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J.K Cotton Spinning And Weaving Mills Company, Ltd., Kanpur v. State Of Uttar Pradesh

Allahabad High Court
Oct 16, 1985
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Structured Summary of the Opinion

Factual and Procedural Background

Respondent 3 was employed by the petitioner to operate a Bradma machine. He submitted a resignation dated 1 November 1970, and the petitioner accepted that resignation in writing on 4 November 1970 with effect from 16 November 1970. The respondent handed over charge in mid-November 1970.

An industrial dispute was raised, and the State Government made a reference to the Labour Court on 28 November 1974 asking whether the termination effected by the petitioner was valid and, if not, what relief the respondent should receive. (Earlier, on 12 November 1973, the State Government had declined to refer the matter.)

The petitioner challenged the 28 November 1974 reference in Writ Petition No. 11072 of 1975; that writ petition was dismissed by this Court on 7 September 1981. The Labour Court subsequently gave an award on 25 January 1984 in favour of respondent 3, holding the termination invalid and directing reinstatement with full back wages. The petitioner filed the present writ petition under Article 226 of the Constitution challenging that award.

Legal Issues Presented

  1. Whether the termination of respondent's services (effective 16 November 1970) was valid and proper — specifically, whether the resignation was a voluntary act by the respondent or whether it was induced by coercion/threats or by denial of overtime payments.
  2. Whether the resignation, once accepted by the employer on 4 November 1970, attained finality and barred the respondent from resiling.
  3. Whether the termination amounted to "retrenchment" within the meaning of the relevant statutory provisions (including S. 6-N of the Uttar Pradesh Industrial Disputes Act and the analogous provisions of the Central Act such as S. 2(oo) and Ss. 25-F), and if so whether the petitioner complied with the mandatory requirements of S. 6-N.
  4. Whether the Labour Court erred in its findings and relief by not addressing compliance with S. 6-N and by finding in favour of the respondent without properly determining the statutory issues.

Arguments of the Parties

Petitioner's Arguments

  • The Labour Court's finding that the resignation was not voluntary and that respondent should have been taken back from 16 November 1970 is unsupported by the record and contrary to documentary evidence.
  • The resignation letter of 1 November 1970 cited family circumstances as the reason for leaving; it made no mention of overtime claims or of any condition relating to payment of overtime dues.
  • The resignation was accepted in unequivocal terms on 4 November 1970 and communicated to the respondent; the respondent had taken over charge and thus could not thereafter resile from his resignation.
  • The respondent's pleaded case before the Labour Court (in written statement filed on 31 August 1972) relied on denial of overtime as the cause, and contained no allegation of threats or coercion; the later testimony alleging threats was inconsistent and was refuted by the petitioner's manager (P.W. J.N. Agarwal).
  • In law, once a resignation is accepted by the appropriate authority, it attains finality (citing Raj Kumar v. Union of India and Jai Ram v. Union of India).

