L. Robert D'Souza v Executive Engineer, Southern Railway (1982)

This is the third and, for the casual or daily-rated worker, the most important case in the s. 2(oo) line. Three things make it worth a whole answer.

First, it completes the story of the previous case: the Kerala Full Bench decision bearing this same name had adopted the "surplusage" reading of retrenchment and was overruled in Santosh Gupta; here the same litigant's appeal came to the Supreme Court and the High Court's judgment was set aside.

Second, it holds that a "deemed termination" for unauthorised absence — the striking of a name off the rolls — is retrenchment, and that a service rule permitting such a termination must be read subject to the Act.

Third, it holds that a long-serving daily-rated casual labourer is a workman entitled to s. 25F, and delivers a rebuke to a rule which allowed a man to serve for decades without ever ceasing to be "casual".

The appellant, L. Robert D'Souza, joined the Southern Railway as a gangman at Mangalapuram on 1 July 1948 and was transferred to various places in the course of his service. He was General Secretary of the Southern Railway Construction Workers Union, Ernakulam, which had submitted a charter of demands; in or about March 1970, while working as a Lascar at Ernakulam, he was transferred to Podannur in Tamil Nadu by way of punishment for his union activities. The transfer was cancelled after the cause was espoused by the trade union leader A.K. Gopalan; he rejoined at Ernakulam on 20 February 1971, and by letter of the Ministry of Labour dated 23 April 1974 his entire absence from 8 March 1970 to 19 February 1971 was directed to be treated as duty.

He and others similarly placed were treated by the administration as daily-rated casual labour, which meant that on approaching superannuation they would be denied full retirement benefits. They filed a writ petition in the High Court of Kerala praying that they be treated at least as temporary railway servants with the attendant benefits.

While that petition was pending, and in connection with the demand that the Central Pay Commission benefits be extended to their category, the appellant undertook a fast, which he broke on 28 September 1974 at the intervention of the Assistant Labour Commissioner. Taking advantage of his absence, the Executive Engineer (Construction), Ernakulam, by letter dated 8 October 1974, intimated that his services were deemed to have been terminated with retrospective effect from 18 September 1974 on the ground of unauthorised absence. The letter, which the Court said had an important bearing on the appeal, read:

"You have absented yourself unauthorisedly from 18.9.1974 and hence your services are deemed to have been terminated from the day you have absented yourself. Please note. Since you are no longer on the rolls of this office you should vacate the quarters allotted to you immediately failing which action will be taken to evict you."

By then he had rendered continuous service for some twenty-six years. A single Judge dismissed the petition; on appeal the matter was referred to a Full Bench, which held there was no retrenchment and dismissed the appeal. Hence the appeal by special leave.

1. Does a "deemed termination" for unauthorised absence, striking a workman off the rolls, constitute retrenchment under s. 2(oo)?
2. Does the notice required by s. 25F(a) stand dispensed with by reason of s. 9A and its proviso?
3. Had the appellant, a daily-rated casual labourer of twenty-six years' standing, acquired the status of a temporary railway servant; and does it matter?

The Court began by pointing out that the construction placed by the Kerala Full Bench on s. 2(oo) — that retrenchment "means only the discharge of surplus labour or staff by the employer for any reason whatsoever" — "is no more good law", the Full Bench decision having been "specifically overruled by this Court in Santosh Gupta v State Bank of Patiala".

Counsel for the Railway again urged that the later decisions ran counter to the Constitution Bench in Hariprasad Shivshankar Shukla and were per incuriam. The Court refused to reopen it, noting that the exercise had been undertaken on five distinct occasions — in Sundera Money, Hindustan Steel Ltd, Santosh Gupta, Delhi Cloth & General Mills and Mohan Lal v Bharat Electronics Ltd — and that "there is neither apparent nor real conflict" between Shukla and the later five decisions, which "stand in harmony with each other" and take note of the amendment to the Act. To re-examine it "would be sheer waste of time and merely adding to the length of the judgment". The concurring observation of Pathak J in Surendra Kumar Verma, reserving his agreement with the interpretation in Santosh Gupta, was noticed and held not to affect the position, the majority there having affirmed the earlier decisions.

The settled law was therefore restated: the expression "termination of service for any reason whatsoever" in s. 2(oo) "covers every kind of termination of service except those not expressly included in s. 25F or not expressly provided for by other provisions of the Act such as ss. 25FF and 25FFF". The excepted categories are (i) termination by way of punishment inflicted pursuant to disciplinary action; (ii) voluntary retirement; (iii) retirement on superannuation where the contract so stipulates; and (iv) termination on the ground of continued ill-health.

