Holding

The termination was retrenchment and, because the employer failed to satisfy the conditions of section 25F, it was void ab initio, leaving the employee in continuous service with entitlement to back wages and other benefits.

Summary

Mohan Lal was employed as a salesman by Bharat Electronics Ltd. from 8 December 1973 and his services were terminated on 19 October 1974. The Labour Court held that the termination was a lawful dismissal on probation and not retrenchment. On appeal, the Supreme Court examined whether the termination fell within the definition of retrenchment under section 2(oo) of the Industrial Disputes Act and whether the procedural pre‑condition of section 25F was complied with. The Court held that the employee had rendered 240 days of work in the preceding 12 months, which under section 25B(2) makes him deemed to have one year of continuous service, so the termination was retrenchment. Because the employer had not complied with the notice and compensation requirements of section 25F, the termination was void ab initio and the employee remained in service, entitled to back wages and other benefits. The Supreme Court set aside the Labour Court award, declared the termination void, and remitted the matter to the Labour Court to determine the appropriate award.

Issues considered

Whether termination of a workman who has worked 240 days in the preceding 12 months constitutes retrenchment under s.2(oo) of the Industrial Disputes Act.
Whether the termination complied with the procedural requirements of s.25F and, if not, whether it is void ab initio.
Interpretation and scope of s.25A and s.25B regarding ‘continuous service’ for the purpose of s.25F.
Whether the employee is entitled to reinstatement or compensation where the termination is held void.

Legislation cited

Industrial Disputes Act, 1947s. 25A, s. 25B, s. 25F, s. 2(oo)
Industrial Employment (Standing Orders) Act, 1946

Subjects

retrenchmentIndustrial Disputes Actsection 2(oo)section 25Fcontinuous servicetermination of servicevoid terminationback wagesreinstatementprobation

Judgment

518

A MOHAN LAL
v.
MANAGEMENT OF

M/S BHARAT ELECTRONICS LTD.
B
April 21, 1981

[ A. C. GUPTA AND D.A. DESAI, JJ. ]

Retrenchment-Section 2(oo) of the Industrial Dispute Act-Whether termi-
c nation of the services of a workman who has put in 240 working days within a period
of one year amounts ro retrenchment and whether for non-compliance with the pro-
visions of section 25F the termination of service is ab initio void-Sections 25A and
25B, scope of-Effect of terminqtion of service which is ab initio void and inopera-
tive, explained.

The appellant was employed with the respondent as Salesman at its Delhi
Sales Depot on a salary of Rs. 520/- per month from 8th December, J 973. His
D service was abruptly terminated by letter dated 12th October, 1974 with effect
from 19th October, 1974.· Consequent upon his termination, an industrial dis-
pute was raised and referred to the Labour Court, Delhi, on 24th April, 1976.
The Labour Court, on evaluation of evidence both oral and documentary, held
that the termination of the service was in accordance with the standing orders
justifying the removal of the employee on unsuccessful probation during the ini-
tial or extended period of probation and, therefore, .the termination would not
E constitute retrenchment within the meaning of section 2(oo) read with section 25 F
of the Industrial Dispute Act. The Labour Court accordingly held that the ter-
mination was neither illegal nor improper nor unjustified and the claim of the
appellant was negatived. Hence the appeal by special leave.

Allowing the appeal, the Court
F
HELD : 1. The termination of service of the appellant was ab initio void
and inoperative. His case not being covered by any of the excepted or excluded
categories referred to under section 2(oo) and he has rendered continuous service
for one year, the termination of his service would constitute retrenchment. The
pre-condition for a valid retrenchment has not been satisfied in this case and
therefore he will be entitled to all benefits including back wages etc.
G (534F G, 535-C-D)

2. Where the termination is illegal especially where th~re is an ineffective
order of retrenchment, there is neither termination nor cessation of service and a
declaration follows that the workmen concerned continues to be in service with
all consequential benefits. It is no doubt true that the Supreme Court had held
H that before granting reinstatement the court must weigh all the facts and exercise
discretion properly whether to grant reinstatement or to award compesantion.
MOHANLAL V. BHARAT ELECTRONICS 519

Here, no case has been made out for departure from the normally accepted A
approach of the courts in the field of social justice: (535A C)

Ruby General Insurance Co. Ltd. v. Chopra (P.P.), (1970) 2 Labour Law
Journal, 63 and Hindustan Steel Ltd., Rourke/av. A.K. Roy and Others, [1970] 3
S.C.R. 343, referred to.