Respondent's Arguments

  • The resignation was conditional: the respondent argued that it was not to be effective until full and final settlement of dues (overtime and other claims) was made.
  • In the written statement the respondent alleged that he had to work on Sundays and other holidays but was denied overtime allowances; repeated requests were ignored, leaving him no option but to resign.
  • Before this Court the respondent relied on an allegation that he was threatened (after a complaint to the Chief Inspector of Factories) and that threats/coercion induced his resignation; this theory was eventually adopted by him in testimony.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Raj Kumar v. Union Of India [(1969) 18 F.L.R 125] Principle that when a public servant tenders resignation and it is accepted by appropriate authority the service is terminated from the date of acceptance; withdrawal is normally not permitted in absence of contrary law/rule. The Court relied on this authority to support the view that the respondent's resignation, having been accepted on 4 November 1970 and communicated, attained finality and could not be withdrawn thereafter.
Jai Ram v. Union of India [A.I.R. 1954 S.C. 584] Supporting authority on finality of accepted resignations of public servants. Used alongside Raj Kumar to reinforce that once acceptance is made by the employer the resignation attains finality.
State Bank of India v. N. Sundaramony [1976-II L.L.N 5] Interpretation of the phrase "for any reason whatsoever" in S. 2(oo) of the Industrial Disputes Act — termination in any form, however produced, constitutes retrenchment. The Court relied on this decision to hold that termination by efflux of time or automatic cessation also constitutes retrenchment; substance (fact of termination) prevails over verbal description.
Hindustan Steel, Ltd. v. Labour Court, Orissa [1976-II L.L.N 479] Applied the principle that absence of an express order by the employer does not prevent a finding of retrenchment where termination occurred by expiry/automatic cessation. Cited to support the proposition that termination need not flow from an active step by the employer to amount to retrenchment; the Court considered this line of authority when construing S. 2(oo).
Delhi Cloth and General Mills, Ltd. v. Shambhu Nath Mukerji [1978-I L.L.N 1] Holding that striking off a workman's name from the rolls amounted to termination of services and thus fell within the concept of termination/retrenchment. Referenced to show that different forms of cessation of employment are captured by the statutory definition of retrenchment.
Santosh Gupta v. State Bank Of Patiala [1980-II L.L.N 170] Discharge for failure to pass a test was held to amount to retrenchment under the statutory definition; automatic cessations fall within S. 2(oo). Cited by the Court to emphasize that even where services cease automatically (e.g., failure of a test), the termination constitutes retrenchment and statutory safeguards apply.
Robert D'Souza (L) v. Executive Engineer, Southern Railway [1982-I L.L.N 257] Authority applying the same principle that automatic determination of service can amount to retrenchment. Referred to as part of the series of decisions establishing that 'termination for any reason' is comprehensively covered by the definition of retrenchment.
Corporation of Cochin v. Jalaja [1984-I L.L.N 685] When a provisional employee is displaced by a candidate selected by the Public Service Commission, that constitutes retrenchment requiring compliance with statutory safeguards; relief may differ in nature. Used to illustrate that retrenchment arises in various factual settings and to note that the form of relief may vary depending on circumstances.

Court's Reasoning and Analysis

The Court proceeded in two principal strands: (A) assessment of voluntariness and finality of the resignation; and (B) statutory analysis whether the termination amounted to retrenchment requiring compliance with S. 6-N of the U.P. Industrial Disputes Act (and analogous Central Act provisions).

A. Voluntariness and Finality of Resignation

  • The Court examined the resignation letter of 1 November 1970 which cited "family circumstances" as the reason for immediate severance; that letter contained no mention of overtime claims or a condition that dues be paid as a prerequisite to acceptance.
  • Subsequent correspondence (including a 3 November 1970 letter asking for a substitute) and the employer's written acceptance on 4 November 1970 (effective 16 November 1970), communicated to respondent, indicated an unequivocal acceptance and a completed handover of charge by mid-November.
  • The respondent's pleaded case in the written statement (filed 31 August 1972) advanced denial of overtime as the ground for resignation and contained no allegation of threats or coercion. The later allegation of threats surfaced at a much later stage in oral testimony (recorded 29 August 1983) and was not supported by earlier pleadings or contemporaneous correspondence. The petitioner's manager denied any threats.
  • The Labour Court did not record a specific finding that the resignation was induced by threats; instead it attributed the resignation to the respondent's subjective consideration about excess work and non-payment.
  • The Court found merit in the petitioner's contention that the record showed shifting contentions by the respondent and that the resignation, having been accepted and acted upon, had attained finality consistent with established authorities.

B. Statutory Question — Retrenchment and S. 6-N

  • The Court noted that the Labour Court had not addressed whether statutory requirements of S. 6-N of the Uttar Pradesh Industrial Disputes Act had been complied with and held this to be a material omission requiring adjudication.
  • The Court analysed the statutory definition of retrenchment (S. 2(s) and the analogous S. 2(oo) of the Central Act) and emphasised the established principle — derived from a succession of Supreme Court decisions — that "termination for any reason whatsoever" captures terminations however produced (including automatic cessations and expiries), and therefore constitutes retrenchment when employment is brought to an end.
  • Given that the resignation required acceptance and such acceptance was communicated (an act of the employer), the Court concluded that there was, in any event, an act of the employer which sealed the cessation of the employment relationship; thus the situation fell within the ambit of retrenchment for statutory purposes.
  • Accordingly, the Labour Court must determine after recording additional evidence, if any, whether compliance with S. 6-N was made and, if not, what relief the respondent is entitled to. The Court also observed that the relief may need to be moulded in view of the allegation that the respondent may have retired subsequently on attaining superannuation.

