Holding

The termination was a retrenchment, not a closure; the pre‑conditions of Section 25F were not complied with, rendering the retrenchment void and the Tribunal’s award correct.

Summary

Niranjan Dass, a senior clerk of Gammon India Ltd., was served notice of termination on the ground of a recession in business, effective 14 October 1967. The dispute was referred to an Industrial Tribunal, which held that the termination was an illegal retrenchment and declared Dass to remain in service with entitlement to back wages and benefits. The company appealed; a Single Judge treated the case as a closure of the Delhi office under Section 25FFF of the Industrial Disputes Act and set aside the award. The Delhi High Court Division Bench reversed that decision, holding that the notice indicated surplus due to reduced work, not closure, making it a retrenchment under Section 25F, and that the statutory pre‑conditions for a valid retrenchment were not met. The Supreme Court upheld the Division Bench, confirming the Tribunal’s award, ordering the company to pay back wages, terminal benefits, interest, and costs, and dismissed the appeal.

Issues considered

Whether the termination of Dass's services was a retrenchment under Section 2(oo) and Section 25F of the Industrial Disputes Act, 1947.
Whether the case fell within the closure provisions of Section 25FFF, which would obviate the requirement of compensation.
Whether the statutory pre‑conditions for a valid retrenchment under Section 25F were complied with.
Whether Dass was entitled to back wages, benefits and interest following the void termination.

Legislation cited

Industrial Disputes Act, 1947s. 25F, s. 25FFF, s. 2(oo)

Subjects

retrenchmentindustrial disputetermination of serviceclosure of undertakingcompensationback wagesIndustrial Disputes ActSection 25FSection 25FFF

Judgment

•
959

· GAMON INDIA LIMITED
A
v.

NIRANJAN DASS

December 5, 1983 . .·
B
[0.A. DESAI, R.B. MISRA AND RANGANATH MISRA, JJ,J

Industrial Disputes Act 1947, Section 2 (oo) retrenchmetJt-What is-
Services terminated on account of recession in work':'"·Termiliation whether O!flOUnts
to retrenchment.
c
The respondent was employed by the appellant!Company as a Senior
Clerk till he received a notice terminating his services. The notice stated that
on account of reduction in volume of the business of the Company as a result
of recession, his serviceS were being terminated.

On a reference by the Government, whether_ the retrenchment of the D
respondent was unjuStified or illegal the Industrial Tribunal held that since the
conditions for a villid retrenchment have not been complied with, the respon·
dent continued to be in service .
•
·Jn a petition undei Acticle 226, a Single Judge held that since the
termination OT the services was consequent upon the closure of the Delhi office, E
the case would be governed by Section 25 FFF of the Industrial Disputes Act
1947 which does not prescribe payment of co1npensation as a cOndition prece-
dent to a valid termination of service by way of retrenchment.

In the Letters Patent Appeal, the Division Bench set aside the judgment
of the SingJc Judge on the ground that the reference to the Industriat Tribunal
was to consider whether the retrenchment was illegal or unjustified and there- .F
· fore it was not open to the Single Judge to come to the conclusion that the case
waS one of closure governed by Section 25 F FF. The Division Bench therefore
restored the Tribunal's award.

Dismissing the Appeal of the Company, ·

HELD: 1. The award of the Tribunal was correct and unassailable.
G
The respondent had become surplus on account of reduction in volume of work
and that constitutes retrenchment· even in the traditional sense of the term
[963 HJ

Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor Union, [1956) H
f SCR 172; State Bank of India v. N. Sundara Money, [1976] 3 SCR 160; Hindustan
Steel Ltd. v. The Presiding Officer, Labour Court. Orjssa and others, [1977] 1 SCR
S86; Santosh Gupta v. State Bank of Patiala, (1980] 3 SCR 340; Delhi Cloth and
960 SUPREME COURT REPORTS (1984) I 9,C.ll.

Genrol Mills Ltd. v. Shambu Nath Mukerjee, [1978] l SCR 591; Mohah. Lal v.
Manaffement of M/s Bharat Electronict Ltd. [1981] 3 SCR 518; L. Robert D'suoza
.·~ v. The Executive Engineer, Southirn Railway & Anr. [1982] 3 SCR 251, referred '
• t.o.

