Holding

Termination of a contract worker on non‑renewal of contract is not "retrenchment"; therefore Chapter VA and the Fifth Schedule of the Industrial Disputes Act do not apply and the award is set aside.

Summary

The Haryana State Agricultural Marketing Board appointed Subhash Chand as a contract Arrival Record Clerk for short seasonal periods. The contract expressly allowed termination without notice and conferred no right to regularisation. After his services were terminated, Chand raised an industrial dispute alleging unfair labour practice under Sections 25‑G and 25‑H of the Industrial Disputes Act, 1947. The Labour Court held the termination invalid, a view affirmed by the High Court, which dismissed the Board’s writ petition. On appeal, the Supreme Court examined whether the termination fell within the definition of "retrenchment" under Section 2(oo)(bb) and whether the Fifth Schedule clauses on status and privilege applied. It held that non‑renewal of a contract is excluded from the definition of retrenchment, so Chapter VA and the Fifth Schedule are inapplicable; consequently the award of the Labour Court was set aside and the appeal allowed.

Issues considered

Whether termination of a contract worker on non‑renewal of contract constitutes "retrenchment" under Section 2(oo)(bb) of the Industrial Disputes Act, 1947.
Whether the Fifth Schedule clauses (b), (d) and (10) relating to status and privilege apply to a worker engaged on a seasonal contract.
Whether the termination amounts to an unfair labour practice under Sections 25‑G and 25‑H of the Industrial Disputes Act.
Whether the award of the Industrial Tribunal‑cum‑Labour Court should be upheld.

Legislation cited

Industrial Disputes Act, 1947s. 25-G, s. 25-H, s. 2(oo)(bb), s. Fifth Schedule

Subjects

industrial disputesretrenchmentcontract employmentunfair labour practiceFifth Schedulestatus and privilegetermination of servicelabour law

Judgment

A THE HARY ANA STATE AGRICULTURAL MARKETING BOARD
v.
SUBHASH CHAND AND ANR.

FEBRUARY 24, 2006

B [S.B. SINHA AND P.K. BALASUBRAMANYAN, JJ.]

labour laws:

Industrial Disputes Act, I947--Chapter V-A and Fifth Schedule-
C Termination of labour-Engaged during paddy seasons on contract-Held:
Does not involve unfair labour practice.

Words and phrases:

Status· and 'privilege "-Meaning of-In the context of Clause (I 0) of
D Fifth Schedule of Industrial Disputes Act. I947.
Respondent was appointed during paddy seasons on contract basis. On
termination of his services, he raised industrial dispute. Labour Court held that
the termination of service was invalid as the management took recourse to unfair
E labour policy. Employer filed Writ Petition before High Court which was
dismissed.

In appeal to this Court employer contended that the courts below failed to
take into consideration the definition of retrenchment as contained in Section
2(oo)(bb) of the Industrial Disputes Act, 1954; that High Court failed to consider
F that Chapter V(A) and consequently the 5th Schedule appended thereto would
have no application.

Allowing the appeal, the Court

HELD: I.I. The question as to whether Chapter VA of the Industrial
G Disputes Act, 1954 will apply or not would depend on the issue as to whether an
order of retrenchment comes within the purview of Section 2(oo)(bb) of the Act
or not If the termination of service in view of the exception contained in clauses r "'
(bb) of Section 2(00) of the Industrial Disputes Act, 1954 is not a 'retrenchment',
the question of applicability of Chapter VA thereof would not arise. (645-A-Bl

H 640
HARYANASTATEAGRICULTURALMARKETINGBOARDv.SUBHASHCHAND 641

1.2. No case has been made out for attracting Clauses (b) and (d) ofitem A
No.5of5th Schedule. (646-B]

Punjab State Electricity Board v. Darbara Singh, (2006] I SCC 121 and
K[shore Chandra Sama/ v. Orissa State Cashew Development Corpn. Ltd.
Dehnkanal [2006( I SCC 253, relied on.
B
Central Bank of India v. S. Satyam and Ors., (1996( 5 SCC 419; State of
UP. v. Neeraj Awasthi and Ors., (2006( 1 SCC 667 and Regional Manager, SBJ v. -
Rakesh Kumar Tewari, [2006( 1 SCC 530, referred to.

