Holding

Because the employer failed to establish the conditions of sub‑clause (bb), the workmen’s termination could not be treated as a project‑completion discharge and therefore amounted to retrenchment, invoking the protections of Section 25F (and 25FFF) of the Industrial Disputes Act.

Summary

The petitioners, a group of casual workmen employed by the Telecom Department for a temporary cable‑laying project, were terminated when the project ended in 1986‑87. They sought reinstatement, continuity of service and back wages, arguing that their termination fell under sub‑clause (bb) of Section 2(oo) of the Industrial Disputes Act and therefore did not attract the retrenchment provisions of Section 25F. The High Court Division Bench held they were project employees and dismissed the claim for back wages, while the Supreme Court reversed this, finding that the employer had not proved the conditions of sub‑clause (bb); consequently the termination amounted to retrenchment and the workmen were entitled to relief under Section 25F (and 25FFF). The Court also held that the seven‑to‑nine‑year delay in filing the dispute was not fatal and could not deprive the workmen of their rights. The Division Bench decision was set aside and the Single Judge’s order restored, granting reinstatement with back wages.

Issues considered

The applicability of sub‑clause (bb) of Section 2(oo) of the Industrial Disputes Act to the workmen’s termination
Whether the termination constituted retrenchment requiring compliance with Section 25F
Whether the employer bears the burden of proving the project‑employment criteria under sub‑clause (bb)
The effect of a 7‑9 year delay in raising the dispute on the entitlement to relief
The relevance of Section 25FFF in cases of closure of a temporary undertaking

Legislation cited

Indian Evidence Act, 1872
Industrial Disputes Act, 1947s. 25B, s. 25F, s. 25FFF, s. 2(oo)(bb)

Subjects

retrenchmentproject employmentcasual labourIndustrial Disputes ActSection 25FSection 25FFFdelay in filingback wagesreinstatementburden of proof

Judgment

A S.M. NILAJKAR AND ORS.
v.
TELECOM. DISTRICT MANAGER, KARNATAKA

MARCH 3 I. 2003

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

labour laws:

Industrial Displlles Act, 1947-Sections 2(oo)(bb) and 25F-Employment
C of workmen on casual basis under a project-Termination of service on
completion of work-Non-co111pliance ofSection 25F-Justiflcation of-labour
Court's order for reinstatement with 50% back wages challenged by way of
writ petition--Single Judge of Hi,,;11 L'uurt held that /erminalion amounted lo
retrenchment-However, back wages denied in view al delay in raising the
D dispute-Division Bench held workmen covered under Section 2(ou)(bb) finding
the employment as project based--Ref"erence held to be vitiated on the ground
of delay-On appeal held, employment H'as project based-Termination of
workmen engaged in a scheme or pro/eel would nut amount lo retrenchment
within the meaning lf sub-clause (bb) subject tu certain ingredie/1/s being
proved-To prove the applicabili1y of lhe sub-clausl' 1he onus lies on the
E employer-For want of proof" atlracting applicability of sub clause (bb) the
termination amounted to re1renchme111-0n the facts of 1he case workmen do
not deserve to be non-suited on 1he ground of delay-Evidence Act, 1872-
0nus lo prove.

l111erpretalion of Sta/l//es:
F
Interpretation of labour laws-Held, has lo be interpre1ed in favour of
beneficiary.

Words and Phrases:

( '1
"Retrenchment ··-Meaning of," in the context a/Section 2(uo) of Industrial
Disputes Act, 1947.

Appdlant-employees were engaged as casual labourers with the
respondent-employer for the purpose of expansion of the work during a
1-1 156
S.M. NILAJKAR v. TELECOM. DISTRICT MANAGER 157

