MANAGEMENT OF KARNATAKA STATE ROAD TRANSPORT CORPORATION, BANGALORE & ORS versus M. BORAIAH & ORS.

RANGANATH M1SRA, J. The employer-Karnataka State Road Transport Corporation-created. under a .State Act entitled the Transport Corporation· Act of 1950 ('Corporation Act' for short) · is in. appeal by 'special leave and the common decision of a Division Bench of the High Court which held that termination of employees while on probation on ground of unsuitability amounted to retrenchment and for non-compliance :fi ith the provisions of s. 25F of the ·Industrial Disputes Act, 1947 ('Disputes Act' for short), .the termination is bad, is challenged,

p. 784, margin F

· As per Rule 7 made under s. 45 of the. Corporatjon Act, direct recruits .are to be on probation (or two years and such probation call be extended. , The empl_oyer .terminated the employment of some of the employees during ihe iiiitial period· of probation and of, some others. during the extended period O!J: the ground of· un· satisfact~ry service. Thereu.pon an industrial dispute was .raised questioning the legality of their termination and the _State Govern· ment referred the dispute to the Labour Court for adjudication under s. 10 of the Disputes Act. The Labour Court held, overruling the stand of the employer that s. 25F of the Disputes Act had no application, to the effect that the discharge was invalid. The employer Corporation came before the High ·court challengi'ng the ·'Award. A learned single Judge dismissed the writ petition holding· that the order of discharge_ amounted to retrenchment as defined in s. 2( oo) of the Dispqtes Act and ·those orders were bad for non· compliance of s. 25F. The employer Corporation challenged the decisio·n of the single Judge before a Division Beneh and the Division Bench. by the impugned judgment upheld the decision of the learned single Judge.

pp. 784–785, margin H

·Admittedly the employees were probationers at the tim .. of discharge from service. There is no dispute . that as a condition precedent to discharge the requirements of s. 25f' of the Disputes Act had not been complied with. If the discharge of the employees would amount to retrenchment, appellant's counsel does not dispute that the order of discharge would be bad ·for, non'compliance of s. 25F _of the Disputes Act. The only question for· consideration· 1n ihese appeals, therefore, is whether the discharge of the· employees from service amounted to retrenchment.

p. 785, margin C

It is the sta.nd of the employer Corporation that the employees were probationers and the order of discharge in every case was on account of unsatisfactory service~ Since the order of discharge has been grounded upon unsaiisfactory service during the. period of probation, it has been argued that such termination of service is. not retren_chmen(. ·

p. 785, margin E

Section 2(oo) of the Disputes Act define~ retrenchment to mean " 'J:etrenchment' 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 includc-(a) voluntary retirement of the ·workman; or (~) retirement of the workman on re&ching the age of superannuation if tho contract ofemp!Qylnent between the employer and the work• man concerned contains a stipulation in that behalf; or (c) teI'Iili· nation of the service of a workman on the ground of continued . ill-health." •

pp. 785–786, margin G

A Constit1,1tion Bench ofthis'Court in llariprasad Shivshaitker Shukla v. A D. Divikar,( ex.,mined the true meaning of the expres~ sion . 'retrenchment' and posed the following 'question : ·

p. 786, margin A

."The question however, before us is•does this definitlon 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 word.s 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

p. 786, margin B

business by the employer." . 'It went on to say :

p. 786, margin C

. .

p. 786, margin D

"There is no doubt that when the Act itself' provides a dictionary for the words used we must look into that . dictionary first fo~ an interpretation for the words used . in the· statute. · We are ngt concerned with any presumed· · Intention of the legislature; . our task is to get. at the intention .as .expressed in the stattite. Therefore, we pro- . pose first to examine the language of the definition and see if the ordinary, accepted notion. of retrenchment fits . in, squarely and fairly, . with· the. language used. What.

p. 786, margin D

. .. ... . is·1he onlinary,. accepted notion . of retrenchment in an industry! . : ...... Let us 'oQw see 'far that meaning.fits in with the· language used. We have referred earlier to the four essential requirements of the definition; and the ·question is, does the ordinary meaning of retrenchment fulfii those requirements ! . In our o.pinion it does. When a portioµ of the staff or labour force is discharged as sur· . plusage in a continuing business, there are (a) termination·

p. 786, margin F

of the :'.service of a workman; (b) by the employer; (c) for . (I) '[19S7]SCR 121, ' any reason· whatsoever; and (d) otherwise than as . puni· . shment inflicted by way .. of disciplinary action.''.' / .

