Holding

If the claim for lay‑off compensation has no nexus with the Voluntary Retirement Scheme, proceedings under Section 33C(2) of the Industrial Disputes Act are maintainable even though the employee has retired.

Summary

The appellants, former employees of a government‑owned sugar undertaking, opted for a Voluntary Retirement Scheme (VRS) and received the special compensation prescribed by a Government Order. They later claimed lay‑off compensation for a period preceding the VRS, filing applications under Section 33C(2) of the Industrial Disputes Act, 1947. The Labour Court dismissed the applications, holding that a retiree was no longer a "workman" under the Act, a view affirmed by the High Court. The Supreme Court examined whether the right to lay‑off compensation, which is unrelated to the VRS, survives the retirement and whether Section 33C(2) can be invoked by a former employee. Relying on earlier decisions, the Court held that the statutory right to lay‑off compensation is not extinguished by a VRS unless expressly waived, and therefore the proceedings under Section 33C(2) are maintainable when the claim has no nexus with the VRS. Because of an apparent conflict between the decisions in National Buildings Construction Corporation and A.K. Bindal, the matter was referred to a larger Bench for definitive resolution.

Issues considered

Whether a workman who has opted for a Voluntary Retirement Scheme ceases to be a "workman" within the meaning of Section 2(s) of the Industrial Disputes Act, 1947 for purposes of filing an application under Section 33C(2).
Whether the right to claim lay‑off compensation, which is unrelated to the VRS, survives the retirement and can be pursued under Section 33C(2).
Whether the earlier Supreme Court decisions in National Buildings Construction Corporation v. Pritam Singh Gill & Ors. and A.K. Bindal v. Union of India create a conflict requiring reference to a larger Bench.

Legislation cited

Andhra Pradesh Relief Undertaking (Special Provisions) Act, 1971
Industrial Disputes Act, 1947s. 2(s), s. 32(s), s. 33C(2)
Payment of Gratuity Act

Subjects

Lay‑off compensationVoluntary Retirement SchemeIndustrial Disputes ActSection 33C(2)Workman definitionMaintainabilityPublic sector undertakingLabour law

Judgment

[2008) 7 S.C.R. 105
,:_ y
A. SATYANARAYANA REDDY AND ORS. A
v.
THE PRESIDING OFFICER, LABOUR COURT, GUNTUR &
ORS.
(Civil Appeal No. 3053 of 2008)
•
• .<(
B
APRIL 29, 2008
(S.B. SINHA AND V.S. SIRPURKAR, JJ.)

Labour laws:
Industrial Disputes Act, 1947; Ss.. 32(S) and 33C(2) and c
G.O. MS.No.25 dated 21.5.2001 issued by Government of
Andhra Pradesh:
Lay-off compensation and benefits under Voluntary
Retirement Scheme to workmen of a Public .Sector
D
Undertaking in terms of a Government Order - Entitlement -
Proceedings u/s. 33 C(2) of the Act - Maintainability of - Held:
Right of workman to claim lay off compensation not denied/·
disputed by Management of the Public Sector Undertaking -
Since, claim of lay off compensation has no nexus with VRS,
proceedings uls. 33 C(2) of the Act would be maintainable - E
However, in view of an apparent conflict on the issue as
apparent in the decisions of the Supreme Court in the case of
National Buildings Construction Corporation vs. Pritam
Singh Gill & Ors. and in the case of A.K. Bindal vs. Union of
-~1

India, the question is referred to the larger Bench,. F
• Appellants were the employees of an Undertaking
of Government of Andhra Pradesh, which was declared
to be a relief Undertaking in terms of Andhra Pradesh
Relief Undertaking (Special Provisions) Act, 1971. The said
G
Undertaking declared lay off compensation to its workmen
for certain period. In the meantime, the State Government
sold the factory run by the Undertaking to a private limited
company, which shifted the factory in the adjoining State
105 H
106 SUPREME COURT REPORTS [2008] 7 S.C.R.