3:1. Niceties and semantics apart, termination by the employer of the B
service of a workman for any reason whatsoever in section 2(oo) of the Industrial
Dispute Act, would constitute retrenchment except in cases excepted in the sec-
tion itself. The excepted or excluded cases are where termination is by way of
punishment inflicted by way of disciplinary action, voluntary retirement of the
workman, retirement of the workman on reaching the age of superannuation if
the contract of employment betw~en the employer and the workman concerned
contains a stipulation in that behalf, and termination of the service of a workman C
on the ground of continued illhealth. (524 E-F)

3:2. It was not open to the Labour Court to record a finding that the
service of the appellant was terminated during the period of probation on account
of his unsatisfactory work which did not improve in spite of repeated warnings
when there was not even a whisper of any period of probation in the appointment
order or in the rules. The termination of service being, for a reason other than D
the excepted category, it would indisputably be retrenchment within .the meaning
of section 2(oo) of the Industrial Dispute Act. (523 G-H, 524A, 525Z)

Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor Union, [1956]
S.C.R. 172; Hariprasad Shivshankar :Jhukla v, A. D. Divikar, [1957] S.C.R. 121;
State of Bombay and Ors. v. The Hospital Mazdoor Sabha and Ors. [1960] 2
S.C.R. 866 at 872; State Bank of India v. N. Sundara Money, [1976] 3 S.C.R. E
160; Hindustan Steet Ltd. v. The Presiding Officer, Labour Court, Orissa and
Ors., [ 1977] S.C.R. 586; Santosh Gupta v. State Bank of Patiala, [ 1980] 3 S.C.R.
340 and Delhi Cloth and General Mills Ltd. v. Shambhu Nath Mukerjee, [1978] 1
S.C.R. 591, explained and followed.

4. Before a workman can complain of retrenchment being not in conso-
nance with section 25F of the Industrial Dispute Act, he has to show that he F
has been in continuous service for not less than one year under that employer
who has retrenched him from service. (529 C)

5:1. The language employed in sub-sections (I) and (2) of section 25B does
not admit of any dichotomy, namely, (a) sub-section (1) providing for uninterrup-
ted service and (b) sub-section (2) comprehending a case where the workman is
in continuous service. Sub-sections (I) and (2) introduce a deeming fiction as to
G
r in what circumstances a workman could be said to be in continuous service for
the purposes of Chapter V-A. (530 G H) ·

5:2. Sub-section (1) provides deetning fiction in that where a workman
is in service for a certain period for that period even if service is interrupted on
account of sickness or authorised leave or an accident or a strike which is not ff
illegal or a lockout or a cessation of work which is not due to any fault on the
520 SUPREME COURT REPORTS [1981] 3 s.c.R.

A part of the workman. Sub-section (I) mandates that interruptions therein indica-
ted are to be ignored meaning thereby that on account of such cessation an
interrupted service shall be deemed to be uninterrupted and such uninterrupted
service shall for the purposes of Chapter V-A be deemed to be continuous
service. (530H, 531A, C-D)

5:3. Sub-section (2) incorporates another deeming fiction for an entirely
different situation. It is not necessary for the purposes of sub-section (2) (a) that
B the workman should be in service for a period of one year. If he is in service
for a period of one year and that if that service is continuous service within the
meaning of sub-section (1) his case would be governed by sub-section (1) and his
case need not be covered by sub-section (2). Sub-section (2) envisages a situation
not governed by sub-section (1). And sub-section (2) 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
c service for a period of 240 days during the period of 12 calendar months counting
backwards and just proceeding the relevant date beini: date of retrenchment.
. (531D-E. 532A-B)

Both on principle and on precedent section 25B(2) comprehends the
situation where workman is not in employment for a period of 12 calendar·
months but has rendered service for a period of 240 days within the period of 12
D calendar months commencing and counting backwards from the relevant date
that is the date of retrenchment, if he has, he would be deemed to be in conti-
nuous service for a period of one year for the purpose of section 25B and Chapter
V-A. ·In the instant case, the appellant's case indisputably falls within section
25 B(2) (a) and he shall be deemed to be in continuous service for a period of one
year for the purpose of Chapter V-A. (534B-D)

Sur Enamel and Stamping Works ( P) Ltd. v. Their Workmen, [1964] 3
E
S.C.R. 616. explained and distinguished.

Surendra Kumar and Ors. v. Central Government Industrial-cum Labour
Court, New Delhi and Another, [1981] l S.C.R. 789 followed.

CivIL APPELLATE JURISDICTION : Civil Appeal No. 364 of
1981.
F
Appeal by special leave from the Award dated the 31st May,
J980 of the Additional Labour Court, Delhi in Industrial l.D. No.
62 of 1976.

