Holding

Section 2(g) does not require the 240‑day work to be in the immediately preceding 12 months; workmen who have completed 240 days in any earlier year are deemed to have one year of continuous service and are protected by Section 6N, making their termination illegal.

Summary

The employer, M/s. U.P. Drugs and Pharmaceuticals Co. Ltd., terminated 29 workmen on the ground that they were casual and there was no work, without the workmen having completed 240 days in the 12 months preceding termination. The labour court held they were not entitled to protection under Section 6N of the Uttar Pradesh Industrial Disputes Act, 1947, but the Allahabad High Court reversed, holding that the 240‑day requirement need not be satisfied in the immediately preceding year if the workmen had completed 240 days in earlier years, deeming them in continuous service. On appeal, the Supreme Court affirmed the High Court’s interpretation, stating that Section 2(g) does not contain the word “preceding” and therefore workmen who have completed 240 days in any earlier year are deemed to have one year of continuous service and are protected by Section 6N; consequently, their termination was illegal. However, the Court declined to order back wages, citing the employer’s financial position. The appeal and the Special Leave Petition were dismissed, and the workmen were ordered reinstated with wages from November 2003.

Issues considered

Whether Section 2(g) of the Uttar Pradesh Industrial Disputes Act, 1947 requires a workman to have worked 240 days in the 12 calendar months preceding the date of retrenchment to be deemed to have completed one year of continuous service.
Whether termination of the workmen without compliance of Section 6N of the Uttar Pradesh Industrial Disputes Act is illegal.
Whether the workmen are entitled to back wages in addition to reinstatement.

Legislation cited

Industrial Disputes Act, 1947s. 25-B, s. 25-C, s. 25-F
Industrial Disputes (Amendment) Act, 1964
Uttar Pradesh Industrial Disputes Act, 1947s. 2(g), s. 4(k), s. 6N

Subjects

continuous serviceterminationretrenchmentUttar Pradesh Industrial Disputes ActSection 6N240 days ruleback wagesindustrial disputestatutory interpretationwelfare legislation

Judgment

A M/S. U.P. DRUGS AND PHARMACEUTICALS CO. LTD.
v.
RAMANUJ YADA V AND ORS.

SEPTEMBER 23, 2003

B [Y.K. SABHARWAL AND BN. AGRAWAL, JJ.]

Uttar Pradesh Industrial Disputes Act, 1947.

Sections 2(g), 4(k), & 6N-Termination/retrenchment-Workmen
C completing 240 days ofwork in each ofthe earlier years but not completing
240 days preceding 12 months from the date of termination-Whether such
workmen entitled to benefit and protection ofSection 6N read with Section
2(g)-Held, requirement of having worked for 240 days during preceding
period of 12 calendar months not necessary for completion of one year of
continuous service under Section 2(g)-Such workmen deemed to be in
D continuous service and entitled to benefit of Section 6N read with Section
2(g)-Termination without compliance of Section 6N illegal-Industrial
Disputes Act, 1947-Section 25-B.

Words & Phrases- 'Continuous service '-Meaning of in the context
E of the Uttar Pradesh Industrial Disputes Act, 1947.
Appellant terminated the services of respondents and some other
workmen w.e.f. 31.3.1987 on the ground that they were causal workers
and there was no work for them. Workmen approached State
F Government against their termination and the State Government in
exercise of power under Section 4(k) of Uttar Pradesh Industrial
Disputes Act, 1947 referred the matter to Labour Court to decide the
dispute. Labour Court held that workmen have not completed 240
days in a calendar year preceding the date of termination/retrenchment
to claim benefit of Section 6N of the U.P. Act though they have worked
G for more than 240 days in each year from 1983 to 1986 and are not
entitled to benefit of continuous service under the U.P. Act. Some of
the workmen challenged the award by filing writ petition which was
allowed by the High Court. High Court held that under Section 6N
read with Section 2(g) of the U.P. Act it is not necessary for workmen
H to complete 240 days in the preceding year and since workmen had
1022
U.P. DRUGS AND PHARMACEUTICALS CO. LTD. v. R. YADAV I 023