A of Karnataka. The employees working in the erstwhile
factory did not show their willingness to continue to work
in the new factory. The State Government issued an order
providing for special compensation under Voluntary
Retirement Scheme for the employees who did not opt to
s continue their employment in the new factory. Appellant-
employees opted for voluntary retirement under the
Scheme. Accordingly, the special compensation in terms
)S of the Government order was paid to them but the
authorities refused to provide them lay off compensation
C for certain period. The Labour Union filed a writ petition,
which was disposed of by the High Court giving liberty to
the petitioner-Union to file claim petition before the
appropriate forum. The aggrieved workmen filed a claim
petition before the Labour Court claiming lay off
compensation for certain period. The Labour Court did
0
not entertain the claim petitions holding that the same were
not maintainable. A writ petition filed thereagainst was
dismissed by the Single Judge of the High Court and the
appeals filed by the workmen were dismissed by the
Division Bench of the High Court. Hence the present
E appeal.
Appellants-workmen contended that the Labour
Court and consequently the High Court committed a
manifest error in passing the impugned orders insofar as
F they failed to take into consideration that the existing right
of the workmen for obtaining the lay off compensation
payable to them under the! Industrial Disputes Act having
nothing to do with the Voluntary Retirement Scheme and
furthermore having regard to the directions of the High
G Court in the earlier Writ Petition, the proceedings under
Section 33C(2) of the Act was maintainable.
Respondents submitted that in view of the definition
of workman as contained in Section 2(s) of the Industrial
Disputes Act, 1947, the workman having opted for
1

H v oluntary retirement ceased to be the workman of the
•'
A.S. REDDY & ORS. v. THE PRESIDING OFFICER, 107
LABOUR COURT, GUNTUR & ORS.

State and thus the proceedings under Section 33C(2) of A
the Act was rightly held by the High Court to be not
maintainable.
Referring the case to a larger Bench, the Court
' ~
HELD: 1. There cannot be any doubt whatsoever that B
ordinarily upon opting for a voluntary retirement under a
Voluntary Retirement Scheme framed in that behalf, the
workmen would cease to have any claim against the
management. However, the same prima facie would not
mean that a statutory right of opting for lay off c
compensation, unless expressly waived, may continue
to remair;i within the realm of legal right, so as to enforce
the same before a forum constituted unde.r the Industrial
Disputes Act. The Bombay High Court in the case of
Premier Automobiles Ltd. as also this Court in the case of
;., A.K. Bindal proceeded on the basis that an employee
D
having received the amount of compensation without any
demur whatsoever would be estopped and precluded
from raising any other or further claim. (Para 15) [113-E, F, G]
A.K. Bindal and Another vs. Union of India and Others E
(2003) 5 SCC 163 and Premier Automobiles Ltd. vs. PAL VRS
Employees Welfare Association & Anr. (2002) (1) LLJ 527 -
referred to.

- )' 2. The right of the workman to claim payment of lay
off compensation is not denied or disputed. If the said F
claim has no nexus with the Voluntary Retirement Scheme
in a given case, like the present one, it is possible to hold
that a proceeding under Section 33C(2) of the Act would
be maintainable. The question being one of some
importance should be considered by the larger Bench as G
there exists an apparent conflict in the decisions in the
case of National Buildings Construction Corporation* and in
the case of A.K. Bindal*. (Para 18) [116-C, DJ
*A.K. Bindal and Another vs. Union of India and Others
H
108 SUPREME COURT REPORTS [2008] 7 S.C.R.
'
1-·
A (2003) 5 SCC 163 and National Buildings Construction
Corporation vs. Pritam Singh Gill & Ors. (1973) 1 S.C.R. 40 -
referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No.
3053 of 2008. #
8 ~

From the final Judgment and Order dated 13.4.2005 of
the High Court of Andhra Pradesh at Hyderabad in Writ Appeal
No. 820 of 2005.

A. Subba Rao for the Appellants. ....
c
R. Sundravardhan, Manoj Saxena, Rajneesh Kumar
Singhal, Rahul Shukla, T.V. George and Mohanprasad Meharia
for the Respondents. I!!

The Judgment of the Court was delivered by
D
S.B. SINHA, J. 1. Leave granted. il
2. Interpretation of the provisions of Section 33C(2) of the
Industrial Disputes Act, 194 7 vis-;:i-vis a Voluntary Retirement
Scheme framed by the State of Andhra Pradesh is in question
E in this appeal which arises out of a judgment and order dated
13.4.2005 passed by a Division Bench of the Andhra Pradesh
High Court in WritAppeal No. 820 of2005 dismissing the appeal
from a judgment and order dated 21.3.2005 passed by a learned
single judge of the said Court in Writ Petition No. 4196 of 2005.

3. Appellants were the employees of Nagarjuna
Cooperative Sugars Limited, a Government of Andhra Pradesh
Undertaking. It was declared to be a 'relief undertaking' in terms
of Andhra Pradesh Relief Undertaking (Special Provisions) Act,
1971. The management of the industrial undertaking declared
lay offwherefor compensation was to be paid. The Employees'
Union of the said industrial undertaking filed a Writ Petition in
the High Court of Andhra Pradesh questioning a Memo dated
5.1.1998 whereby and whereunder lay off compensation was
denied to the workmen. According to the workmen, that lay ciff
compensation was paid only for the months of June and July
,_ t A.S. REDDY & ORS. v. THE PRESIDING OFFICER, 109
LABOUR COURT, GUNTUR & ORS. [S.B. SINHA, J.]