pp. 786–787, margin G

.. . . The C<institution Bench: further said :

p. 787

..

p. 787

.. ·."The legislature. is using. the ·expression: 'fo~ : any ... : "reason" whatsoever' says in effect": :'It does not.matter why . : •. you are discharging the surplus; if the other requirements." .

p. 787

of the definition ·are fulfilled, then it is ret(enchment."

p. 787

Id the. absence-of any coOlpelling · words to indicate . that.· : . . . . the intention' was evei1 io indude a: bo~a fide closure of the. whole busin"ess, it would, we thiuk, be divorcing the ..

p. 787

expression altogether .from its context to give it such a: • . wide• ine~ning.as is contended f~r by learned ··counsel for· ·•·the·. respondents. · \Vhat ·_is' being "defined· is retrenchment: ·.and- that" is- the-: CCnfiexf of the :.<leJinition-~ -·:It ·i~ \,r:ue ihb.t

p. 787

. an a~tificial. definition may.· include a m~ariirig-different • - . . from .or. fa excess of the ordinary" ac~epiation of the word' .

p. 787

which is the subject of definition; 'but.there must the"!) be: compeJling Word:; to show thaf~uch a·meailitig diff6reni from "or in excess\ .c)f the ordina;,.. meaning fs intended; . ·

p. 787

. ·Where,:within the framework of the ordinary acceptation · ··. of th~. word, ·every· single· requirement.of the· definition · · · . clause is' fuifilled, it" would be wrong :to t<,1ke ihe' definition · aS <lOsti-oying the essential meaning of the word . defined." .. • ... . ..

p. 787

... . After referring t~ certain decision~· the Coristltutiori Bench c~u"cluded by saying: · · ·. · ·.c. ' ' ·< > '"

p. 787

...

p. 787

.. . . . . ~ ... . .. "For _the reasons · given·· above; we hold, contrary io · . the . view: expresse<l by· the· Bombay'· High ·Court, · thae ··retrenchment as 'defined in 2(oo) and as used ins; 25F: has no wid.er meaning than t!ie orainary; aecepted connQc ' . . . talion of . the word; it meads . the 'discharg~ surplds ·labour "or siaff by ihe emp!dyerfor'a~y reason\vhatsiiev~r;' otherwise.· than as a· punishment' iilflicted by. way ··or .. di~ip.U~a~!., aetj?n,.~-~·..-; ;_:.;~· :-, · -~· -:,:",:·,- .··~-:~-:~~- '~ ·' ~ .

p. 787

·The,·ratio 'of.this decisl~n has been pressed into· service by ·the.· appellant Corporation for its stand. that" in-.the instani. case· the-" . services· have been terminated oil. the ground of.Unsuitability and , was not a case of disbanding surpluilabour ·.force and, tneref(i'rc, di<I . . .. .... .. ·.,' ..

p. 787

.·

p. 787, margin H

.. 7s8 · h984) i S.C.R. not ·amount to retrenchment. On the other hand, counsel for the ·.employees have contended that the consensus of judicial opinion ill later· decisions of this Court is against the appellant's stand. The first decision is the. case of State -Bank of India v. N. Sundara Money.(') A Bench of three leanied Judg~s of this· Court referred° to the definition in section 2(oo) of the Disputes Act and observed :

p. 788

· "To protept the weak against the strong this policy of ·comprehensive definition has been effectuated. Terminlt!6n embraces no! merely the a9t of termination by the employer, but the fact of termination howsoever produced."

p. 788, margin B

. Then c~me the decision in Hindustan Steel Ltd. v. The Presiding Officer, Labour. Court, Orissa & Ors.,(') when a three Jutlge Bench of this Court again examined the true.· meaning of the. definition of the expression 'retrenchment'; On this occasion reference was made to the Constitution Bench decision and as would appear from page 589 of the Repori, counsel had submitted that the three Judge decision of this Cpurt in Sundara Money's case (supra) was in apparent conflict with the Constitution· Bench. decis_ion and required reconsideration. This submission of counsel was considered and facts of the Constitution Bench c~se were analysed and Gupta, J . . who spoke for the .Court, stated :

p. 788, margin B

"On the facts of the case before us, giving full effect to the words 'for any reason whatsoever' would be consistent with the sc.ope and -purpose of section 25F of the Industrial Disputes Act, and n~t contrary to the scheme of the Act .. We do not find anything in Hariprasad's case 'Yhich is inconsistent with what has been held in State Bank of India v. N. Sundara Money (supra)."