2. Tho pre-requisite for a_ valid retrenchm.ent as laid down in Section
'25 F has not been complied with, and therefore the retr"nchmeot bringing about
termination.of service ia ab ~nitio :void. [964 E]
b
in the instant _case, the n·otice fecites that as a result of the recession in
the volum_e of the work of the company, the services of the respondent would
not be required by tho company after October 14, 1967 and that this notice con-
templated by section 25F ca). Not even on~ word is Stated in the notice that the_
office·to which the reS:pondent was attached was -in the process of being closed
down, so his seri<ices.would no more be required. [963 D-E) •

• • for the reasons mentioned in the notice is
3. The terminatiori of service •

n 0t covered by any of the Clauses (a), (b) and (c) of Section 2 (oo) which
defines retrepchment anjf it is now well-settled that where the termination of
service does not fall wJthin any of the excluded categories, the termination
would be ipso facto retrenchment. It was not even attemPted to be urged that
D the case of the respondent would fatl in any of the excluded categories. It
is there!or.e, indisputably a case of retrenchment. [964 C-D]
)

4 (i). The appellant will have to establish the fact that the respondent
has· reached the age of superannuation and that physical. re-instatement is not
· possible. [965 A] ·

(ii). The respondent 'will be entitled to all backwages including benefit of
rCvised ·wag'es or salary i-f there is revis_ion of pay-~ales with yearly increment,
revised d~arriess _al1owa.i:ice or vafiable dearness allowance and all terminal
benefits if be waS reached the age of superanriuaiion i;uch as Provident Fund, •
Gratuity etc. Back wap should be calculated as if the respondent continued
in sorvico uninterrupted.' [965 B-CJ

(iii). Tho respondent has been unlawfully kept out of service. The
appellant-company shall therefore pay aU the arrears with 12 per cent; interest
from the date the amount became due and payable tjll realisation. [965 DJ

CIVIL APPELLATE JURISDICTION : Civil Appeal .. No. 1741 of
1980. ~

Fr9m the Judgment and Order dated. 16th January, 1980 of the
High Court of Delhi at New Delhi, in Letters Patent Appeal No. 25
H of 1970. .
. ' U.R. Lalit, V,N.. Ganpule and. Mrs. V.D. Khanna for the
Appellant,
GAMMON INDIA LTD. v. NIRANJAN DASS (Desai, J.) 961

Jitendra Sharma for the Respondent.
A
The Judgment of the Court was -Oelivered by

.DESAI; J. Respondent Shri Niranjan Dass was employed as a
Senior Clerk by the appellant-company as per the appointment order
contained in the letter dated April 10, 1962. The letter of appoint- B
ment inter alia provided that the respondent may be· posted any-
where in India or abroad as per the requirements of the company and
it was signed by its Zonal Manager, Central Zo.ne, Delhi. Respondent
• continued to serye in that capacity when on September 14, 1967, he
was served with a notice terminating his services. The notice reads
as under :
c
"Due to the reduction in the volume of business of
the Company as a result of the recession in· (sic) services .
will not be required by the company after the 14th'
October,'1967, and this may be treated as statutory notice {)
of <me month of termination of your.service.

Your leave shall run.· concurrently with the notice
period, and you may avail of.leave due to you, if any,
during the notice period.
E
Personnel Section at Head Office have been advised
to settle your dues, and you may write to them in the
. matter.

We take this opportunity to thank you for your past F
s.ervices, and it is very unfortunate that tl;ie present
circumstances have compelled us to issue this notice ..

Should it be possible for us to offer you a job at any
of our works sites at a later date, we shall inake you a
fresh offer at that time." G

Respondent raised an indµstrial dispute and the appropriate Govern-
ment by the order dated May 30, 1968 referred the industrial dispute
for adjudication to the Industrial Tribunal. The reference was
couched in the fol!owin$ language.
·-
962 ·SUPREME COURT REPORTS (1984) 1 s.c.R.
. .
"Whether the retrenchment ·of Shri Niranjan Dass is
A unjustified or illegal and if so, what directions are
necessary in this respect."

