Case: J. K. Cotton Spinning and Weaving Mills Company Limited Vs. State of Uttar Pradesh and Others

The facts relevant to be stated for the disposal of this appeal are asSingh was employed by the appellant-company on March 10, 1960 and was posted in the Bradma machine section of the company. His duties were to attend to the printing of shares, pay sheets, registers, ESI cards etc. relating to the appellant-company. On November 1, 1970 he addressed a letter of resignation to the Manager of the appellant company in the followingregret to bring to your kind notice that my family circumstances do not permit me to continue my service and hence I am compelled to sever my connections with these Mills immediatelyI, therefore, request your goodself kindly to arrange for the payment of all my dues at an early date."Two days thereafter the wrote another letter to the Manager of the Company which reads as under"R/SirSince I have already tendered my resignation from any services, I request you kindly to depute somebody in the Bradma office taking charge and learning the work, so that the entrusted work may be carried on smoothlyThanking you so much for making early arrangement ascopy of this letter was endorsed to the Special Executive of the appellant-company for information and necessarily action. On receipt of the above letters, the Manager of the appellant-company replied as under"The resignation tendered by you vide your letter dated 1st instant, hereby accepted with effect from 16th instantPlease hand over charge of the companys properties in your possession to Shri R. S. Mathur and collect payment in full and final settlement from the Mills Paythe receipt of this letter the charge of the Bradma section was handed over by the employee to the said R. S. Mathur on November 15, 1970. The amount due to the employee by way of salary, allowances, etc. up to November 16, 1970 was worked out but the actual payment was received by the employee on December 22, 1970. He was also paid his service gratuity at the end of February 1971. It appears that the employee raised an industrial dispute and sought a reference under Section 4-K of the State Act. The employees demand for a reference was initially rejected by the State Government on November 12, 1973 but it came to be accepted subsequently on November 28, 1974. The appellant company thereupon filed a writ petition challenging the said reference made by the State Government but the High Court dismissed the petition on September 7, 1981. Pursuant to the reference, the Labour Court made an award in favour of the employee on January 25, 1984. The Labour Court came to the conclusion that the employees resignation was not voluntary and, therefore, his services had been wrongly terminated with effect from November 15, 1970. He was ordered to be reinstated. Against this award of the Labour Court the appellant approached the High Court under Article 226 of the Constitution. The High Court came to the conclusion that the employees resignation was not voluntary and, therefore, his services had been wrongly terminated with effect from November 15, 1970. He was ordered to be reinstated. Against this award of the Labour Court the appellant approached the High Court under Article 226 of the Constitution. The High Court came to the conclusion that the employee had tendered his resignation voluntarily and without any treat or coercion, It also took the view that the claim for overtime wages was an afterthought. However, considering the definition of retrenchment in Section 2(s), the High Court came to the conclusion that the termination of service of the employee fell within the said definition and as the appellant-company had fail to observe the requirements of Section 6-N, the termination of service was clearly invalid. The approach to the High Court is reflected in the following passage of itsapproach to the High Court is reflected in the following passage of itscontention raised is that there was no act of the employer in this connection and hence this may not be said to be case of retrenchment of the respondent. To this I do not find possible to agree. There is no denial that the respondent had been in continuous service for not less than one year within the meaning of Section 6-N. According to Section 22(s), retrenchment covers termination by the employer of the service of a workman for any reason whatsoever. To this there are exceptions applicable where the termination is by way of punishment inflicted as a result of a disciplinary action or voluntary retirement of the workman or retirement of the workman on attaining the age of superannuation. The provision is in pari materia with Section 2(oo) of the Central Act. The case does not fall within any of these exceptions. Voluntary retirement may not stand in need of acceptance by the employer; this may be hedged in with certain conditions such as those relating to certain number of years having been put in service and the like, but resignation may be tendered at any time thought it requires acceptance to be effective. There is retrenchment under law where the service of a workman stand terminated for any reason whatsoever. This may not be a consequence directly lowing from an act of the employer. The material factor would be whether there is determination of the relationship of employer and workman between the parties. If as a consequence this relationship has ceased or has been brought to an end, there is the resultant termination of the services of thesupport of this view reliance was placed on the decisions of this Court in State Bank of India v. N. Sundara Money ((1976) 1 SCC 822 ), Hindustan Steel Ltd. v. Presiding Officer, Labour Court, Orissa ((1976) 4 SCC 222 ), Delhi Cloth and General Mills Ltd. v. Shambhu Nath Mukherji ((1977) 4 