1995. They claimed existing legal right for obtaining lay off A
compensation for the period 1.8.1995 to 6.9.2002.
4. Before, however, we embark upon the said question,
we may place on record that the State of Andhra Pradesh sold
.. ~~
,., _..(
the said factory to one SCM Sugars Limited. Some of the
workmen were absorbed by the transferee - Company. Out of B
the said absorbed employees, some of them were paid lay off
compensation and some were not. At one point of time, all the
. workmen had shown their willingness to continue to work under
the new management. Later, however, the Government of Andhra
Pradesh permitted the said SCM Sugars Limited to shift the c
factory to the State of Karnataka, as a result whereof, the
workmen lost the opportunity to continue to be employed.
::::\ 5. The Government of Andhra Pradesh issued G.O. Ms .
... No. 25 dated 21.5.2001 providing for a special compensation
D
package for the employees. The said amount of compensation
'
<
was to be paid to the workmen only in the event they had not
opted for employment with the new owner.
6. The benefits provided for under the said Voluntary
Retirement Scheme were stated as under: E
,_4~ "Terminal benefits
The following benefits as statutorily due will be paid as
-'f per eligibility.
i. The balance in the P.F. Account payable as per the F
CPF regulation.
ii. Cash equivalent of accumulated earned leave as
per the rules of the enterprise.

·+- iii. Gratuity as per the provisions of the Payment of G
Gratuity Act or other applicable Rules of the
Organization.
EXGRATIA BENEFITS
~

i) An employee who is re,gular or permanent, whose H
110 SUPREME COURT REPORTS [2008] 7 S.C.R.
1-'

A request for VRS is accepted would be entitled to an
Ex-gratia payment ,equivalent to One and Half months
emoluments (Pay + DA) last drawn, for each
completed year of service or the monthly emoluments
at the time of retirement multiplied by the balance
B months of serviGe left before normal date of
retirement whichever is less, subject to a minimum
of Rs.30,000/- (Rupees Thirty Thousand only).
One month/three months notice pay, as per the service
conditions applicable."
c
7. Appellants opted for voluntary retirement. Indisputably,
they were paid the amount of special compensation in terms of
the said G.O. Contending, however, that the said Voluntary
Retirement Scheme did not provide for payment of lay off
compensation, a writ petition was filed by the Union, which was
0
marked as Writ Petition No. 16916 of 1998. Before the High
Court, a contention was raised by the respondents herein that
the workmen having taken voluntary retirement and the
relationship of employer and employee having ceased, the writ
petition was not maintainable. A learned single judge of the High
E Court, however, opined:
"Be that as it may, in the circumstances of this case, I am
of the considered opinion that the petitioner should
approach the appropriate labour court or the Industrial
F tribunal and work out its remedies by way of a claim
petition and by leading appropriate evidence before the
said court. The petitioner can raise all the questions, which
are available to it, including those which have been raised
in this Writ Petition. Therefore, the Writ Petition is
disposed of giving liberty to the petitioner to approach the
G
appropriate labour Court or Industrial tribunal by filing an
appropriate claim petition. On filing such a claim petition,
the labour court/industrial tribunal shall entertain the same
and decide on merits within a period of six months from
the date of filing of such a petition."
H
AS. REDDY & ORS. v. THE PRFSIDING OFFICER, 111
,_ r LABOUR COURT, GUNTUR & ORS. [S.B. SINHA, J.)

8. Pursuant to or in furtherance of the said observations, A
the workmen filed applications under Section 33C(2) of the
Industrial Disputes Act, 194 7 (for short "the Act") claiming lay off
compensation for the period be!Ween 1.8.1995 to 6.9.2002. The
~ Labour Court, Guntur, did not entertain the said applications
..-<
holding that the same were not maintainable in view of a decision B
of this Court in AK. Bindal and Another v. Union of India and
Others ((2003) 5 SCC 163] holding:
i

"The workman under Sec. 33C(2) must be a workman
under Sec. 2(s) of the 1.0. Act.
c
Under Sec. 2 (s) of the 1.0. Act, there are four categories
of workmen, 1) persons presently employed, 2) persons
dismissed from service, 3) persons discharged from service
and 4) persons retrenched from service .
... All other persons do not come under Sec. 2(s) of the l.D. D
Act.