Holding and Implications

Holding: The petition "succeeds in part and is allowed accordingly." The Court set aside the Labour Court's award dated 25 January 1984.

Direct orders and consequences:

  • The Fifth Labour Court, Kanpur (respondent 2), is directed to readjudicate the reference in the light of the observations contained in the opinion and to record additional evidence, if any, adduced by the parties.
  • The issue of resignation shall not be open for readjudication by the Labour Court.
  • The Labour Court is directed to give its verdict expeditiously and, as far as possible, within four months from the date of receipt of a certified copy of this decision.
  • Costs are to be borne by the parties.

Implications: The immediate effect is the setting aside of the Labour Court award and remittal for fresh adjudication limited by the Court's directions (the resignation issue is closed). The opinion does not state that it establishes any new legal precedent beyond applying and following existing authorities on the statutory meaning of "retrenchment" and the finality of an accepted resignation.

Show all summary ...

1. Respondent 3 was an employee of the petitioner engaged to operate Bradma machine. His services were terminated by the petitioner with effect from 16 November, 1970, on the basis of resignation tendered by the respondent, dated 1 November, 1970, Industrial dispute being raised, the State Government made reference on 28 November, 1974, to the Labour Court as to whether the termination brought about by the petitioner is valid and proper and, if not, the relief to which the respondent is entitled. Earlier, it appears, the State Government bad on 12 November, 1973, declined to refer the matter for adjudication. The petitioner filed Writ Petition No. 11072 of 1975, in which the reference made on 28 November, 1974, was challenged on this ground. That petition was dismissed on 7 September, 1981, by this Court. An award was given by the Labour Court on 25 January, 1984, in favour of respondent 3. The termination of the services of the respondent has been found invalid and direction has been made to reinstate him with full back-wages. Aggrieved, the petitioner has preferred this writ petition under Art. 226 of the Constitution.

2. Learned counsel for the petitioner urged that the finding of the Labour Court to the effect that the resignation submitted by the respondent was not his voluntary act and that he should have been taken back in any event with effect from 16 November, 1970, is unsupported from the record. The submission made is that the stand taken by the respondent in this behalf has been shifting I find merit in this contention. On 1 November, 1970, the respondent submitted resignation under his hand which reads:

“I regret to bring to your kind notice that my family circumstances do not permit me to continue my services and hence I am compelled to sever my connections with these mills immediately. I, therefore, request your goodself kindly to arrange for the payment of all my dues at an early date.”

The reason assigned in support of the resignation thus was the family circumstances particular to the respondent. There is no talk of payment of overtime allowance in this letter of resignation nor is the payment of dues in that connection made a condition precedent to the acceptance of resignation. Immediately thereafter respondent wrote on 3 November, 1970, asking the petitioner to depute someone to take charge for operating the Bradma machine. The resignation tendered by the respondent was accepted by the petitioner in writing on 4 November, 1970 with effect from 16 November, 1970. This was well communicated to the respondent. The acceptance made was in unequivocal terms. In pursuance of the resignation complete charge of the Bradma section was taken over from the respondent on 15 November, 1970. In the written statement filed by the respondent before the Labour Court on 31 August, 1972, he does not talk of any family circumstances. On the other hand, the contention in Paras. 2 to 5 is to the effect that he had to work on Sundays and other holidays but was denied overtime allowances and despite request made by him time to time in this connection this was not acceded to leaving no option for him except to resign. It is worthy of note in the written statement the respondent made no reference to any threat to coercion proceeding from the side of the petitioner in this behalf. It was argued on respondent's behalf before me that on 26 October, 1970, the respondent had written to the Chief Inspector of Factories referring to his claim for overtime allowances and that thereafter he was threatened due to the annoyance of the manager. It is not explained why no reference to any kind of threat or coercion should have in the event found place in the written statement. Upon being examined before the Labour Court the respondent maintained that threat was extended to his life and property from the side of the management. This statement was recorded on 29 August, 1983. In cross-examination he was confronted with the stand by him in the letter of resignation and the written statement filed prior to which the reply that he gave was that of these three things, the theory of threat and coercion was the correct one. He gave up in this manner the contention raised in the written statement to the effect that the denial of overtime allowance was the direct cause for him to resign. P.W, J.N Agarwal, the manager, examined for the petitioner, refuted that there was threat or coercion of any kind brought to bear against the respondent. A perusal of the letters, dated 3, 5, 14, and 15 November, 1970, from the respondent which have been filed along with the counter-affidavit reveals that they are conspicuous by complete reference of any mention to alleged threat fit coercion. It is significant moreover that the Labour Court does not record a finding of fact to the effect that the resignation proceeded due to the threat or coercion that the respondent in his turn pointed during cross-examination. According to the Labour Court, the resignation proceeded on account of excess work and recompense for the same being denied which in itself was a matter for subjective consideration of the respondent.

