The Judgment of the Court was delivered by
Subramonian Poti, J.:— The petitioners were employed as khalasies in the Olavakot Division of the Southern Railway. After continuous service of six months, all the petitioners were declared to have acquired the status of temporary workmen falling within the scope of Chap. XXIII of the Indian Railway Establishment Manual. They were in continuous service for more than one year within the meaning of that term as employed in S. 25-F of the Industrial Disputes Act, 1947, read with S. 25-B thereof. While so, their services were terminated by respondent 2, the Loco Foreman, Southern Railway, Shoranur. This was during the period between 16 and 23 January, 1970. There was no case that any written order of termination was issued to the petitioners. Though this termination is challenged in the original petition on several grounds one of them alone was urged by the petitioners' counsel at the hearing and, therefore, we need only advert to it. It is said that the termination of the petitioners' services was invalid as contravening S. 25-F of the Industrial Disputes Act (hereinafter referred to as the Act). Neither notice of one month nor wages for that period is said to have been tendered or paid at the time of retrenchment nor was retrenchment compensation tendered or paid. The prayers in the original petition are that this Court must declare that the termination of the service of the petitioners was illegal and also issue a mandamus compelling the respondents to reinstate the petitioners in service.
2. That the petitioners have been in continuous service for not less than one year at the time their services were terminated is not disputed by the respondents. Nor is it disputed that after a period of continuous service of six months they acquired temporary status. In the counter-affidavit of respondent 1 the reason for terminating the services of the petitioners is indicated. It is mentioned that as a result of the
“increase in the number of engines in the said depot and reallotment of strength in different categories, permanent staff were posted against the posts occupied by the petitioners”.
Apparently, the case of respondent 1 is that the services of the petitioners had to be terminated
“for giving room to the permanent employees”.
and there is, therefore, nothing illegal in the said termination. It is respondent 1's case that though the petitioners were not entitled to any retrenchment compensation, as a matter of concession an amount equal to retrenchment compensation, have since been arranged to be paid but none of the petitioners received payment.
3. At the hearing, counsel for respondents took the stand that the termination in the instant case could not be characterized as retrenchment as it would not fall within the scope of the definition of retrenchment in S. 2 (oo) of the Act. According to counsel the termination of the services of the petitioners was in accordance with rule 149(1) of the Railway Establishment Code and since that rule enabled the employer to terminate the services of employees like the petitioners, it cannot be said that there was violation of S. 25-F so long as the termination was in accordance with that rule. It is not contended by counsel for respondents that in the event the Court finds that S. 25-F of the Industrial Disputes Act would apply to the termination in the instant case and the petitioners have been sent out of service without resort to the provisions of that section the termination could be sustained. His case is that S. 25-F will have no application as this is not a case of retrenchment falling within that section.
4. Retrenchment is defined in S. 2(oo) of the Act as follows:
“‘retrenchment’ means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include—
(a) voluntary retirement of the workman; or
(b) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf; or
(c) termination of the service of a workman on the ground of continued ill-health”.
Section 25-F of the Act specifies conditions precedent to retrenchment of workmen and it reads thus:
“25-F. Conditions precedent to retrenchment of workmen.— No workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until;
(a) the workman has been given one month's notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice:
Provided that no such notice shall be necessary if the retrenchment is under an agreement which specifies a date for the termination of service;
(b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days' average pay for every completed year of continuous service or any part thereof in excess of six months; and
(c) notice in the prescribed manner is served on the appropriate Government or such authority as may be specified by the appropriate Government by notification in the official gazette”.
The term “continuous service” is defined in S. 25-B and for the purpose of this case, it is sufficient to refer to S. 25-B (1) Which reads thus:
“25-B. Definition of continuous service.— For the purpose of this chapter: (1) a workman shall be said to be in continuous service for a period if he is, for that period, in uninterrupted service, including service which may be interrupted on account of sickness or authorized 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”.