V. M. Tarku11de, Hemani Sharma and P. H. Parekh for the
G
Appellant.

S. Markendaya for the Respondent.

The Judgment of the Court was delivered by
H
DESAI, J. The appellant Mohan Lal was employed with the
respondent M/s .Bharat Electronics Limited as Salesman at its Delhi
MOHANLAL v. BHARAT ELECTRONICS (Desai, J.) 521

Sales Depot on a salary of Rs. 520 per month from 8th December, A
1973. His service was abruptly terminated by letter dated 12th
October 1974 with effect from 19th October, 1974. Consequent upon
this termination, an industrial dispute was raised and the Delhi
Administration, by its order dated 24th April, 1976 referred the
following dispute to the Labour Court, Delhi for adjudication :
B
"Whether the terminaticn of services of Shri Mohan Lal
is illegal and/or unjustified and if so, to what relief is he
entitled and what directions are necessary in this respect?"
'
As the respondent management at one stage failed to parti-
cipate in the proceedings, the ·reference was heard ex-parte and the
Labour Court made an award on 2nd May, 1977 directing re-instate-
c
ment of the appellant with continuity of service and full back wages
at the rate of Rs. 520 per month from the date of termination till
re-instatement. Subsequently, respondent moved for setting aside the
ex-parte award and seeking permission to participate in the proceed-
ings, which motion was granted. The respondent inter alia contended D
that the appellant was a salesman appointed on probation for six
months and subsequently on the expiry of the initial period, the
period of probation was extended upto 8th Sept., 1974 and on the
expiry of this extended period of probation, his service was terminated
by letter dated 12th October, 1974, as he was not found suitable
for the post to which he was appointed. E
The Labour Court, on evaluation of evidence both oral and
documentary, held that the termination of the service was in accor-
dance with the standing orders justifying the removal of the em-
ployee on unsuccessful probation during the initial or extended
period of probation; and therefore the termination in this case, F
according to the Labour Court, would not constitute retrenchment
within the meaning of section 2( oo) read with section 25F of the
Industrial Dispute Act. Accordingly it was held that the termina-
tion was neither illegal nor improperno r unjustified and the claim
of the appellant was negatived. Hence, this appeal by special leave.
G
The only point for determination is whether even in the cir-
cumstances, as pleaded by the respondent termination of service of
the appellant would amount to retrenchment within the meaning of
the expression as defined in section 2(oo) of the Industrial Dispute
Act, 1947 ('Act' for short) ? If the answer is in affirmative, the
consequential question will have to be answered whether in view of
H
522 SUPREME COURT REPORTS [1981] 3 S.C.R.

A the admitted position that the mandatory pre-condition prescribed
by section 25F for a valid retrenchment having not been satisfied, the
appellant would be entitled to re-instatement with' back wages or as
contended by Mr. Markandey in the special facts of this case, the
Court should not direct re-instatement but award compensation in
lieu of re-instatement.
B
An apparent contradiction which stares in the eye on the
stand taken by the respondent is overlooked by ·the Labour Court
which has resulted in the' miscarriage of justice. In this context the
facts as alleged by the respondent may be taken as true. Says the
respondent, that the appellant was appointed by order dated July 21,
c 1973. The relevant portion of 1he order of which notice may be
taken is paragraph 2. It reads as under :

"This appointment will be temporary in the first ins-
tance but is likely to be made permanent."

D Paragraph 4 refers to the consequences of a temorary appointment,
namely, that the service would be terminable without notice and
without any compensation in lieu of notice on either side. Paragraph
6 provides that the employment of the appellant shall be governed
by rules, regulations and standing orders of the company then in
force and which may be amended, altered or extended from time to
E time and the acceptance of the offer carries with it the necessary
agreement to obey all such rules, regulations and standing orders. I
)
There is not even a whisper of any period of probation prescribed
for the appointment nor any suggestion that there are some rules
which govern appointment of the appellant which would initially be
on probation. Thus, the appointment was temporary in the first
F instance and there was an in!ler indication that it was likely to be
made permanent. Even if this promise of likely to be made perma-
nent is ignored, indubitably the appointment was temporary. The
respondent, however, says that note 3 at the foot of the appointment
order intimates to the appellant that in the event of his permanent
appointment the temporary service put in by him will be counted as
G
part of probationary period of service as required under the rules.
This consequence would follow in the event of permanent appoint-
ment being offered and this is clear from the language employed in
note 3. In this case no permanent appointment having been offered,
the consequence set out in note 3 could not have emerged. Assuming,
H
however, that this note incorporates all the necessary rules and
regulations in the contract of employment, it was incumbent upon
MOHANLAL v. BHARAT ELECTRONICS (Desai, J.) 523 .

