Case: Uptron India Ltd Vs. Shammi Bhanu

Respondent 1 was appointment as an Operator (Trainee) on 13.5.1980 in the petitioners establishment. On completion of training, she was absorbed on that post with effect from 13.7.1981 and was confirmed on 13.7.1982. She thus acquired the status of a permanent employee.2. With effect from 7th of November, 1984, respondent 1 proceeded, and remained till 29th January, 1985, on maternity leave. Thereafter, she allegedly remained absent with effect from 30.1.1985 to 12.4.1985 without any application for leave and consequently, by order dated 12th April, 1985, the petitioner informed respondent 1 that her services stood automatically terminated in terms of Clauses 17(g) of the Certified Standing Orders. Respondent 1 raised an Industrial Dispute and made a prayer to the State Government in 1985 that her case may be referred to the Industrial Tribunal for adjudication. Her application, filed before the Deputy Labour Commissioner, Lucknow, was registered as C.B. Case No. 310-1985. The State Government, by its order dated 18.7.1990, referred the following question for adjudication to the Industrial Tribunal,the termination of the services of female Smt. Shammi Bhan, Operator, daughter of C.N. Kaul, by the management by its letter dated 12.4.1985 is proper and legal. If not, the relief which the employee will be entitledfrom Hindi)3. The Tribunal, by its Award dated 21st July, 1992, held that the termination of services of respondent 1 amounted to "Retrenchment" within the meaning of Section 2(oo) of the Industrial Disputes Act and since all other legal requirement had not been followed, the termination was bad and consequently she was entitled to reinstatement as also fifty per cent of back wages from the date of termination till reinstatement.4. This Award was challenged by the petitioner through a Writ Petition in the Allahabad High Court (Lucknow Bench) and the High Court, by the impugned judgment dated 28.10.1997, dismissed the writ petition upholding the findings of the Tribunal that termination of respondents services was "retrenchment". The High Court further held that while invoking the provisions of Clause 17(g) of the Certified Standing Orders, the petitioner ought to have given an opportunity of hearing to respondent.

Court's reasoning:
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.