completed 240 days in earlier years preceding 12 months from the date A
of termination they were deemed to be in continuous service and their
termination was illegal and in violation of Section 6N read with Section
2(g) of the U.P. Act. However, High Court declined payment of wages
to workmen. Hence, this appeal by Management and Special Leave
Petition by workmen for payment of back wages. B
Appellant contended that respondents have not worked for 240
days in preceding 12 months from the date of termination and hence
are not entitled to benefit of Section 6N read with Section 2(g) of the
U.P. Act even though they have worked for 240 days or more during
the period earlier to 12 calendar months. C
Respondent contended that the contention propounded by
Management, if accepted, it would provide a handle of abuse in the
hands of the Management.

Dismissing the appeal and also the Special Leave Petition, the D
Court

,., HELD : I. Section 2(g) of the U.P. Industrial Disputes Act, 1947
does not require a workman, to avail the benefit of the deeming
provision of completion of one year of continuous service in the E
industry, to have worked for 240 days during 'preceding' period of 12
calendar months. The work 'preceding' has been used in Section
25-B of the Industrial Disputes Act, 1947 as incorporated in the year
1964. Section 25-B was substituted by Industrial Disputes (Amendment)
Act, 1964. It brought in the concept of preceding 12 calendar months. F
The earlier definition did not mention 'preceding' with reference to
period of 12 calendar months. Section 2(g) does not use the word
'preceding'. The concept of 'preceding' was introduced in the Industrial
Disputes Act so as to give complete and meaningful benefit of welfare
legislation to the working class. Welfare statutes must, of necessity, G
receive a broad interpretation. Where legislation is designed to give
relief against certain kinds of mischief, the Court is not to make
inroads &y making etymological excursions. [1031-D-F]

Sur Enamel and Stamping Works Ltd v. The Workmen, (1964] 3 SCR
616 and Surendra Kumar Verma Etc. v. The Central Government Industrial H

-
1024 SUPREME COURT REPORTS [2003) SUPP. 3 S.C.R.

A Tribunal-cum-Labour Court, New Delhi & Anr., (1981) 1 SCR 789, relied
on.

2. If the viewpoint propounded by the management is accepted,
then in every year the workman would be required to complete more
B than 240 days. If in any one year the eRtployer gives him actual work
for less than 240 days, the service of the workman can be terminated
without compliance of Section 6N of the Uttar Pradesh Industrial
Disputes Act, despite his having worked for number of years and for
more than 240 days in each year except the last. Such an intention
cannot be attributed to the U.P. Act. The interpretation propounded
C for the appellant is wholly untenable. The termination of the respondents
was in violation of Section 6N read with Section2(g) of the U.P. Act.
[1032-F-G, 1033-B-DI

Ramakrishna Ramnath v. The Presiding Officer, Labour Court,
D Nagpur & Anr, (19701 3 sec 67, referred to.
Mohan Lal v. Management of Mis. Bharat Electronics Ltd., [19811
3 SCC 225 and V.P. State Co-operative Land Development Bank Ltd. v.
TazMulk Ansari & Ors., (1994) Supp. 2 SCC 745, held inapplicable. ...
E 3. No interference is called for regarding denial of back wages to
the respondents having regard to the facts and circumstances of the
case including the circumstance of the financial position of the appellant
and the proceedings before the Board for Industrial and Financial
Reconstruction. (1033-D, E)
F CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2537 of
2001.

From the Judgment and Order dated 21.9.99 of the Allahabad High
Court in C.M.W.P. No. 5125 (SIS) of 1991.
G
WITH

S.L.P. (C) No. 18267 of 2003.