2.1. As regard applicability of clause (I 0) of 5th Schedule the meaning of
'status' and 'privilege' is to be seen. (646-B] C
2.2. The definitions of the expressions 'status' and 'privilege' says that such
'status' and 'privilege' must emanate from a statute. If legal right has been derived
by the respondent to continue in service in terms of the provisions of the Act
under which he is governed, then only, the question of depriving him of any status D
or privilege would arise. Furthermore, it is not a case where the respondent had
worked for years. He has only worked, on his own showing, for 356 days whereas
according to the appellant he has worked only for 208 days. Therefore, Fifth
Schedule of the Industrial Disputes Act, 1947 has no application in the instant
case. In view of the above, the dispensing with of the engagemen;ofthe respondent
cannot be said to be unwarranted in law. (647-E) E
B.HE.L. and Anr. v. B.K. Vijay and Ors., (2006) 2 SCALE 195, relied on.

P. Ramanatha Aiyar's Advanced Law Lexicon, 3rd edition, Volume 4,
relied on.
F
CIVIL APPELLATE JURJSDICTION: Civil Appeal No. 1271 of2006.

From the Final Judgment and Order dated 16.09.2003 of the Punjab and
Haryana High Court in C.W.P. No. 14737 of2003.

Neeraj Kumar Jain, Aditya Kumar, Bharat Singh, Sanjay Singh and Ugra G
Shankar Prasad for the Appellant.

Mahabir Singh, Rakesh Dahiya, Ms. Madhushita, Ms. Nikhil Jain and
D. Mahesh Babu for the Respondent.

The Judgment of the Court was delivered by H
1
\

642 SUPREME COURT REPORTS [2006] 2 S.C.R.
1
A S.B. SINHA, J. Leave granted.

The respondent was appointed on contractual basis as an Arrival Record
Clerk. Such appointments were made during paddy seasons. The period of
first appointment was from 17. l 0.1997 to 15.1.1998. Again in the next wheat
season he worked under the appellant from 4.4.1998 to I. 7.1998. He was again
B appointed vide order dated 11.9.1998 and worked from 16.9.1998 till 13.12.1998.
The terms and conditions of service as contained in the order dated 11. 9.1998
in regard to the appellant are as under:

"I. That the appointment will be on consolidated wages at the rate
of Rs. 1536/- P.M. No other allowances will be admissible.
c 2. The period of engagement will be 89 days.
3. Services can be terminated/dispensed at any time without
assigning any notice and reason and this will not confer any right
for his/her being considered for regular appointment.
D 4. He/she will not entitle to any leave except one day casual leave
for each complete month.
5. The unavailed casual leave shall lapse on the last day of
calendar year.
6. His/her appointment on contract basis shall not confer upon
E any right for regularization of appointment.
7. He will be bound by office secrecy act and shall be required
to maintain decorum as is expected under conduct rules of the
Board.

F 8. His retention on contract basis shall firm the performance in the
job assigned to him. He will have to join the duty within I00 days
from the date of issue of this order failing which the engagement
will stand cancelled automatically."

After termination of his services, the appellant raised an industrial
G dispute. The Government of Haryana made a reference thereof purported to
be in exercise of its jurisdiction under Section I0(1) (c) of Industrial Disputes
Act, 1947 (herein after referred to as 'the Act') to the Industrial Tribunal-cum-
Labour Court, Panipat. It was registered as Reference No. 383 of 2000. Both
parties filed their respective written statements before the Labour Court.

H One of the disputes related to the total number of days of work completed
.,.
(

HARYANA STATEAGRJCULTURAL MARKETING BOARD v. SUBHASH CHAND [SINHA,J]64 3

~ by the. workman in twelve months prior to the date of termination of his A
services. The appellant contended that the respondent had worked for 208
days whereas the contention of workman was that he had worked for 356
days.

The Labour Court inter alia held that the termination of services of the
workman was in violation of the provision of Section 25-G of the Act and the B
management took recourse to unfair labour policy.

y A writ ~etition filed by the appellant herein before the High Court of
Punjab and Haryana being Civil Writ Petition No. 14737 of2003 was dismissed
by a Division Bench summarily. The appellant is, thus, before us. c
Mr. Neeraj Kumar Jain, learned counsel appearing on behalf of the
appellant raised a short question in support of this appeal. It was contended
that the Labour Court as well as the High Court committed a manifest error
in passing the impugned judgment insofar as they failed to take into
consideration the definition of retrenchment as contained in Section 2 (oo) D
(bb) of the Act. It was urged that the High Court failed to take into
consideration that Chapter VA of the Industrial Disputes Act and consequently
1 the Fifth Schedule appended to this Act would have no application herein.
Mr. Jain submitted that Labour Court committed an illegality in coming to the
conclusion that workmen junior to the respondent had been retrained in E
service as those employees were surplus employees and were retained under
the directions of the State Government.