particular period. On completion of the work their services were A
terminated. Pursuant to judgment in Daily Rated Casual labour employed
under P & T Department through Bhartiya Dak Tar Majdoor Manch v. Union
of India and Ors., j1988j 1 SCC 122 wherein direction to regularize casual
labourers was given, Department formulated a scheme and prepared a
list of casual labourers for regularization. Appellants were refused to be B
accommodated therein, on 16.1.1990. On 28.12.1990 they initiated
proceedings under Industrial Disputes Act, 1947 followed by Conciliation
proceedings. Thereafter the dispute was referred to Industrial Tribunal-
cum Labour Court. The Tribunal directed the employer to reinstate all
the workmen with the benefit of continuity of service and 50% back wages.
In writ proceedings Single Judge of High Court held that the workers C
would not be governed by Section 2 (oo)(bb) of the Industrial Disputes
Act, 1947 as their employment was not for any particular project; that
their termination amounted to retrenchment and the same was invalid for
non-compliance with Section 25F of the Act; that the Tribunal was right
in relying on the oral evidence of the workmen as to the period of their D
employment due to delay of around 7 to 9 years in raising the dispute;
that employer was not in it position to produce the record regarding the
same; and that on account of delay in raising the dispute workmen were
not entitled to any back wages. In writ appeal Division Rench of High
Court held that the workmen were emp.loyed in a project and, therefore,
were covered by Section 2(oo)(bb); that the question of non-compliance E
of Section 25F of the Act did not arise as the termination of service was
as a result of non-renewal of contract of employment on the expiry of the
contract; and that delay of 7 to 9 years in raising the dispute vitiated the
reference because.of !aches.
F
In appeal to this Court appellant-workmen contended that they were
employed for general maintenance work and not under a project; and that
the reference sougM by the workmen cannot be said to be delayed
particularly when the law .does not prescribe any period of limitation for
raising a dispute under Section 10 of the Act. G

Allowing the appeals, the Court

HELD: I.I. Government as a welfare State floats several schemes
and projects generating employment opportunities, though they are short-
lived. The objective is to meet the need of the moment. The benefit of such H
158 SUPREME COURT REPORTS [2003] 3 S.C.R.

A schemes and projects is that for the duration they exist, they provide
employment and livelihood to such persons as would not have been able
to secure the same but for such schemes or projects. If the workmen
employed for fulfilling the need of such passing-phase-projects or schemes
were to become a liability on the employer-State by too liberally
B interpreting the iabour law:> in favour of the workmen, then the same may
well act as a di!;incentive to the State for floating such schemes and the
State may opt to keep away from iniliating such schemes and projects even
in times of dire need , because it may feel that by opening the gates of
welfare it would be letting in onernus obligations entailed upon it by
extended application of the labour laws. Sub-clause (bb) of Section 2(oo)
C in the definition of retrenchment was introduced to take care of such like-
situations by Industrial Disputes (Amendment) Act, 1984.
1166-F-H; 167-AI

1.2. 'Retrenchment' in its ordinary connotation is discharge of labour
D as surplus though the business or work itself is continued. Labour laws
being beneficial pieces of legislation are to be interpreted in favour of the
beneficiaries in case of doubt or wh1ere it is possible to take two views of
a provision. Parliament has employed the expression "the termination by
the employer of the service of a workman for any reason whatsoever"
while defining lhe term "retrenchment", which is suggestive of the
E legislative intent to assign the term 'retrenchment' a meaning wider than
what it is understood to have in common parlance. 1167-B, Cl

1.3. The termination of service of a workman engaged in a scheme
or project may 11ot amount to retrenchment within .the meaning of sub-
F clause (bb) subject to the following conditions being satisfied; that the
workman was employed in a project or scheme of temporary duration;
the employment was on a contract, 21nd not as a daily-wager simplicitor,
which provided inter alia that the employment shall come to an end on
the expiry of the scheme or project, and the employment came to an end
G simultaneously with the termination of the scheme or project and
consistently with the terms of the contract. The workman ought to have
been apprised or made aware of the abovesaid terms by the employer at
the commencement of employment. 1167-E-HI

1.4. To excl11de the termination ofa scheme or project employee from
H the definition of rt:trenchment it is for the employer to prove the abovesaid
S.M. NILAJKAR v. TELECOM. DISTRICT MANAGER 159
ingredients so as to attract the applicability of sub-clause (bb) of Section A
2(00). In the present case, the respondent-employer has failed in alleging
and proving the ingredients of sub-clause (bb). All that has been proved
is that the appellants were engaged as casual workers or daily wagers in
a project. For want of proof attracting applicability of sub-clause (bb) of
Section 2(00), it has to be held that the termination of the services of the
appellants amounted to retrenchment. 1168-C, DI B

