a Written Statement in which the case of the First Respondent was denied. Evidence was adduced in support of the Statement of claim by the First Respondent and, in defence, on behalf of the Petitioner. The Labour Court by its award dated 21st April 2003 held that the termination of the services of the First Respondent amounted to 4 retrenchment under Section 2(oo) of the Industrial Disputes Act, 1947 and since the retrenchment had been effected without complying with the provisions of Section 25F, the termination from service was illegal. The Petitioner was directed to reinstate the workman with continuity of service with effect from 15th September 1992 with back wages quantified at 50%. 4. On 19th November 2003, a Learned Single Judge of this Court granted rule on the petition. In so far as interim relief was concerned, the Learned Single Judge held that prima facie the conduct of the worker in leaving the country and joining service with an employer in a foreign country would not justify payment of back wages. The order on the payment of back wages was stayed, but stay on reinstatement was refused. An appeal against the interim order passed by the Learned Single Judge was dismissed by a Division Bench of this Court. The First Respondent has accordingly been allowed to join duty in pursuance of the interim directions of this Court. An affidavit has been filed on behalf of the Petitioner in these proceedings in which it has been stated before the Court that the 5 establishment at Prabhadevi wherein the First Respondent was employed has been entirely closed; that all the machinery, plant and equipment have been sold together with the landed property and that all the other workmen who were engaged in the establishment at the time of closure had applied for and were granted voluntary retirement under a scheme floated by the management. Since this has been disputed on behalf of the workman that is an issue which would warrant consideration in a subsequent part of this judgment. 5. On behalf of the Petitioner it has been submitted that: (i) Clause 13.4 of the Certified Standing Orders specifically contemplates that a workman who has remained absent beyond the period of leave shall be liable to lose his lien on his appointment unless he returns within eight days of the expiry of the sanctioned leave and explains his absence to the satisfaction of the management. Thereafter, if the workman does not return for duty within a period of fifteen days of the expiry of his leave, he shall be treated as having left service from the date he was due to return to work; (ii) Provisions of Standing Orders similar to that which falls for 6 consideration in the present case, have been construed by the Supreme Court in Buckingham and Carnatic Co. vs. Venkatayya,1 and in National Engineering Industries vs. Hanuman.2 Conduct of a workman which falls within the purview of the Standing Order gives rise to an inference of abandonment or relinquishment of employment, upon which his services would stand automatically terminated without any further action on the part of the employer; (iii) In the circumstances, this does not amount to retrenchment within the definition of that expression in Section 2(oo) of the Industrial Disputes Act, 1947; (iv) While the judgment of the Supreme Court in D.K. Yadav vs. J. M. A. Industries Ltd.,3 requires that the principles of natural justice must be read into a Standing Order which postulates a loss of lien on the failure of an employee to report to work upon the expiry of a stipulated period. Once a challenge is raised in a reference under Section 10 of the Industrial Disputes Act, 1947 and evidence is adduced before the Tribunal, it is for the Court to evaluate as to whether the employee has a reasonable or plausible explanation for his absence from work; (v) Once it is 1 1963 II LLJ 638 2 1967 II LLJ 883 3 1993 II CLR 116 7 demonstrated that there was absolutely no plausible reason to be absent from work and the facts demonstrate an intention to abandon or relinquish duties, a mere breach of the principles of natural justice cannot lead to an invalidation of the severance of the relationship of employer and employee which has taken place upon the conduct of the employee in abandoning his duties; (vi) On the facts of this case, evidence on the record shows that the workman took up a job in South Africa, by offering a false justification for the leave which he took to travel within India and the award of the Labour Court requires interference under Article 226 of the Constitution; (vii) The establishment at Prabhadevi where the workman was engaged has been completely closed and the landed property as well as machinery have been sold. All workmen at the establishment on the date of the closure had applied for and were granted voluntary retirement. The management should not be saddled with the requirement of reinstating the workman. The effect of the interim direction has been that the Petitioner was compelled to allow the First Respondent to report for work despite the absence of work. 8 6. On the other hand, Counsel appearing on behalf of the First