By the award dated February 25, 1969. ihe Industrial Tribunal
held that the retrenchment of the respondent was illegal ~nd unjusti-
fied and gave a declaration that he continues to be in service of the
B appellant-company and is entitled to: his wages till he ii lawfully
retrenched. Appellant-company challenged the award in Civil Writ
No. 462 of 1969 filed by it in the High Court. of Delhi. A learned
Single Judge held that as the Delhi·office of the appellant-company
was closed, the case of the respondent would be ·governed . by Sec. t •
c 25FFF being termination consequent upon closure, and therefore
payment of compensation was not a condition precedent and the
termination of service was valid, The learned Judge accordingly set
aside the award .and remitted the matter to the Tribunal to decide
what directions, if any, are necessary in respect of reterenchment of
the respondent in the light of the discussion in the judgment Respon-
D dent preferred Letters Patent Appeal No .. 25 of 1970 against the
decision of the learned Single Judge. A Division' Bench of Delhi
High Court held that the reference made by the appropriate Govern-
ment required the Indust'rial Tribunal to consider whether the
retrenchment. was illegal or unjustified and therefore it was ·implicit
.E in the reference itself that it was a·case of retrenchment, validity' of
which to be examined in the reference and therefote it was not open
to the learned Single Judge to change the 'base' of the reference an\!
to come to the conclusion that the case was one of closure of the
.the lndustrial undertaking. governed by Sec. 25FFF of !>he Industrial
.
. Disputes Act. Approaching the matter from this angle, the Divison
F Bench set aside the decision of the learned Single Judge and .restored
the award made by the Industrial, Tribunal. Hence this appeal by the
company by special leave. •
The Industrial Tribunal held that respondent was retrenched
from service by the appellant and the pre-conditions for a va(id
retrenchment were not complied with and therefore the respondent
was entitled to a· declaration that he contines ro· be in service with all
the benefits flowing from the said declaration. · A· learned Single
Judge of the High Court interfered with this award ~olding that the
appellant-company had closed its Delhi· office and therefore the
termination of service was consequent upon the closure and even if
it constitutes retrenchment, the case would be governed by Sec.
;!SFFF whfoh does not prescribe payment of compensation as a
•·
GAMMON INDlA LTD. v. NIRANJAN DASS (Desai, J.) . 9~3

't . condition-precedent to a valid termination of service by way of
teterncbment. In the Letters Patent Appeal at the inst.ance of the A
respond~nt, the Division Bench set aside tlie judgment of the .learned
i Single Judge holding that it was not open to the learned Single Judge
to bold that it was a case of closure covered by Sec. 25FFF
because it was implicit in the reference that the .case was one of
retrenchment and the only question with the Industrial Tribunal was
B
called upon to.. deci.de. was whether the retrenchment was unjustified
;.. · or illegal. It is not necessary to examine the view expressed·. by the
· Divison Bench of tlie High Court whether the assumption underlying
·an order of reference is unquestionable at the hearing of the
reference. The question, however, is wheth~r the learned Single
Judge, who .interfered with the award of the Tribunal was justified in c