Mr. Mahabir Singh, learned senior counsel appearing on behalf of the
respondent, on the other hand, would contend that in view of the fact that
the workmen junior to the respondent were retained in service the provisions F
_.... of Section 25-G besides 25-H of the Act had clearly been breached. It was
y
submitted that the action on the part of the appellant amounts to unfair labour
practice and in this behalf our attention has been drawn to clauses (b) and
(d) of Item No. 5 as also clause (10) of the Fifth Schedule of the Industrial
Disputes Act. It was also submitted that pursuant to the directions of the G
High Court the respondent has not yet been reinstated with entire wages and
thus this Court should not exercise its discretionary jurisdiction under Article
~ 136 of the Constitution of India. 'Retrenchment' has been defined in Section
·'
"i 2 (oo) of the Act to mean:

_, " ....2 (oo) 'retrenchment' means the termination by the employer of the H
'
i

644 SUPREME COURT REPORTS [2006] 2 S.C.R.

A service of a workman for any reason whatsoever, otherwise than as
a punishment inflicted by way of disciplinary action, but does not
include

(a)-(b) xxx xxx xxx

B (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;"

It is the contention of the appellant that the respondent was appointed
C during the 'wheat season' or the 'paddy season'. It is also not in dispute that
the appellant is a statutory body constituted under the Punjab and Haryana
Agriculture Produce Mark.e;ting Board Act. In terms of the provisions of the
said Act, indisputably, regulations are framed by the Board laying down terms
and conditions of services of the employees working in the Market Committees.
D A bare perusal of the offer of appointment clearly goes to show that the
appointments were made on contract basis. It was not a case where a workman
was continuously appointed with artificial gap of 1 day only. Indisputably, the
respondent had been re-employed after termination of his services on contract
basis after a consideration period (s).

E In Municipal Council, Samra/a v. Raj Kumar [Civil Appeal Nos.299-
300 of 2006] disposed of on 6th January, 2006, wherein, in the offer of
appointment it was specifically averred that "his services will be availed till
it is considered as fit and proper and necessary. After that his services will
be dispensed with'', which was accepted by the employee by affirming an
p affidavit to the effect that he would not have any objection, if Municipal
Corporation dispensed with his services and thereby acknowledged its right
to that effect, this Court held :

"Clause ( oo )(bb) of Section 2 contain an exception. It is in two
parts. The first part contemplates termination of service of the workman
G as a result of the non-renewal of the contract of employment or on
its expiry; whereas the second part postulates termination of such
contract of employment in terms of stipulation contained in that behalf'
r
[See also Punjab State Electricity Board. v. Darbara Singh, [2006] I
SCC 121 and Kishore Chandra Sama/ v. Orissa State Cashew Development
H Corpn. Ltd., Dehnkanal., [2006] I sec 253]
HARYANASTATEAGRJCULTURALMARKETINGBOARDv.SUBHASHCHAND[SINHA,J] 645

The question as to whether Chapter VA of the Act will apply or not A
would dependent on the issue as to whether an order of retrenchment comes
within the purview of Section 2 (oo) (bb) of the Act or not. If the termination
of service in view of the exception contained i.n clauses (bb) of Section 2( oo)
of the Act is not a 'retrenchment', the question of applicability of Chapter VA
thereof would not arise.
B
Central Bank ofIndia V. S. Stayam & Ors. [1996) 5 SCC 419, whereupon
reliance was placed by Mr. Singh, is itself an authority for the proposition that
the definition of 'retrenchment' as contained in the said provision is wide.
Once it is held that having regard to the nature of termination of services .it
would not come within the purview of the said definition, the question of C
applicability of Section 25-G of the Act does not arise.