3. For the respondent learned counsel urged then that the resignation submitted on 1 November, 1973, was conditional and since the condition was not fullfiled, there could be no acceptance legally made of the same. As mentioned above, the resignation was followed up the respondent by his letter, dated 3 November, 1970, wherein he asked for substitute to be arranged and there was the acceptance of the resignation on 4 November, 1970, with effect from 16 November, 1970. On 16 November, 1970, it appears the respondent wrote to the petitioner for the first time that his resignation was not to be deemed as effective till full and final settlement of the entire dues to which he was entitled. No such condition was incorporated in the letter of resignation itself. The resignation had been accepted on 4 November, 1970, and the acceptance also communicated to the res pondent. The charge had also been handedover by him on 13 November, 1970, in pursuance of his resignation. It did not remain open thereafter in consequence for the respondent to resile from the position taken by him. There is no dispute that the resignation in the present stood in need of acceptance and it attained finality when the acceptance was made and also communicated vide Raj Kumar v. Union Of India [(1969) 18 F.L.R 125], wherein the Supreme Court reiterated that when a public servant has invited by his letter of resignation determination of his employment, his services normally stand terminated from the date on which the letter of resignation is accepted by the appropriate authority and in the absence of any law or rule governing the conditions of his service to the contrary, it will not be open to the public servant to withdraw his resignation after it is accepted by the appropriate authority. See also Jai Ram v. Union of India [A.I.R 1954 S.C 584].

4. The question arising next is if there was compliance by the petitioner of the requirements of S. 6-N of the Uttar Pradesh Industrial Disputes Act and, if not, the effect thereof. The Labour Court has not addressed itself on this material issue. It was argued for the petitioner that there is such plea raised in the written statement filed by the respondent. The respondent has assailed the validity of the termination of his services. The reference also covers issue of validity of the termination of the services of respondent brought about with effect from 26 November, 1970, by the employer. The omission to refer to S. 6-N in express terms is not to be attached much importance especially because the facts placed on the record from both sides do call for an adjudication as to whether compliance was made to this mandatory provision and if not the effect thereof. The contention raised is that there was no act of the employer in this connection and hence this may not be said to be a case of retrenchment of the respondent. To this I do not find possible to agree. Then is no denial that the respondent had been in continuous service for not less than one year within the meaning of had S. 6-N. According to S. 2(s), retrenchment covers termination by the employer of the service of a workman for any reason what soever. To this there are exceptions applicable where the termination is by way of punishment inflicted as a result of disciplinary action or voluntary retirement of the workman or retirement of the workman on attaining the age of superannuation. The provision is in part materia with S. 2(oo) of the Central Act. The case does not fall within any of these exceptions. Voluntary retirement of a workman may not stand in need of acceptance by the employer; this may be hedged in with 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 though it requires acceptance to be effective. There is retrenchment under law where the services of a workman stand terminated for any reason whatsoever. This may not be in consequence directly flowing 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 the workman.