Respondent has sought to sustain the correctness of the order passed by the Labour Court by asserting that (i) In the present case, the management had struck off the name of the workman from the muster roll which involved a positive act of termination thereby attracting the provisions of Section 2(oo) of the Industrial Disputes Act, 1947; (ii) The allegations against the workman would show that the case of the management was that the workman was guilty of misconduct in which case the management ought to have issued a chargesheet followed by a regular disciplinary enquiry before proceeding to terminate the services of the workman; (iii) No opportunity was given to the workman of explaining his absence from duty and the order of termination was contrary to the principles of natural justice; (iv) An adverse inference ought to have been drawn against the management for its failure to produce the then General Manager Mr. V.V. Kanuga who had called upon the workman to take alternate employment which was not rebutted by the management; the non-production of Kanuga for the purposes of giving evidence is a vital omission to substantiate the defence; and (v) The statement of 9 the management that the establishment at Prabhadevi has been closed is erroneous. 7. In considering the submissions which have been urged on behalf of the contesting parties, it would, at the outset, be necessary to advert to the provisions of the Certified Standing Orders. Standing Order 13.4 provides as follows : “(4) A workman remaining absent beyond the period of leave originally granted or subsequently extended, shall be liable to lose his lien on his appointment unless he returns within eight days of the expiry of the sanctioned leave and explains to the satisfaction of the authority granting leave his inability to resume his duty immediately on the expiry of his leave. A workman who loses his lien under the provisions of this Standing Order but reports for duty within fifteen days of the expiry of his leave shall be kept on the waiting list if he so desires and his name shall thereupon be entered in the waiting list. A workman not reporting for duty within fifteen days of the expiry of his leave shall be treated as having left the service from the date he was due to return to work.” Now what this Standing Order provides is that a workman who remains absent beyond the period of sanctioned leave is liable to lose his lien unless he returns within a period of eight days of the expiry of the leave and explains the reasons for his absence beyond the period of leave that was sanctioned, to the satisfaction of the management. 10 A workman who has thus lost his lien but who returns for duty within fifteen days of the expiry of the leave is to be kept on the waiting list. However, in the event that the workman does not report for duty within a period of fifteen days of the expiry of leave, he has to be treated as having left the service from the date on which he was due to return to work. 8. The Supreme Court considered the impact of a Standing Order which contains a deeming provision by which a workman is treated as having left the service of the management upon absenting from work for a certain stipulated period without leave. In Buckingham and Carnatic Co. vs. Venkatayya, (supra), the Standing Order was to the following effect : “Absent without leave.- Any employee who absents himself for eight consecutive working days without leave shall be deemed to have left the company's service without notice thereby terminating his contract of service. If he gives an explanation to the satisfaction of the management, the absence shall be converted into leave without pay or dearness allowance. Any employee leaving the company's service in this manner shall have no claim for re-employment in the mills. 11 But if the absence is proved to the satisfaction of the management to be one due to sickness, then such absence shall be converted into medical leave for such period as the employee is eligible with the permissible allowances”. Mr.Justice P.B. Gajendragadkar (as the Learned Chief Justice then was) delivered the judgment of a Bench of three Learned Judges of the Supreme Court and noted that under the common law an inference that an employee has abandoned or relinquished service is not easily drawn unless an inference to that effect can be legitimately drawn from the length of absence and other surrounding circumstances. Abandonment, the Court noted, was a question of intent and normally such an intention cannot be attributed to an employee without adequate evidence in that behalf. The Court, however, held that the position is different where a specific provision is made in the conditions of service as contained in a certified Standing Order. In that case, it is a matter of construing the relevant term itself. The Court held thus ; “But where parties agree upon the terms and conditions of service and they are included in certified Standing Orders, the doctrines of common law or considerations of equity would not be relevant. It is then a matter of construing the 12 relevant term itself. Therefore, the first part