the respondent to show that even when appointment is not shown A
to be on probation in the order of appointment, in view of the rules
governing the contract of employment there shall always be a period
of probation for every appointee. Witness Bawdekar who appeared
on behalf of the respondent stated in his evidence that the appellant
was appointed as a probationary salesman. Even according to him
prescribed period of probation was six months. He then stated that B
by the letter dated July JO, 1974, respondent informed the appellant
that his service should have been terminated on the expiry of initial
period of probation, i.e. on June 8, 1974. However, as a special
case the probation period was extended upto September 8, 1974.
No rule was pointed out to us enabling the respondent to extend
the initial period of probation. Assuming even then that such was
the power of the respondent, on September 9, 1974, the period of c
probation having not been further extended nor termination of
service having been ordered during or at the end of the probationary
period on the ground of unsuitability, the consequence in law is
that either he would be a temporary employee or a permanent em-
ployee as per the rules governing the contract of employment
between the appellant and the respondent. Admittedly his service D
was terminated by letter dated October 12, 1974, with effect from
October 19, 1974. It is not the case of the respondent that there
was any further extention of the probationary period. Thus, if the
initial appointment which was described as temporary is treated on
probation, even according to the respondent the period of probation
was six months, it expired on June 8, 1974. Even if by the letter
E
dated July 10, 1974, the period of probation was said to have been
extended, on its own terms it expired on September 8, 1974. The
service of the appellant was terminated with effect from October 19,
1974. What was the nature and character of service of the appellant
from September 8, 1974 when the extended period of probation
expired and termination of his service on October 19, 1974? He F
was unquestionably not on probation. He was either temporary or
permanent but not a probationer. How is it open then to the
Labour Court to record a finding that the service of the appellant
was terminated during the period of probation on account of his
unsatisfactory work which did not improve in spite of repeated
G
warnings? The Labour Court concluded that notwithstanding the
fact that the appellant was not shown to have been placed on pro-
bation in the initial appointment letter but in view of the subsequent
orders there was a period of probation prescribed for the appellant
H
and that his service was terminated during the extended period of
524 SUPREME COURT REPORTS [1981] 3 S.C.R.

A probation. This is gross error apparent on the face of the record
which, if not interfered with, would result in miscarriage of justice.

If on October 19, 1974, the appellant was not on probation
and assuming maximum in favour of the respondent that he was
a temporary employee, could termination of his service, even accor-
B ding to the respondent, not as and by way of punishment but a
discharge of a temporary servant, constitute retrenchment within the
meaning of section 2(00), is the core question. Section 2(oo) reads
as under:

"2(oo) "retrenchment" means the termination by the
c employer of the service of a workman for any reason what-
soever, otherwise than as a punishment inflicted by way of ·---
disciplinary action, but does not include-

(a) voluntary retirement of the workman; or

D (b) retirement of the workman on reaching-the age of
superannuation if the contract of employment
between the employer and the workman concerned
contains a stipulation in that behalf; or

(c) termination of the service of a workman on the
E ground of continued ill-health."

Niceties and semantics apart, ter~ination by the employer of
the service of a workman for any reason whatsoever would constitute
retrenchment except in cases excepted in the section itself. The
excepted or excluded cases are where termination is by way of
F punishment inflicted by way of disciplinary action, voluntary retire-
ment of the workman, retirement of the workman on reaching
the age of superannuation if the contract of employment between the
employer and the workman concerned contains a stipulation in that
behalf, and termination of the service of a workman on the ground
of continued ill-health. It is not the case of the respondent that
G termination in the instant case was a punishment inflicted by way of
disciplinary action. If such a position were adopted, the termination
would be ab initio void for violation of principle of natural justice
or for not following the procedure prescribed for imposing punish-
ment. It is not even suggested that this was a case of voluntary
H retirement or retirement on reaching the age of superannuation or
absence on account of continued ill-health. The case does not fall
under any of the excepted categories. There is thus termination of
MOHANLAL v. BHARAT ELECTRONICS (Desai, J.) 525

service for a reason other than the excepted category. It would A
indisputably be retrenchment within the meaning of the word as
defined in the Act. It is not necessary to dilate on the point nor to
refer to the earlier decisions of this Court in vit:w of the later two
y pronouncements of this Court to both of which one of us was a
party. A passing reference to the earliest judgment which was the
sheet an ch cir till the later pronouncements may not be out of place. B
In Hariprasad Shivshankar Shukla v. A. D. Divikar(1), after referring
to Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor Union("),
a Constitution Bench of this Court quoted with approval the follow-
ing passage from the aforementioned case :