p. 788, margin E

The same question came up for consideration before a two Judge .. Bench of this Court in Santosh Gupta v. State Bank of Patiala.( The· facts of the case were more or 'Jess the same as in ·the present dispute. Employment there had. been terminated upon · failure of the workman to pass the test _which would have_ enabled her to be confirmed in service and it was contended on behalf of the

p. 788, margin F

3 SCR (2) ,(1977) I SCR 586, (3) 3 SCR 884.

p. 788, margin G

· k.s.il..T. "collPi.. v. (Ranganath Mi.Ira, I.) managcinent that termination of service was not due to discharge of surplus labour force and, therefore, it did not amount to retrenchment .. The Division Bench referred to the Constitution Bench decision and observed :

p. 789

"If the definition of '~trenchment' is looked .at unaided and unhampered by precedent, one is at once struck. by the remarkably wide language employed and particularly by the use of the w,ords "termination ...... for any reason whatsoever''.. · The definition expressly excludes termination of service as a 'punishment inflicted by way of disi;iplinary action'. The definition does not include, so it expre.ssiy says,· voluntary retrenchment of the workman or retrenchment of the workillan oiueaching the age of superannuation or termination of the service of the workman on the ground of continuous ill·health. Voluntary retrenchment of a workman or retrenchment of the workman on reaching the _age of superannuation can hardly bp described as termination, by the. employer, of the service ofa workman. ·Yet, the Legislature took special care to mention that they.were not included within the meaning of 'termination by the employer of the service of a workman for any reason whatsoever'. This, in our opinion, emphasizes the broad . interpretation to be given to the expression 'retrenchment'. In our view if. dm1 weight is given to the words .'the termination .by the 'employer of the service ofoa workman. 'for any-reas,on whatsoever' are understood to mean what they plainly say, it is difficulfto escape the conclusion that the expression 'retrenchment' must include every termination of the service of a workman by an act of the employer .. The und.erlying assumption, of ·course, is that

p. 789, margin A

the uudertakiilg is running as . an undertaking and the · . employer continues as an empfoyer but where .either on account of transfer of the undertaking or on account of the closure of the undertaking the basic assumption disappears; there can be no question .of 'retrenchment, within the meaning of the definition contained ins. 2(00). This came to be realised as a result of the decision of this Court in Hariprasad Shivshanker Shukla v. A. D. . Divikar (supra). The Parliament then· stepped in and · introduced 25F aQd 25FFF by providing that compen; satioli. shall be payable to workmen in case of transfer of undertaking or closure of und,ertaking as if the wor.kinen ·had been retrerich~d. We. rriay rightly say that the termination of the service of a workman o.n the transfer· or closure of an undertaking was treated by Parliament as 'deemed retrenchment'. The effect was that every case of :termination of service .by act of employer· even if such· termination involved was a· consequence of transfer· or closure of the undertaking· was to be treated as 'retren- · chmenC for the· purposes of notice, compensation etc. · · Whatever doubts might· Ii~ve · existed before Parliament · enacted 25FF and 25FFF about the width 25F there cannot ndw be any doubt that the expression 'ternii- · nation' of service for auy.· reason wh'it&oever now covers every killd of termination of service except those not expressly included.in s. 25F or not expressly provided for bi other provisions of the Act such as ss. · 25FF

pp. 789–790, margin F

and 25FFF." . . The .learned Judges drew support from what had been observed in .Indian Hume Pipe Co: Ltd. v~ TM Workmen,(') "the object ot ·retrenchment. compensati~n is to give protection to the retrenched employee and his family to enable them to tide over the hard period of unemployment," and . observed :

p. 790, margin B

'..'Once th~ object of 25F, 25FF and 25FFF is understood and the true nature of the· compensation which th!lse provisions. provide is realised, it is difficult to make any distinction between termination bf service

p. 790, margin E

for one reason and terminati.on of service for another." Chinilappa Reddy, J. thereafter referred to the Constitution Bench · decision ·and said : ·

p. 790, margin E

"It is tiue that there are some observations which, if . not'properly understood wiih reference. to the que.stion at issue, seemingly support the submission of Dr. Anand

p. 790, margin F

Prakasli that "termination of ·service for any reason · · whatsoe~er" means no rriore and no less than discharge -of a labour fprce. which is a surplusage. The mis under- .standing of the observations and the resulting confusion stem, from not appreciating (I) the lead question which (I) [1960) 2 S.C.R. 32.

