Case: Mohan Lal Vs. Management of Messrs Bharat Electronics Limited

The appellant Mohan Lal was employed with the respondent M/s Bharat Electronics Limited as Salesman at its Delhi Sales Depot on a salary of Rs. 520 per month from 8th December, 1973. His service was abruptly terminated by letter dated 12th October 1974 with effect from 19th October, 1974. Consequent upon this termination, an industrial dispute was raised and the Delhi Administration, by its order dated 24th April, 1976 referred the following dispute to the Labour Court, Delhi forthe termination of services of Shri Mohan Lal is illegal and/or unjustified and if so, to what relief is he entitled and what directions are necessary in thisthe respondent management at one stage failed to participate in the proceedings, the reference was heard ex- parte and the Labour Court made an award on 2nd May, 1977 directing reinstatement of the appellant with continuity of service and full back wages at the rate of Rs. 520 per month from the date of termination till reinstatement. Subsequently, respondent moved for setting aside the ex- parte award and seeking permission to participate in the proceedings, which motion was granted. The respondent inter alia contended that the appellant was a salesman appointed on probation for six months and subsequently on the expiry of the initial period, the period of probation was extended upto 8th Sept., 1974 and on the expiry of this ex tended period of probation, his service was terminated by letter dated 12th October, 1974, as he was not found suitable for the post to which he wasLabour Court, on evaluation of evidence both oral and documentary, held that t he termination of the service was in accordance with the standing orders justifying the removal of the employee on unsuccessful probation during the initial or extended period of probation; and therefore the termination in this case, according to the Labour Court, would not constitute retrenchment within the meaning of section 2(oo) read with section 25F of the Industrial Dispute Act. Accordingly it was held that the termination was neither illegal nor improper nor unjustified an d the claim of the appellant was negatived. Hence, this appeal by special leave.

Court's reasoning:
Admittedly his service was terminated by letter dated October 12, 1974, with effect from October 19, 1974. It is not the case of the respondent that there was any further extension of the probationary period. Thus, if the initial appointment which was described as temporary is treat ed on probation, even according to the respondent the period of probation was six months, it expired on June 8, 1974. Even if by the letter dated July 10, 1974, the period of probation was said to have been extended, on its own terms it ex pired on September 8, 1974. The service of the appellant was terminated with effect from October 19, 1974. What was the nature and character of service of the appellant from September 8, 1974 when the extended period of probation expired and termination of his service on October 19, 1974? He was unquestionably not on probation. He was either temporary or permanent but not a probationer. How is it open then to the Labour Court to record a finding that the service of the appellant was terminated during the period of probation on account of his unsatisfactory work which did not improve in spite of repeated warnings? The Labour Court concluded that notwithstanding the fact that the appellant was not shown to have been p laced on probation in the initial appointment letter but in view of the subsequent orders there was a period of probation prescribed for the appellant and that his service was terminated during the extended period of probation. This is gross error apparent on the face of the record which, if not interfered with, would result in miscarriage of justice.If on October 19, 1974, the appellant was not on probation and assuming maximum in favour of the respondent that he was a temporary employee, could termination of his service. even according to the respondent, not as and by way of punishment but a discharge of a temporary servant, constitute retrenchment within the meaning of section 2(oo), is the core question.Markendaya contended that clauses (I) and (2) o f section 25B provide for two different contingencies and that none of the clauses is satisfied by the appellant. He contended that) provides for uninterrupted service and) comprehends a case where the workman is not in continuous service.The language employed in sub-sections (1) and (2) does not admit of this dichotomy. Sub-sections (1) and (2) introduce a deeming fiction as to in what circumstances a workman could be said to be in continuous service for the purposes of Chapter VA. Sub-section (1) provides a deeming fiction in that where a workman is in service for a certain period he shall be deemed to be in continuous service for that period even if service is interrupted on account of sickness or authorised leave or an accident or a strike which is not illegal or a lockout or a cessation of work which is not due to any fault on the part of the workman. Situations such as sickness, authorised leave, an accident, a strike not illegal, a lockout or a cessation of work would ipso facto interrupt a service. These interruptions have to be ignored to treat the workman in uninterrupted service and such service interrupted on account of the aforementioned causes which would be deemed to be uninterrupted would be continuous service for the period for which the workman has been in service. In industrial employment or for that matter in any service, sickness, authorised leave, an accident, a strike which is not illegal, a lockout and a cessation of work not due to any fault on the part of the workman, are known hazards and there are bound to be interruptions on that account. Sub-section (I) mandates that interruptions therein indicated are to be ignored meaning thereby that on account of such cessation an interrupted service shall be deemed to be uninterrupted and such uninterrupted service shall for the purposes of Chapter VA be deemed to be continuous service. That is only one part of the fiction.Sub-section (2) incorporates another deeming fiction for an entirely different situation. It comprehends a situation where a workman is not in continuous service within the meaning of sub-section (1) f or a period of one year or six months, he shall be deemed to be in continuous service under an employer for a period of one year or six months, as the case may be, if the workman during the period of 12 calendar months just preceding the date with ref erence to which calculation is to be made, has actually worked under that employer for not less than 240 days. Sub-section (2) specifically comprehends a situation where a workman is not in continuous service as per the deeming fiction indicating in sub-section (1) for a period of one year or six months. In such a case he is deemed to be in continuous