Case: Muir Mills Unit Of N.T.C. (U.P.) Ltd Vs. Swayam Prakash Srivastava

1. 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.2. 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.3. 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".4. 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."5. 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.6. On 01.11.2002, the High Court dismissed the writ petition No.22193 of 1987 holding that the High Court will not interfere with the order of the Labour court as the same has neither been shown to be perverse, nor suffering from any error of law. By letter dated 9/11.03.2004, the Ministry of Labour, Government of India approved the formal closure of Muir Mills.7. 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. An SLP was filed by the appellant on 16.07.2004 challenging the order of the High Court dated 01.11.2002.

Court's reasoning:
In the fact situation of this case, from the perusal of the job profile of respondent No.1 and after examining section 2 (z) of the U.P.I.D Act it can be said that, respondent No.1 did not fall into the category of workman as contended by the respondents as respondent No.1 falls under exception (iv) of section 2 (z) of the U.P.I.D Act, 1947.It can be observed that even before the Labour Court as a preliminary objection, it was contended by the appellant that, the respondent No.1 was not under the category of workman as defined in section 2 of the U.P. Industrial Disputes Act, 1947. Hence the reference order is not covered under the U.P. Industrial Disputes Act, 1947; and the reference order is totally vague, bad in law and is liable to be rejected. It was also stated before the Labour Court that the total emoluments for the month of April, 1983 drawn by Sri Srivastava were totally in his supervisory capacity and he was designated as Legal Assistant in the Litigation Department of the Mill and therefore the reference before the Labour Court is not maintainable.The perusal of the appointment order becomes useful here for addressing the issue whether the High Court failed to appreciate that the award of the Labour Court was perverse as it directed the reinstatement with backwages of a probationer whose services had been discontinued upon completion of the probationary period on account of unsatisfactoryState of Madhya Pradesh vs. VK Chourasiya 1999 SCC (L&S) 1155 also has held that in the event of a non-stigmatic termination of the services of a probationer, principles of audi alteram partem are not applicable.28. We are also of the view that the award of the Labour Court is perverse as it had directed grant of backwages without giving any finding on the gainful employment of respondent No.1 and held that the discontinuance of the services of a probationer was illegal without giving any finding to the effect that the disengagement of respondent No.1 was in any manner stigmatic.30. However, we are of the view that, the emoluments for the month of April, 1983 drawn by respondent No.1 was Rs.866.51 and the nature of duties of respondent No.1 were totally supervisory capacity and he was designated as Legal Assistant in the Mills litigation department. So the respondent is not entitled to raise an Industrial Dispute and also that his services are 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 as is clear from the appointment order of 04.06.1982. Also it is clear from the facts that the appellants have complied with the interim order of the High Court.31. We also observe that the respondent No.1 had been receiving interim wages for over 15 years without having worked at all and without having established his unemployment. The High Court failed to appreciate that the award itself had only granted reinstatement to respondent No.1 as a probationer giving the petitioner the right to take a decision on confirmation. Further the Mill itself has been shut down now and given the lapse of 22 years, it was impracticable to reinstate respondent No.1 as a probationer.However, this provision is not applicable to the U.P. Industrial Disputes Act, 1947. With regard to the contention of the respondents that in the present fact scenario retrenchment is bad under law as conditions under section 6-N, which talks about a reasonable notice to be served on an employee before his/her retrenchment, is not complied with; we are of the view that an even under Section 6-N, proviso states that no such notice shall be necessary if the retrenchment is under an agreement which specifies a date for the termination of service." In the present case on the perusal of the appointment letter it is clear that no such notice needs to be issued to respondent No.1.34. The respondents had referred to many cases with regard to backwages to be paid to the retrenched workman. The learned counsel cited a string of decisions of this court in support of this contention. We are however not addressing this plea of the respondents, as we have already observed that respondent No.1 is not a workman under the Industrial Disputes Act, 1947 and the U.P.I.D Act, 1947 and also that the retrenchment was not illegal and therefore the question of backwages do not arise.