p. 790, margin F

was "posed and answered by \he learned judges and (Z) · that the reference to 'discharge on. account of surplusage' was illustrative and ·not e~haustive ·and by way of contrast .with discharge o~ account of transfer or closure of

p. 791

business .. ' was further .observed :

p. 791, margin A

"The ratio of Shukla's case in fact has· rtlready been· explained, in Hindustan ·Steel Ltd. v. The Presiding Officer, Labour Court Orissa & Ors. The decisjons iu Hindustan Steel Ltd. v. The Presiding Officer, Labour: Court, Orissa & Ors. and State Bank o/ India v. N. Su11dara Money have, in our view, properly explained Shukla's case and have laid "down the cc>rrect law."

p. 791, margin B

The same question aro~e for cons.ideration before ~nother Judge Bench in Mohan Lal· v. Mmiagement of M/;. Bharat Electronics Desai, i. spoke for the Court thus: ·

p. 791, margin C

·"NicetieS and sfn1aniicS ap~rt, termination by the em.ployer of the· service of a workman for any reason

p. 791, margin D

.. whatsoever would constjtute retrenchment except in·cases excepted in the section. itself. The.excepted or .excluded cases are where termination is by way of punishme.nt inflicted by way of disciplinary action, voluntary retirement of. the workman, retirement of the workman on reaching the age of· superannuation if the contract of empl~ymcnt between -the employer and the. workman . concei;ned contains a stipulation in that .behalf; al)d termination of the s.ervice of a workman on the ground of continued ill-health. It is not the case of the respondent that tcrinina(ion in .the .instant case ·was a punishment inflicted by way of disciplinary action. If such a position . were adopted," the termi_nation. would be ab initio void for violation of principle of natural justiCe or for not following the procedure prescribed for imposing punishment. Jt is not even suggested that this was a case of. voluntary retirement or retirement o)) reaching the age of supe~annu­ ation or absence on account of continued ill-health ... The · case does not fall under any ofthe excepted categories. (I) [1981f 3 S.C.R. 518. There is thus termination of service for a reason other than. the excepted category. It would fodisputably be retrenchment within the meaning of ,the word as defined · in the Act: It is not necessary to dilate on the point nor to refer to the. earlier decisions of this Court fa view of . the later two pronouncements of this .Court to both o! · which one of us was a party. A passing reference to the earliest judgment which. was the sheet anchor till tlie later pronouncements may not be out of place. In Hariprasad Shivshanker Shuk(a v. A. D: Divikar, after referring to Pipraich Sugar Mi/ls Ltd. · v. Pipraich Sugar Mi/ls Mazdoor Union, a . Constitution Bench of this Court · quoted with approval the following passage from the aforementioned ·case :

pp. 791–792, margin D

'But retrenchment connotes in its ordinary accept· ation that the business .itself is being continued but that a portion of the staff. or the labour force is discharged as

p. 792, margin C

surplusage and the termination of, services of all the • workmen as a result of the closure of ~he business cannot therefore be properly described as retrenchment.'

p. 792, margin C

"This observation was made in the context of the closure of an undertaking and being con;cious of this position, the question of the correct interpretation of the definition of the expression 'retrenchment' in s. 2( oo) of the Act was left open. Reverting to that ·question, the vi~w was re-affirmed but let it be remembered that the . two appeals which were heard together in ShuklJ'S case

p. 792, margin E

. " were cases of closure, ......

