CASE 1

Barsi Light Railways VS KN Joglekar

Q1. Summary discussions of the cases with respect to the issues before the
Court.

The Government of India decided to end the rail company's contract and take over
the railway, thus the rail company delivered a notice terminating the services of all of
its employees as of a certain date. Some of the company's employees claimed they
had been laid off by the employer and were therefore entitled to compensation under
section 25F of the Industrial Disputes Act, 1947, in a petition under section 15 of the
Payment of Wages Act, 1936. Regarding the issue of whether the workmen were
entitled to compensation under Section 25F of the Act:

It was decided that the railway company had laid off the workers in accordance with
the definition of "retrenchment" in Section 2 (OO) of the Industrial Disputes Act,
1947, and that as a result, the firm was required to pay retrenchment benefits under
Section 25F of the Act.

Under Articles 226 and 227 of the Indian Constitution, the petitioner asked the High
Court for a writ of certiorari, a directive, or an order, among other things, quashing
Authority's ruling and ordering him to hear and rule on the merits of the petitioner's
applications.

Hearing on the petition the Court said, any artificial expressions or terms of art
introduced by the Legislature must be interpreted in accordance with the legislative
language. The Court must be disposed to interpret social legislation in a way that
aids the Legislature in meeting the social need.

According to the Court, the Railway Company was required by section 25F of the
Industrial Disputes Act to compensate its employees.
Q2. What are the contentions of both sides?

The Contention of both the sides are as follows:

● The Railway was taken over by the union of India and a notice was served by
the railway Company terminating the services of its workmen, The workmen
then decided to file an application to the authority demanding compensation
for the retrenchment.
● According to the company's argument, Section 25F of the Act does not
require that workers receive compensation.
● On January 1, 1954, the Railway Company ceased operations, and on that
date, the Central Government assumed control of the Company's operations.
According to Mr. Palkhivala, a true reading of that act would indicate that an
employer who has ceased operations is not covered by it.
● The petitioner claims that the employer terminated the employee's
employment and that regardless of the reason for the termination, the term
"retrenchment" applies to the termination of the employee's employment while
the company states that it does not apply in situations where an employee is
fired as a result of a closed business; rather, it only applies when an employer
terminates an employee while the business is still open.
● The company states that it would be incorrect to assume that the Legislature
could have intended to punish an employer further by requiring him to pay the
compensation under Section 25F if he chooses to shut down his business out
of necessity.
● Mr. Palkhivala's next contention is the constitutionality of Section 25F, which
he claims is "ultra vires" of the Legislature because it violates the provisions of
Article 19(1)(g). This article ensures that every citizen has the right to engage
in any trade or business. What the company means when it states the above
lines are that the penalty imposed by Section 25F for closing a business is so
severe that it may deter a business owner from closing his business thereby
violating the article 19(1)(g).
● The legislature doesn't tell people who run businesses whether or not they
should operate at a loss or whether or not they should shut down and when
they should shut down.
 ● Mr. Palkhivala's third argument, which he did not elaborate on but simply
stated, was that Section 25F does not apply to the case of a business that
was succeeded by another business.

Q3. What was decided by the Court and what are the various propositions laid
down by the Court while passing its final judgment?

The Judgement passed by the Court was that the Railway Company is liable to pay
compensation to its workmen under Section 25F, Industrial Disputes Act. The
Railway Company must pay the costs of the petition. No order as to costs of the
Union Government. The order of the Payment of Wages Authority who dismissed the
application will be set aside.

The court held that the retrenchment is legal if other requirements of the definition of
retrenchment are fulfilled. The employer has a right to discharge the uneconomic
surplus and his act is bona fide and not for the purpose of victimization of his
employees.

It also stated that the legislature has fixed a certain amount as the proper amount to
be paid to a workman whose services have been terminated. What exactly should be
the rights of labor, where the line must be drawn, are matters of policy with which the
Court is not concerned.

The Parliament provided no clear or specific meaning for the term “Retrenchment”
and at that time the Court had to take the ordinary meaning to interpret the definition.
If so, then the phrase would mean only one ground for retrenchment
i.e.termination/discharge of surplus labor from the industrial establishment and the
court reiterated the well-known legal position that even a temporary worker can claim
retrenchment compensation, if he is covered by the provisions of Section 25 F of the
Industrial Disputes Act, 1947.