Hariprasad Shivshanker Shukla and Anr. v. A.D. Divikar and Ors.,
119571 SCR 121; Bangalore Water Supply and Sewerage Board etc. v. A
Rajappa and Ors. etc., 119781 2 SCC 213; Management of Hindustan Steel
Ltd v. The Workmen and Ors., 119731 3 SCC 564, Ghaziabad Development C
Authority and Ors. v. Vikram Choudhary and Ors., 119951 5 SCC 210 and
Exec!ltive Engineer, State of Karnataka v. K. Somasetty and Ors., 119971 5
sec 434, referred to.
2. I. High Court was not justified in denying relief to the appellants
on account of delay in raising the dispute by the appellants. Although the D
High Court has opined that there was a delay of 7 to 9 years in raising
the dispute before the Tribunal but High Court is factually not correct.
The employment of the appellants was terminated sometime in 1985-86
or 1986-87. Pursuant to the judgment in Daily Rated Casual Employees'
case the department formulated a scheme to accommodate casual E
labourers and the appellants were justified in awaiting the outcome
thereof. On 16.1.1990 they were refused to be accommodated in the
scheme. On 28.12.1990 they initiated the proceedings under Industrial
Disputes Act followed by conciliation proceedings and then the dispute was
referred to the Industrial Tribunal-cum-Labour Court. Appellants do not
deserve to be non-suited on the ground of delay. 1170-E; 171-B-DI F

2.2. It is true that merely because the Industrial Disputes Act does
not provide for a limitation for raising the dispute it does not mean that
the dispute can be raised at any time and without regard to the delay and
reasons therefor. There is no limitation prescribed for reference of disputes G
to an industrial tribunal; even so it is only reasonable that the disputes
should be referred as soon as possible after they have arisen and after
conciliation proceedings have failed particularly so when disputes relate
to discharge of workmen wholesale. The delay would certainly be fatal if
it has resulted in material evidence relevant to adjudication being lost and
rendered not available. However the delay in the present case is not so H
160 SUPREME COURT REPORTS 120031 3 S.C.R.

A culpable as to disentitk the appellants for any relief. 1170-F-H; 171-AI

2.3. There was delay, though n01I a fatal one, but the employee cannot
be blamed for the delay. The order of Single Judge denying the relief of
hack-wages while directing the appellants to be reinstated appears to be
just and reasonable. Moreover, the judgment of the Single Judge was not
B put in is~oe by the appellants by filing an appeal. 1171-El

Mis. Shalimar Works limited v. Their Workmen, 119601 I SCR 150;
Nedungadi Bank Ltd. v. KP. /\ladhavankutty and Ors., 120001 2 SCC 455;
Ratan Chandra Sam manta and Ors. v. Union of India and Ors, 119931 Supp.
c 4 sec 67, relied on.

Daily Rated Casual E111ployees zrnder P & T Depart111ent v. Union of
India. I 19881 1 SCC 122, rekrred to.

3. The project in which the workmen were engaged has come to an
D end. The respondent Government may consider the appellants being
accommodated in some other project or scheme or regular employment,
if available, by issuing suitable instructions or guidelines. If it be not
possible, the respondent shall be at liberty to terminate the employment
of the appellants after reinstating them JS directed by the High Court and
E then complying with Section 25F of the Act. 1171-H; 172-AI

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1239-44 of
2001.

From the Judgment and Order dated 9.2.2000 of the Karnataka High
F Court in W.A. Nos. 7506, 7507, 7508, 7510, 7512. 7514 of 1999.
WITH

C.A. Nos. 1245-1248 of 200 I.

S.N. Bhat, S.R. Bhatt and Shiv Kumar Suri for the Appellants.
G
Mukul Rohtagi, Additional Solicitor General (NP), Ajay Shanna and P.
Parmeswaran for the Respondent.

The Judgment of the Court was delivered by

H R.C. LAHOTI, J. A number of workers were engaged as casual
S.M. NILAJKAR v. TELECOM. DISTRICT MANAGER[LAHOTI, J.] 161

lab.ourers for the purpose of expansion of telecom facilities in the district of A
Belgaum, Karnataka, during the years 1985-86 and 1986-87, The services of
these workers were utilized for digging, laying cables, erecting poles, drawing
lines and other connected works. It appears that the services of these workmen
were terminated sometime during the year 1987 and they were not engaged
on work thereafter. In Daily Rated Casual labour employed under P& T
Deptt. tlirough Bhartiya Dak Tar Ma::door Manch v, Union of India and B
Ors., [I 988] I SCC 122, the Supreme Court by its judgment dated 27.10.1987
directed the Depa11ment to fonnulate a scheme under which all casual labourers
who had rendered more than one year's continuous service could be absorbed,
Pursuant to the said directions, the Department of Telecommunications
formulated a scheme called "Casual labourers (Grant of Temporal)' Status C
and Regularisation) Scheme, 1989" which came into force w.e.f. 0L10.1989.
A list of casual labourers was drawn up for inclusion under the said scheme,
On 16.0L1990, a number of workers whose names were not included for
regularization under the said scheme, raised disputes before the Assistant
Labour Commissioner, Mangalore. Conciliation proceedings were initiated
but they failed. Several disputes were referred for adjudication by the Labour D
Court in the years 1994 to 1997. The disputes which were referred were
almost identically framed. In substance, the dispute was 'whether the
termination of the services of (name of worker) w.e.f. (a date in 1986 or
1987), Casual Mazdoor by the Management of Telecom District Manager,
Belgaum is justified or not 9 If not, to what relief the workman is entitled?' E

