PRAMOD JHA AND OTHERSversusSTATE OF BIHAR AND OTHERS

A                          PRAMOD JHA AND OTHERS
                                            V.

                        STATE OF BIHAR AND OTHERS                                    ...
                                  MARCH 3, 2003

B                  [R.C. LAHOTI AND BRIJESH KUMAR, JJ.].



          Industrial Disputes Act, 194.7:

         Section 25F-Daily wage workers challenging retrenchment on the
C   ground of non-compliance of section 25F clauses (a) and (b)-Justification
    of-Held: Workmen having been given one month's notice in writing indicating
    reasons and compensation as required by Section 25F in the form of banker's
    cheque, the retrenchment is justified
                                                                                      .,  .


D         Section 25N-App/icabi/ity of-Held, in the instant case, SP..ction 25N
    not applicable since in th~ industrial establishment less than 100 workmen are
    employed, on an average.

         Practice and Procedure : ·

E        Plea-Maintainability of-Jn the absence of requisite pleadings and
    documents plea not maintainable.

          Appellants were project/scheme employees engaged on daily wage
    basis. Authorities issued one month notice proposing termination of their
    services under section 25F of the Industrial Disputes Act, 1947. Aggrieved ·      ,
F   appellants challenged the validity of notices. High Court passed an interim      "
    order protecting their employment and maintaining status quo.
    Subsequently authorities issued another notice informing the workers that
    their services were terminated due to discontinuance of new schemes and
    that the amount due and payable to them was available in the Divisional
    Office by way of banker's cheque. Hence the present appeals.
G
          Appellants contended that the retrenchment of the ap11ellants suffers
    from serious infi:-mities as tht notice is not accompanied lily the amount
    of requisite compensatio.n, and the amount of compensation has not been
    paid or tendered to the workmen since asking the work111en to come to
H   the Divisional Office for collecting the amount of compensation cannot be
                                        512
                         PRAM OD JHA v. ST ATE                        Sl3
said to be compliance of clause (b ).                                         A
      State Government contended that the communications made and the
steps taken by it fully and strictly satisfied the requirements of Section
25F and no fault could be found therewith.

     Dismissing the appeals, the Court                                        B
      HELD: 1.1. The underlying object of &ection 25F of the Industrial
Disputes Act, 1947 is two-fold. Firstly, a retrenched employee must have
one month's time available at his disposal to search for alternate
employment, and so, either he should be given one month's notice of the
proposed termination or he should be paid wages for the notice period.        C
Secondly, the workman must be paid retrenchment compensation at the
time of retrenchment, or before, so that once having been retrenched there
should be no need for him to go to his employer demanding retrenchment
compensation and the compensation so paid is not only a reward earned
for his previous services rendered to the employer but is also a sustenance   D
to the worker for the period which may be spent in searching for another
employment. Section 25F nowhere speaks of the retrenchment
compensation being paid or tendered to the worker along with one month's
notice; on the contrary clause (b) expressly provides for the payment of
compensation being made at the time of retrenchment and by implication
it would be permissible to pay the same before retrenchment. Payment of       E
tender of compensation after the time when the retrenchment has taken
effect would vitiate the retrenchment and non-compliance with the
mandatory provision which has a beneficial purpose and a public policy
behind would result in nullifying the retrenchment. [519-B-C-D)
                                                                              F
      1.2. In the instant case, workmen have been given one month's notice
in writing. The reasons for retrenchment have been indicated. An
opportunity of hearing against the proposed termination was also afforded
though not required by Section 25F. Retrenchment was to take effect on
expiry of one month from the date of the notice. Compensation as required
by Section 25F was available in the form of banker's cheque for payment       G
to the workers simultaneously with the time of retrenchment and they were
given intimation in advance in that regard. The workers had already
approached the High Court and secured an interim order protecting their
employment and status quo being maintained. They were obviously not
interested in receiving the retrenchment compensation which if done may       H
    514                   SUPREME COURT REPORTS                  (2003) 2 S.C.R.