R.C. Srivastava, Ms. Rachna Srivastava and Rohit Singh for the
H Appellant.
U.P. DRUGS AND PHARMACEUTICALS CO. LTD v. R YADAV [SABHARWAL, J] 1025

Jitendra Shanna and Ms. Chandan Ramamurthi for the Respondents. A

The Judgment of the Court was delivered by

Y.K. SABHARWAL, J.: The appellant directed the respondents and
few other workmen to cease work w.e.f. 3 lst March, 1987. According to
the appellant, they were casual workers and had worked for a short time B
and since there was no work, they were asked to cease work and their
services were, thus, tenninated. The workmen approached the State
Government of Uttar Pradesh against their tennination and pursuant
thereto, the State Government, in exercise of power under Section 4(k) of
Uttar Pradesh Industrial Disputes Act, 1947 (for short, 'the UP Act') C
referred the matter to the labour court of Lucknow to decide the dispute.
It was not disputed before the labour court that none of the workmen had
worked for 240 days in the year preceding the date of tennination. In this
view, the Jabour court, in the award dated 31st May, 1991, concluded that
the workmen/respondents were not entitled to protection of Section 6N of D
the UP Act. According to labour court, the workmen ought to have
completed 240 days in a calendar year preceding the date of tennination/
retrenchment so as to claim benefit of Section 6N of the UP Act.
Considering the evidence, the labour court also held that all the 29
workmen had worked for more than 240 days in each year during the past
years prior to 1986. The effect of the finding recorded by the labour court E
is that the workmen have worked for more than 240 days from the year
1983 to 1986 but they having not worked for 240 days from I st April, 1986
to 31st March, 1987, they were not entitled to protection and benefit of
the continuous service under the UP Act. On appreciation of evidence, the
finding recorded by the labour court is as follows : F
"In these circumstances, I arrive to the conclusion that the
empfoyer have failed to dispute the evidence of the workmen that
all the 29 workmen had worked for more than 240 days in each

- year during the past years prior to 1986. In other words, I reached G
to the conclusion that although these workmen have not completed
240 days of service in a year preceding the date of their
tennination but have worked for more than 240 days in each year
prior to. that after joining the service."

Out of29 workmen before the labour court, the award was challenged H
"'
1026 SUPREME COURT REPORTS [2003] SUPP. 3 S.C.R.

A by 18 workmen in a writ petition filed in the High Court. The said
workmen are respondents in this appeal. By the impugned judgment, the
High Court, setting aside the award, has held that under Section 6N read
with Section 2(g) of the UP Act, it is not necessary for the workmen to
complete 240 days in the preceding year and since workmen had completed
B 240 days in earlier calendar years preceding to 12 months on the date of
retrenchment, they were deemed to be in a continuous service and hence
their termination in violation of Section 6N of the UP Act was illegal. The
respondents have been held to be in continuous service. The High Court
has directed that they shall be given consequential service benefits
including reinstatement except the back wages. The appellant has been
C directed to pay the wages to the respondents from the date of reinstatement.
-
Assailing the impugned judgment, it has been contended that for
applicability of Section 6N read with Section 2(g) of the UP Act, it is
essential for a workman to complete 240 days in preceding 12 calendar
D months. Learned counsel for the appellant argues that the respondents
having worked for 240 days or more during the period earlier to 12
calendar months is inconsequential. The undisputed fact is that the
respondents whose services were terminated w.e.f. 31st March, 1987, did
not actually work for 240 days for the period from 1st April, 1986 to 31st
E March, 1987. The finding of the labour court, however, is that for earlier
years, they did work for more than 240 days. What is the consequence
of this finding is the question. The correctness of the impugned judgment
is required to be examined on these facts. We may note that the
respondents have also challenged the impugned judgment in so far as it
declines payment of back wages to them. Mr. Jitender Sharma, learned
F advocate appearing for the respondents, supporting the impugned judgment
on the aspect of interpretation of Sections 6N and 2(g), contends that if
the contention propounded by the management is accepted, it will provide
a handle of abuse in the hands of the management.