Persons retired from service, whether voluntarily or due to
superannuation, persons left the service voluntarily and
persons resigned from the service do not come under
Sec. 2(s) of the 1.0. Act. Those persons, even though they E
have got any right to receive any amount or any benefit
from the employer for the work done by them are not entitled
to file petition under Section 33-C(2) of the I .D. Act.
"l Because they are not workmen under Section 2(s) of the
LO.Act." F

A writ petition was preferred thereagainst, which was
. dismissed by a learned single judge of the Andhra Pradesh High
Court by an order dated 21.3.2005.

,,._ 9. Mr. A. Subba Rao, learned counsel appearing on behalf G
of the petitioner would contend that the Labour Court and
consequently the High Court committed a manifest error in
passing the impugned orders insofar as they failed to take into
consideration that the existing right of the workmen for obtaining
the lay off compensation payable to them under the Industrial H
112 SUPREME COURT REPORTS [2008] 7 S.C.R.

A Disputes Act, 1947 havin!~ nothing to do with the Voluntary
Retirement Scheme and furthermore having regard to the
directions of the High Court in the earlier Writ Petition, the
proceedings under Section 33C(2) was maintainable. Strong
reliance in this behalf has been pressed on National Buildings 4
'>
B Construction Corporation v. Pritam Singh Gill & Ors. [(1973) 1
S.C.R. 40].

10. Mr. R. Sundravardhan, learned Senior Counsel
appearing on behalf of the respondents, on the other hand,
would contend that in view of the definition of workman as
c contained in Section 2(s) of the Industrial Disputes Act, 1947,
the workman having opted for voluntary retirement ceased to
be the workman of the State and thus the proceedings under ir

Section 33C(2) of the Act wais rightly held to be not maintainable. "
Apart from relying on A.K. Bindal (supra), reliance has also
D ,A •
been placed by Mr. Sundravardhan on a decision of the Bombay r
High Court in Premier Automobiles Ltd. v. PAL VRS
Employees Welfare Association & Anr. [2002 (1) LLJ 527].
11. Section 2(s) of the Act defines a workman to mean :
E "2(s) "workman" means any person (including an
apprentice) employed in any industry to do any manual,
unskilled, skilled, technical, operational, clerical or
supervisory work for hire or reward, whether the terms of \..

employment be express or implied, and for the purposes f'-
F of any proceeding und13r this Act in relation to an industrial
dispute, includes any such person who has been
dismissed, discharged or retrenched in connection with,
or as a consequence of, that dispute, or whose dismissal, .....
discharge or retrenchment has led to that dispute, but
G does not include any such person - ....
(i) who is subject to the Air Force Act, 1950 (45of1950),
or the Army Act, 1950 (46 of 1950), or the Navy Act,
1957 (62 of 1957); or

H (ii) who is employed in the police service or as an officer
A.S. REDDY & ORS. v. THE PRESIDING OFFICER, 113
LABOUR COURT, GUNTUR & ORS. [S.B. SINHA, J.)

or other employee of a prison; or A
(iii) who is employed mainly in a managerial or
administrative capacity; or
(iv) who, being employed in a supervisory capacity,
draws wages exceeding one thousand six hundred B
rupees per mensem or exercises, either by the nature
of the duties attached to the office or by reason of
the powers vested in him, functions mainly of a
managerial nature."

12. A literal meaning given to the said provision would C
indicate that the workmen have ceased to enjoy the protection
conferred upon them under the said Act.
13. Would the workmen continue to be workmen for the
purpose of filing an application under Section 33C(2) of the Act D
· is the question.
14. Before embarking on the said question, we may notice
that the contention of Mr. Sundravardhan before us was that all
the legal dues have been paid to the workmen. We are not
concerned with the merit of the matter; maintainability of the E
application under Section 33C(2) being in issue.
15. There cannot be any doubt whatsoever that ordinarily
upon opting for a voluntary retirement under a Scheme framed
in that behalf, the workmen would cease to have any claim
against the management. However, the same prima facie in F
our opinionwould not mean that a statutory right of opting for lay
off compensation, unless expressly waived, may continue to
· remain within the realm of legal right, so as to enforce the same
·before a forum constituted under the Act. The Bombay High
Court in Premier Automobiles Ltd. (supra) as also this Court in G
A.K. Bindal (supra) proceeded on the basis that an employee
having received the amount of compensation without any demur
whatsoever would be estopped and precluded from raising any
· other orfurther claim stating:
H
114 SUPREME COURT REPORTS [2008) 7 S.C.R.