A consolidated enquiry was held into all the disputes and they were
disposed of by a common award dated 21.06.1999 by the Central Government
Industrial Tribunal-cum-Labour Court, Bangalore. The Tribunal directed the
employer to reinstate all the workmen into service, with the benefit of
continuity of service and with 50% of back wages. The employer filed ten F
writ petitions in the High Court of Karnataka which were disposed of on
16.09.1999 by a common judgment delivered by a learned Single Judge. The
learned Single Judge held that the workers were not project employees as
contended by the employer. The appointment was not for any particular
project and hence would not be governed by sub-clause (bb) of clause (oo) G
of Section 2 of the Industrial Disputes Act. 1947 (hereinafter 'the Act' for
short). Of the workmen each had rendered a continuous service within the
meaning of Section 25B of the Act for a period over 240 days and, therefore,
their termination amounted to retrenchment which was invalid for non-
compliance with Section 25F of the Act. The workmen were, therefore, entitled
to reinstatement. However, there was a delay of nearly 7 to 9 years in raising H
162 SUPREME COURT REPORTS [2003) 3 S.C.R.

A the disputes. The workmen had not placed any material on record to hold that
there was no delay and the disputes were promptly raised. It was because of
this delay that th1e employer was not in a position to produce the record
-
relating to the days for which the workmen had worked inasmuch as according
to the standing instructions of the Department, the registers of muster rolls
were preserved for a period of 5 years only, whereafter they were eliminated.
B The Tribunal did not err in believing the oral evidence adduced by the
workmen as to the period of their employment (i.e. for over 240 days). On
account of delay in raising the dispute, the High Court held that the workmen
were not entitled to any back wages. The learned Single Judge directed the
award to be modified to that extent and upheld the Tribunal's award to the
C extent tv which it directed reinstate1ni:nt with the benefit of continuity of
service and consequential benefits but without back wages.

The employer filed intra-court writ appeals under Section 4 of the
Karnataka High Court Act, which were heard and disposed of by a Division
Bench of the High Court vide the impugned order dated 9.02.2000. Before
D the Division Bench, it was an admitted case of the parties that the workmen
were employed by the Telecom Department as casual labourers in connection
with a project for ·extension of telecom facilities in the district of Belgaum.
Their services were utilized for digging, laying of coaxial cables and other
sundry work. The project was completed sometime in the year 1986-87. The
E disputes were raised after a lapse of 7 to 9 years.

Before the Division Bench, the employer placed reliance on Circular
No. 270/6/84-STM dated 30.03.1985 issued by the Director General (Posts &
Telegraphs), New Delhi to all heads of telecom circles etc. The Circular
reads as under :-
F
Copy of Le1ter No.270/6/84-STN, dated 30.3.1985 from the DG P&T,
New Delhi to All Heads of Te!.ecom Circles., Etc.

Sub. Casual labour-engagement

G Sir.

15.6.80 A number of instructions have been issued from time to
time stressing the need to limit the number of casual labour employed
by the Telecom Units to a minimum. It is, however, regretted to note
that inspite of these instructions. the number of such casual labours
H
S.M. N!LAJKAR v. TELECOM. DISTRICT MANAGER[LAHOTL J.] 163

--
__,,. in Telecom. Circles/Districts is increasing.

2. The position has been reviewed and it has been decided that
A

fresh recruitment and employment of casual labour for any type of
work should be stopped forthwith in Telecom Circles/Districts. The
casual labour already in employment should be utilized only (I) for
work of casual nature, (2) all installation works of temporary nature, B
(3) cable laying work and (4) lines construction/dismantling work.
Regular posts of Mazdoors/Group 'D' posts are sanctioned for
maintenance/Admn. Work as per standards already laid down by this
office from time to time. As such, no casual mazdoors are required
for utilized for maintenance/office work, they should be reallotted/ C
transferred and used in the works enumerated above. Every effort
should be made to reduce the number of casual mazdoors employed
and in no case fresh recruitment/employment made.