G Section 6N was inserted in the UP Act by Section 8 of the UP Act
No.I of 1957. It reads as under:
-
6N. Conditions precedent to retrenchment of workmen.- No
workman employed in any industry who has been in continuous
service for not less than one year under an employer shall be
H retrenched by that employer until-
U.P. DRUGS AND PHARMACEUTICALS CO.LTD. v. R. YADA V [SABHARWAL J] I 027

(a) the workmen has been given one month's notice in writing A
indicating the reasons for retrenchment and the period of
notice has expired or the workman has been paid in lieu of
such notice wages for the period of the notice :

Provided that no such notice shall be necessary if the
retrenchment is under an agreement which specified a date
B
of the termination of service;

-t.., (b) the workmen has been paid, at the time of retrenchment,
compensation which shall be equivalent to fifteen days'
average pay for every completed year of service or any part c
thereof in excess of six months, and

(c) notice in the prescribed manner is served on the State
Government"

The expression 'continuous service' is defined in Section 2(g) of the D
UP Act which reads as under :

-
2.(g)'Continuous service' means uninterrupted service, and
·'· includes service which may be interrupted merely on account of
sickness or authorized leave or an accident or a strike which is E
not illegal, or a lock-out or a cessation of work which is not due
to any fault on the part of the workman, and a workman, who

- during a period of twelve calendar months has actually worked
in an industry for not less than two hundred and forty days shall
be deemed to have completed one year of continuous service in F
the industry.

Explanation.- In computing the number of days on which a
workman has actually worked in an industry, the days on which-

-· (i) he has been laid off under the agreement or as permitted by G
standing order made under the Industrial Employment
(Standing Orders) Act, 1946, or under this Act or under
any other law applicable to the industrial establishment,
the largest number of days during which he ,has been so
laid off being taken into account for the ptlrposes of this H

_,....
1028 SUPREME COURT REPORTS [2003] SUPP. 3 S.C.R.

A clause,

(ii) he has been on leave with full wages, earned in the previous
year, and

(iii) in the case of a female, she has been on maternity leave; so
B however that the total period of such maternity leave shall
not exceed twelve weeks, shall be included."

Let us also examine the central legislation. In the Industrial Disputes ,,•
Act, 1947 (for short, the 'ID Act'), Chapter V-A containing Sections 25
C A to 25J was inserted by the Industrial Disputes (Amendment) Act, 1953
(43of1953) w.e.f. 24th October, 1953. Section 25-B as it stood then was
as under :

"25-B. Definition of one year of continuous service.
D For the purposes ofSs.25C and 25F, a workman who, during
a period of 12 calendar months, has actually worked in an industry
for not less than two hundred and forty days shall be deemed to
have completed one year of continuous service in the industry.

E &planation.-ln computing the number of days on which a
workman has actually worked in any industry, the days on
which-

(a) he has been laid off under an agreement or as permitted by
standing orders made under the Industrial Employment (Standing
F
Orders) Act, 1946, or under this Act or under any other law
applicable to the industrial establishment, the largest number of
days during which he has been so laid-off being taken into account
for the purposes of this clause.

G (b) he has been on leave with full wages, earned in the previous
year, and

(c) in the case of a female, she has been on maternity leave; so
however, that the total period of such maternity leave shall not
H exceed twelve weeks.
U.P. DRUGS AND PHARMACEUTICALS CO LTD. v. R. YADAV [SABHARWALJ] 1029

Shall be included." A
The same Amending Act introduced the definition of 'continuous
service' in Section 2(eee) as under :

"2.(eee) 'continuous service' means uninterrupted service, and
includes service which may be interrupted merely on account of B
sickness or authorized leave or an accident or a strike which is
not illegal, or a Jock-out or a cessation of work which is not due
to any fault on the part of the workman;"

Section 25-B was, however, substituted by Industrial Disputes C
(Amendment) Act, 1964 (36of1964) w.e.f. 19th December, 1964 and the
same reads as under :

"25-B. DEFINITION OF CONTINUOUS SERVICE- For the
purposes of this Chapter, -
D
(I) a workman shall be said to be in continuous service for a
period if he is, for that period, in uninterrupted service,
including service which may be interrupted on account of
sickness or authorised leave or an accident or a strike which
is not illegal, or a lock-out or a cessation of work which is E
not due to any fault on the part of the workman;

(2) where a workman is not in continuous service within the
meaning of clause (I) for a period of one year or six months,
he shall be deemed to be in continuous service under an
employer - F
(a) for a period of one year, if the workman, during a
period of twelve calendar months preceding the
..... date with reference to which calculation is to be made,
has actually worked under the employer for not less G
than -

(i) one hundred and ninety days in the case of a
workman employed below ground in a mine; and

(ii) two hundred and forty days, in any other case; H

.. "
1030 SUPREME COURT REPORTS [2003] SUPP. 3 S.C.R.

