Muir Mills Unit Of N.T.C. (U.P) Ltd vs Swayam Prakash Srivastava & Anr

The appellant in the present matter is Muir Mills a subsidiary of the National Textile Corporation Ltd. of State of Uttar Pradesh. The respondent No.1 was offered appointment as Legal Assistant in the litigation section on a probation period of 1 year (in the pay scale of Rs. 330-560) on 04.06.1982. The appointment letter stated that the said appointment was on a probationary basis. The period of probation was set at one year from the date of joining. On 12.06.1982, the respondent No.1 joined his duties.

On 23.11.1982, a letter was written by the Senior Legal Assistant to the General Manager of the Mill stating that respondent No.1 had completed 6 months of probation but was not able to understand fully the work of his post and stated that "His work is not up to the mark; therefore he is of no use to us". However, it was decided to give the respondent No.1 an opportunity to improve his performance. It is the case of the appellants that the respondent No.1 was orally informed about the above decision of the appellants.

On the expiry of the probation period of the respondent No.1, a letter dated 04.06.1983 was issued to the respondent No.1 stating that, "Your performance has not been found satisfactory and as such, you have failed to complete the probationary period successfully".

On 06.02.1985, respondent No.1 raised an industrial dispute which was referred for adjudication by respondent No.2 the State of Uttar Pradesh, to the Labour Court in the following terms, "Is termination of the services of the workman Swayam Prakash Srivastava (son of Hori Lal Srivastava), Legal Assistant by the employers vide their order dated 04.06.1983 is right and/or legal? If not, the concerned workman is entitled to which benefit/relief and along with which other details."

On 25.05.1987, the Labour Court delivered an award holding that, the respondent No.1 was a workman and the termination was illegal and that respondent No.1 has to be reinstated within a month of the order with backwages. The Labour court also observed that the Industrial adjudicator had no power to examine the validity of the termination of the services of a probationer before the completion of probation period. Aggrieved by this order of the Labour Court, the appellant preferred a writ petition being WP No.22193 before the High Court of Judicature, Allahabad challenging the award of the Labour Court dated 25.05.1987. By an interim order dated 02.12.1987, the High Court stayed the operation of the award of the Labour Court subject to the deposit of one half of the decreed backwages. The appellant was also directed to continue to make payment of the future salary of respondent No.1 till further orders. The respondent No.1 was given the liberty to withdraw the backwages upon furnishing security. The future salary be withdrawn by respondent No.1 without any security. The appellants complied with the order of the High Court immediately. Muir Mills ceased to be operational in 1991. In the period 1992-1993, the appellants referred to the Board of Industrial and Financial Reconstruction ('BIFR') under the Sick Industrial Companies (Special Provisions) Act ('SICA'). On 05.02.2002 the National Textile Corporation (UP) Ltd, of which the appellants is a constituent entity was declared as a sick industrial company under the SICA and 9 of the 11 mills owned by the said company was directed to be closed.

However, on 20.04.2004, the appellant company received a show cause notice from the Deputy Labour Commissioner asking the appellant to explain why a recovery certificate of over ten lakhs be not issued in favour of respondent No.1.

The appellants stated that respondent No.1 was not a workman as understood under the Industrial Disputes Act. The respondent No.1 was being paid a sum of Rs. 866.51 as salary and his work was essentially of supervisory nature. The nature of respondent No.1, Mr. Swayam Prakash Srivastava's work was to supervise the court cases and conduct them in the courts for the appellant Mill.

500-EB- 15-560/- with a starting basic pay of Rs.330/- (Rupees Three hundred Thirty only) per month with effect from the date of your joining the Mills, on the following terms and conditions:-

6. Your employment will be governed by all the rules and regulations, terms and conditions of service, administrative orders and/or standing orders presently in force or as may be framed, amended, altered or extended from time to time and as applicable to the employees of the Mills.

12. On attaining the age of 58 years, you shall have no claim to be continued in the service of the Mill thereafter and your services shall come to an end automatically.

(a) Voluntary retirement of the workman; or