3. These orders would, however, not apply to the coaxial cable
laying work in the projects organization and in line dismantling/ D
constructions work in the Electrification Projects Circle. The casual
labour for such works in these units could be engaged only for specific
jobs and retrenched as soon as the work is over.

4. The Heads of Telecom Circles/districts may take immediate
action to bring these instructions to the notice of all subordinate units E
for strict adherence. The receipt of this letter may please be
acknowledged.

xxx xxx xxx xxx

They should ensure that no fresh recruitment and employment of
F
casual mazdoors for any type of work is made in future. All subordinate
units may be instructed suitably. They should acknowledge the receipt
of this communication by next post.

Sd/- G
For General Manager, Telecom.
Karnataka Circle, Bangalore-9"

Another Circular No. 269-29/87-STM dated 10th November 1988 issued
by the Government of India, Ministry of Communications, Department of
Telecommunications, New Delhi, was relied on, dealing with the subject of H
164 SUPREME COURT REPORTS [2003 j .l S.C R.

A regularization of casual labourers. Guidelines for eligibility for regularization
of casual labourers as against 14. 117 posts of regular mazdoors (group · D')
for various circles were laid down. Out of several eligibility conditions. one
was that the casual labourer/ part-time casual labourer should have served the
Department for a minimum period of 7 years as on 31.03.1986. Admittedly,
B the respondent workmen did not satisfy this eligibility condition.

The Division Bench held that the workmen (respondents before it)
were employed under a project of the Telernm Department and were. therefore.
covered by sub-clause (bb) of clause (oo) of Section 2 of the Act. It was a
clear case of termination of services of the workmen as a result of non-
C renewal of contract of employment on the expiry of the contract. The question
of compliance of Section 25F of the Act did not arise. The respondent-
workmen could not be said to have been retrenched. The engagement of the
workmen was on daily wages and only for the purpose of completion of the
project undertaken by the Telecom Department for laying coaxial cables in
the Belgaum District. That the project had been completed in 1986-87 itself,
D is not in dispute. Because of completion of the project their services stood
terminated ipso facto. The Department's Circular dated 30.03.1985 was relied
upon. The Division Bench placed reliance on decisions of this Court in
Gha:iabad Development Authority am/ Ors. v. Vikram Choudhary & Ors ..
[ 1995] 5 sec 210 and Executive Engineer. State ojKarnataka v. K. Somasetty
E and Ors., [1997] 5 sec 434 for forming the opinion that the workmen could
not be said to have been illegally retrenched. The Division Bench also formed
the opinion that unexplained and undue delay of 7 to 9 years in raising the
disputes before the Tribunal vitiated the reference because of !aches. For
taking this view, reliance was placed on Shalimar Works Ltd. v. Their
Workmen. [1960] I SCR 150. Ratan Chandra Sammon/av. Union of India,
F [ 1993] Supp. 4 SCC 67 and Nedungadi Bunk Ltd v. K. P. Madhavankutty &
Ors .. [2000] 2 sec 455. The Division Be1ch allowed the appeals preferred
by the employer and directed the award of the Tribunal as also the judgment
of the learned Single Judge to be set aside.

G Feeling aggrieved by the judgment of the Division Bench, these ten
appeals have been filed by the workers by special leave.

The learned counsel for the workmen-appellants have submitted that
the workmen were employed for general maintenance work of the Telecom
Department and not in any project work. There are two types of organizations
H in Telecom Department, namely, (i) Telecom Circles and, (ii) Telecom Project
S.M. NILAJKAR v. TELECOM. DISTRICT MANAGER[LAHOTI, J.] 165
Circles. The workmen were employed in Karnataka Te_lecom Circie, Belgaum A
Division. The Circular dated 30.03.1985 has no application to these workmen.
The disputes were promptly raised and pursued. The reference sought for by
the workmen cannot be said to be delayed or suffering from lapse, particularly
when the law does not prescribe any period of limitation for raising a limitation
under Section I 0 of the Act. It was, therefore, submitted that the award as B
given by the Tribunal was not liable to be interfered with. On behalf of the
employer-respondent, the same pleas have been reiterated as were taken before
the Tribunal and the High Court. It is submitted that the workmen are project
employees whose services are liable to be dispensed with ipso facto on
termination of the project and that the Division Bench of the High Court has
rightly held the disputes raised by the workmen to be vitiated by delay and C
Iaches.