-f_•
A ''The employees accepted VRS with their eyes open
without making any kind of protest regarding their past
rights based upon revision of pay scale from 1.1.1992."

The said decision moreover proceeded on the basis that
when the parties enter into a transaction known as "golden
B handshake", the jural relationship between the employer and
).
the employee comes to an end. It was opined:

"After the amount is paid and the employee ceases to be
under the employment of the company or the undertaking,
c he leaves with all his rights and there is no question of his
again agitating for any kind of his past rights with his
erstwhile employer including making any claim with regard
to enhancement of pay scale for an earlier period. If the
employee is still permitted to raise a grievance regarding
enhancement of pay scale from a retrospective date, even
D
after he has opted for Voluntary Retirement Scheme and
has accepted the amount paid to him, the whole purpose
of introducing the Scheme would be totally frustrated."
The claim of the appellants in A.K. Bindal (supra) was
E based on the revision in the scale of pay. It was in that context,
the aforementioned observations were made.
16. The question which fell for consideration before the
Bombay High Court was as to whether the employees having
opted for the Voluntary Retirement Scheme can still ask for
F benefits under a settlement which were overlapping with each ~
,, '
other.
What was sought to be enforced in the said proceeding
was the terms of a settlement. The Bombay High Court held:
G "The terms and conditions of the said Scheme are clear
enough which show that the employees who opted for
Voluntary Retirement Scheme were to be considered as
relieved from services of the Company within a week from
...
the date of their letter of acceptance. According to the
H said Scheme, it would come into force with effect from
A.S. REDDY & ORS. v. THE PRESIDING OFFICER, 115
LABOUR COURT, GUNTUR & ORS. [S.B. SINHA, J.]
,_ r
December 20, 1991 and stood open till January 27, 1992." A
The said decision, thus, was rendered in different fact
situation.
In Vijay Kumar & Ors. v. Whirlpool of India Ltd. & Ors.
t [(2008) 1 SCC 199], the Division Bench, inter alia, followed A.K. B
_,( Bindar (supra).
17. The decision of this Court in National Buildings
Construction Corporation (supra) was not noticed in the
aforementioned decision. The question which arose for
, consideration therein was as to whether a workman even after c
an order of discharge could maintain an application under
Section 33C(2) of the Act claiming lay off compensation, in
response whereto this Court held:
"In U.P. Electric Supply Co. v. R.K. Shukla [AIR 1970 SC
D
237] this Court approvingly referred to a passage from
,~
the judgment in Chief Mining Engineer, East India Coal
Co. Ltd. (supra}, already reproduced by us, in which, inter
alia, it was emphasized that Labour Court had jurisdiction
to entertain a clai.m in respect of an existing right arising
from the relationship of an industrial workman and his E
employer. Again in R.B. Bansilal Abhirchand Mills Co. (P)
Ltd. v. The Labour Court, Nagpur [AIR 1972 S.C. 451] this
Court, after a review of its previous decisions, upheld the
jurisdiction of the Labour Court to entertain application for
lay-off compensation under s. 33C observing that such F
,., ' jurisdiction could not be ousted by a mere plea denying
the workman's claim to computation of the benefit in terms
of money, adding that the Labour Court had to go into the
question and determine whether on the facts it had
jurisdiction to make the computation." G

Noticing a large number of decisions of the High Courts
on the said subject, this Court held:
"In order to remove this repugnancy s. 33C(2) must be so
construed as to take within its fold a workman, who was H
116 SUPREME COURT REPORTS [2008] 7 S.C.R.

A employed during the period in respect of which he claims
relief, even though he is 110 longer employe9 at the time of
the application. In other words the term "workman" as used
in s. 33C(2) includes all persons whose claim, requiring
computation under this sub-section, is in respect of an
B existing right arising from his relationship as an industrial
workman with his employer. By adopting this construction
alone can we advance the remedy and suppress the
mischief in accordance with the purpose and object of
inserting s. 33C in the Act."
C 18. The right of the workman to claim payment of lay off
compensation is not denied or disputed. If the said claim has
no nexus with the Voluntary Retirement Scheme, in our opinion,
in a given case, like the present one, it is possible to hold that a
proceeding under Section :33C(2) of the Act would be
D maintainable. We are, therefore, of the opinion that the question
being one of some importance! should be considered by the
larger Bench as there exists an apparent conflict in the said
decisions of National Buildings Construction Corporation
(supra) and AK Bindal (supra).
E We direct accordingly. Let the records be placed before
the Hon'ble the ·chief Justice of India for passing appropriate
orders.
S.K.S. Referred to larger Bench.

I •