It is also necessary to refer in this context to the provision in S. 25-J which deals with the effect of laws inconsistent with Chap. V-A of the Act dealing with lay-off and retrenchment.
“25-J. (1) The provisions of this chapter shall have effect notwithstanding anything inconsistent therewith contained in any other law (including standing orders) made under the Industrial Employment (Standing Orders) Act, 1946(20 of 1946):
Provided that where under the provisions of any other Act or rules, orders or notifications issued thereunder or under any standing orders or under any award, contract of service or otherwise, a workman is entitled to benefits in respect of any matter which are more favourable to him than those to which he would be entitled under this Act, the Workman shall continue to be entitled to the more favourable benefits in respect of that matter, notwithstanding that he receives benefits in respect of other matters under this Act”.
5. The definition of the term “retrenchment” indicates that cases of termination by the employer for any reason whatsoever, otherwise than in the four cases referred to in the definition itself, would amount to retrenchment. If there is any provision in any statute or in the standing order made under the Industrial Employment (Standing Orders) Act, 1946, inconsistent with the provision in S. 25-F, which lays down the condition precedent, nevertheless S. 25-F would prevail by reason of S. 25-J. Therefore, if it is shown that the case is one of retrenchment and there has been non-compliance with S. 25-F, even if there be any provision in any statute which enables the retrenchment of an employee without compliance with the provisions of S. 25-F that provision must yield to the provision in S. 25-F. That appears to be the plain meaning of the provision. But counsel for the respondents urges that the definition of the term retrenchment in S. 2(oo) must be read so as to exclude cases of termination of services by an employer under standing orders or under provisions governing the service conditions of the employees. In other words, according to him, “for any reason whatsoever” in the definition in S. 2(oo) must be read as limited to cases of discharge or termination of the services of the workmen on the ground of surplus to requirements, We will examine the carrectness of this contention shortly. But, even assuming that the contention of counsel in this regard is correct, on the facts of the case, we do hot think that the respondents would succeed in their case. Even on the basis of the averments in the counter-affidavit it is evident that the services of the petitioners were terminated because they were found to be surplus. I have already referred to the relevant contention. It is the case of the respondents that when permanent staff from other divisions had to be employed in the posts occupied by the petitioners necessarily they had to be thrown out. It is impossible to read this as any averment other than that petitioners were rendered surplus. If that be the case, I do not think that any assistance can be derived by the contention urged before us that unless it be a case of termination of services of surplus staff it cannot be characterized as retrenchment.
6. Nevertheless we will deal with the respondents' arguments because it is further contended by counsel that irrespective of any question whether the termination was for the reason that the staff was in surplus, such termination would not amount to retrenchment in case it is in accordance with the standing orders binding on the employer and the employees. In this case it is said that rule 149(1) of the Railway Establishment Code must be considered as similiar to a standing order and if termination is made in accordance with that order application of definition of S. 2(oo) must stand excluded. This, in short, is the respondents' case.
7. Reference is made in support of this to the decision of the High Court of Assam and Nagaland in S.K Neogi v. Union of India [A.I.R 1970 Assam and Nagaland 131]. The petitioner in that case was a temporary Assistant Station-master in the service of the North-east Frontier Railway. In connexion with the strike that took place on 19 September, 1968, the petitioner was arrested. The General Manager of the railway had issued orders instructing all his subordinate gazetted officers to suspend and terminate, by application of rule 149(1) of the Railway Establishment Code, the services of the temporary employees who were arrested for any offence. The service of the petitioner was terminated accordingly and he challenged this before the High Court. One of the grounds of attack was that the order of termination contravened S. 25-F of the Industrial Disputes Act, 1947. Considering this contention the learned Judges found that the termination of service of the petitioners was not a case of retrenchment within the meaning of S. 2(oo) of the Act. We find no independent discussion on this question in the judgment, but it has apparently been assumed that this must follow from the decision of the Supreme Court in Hariprasad Shivshanker Shukla v. A.D Divelkar [1957—I L.L.J 243]. Referring to the decision in State of Bombay v. Hospital Mazdoor Sabha [1960-I L.L.J 251], the learned Judges observed that this question was not decided by the Supreme Court in that case since there was a concession that the case was one of retrenchment. Of course, it is true that in that decision this question was not gone into as it was assumed that the case was one of retrenchment. Referring to the decision of the Supreme Court in Hariprasad Shivshanker Shukla v. A.D Divelkar (vide supra), the Court said thus:
“… The Supreme Court has interpreted the definition of retrenchment in S. 2(oo) in Hariprasad Shivshanker Shukla v. A.D Divelkar [1957-I L.L.J 243], and has held that the ordinary meaning of retrenchment fulfils the requirements of S. 2(oo), that is to say, when a portion of the staff or the labour force is discharged as surplus. The present termination of the service of the petitioner is therefore not a case of retrenchment within the meaning of S. 2(oo), and as such he cannot invoke the provisions of S. 25-F of the Act, which is mentioned in sub-rule (6) of rule 149, sought to be invoked in his favour”.