Let it be stated that on the material available we are not inclined to
upset the finding of fact arrived at in the impugned judgment that the appellant
workmen are project employees and not employed in any department. The
principal issue argued by the learned counsel for the parties centers around D
the status of project or scheme employees - whether the workmen recruited
for discharging temporary job under a project can insist on compliance of
Section 25F of the Act if their services are dispensed with on the project
coming to an end9
E
Section 2(oo) and 25F of the Act, relevant for our purpose, provide as
under:

2. Definitions : In this Act, unless there is anything repugnant in the
subject or context,
F
xxx xxx xxx xxx

[(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
include- G
(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 H
166 SUPREME COURT REPORTS [2003] 3 S.C.R.

A [(bb) termination of the service of a workman as a result of the non-
renewa:I of the contract of employment between the employer
and the workman concerned on its expiry or of such contract
being terminated under a ~;tipulation in that behalf contained
therein; or]

B (c) termination of the service of a workman on the ground of
continued ill-health r -~·

"25F. Conditions precedent to retrenchment of workmen.-No
workman employed :n any industry who has been in continuous service
for not less than one year under an employer shall be retrenched by
c 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 workman has been paid in lieu of such notice, wages
D for the period of the notice',

(b) the workman has been paid. at the time of retrenchment,
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
E
(c) notice in the prescribed manner is served -::in the appropriate
Government [or such authority as may be specified by the appropriate
Government by notification in the Official Gazette]."

It is common knowledge that the Government as a welfare State floats
F severa 1 schemes and projects generating employment opportunities, ti ough
they are short-lived. The objective is to meet the need of the moment. The
benefit of such schemes and projects is that for the duration they exist, they
provide employment and livelihood to such persons as would not have been
able to sec1:re the same but for such schemes or projects. If the workmen
G employed for fulfilling the need of such passing-phase-projects or schemes
were to become a liability on the employer-State by too liberally interpreting
the labour laws in favour of the workmen, then the same may well act as a
disincentive to the State for floating such schemes and the State may opt to
keep away from initiating such schemes and projects even in times of dire
need, because it may feel that by opening the gates of welfare it would be
H letting-in onerous obligations entailed upon it by extended application of the
S.M. NILAJKAR v. TELECOM. DISTRICT MANAGER[LAHOTI. .1.)167

labour laws. Sub-clause (bb) in the definition of retrenchment was introduced A
to take care of such like-situations by Industrial Disputes (Amendment) Act,
1984 with effect from I 8.8.1984.

'Retrenchment' in its ordinary connotation is discharge of labour as
surplus though the business or work itself is continued. It is well-settled by
a catena of decisions that labour laws being beneficial pieces of legislation B
are to be interpreted in favour of the beneficiaries in case of doubt or where
it is possible to take two views of a provision. It is also well-settled that the
Parliament has employed the expression "the termination by the employer of
the service of a workman/or any reason whatsoever" while defining the term
"retrenchment", which is suggestive of the legislative intent to assign the C
term 'retrenchment' a meaning wider than what it is understood to have in
common parlance. There are four exceptions carved out of the artificially
extended meaning of the term 'retrenchment', and therefore, termination of
service of a workman so long as it is attributable to the act of the employer
would fall within the meaning of 'retrenchment' de hors the reason for
termination. To be excepted from within the meaning of 'retrenchment' the D
termination of service must fall within one of the four excepted categories.
A termination of service which does not fall within the categories (a), (b),
(bb) and (c) would fall within the meaning of 'retrenchment'.

The termination of service of a workman engaged in a scheme or E
project may not amount to retrenchment within the meaning of sub-clause
(bb) subject to the following conditions being satisfied :-

(i) that the workman was employed in a project or sch~me of
temporary duration;
F
(ii) the empioyment was on a contract, and not as a daily-wager
simplicitor, which provided inter alia that the employment shall
come to an end on the expiry of the scheme or project; and

(iii) the employment came to an end simultaneously with the
termination of the scheme or project and consistently with the G
terms of the contract;

(iv) the workman ought to have been apprised or made aware of the
abovesaid terms by the employer at the commencement of
employment.
H
168 SUPREME COURT REPORTS 120031 3 SCR

