D.K. Yadav v J.M.A. Industries Ltd (1993)

Almost every set of certified standing orders in the country contained a clause of this kind: a workman who overstays his sanctioned leave, or is absent without leave beyond a stated period, loses his lien on his appointment and is deemed to have abandoned his employment, his name being struck off the rolls.

The attraction for an employer is obvious. It is not a punishment; it is said to operate automatically, on the happening of a fact. If that is right there is nothing to enquire into — no charge-sheet, no hearing, no domestic enquiry, no s. 11A; and because the employer says the workman abandoned his job rather than being retrenched, no s. 25F either. The clause was the standard route to a dismissal without a dismissal.

D.K. Yadav closes that route. It holds that such a clause cannot operate without an enquiry, that natural justice is read into it, and that Art. 21's protection of livelihood requires a just, fair and reasonable procedure before employment is taken away.

The appellant, D.K. Yadav, was a workman employed by J.M.A. Industries Ltd. He had been granted leave, and the dispute arose out of what happened when it expired.

His case was that he presented himself for duty on 3 December 1980 and was prevented from entering the factory at the gate; that he returned day after day, from 3 to 12 December 1980, and was refused entry each time. On his account he was not absent at all — he was locked out and then treated as though he had absconded.

The management said he had simply not returned. It relied on clause 13(2)(iv) of its certified standing orders, under which a workman absent without sanctioned leave beyond the period granted loses his lien on his appointment unless he reports within eight calendar days with a satisfactory explanation, and on the expiry of the eight days is deemed to have automatically abandoned his service.

Applying that clause, the management issued a letter dated 12 December 1980, served on 19 December, terminating his services. There was no charge-sheet, no enquiry, no notice of any allegation and no opportunity to explain — none of which, it said, was necessary, because the standing order operated of its own force.

On the reference, the Labour Court held that the appellant had failed to prove that he had been prevented from entering, upheld the termination under the standing order, and held that it was not a retrenchment.

Note the shape of the case, because it is what makes the decision strong. The Labour Court had found against the workman on the facts. The Supreme Court nevertheless set the termination aside — because the employer had never given him the chance to establish those facts before deciding against him.

1. Can a certified standing order providing for automatic loss of lien and deemed abandonment operate without any enquiry and without hearing the workman?
2. Do the principles of natural justice apply where the standing order says nothing about them?
3. Does Article 21, which protects the right to livelihood, require that employment be taken away only by a just, fair and reasonable procedure?
4. What relief follows?

For the workman. The clause operates not on a bare fact but on a conclusion — that the workman was absent without sanctioned leave and that his explanation is unsatisfactory. Whether he was absent at all, whether he reported and was turned away, and whether his explanation is satisfactory are questions of fact on which he is entitled to be heard. To decide them behind his back and call the result automatic is arbitrary, offending Art. 14; and because the consequence is loss of livelihood, Art. 21 as well.

For the management. The standing order is certified — a statutory instrument binding on both sides. The consequence follows on the facts occurring, so no decision has to be made and there is nothing to which natural justice can attach; the termination is not a punishment, so the disciplinary machinery does not apply; and Part III is not enforceable against a private company.

The appeal was allowed. The Court set aside the award of the Labour Court and quashed the termination letter dated 12 December 1980. The reasoning has three limbs and all three must be given.

1. A deeming or automatic-termination clause does not dispense with an enquiry. Whether a workman has in fact abandoned his employment, or has overstayed with or without justification, is a question of fact on which he is entitled to be heard. The employer must give him notice, tell him the ground, and hear his explanation before acting. A clause cast in automatic language merely describes the consequence which follows after the facts have been properly determined.

2. The principles of natural justice are read into the standing order. In the Court's own words, they must be read into standing order 13(2)(iv), or "it would become arbitrary, unjust and unfair violating Article 14". No decision affecting a person's rights may be taken without first informing him of the case against him and giving him an opportunity to put his case; "the cardinal point that has to be borne in mind, in every case, is whether the person concerned should have a reasonable opportunity of presenting his case and the authority should act fairly, justly, reasonably and impartially". Nothing in the standing order excluded natural justice, and silence does not exclude it.

