IN THE HIGH COURT OF BOMBAY AT GOA **** LETTERS PATENT APPEAL NO. 5 OF 2004 Union of India, Ministry of Labour, through the Welfare Commissioner, Labour Welfare Organisation, C60, Complex (Block ‘C’), Seminary Hills, Nagpur (M.S.). ... Appellant. Versus 1. The Presiding Officer, Central Government Industrial Tribunal, No.2, Mumbai (M.S.), and 2. Shri Newton Mazarello, r/o Velim, Olizaino, Salcete, Goa. ... Respondents. Mr. E. P. Badrinarayana, Advocate for the appellant. Mr. V. Menezes, advocate for respondent no.2. CORAM : B. H. MARLAPALLE & N. A. BRITTO, JJ. DATE : 25th October, 2004. 1st November, 2004. ORAL JUDGMENT (Per Marlapalle, J.) Heard. Admit. With consent of the parties taken up for final hearing. 2. This Letters Patent Appeal arising from the Judgment of this Court (Single Bench) in Writ Petition no.153/99 raises an important question of law for our consideration, namely: "Whether the termination of service of a Central Government employee by invoking the powers under the applicable service rules framed under Article 309 of the Constitution is required to be examined on - 2 - the touch-stone of Articles 311, 14 and 16 of the Constitution of India, or, on the ground of failure to comply with the provisions of Section 25 F of the Industrial Disputes Act, 1947?" Writ Petition No.153/99 was filed under Articles 226 and 227 of the Constitution challenging the Award passed by the Central Government Industrial Tribunal II on 18th June, 1998 in Reference No.CGIT-2/39/1986 and by the said Order the present respondent no.2/employee was directed to be reinstated with continuity in service and with full back wages from the date of termination, i.e. 15th October, 1980 and the order of termination dated 15th October, 1980 was held to be not justified. The said Award came to be confirmed by the learned Single Judge and, therefore, it is an intra-Court appeal for correction of the said Order dated 6th February, 2004. 3. The respondent no.2/employee came to be appointed in the temporary post of Laboratory Technician in the office of the Vice Chairman of the Iron Ore Mines Labour Welfare Fund Advisory Committee for Goa, Daman and Diu by Memorandum dated 12th March, 1974, and by the further Order dated 25th April, 1974, issued by the Vice Chairman of the Iron Ore Mines Labour Welfare Fund Organization at Goa, he came to be appointed as temporary Laboratory Technician in the Central Hospital, Tiska, Darbandora, under the office of the Vice Chairman of the said organization/committee in the pay scale of Rs.130 - 300. The post of Laboratory - 3 - Technician is a permanent post, but the employee was appointed on temporary basis. After about six years his services came to be terminated by the Order dated 15th October, 1980, passed by the Welfare Commissioner by invoking his powers under Rule 5(1) of the Central Services (Temporary Service) Rules, 1965 (hereinafter referred to as "the Rules", for short). The said termination Order came to be challenged in Writ Petition No.111/82 and the said petition was disposed as withdrawn after it was amended. The employee thereafter submitted a representation dated 3rd September, 1984, and raised an industrial dispute before the Assistant Labour Commissioner (Central), Vasco da Gama, alleging that the Welfare Commissioner - Iron and Manganese Ore Welfare Organization, Panaji, had illegally terminated his services with effect from 15th October, 1980. The Conciliation Officer submitted his failure report dated 1st August, 1985, to the Secretary, Ministry of Labour, Government of India and a reference under Section 10(1) of the Industrial Disputes Act for adjudication came to be made by the Labour Ministry. The issue referred for adjudication read thus:- "Whether the action of the management of Welfare Commissioner, Iron & Manganese Ore Welfare Organization, Panaji, in respect of Central Hospital, Tiska in terminating the services of Shri Newton Mazarelo Laboratory Technician with effect from 15.10.1980 is justified? If not, to what relief the workman is entitled?" - 4 - Before the Tribunal, the reference came to be registered as Reference No. CGIT-2/39/86 and on consideration of the respective averments as well as the evidence before it, the Tribunal by its Award dated 18th June, 1998, allowed the reference and passed an order as referred to hereinabove directing reinstatement with full back wages and continuity in service. 