A The engagement of a workman as a daily-wager does not by itself
amount to putting the workman on notice that he was being engaged in a
scheme or project which was to last only for a particular length of time or
upto the occurrence of some event. and therefore, the workman ought to
know that his employment was short-lived. The contract of emplo;nnent
B consciously entered into by the workman with the employer would result in
a notice to the workman on the date of the commencement of th~ employment
itself that his employment was short-lived and as per the terms of the contract
the same was liable to termination on the expiry of the contract and the
scheme or project coming to an end. The workman may not therefore complain
that by the act of employer his employment was coming to an abrupt
C termination. To exclude the termination of a scheme or project employee
from the definition ofretrenchment it is for the employer to prove the abovesaid
ingredients so as to attract the applicability of sub-clause (bb) abovesaid. In
the case at hand, the respondent-employer has failed in alieging and proving
the ingredients of sub-clau~.e (bb), as stated hereinabove. All that has bc·cn
proved is that the appellants were engaged as casual workers or daily-wagers
D in a project. For want of i:roof attracting applicability of sub-clause (bb), it
has to be held that the termination of the services of the appellants amounted
to retrenchment.

The appropriate provision which should govern the cases of the
r;-
L
appellants is Sectwn 25FFF, the relevant part whereof is extracted and
reproduced hereunder:-

"25 FFF. Compensation to workmen in case of closing down of
undertakings,-( I) Where an undertaking is closed down for any
reason whatsoever, every workman who has been in continuous service
F for not less than one year in that undertaking immediately before
such closure shall, subject to the provisions of sub-section (2), be
entitled to notice and compensation in accordance with the provisions
of section 25F, as if the workman had been retrenched:

Provided that '.vherc the undertaking is closed down on account of
G unavoidable circumstances beyond the COl'trol of the employer. 1he
compensation to be paid to the workman under clause (b) of sectic,n
25F shall not exceed hi~. average pay for three months.

{Explanation: An undertaking v.hich is closed down by reason merely
H of
S.M. NILAJKAR v. TELECOM. DISTRICT MANAGER[LAHOTL .I.] 169

(i) financial difficulties (including financial losses); or A
(ii) accumulation of undisposed of stocks; or

(iii) the expiry of the period of the lease or licence granted to it; or

(iv) in a case where the undertaking is engaged in mining operations,
exhaustion of the minerais in the area in which such operations B
are carried on,

shall not be deemed to be closed down on account of unavoidable
circumstances beyond the control of the employer within the meaning
of the proviso to this sub-section.] C
IA. [Not reproduced]

IB. [Not reproduced]

(2) Where any undertaking set-up for the construction of buildings, D
bridges, roads, canals, dams or other construction work is closed
down on account of the completion of the work within two years
from the date on which the undertaking had been set up, no workman
employed therein shall be entitled to any compensation under clause
(b) of section 25F, but if the construction work is not so completed E
within two years, he shall be entitled to notice and compensation
under that section for every [completed year of continuous service]
1 or any part thereof in excess of six months."

It is pertinent to note that in Hariprasad Shivshanker Shukla and Anr.
v. A.D. Divikar and Ors., [ 1957] SCR 121 the Supreme Court held that F
'retrenchment' as defined in Section 2(oo) and as used in Section 25F has no
wider meaning than the ordinary accepted connotation of the word, that is,
discharge of surplus labour or staff by the employer for any reason whatsoever
otherwise than by way of punishment inflicted in disciplinary action.
Retrenchment was held to have no application. where the services of all G
workmen were terminated by the employer on a real and bona fide closure
of business or on the business or undertaking being taken over by another
employer. The abovesaid view of the law taken by the Supreme Court r"sulted
in promulgation of the Industrial Disputes (Amendment) Ordinance. 1957
with effect from 27.4.1957, later on replaced by an Act of ParliJm"m (Aci

-- 18 of 1957) with effect from 6.6.1957 whereby Section 25FF and Sc.:liG11 i l
I
)..

170 SUPREME COURT REPORTS [2003] 3 S.C.R.

A 25FFF were introduced in the body of the Industrial Disputes Act. 1957.
Section 25FF deals with the case of transfer of undertakings with which we
are not concerned. Section 25FFF deals with closing down of undertakings.
The term 'undertaking' is not defined in the Act. The relevant provisions use
the term 'industry'. Undertaking is a concept narrower than industry. An
B undertaking may be a part of the whole, that is, the industry. It carries a
restricted meaning. (see Bangalore Water Supply & Sewerage Board etc. v.
A. Rajappa and Ors. etc., [I 978] 2 SCC 213 and the Management of Hindustan
Steel Ltd v. The Workmen and Ors., (1973] 3 SCC 564. With this amendment
it is clear that closure of a project or scheme by the State Government would
be covered by closing down of undertaking within the meaning of Section
C 25FFF. The workman would therefore be entitled to notice and compensation
in accordance with the provisions of Section 25F though the right of employer
to close the undertaking for any reason whatsoever cannot be questioned.
Compliance of Section 25F shall be subject to such relaxations as are provided
by Section 25FFF. The undertaking having been closed on account of
D unavoidable circumstances beyond the control of the employer, i.e. by its
own force as it was designed and destined to have a limited life only, the
compensation payable to the workman under clause (b) of Section 25F shall
not exceed his average pay for three months. This is so because of failure on
the part of respondent employer to allege and prove that the termination of
employment fell within sub-Clause(bb) of Clause (oo) of Section 2 of the
E Act.