A (b) for a period of six months, if the workman, during a period
of six calendar months preceding the date with reference to
which calculation is to be made, has actually worked under
the employer for not less than -

(i) ninety-five days, in the case of a workman employed
B below ground in a mine; and

(ii) one hundred and twenty days, in any other case.

Explanation : For the purpose of clause (2), the number of days
C on which a workman has actually worked under an employer shall
include the days on which -

(i) he has been laid-off under an agreement or as permitted by
standing orders made under the Industrial Employment
(Standing Orders) Act, 1946 (20 of 1946), or under this Act
D or under any other law applicable to the industrial
establishment;

(ii) he has been on leave with full wages, earned in the previous
year;
E
(iii) he has been absent due to temporary disablement caused by
accident arising out of and in the course of his employment;
and

(iv) in the case of a female, she has been on maternity leave; so,
F however, that the total period of such maternity leave does
not exceed twelve weeks."

The Amending Act of 1964 deleted Section 2(eee), having incorporated
in Section 25-B itself the definition of 'continuous service'. It also brought
G in the concept of preceding 12 calendar months. The earlier definition did
not mention 'preceding' with reference to period of 12 calendar months.
It appears that the decision of this Court in Sur Enamel and Stamping
Works Ltd v. The workmen, [1964] 3 SCR 616 interpreting Sections 2(eee)
and 25-B led to the amendments made by Amending Act of 1964. In Sur
H Enamel, interpreting Sections 2( eee) and 25-B, it was held that twin
U.P. DRUGS AND PHARMACEUTICALS CO. LTD. r. R. YADAV [SABHARWALJ] 1031

conditions were required to be fulfilled before a workman can be considered A
to have completed one year of continuous service in an industry. It must
be. shown first that the workmar. wa~ employed for a period ofnot less than
12 calendar months and next that during those 12 calendar months, he had
worked for not less than 240 days. In that case, the workman had not been
employed for a period of 12 calendar months. Therefore, the Court held B
that it was unnecessary to examine whether actual days of work were 240
or more for in any case the requirements of Section 25-8 would not be
satisfied by mere fact of number of working days being not less than 240
days. The effect was that if a workman completes actual 240 or more days
of work in less than 12 calendar months, he would not be entitled to the
benefit of beneficial legislation. This anomaly led to the amendment of C
the ID Act in the manner abovestated.

Under the aforesaid legislative background, the question involved is
required to be considered. Section 2(g) of the UP Act does not require ·
a workman, to avail the benefit of the deeming provision of completion D
of one year of continuous service in the industry, to have worked for 240
days during 'preceding' period of 12 calendar months. The word
.. 'preceding' has been used in Section 25-8 of the ID Act as incorporated
in the year 1964. Section 2(g) does not use the word 'preceding'. The
concept of 'preceding' was introduced in the ID Act so as to give complete E
and meaningful benefit of welfare legislation to the working class. The
approach to be borne in mind while interpreting the welfare legislation is
illustrated in Surendra Kumar Verma Etc. v. The Central Government
Industrial Tribunal-cum-Labour Court, New Delhi & Anr., [1981] l SCR
789 where this Court has observed that semantic luxuries are misplaced F
in the interpretation of 'bread and butter' statutes. Welfare statutes must,
of necessity, receive a broad interpretation. Where legislation is designed
to give relief against certain kinds of mischief, the Court is not to make
inroads by making etymological excursions.