A have had the effect of frustrating the interim order protecting their
    employment. Therefore the retrenchment of any of the appella111ts cannot
    be found fault with on any of the grounds raised by the appellants by
    reference to clauses (a) and (b) of Section 25F. 1521-C-D)

          1.3. The submission that relief be allowed on the ground of non-
B   compliance with the provisions of Se.:tion 25N of the Act cannot be
    accepted. Section 25N is placed in Chapter V-8 of the Act which according .
    to Section 25K has an application only to industrial establishment in which
    not less than 100 workmen were employed on an average per working day
    for the preceding 12 months. The plea was not raised befo1·e the High
C   Court. It is not even taken in the special leave petitions. It was sought to
    be taken only at the time of hearing. The infirmity in retrenchment by
    reference to Section 25N cannot be ventured to be found out without laying
    factual foundation attracting applicability of the provision. It is basically
    a question of fact. In the absence of requisite pleading having been raised
    and documents having been brought on record, the plea cannot be
D   entertained. (521-E-F-G)

          1.4. Workers are free to collect the amount of retrenchment
    compensation as was offered to them. For the convenience of the
    appellants, respondents are directed·to have the banker's cheques renewed
E   or fresh banker's cheques drawn up in lieu of the earlier banker's cheques
    for the amount due and payable to the workers under Section 25F of the
    Act and inform the workers to collect the same at an appointed time and
    place. (522-C)

        Sain Steel Products v. Naipal Singh and Ors., AIR (2001) SC 2401 and
F   Gammon India Limited v. Niranjan Dass, [1984) 1 SCC 509, distinguished.

          Gurmail Singh and Ors. v. State of Punjab and Ors., (1991) 1 SCC
    189; The Management of Delhi Transport Undertaking v. The Industrial
    Tribunal, Delhi and Anr., [19651 1 SCR 998 and Hindustan Steel Works
G   Construction Ltd. and Ors. v. Hindustan Steel Works Construction ltd.
    Employees' Union, Hyderabad and Anr., [1995) 3 SCC 474, referred to.

          CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4157 of2000.

         From the Judgment and Order dated 22.9.1999 of the Patna High Court
H   in C.W. J.C. No. 6478 of 1988.
                PRAMOD JHA v. STATE [R.C. LAHOTJ,.J.)                       515
                                     WITH                                           A
      C.A. Nos. 1902-1905 of 2003.

    P.S. Mishra, Tathagat H. Vardhan, Ail K. Jha, Santosh Mishra, S.B.
Upadhyaya, B.B .. Singh and Kumar Rajesh Singh for the appearing parties.
                                                                                    B
      The Judgment of the Court was delivered by

      R.C. LAHOTI, J. Leave granted in SLP(C) Nos. 9735-9738/2000.

      Validity of retrenchment of project/scheme employees as also the precise
procedure to be followed so as to amount to retrenchment as per law, are the        C
issues arising for decision in these appeals.

      A brief resume of uncontroverted and such other facts as cannot at this
stage be disputed. In the State of Bihar a· large number of workers were
engaged on daily wage basis, instead of making regular appointments, in the
Government departments by the authorities. The practice was viewed with             D
concern by the State Government and it was decided to discourage the same.
However, the authorities continued with making such illegal appointments
contrary to the dir~ctions issued by the State Government. A stage reached
when the State Government had to take a decision of terminating all
appointments made on daily wage basis or on muster roll. The employment             E
of a good number of such employees whose employment on daily wage basis
or on muster roll came to an end, or was likely to come to an end, in view
of the State Government's policy decision, was converted into employment
on regular basis by regularizing their services as. far as that was practicable
and could be done by filling up the vacancies available. So far as the appellants
are concerned they are project/scheme employees engaged on daily wage               F
basis and who could not be absorbed in regular vacancies as neither vacancies
nor work nor funds were available.

      On 30.6.1995 Office of the Executive Engineer, Gangji"Pump Canal
Division, District Munger, served notices on 55 employees engaged on daily          G
wage basis informing them that they were appointed for the timely
implementation of the projects of the State Government on daily wage basis
as per necessity. On account of the cut in running the project and ri<source
crunch in t~ finance etc. there was a reduction in the work-load and there
was no necessity of continuing the work on daily wage basis. Therefore, the
daily wagers were informed "your services are terminated with effect from           H
    516                     SUPREME COURT REPORTS                   [2003] 2 S.C.R.

A 01.08.1995" and the provisions of Section 25F of Industrial Disputes Act
  would be complied with; that this letter be treated as notice in accordance
  with Section 25F of Industrial Disputes Act. On 1.7.1995 another notice was
  issued to the daily wage employees supplemental to the earlier notice, giving
  each one of them opportunity to show cause against the proposed termination
B of their employment, consistently with Section 25F of the ID Act, on or
  before 17. 7.1995. The appellants laid challenge t:> the validity of the notice
  by post haste filing civil writ petitions in the High Court. By order dated
  28. 7.1995 the High Court directed status quo to be maintained meaning thereby
  that the employment of the appellants was not to be discontinued.

