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Judgment
P.S. Mishra, C.J.—Heard learned counsel for the appellant and learned counsel for the respondent-Management.
A similar matter had come before the Court in Writ Appeal No. 585/1996, but the Court decided the questions raised before it on conclusions, inter alia, that the appellant therein was retrenched on the ground that the project concerned was at the verge of the closure which did not satisfy the requirements of law and without, thus, complying with Section 25F of the Industrial Disputes Act, the appellant could not have been retrenched. In the instant case, however, some fresh arguments have been advanced based on facts, inter alia, that in the contract of service which is available in the shape of a letter of appointment dated September 29, 1986, the appellant herein was given appointment for Vizag project at Vizag site for the duration of one/two years or till the completion of the project, whichever was earlier and, "however, during this period, your services can be terminated with one month''s notice or one month''s pay in lieu thereof without assigning any reason" and the termination has accordingly been effected on the grounds, inter alia, "as major activities of the project site have been completed services are no longer required from September 30, 1995" (vide letter dated August 31, 1995) which attracted Section 25FFF of the Industrial-Disputes Act and terminal benefits as contemplated therein have been given to the appellant and alternatively, even if it is taken to be a termination simpliciter, all conditions as contemplated u/s 25F of the Industrial Disputes Act have been complied with. To answer the second question first, if the case of the petitioner-appellant is one of termination simpliciter since the respondent-management is an industrial establishment, Section 25N is attracted and admittedly no steps have been taken to comply with the requirements therein. Coming to the first argument, learned counsel for the appellant has given great emphasis upon the fact that termination has been effected in the process of the closure of the project and thus it will be one deemed to be u/s 25FFF of the Industrial Disputes Act. He has placed reliance upon two judgments of the Supreme Court -- Workmen of The Straw Board Manufacturing Co. Ltd. Vs. Straw Board Manufacturing Co. Ltd., wherein it is observed as follows at page 508 :
"It may not always be possible to immediately shut down a mill or concern even though a decision to close the same may at any rate at the time have irrevocably been taken. There is, therefore, nothing wrong in the employer arranging closure of the S. Mill in such a way as to guard against unnecessary inconvenience to both the managements as well as to the about and against possible avoidable wastage or loss to the concern, say for not being able to complete some processes which have ultimately to be finished. Having decided to close clown a unit on account of non- availability of raw materials the supply of which had stopped, it was necessary to go on with the unused stock of raw materials for some time for which a lesser number of workers would be necessary who would then naturally constitute the next batch or batches to go. We do not see anything wrong in law in electing such a step or mode in finally closing a unit or a concern. It may be in the nature of a business to take recourse to such a mode which cannot ordinarily and per se be considered as unfair or illegitimate."
The other Judgment is in the case of Hindustan Steel Works Construction Ltd. v H.S.W.C Ltd. Employees Union Hyderabad (1997 III LLJ 1224) in which it is observed on the question whether the Court could give a direction to absorb employees found surplus and retrenched on that ground at one place of work to another place of work of the establishment is concerned, as follows:
"The first question that must be answered is, whether the works at Hyderabad had come to an end? We have been taken through the relevant material. It clearly discloses that both the works had come to a close; only certain very minor works remained to be done which were assigned to private contractors. Indeed, both the workmen and Management were acting on the assumption that the works had come to an end. The retrenchment notices say so; the questions referred to the Tribunal are based upon the said assumption. If the works at Hyderabad were not completed, question of absorption of these workmen elsewhere would not have arisen. We, therefore, agree with the Management-appellant that the works at Hyderabad had indeed come to a close."