3. Article 21 is engaged. "Article 21 guarantees right to life which includes right to livelihood, the deprivation thereof must be in accordance with just and fair procedure prescribed by law conformable to Articles 14 and 21 so as to be just, fair and reasonable and not fanciful, oppressive or at vagary." A termination effected without notice or hearing is not such a procedure.

Relief. The Court directed reinstatement and 50 per cent of back wages, payable within three months, and explained the reduction: the management had held no enquiry and given no opportunity, but the appellant was also partly to blame for the situation, and in those circumstances half the back wages met the ends of justice. The employer was left free to hold a proper enquiry into the absence.

The ratio is that a power conferred by a certified standing order to terminate employment on the footing of deemed abandonment or automatic loss of lien cannot be exercised without complying with the principles of natural justice — notice of the ground and an opportunity to be heard — because the right to livelihood is part of the right to life under Art. 21 and can be taken away only by a procedure which is just, fair and reasonable.

That was necessary to the decision — the only ground on which the termination could be set aside, the Labour Court having found the facts against the workman. The Art. 14 arbitrariness limb and the Art. 21 livelihood limb are both ratio: two routes to the same conclusion, and the Court relied on both. The obiter includes the wider observations on the obliteration of the distinction between quasi-judicial and administrative functions.

The case is not authority that a standing order permitting termination for absence is void; it is authority that such a standing order must be operated fairly. Nor is it authority that back wages follow automatically — the express reduction to 50 per cent shows the opposite.

The move that decides the case is the recharacterisation of the clause. The employer said it operated on a fact; the Court held it operated on a finding. Once someone has to decide whether the workman was absent, whether the absence was without sanctioned leave, and whether any explanation is satisfactory, the employer is exercising a power of decision that visits civil consequences on another — and every such power carries the duty to hear. The word "deemed" does not exempt the decision-maker; it describes what happens once the decision is properly made.

The second move is the constitutional grounding, and this is where the case earns its place on a syllabus. The Court did not rest on the common law of natural justice alone. It located the duty in Art. 21 by way of the right to livelihood recognised in Olga Tellis v Bombay Municipal Corporation (1985) and the just, fair and reasonable procedure requirement of Maneka Gandhi v Union of India (1978), drawing also on Delhi Transport Corporation v D.T.C. Mazdoor Congress (1991), where a Constitution Bench struck down a power to terminate a permanent employee by notice without reasons or hearing, and on A.K. Kraipak v Union of India (1970).

The third element is the link to retrenchment. The Court relied on Punjab Land Development and Reclamation Corporation v Presiding Officer, Labour Court (1990, Constitution Bench), which gave "retrenchment" in s. 2(oo) its wide meaning, and on Robert D'Souza v Executive Engineer, Southern Railway (1982) and Delhi Cloth & General Mills Ltd v Shambhu Nath Mukherjee (1978), holding that striking a name off the rolls for absence is retrenchment.

Put those together and the escape route closes. An employer who removes a workman for absence must satisfy either the disciplinary route — charge-sheet, enquiry, natural justice, subject to s. 11A — or the retrenchment route — notice, compensation and notice to Government under s. 25F. He cannot avoid both by calling the removal an automatic cessation. That is the sentence to write in an exam.

A caution worth a mark. D.K. Yadav applies Art. 21 to a private employer's standing order, which is striking since Part III is ordinarily enforced against the State. The justification is that the standing order derives its force from a statute, and a power that exists only because a statute gives it must be exercised consistently with Part III.

D.K. Yadav has effectively ended the "automatic termination" device. Three consequences are worth naming.

Standing orders were read down. Where a certified standing order retained deeming language, tribunals read the natural-justice requirement into it. The clause survives as a description of the consequence; it no longer works as a substitute for procedure.