C       During the period 1979 to 1981 there were several employees engaged
  as daily wagers. So far as Ganga Pump project nos. 1 & 2 are concerned
  there were 55 such workers. On 28.7.1995 another notice was issued whereby
  the daily wage employees were informed that their employment was being
  terminated in view of the high level decision taken discontinuing the new
  schemes, financial crunch and consequent reduction in employment
D opportunities and hence need for employment of daily wagers not surviving
  any more. It was also stated that the employment of the daily wagers was
  being terminated with effect from 1.8.1995 under Section 25F of ID Act. The
  daily wagers were informed that 'the amount due and payable to each one of
  them calculated as per Section 25F of ID Act' was available to be delivered
E to them by way of banker's cheques and each one of them should positively
  collect the amount on 31.7.1995 from the Divisional Office. It is categorically
  stated on the affidavit of the Executive Engineer, Ganga Pump Canal, Division
  No.I, Government of Bihar that the banker's cheques were available for
  being delivered to the employees concerned but they did not tum up to
F collect the same. This statement on oath is not controverted in the rejoinder
  filed on behalf of the appellants. The reasons for termination of the
  employment of the daily wagers are also mentioned in the affidavit of the
  Executive Engineer which goes on to say that the project/scheme in which
  the appellants were engaged has been discontinued. The appellants do not
  dispute the correctness of these averments. It is not their case thal the project/
G scheme in which they were engaged is still continuing or that anyone else has
  been appointed in their place after their retrenchment. The High Court has-'
  also recorded a finding of fact in its impugned judgment that the amount
  payable to the daily wagers under Section 25F of the ID Act was available
  at the Divisional Office in the form of banker's cheques and the workers
H were askeil to personally appear and receive the payment from the Cashier
  at the Divisional Office but they did not do so.
                PRAMOD JHA v. STATE [R.C. LAHOTI, J.]                      517
       Sections 25F and 2( oo) of the Act read as under :                          A
       "Conditions precedent to retrenchment of workmen.

       25F. No workman employed in any industry who has been in
       continuous service for not less than one year under an employer shall
       be retrenched by that employer until                                        B
       (a) the workman has been given one month's notice in wntmg
       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;

       (b) the workman has been paid, at the time of retrenchment,                 C
       compensation which shall be equivalent to fifteen days' average pay
       [for every completed year of continuous service] or any part thereof
       in excess of six months; and

       (c) notice in the prescribed manner is served on the appropriate
       Government [or such authority as may be specified by the appropriate        D
       Government by notification in the Official Gazette].

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

       (a) voluntary retirement of the workman; or
       (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             F
       [(bb) termination of the service of the workman as a result of the non-
            renewal of the contract of employment between the employer
            and the workman concerned on its expiry or of such contract
            being terminated under a stipulation in that behalf contained
            therein; or]                                                           G
       (c) termination of the service of a workman on the ground of
           continued ill-health;]"

      On behalf of the State of Bihar it is not disputed for the purpose of this
case that the project wherein the appellants were engaged falls within the         H
    518                     SUPREME COURT REPORTS                    [2003] 2 S.C.R.

A definition of 'industry' and that each one of the appellants had served              ·~
    continuously for not less than one year within the meaning of Section 25F,
    and therefore, the employment could not have been termin!lted except on
    compliance with the provisions of Section 25F of the Act: The core of
    controversy centers around the question whether it can be said that the
    mandatory requirements of Section 25F were complied with or not. A bare
B   reading of Section 25F of the Act shows that retrenchment within the meaning
    of the Section 2(oo) of the Act must satisfy the following requirements:-

            (i) that the workman has been given ane month's notice :(a) in
                writing, and (b) indicating the reasons for retrenchment;
c           (ii) that the retrenchment must take effect after the expiry of the
                 period of notice, i.e., one month or else the workman should be
                 paid in lieu of such notice, wages for the period of the notice;

             (iii) that at the time of retrenchment the worker has been paid
D                 compensation equivalent to 15 days average pay for every
                  completed year of continuous service or any part thereof in excess
                  of six months, and

            (iv) that the notice in the prescribed manner is served on the                  I-
                 appropriate government or on the specified authoriiy as notified.
E
         Shri P.S. Mishra, the learned senior counsel for the appellants submitted
  that the amount of compensation as contemplated by clause (b) of Sec. 25F,
  (and the wages for the period of notice where one month's notice is not
  given) must accompany the notice under rlause (a), and if that is not done
  the notice shall be invalid, as is the present case. The learned senior counsel
F submitted that the retrenchment of the appellants suffers from two serious
  infirmities : firstly, the notice is not accompanied by the amount of requisite
  compensation, and secondly, the amount of compensation has not been paid
  or tendered to the workmen; asking the workmen to come to the Divisional
  Office for collecting the amount of compensation cannot be said to be
G compliance of clause (b). Reliance was placed on a recent decision of this
  Court in Sain Steel Products v. Naipa/ Singh and Ors .. AIR (2001) SC 2401.