This necessarily leads us to examine whether this conclusion reached by the learned Judges on the basis of the Supreme Court decision necessarily follows from it.
8. In Hariprasad Shivshanker Shukla v. A.D Divelkar [1957—I L.L.J 243], (vide supra), the Court was dealing with two appeals, one relating to a claim to compensation urged by an employee under S. 25-F made under the Payment of Wages Act on the transfer of a railway undertaking and the other a similar claim to compensation under S. 25-F of the Act made under the Payment of Wages Act on the closure of a mill. The Supreme Court had to consider whether the definition of the term “retrenchment” was so wide as to include cases of termination of services of workmen even when the business was not continuing it having been closed down due to bona fide reasons and also cases where there the undertaking had been transferred. Dealing with this, the Supreme Court said (at p. 250.)
“… Retrenchment means discharge of surplus workmen in an existing or continuing business; it had acquired no special meaning so as to include discharge of workmen on bona fide closure of business, though a number of Labour Appellate Tribunals awarded compensation to workmen on closure of business as an equitable relief for a variety of reasons…”
This was in answer to the question which was posed in that judgment (at p. 247):
“… The question, however, before us is: does this definition merely give effect to the ordinary, accepted notion of retrenchment in an existing or running industry by embodying the notion in apt and readily intelligible words or does it go so far beyond the accepted notion of retrenchment as to include the termination of services of all workmen in an industry when the industry itself ceases to exist on a bona fide closure or discontinuance of his business by the employer? …”
9. It is evident that it was only by way of answer to the question that was so posed that the learned Judges referred to retrenchment as discharge of surplus workmen in an existing or continuing business in antithesis to discharge of workmen on closure of business or transfer of undertaking. We see no warrant in that decision to assume that the Court laid down the rule that unless it be a case of discharge of surplus staff in no event could it be characterized as retrenchment nor could we see support to the proposition that if retrenchment is pursuant to any standing order or any service condition governing employees that will not come within the scope of the definition of retrenchment in S. 2(oo).
10. Since we do not find any support for the view taken by the learned Judges of the High Court of Assam and Nagaland in the decision of the Supreme Court to which we have adverted, we, with great respect, disagree with the view expressed by the learned Judges on the scope of the term “retrenchment”.
11. Our attention has been invited by learned counsel for the respondents to the decision in Haji Ismail Said & Son (Private), Ltd. v. Fourth Industrial Tribunal [1966—II L.L.J 59]. That was a case of a challenge to the termination of the service of the employees of a private limited company in accordance with its standing orders. The appellant in that case was a company running a distillery. Due to the failure of the Excise Department to supply molasses the distillery could not be worked fully, and notice was given to the workmen terminating their services in accordance with Cl. 13 of the standing orders of the company. Only a skeleton staff was maintained by the company for the purpose of running the distillery. The matter reached the Industrial Tribunal in an industrial dispute and the Tribunal awarded compensation to the workmen under S. 25-F of the Act. It was that award which was challenged before the High Court. The question in the appeal before the High Court was whether the termination of the services of the workmen would amount to retrenchment under S. 2(oo) of the Act. The case of the management was that it was only a termination under the conditions laid down in the standing orders and, therefore, no compensation was payable under S. 25-F of the Act.