Q4. Discuss among your group and come to a broad-based decision on what
the group would have decided if it decided the case.
Our group has concluded that we would have made the same choice after having
numerous talks about it. The entire purpose of Chapter VA was to standardize the
compensation that must be paid when an employee's employment is terminated and
prevent different Industrial Tribunals from awarding varying compensations based on
diverse bases.

The legal obligation placed on the employer by section 25F of the Industrial Disputes
Act is to pay a specific sum when he ends an employee's employment.

It is unquestionably true that any restriction on the right to enter into contracts must
be interpreted carefully when a provision of legislation does so. The whole purpose
of Parliament is to raise the level of labor in this country and to make it possible for
them to get a living wage and should attain a decent standard of living. However,
there is another canon of construction that is equally well established and significant:
when the Court is dealing with social legislation, it must inquire about what social
need is intended to be satisfied.

Just as an employer knows that he has got to pay wages, this Act abides and the
employer should be aware that over and above wages he has got to pay
compensation if he terminates the services of any employee for any reason
whatsoever.

CASE 2

SUNDARAMONY (N.) v. State Bank of India

Madras High Court

July 19, 1973

Petitioner: Sundaramony

Respondent: State Bank of India

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Q1. Summary discussions of the case:

Sundaramony was hired in Kuzhithurai branch of State Bank of India (SBI) for two
years but worked intermittently. The nature of work the petitioner performed was not
so that it would make the petitioner come under the category of a ‘temporary worker’,
however he was still termed so. The petitioner was of the opinion that he was
employed in this manner so that the bank could avoid granting benefits to him if he
was a permanent worker.

The petitioner also mentions that even if the work had become temporary, he should
have been given the retrenchment pay he was entitled to, as he had fulfilled the
criteria for receiving the compensation. He also challenged Ex. A (the last letter sent
on November 10, 1972 , marked as A, under which his services came to an end from
November 18, 1972).

State Bank of India, the respondent, opined that for several reasons petitioner’s
demands cannot be considered valid: there was no surplus labour hence, the
element of retrenchment disappears. The qualifications of the petitioner were also
brought into question. The allegations of work nature being intermittent simply to
avoid benefits to petitioners were also denied.

Issue before the court:

1. Allow or disallow the writ petition and;

2. To decide if the Ex. A was void and inoperative or not

Q2. What are the contentions of both sides?

Petitioner:

● The work petitioner performed was of permanent nature however according to

him, to avoid the provision of any benefits a permanent worker might be privy
to, the petitioner’s services were kept intermittent.
● The petitioner prays that he should be reappointed in the same position in
which he worked earlier because as retrenchment payment was not provided
 to him, the termination stood null and inoperative. Hence, he was technically
still in service and his reinstatement should face no issues.
● Even if reappointment is not possible, at least the retrenchment compensation
should be provided since the petitioner had put in the 240 days of service as
per S. 25-F.

Respondent:

● The prayers of the petitioner cannot be carried out because the order has
already been carried out in effect since November 18, 1972 and hence, there
is lack of clarity as to how it could be undone.
● The respondent refuses the allegation that intermittent work nature, of the
cashier position petitioner assumed, was to deny latter the benefits he could
otherwise receive as a permanent worker. The respondent gave two reasons
for why petitioner could not be considered as a permanent worker:
1. While the petitioner fulfilled the eligibility criteria for the cashier position
in terms of age and minimum qualifications required, he did not pass
the written test that is part of the selection procedure.
2. The reason for the intermittent work nature was temporary increase in
work and leave vacancy and hence, respondent indicated no need for
hiring the petitioner.