          Shri B.B. Singh, the learned counsel for the State Government submitted,
    on the other hand, that the communications made on behalf of the State of
    Bihar and the steps taken by it fully and str~tly satisfy the requirements of
H   Section 25F and no fault can be found therewith.
                 PRAMOD JHA v. STATE [R.C. LAHOTI, J.)                      519
      We have given our anxious consideration to .submission and counter- A
submission made before us in the light of the pleadings and undisputed
documents available on record. We are of the opinion that the appeals are
devoid of any merit and liable to be dismissed. The underlying object of
Section 25F is two-fold. Firstly, a retrenched employee must have one month's
time available at his disposal to search for alternate employment, and so,
either he .should be given one month's notice of the proposed termination or B
he should be paid wages for the notice period. Secondly, the workman must
be paid retrenchment compensation at the time of retrenchment, or before, so
that once having been retrenched there should be no need for him to go to
his employer demanding retrenchment compensation and the compensation
so paid is not only a reward earned for his previous services rendered to the C
employer but is also a sustenance to the worker for the period which may be
spent in searching for another employment. Section 25F nowhere speaks of
the retrenchment compensation being paid or tendered to the worker along
with one month's notice; on the contrary clause (b) expressly provides for the
payment of compensation being made at the time of retrenchment and by
 implication it would be permissible to pay the same before retrenchment. D
Payment of tender of compensation after the time when the retrenchment has
taken effect would vitiate the retrenchment and non-compliance with the
mandatory provision which has a beneficial purpose and a public policy
behind would result in nullifying the retrenchment.
                                                                                    E
       Compliance with clauses (a) and (b) of Section 25F strictly as per the
requirement of the provision is mandatory. However, compliance with clause
(c) is directory, as held in Gurmail Singh and Ors. v. State of Punjab and
Ors., (1991] I SCC 189 and a substantial compliance would be enough.

      Gammon India Limited v. Niranjan Dass, (1984] 1 SCC 509, relied on            p
by Shri Mishra, the learned senior counsel for the appellants, has no application
to the facts of the present case. There the notice under Section 25F (a) stated
the reason for retrenchment as "due to the reduction of the volume of work
of company as a result of the recession". However, the real reason was
closure of company's Delhi office and there was not even a whisper in the
notice of this real reason and the same was sought to be disclosed by leading       G
evidence before the Industrial Tribunal which was not countenanced by this
Court.

     In Gurmail Singh 's case (supra) a three-Judge Bench of this Court
examined the question of compliance of Section 25F(b ). It was contended on         H
    520                    SUPREME COURT REPORTS                    [2003] 2 S.C.R.

A behalf of the workers that the State had not furnished the details of the
    amounts of compensation determined in the case of each employee and that
    the State had not taken steps to deliver the amount in respect of each employee
    at his doorsteps by the relevant date. It was urged that the tender of
    compensation under Section 25F, in order to be valid, should be of the
B   precise amount and should be made simultane.ously with termination of the
    service. It was found that the bank drafts in respect of individual employees
    were dispatched in time so as to reach Divisional/Sub-Divisional Offices of
    the employer well in advance of the date of expiry of the notice period and
    the date on which the retrenchment was to be effective.' The amounts were
    not actually paid or tendered to. the workers directly but a method for
C   disbursement of compensation was evolved in the interest of workers'
    convenience. Instead of the workers, spread out all over the State, being
    asked to come to the Head Office to collect the amount of compensation and
    the difficulty of the employer in making available the compensation at the
    doorstep of each employee, an arrangement was made whereby the workers
    could go to the nearest Divisional/Sub-Divisional Office and collect the amount
D   of compensation due to them. None of the workers ascertained whether the
    amounts sent by the Head Office to the Divisional/Sub-Divisional Offices
    were the correct amounts. No instance was pointed out to show that the bank
    drafts were not for the correct amounts. The High Court felt satisfied that the
    individual compensation drafts were sent to the various subordinate offices
E   ready for disbursement to the concerned workers on or before the relevant
    date. It was held that there was sufficient compliance with the provisions of
    clause (b) of Section 25F. This Court agreed with the view of the High Court.