4. The initial memorandum of appointment dated 12th March, 1974 had set out the terms of appointment and some of the relevant terms are reproduced as under:- (i) the post is temporary, but is likely to become permanent. In the event of its becoming permanent his/her claims for permanent absorption will be considered in accordance with the rules in force. (iii) the appointment may be terminated at any time by month’s notice given by either side, viz. the appointee or appointing authority, without assigning any reason. The appointing authority however, reserves their right of terminating the services of the appointee forthwith or before the expiration of the stipulated period of notice by making payment to him of a sum equivalent of the unexpired portion thereof. The termination Order dated 15th October, 1980, issued by the Welfare Commissioner read as under:- " BHARAT SARKAR/GOVT. OF INDIA SHRAM MANTRALAYA/MINISTRY OF LABOUR OFFICE OF THE WELFARE COMMISSIONER IRON ORE MINES LABOUR WELFARE FUND ORGANIZATION RUA ST. TOME, SALDHANA BUILDING, PANJIM, GOA - 5 - No.CH/16/PF-40 Dt.15.10.80 ORDER In pursuance of the proviso to sub rule (1) of Rule 5 of the Central Services (Temporary Service) Rules, 1965, I hereby terminate forthwith the services of Shri Newton Mazarelo, Lab. Technician and direct that he shall be entitled to claim pay plus allowances for the period of notice at the same rates at which he was drawing them immediately before the termination of his service, or, as the case may be, for the period by which such notice falls/short of the month. Sd/- (S. A. Rahim) Welfare Commissioner To Shri Newton Mazarelo, Lab. Technician, Central Hospital, Tiska, Goa. Copy to 1. The Medical Officer in Charge, Central Hospital, Tiska Goa. 2. Personal File. 3. Office copy." 5. In his representation dated 3rd September, 1984, submitted to the Assistant Labour Commissioner (Central), the employee had challenged the termination order as abrupt and only to appoint one Ms. Rozama K. George in his place and he claimed that against a permanent post he was appointed on temporary basis. However, during the course of conciliation proceedings on 28th November, 1994, he, for the first time, took the plea that the termination of his services was not in compliance with the conditions - 6 - precedent set out under Section 25 F of the Industrial Disputes Act, 1947 ("I.D. Act" for short) and, therefore, the said termination order was void and illegal. The employer organization opposed this contention on two grounds, namely:- " (a) it was not an "industry" as defined under Section 2(j) of the Industrial Disputes Act; and (b) when the termination order was issued under Rule 5(1) of the Rules, compliance with the requirements of Section 25 F of the Industrial Disputes Act, was not required to be made by the employer." 6. In his statement of claim dated 26th August, 1996 (Exh.1) before the Tribunal, it was claimed that the order of termination dated 15th October, 1980, amounted to retrenchment within the meaning of Section 2(oo) and the mandatory conditions precedent as set out under Section 25 F of the I.D. Act, were not complied with and, therefore, the termination was illegal and void ab initio. The department filed its written statement under the signature of the Welfare Commissioner on 3rd February, 1987 (Exh.6). In para 6 of the said written statement it set out in detail the unsatisfactory service record of the employee right from 1977, in para 8 it set out the instances of dereliction of duty by the employee and in para 9 the reasons for issuance of the termination order as well as non-applicability of the provisions of Section 25 F of the I.D. Act. We deem it appropriate to reproduce the averments in para 9 of the - 7 - written statement (Exh.I) submitted before the Tribunal as under:- 9. The record of preference by Shri Newton Mazarelo, being as narrated above, his incompatible temperament with the other staff, his habit of meddling with other people affairs, his failure to think and act clearly, the adverse remarks for the past 3 years and above all his professional dishonesty in rendering bogus investigation reports, without carrying out the necessary investigation, compelled the Welfare Commissioner to take stern action against him. As the very lives of the patients were in danger and the reputation of the Organization was at stake, the services of Shri Newton Mazarelo, Lb. Technician, who was a purely temporary employee, had to be terminated with immediate effect on 15.10.1980, under Rule 5(1) of the Central Civil Services (Temporary Service) Rules, 1965, by paying him a month’s salary in advance in lieu of one month’s notice. The Welfare Commissioner submits that he was within hi rights to terminate the services of the employee, Shri Newton Mazarelo, who was a temporary employee, under Rule 5(1) of the said Rules, it is therefore, submitted that the termination of the services of the employee, Shri Newton Mazarelo, is fully justified and is in order. If an inquiry was to be held in the charges levelled against