~
coming to the conclusion that the case was one of closure covered
by Sec. 25FFF or the Industrial Tribunal was right in holding that
·it i~ a case of retrenchment covered by Sec. 25F of Industrial
I
·Disputes Act. This point can be answered by mere refrrence to the
notice ser~ed by the appe!lant·company on the respondent intimating
to him that his services will no more be required effective from
D
October 14, 1967. The.notice as a whole ltas been extracted herein-
before. The notice recites that as a result of recession in the volume
of work oi'the company, services of the respondent would nO" more
be required by the company after October 14, 1967 and this notice
n\ay be treated as a statutory notice as contemplated by Sec. 25F(a). E
There is not even a whisper in the notice that as the Delhi office is
being closed down, the services of the respondent would not be
required. An attempt was made while.leading evidence before. the
Industrial Tribunal to show that the Zonal office at Delhi was
closed on January 31, 1968 whil.e the Central Zone' office was closed
somewhere in October, 1967. If by September, 1967, the appellant- F
company had resolved to close the office at Delhi to which the
respondent was attached, it is unthinkable that ·that aspect would noi
be recited in the notice. The necessity for termination of service of
the respondent recited in the notice was recession in the work hand-
led by the company. 'Not even one word is stated in the notice that
the office to which the respondent was attached was in the process of
being closed down, so his services would no more be required. On a
true construction of the notice, it would appear that the respondent
.had become surplus on account of reduction in volume of work and
that constitutes retrenchment even in the traditional sense of the term H
as interpreted in Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills
SUPREME COURT REPORTS (1984] 1 s.C,I\.
•
Mazdoor Union(') though that view does not'hold the field. in view
A · of the recent decisions of this Court in State ·Bank of India v.
N. Sundara Money(') Hindustan Steel Ltd.· v. The Presiding Officer,
Labour Co1,1rt, Orissa and Others;(') Santosh Gupta v. State Bank of
• Pat/a/a;(') Delhi Cloth and General Mills Ltd. v. Shambu Nath
Mukerjee;(5) Mohan Lal v. 'Management of M/s Bharat Electronics
B Ltd(') and L. Robert D'souza ·v. The Executive Engineer, Southern·
Railway & Anr.(1) The recitals and averments in the notice leave no•
room for doubt that the service of .the respondent was terminated
for the reason that on account of .recession and reduction in the
volume of work of the company, respondent has become surplus.
Even apart from this, the termination of service 'for the reasons
mentioned in the notice is not covered by any of the clauses (a), (b)
and (c) of Sec. 2(oo) which defines retrenchment and it' is by now
well-settled that where the termination of service does not fall within
any of the excluded categories, the termination would be ipso facto
reternchment. It was not even. attempted to be urged that the case
of the respondent would fall in any of the excluded categories. It is
D there indisputably a case of retrenchment.

It is not disputed that the pre-requisite for a valid retrenchment
as laid down in Sec. 25F has not been complied with and therefore
the.retrenchmenLbringing about termination of service is a/1 initio
'·
E void. Viewed from this angle, the award of the Industrial Tribunal
was· correct and unassialable and the learned Single Judge was in
errodn interfering with the same.' Undoubtedly, the Division Bench
of the High Court has set aside the order of the learned Single Judge
and restored the award for reasons ·of its own. However, for the
reasons herein indicated, the decision of the Division Bench in
F Letters.Patent Appeal No. 25 of 1970 is. upheld and ·confirmed and
this appeal must therefore fail and accordingly it is dismissed. ·
'
In the course of hearing of this appeal, it was stated that the
respondent has reached the age of superannuation therefore physical
G re-instatement in service is. not possible. . Appellant will have to

(lY [19561 SCR I 72 .
(2) {1976] 3 SCR 160
(3) [1977] 1 SCR 586
·e (4) [1980] 3 SCR·340
(5) 1197811 SCR 591
• (6) (1981] 3 SCR, 518
(7) .[1982) 3 SCR 251
1
dAMMON INDIA tTo. f, NiRANJAN DASS (Desai, /.) 96~ .

establish that fact but in the event, the appellant shows that under a
valid rule, respondent.,has reached the stage of superannuation and
therefore physical re•instatement is not possible, it is hereby declared
that the respondent shall continue to )le in service un·interruptedly
from the date of the attempted termination of seruice till the date of
sup~rannuation. - Resp~ndent won.Id be entitled to all back wages
including the benefit o~ revised wages or salaiy if during the period
there is revision of p_ay'scales with yearly focrement, revised dearness
allowance or variable dearness allowance and. all terminal b"enefits if
. he .has reached the age .of superannuation such as Provident Fund,
Gratuity etc. Back wages should be calculated as. if the respondent .·
continued in service uninterrupted_ He is also entitled to "leave
encashment and bonus if other workmen-in the same category were c

~
paid the same. It appears that the respondent h.as been unlawfully
kept out o[ service, therefore it is but just that the appellant-company
shall pay all the ·arrears as calculated according to the directions here·
in given with 12% interest from the date the amount became due and
payable till realisation. Appellant shall also pay costs - to the
i respondent quantified at Rs. 5,000.· The appellant is directed to ·pay D
! the amount as herein directed to be paid within 3 months.from today.'.
'
Mr: Jitendra Sharma, learned counsel for the respondent stated
that the costs awarded to the respondent be paid to the legal Aid
Cell set up by Indian Association of Lawyers in colloboration ·with E
Woinens' Council. ·

Order accordingly.

·Ns.K. Appeal dismused.
F

'

•
•