         In The Management ofDelhi Transport Undertaking Vs. The Industrial
  Tribunal, Delhi and Anr., [1965] I SCR 998 pari materia provision as to
F payment of compensation equivalent to one month's wages to workmen
  contained in proviso to sub-section (2) of Section 33 of ID Act came up for
  the consideration of this Court. It was held that the proviso did not mean that
  the wages for one month have to be actually paid; the employer is expected
  to tender the amount before the dismissal but cannot force the employee to
  receive the payment before dismissal becomes effective. The making of the
G tender of the amount, before the order of dismissal becomes effective, would
  be sufficient compliance.

         In Sain Steel Products (supra), which is a two-Judge Bench decision of
  this Court, the worker was informed "to collect what is due to him" without
H spelling out whether or not it included the amount as contemplated under
                PRAMOD JHA v. STATE [R.C. LAHOTI, J.]                     521

Section 25F. It was in such peculiar facts and circumstances of the case that    A
this Court refused to accept the offer in the terms in which it was made and
quoted hereinabove as amounting to making an offer in terms of Section 25F
of the Act. Both the Labour Court and the High Court had recorded a finding
of fact that Section 25F (b) was not complied with. Sain Steel Products Case
(supra) is clearly distinguishable and has. no application to the facts of the   B
present case.

       In the case before us the workmen have been given one month's notice
in writing. The reasons for retrenchment have been indicated. An opportunity
of hearing against the proposed termination was also afforded though not
required by Section 25F. Retrenchment was to take effect on expiry of one C
month from the date of the notice. Compensation as required by Section 25F
was available in the form of banker's cheques for payment to the workers
simultaneously with the time of retrenchment and they were given an
intimation in advance in that regard. The workers had already approached the
High Court and secured an interim order protecting their employment and
status quo being maintained. They were obviously not interested in receiving D
the retrenchment compensation which if done may have had the effect of
frustrating the interim order. In these facts and circumstances, ti,;: retrenchment
of any of the appellants cannot be found fault with on any of the grounds
raised by the appellants by reference to clauses (a) and (b) of Section 25F.

       Faced with this situation, a last effort was made by the learned senior E
counsel for the appellants urging for relief being allowed on the ground of
non-compliance with the provisions of Section 25N of the Act. Section 25N
is placed in Chapter V-B of the Act which according to Section 25K has an
application only to industrial establishment in which not less than 100 workmen
were employed on an average per working day for the preceding 12 months. p
The plea was not raised before the High Court. It is not even taken in the
special leave petitions. It was sought to be taken only at the time of hearing.
The plea need not detain us any longer. The infirmity in retrenchment by
reference to Section 25N cannot be ventured to be found out without laying
factual foundation attracting applicability of the provision. It is basically a
question of fact. In the absence of requisite pleadings having been raised and G
documents having been brought on record, we are not persuaded to entertain
the plea. On the contrary, Shri B.B. Singh, the learned counsel for the State·
has pointed out that the controversy in this case is confined only to 55
workers and therefore the submission based on Section 25N of the Act is
totally irrelevant and devoid of any merit, We find substance in the opposition · H
    522                   SUPREME COURT REPORTS                   [2003) 2 S.C.R.

A so offered. Jn Hindustan Steel Works Construction Ltd. and Ors. v. Hindustan
    Steel Works Construction Ltd Employees' Union, Hyderabad and Anr., (1995)
    3 SCC 474 (vide para 18), this Court refused to entertain a plea raised on
    behalf of the workers by reference to Chapters V-A and V-B of the Act as
    the contention was not urged before the High Court.

B         For all the foregoing reasons we find the appeals devoid of any merit
    and liable to be dismissed. They are dismissed accordingly. The workers are
    free to collect the amount of retrenchment compensation as was offered to
    them. For the convenience of the appellants we direct the respondents to have
    the banker's cheques renewed or fresh banker's cheques drawn up in lieu of
C   the earlier banker's cheques for the amount due and payable to the workers
    under Section 25F of the Act and inform the workers to collect the same at
    an appointed time and place. Subject to the said observation the appeals are
    dismissed though without any order as to costs.

    N.J.                                                     Appeals dismissed.