5. In the view I am fortified by a series of decisions of the Supreme Court. The expression “for any reason whatsoever” appearing in S. 2(oo) of the Industrial Disputes Act came up for interpretation in State Bank of India v. N. Sundaramony [1976-II L.L.N 5]. For the employer it was argued that, when the order of appointment carried an automatic cessation of service, the period of employment worked itself out by efflux of time, not by act of employer and hence this could not be termed as “retrenchment”. The contention was negatived and it was laid down in Para. 9, at page 9:

“… ‘Termination… for any reason whatsoever’ are the key words, whatever the reason, every termination spells retrench ment. So the sole question is: has the employee's service been terminated? Verbal apparel apart, the substance is decisive. A termination takes place where a term expires either by the active step of the master on the running out of the stipulated term. To protect the weak against the strong this policy of comprehensive definition has been effectuated. Termination embraces not merely the act of termination by the employer, but the fact of termination, howsoever produced…”

6. The termination, therefore, comes about not merely by the act of termination of the employer, Hindustan Steel, Ltd. v. Labour Court, Orissa [1976-II L.L.N 479], there was no order of the employer terminating the services of the workman; according to the appellant, the termination was automatic on the expiry of the contractual period of service. Following the dictum laid down in State Bank of India v. A. Sandaramony [1976-II L.L.N 5] (vide supra), it was affirmed that this would be a case of retrenchment nonetheless. The pro visions of Ss. 25-F(a) and 25-F(b) of the Central Act were found to be mandatory and an order of retrenchment in violation of these pre-emptory conditions was held to be invalid. In Delhi Cloth and General Mills, Ltd. v. Shambhu Nath Mukerjt [1978-I L.L.N 1], the Standing Orders contained provision to the effect that if the workman absented for more than 8 consequtive days, his services shall be terminated and he shall be treated as having left the service without notice. Striking off the name of the workman from the rolls of the management was held to amount to termination of his services. In Santosh Gupta v. State Bank Of Patiala [1980-II L.L.N 170], referred to for the petitioner before me, the discharge of the workman was done on the ground that he did not pass the test which would have enabled him to be continued. Their Lordships pointed out that in N. Sundaramony the question was whether S. 25-F is attracted to a case where the order of appointment carries an automatic cessation of service; the period of employment working itself out by efflux of time and not by the act of the employer and the same principle applied where the services stood determined due to the failure to pass the test. Once the case does not fall in any of the accepted categories, the termination of service, even if it is authomatic discharge under the agreement, would nonetheless be retrenchment within the meaning of S. 2(oo). Vide Robert D'Souza (L) v. Executive Engineer, Southern Railway [1982-I L.L.N 257]. The case in Corporation of Cochin v. Jalaja [1984-I L.L.N 685], does not strike a different note in this connection. There also it is accepted that when a provisional employee-workman under the Industrial Disputes Act has to give way to a candidate selected by the Public Service Commission, there is retrenchment brought about and this can only be done after compliance with the conditions prescribed under S. 25-F. The difference lies in the matter only of the relief which may be granted to the workman in such a case. The Labour Court has, therefore, to determine after recording additional evidence, if any, from both sides as to whether there has been compliance made of S. 6-N of the Uttar Pradesh Industrial Disputes Act in the instant case and the relief to which the respondent is entitled on that basis. The relief may have to be moulded also keeping in view that the respondent is alleged to have retired subsequent to having attained the age of superannuation.

7. This apart, the present is a case where there was an act of the employer 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 4 November, 1970, expressly in writing and this clearly is an act of the employer which put a seal over 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 S. 6-N.

8. Having regard to the discussion made in the above, the petition succeeds in part and is allowed accordingly. The award, dated 25 January, 1984, is set aside. The Fifth Labour Court, Kanpur, respondent 2, is directed to readjudicate upon the reference in the light of the observations contained hereinafter recording additional evidence, if any, adduced by the parties. The issue of resignation shall not be open to readjudication. The reference having been made a decade back, it is expedient and the respondent is directed accordingly to give its verdict expeditiously and as far as possible within, four months from the date of receipt of a certified copy of this decision. Costs shall in the circumstances, be borne by the parties.