The overlap with s. 11A became clear. Once the removal is treated as disciplinary, s. 11A applies. And by Workmen of Firestone Tyre & Rubber Co v Management (1973), an employer who held no enquiry may still lead evidence before the tribunal — provided he asks at the earliest opportunity, in his written statement (KSRTC v Lakshmidevamma, 2001, Constitution Bench). So a D.K. Yadav breach is not automatically fatal to the employer's case on the merits; it is fatal to his reliance on the standing order as self-executing.

Relief was moderated. The 50 per cent back wages order has been widely followed; the later line, including U.P. State Brassware Corporation v Uday Narain Pandey (2006), is that reinstatement with full back wages does not follow automatically from an illegal termination.

Two of the three statutes engaged were repealed on 21 November 2025 by IR Code 2020, s. 104(1): the Industrial Employment (Standing Orders) Act 1946 (s. 104(1)(b)) and the Industrial Disputes Act 1947 (s. 104(1)(c)). The third — the Constitution — was not.

The case survives the repeal, and survives strongly, because its central holding is constitutional. Article 21's protection of livelihood and the requirement of a just, fair and reasonable procedure are untouched by the repeal. Whatever instrument confers the power to terminate — a standing order certified under the 1946 Act or under the Code — the power is statutory and must be exercised consistently with Arts. 14 and 21, so D.K. Yadav applies to the Code's standing orders in exactly the terms in which it applied to the old ones.

The successor chapter is IR Code 2020, Chapter IV — "Standing Orders", ss. 28 to 39. The scheme is recognisably the same:

• s. 28(1) — the Chapter applies to every industrial establishment wherein three hundred or more workers are employed, or were employed on any day of the preceding twelve months. This is the substantive change: the Standing Orders Act applied at 100 or more, so the threshold triples and many establishments now fall outside certified standing orders altogether.
• s. 29 — the Central Government makes model standing orders, and until an establishment's own orders are certified the model orders are deemed to be adopted.
• s. 30 — the employer prepares draft standing orders within six months of commencement, based on the model orders and covering every matter in the First Schedule, after consulting the Trade Unions or the recognised negotiating union or negotiating council; where he simply adopts the Central model order it is deemed certified (s. 30(3)).
• First Schedule, items 8 and 9 — standing orders must provide for "Termination of employment, and the notice thereof" and "Suspension or dismissal for misconduct, and acts or omissions which constitute misconduct". So a clause of the D.K. Yadav kind can still be made under the Code — and is still subject to D.K. Yadav.
• s. 37 — questions of application or interpretation go to the Tribunal, whose decision is final and binding.
• s. 38 — new and important. Where a worker is suspended pending investigation or inquiry into charges of misconduct, it must ordinarily be completed within ninety days, and subsistence allowance is payable at 50 per cent of wages for the first ninety days and 75 per cent thereafter where the delay is not attributable to the worker.

Two further mappings complete the picture. The s. 11A power is now IR Code s. 50 — where the Tribunal is satisfied that an order of discharge, dismissal "or otherwise termination" was not justified it may set it aside, reinstate on terms, or award a lesser punishment in lieu, with a new interim relief power in s. 50(2). The s. 25F route is now IR Code s. 70 read with s. 2(zh). So the proposition maps across cleanly: an employer who removes a worker for absence must satisfy either a fair enquiry under Chapter IV standing orders, subject to s. 50, or the retrenchment route under s. 70.

Under the Code. IR Code 2020, Chapter IV (ss. 28–39) replaces the Industrial Employment (Standing Orders) Act 1946. The change is the threshold: s. 28(1) applies the Chapter at 300 or more workers, against 100 under the old Act. Central model standing orders under s. 29 are the default until certification, and First Schedule items 8 and 9 still require standing orders to deal with termination and misconduct — so deeming clauses of the D.K. Yadav kind remain possible, and remain subject to D.K. Yadav, whose Art. 21 / natural-justice holding is constitutional and survives the repeal untouched. s. 38 adds a ninety-day limit on disciplinary proceedings with subsistence allowance at 50 and then 75 per cent.