The learned Judges took the view that the defini-tion of the term retrenchment as found in S. 2(oo) had to be read as limited or restricted in terms of the decision in Hariprasad Shiv-shanker Shukla v. A.D Divelkar [1957—I L.L.J 243] (vide supra), to which we have already adverted. Referring to that decision, the learned Judges said thus (at p. 64):
“… In other words, the Supreme Court lays down that unless business is continuing or running there is no question of any retrenchment. In this case, the admitted fact is that, without licence and without molasses, the business of the company could not run and in fact this business had closed on 23 April, 1959, and the attempt to reopen it by mutual agreement for reasons stated above could not succeed …”
Incidentally we may observe here that the case before the Calcutta High Court was not treated as one of closure of business, presumably because the entire workmen were not retrenched and the business was not completely closed down. The learned Judges of the Calcutta High Court proceeded to consider the decisions of the Supreme Court, which, according to the learned Judges, indicated that termination in accordance with standing orders would not amount to retrenchment. In p. 68 of the judgment. P.B Mukharji, J., concludes thus:
“The Supreme Court decisions have laid down that even termination of services under the standing orders can, in certain circumstances, such as colourable exercise of power, unfair labour practice or victimization or mala fides, be retrenchment within the meaning of S. 2(oo) of the Industrial Disputes Act. But, outside such cases, termination under the standing orders is not retrenchment within the meaning of S. 2(oo) of the Industrial Disputes Act”.
We have anxiously gone through the Supreme Court decisions referred to by the learned Judges and we are unable to find any consideration of the question of retrenchment in any of these decisions. In none of those cases the question whether S. 2(oo) of the Act will apply in case where the termination is in accordance with the standing orders applicable to the employer and the employees is seen to have arisen for decision. Reference is seen made to the decisions in Nagpur Electric Light and Power Company, Ltd. v. Shreepathirao (K.) [1958—II L.L.J 9]; Chartered Bank, Bombay v. Chartered Bank Employees' Union [1960—II L.L.J 222]; U.B Dutt and Co. (Private), Ltd. v. its workmen, (Kozhikode Taluk Earcha Mill Thozhi-lali Union) [1962—I L.L.J 374]; Buckingham and Carnatic Company, Ltd. v. Venkatayya [1963—II L.L.J 638]; and Murugan Mills, Ltd. v. Industrial Tribunal, Madras [1965—I L.L.J 422]. Nagpur Electric Light and Power Company, Ltd. v. Shreepathirao (K.) (vide supra) was a case where a deputy head clerk employed in the Nagpur Electric Light and Power Company, Ltd., Was served with a notice of termination of service in accordance with the standing orders of the company. The High Court found that the termination was illegal as the standing order did not apply to the employee whose service was terminated and further that the termination was without any statutory authority. The matter was taken to the Supreme Court and the question that was considered by the Court was whether the standing order would have application to the petitioner. It was found that the standing order would apply and that was held to be decisive of the appeal. This was so because, if the standing order applied to the employee, there could be no objection to the termination in accordance with such standing order. There was no further case that the termination of service was not in accordance with S. 25-F and naturally therefore, there was no occasion to consider that question in that case.