● The respondent denies any element of retrenchment in the case as post the
removal of petitioner, another candidate was immediately appointed after him,
which has been acknowledged by even the petitioner. The reason for
petitioner’s removal was not surplus labour- so petitioner cannot be
considered retrenched even if he had put in 240 days as per S. 25-F. Hence,
retrenchment compensation cannot be demanded and this also fails to make
Ex. A void.
● It is also contended that the Bank has the right to resort to temporary
appointment and any composite order of bank appointing a person for a
definite period at the end of which appointment automatically comes to an
 end. Hence, the cases petitioner mentions as references do not hold ground
as they are unrelated to this case.
● In case there were any such grievances, the petitioner could have raised an
issue in the industrial court.

Urvi Sharma

IROM2022HRM001

Q3. What was decided by the Court and what are the various propositions laid
down by the Court while passing its final judgement?

The conclusion of this trial was that a workman cannot be retrenched without
payment and has to be compensated as prescribed in Section 25B (2) of the
Industrial Dispute Act. Subject to aforementioned observations, the appeal is
dismissed. The parties would bear their costs throughout, although, in cases like this,
where one of the affected parties is weak, being a worker, the costs must come out
of public funds as suggested in Trustees of Port, Bombay. The State will constitute a
suitors' fund which will take care of hardships and public interest in the area of
necessary litigation.

In C.A. 933 of 1975 the respondent has been re-employed by the appellant although
in his case also it is declared, for reasons already given and subject to the same
term till his absorption that the retrenchment is invalid.

Had the State Bank known the law and acted on it, half-a-month's pay would have
concluded the story. But that did not happen. And now, since some years had
passed, the Bank has to pay, for no service rendered.

Such cases fall outside the definition of "retrenchment" and cannot be subject to the
burdensome conditions of Section 25F. Of course, a nine-day employment with an
express condition of temporariness and automatic termination may appear to be on a
different street than telling a man off by retrenching him. To retrench is to cut down;
retrenchment cannot occur without trenching or cutting.

A dissection of s. 2 unmistakably broadens the semantics of retrenchment. The key

words are 'termination... for any reason whatsoever.' Whatever the reason, every
termination signals a retrenchment. So the only question is whether or not the
employee's service has been terminated. Aside from the verbal adornment, the
substance is decisive.

In the particular facts and circumstances of this case, the respondent was put back
where he left off, but his new salary would be what he would draw if he was
appointed in the same post in present day.

As for benefits, if any, he was given rank below all permanent employees in that
group and was deemed to be a temporary hand up to now. He was not allowed to
claim any advantages in the matter of seniority or other priority among temporary
employees on the ground that his retrenchment was being declared invalid by this
Court. As for the respondent's salary, he will have to pursue other remedies, if any.

Q4. Discuss among your group and come to a broad-based decision on what
the group would have decided if it decided the case.

In thus case the Supreme Court for the first time gave a broad interpretation to the
definition of retrenchment, which brought a lot of protection to the workers who were
engaged with deliberate breaks in service for more than 240 days in a calendar year
without any compensation. This judgment gave relief to a number of workers who
had been sent out without even minimum statutory benefits. The social justice and
labour jurisprudence in keeping with the Constitution come out prominently in this
judgment, where the learned judges observe that to protect the weak against the
strong, this policy of comprehensive definition has been effectuated. Repeated
attempts by the powerful employers to see that the scope of this judgment is
narrowed down, have failed.

K.N. Mudaliyar, J., who considered the petition, allowed it on the view that although
there was no separate order terminating the respondent's services, the provision in
the appointment order aforesaid bringing about an automatic termination amounted
to a termination and a "retrenchment" within the meaning of the term as defined by
Section 2(oo) of the Industrial Disputes Act. He quashed the appointment order, but
said that he would forbear from giving any further direction.

It may be noted that though no separate order by an employer is issued, still,

because termination of service is provided for and agreed to that it should take place
on a specified date, the workman is given the retrenchment benefit. That is another
indication, in our opinion, against the contention of the appellant restricting the scope
of retrenchment for purposes of the Industrial Disputes Act.

The conclusion of this trial was that a workman cannot be retrenched without
payment and has to be compensated as prescribed in Section 25B (2) of the
Industrial Dispute Act. We are, therefore, of opinion that the respondent's stand is
correct, namely, that he was entitled to retrenchment compensation and that
considering as it was not paid, but nevertheless he was terminated, the termination
would be invalid.