Case: Uptron India Ltd Vs. Shammi Bhanu

counsel appearing on behalf of the employee that the provision in the Standing Orders regarding automatic termination of services is not bad. This was endorsed by this Court by observing that "Learned counsel for the respondent rightly made no attempt to support this part of the High Courts order." This again cannot be treated to be a finding that provision for automatic termination of services can be validly made in the Certified Standing Orders. Even otherwise, a wrong concession on a question of law, made by a counsel, is not binding on his client. Such concession cannot constitute a just ground for a binding precedent. The reliance placed by Mr. Manoj Swarup on this judgment, therefore, is wholly out of place.24. It will also be significant to note that in the instant case the High Court did not hold that Clause 17(g) was ultra vires but it did hold that the action taken against the respondent to whom an opportunity of hearing was not given was bad. 25. In view of the above, we are of the positive opinion that any clause in the Certified Standing Orders providing for automatic termination of service of a permanent employee, not directly related to "Production" in a Factory or Industrial Establishment, would be bad if it does not purport to provide an opportunity or hearing to the employee whose services are treated to have come to an end automatically. 26. We may now consider the question of "Retrenchment" which is defined in Section 2(oo) as under:- "2(oo) `retrenchment means 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, 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 of employment between the employer and the workman concerned contains a stipulation in that behalf; or(bb) termination of the service of a 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." 27. The definition of "Retrenchment" was introduced in the Act 43 of 1953 with effect from 24th of October, 1953. Clause (bb) was inserted in the definition by Act 49 of 1984 with effect from 18.8.1984. 28. The definition is conclusive in the sense that "Retrenchment" has been defined to mean the termination of the service of a workman by the employer for any reason whatsoever. If the termination was by way of punishment as a consequence of disciplinary action, it would not amount to "Retrenchment". Originally, there were two other exceptions, namely, (i) voluntary retirement of the workman, and(ii) retirement of the workman on reaching the age of superannuation if the contract of employment contained a stipulation to that effect. 29. By the Amending Act 49 of 1984, two further exceptions were introduced in the definition by inserting Clause (bb) with effect from 18.8.84; one was the termination of service on the ground of continued ill-health of the workman and the other was termination of service on account of non-renewal of the contract of employment on the expiry of the term of that contract. If such contract of employment contained a stipulation for termination of service and the services of the workman are terminated in accordance with that stipulation, such termination, according to Clause (bb), would also not amount to "Retrenchment".30. What was contended before the Tribunal as also before the High Court was that the termination of the services of respondent was covered by Clause (bb) of Section 2(oo) and, therefore, it could not be treated as "Retrenchment" with the result that other statutory provisions, specially those contained in Section 25F of the Act were not required to be complied with. This argument which was not accepted by the Tribunal and the High Court has been stressed before us also and here also it must meet the same fate as it is without any substance or merit.31. From the facts set out above, it would be seen that the respondent was a permanent employee of the petitioner. There was no fixed-term contract of service between them. There was, therefore, no question of services being terminated on the expiry of that contract. In the absence of a fixed-term contract between the parties, the question relating to the second contingency, namely, that the termination was in pursuance of a stipulation to that effect in the contract of employment, does not arise.32. The contract of employment referred to in the earlier part of Clause (bb) has to be the same as it referred to in the latter part. This is clear by the use of words "such contract" in the earlier part of this Clause. What the Clause, therefore, means is that there should have been a contract of employment for a fixed-term between the employer and the workman containing a stipulation that the services could be terminated even before the expiry of the period of contract. If such contract, on the expiry of its original period, is not renewed and the services are terminated as a consequences of that period, it would not amount to "Retrenchment". Similarly, if the services are terminated even before the expiry of the period of contract but in pursuance of a stipulation contained in that contract that the services could be so terminated, then in that case also, the termination would not amount to "retrenchment". This view finds support from a decision of this Court in Escorts Ltd. v. Presiding Officer, (1997) 11 SCC 621. 33. This case does not fall in either of the two situations contemplated by Clause (bb). The `Rule of exception, therefore, is not applicable in the instant case and consequently the finding recorded by the Tribunal on "retrenchment" cannot be disturbed.