"But retrenchment connotes in its ordinary acceptation c
that the business itself is being continued but that a portion
of the staff or the labour force is discharged as surplusage
and the termination of services of all the workmen as a
result of the closure of the business cannot therefore be
properly described as retrenchment."
D
This observation was made in the context of the closure of an under-
taking and being conscious of this position, the question of the
correct interpretation of the definition of the expression 'retrench-
ment' in section 2(oo) of the Act was left open. Reverting to that
question, the view was reaffirmed but let it be remembered that the
two appeals which were heard together in Shukla's case were cases E
of closure, one Barsi Light Railway Company Ltd., and another Shri
Dinesh Mills Ltd. Baroda With specific reference to those cases,
in State Bank of India v. N. Sundara Money,(3) Krishna Iyer J.
speaking for a three judges bench, interpreted the expression 'termi-
nation ...... for any reason whatsover' as under:
F
"A break-down of s. 2(oo) unmisrakably expands the
semantics of retrenchment. 'Termination ... for any reason
, whatsoever' are the key words. Whatever the reason, every
termination spells retrenchment. So, the sole question is--
has the employee's service been terminated? Verbal appa-
rel apart, the substance is decisive. A termination takes G
place where a term expires either by the active step of the
master of the running out of the stipulated term. To pro-

(I) [1957] S.C.R. 121.
(2) [1956] S.C.R. 872. H
(3) [1976] 3 S.C.R. 160
526 SUPRME COURT REPORTS [1981] 3 S.C.R.

A tect the weak against the strong this policy of comprehen-
sive definition has been effectuated. Termination em-
braces not merely the act of terminatiOn by the employer,
but the fact of termination howsoever produced. May be,
the present may be a hard case, but we can visualise abuses
by employers, by suitable verbal devices, circumventing the
B armour of section 25F and section 2(00) . . Without specu-
lating on possibilities, we may agree that 'retrenchment' is
no longer terra incognito but area covered by an expansive
definition. It means 'to end, conclude, cease'. In the pre-
sent case the employment ceased, concluded, ended on the
expiration of nine days-automatically may be, but cessation
c all the same. That to write into the order of appointment
the date of termination confers no moksha from section
25F(b) is inferable from the proviso to section 25F(l).
True, the section speaks of retrenchment by the
employer and it is urged that some act of volition by
the employer to bring about the termination is essential to
D attract section 25F and automatic extinguishment of service
by effluxion of time cannot be sufficient."

It would be advantageous to refer to the facts of that case to
appreciate the interpretation placed by this Court on the relevant
section. State Bank of India appointed the· respondent by an
E order of appointment which incorporated the two relevant
terms relied upon by the Bank at the hearing of the case. They
were : (i) the appointment is purely a temporary one for a period
of 9 days but may be terminated earlier, without assigning any
reason therefor at the Bank's discretion; (ii) the employment, unless
terminated earlier, will automatically cease at the expiry of. the
F period i.e. 18.I 1.1972. It is in the context of these facts that the
Court held that where the termination was to be automatically
effective by a certain date as· set out in the order of appointment it
would nontheless be a retrenchment within the meaning section 2(oo)
and in the absence of strict compliance with the requirements of
section 25F, termination was held to be invalid.
G
Continuing this line of approach, in Hindustan Steel Ltd. v.
The Presiding officer, Labour Court, Orissa and Ors.,_(1) a bench of
three judges examined the specific contention that the decision in
Sundara Money's case runs counter to the construction placed on
H that section by a Constitution Bench and, therefore, the decision is

(I) [1977] S.C.R. 586.
MOHANLAL v. BHARAT ELECTRONICS (Desai, J.) 527

per incuriam. This Court analysed in detail Shukla' s case and Sundara A
Money's case and ultimately held that the Court did not find any-
thing in Shukla' s case which is inconsistent with what has been held
in Sundara Money's case. In reaching this conclusion it was observ-
ed that in Shukla' s case the question arose in the context of closure
of the whole of the undertaking while in Hindustan Steel's case and
Sundara ltfoney's case the question was not examined in the context B
of closure of whole undertaking but individual termination of service
of some employees and it was held to constitute retrenchment ·with-
in the meaning of the expression. This question again cropped up
in Santosh Gupta v. State Bank of Patiala(1). Rejecting the conten-
tion for reconsideration of Sundara Money's case on the ground that
it conflicted with a Constitution Bench decision in Shukla' s case and c
adopting the ratio in Hindustan Steel's case that there was nothing
in the two aforementioned decisions which is inconsistent with each
other and taking note of the decision in Ddhi Cloth and General
Mills Ltd. v. Shambu Nath Mukerjee(') wherein this Court had held
that striking off the name of a workman from the rolls by the
management was termination of service which was retrenchment D
within the meaning of section 2(00), the Court held that discharge
of the workman on the ground that she had ·not passed the test
which would enable her to obtain confirmation was retrenchment
within the meaning of section 2(oo) and, therefore, the requirements
of section 25F had to be complied with. It was pointed out that
since the decision in Shukla' s case, the Parliament stepped in and E
introduced section 25FF and section 25FFF by providing that com-
pensation shall be payable to workman in case of transfer or clo-
sure of the undertaking, as if the workmen had been retrenched.
The effect of the amendment was noticed as that every case of
termination of service by act of employer even if such termination
was as a consequence of transfer or closure of the undertaking was F
to be treated as 'retrenchment' for the purposes of notice, compen-
sation, etc. The Court concluded as under :