The above two cases, however, are in matters relating to the retrenchment effected before the Industrial Disputes Act underwent very vital amendment by, Amendment Act with effect from August 21, 1984. By the said amendment, procedure for closing down an Undertaking is introduced in the Act enjoining as follows :
"(1) An employer who intends to close down an undertaking of an industrial establishment to which this Chapter applies shall, in the prescribed manner, apply for prior permission at least ninety days before the date on which the intended closure is to become effective to the appropriate Government, stating clearly the reasons for the intended closure of the undertaking and a copy of such application shall also be served simultaneously on the representatives of the workmen in the prescribed manner. Provided that, nothing in this sub-section shall apply to an undertaking set up for the construction of buildings, bridges, roads, canals, dams or for other construction work"
Detailed procedure therein provides for enquiry by the appropriate Government to decide having regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the general public and all other relevant factors, by order and for reasons to be recorded in writing, and says in Sub-section (6) thereof as follows:
"Where no application for permission under Sub-section (1) is made within the period specified therein or where the permission for closure has been refused, the closure of the undertaking shall be deemed to be illegal from the date of closure and the workmen shall be entitled to all the benefits under any for the time being in force as if the undertaking had not been closed down."
The project concerned is not engaged in activities of construction of buildings, bridges, roads, canals, dams or any other construction work. It is a project to which the procedure for closing down the undertaking as envisaged u/s 25O of the Act is attracted. Admittedly the respondent management has not applied to the appropriate Government for prior permission with respect to its intentions to close down the undertaking. Consequentially, there is no closure of the undertaking in the eye of law. The project, until such order by the appropriate Government thus, cannot be deemed to have been closed down. In the order of termination, the employer has admitted that it was effected not under the alternatives envisaged in the contract of service (as envisaged in the letter of appointment) but on the ground, "as major activities of the project site has been completed." If major activities, of the project were completed and it was thus ripe for being closed down, it was the proper time for the respondent- management to act as enjoined by Sub-section (1) of Section 25O of the Industrial Disputes Act, and not take on its own the authority to terminate the services of the appellant herein on that ground. Concerned employees are given a right of being heard in the event of the management deciding to close down the undertaking. The appellant has been denied the said right.
Learned counsel for the appellant has drawn our attention to a Judgment of the Supreme Court in State of Himachal Pradesh Vs. Suresh Kumar Verma and another, , in which it is observed, "it is seen that the project in which the respondents were engaged had come to an end and that, therefore, they have necessarily been terminated for want of work. The Court cannot give any directions to re-engage them in any other work or appoint them against existing vacancies. Otherwise, the judicial process would become other mode of recruitment dehors the rules." We see great wisdom in the words afore- quoted and we intend in no manner to give any direction to re-engage the appellant. All that we, however, see in the instant case is that appellant''s service has been terminated without following the prescribed procedure of law and thus, the termination is without jurisdiction. As a consequence, the appellant has to be declared to continue in service until his service is terminated in accordance with law. We are not required in the instant case to go into the question whether the appointment of the appellant has been for a fixed period and whether the termination order has been issued in terms of the contract of service and thus will not be a retrenchment failing u/s 2(oo)(bb). We have proceeded on the footing that in the event of the closure of the project, if the, appellant has to be terminated, the condition as above has to be applied and only then there can be a legal closure of the project and not otherwise. The principle stated in this behalf in the Judgment of the Supreme Court in State of Rajasthan and others Vs. Rameshwar Lal Gahlot, , in our view, is not attracted.
Respondent-employer may have a genuine ground and as stated, the project might have reached its completion and thus fit to be closed down. It, however, cannot cover up its failings of not following prescribed procedure of law by taking recourse to removal of the employees who are entitled to the protections under Chapter V-A and V-B of the Industrial Disputes Act. Section 25J of the Industrial Disputes Act gives to the provisions in Chapter V-A an overriding effect which includes Sections 25FFF and Section 25F. A further protection in the case of an industrial establishment is extended by Section 25N and without following the same unless it is a termination simpliciter or in terms of contract of service, employee cannot be terminated. It shall be open to the respondent-employer to follow the prescribed procedure of law and accordingly terminate the services of the appellant. Until the same is done we have no hesitation in holding, the termination order cannot be given effect.
For the reasons aforementioned the impugned Judgment is set aside. The writ petition is allowed in terms as above with costs. Hearing Fee-Rs. 1,500/-.
The writ appeal is allowed. No costs.