him, there would have been a time lag, not to speak of the public scandal and the harm which would have been caused to the reputation of the Hospital. The case of Shri Newton Mazarelo was a typical case of the Employer losing confidence in the employee whose continuance in service even for a brief period for holding an inquiry under the service rules was neither possible nor advisable in view of the dangerous consequences which would have possibly ensued in treating the patients. Considering his deliberate acts of submitting bogus investigation reports and of not entering MRD Nos.on the reports giving rise to possibilities of wrong reports being connected to the case papers of the patients resulting in complications - 8 - and fatalities of patients. In view of this, the employer submits that the action taken to terminate the services of Shri Newton Mazarelo with immediate effect under Rule 5(1) of Central Civil Services (Temporary Service) Rules, 1965, was not only warranted but was the only course open to the Employer in the circumstances. The Employer seeks to rely on the various rulings of the High Courts and the Supreme Court which have upheld such action taken by the Employer for loss of confidence in the employee and have held that such termination does not violate Section 25 F of the Industrial Disputes Act, 1947, which enacts a safeguard against wrongful retrenchment. In the circumstances, the Employer submits that the Employer was not under a legal obligation to pay retrenchment compensation to the applicant while terminating his services under Rule 5(1) of the said Central Civil Services (Temporary Service) Rules, 1965." 7. In support of his case the employee had submitted affidavit by way of examination-in-chief and he was cross-examined by the Department. On behalf of the Department, two witnesses, namely Mr. Aziz Ahmed, s/o Abdul Halin, Welfare Administrator and Mr. A. Siddeshi, Assistant Welfare Commissioner, were examined. It was contended that the Iron Ore Mines Manganese Ore Mines and Chrome Ore Mines Labour Welfare Fund came to be constituted under the Iron Ore Mines and Chrome Ore Mines Labour Welfare Fund Act, 1976 by the Government of India, by invoking its rule-making powers under Section 14 and the Government of India has framed the Iron Ore Mines Manganese Ore Mines and Chrome Ore Mines Labour Welfare Fund Rules, 1978. Rule 18 therein states that persons appointed under Section 8 shall be governed by such rules relating to the terms and - 9 - conditions of service as are applicable to Central Government Service. Section 8(2) of the Iron Ore Mines Act states that the Central Government may, by general or special order, direct a Welfare Commissioner to appoint such staff as is considered necessary for the purpose of the Act and the Iron Ore Mines Manganese Ore Mines and Labour Welfare Cess Act, 1976. As per Section 8(3) of the Act every person so appointed shall be deemed to be a "public servant" within the meaning of Section 21 of the Indian Penal Code. There is no dispute that the welfare Commissioner was the appointing authority for the employee, the employee was a servant of the Central Government and his service conditions were governed by the Central Civil Services (Temporary Services) Rules, 1965. Rule 5 of the said Rules reads as under:- "5. Termination of temporary service. - Termination of temporary service. - Termination of temporary service. - (1)(a) The services of a temporary Government Servant shall be liable to termination at any time by a notice in writing given either by the Government Servant to the appointing authority or by the appointing authority to the Government Servant; (b) the period of such notice shall be one month: Provided that the services of any such Government Servant may be terminated forthwith by payment to him of a sum equivalent to the amount of his pay plus allowances for the period of the notice at the same rates at which he was drawing them immediately before the termination of his services, or, as the case may be, for the period by which such notice falls short of - 10 - one month. Note:- Note:- Note:- The following procedure shall be adopted by the appointing authority while serving notice on such Government Servant under clause (a) - (i) The notice shall be delivered or tendered to the Government Servant in person. (ii) Where personal service is not practicable, the notice shall be served on such Government Servant by registered post acknowledgment due at the address of the Government Servant available with the Appointing Authority. (iii) If the notice sent by registered post is returned unserved it shall be published in the Official Gazette and upon such publication, it shall be deemed to have been