p. 792, margin F

· In the majority judgment in Surendra Kum.ar Verma etc. v. The Central Government Industrial TribunaJ..cum-Labour Court, New Delhi & Anr.,( the ratio of the latter case has been followed. A Bench of two learned Judges in the case of L. Robert D'Souza v. The Executive Engineer, Southern Railway & Anr.,( re-examined the entire position." Desai, J .. who again spoke for the Court indicated:

p. 792, margin F

El.s.R..'f. v. noRAIAW(R4nganath Misra, J.) 193

p. 793

"At the " ourset it.must at once be pointed out . that the construction put by the Full Bench of the Kerala High Court on the. expression 'retrenchment'. in s. 2(oo) of the Act that it means. only the discharge of surplus labour or staff by the employer for any reason whatsoever is no more good law and 'in fact the decision of the full Bench of Kerala High Court in L. Robert D'. Souza v. E)fecutive· Engineer, Southern Railway & Anr., [(1970) I LLJ 2111) has been specifically overruled by this Court in Santosh Gupta v. State Bank of Patiilla. · This Court has consistently held in State Bank of India v. N. Sundara Money, Hindustan Steel Ltd. v. Presiding Officer, Labour Court, and Delhi Cloth & General Mills Ltd. v. Shambhu Nath Mukherjee, [(1971) I SCR 591] that the expression 'termination of service for any whatsoever' flow. covers every kind of termination of service except those not expressly induded in s. 25F or not expressly provided for by other provisions of the Act such as ss. 25FF an.d 25FfF. Itwas attempted to urge that in view of the decision of this. Co.urt .in Pipraich Sugar Mills Ltd. v. Pipraii:h Sugar Mills Mazdoor Union, the ratio of which was re-affirmed by a Constitution Ben.ch of this Court in Hariprasad S/zivshanker Shukla· v. A. D. Divikar, all the later decisions run counter to the Constitution. Bench and must he treated per in curium. This contention neetl not detain ·us because first in Hindustan Stee!Ltd. case' than in, Santosh Gupta's case, (supra) and lastly in Mohan Lal v. Bharat E/ei:tronics Ltd., it was in :terms held .that the decision in Sundara Money's case was not at all inconsistent witn the decision . of the ·Constitution Bench In Hariprasad Shuk/a's'case and not only required no recon.sidetation but the decision in Sundara Money's case was ,approved ·.in the aforementioned thre~ cases. 'This position is further buttressed by the decision in Delhi Cloth. & General Mills Ltd·. case wherein striking off. the name of a w_orkman from the roll was held to· be retrenchment."

p. 793

In the series of cases that h~\'.e come later the Constitution Bench dedsion has been .examined and the raHo indicated therein has been confined to its own facts. The view indicated by this.Court in that· . case obviously did not meet with the approval of Parliament and, 194 il984) s.c,!l. therefore, the law has been subsequently · amended . as already . · indicated. Lord Devlii;i once .observed·: ·

pp. 793–794, margin G

"I am not one of those who believe that· the .only function ofla.w is to preserve the status quo. Rather, I ·should say that law is the gate-keeper of the ·status .quo, There is a.I ways a host of new ideas· galloping around· the 'outskirts of society's thought. All of them ·seek admission but ~ach must first wm ·its spurs; the. Jaw 'at first resists, but will submit to. a conqu.eror and· become his· servant. Tn a changing society the law acts a valve. ·Ne~i policies niust gather strength before . they can· force an entry; when they are admitted and absorbed . into the consensus, the'leg,al system should expand to. hold tliem, as also it shoul'd ·.contract to squeeze out old policies

p. 794, margin A

which have lost the con.sensus they once obtained."(') We are inclined to hold that the stage has come when the view indicated· in Money'~ case (supra) has been .. "absorbed . into the consensus" and there is no scope for p11tting the clock back or for . an antf-clockwise ope,ration; · ·

p. 794, margin C

Once the conclusion' is reached that retrenchment as defined in s.2(oo) of the Disputes Act covers every ca;e of termination of servJce except those which have· been embodied in the d~finition, discharge · from employment or termination of service of a probatibner -would · also amo~nt to retrenchment. Admittedly the requirements of s. 25F ·orthe Disputes Act had not .been complied with in these cases. Counsel for the appellant.did not very appropriately dispute before us that the necessary consequence of non-compliance of s. 25F of the Disputes Act in a case. where it applied. made the order of termination void; The. High Court, in our opinion, has, therefore, rightly come to the contlusion. that . in t)lese cases the order of retrenchment was bad and consequently it upheld tire Award of the . Labour· Court which set· aside those orders and gave appropriate relief. These appeals are dismissed;· There would be one set Of costs. Consolidated hearing fee is assessed at Rs;. 5,000. N.V.K. Appeal dismissed • --(i).4ih Chorley Lectures delivered at the London School of Economics 25.6.7$;

p. 794, margin D