Delhi Cloth & General Mills Ltd v Shambhu Nath Mukherjee (1977)

This is the case that puts the striking of a workman's name off the rolls squarely inside s. 2(oo). A management that does not dismiss, does not discharge and does not serve a retrenchment notice, but simply removes a man's name from the muster roll for absence, has nonetheless terminated his service; that termination is retrenchment; and retrenchment without compliance with the two peremptory conditions in s. 25F(a) and (b) is invalid. For a Unit on discharge, dismissal and retrenchment, that is the central proposition: the label the employer uses does not govern, the effect does.

Two supporting points travel with it. First, the Court applies the Standing Order by its own terms — a clause allowing termination after absence for "more than eight consecutive days" cannot be invoked where the man had not been absent that long, and the arithmetic of the calendar decides the case. Second, on the procedural side, the Court holds that merely pleading that a section is ultra vires in a writ application does not dispense with the obligation to state the facts that would raise the point; a constitutional question cannot be sprung for the first time in the Supreme Court on a record that never disclosed it.

The judgment opens with a sentence that fixes its temper: "This is a fight between a Goliath and a dwarf in an Industrial arena."

The workman, Shambhu Nath Mukherjee, was recruited as a labourer in the Store in 1951. After about six months he was promoted Fitter-Helper, and after about a year and a half Motion-Setter, which he remained till 1964.

On 1 October 1964 there was a reorganisation of the establishment and the post of Motion-Setter was abolished. Ordinarily he would then have been retrenched; but under a settlement between the management and the representatives of the workmen no employee was retrenched, the management agreeing instead to offer work "on any other suitable post." Accordingly he was offered, without loss of wages, the job of a trainee on probation for the post of Assistant Line-Fixer (Assistant Grade I).

The management found him unsuitable for that post even after extending his probation up to nine months, and by letter of 31 July 1965 offered him the post of a fitter on the same pay he had drawn as Motion-Setter. That letter closed with the paragraph:

"In case you agree to the above proposal, then your acceptance should reach my office within two days of the receipt of this letter otherwise it will be presumed that the above proposal is not acceptable to you and as a consequence you can be retrenched from the service of the Mills."

The workman was on leave; the letter reached him on 11 August 1965. It was common ground that he worked as a Trainee (Assistant Grade I) up to 14 August 1965. 15 August was a public holiday. On 16 August 1965 he wrote asking for a further chance to show his efficiency, undertaking to resign voluntarily if he failed to improve, and ending:

"So, I hope that you will be kind to inform me without delay regarding the order served on me because I am a displaced person of East Pakistan and unable to stay more without any job."

The management did not reply; the workman also did not report for work. The only answer he ever received was a letter of 19 January 1966, stating that "your name has been automatically struck off the rolls under the provisions of the Standing Orders with effect from 24-8-65, for continued absence without any intimation".

The Court's comment on that silence is itself instructive: it was surprising that the management did not at once tell the workman it could not agree to his proposal, in which case its only alternative was to retrench him; had it done so on receipt of his letter of 16 August 1965 it would have been spared this "tortuous and expensive litigation which may not affect the management but has caused immense hardship to the workman."

The dispute went to conciliation and then to a Reference by the Lieutenant Governor under s. 10(1)(c) read with s. 12(5). The Labour Court made an award on 21 December 1967 reinstating the workman with full back wages, while making clear that "if, the management wants to revert or retrench him it should do so in accordance with the rules and regulations applicable to his case after taking proper proceedings according to rules".

The management's petition under Article 226 was rejected by a single Judge of the Delhi High Court, and its appeal by the Division Bench; hence the appeal by certificate. By the time the Supreme Court heard it, the management had been "persistently fighting him for the last twelve years".

Before the Labour Court the management framed the issue "Whether the dispute is an industrial dispute and the reference is bad"? The Labour Court answered it against the management, holding that under the newly added s. 2A any dispute regarding discharge, dismissal, retrenchment or termination of services of even an individual workman amounts to an industrial dispute, so that the reference could not be rejected merely because it related to an individual workman.