SCC 415 ), Santosh Gupta v. State Bank of Patiala ((1980) 3 SCC 340 ) and L. Robert DSouza v. Executive Engineer, Southern Railway ((1982) 1 SCC 645 ). Reliance was also placed on the decision of the Kerala High Court in Corporation of Cochin v. Jalaji ((1984) 1 LLJ 526 (KerProceeding further the High Court concluded asthe present is a case where there was act of the employee also before the termination became effective. As discussed above, the resignation tendered by the respondent could not take effect without the acceptance on the part of the employer. The acceptance was accorded on November 4, 1970, expressly in writing. This clearly is an act of the employer which put a seal to the matter and brought about cessation of the relationship of the employer and the workman. Therefore, there is no escape from the conclusion that it was a case of retrenchment. It remains to be seen on relevant material whether in fact there was compliance made of the requirement of Sectionthe order of reinstatement passed by the Labour Court, Kanpur was set aside and the matter was remanded to the Labour Court for a decision on the question whether there was an infraction of Section 6-N. The High Court, however, made it clear that "the issue of resignation shall not be open to readjudication". In other words, the only question which the Labour Court was required to consider was whether the retrenchment was in conformity with Section 6-N of the State Act. Feeling aggrieved by this order the appellant-company has approached this Court under Article 136 of the Constitution

Court's reasoning:
It becomes clear on a plain reading of the definition of the term retrenchment that it comprises of two part; the first part is the inclusive part which defines retrenchment whereas the second part is in the nature of an exception and excludes two types of cases from the scope and ambit of the saidthis correspondence it is crystal clear that the employee desired to serve his relations with the appellant company on account of his family circumstances. But for this request made by the employee there was no reason for the appellant-company to terminate the contract of service on its own. Just as an employer has a right to terminate the service of an employee, an employee too has a right to put an end to the contract of employment by informing his employer of his intention to give up the job. This right is specifically conferred by clause 21 of the Standing Orders certified under Section 5 of the Industrial Employment (Standing Orders) Act,would be unfair to saddle the employer with the liability to pay compensation even where the service is terminated on the specific request of the employee. Such an intention cannot be attributed to the legislature. We are, therefore, of the opinion that where a contract of service is determined on the employee exercising his right to quit, such termination cannot be said to be at the instance of the employer to fall within the first part of the definition of retrenchment in Section 2(s) of the Statecases are, therefore, not helpful since they turn on their own special facts. None of them deals with a case of voluntary resignation tendered by ancan be no doubt that a resignation must be voluntarily tendered for if it is tendered on account of duress or coercion, it ceases it be a voluntary act of the employee expressing a desire to quit service. In the present case the High Court has come to the conclusion that the employee had tendered his resignation voluntarily.From the aforesaid dictionary meanings it becomes clear that when an employee resigns his office, he formally relinquishes or withdraws from his office. It implies that he has taken a mental decision to serve his relationship with his employer and thereby put an end to the contract of service. As pointed out earlier just as an employer can terminate the services of his employee under the contract, so also an employee can inform his employer that he does not desire to serve him any more. Albeit, the employee would have to give notice of his intention to snap the existing relationship to enable the employer to make alternative arrangements so that his work does not suffer. The period of notice will depend on the period prescribed by the terms of employment and if no such period is prescribed, a reasonable time must be given before the relationship is determined. If an employee is not permitted by the terms of his contract to determine the relationship of master and servant, such an employment may be branded as bonded labour.In the present case the employees request contained in the letter of resignation was accepted by the employer and that brought an end to the contract of service. The meaning of term resign as found in the Shorter Oxford Dictionary includes retirement. Therefore, when an employee voluntarily tenders tenders his resignation it is an act by which he voluntarily gives up his job. We are, therefore, of the opinion that such a situation would be covered by the expression voluntary retirement within the meaning of clause (i) of Section 2(s) of the Stateabove observation clearly supports the view which commends itself to us. We are, therefore, of the opinion that the High Court was not right in concluding that because the employer accepted the resignation offer voluntarily made by the employee, he terminated the service of the employee and such termination, therefore, fell within the expression retrenchment rendering him liable to compensate the employee under Section 6-N. We are also of the view that this was a case of voluntary retirement within the meaning of the first exception to Section 2(s) and therefore the question of grant of compensation under Section 6-N does not arise. We, therefore, cannot allow the view of the High Court to stand