From that, two conclusions follow. "Once the case does not fall in any of the excepted categories, the termination of service even if it be according to automatic discharge from service under agreement would nonetheless be retrenchment." And, on the authority of Delhi Cloth & General Mills Ltd v Shambhu Nath Mukherji, "it must as a corollary follow that if the name of the workman is struck off the roll, that itself would constitute retrenchment".

The Court observed that this emerging legal position "alone would be sufficient for us to allow the appeal".

It was argued that notice under s. 25F(a) was unnecessary in view of the proviso to s. 9A. The Court rejected this. Section 9A is "an independent provision having no co-relation with s. 25F". It obliges an employer who intends to effect a change in the conditions of service in respect of a matter specified in the Fourth Schedule to give notice in the prescribed manner and to wait twenty-one days; if the proposed change does not cover a Fourth Schedule matter, s. 9A is not attracted at all.

"A careful reading of ss. 9A and 25F makes it clear that when a workman is retrenched, no change in his conditions of service is effected. No item in the Fourth Schedule which sets out the conditions of service covers the case of retrenchment. In fact retrenchment is specifically covered by item 10 of the Third Schedule." Section 9A not being attracted, no question of exemption under its proviso could arise.

The Court restated the three conditions of a valid retrenchment under s. 25F: (a) subject to the proviso, one month's notice in writing specifying the reasons for retrenchment, or wages in lieu of notice; (b) compensation according to the measure in the clause, payment to be simultaneous with the retrenchment; and (c) notice in the prescribed manner to the appropriate Government.

None had been satisfied. "The very letter of termination of service shows that services were deemed to have been terminated from a back date, which clearly indicates no notice being given, no compensation being paid and no notice being given to the prescribed authority." The termination, being retrenchment, was for failure to comply with s. 25F void ab initio.

Under Rule 2501(b)(i) of the Railway Establishment Manual, casual labour employed on construction work other than work-charged projects who render six months' continuous service without a break acquire the status of temporary railway servant by the operation of a statutory rule, and the same is true even of seasonal labour; the rule expressly covers staff paid from contingencies. The test of eligibility is "the period of continuous work put in by each individual labour on the same type of work and not the period put in collectively by any particular gang or group of labourers". Once that status is acquired the service may be terminated only as provided by Rule 2301, and Rule 2302 prescribes the mode and manner of doing so.

On the facts the Court held: the appellant had acquired the status of temporary railway servant long before the termination, so his service could not have been terminated under Rule 2505; he had never worked on a "Project" but in a Construction Unit, which is a regular unit and cannot be equated with a project, "every construction work does not imply Project"; persons in the casual labour category cannot be transferred, yet he had been transferred on innumerable occasions; and three co-petitioners had been informed that they were treated as in regular employment while he alone was terminated, so that he "received discriminatory treatment offending Article 14 and 16 of the Constitution".

The Court then tested the matter on the contrary assumption as well. Even assuming he remained casual labour, he was a workman within s. 2(s) — doing manual or technical work, on wages below Rs. 500 — and had rendered continuous service well over one year, indeed over twenty years, so the eligibility condition in s. 25F was satisfied. "It is immaterial that he is a daily rated worker." And "notwithstanding the fact that Rule 2505 would be attracted, it would have to be read subject to the provisions of the Act."

There was a further and independent ground: "Absence without leave constitutes misconduct, and it is not open to the employer to terminate service without notice and inquiry or at any rate without complying with the minimum principle of natural justice." Rule 2302 having prescribed the procedure for terminating a temporary railway servant, and that procedure admittedly not having been followed, the termination was void and invalid on that footing too.

Desai J added an observation which is frequently quoted. Rule 2501, "which permits a man serving for 10, 20, 30 years at a stretch without break being treated as daily rated servant, is thoroughly opposed to the notions of socio-economic justice", and it was "high time" that the Railway administration brought this "antiquarian and antediluvian" part of the Manual into conformity with the Directive Principles in Part IV of the Constitution, so that justice and fair play reached "the lowest and the lowliest in Railway administration".

The appeal was allowed, the order of the High Court set aside, and it was declared that the termination of service was illegal and invalid, that the appellant continues to be in service, and that he is entitled to full back wages and costs quantified at Rs. 2,000.

Striking a workman's name off the rolls, or treating his service as automatically terminated for unauthorised absence, is a termination for a reason outside the excepted categories and is therefore retrenchment under s. 2(oo); s. 9A has no bearing on the notice required by s. 25F, retrenchment being a Third Schedule and not a Fourth Schedule matter; a service rule permitting such a termination must be read subject to the Act; and non-compliance with s. 25F renders the termination void ab initio, the workman continuing in service. A daily-rated casual worker doing manual or technical work is a workman and takes the benefit of s. 25F on completing one year of continuous service.