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Citation Codes
Equivalent Citations
citation codes
Case Number
Disposition
Judges
Acts
  • The Industrial Disputes Act, 1947
  • Section 2(oo) and Section 25-F of the Industrial Disputes Act, 1947 (as amended by Act 43 of 1953)
  • the relevant provisions of the Act
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Disposition
Judges
Acts
  • The Industrial Disputes Act, 1947
  • Section 2(oo) and Section 25-F of the Industrial Disputes Act, 1947 (as amended by Act 43 of 1953)
  • the relevant provisions of the Act
Smart Summary

Factual and Procedural Background

The appellant–employer challenged an award of the Labour Court, Delhi, which had ordered the reinstatement of three temporary workmen—Sarvashri Jagan Nath, Naunit Lal and S.K. Blaggan—with continuity of service and full back wages. The Labour Court found that although the men were engaged on a temporary, daily-wage basis, their services were terminated because the employer considered them surplus. As no retrenchment compensation was paid, the Labour Court held the terminations invalid and directed reinstatement. The employer obtained special leave to appeal to the Supreme Court.

Legal Issues Presented

  1. Whether termination of the services of temporary, daily-wage workmen on the ground of shortage of work amounts to “retrenchment” under Section 2(oo) read with Section 25-F of the Industrial Disputes Act, 1947.
  2. If such termination is retrenchment, whether non-payment of retrenchment compensation renders the dismissal illegal and justifies an order of reinstatement with back wages.

Arguments of the Parties

Appellant's Arguments

  • The letters of appointment constituted contracts permitting termination on 24-hours’ notice; hence the services were validly ended under the contractual terms.
  • Because the employees were hired only for specific assignments that had ended, their discharge was not “retrenchment” but a contractual cessation of temporary employment.

Workmen’s Arguments

  • The terminations were motivated by shortage of work, making them cases of surplus labour and therefore “retrenchment.”
  • No retrenchment compensation was paid, violating Section 25-F; consequently, the workmen were entitled to reinstatement with back wages.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Hariprasad Shivshankar Shukla v. A.D. Divikar, AIR 1957 SC 121; 1957 SCR 121 “Retrenchment” means discharge of surplus labour and does not encompass termination on bona fide closure or change of ownership. Used to reaffirm that discharge owing to surplus labour falls squarely within the statutory definition of retrenchment.
Employers in relation to Digwaam Colliery v. Workmen, AIR 1966 SC 75; (1965) 3 SCR 448 Even a badli (substitute) workman who satisfies the statutory conditions is entitled to retrenchment benefits. Cited to equate temporary daily-wage employees with badli workers for purposes of statutory protection, negating any distinction urged by the employer.

Court's Reasoning and Analysis

1. The Court examined the letters of appointment, noting they expressly described the workmen as temporary, daily-wage employees terminable on 24-hours’ notice, and conferred no regular employee benefits.

2. It then reviewed the employer’s written statement before the Labour Court and the testimony of its Personnel Officer, Shri J.K. Nayar. Both sources conceded that the men were discharged because “the company did not have enough work,” establishing that the terminations were rooted in surplus labour.

3. Applying the definition of “retrenchment” affirmed in Hariprasad Shivshankar Shukla, the Court held that dismissal occasioned by surplus labour, even of temporary staff, constitutes retrenchment.

4. Relying on Digwaam Colliery, the Court rejected the argument that a temporary or badli status deprives a worker of retrenchment benefits once the statutory conditions are fulfilled.

5. Because the employer had not complied with Section 25-F—specifically, it failed to pay retrenchment compensation—the retrenchment was unlawful.

6. Consequently, the Labour Court’s directive of reinstatement with continuity of service and back wages was affirmed.

Holding and Implications

Appeal Dismissed with Costs.

The Supreme Court upheld the Labour Court’s order reinstating the three temporary workmen with full back wages. The decision reinforces that employers cannot evade the statutory obligations of Section 25-F by labelling workers “temporary” when discharging them for surplus labour. No new legal test was announced, but the judgment underscores that even daily-wage or badli workers are protected by retrenchment provisions when their services are terminated due to shortage of work.

    Management Of M/S Willcox Buckwell India Ltd. v. Jagannath And Others

    A.N Grover, J.— This is an appeal by special leave from an award of the Labour Court, Delhi, on a reference the terms of which are as follows:

    “Whether Sarvashri Jagan Nath, Naunit Lal and S.K Blaggan should be reinstated in service with continuity of past service and with full back wages for the intervening period and what directions are necessary in this respect?”