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]25. In view of the above, we are of the positive opinion that any clause in the Certified Standing Orders providing for automatic termination of service of a permanent employee, not directly related to "Production" in a Factory or Industrial Establishment, would be bad if it does not purport to provide an opportunity or hearing to the employee whose services are treated to have come to an end automatically.By the Amending Act 49 of 1984, two further exceptions were introduced in the definition by inserting Clause (bb) with effect from 18.8.84; one was the termination of service on the ground of continued ill-health of the workman and the other was termination of service on account of non-renewal of the contract of employment on the expiry of the term of that contract. If such contract of employment contained a stipulation for termination of service and the services of the workman are terminated in accordance with that stipulation, such termination, according to Clause (bb), would also not amount to "Retrenchment".30. What was contended before the Tribunal as also before the High Court was that the termination of the services of respondent was covered by Clause (bb) of Section 2(oo) and, therefore, it could not be treated as "Retrenchment" with the result that other statutory provisions, specially those contained in Section 25F of the Act were not required to be complied with. This argument which was not accepted by the Tribunal and the High Court has been stressed before us also and here also it must meet the same fate as it is without any substance or merit.31. From the facts set out above, it would be seen that the respondent was a permanent employee of the petitioner. There was no fixed-term contract of service between them. There was, therefore, no question of services being terminated on the expiry of that contract. In the absence of a fixed-term contract between the parties, the question relating to the second contingency, namely, that the termination was in pursuance of a stipulation to that effect in the contract of employment, does not arise.32. The contract of employment referred to in the earlier part of Clause (bb) has to be the same as it referred to in the latter part. This is clear by the use of words "such contract" in the earlier part of this Clause. What the Clause, therefore, means is that there should have been a contract of employment for a fixed-term between the employer and the workman containing a stipulation that the services could be terminated even before the expiry of the period of contract. If such contract, on the expiry of its original period, is not renewed and the services are terminated as a consequences of that period, it would not amount to "Retrenchment". Similarly, if the services are terminated even before the expiry of the period of contract but in pursuance of a stipulation contained in that contract that the services could be so terminated, then in that case also, the termination would not amount to "retrenchment". This view finds support from a decision of this Court in Escorts Ltd. v. Presiding Officer, (1997) 11 SCC 621. 33. This case does not fall in either of the two situations contemplated by Clause (bb). The `Rule of exception, therefore, is not applicable in the instant case and consequently the finding recorded by the Tribunal on "retrenchment" cannot be disturbed.This being the legal position, the action taken against the respondent, who, as pointed out earlier, was a permanent employee, was wholly illegal.In view of this observation, the question whether the stipulation for automatic termination of services for overstaying the leave would be legally bad or not, was not decided by this Court in the judgment relied upon by Mr. Manoj Swarup. In that judgment the grounds on which the interference was made were different. The judgment of the High Court was set aside on the ground that it could not decide the disputed question of fact in a writ petition and the matter should have been better left to be decided by the Industrial Tribunal. Further, the High Court was approached after more than six years of the date on which the cause of action had arisen without there being any cogent explanation for the delay. Mr. Manoj Swarup contended that it was conceded by the counsel appearing on behalf of the employee that the provision in the Standing Orders regarding automatic termination of services is not bad. This was endorsed by this Court by observing that "Learned counsel for the respondent rightly made no attempt to support this part of the High Courts order." This again cannot be treated to be a finding that provision for automatic termination of services can be validly made in the Certified Standing Orders. Even otherwise, a wrong concession on a question of law, made by a counsel, is not binding on his client. Such concession cannot constitute a just ground for a binding precedent. The reliance placed by Mr. Manoj Swarup on this judgment, therefore, is wholly out of place.24. It will also be significant to note that in the instant case the High Court did not hold that Clause 17(g) was ultra vires but it did hold that the action taken against the respondent to whom an opportunity of hearing was not given was bad.