"Whatever doubts might have existed before Parlia-
ment enacted sections 25FF and 25FFF about the width of
G
section 25F there cannot be any doubt that the expression
'termination of service for any reason whatsoever' now
covers every kind of termination of service except those not

(I) [1980] 3 S.C.R. 340.
(2) [1978] 1.S.C.R. 591 H
528 SUPREME COURT REPORTS [1981) 3 S.C.R.

A expressly provided for by other provisions of the Act such
as sections 25FF and 25FFF."

Reverting to the facts of this case, termination of service of
the appellant does not fall within any of the excepted, or to be
precise, excluded categories. Undoubtedly therefore the termination
B would constitute retrenchment and by a catena of decisions it is well
settled that where pre-requisite for valid retrenchment as laid down
in section 25F has not been complied with, retrenchment bringing
about termination of service is ab initio void. In State of Bombay and
Ors. v. The Hospital Mazdoor Sabha and Ors.,( 1) this Court held that
failure to comply with the requirement of section 25F which pres-
c cribes a condition precedent for a valid retrenchment renders the
order of retrenchment invalid and inoperative. In other words, it
does not bring about a cessation of service of the workman and the
workman continues to be in service. This was not even seriously
controverted before us.
n It was, however, urged that section 25F is not attracted in
this case for an entirely different reason. Mr. Markendaya contended
that before section 25F is invoked, the condition of eligibility for a
workman to complain of invalid retrenchment must be satisfied.
According to him unless the workman has put in continuous service
for not less than one year his case would not be govern(;!d by section
E 25F. That is substantially correct because the relevant provision
of section 25F provides as under :

"25F. "No workman employed in any industry who
has been in continuous service for not less than one year
F under an employer shall be retrenched by that employer
until:-

(a) the workman has been given one month's notice
in writing indicating the reasons for retrenchment
and the period of notice has expired, or the work-
G man 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 retrench-
ment is under an agreement which specifies a date for the terminal ion
of service;
H
(1) [1960) 2 S.C.R. 866 at 872,
MOHANLAL v. BHARAT ELECTRONICS (Desai, J.) 529

(b) the workman has been paid, at the time of re- A
trenchment, compensation which shall be equiva-
y lent of fifteen days' average pay (for every comp-
leted year of continuous service) or any part there-
of in excess of six months; and

(c) notice in the prescribed manner is served ~on the B
appropriate Government (or such authority as
may be specified by the appropriate government
by notification in the Official Gazette)."

Before a workman can complain of retrenchment being not in conso·
nance with section 25F, he has to show that he has been in conti- c
nuous service for not less than one year under that employer who
has retrl':nched him from service. Section 25B is the dictionary
clause for the expression 'continuous'. It reads as under ;

"25B (I) a workman shall be paid to be in
continuous service for a period if he is, for that period in D
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 not due to any fault
on the part of the workman;
E
(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-

(a) for a period of of one year, if the workman, during F
a period of twelve calendar months preceding the
date with reference to which calculation is to he
·made, has actually worked under the employer
for not less than-
~ (i) one hundred and ninety days in the case of G
a workman employed below ground in a
mine; and

(ii) two hundred and forty days. in any other
case; H
530 SU~REME COURT REPORTS [ 1981] 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-

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

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

Explanation-J<'or the purposes of clause (2), the number of days on
c which a workman has actually worked under an
employer shall include the days on which·-

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

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

E . (iii) he has been absent due to temporary disable-
ment 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 mater-
nity leave; so, however, that the total period
F of such maternity leave does not exceed
twelve weeks.

Mr. Markendaya contended that clauses (I) and (2) of section
25B provide for two different contingencies and that none of the
G clauses is satisfied by the appellant. He contended that sub. section
(I) provides for uninterrupted service and sub-section (2) compre-
hends a case where 'the workman is not in continuous service. The
language employed in sub-sections (I) and (2) does not admit of
this dichotomy. Sub-seciions (I) and (2) introduce a deeming
H fiction .as to in what circumstances a workman could be said to be
in continuous service for the purposes of Chapter VA. Sub-section
(1) provides a deeming fiction in that where a workman is in service
MOHANLAL v. BHARAT ELECTRONICS (Desai, J.) 531