    In the award, the Labour Court came to the conclusion that although the three workmen concerned were temporary employees they had been retrenched due to there being surplusage of labour. For that reason, the Labour Court held that as no retrenchment compensation had been given to them, they were entitled to reinstatement, and the reinstatement was, accordingly, directed.

    2. The letters of appointment clearly show that the concerned workmen were appointed temporarily and it was stated in the letters of appointment that the remuneration would be on daily wage basis. It was further stated that during the period of temporary employment, the workmen would not be entitled to any kind of leave or to any benefits extended to the confirmed employees. The other matter, which is material in the letters related to the termination of services by giving 24 hour's notice in writing.

    3. The services of these workmen, namely, Naunit Lal, S.K Blaggan and Jagan Nath, were terminated on August 11, 1966, September 1, 1966 and September 6, 1966 respectively. Although in the statement of claims filed by the workmen, allegations of unfair labour practice and victimisation were made, in the reply, which was filed by the management, it was stated inter alia that the services of these workmen had been terminated according to the terms and conditions of the letters of appointment as “the company did not have enough work to continue the employment of these two temporary workmen”.

    4. Shri J.K Nayar, Personnel Officer of the appellant before us, gave evidence before the tribunal. According to him, the work was comparatively better in August 1965 but it became dull in the year 1966. S.K Blaggan, who had been employed in the construction division of the parts department, had to be asked to go, because there was not much work for him. Naunit Lal was appointed in the parts store as “temporary labour”. His services were terminated in October 1966 due to shortage of work. About Jagan Nath also, it was stated that in February 1965 some consignments were to be painted and there was sufficient work, but in September 1966 the work was over for which Jagan Nath was engaged; so his services were terminated.

    5. The main contention of learned Counsel for the appellant is that the services of the concerned workmen were terminated in terms of the contract or the letters of appointment issued to them. They were, therefore, not entitled to get the benefit of the provisions relating to the workmen, who are retrenched. In Hariprasad Shivshankar Shukla v. A.D Divikar AIR 1957 SC 121, 1957 SCR 121 it was laid down that the word “retrenchment” as defined in Section 2(oo) and the word “retrenched”, in Section 25-F of the Industrial Disputes Act, 1947, as amended by Act 43 of 1953, had no wider meaning than the ordinary accepted connotation of those words and meant the discharge of surplus labour or staff by the employer for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, and did not include termination of services of all workmen on a bona fide closure of industry or on change of ownership or management thereof.

    6. The question which arises in the present case is whether the services of the concerned workmen were terminated on the grounds of surplus labour. If they were asked to go because of that reason, there seems to be little doubt that provisions contained in the Industrial Disputes Act, relating to the payment of retrenchment compensation would be attracted.

    7. Mr Pai laid a great deal of emphasis on the fact that these temporary workmen had been employed only for the purpose of doing a particular work and as soon as that work was finished it was no longer necessary to keep them in employment and, therefore, it was legitimate for the management to terminate their employment in terms of the letters of appointment, giving them the requisite notice. We find it difficult to accede to the contention of Mr Pai that the concerned workmen were asked to go in the circumstances mentioned by him. It is quite clear from the admission made in the written statement filed before the Industrial Tribunal and the evidence of Shri J.K Nayar, that these workmen were served with notices of termination of service, because there was not enough work for them, which apparently meant that they had become surplus so far as their services were concerned. The tribunal came to the same conclusion and we have not been persuaded to take a different view in the matter. We may also refer to a decision of this Court in Employers in relation to Digwaam Colliery v. Workmen AIR 1966 SC 75, (1965) 3 SCR 448 in which a badli workman had worked as employee for more than 240 days, etc. He was retrenched in 1961, and the court apparently proceeded on the basis that even a person, who was working as badli was entitled to the benefit of the provisions relating to retrenchment if he fulfilled the requisite conditions. We can find no distinction between the case of a badli worker and that of a temporary employee. If the reason, which the management itself gave, was that the termination of the services was on account of surplus labour, there is no escape from the conclusion that the concerned workmen were retrenched and that could not have been done without giving them the benefits provided by the relevant provisions of the Act. As that was not done, the Labour Court was fully justified in ordering their reinstatement.

    8. The appeal fails and is dismissed with costs.

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    Management Of M/S Willcox Buckwell India Ltd. v. Jagannath And Others
    (Mar 28, 1973)