Learned counsel for the appellant, however, relies upon Mohan Lal G
v. Management of Mis. Bharat Electronics Ltd.., [1981] 3 SCC 225. In
that case, the Court was considering the scope of Section 25-8 of the ID
Act. It was observed that in order to invoke the fiction enacted in clause
(2)(a) of Section 25-8, it is necessary to determine first the relevant date,
i.e., the date of termination of service which is complained of as retrenchment. H
1032 SUPREME COURT REPORTS [2003] SUPP. 3 S.C.R.
A After that date is ascertained, move backward to a period of 12 months
just preceding the date of retrenchment and then ascertain whether within
a period of 12 months, the workman has rendered service for a period of
240 days. It was held that if these three factors are affirmatively answered
in favour of the workman pursuant to the deeming fiction enacted in clause
B (2)(a), it will have to be assumed that the workman is in continuous service
for a period of one year and he will satisfy the eligibility qualification
enacted in Section 25-F. In Mohan Lal's case, the appellant was employed
with the respondent from 8th December, 1973. His services were abruptly
terminated by letter dated 12th October, 1974 w.e.f. October 19, 1974.
C This Court said that it is not necessary for the purpose of clause (2)(a) of
Section 25-B that workman should be in service for a period of one year.
It was held that if he is in service for a period of one year and that service
is continuous service within the meaning of clause (I), his services would
be governed by clause (I) and his case need not be covered by clause (2).
Clause (2) envisages the situation not governed by clause ( 1). Clause (2)(a)
D provides for a fiction to treat a workman in continuous service for a period
of one year despite the fact that he has not rendered uninterrupted service
for a period of one year but he has rendered service for a period of 240
days during the period of 12 calendar months counting backward and just
preceding the relevant date the date of retrenchment. These were the facts
...
E under which it was held as to how the period of 240 days was to be
calculated. The decision in the case of Mohan Lal does not lay down that
if a workman had worked for more than 240 days in any number of years
and if during the year of his termination, he had not worked for the said
number of days, he would not be entitled to the benefit of Section 25-B.
F The question with which we are concerned was not under consideration
in Mohan Lal 's case. If the viewpoint propounded by the management is
accepted, then in every year the workman would be requiJ:ed to complete
more than 240 days. If in any one year the employer gives him actual work
for less than 240 days, the service of the workman can be terminated
without compliance of Section 6N of the UP Act, despite his having ·-
G worked for number of years and for more than 240 days in each year except
the last. Such an intention cannot be attributed to the UP Act. In the
present case, as already noticed, the finding of the labour court is that the
respondents worked for more than 240 days in each year from 1983 to 1986 · ·
but not having worked for 240 days in the year of termination, the
H termination was held by the labour court not to be violative of Section 6N.

.,
U.P. DRUGS AND PHARMACEUTICALS CO. LTD. v. R. YADAV [SABHARWAL J.] 1033

Reference may also be made to the decision in Ramakrishna Ramnath v. A
The Presiding Officer, Labour Court, Nagpur & Anr., [1970] 3 SCC 67
where this Court observed that the provision requiring an enquiry to be
made to find out whether the workman has actually worked for not less
than 240 days during a period of 12 calendar months immediately
preceding the retrenchment does not show that a workman, after satisfying B
the test, has further to show that he has worked during all the period he
has been in service of the employer for 240 days in the year. The
interpretation propounded for the appellant is wholly untenable. The
decision in U.P. State Cooperative Land Development Bank Ltd. v. Taz
Mulk Ansari & Ors., [1994] Supp. 2 SCC 745 relied upon by learned
• counsel for the appellant has no applicability since that was a case of clause C
(a) of Section 6N and, therefore, Section 2(g) had no relevance.

The High Court has rightly concluded that the termination of the
respondents was in violation of Section 6N read with Section 2(g) of the
~~ D
Regarding denial of back wages to the respondents, in our view, no
interference is called for having regard to the facts and circumstances of
the case including the circumstance of the financial position of the
appellant and the proceedings before the Board for Industrial and Financial E
Reconstruction.

For the foregoing reasons, we find no merit in the appeal. The same
is accordingly dismissed. The Special Leave Petition No. 18267 of 2003
(CC-384712000) is also dismissed. The respondents are directed to be
reinstated from November, 2003. They shall be paid wages from the month F
of November, 2003. There shall be no order as to costs.

- A.K.T. Appeal/Special Leave Petition dismissed.

....