personally served on such Government Servant on the date it was published in the Official Gazette. (2)(a) Where a notice is given by the appointing authority terminating the services of a temporary Government Servant, or where the services of any such Government Servant is terminated either on the expiry of the period of such notice or forthwith by payment of pay plus allowances, the Central Government or any other authority specified by the Central Government in this behalf may, of its own motion or otherwise, re-open the case, and after calling for the records of the case and after making such enquiry it deems fit- (i) confirm the action taken by the appointing authority; (ii) withdraw the notice; (iii) reinstate the Government Servant in service; or (iv) make such other order in the case as it may consider proper; Provided that except in special circumstances, which should be recorded in writing, no case shall be reopened under this sub-rule after the expiry of three - 11 - months: (i) from the date of notice, in a case where notice is given; (ii) from the date of termination of service, in a case where no notice is given. (b) Where a Government Servant is reinstated in service under sub-rule (2) the order of reinstatement shall specify; (i) the amount of proportion of pay and allowances, if any, to be paid to the Government Servant for the period of his absence between the date of termination of his services and the date of his reinstatement; and (ii) whether the said period shall be treated as a period spent on duty for any specified purpose or purposes." Sub-rule (1) of Rule 5 sets out the procedure for termination of a temporary Government Servant, whereas Sub-rule (2) of the said Rule provides for the remedy of revision/appeal against the order of termination passed under Sub-rule (1). The Government of India O.M. No.39/14/56-ESTS (A) dated 22nd June, 1956, stipulated that when action is taken under Rule 5 to terminate the services of a temporary employee the order of termination which should be passed by the appointing authority, should not mention the reasons for such termination. Rule 5 was thereaftrer amended by amending the proviso with effect from 1st May, 1965. The Rules have been framed under Article 309 of the Constitution. 8. Though the Department had placed before the Tribunal, through its witnesses, the details of - 12 - unsatisfactory service record purportedly leading to loss of confidence and supporting the disciplinary authority’s powers under Rule 5(1) of the Rules to terminate a temporary employee without assigning any reasons, the Tribunal held that the said termination amounted to retrenchment within the meaning of Section 2(oo) of the I.D. Act, the said termination was in contravention of the provisions of Section 25 F of the said Act and the termination was not justified. The primary issue regarding the jurisdiction of the Tribunal to entertain and adjudicate the reference was also answered against the Department. In paragraphs 16 and 17 of its Award, the Tribunal observed as under:- "16. Aziz Ahmed and A. Siddeshi tried to bring on record that there were series of complaints against the workman and they have produced necessary documents to substantiate their case alongwith Exhibits 7 and 14. It is admitted position that there was no departmental inquiry against the workman he had no opportunity to meet out those allegations. Siddeshi in categorical term admits the position that when the workman was terminated he was not paid retrenchment compensation. It can be seen from the record that he was given one month’s notice but at the same time he was not paid the salary but later on was asked to collect it. Non payment of retrenchment compensation as contemplated under Section 25 F of the Industrial Disputes Act clearly goes to show that his termination is void. 17. The workman in his affidavit had taken different contentions in respect of interest of the management of appointing some lady and his harassment. All these matters have no merit to decide this case. As observed above as the workman is in continuous service from 1974 to 1980 and as his termination is without following the - 13 - provisions of Section 25 F of the Industrial Disputes Act of 1947 the action is to be declared void." 9. At this stage itself, we may deal with the alleged issue of non-payment of notice pay alongwith the termination Order dated 15th October, 1980. In the case of Management of M.C.D. vs. Prem Chand Gupta & Anr. Management of M.C.D. vs. Prem Chand Gupta & Anr. Management of M.C.D. vs. Prem Chand Gupta & Anr., (AIR 2000 S.C.454), it has been held that consequent to the amendment of Rule 5 of the Rules with effect from 1st May, 1965, the failure to make the payment