for a certain period he shall be deem.ed to be' in continuous service A
for that period even if service is interrupted on account of sickness
or authorised leave or an accident or a strike which is not illegal
y or a l0ckout or a cessation of work which is not due to any fault
on the part of the workman. Situations such as sickness, autho·
rised leave, an accident, a strike not illegal, a lockout or a cessation
of work would ipso facto interrupt a service. These interruptions B
have to be ignored to treat the workman in uninterrupted service
and such service interrupted on account of the aforementioned causes
which would be deemed to be uninterrupted would be continuous
service for the period for which the workman has been in service.
In industrial employment or for that matter in any service, sickness, c
authorised leave, an accident, a strike which is not illegal, a lockout
and a cessation of work not due to any fault on th·e part of the
workman, are known hazards and there are bound to be interrup·
tions on that account. Sub-section (I) mandates that interruptions
therein indicated are to be ignored meaning thereby that on account
of such cessation an interrupted service shall be deemed to be un·
interrupted and such uninterrupted service shall for the purposes of D
Chapter VA be deemed to be continuous service. That is only one
part of the fiction.

Sub-section (2) incorporates . another deeming fiction for an
entirely different situation. It comprehends a situation where a
workman is not in continuous service within the meaning of sub- E
section (!) for a period of one year or six months, he shall be
deemed to be in continuous service under an employer for a period
of one year or six months, as the case may be, if the .workman
during the period of 12 calendar months just preceding the date
with reference to which calculation is to be made, has actually
worked under that employer for not less than 240 days. Sub-section F
(2) specifically comprehends a situation where a workman is not in
continuous service as per the deeming fiction indicating in sub-
section (I) for a period of one year or six months. In such a case
he is deemed to be in continuous service for a period of one year
if he satisfies the conditions in clause (a) of sub-section (2). The
G
conditions are that commencing the date with reference to which
calculation is to be made, in case of retrenchment the date of re-
trenchment, if in a period of 12 calendar months just preceding such
date the workman has rendered service for a period of 240 days, he
shall be deemed to be in continuous service for a period of one year
H
for the purposes of Chapter VA. It is not necessary for the pur-
poses of sub-section (2) (a) that the workman should be in service
532 SUPREME COURT REPORTS [1981] 3 S.C.R.

A for a period of one year. If he is in service for a period of one
year and that if that service is continous service within the meaning
of sub-section (1) his case would be governed by sub-section (I) and
his case need not be covered by sub-section (2). Sub-section (2) y
envisages a situation not governed by sub-section (!). And
sub-section (2) provides for a fiction to treat a workman in
B 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 backwards and just preceding the
relevant date being the date of retrenchment. In other words, in
order to invoke the fiction enacted in sub-section 2(a) it is necessary
c to determine first the relevant date, i.e., the date of termina-
tion of service which is complained of as retrenchment. After
that date is ascertained, move backward to a period of 12
months just preceding the date of retrenchment and then
ascertain whether within the period of 12 months, the workman
has rendered service for a period of 240 days. If these three facts
D are affirmatively answered in favour of the workman pursuant to
the deeming fiction enacted in sub-section 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 25F. On a pure grammatical construction the contention
that even for invoking sub-section (2) of section 25B the workman
E must be shown to be in continuous service for a period of one year
would render sub-section (2) otiose and socially beneficial legislation
would receive a set back by this impermissible assumption. The con-
tention must first be negatived on a pure grammatical construction
of sub-section (2). And in any event, even if there be any such thing in
favour of the construction, it must be negatived on the ground that
F it would render sub-section (2) otiose. The language of sub-section
(2) is so clear and unambiguous that no precedent is necessary to
justify the interpretation we have placed on it. But as Mr.Markandaya
referred to some authorities, we will briefly notice them.

In Sur Enamel and Stamping Works (P) Ltd. v. Their Work-
G men(1), referring to section 25B as it then stood read with section
2(eee) which defined continuous service, this Court held as
under:
"The position therefore is that during a period of
H employment for less than 11 calendar months these two

(!) [1964] 3 S.C.R. 616.
MOHANLAL V; BHARAT ELECTRONICS (Desai, J.) 533

persons worked for more than 240 days. In our opinion A
that would not satisfy the requirement of section 25B.
Before a workman can be considered to have completed
y one year of continuous service in an industry it must be
shown first that he was employed for a period of not less
than 12 calendar months and, next that during those 12
calendar months had worked for not less than 240 B
days. Where, as in the present case, the workmen have
not at all been employed for a period of 12 calendar months
it becomes unnecessary to examine whether the actual days
of work numbered 240 days or ·more. For, in any case,
the requirements of section 25B would not be satisfied by
the mere fact of the number of working days being not less c
than 240 days.''