It was submitted on behalf of the respondent that on account of delay
in raising the dispute by the appellants the' High Court was justified in denying
relief to the appellants. We cannot agree. It is true, as held in Mis Shalimar
F Works Limited v. Their Workmen (supra) that merely because the Industrial
Disputes Act does not provide for a limitation for raising the dispute it does
not medn that the dispute can be raised ar. any time and without regard to the
delay and reasons therefor. There is no limitation prescribed for reference of
disputes to an industrial tribunal; even so it is only reasonable that the disputes
G should be referred as soon as possible after they have arisen and after
conciliation proceedings have failed particularly so when disputes relate to
discharge of workmen wholesale. A delay of 4 years in raising the dispute
after even re-employment of the most of the old workmen was held to be
fatal in Mis Shalimar Works Limited v. Their Workmen (supra). In Nedungadi
Ba11k ltd v. K.P. Madhavankutty and Ors. (supra), a delay of 7 years was
H held to be fatal and disentitled the workmen to any relief. In Ratan Chandra
.--f,.

S.M. NILAJKAR v. TELECOM. DISTRICT MANAGER[LAHOTL .1]171

Sammanta and Ors. v. Union of India and Ors., (supra), it was held that a A
casual labourer retrenched by the employer deprives himself of remedy
available in law by delay itself; lapse·of time results in losing the remedy and
the right as well. The delay would certainly be fatal if it· has resulted in
material ev'idence relevant to adjudication being lost and rendered not available.
However, we do not think that the delay in the case at hand has been so B
culpable
. , as to disentitle the appellants for any relief. Although the High
Court has opined that there was a delay of 7 to 9 years in raising the dispute
before the Tribunal but we find the High Court factually' not correct. i'he
employment of the appellants was terminated sometime in 1985-86 or 1986'
87. Pursuant to the judgment in Daily Rated Casual Employees Under P &
T Department v. Union of India, (supra) the department was formulating a· C
scheme to accommodate casual labourers and the appellants were justified in
awaiting the outcome thereof. On 16.1.1990 they were refused to be
'' accommodated in the scheme. On 28.12.1990 they initiated the proceedings
under the Industrial Disputes Act followed by conciliation proceedings and
then the dispute was referred to the Industrial Tribunal-cum-Labour Court.
We do not think that the appellants deserve to be non-suited on the ground D
of delay.

The fact remains that there was delay, though not a fatal one, in initiating
proceedings calculating the time between the date of termination and initiation
of proceedings before the Industrial Tribunal-cum-Labour Court. The employee E
cannot be blamed for the delay. The learned Single Judge has denied the
relief of back-wages while directing ti'e appellants to be reinstated. That
appears to be a just and reasonable order. Moreover, the judgment of the
learned Single Judge was r.ot put in issue by the appellants by filing an
appeal.
F
For all !he foregoing reasons we are of the opinion that the decision of
the Division Bench deserves to be set aside and that of the learned Single
Judge restored, except for the finding that the appellants were not project
employees.

During the course of hearin!l it was stated at the Bar that there are a
G
number of matters pending in different fora, Industrial-cum-Labour Court or
High Court, raising similar issues a1~aiting decision in this case. We clarify
that all such pending cases shall be heard and decided in accordance with the
law as stated hereinabove. The project in which the workmen were engaged
has come to an end. The respondent Government may consider the appellants H
172 SUPREME COURT REPORTS [2003] 3 S.C.R.

A being accommodaied in some other project or scheme or regular employment,
if available, by issuing suitable instructions or guidelines. If it be not possible,
the respondent shall be at liberty to terminate the employment of the appellants
after reinstating them as directed by the High Court and then complying with
Section 25F of the Industrial .Disputes Act.
B The appeals are allowed. The impugned decision of the Division Bench
is set aside and that of the learned single Judge is restored as above. The
appellants shall be entitled to their costs throughout.

K.K.T. Appeals allowed.

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