of notice pay/compensation, does not vitiate the termination Order as the payment of compensation simultaneously with the order of termination is not a condition precedent. The Supreme Court examined the applicability of Section 25 F of the I.D. Act eventhough the termination order was issued under Rule 5(1) of the Rules and noted that the provisions of Section 25 F got squarely attracted as the order of termination was not by way of punishment, by referring to its earlier decisions by a three Judge Bench in the case of State Bank of India s. State Bank of India s. State Bank of India s. N. Sundara Money N. Sundara Money N. Sundara Money, (AIR 1976 S.C. 1111) and Constitution Bench judgment in the case of Punjab Land Development and Punjab Land Development and Punjab Land Development and Reclamation Corporation Ltd., Chandigarh vs. Presiding Reclamation Corporation Ltd., Chandigarh vs. Presiding Reclamation Corporation Ltd., Chandigarh vs. Presiding Officer, Labour Court, Chandigarh Officer, Labour Court, Chandigarh Officer, Labour Court, Chandigarh, [(1990)3 SCC 682]. In all these cases the employer was either a corporation, company or undertaking owned by the Central Government or the State Government. Such is not the case at hand. The employee was the servant of the Government of India and not of any corporation or company owned by the State or Central - 14 - Government. Under such circumstances, while examining the challenge to the termination Order dated 15th October, 1980, on the grounds of its justifiability, the following three issues were required to be adjudicated upon:- (a) whether the termination order was punitive or stigmatic and/or amounted to punishment; (b) whether it was required to be preceded by a departmental enquiry regarding the unsatisfactory service record, dereliction in duty and loss of confidence, etc.; and (c) whether the termination order was in breach of any of the service rules or guarantee provided under Article 311 read with Articles 14 and 16 of the Constitution. 10. The Tribunal did not do so and in fact, it appears to have been overwhelmed by the contentions of the employee that his termination amounted to retrenchment and as there was failure to comply with Section 25 F of the I.D. Act, the termination order was illegal. This approach of the Tribunal was manifestly erroneous. The term "retrenchment" has been defined under Section 2(oo) of the Industrial Disputes Act and it means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way - 15 - of disciplinary action, but does not include - (a) voluntary retirement of the workman; or (b) retirement of the workman on reaching the age of superannuation if the contract employment between the employer and the workman concerned contains a stipulation in that behalf, or (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) termination of the service of a workman on the ground of continued ill-health. On the face of the pleadings raised by the department in its written statement before the Tribunal (Exh.6) admittedly, clauses (a) to (c) of Section 2(oo) of the Industrial Disputes Act, were not attracted. However, it was necessary for the Tribunal to record a finding that the termination Order impugned did not amount to a punishment or loss of confidence or was not based on unsatisfactory performance. In the case of Chandu Lal vs. Chandu Lal vs. Chandu Lal vs. The Management of M/s. Pan American World Airways Inc. The Management of M/s. Pan American World Airways Inc. The Management of M/s. Pan American World Airways Inc., (AIR - 16 - 1985 S.C.1128), and Komal Kishore Lakshman vs. Management of Komal Kishore Lakshman vs. Management of Komal Kishore Lakshman vs. Management of M/s. Pan American World Airways Inc. & Ors M/s. Pan American World Airways Inc. & Ors M/s. Pan American World Airways Inc. & Ors., (AIR 1987 S.C. 229), it has been held that the termination of service by the employer by way of inflicting punishment for misconduct on the ground of loss of confidence, does not amount to retrenchment within the meaning of Section 2(oo) of the I.D. Act. We need not add to the list of enunciations in this regard, in view of the settled legal position. 11. A similar order of termination had come up for consideration before a three Judge Bench in the case of Air-India Corporation, Bombay vs. V. A. Revellow & Anr. Air-India Corporation, Bombay vs. V. A. Revellow & Anr. Air-India Corporation, Bombay vs. V. A. Revellow & Anr., [(1972) 1 SCC 814]. One of the two issues decided was whether the termination of service was a dismissal as alleged or was a mere termination of service not amounting to dismissal. The termination Order dated 19th June, 1965, read as under:- "Dear Sir, It has been decided