of Standing Order 8(ii) inevitably leads to the conclusion that if an employee is absent for eight consecutive days without leave, he is deemed to have terminated his contract of service and thus relinquished or abandoned his employment.” The Supreme Court held that the latter part of the Standing Order under which the employee was entitled to offer an explanation for his absence was in substance a proviso to the first part. If the explanation is treated as satisfactory by the management, the inference of a termination of the contract of service would stand rebutted. Contrariwise, if the explanation is not found to be satisfactory by the management, the inference arising in the first part would prevail and the employee should be deemed to have terminated his contract of service with the result that the relationship of employer and employee would cease. The Supreme Court held that though the Standing Orders may also provide for the institution of disciplinary proceedings on a charge of misconduct and an absence from duty is also a misconduct, the termination of the contract of service under the Standing Orders for the absence of the employee, without leave, for a stipulated period was entirely different 13 from the employer adopting disciplinary proceedings to penalise the employee for his misconduct. If the Certified Standing Order was applicable, it was no answer to the employer's case to say that a case of misconduct is also attracted. Finally, the Supreme Court also held that such a cessation of the relationship of employer and employee follows automatically without a positive act on the part of the employer: “Where termination of the employee's services follows automatically either from a contract or from a Standing Order by virtue of the employee's absence without leave for the specified period, such termination is not the result of any positive act or order on the part of the employer, and so, to such a termination the prohibition contained in S.73 (1) would be inapplicable.” To such a termination, it was held that Section 73 of the Employees' State Insurance Act was not attracted. 9. The judgment in Buckingham and Carnatic came to be followed by a Bench of two Learned Judges of the Supreme Court in National Engineering Industries vs. Hanuman, (supra). The Certified Standing Orders in that case provided that a workman who 14 did not report for duty within eight days of the expiry of his leave lost his lien on the appointment. The Supreme Court held that the consequence of the Standing Order was that the services of the workman would stand automatically terminated on the happening of the contingency envisaged in the Standing Order : “This shows what the workman understood the Standing Order in question to mean. The Standing Order is inartistically worded, but it seems to us clear that when the Standing Order provides that a workman will lose his lien on his appointment in case he does not join his duty within eight days of the expiry of his leave, it obviously means that his services are automatically terminated on the happening of the contingency. We do not understand how a workman who has lost his lien on his appointment can continue in service thereafter. Where therefore, a Standing Order provides that a workman would lose his lien on his appointment, if he does not join his duty within certain time after his leave expires, it can only mean that his service stands automatically terminated when the contingency happens.” 10. Before completing the narration of this line of cases, it would be necessary to advert to certain other judgments of the Supreme Court. In Management of M/s.Indian Iron & Steel Co. Ltd. vs. Prahlad Singh,4 the Certified Standing Orders postulated a loss of lien on the part of the workman in the event of a workman 4 2001 I CLR 185 15 remaining absent beyond the period of leave unless he returned within ten days of the expiry of leave and explained the reasons for his absence to the satisfaction of the management. The workman was on leave from 1st July 1974 to 20th September 1974 and upon his failure to return, a notice was issued by the management on 8th October 1974 terminating his services with effect from 21st September 1974. The workman challenged the termination nearly thirteen years thereafter in April 1987 by raising a dispute. The Industrial Tribunal rejected the reference firstly, on the ground of delay on the part of the workman in raising the dispute and secondly, on the ground that the loss of lien upon the failure of the employee to return on the expiry of leave was automatic. This automatic termination was in accordance with the Standing Order which would be binding both on the management and the workman. The judgment of the Tribunal was set aside by a Learned Single Judge of the Patna High Court and that decision was confirmed in appeal by a Division Bench. In a Special Leave Petition filed by the management, the Supreme Court held that the High Court was in error in reversing the decision of the Tribunal. The Supreme Court held that the Tribunal 16 was correct in finding fault with the workman for raising a dispute only