12. The statement of facts in the decision in Chartered Bank, Bombay v. Chartered Bank Employees' Union [1960-II L.L.J 222] (vide supra) would itself indicate that it was a case where, along with the notice of termination, the employee was given retrenchment compensation. Therefore, there was no occasion to consider the question relevant here in that decision also. The services of an assistant cashier in the Chartered Bank, Bombay, was terminated by the bank in accordance with the mode of termination prescribed by Para. 522(1) of the All-India Industrial Tribunal (Bank Disputes) Award of March 1953. Thereupon, a dispute was raised by the workmen of the bank and a reference was made to the Industrial Tribunal. The dispute concerned the wrongful termination of the assistant cashier. The Tribunal held that even though the bank had chosen to follow the procedure laid down in Para. 522(1) of the Bank award this did not preclude the Tribunal from inquiring into the reasons for the termination of service and into the legality or propriety of the action taken by the bank and further that Para. 522(1) did not give a free hand to the management of the bank to dispense with the service of a permanent employee at their will. That case only decided that even in cases where such termination was made in accordance with the standing orders it should not be mala fide. The case in U.B Dutt & Co. (Private), Ltd. v. its workmen (Kozhikode Taluk Earcha Mill Thozhilali Union) [1962-I L.L.J 374] (vide supra) was one of termination of service of an employee without disciplinary action being taken against him though originally such disciplinary action was contemplated. In terminating the services of the employee the management invoked rule 18(1) of the standing orders which enabled the management to terminate such service otherwise than for misconduct. It was contended in the dispute before the Tribunal which followed the termination that the employer had a right to terminate the service of the employee without any reason being shown. The matter ultimately reached the Supreme Court. The Supreme Court held thus: (at p. 376)
“We are of opinion that this claim of the appellant cannot be accepted, and it is too late in the day for an employer to raise such a claim for it amounts to a claim ‘to hire and fire’ an employee as the employer pleases and thus completely negatives security of service which has been secured to industrial employees through industrial adjudication for over a long period of time now…”
Here again we fail to find any relevance on the question in issue before us or the question that was in issue before the Calcutta High Court. The point decided in Buckingham and Carnatic Company, Ltd. v. Venkatayya [1963 - II L.L.J 638] (vide supra) has again no relevance to the contention before us. The dispute concerned the construction of S. 73(1) of the Employees' State Insurance Act, 1948, whether the prohibition in that section is to taking punitive action during the period when the employee was sick or whether it should be given a more extended meaning. We do not see anything in that judgment which would in any way assist the case advanced by the respondents here. The case in Murugan Mills, Ltd. v. Industrial Tribunal, Madras [1965—I L.L.J 422] (vide supra) was one where the service of an employee was terminated by the employer under Cl. 17 (a) of the standing orders which enabled the management to terminate the services of a worker by giving him fourteen days' notice. Such termination took place when there was a dispute between the employer and its workmen pending adjudication. No reasons were given in the order of termination and when the matter was brought to the Industrial Court under S. 33-A of the Industrial Disputes Act, the question that was raised was whether there had been misuse of the power of the management in the application of the standing order to the case. The Supreme Court expressed the view that if there was such misuse the order was bad. We find nothing more in that decision too.
13. With great respect to the learned Judges who decided the case in Haji Ismail Said & Son (Private), Ltd. v. Fourth Industrial Tribunal [1966—II L.L.J 59] (vide supra), we see no justification for the view taken by the learned Judges as to the scope of the term retrenchment on the basis of the Supreme Court decisions relied on in the case.
14. We have already indicated earlier that the case here is one of termination of services of surplus staff. We have also indicated that the mere fact that such termination is in accordance with any rule such as rule 149(1; of the Railway Establishment Code, will not make it any the less a retrenchment within the scope of S. 25-F. We may also notice here that rule 149(1) is subject to rule 149(6) which provides:
“6. Notwithstanding anything contained in Cls. (1), (2) and (4) of this rule, if a railway servant or apprentice is one to whom the provisions of the Industrial Disputes Act, 1947, apply he shall be entitled to notice or wages in lieu thereof in accordance with the provisions of that Act,”
It is apparent from this provision that even a termination under rule 149(1) requires compliance with S. 25-F of the Act. For this reason too the contention of the respondents is unacceptable.
25. In the result, we find that the termination of the services of the petitioners have not been validly made. We, therefore, issue a direction to reinstate the petitioners in service. Parties are directed to suffer costs.