If section 25B had not been amended, the interpretation which it
received in the aforementioned case would be binding on us. How-
ever, section 25B and section 2(eee) have been the subject-matter of
amendment by the Industrial Disputes (Amendment) Act, 1964. D
Section 2(eee) was deleted and section 25B was amended. Prior to
its amendment by the 1964 amendment Act, section 25B read as
under:

"For the purposes of ss. 25C and 25F a workman who
during the period of 12 calendar months has actually E
-~
\ worked in an industry for not less than 240 days, shall be
deemed to have completed one year of continuous service
in the industry."

We have already extracted section 25B since its amendment
and the change in language is the legislative exposition of which note F
must be taken. In fact, we need not further dilate upon this aspect
because in Surendra Kumar Verma and Ors. v. Central Government
Industrial-cum-Labour Court, New Delhi and Anr.(1), Chinnappa
Reddy. J., after noticing the amendment and referring to the decision
in Sur Enamel and Stomping Works (P) Ltd. case, held as under :
G
"These changes brought about by Act 36 of 1964
appear to be clearly designed to provide that a workman
who has actually worked under the employer for not less

(1) [1981] I S.C.R. 789. H
534 SUPREME COURT REPORTS [1981] 3 S.C.R.

A than 240 days during a period of twelve months shall be
deemed to have been in continuous service for a period of
one year whether. or not he has in fact been in such
continuous service for a period of one year. It is enough
that he has worked for 240 days in a period of 12
months, it is not necessary that he should have been in
B the service of the employer for one whole year."

In a concurring judgment Pathak J. agreed with this interpretation
of section 25B(2). Therefore, both on principle and on precedent
it must be held that section 25B(2) comprehends a situation where
a workman is not in employment for a period of 12 calendar
c months, but has rendered service for a period of 240 days within
the period of 12 calendar months commencing and counting back-
wards from the relevant date, i.e. the date of retrenchment. If he
--
has, he would be deemed to be in continuous service for a period
of one year for the purpose of section 25B and Chapter VA.

D Reverting to the facts of this case, admittedly the appellant
was employed and was on duty from December 8, 1973 to October
19, 1974 when his service was terminated. The relevant date will
be the date of termination of service, i.e. October 19, 1974. Com-
mencing from that date and counting backwards, admittedly he had
rendered service for a period of 240 days within a period of 12
months and, indisputably, therefore, his case falls within section
25B(2) (a) and he shall be deemed to be in continuous service for a
period of one year for the purpose of Chapter VA.

Appellant has thus satisfied both the eligibility qualifications
prescribed in section 25F for claiming retrenchment compensation.
F He has satisfactorily established that his case is not covered by any
of the excepted or excluded categories and he has rendered conti-
nuous service for one year. Therefore, termination of his service
would constitute retrenchment. As pre-condition for a valid re-
trenchment has not been satisfied the termination of service is ab
G initio void, invalid and inoperative. He must, therefore, be deemed
to b~ in continuous service.

The last submission was that looking to the record of the
appellant this Court should not grant reinstatement but award com-
H pensation. If the termination of service is ab initio void and in-
operative, there is no question of granting reinstatement because there
is no cessation of service and a mere declaration follows that
MOHANLAL v. BHARAT ELECTRONICS (Desai, J.) 535

he continues to be in service with all consequential benefits. A
Undoubtedly, in some decisions of this Court such as"Ruby General
Insurance Co. Ltd. v. Chopra (P. P.),{1) and Hindustan Steel Ltd.
Rourke/a v. A. K. Roy and Others(2) it was held that the Court before
granting reinstatement must weigh all the facts and exercise discre-
tion properly whether to grant reinstatement 'or to award compensa-
tion. But there is a catena of decisions which rule that where the
B
termination is illegal especially where there is an ineffective order of
retrenchment, there is neither termination nor cessation of service
and a declaration follows that the workman concerned continues to
be in service with all consequential benefits. No case is made out
for departure from this normally accepted approach of the Courts
in the field of social justice and we do not propose to depart in. the
c
case.

Accordingly, this appeal is allowed and the Award of the
Labour Court dated May 31, 1980, is set aside. We hold that the
termination of service of the appellant was ab initio void and inoper-
ative and a declaration is made that he continues to be in service
D
with all consequential benefits, namely, back wages in full and other
benefits, if any. However, as the Award is to be made . by the
Labour Court, we remit the case to the Labour Court to make an
appropriate Award in the light of the findings of this Court. The
respondent shall pay the costs of the appellant in this Court quanti-
fied at Rs. 2000 within four weeks from the date of this judgment E
and the costs in the Labour Court have to be quantified by the
Labour Court.

S.R. Appeal allowed.

(!) [1970] 1 L.L.J., 63
(2) [1970] 3 S.C,R. 343 ..