after an expiry of a long period of thirteen years. The Supreme Court also held that the Tribunal had not refused relief merely on the ground of delay and latches but had held that even without considering the question of delay, the workman had lost his lien on his appointment. A similar view was taken by the Supreme Court in Dr.Anil Bajaj vs. Post Graduate Institute,5 which was a decision of three Learned Judges. The Petitioner in that case who was a doctor was permitted to take an assignment abroad, ex-post facto, for a period of two years from 27th September 1994. The letter of sanction stipulated that in the event that he failed to resume duty upon the expiry of the period of sanction, his lien would automatically expire and he would be deemed to have permanently left the institute from the original date. The Petitioner did not return to duty until 1998 and his request for extension, in the meantime, was rejected. The Supreme Court held that a person who had obtained an advantage, namely of a sanction to go abroad on service on the condition that he would come back within two years, failing which his lien would be automatically terminated was estopped from turning back and challenging the basis 5 2002 I CLR 923 17 on which he was granted sanction to go abroad. 11. Section 2(oo) of the Industrial Disputes Act, 1947 which was inserted by Act 43 of 1953 defines the expression 'retrenchment' to mean the termination by the employer of the service of a workman for any reason whatsoever otherwise than as a punishment inflicted by way of disciplinary action. An exception is, however, carved out by the second part of Section 2(oo) in four stipulated categories which are not included in the definition of the expression. These four categories are: (i) Voluntary retirement of a workman; (ii) Retirement of the workman on reaching the age of superannuation as contained in the contract of employment; (iii) Termination of the service of the workman as a result of the non-renewal of the contract of employment on its expiry or upon such contract being terminated in accordance with a stipulation contained therein; and (iv) A termination on the ground of continued ill-health. The width of this definition was noted by a Constitution Bench of the Supreme Court in The Punjab Land Development & Reclamation Corporation Ltd. vs. The Presiding Officer, Labour Court.6 The Supreme Court held that the definition 6 1990 II CLR 1 18 of “retrenchment” would show that firstly it means termination by the employer of the service of a workman for any reason whatsoever. The Supreme Court held that having said so, Parliament had proceeded to limit the definition by excluding certain types of terminations. Had Parliament envisaged only the question of termination of surplus labour, there would arise no question of excluding categories which stand basically excluded. The Supreme Court held that while naturally and ordinarily the expression “retrenchment” meant discharge of surplus labour, the defined meaning was termination of service of a workman for any reason whatsoever except for those reasons excluded in the definition itself. Analysing the definition, the Supreme Court held that termination by the employer of the services of a workman would not have otherwise covered the cases excluded in clauses (a) and (b) viz., (i) voluntary retirement; and (ii) retirement on attaining the age of superannuation since there would be no volitional element of the employer. Their express exclusion implies that those categories would otherwise have been included. Again, the Supreme Court noted, if those cases were to be included, termination on abandonment of service, or on efflux of 19 time, and on failure to qualify, although only consequential or resultant, would be included as those have not been excluded. Thus, the Supreme Court held, there appears to be a gap between the first part and the exclusionary part. It would be necessary for the purpose of present case to note that it was specifically urged before the Supreme Court that if retrenchment is understood in its wider sense that would affect the rights of the employer under the Standing Orders and under contracts of employment. That was, however, repelled by the Supreme Court with the following observations: “The last submission is that if retrenchment is understood in its wider sense what would happen to the rights of the employer under the Standing Orders and under the contracts of employment in respect of the workman whose service has been terminated. Firstly, those rights may have been affected by introduction of Ss.2(oo), 25-F and the other relevant sections. Secondly, it may be said, the rights as such are not affected or taken away, but only an additional social obligation has been imposed on the employer so as to give the retirement benefit to the affected workmen, perhaps for immediate tiding over of the financial difficulty. Looked at from this angle, there is implicit a social policy. As the maxim goes – stat pro ratione voluntas populi; the will of the people stands in place of a reason.” In the circumstances, the principle that has been