In State of UP. v. Neeraj Awasthi & Ors., [2006) I SCC 667 wherein this
Court upon taking into consideration the provisions of the U.P. Agricultural
Produce Markets Board (Officers. and Staff Establishment) Regulations, 1984
held that it is not permissible to regularize the services of the employees D
although they might have worked for more than 240 days within a period of
twelve months preceding such termination

In Regional Manager, SB/ v. Rakesh Kumar Tewari, [2006) I SCC 530
a distinction was made between the provisions of Sections 25-G and 25-H in
the following terms: E
" ... No conditions of services were agreed to and no letter of
appointment was given. ~he nature of the respondents' employment
was entirely ad hoc. They had been appointed without considering
any rule. It would be ironical if the persons who have benefited by
the flouting of the rules of appointment can rely upon those rules F
when their services are dispensed with."

Reliance placed by Mr. Mahabir Singh upon Fifth Schedule of the
Industrial Dispute Act is again of no assistance. Clauses (b), (d) of Item No.
5 as also clause (10) of the Fifth Schedule are as under:
G
"5. To discharge or dismiss workmen

••• *** ***
(b) not in good faith, but in the colourable exercise of the employer's
~~ H
646 SUPREME COURT REPORTS (2006) 2 S.C.R.

A *** *** ***
(d) for patently false reasons;

(10) to employ workmen as "badlis", casuals or temporaries and to
continue them as such for years, with the object of depriving them of
B the status and privileges of permanent workmen."

No case has been made out for attracting Clauses (b) and (d) of item
No. 5. As regard applicability of clause (10) thereof, we may notice the
meaning of 'status' and 'privilege'.

C In P. Ramanatha Aiyar's Advanced Law Lexicon, 3rd edition, Volume 4,
at page 4469, the expression "status" has been defined as under:

"Status is a much discussed term which, according to the best modern
expositions, includes the sum total of a man's personal rights and
duties (Salmond, Jurisprudence 253, 257), or, to be verbally accurate,
D of his capacity for rights and duties. (Holland, Jurisprudence 88).

The status of a person means his personal legal condition only so far
as his personal rights and burdens are concerned. Dugganna v.
GaneshGJ-Ya, AIR 1965 Mys 97, IOI. [Indian Evidence Act (I of 1872),
S.41]
E Jn the language of jurisprudence status is a condition of membership
of a group of which powers and duties are exclusively determined by
law and not by agreement between the parties concerned. (Roshan
Lal v. Union, (1967) SLR 832)."

F [See also the judgment of this Court delivered in B.H.E.L and Anr. v.
B.K. Vijay & Ors., (2006) 2 SCALE 195] ....

The word 'privilege' has been defined, at page 3733, as under:

"Privilege is an exemption from some duty, burden, or attendance to
which certain persons are entitled; from a supposition of Law, that the
G stations they fill, or the offices they are engaged in, are such as
require all their care; that therefore, without this indulgence, it would
be impracticable to execute such offices, to that advantage which the
Public good requires.

A right or immunity granted as a peculiar benefit; advantage or favour;
H
r
• HARYANA STATEAGRICULTURAL MARKETING BOARD v. SUBHASH CHAND [SINHA, J.J 64 7

a peculiar or personal advantage or right, especially when enjoyed in A
derogation of a common right.

Immunity from civil action may be described also as a privilege,
because the word "privilege" is sufficiently wide to include an
immunity.
B
The word 'privilege' has been defined as a particular and peculiar
benefit or advantage enjoyed by a person.

Privileges are liberties and franchises granted to an office, place, town
)(
or manor, by the King's great charter, letters patent, or Act of
Parliament."
c
In view of the aforementioned definitions of the expressions 'status'
· and 'privilege' it must be held that such 'status' and 'privilege' must emanate
from a statute. If legal right has been derived by the respondent herein to
continue in service in terms of the provisions of the Act under which he is
governed, then only, the question of depriving him of any status or privilege D
would arise. Furthermore, it is not a case where the respondent hi!d worked
for years. He has only worked, on his own showing, for 356 deys whereas
according to the appellant he has worked only for 208 days. Therefore, Fifth
Schedule of the Industrial Disputes Act, 194 7 has no application in the instant
case. In view of the above, the dispensing with of the engagement of the
respondent cannot be said to be unwarranted in law. E
For the foregoing reasons, we are of the opinion that the impugned
judgment cannot be sustained which is set aside accordingly. The Award of
the Industrial Tribunal-cum-Labour Court is set aside. In the facts and
circumstances of the case, the parties shall bear their own costs. The appeal F
is allowed accordingly.

D.G. Appeals allowed.