In the Supreme Court the management sought to raise the vires of s. 2A on the ground of legislative incompetence under Item 22, List III, Schedule VII, and on the second day of argument submitted that the appeal must therefore go before a Bench of seven Judges under Article 144A.

The Court refused. The objection could only rest on the factual basis that the dispute had not been espoused by other workmen or by a union — and no such allegation of fact had ever been made. The Reference under s. 10(1)(c) did not ex facie show that it was a reference of an individual dispute under s. 2A; even so, it was open to the management to raise before the Labour Court the issue whether the Administration had in fact referred the matter merely on the workman's own application, and nothing had prevented it from taking the point even before the Conciliation Officer. "Merely taking a ground in the writ application does not dispense with the requirement of stating facts in order to support the legal ground." Had the allegation been made, the Labour Court would have had to call for a report from the Administration, and the workman would have had the opportunity to show that his case was in fact espoused by a substantial number of workmen or by a union.

Before a constitutional question of that order can be raised, "it must be manifest on the records that the question arose on the facts disclosed." The Court declined to treat the appeal as fit for reference to a seven-Judge Bench, holding that there was "no basis for considering the provision of section 2A in this appeal" and that litigation could not be dragged on by permitting the point to be raised for the first time in the Supreme Court without any basis.

The management also pressed that s. 10 offended Article 14. The Court held the matter concluded by Niemla Textile Finishing Mills Ltd v The 2nd Punjab Industrial Tribunal, where a like challenge to s. 10 had been repelled in an exhaustive judgment. Counsel's attempt to distinguish it on the footing that he wished to advance a different ground in support of the same objection failed: "It is certainly easy to discover fresh grounds of attack to sustain the same objection, but that cannot be permitted once the law has been laid down by this Court holding that section 10 of the Act does not violate Article 14" of the Constitution.

The High Court's refusal to interfere under Article 226 was upheld. There was no manifest error of law on the face of the award and no error of jurisdiction; the issue before the Labour Court was one of reinstatement and it was entitled to go into the whole question, which it did.

On the order itself: "On the face of it, the order striking off the name of the workman from the rolls on August 24, 1965, is clearly erroneous." The Standing Order relied on, clause 27(c), read:

"If any workman absents for more than eight consecutive days his services shall be terminated and shall be treated having left the service without notice".

The arithmetic decided it. The workman last attended work on 14 August 1965; 15 August was a public holiday; he was therefore absent only from 16 August. On 24 August 1965 he had accordingly not been absent for "more than eight consecutive days", and the order was "clearly untenable even on the basis of the Standing Orders." The Court expressly found it unnecessary to decide whether "eight consecutive days" in the Standing Orders means eight consecutive working days.

Then comes the proposition for which the case is cited. Striking the name of the workman off the rolls "is termination of his service. Such termination of service is retrenchment within the meaning of section 2(00) of the Act." There was nothing to show that s. 25F(a) and (b) had been complied with, and those provisions, the proviso apart, are mandatory: "any order of retrenchment, in violation of 'these two peremptory conditions precedent, is invalid."

1. A constitutional ground — here, the vires of s. 2A — cannot be entertained where the party never pleaded the facts on which it depends; the request for reference to a seven-Judge Bench under Article 144A was refused.
2. The challenge to s. 10 under Article 14 was concluded against the management by Niemla Textile Finishing Mills, and could not be reopened on a fresh ground of attack.
3. An order under the Standing Orders could not be made against a workman who was not absent for "more than eight consecutive days"; on the calendar, this workman was not.
4. Striking a workman's name off the rolls is termination of service, and such termination is retrenchment within s. 2(oo); retrenchment in violation of the mandatory conditions precedent in s. 25F(a) and (b) is invalid.
5. The award of reinstatement with full back wages stood. The appeal was dismissed with costs.

Termination of service is to be judged by its effect, not by the administrative form given to it: removal of a name from the rolls for alleged absence is termination, and therefore retrenchment within s. 2(oo), attracting the mandatory conditions precedent of s. 25F(a) and (b), non-compliance with which renders the order invalid. A Standing Order authorising termination after a stated period of absence operates only when that period is actually complete. And a ground of unconstitutionality must be supported by pleaded facts before it can be argued at all.