service for a period of one year if he satisfies the conditions in clause (a) of sub-section (2). The conditions are that commencing the date with reference to which calculation is to be made, in case of retrenchment the date of retrenchment, if in a period of 12 calendar months just preceding such date the workman has rendered service for a period of 240 days, he shall be deemed to be in continuous service for a period of one year for the purposes of Chapter VA. It is not necessary for the purposes of sub-section (2) (a) that the workman should be in service for a period of one year. If he is in service for a pe riod of one year and that if that service is continuous service within the meaning of sub-section (1) his case would be governed by sub-section (1) and his case need not be covered by sub-section (2).to the facts of this case, admittedly the appellant was employed and was on duty from December 8, 1973 to October 19, 1974 when his service was terminated. The relevant date will be the date of termination of service, i.e. October 19, 1974 Commencing from that date and counting backwards, admittedly he had rendered service for a period of 240 days within a period of 12 months and, indisputably, therefore, his case falls within section 25B(2) (a) and he shall be deemed to be in continuous service for a period of one year for the purpose of Chapterhas thus satisfied both the eligibility qualifications prescribed in section 25F for claiming retrenchment compensation. He has satisfactorily established that his case is not covered by any o f the excepted or excluded categories and he has rendered continuous service for one year. Therefore, termination of his service would constitute retrenchment. As pre-condition for a valid retrenchment has not been satisfied the termination of service is ab initio void, invalid and inoperative. He must, therefore, be deemed to be in continuous service.The last submission was that looking to the record of the appellant this Court should not grant reinstatement but award compensation. If the termination of service is ab initio void and inoperative, there is no question of granting reinstatement because there is no cessation of service and a mere declaration follows that he continues to be in service with all consequential benefits. Undoubtedly, in some decisions of this Court such as Ruby General Insurance Co. Ltd v. Chopra (P.P.), and Hindustan Steel Ltd. Rourkela v. A. K. Roy and Others it was held that the Court before granting reinstatement mu st weigh all the facts and exercise discretion properly whether to grant reinstatement or to award compensation. But there is a catena of decisions which rule that where the termination is illegal especially where there is an ineffective order of retrenchment, there is neither termination nor cessation of service and a declaration follows that the workman concerned continues to be in service with all consequential benefits. No case is made out for departure from this normally accepted approach of the Courts in the field of social justice and we do not propose to depart in thethe answer is in affirmative, the consequential question will have to be answered whether in view of the admitted position that the mandatoryprescribed by section 25F for a valid retrenchment having not been satisfied, the appellant would be entitled to reinstatement with back wages or as contended by Mr. Markandey in the special facts of this case, the Court should not direct reinstatement but award compensation in lieu of reinstatement.4. An apparent contradiction which stares in the eye on the stand taken by the respondent is overlooked by the Labour Court which has resulted in the miscarriage of justice. In this context the facts as alleged by the respondent may be taken as true. Says the respondent, that the appellant was appointed by order dated July 21, 1973. The relevant portion of the order of which notice may be taken is paragraph 2. It reads asappointment will be temporary in the first instance but is likely to be made permanent.Paragraph 4 refers to the consequences of a temporary appointment, n amely, that the service would be terminable without notice and without any compensation in lieu of notice on either side. Paragraph 6 provides that the employment of the appellant shall be governed by rules, regulations and standing o rders of the company then in force and which may be amended, altered or extended from time to time and the acceptance of the offer carries with it the necessary agreement to obey all such rules, regulations and standing orders. There is not even a whisper of any period of probation prescribed for the appointment nor any suggestion that there are some rules which govern appointment of the appellant which would initially be on probation. Thus, the appointment was temporary in the first instance and there was an inner indication that it was likely to be made permanent. Even if this promise of likely to be made permanent is ignored, indubitably the appointment was temporary. The respondent, however, says that note 3 at t he foot of the appointment order intimates to the appellant that in the event of his permanent appointment the temporary service put in by him will be counted as part of probationary period of service as required under the rules. This consequence would follow in the event of permanent appointment being offered and this is clear from the language employed in note 3. In this case no permanent appointment having been offered, the consequence set out in note 3 could not have emerged. Assuming, however, that this note incorporates all the necessary rules and regulations in the contract of employment, it was incumbent upon the respondent to show that even when appointment is not shown to be on probation in the order of appointment, in view of the rules governing the contract of employment there shall always be a period of probation for every appointee. Witness Bawdekar who appeared on behalf of the respondent stated in his evidence that the appellant was appointed as a probationary salesman. Even according to him prescribed period of probation was six months. He then stated that by the letter dated July 10, 1974, respondent informed the appellant that his service should have been terminated on the exp iry of initial period of probation, i.e. on June 8, 1974. However, as a special case the probation period was extended upto September 8, 1974. No rule was pointed out to us enabling the respondent to extend the initial period of probation. Assuming even then that such was the power of the respondent, on September 9, 1974, the period of probation having not been further extended nor termination of service having been ordered during or at the end of the probationary period on the ground of unsuitability, the consequence in law is that either he would be a temporary employee or a permanent employee as per the rules governing the contract of employment between the appellant and the respondent.