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Judgment
In these writ petitions respective petitioners who were erstwhile employees of Narendra Air Force Cinema whose services have been
terminated, have sought for the issue of a writ of certiorarified mandamus to quash Rules 24 and 25 of the Terms and Conditions of Service of the
Non-Public Fund Employees other than Air Force canteen, Air Force School as unconstitutional and a consequent order of termination dated
25.1.2001 issued by the third respondent, and to direct the respondents to reinstate the petitioners with all backwages and provide an alternative
employment with all attendant benefits.
According to the petitioners, the Cinema theatre was started in the year 1965 and in the year 1975 Air Force Cinema theatre was taken over by
the Air Force and the staff employed by the Canteen Store Department (CSD) were continued with consolidated pay equivalent to last
emoluments. Even though the purpose of the welfare venture was for entertaining the personnel belonging to the Air Force, it was always over-
flooded with civilians and the theatre was earning much profit and invested in the Small Scale industries. The petitioners have been appointed in
various capacities as stated by them in their respective affidavits. The petitioners to their surprise and shock had received a notice of proposed
termination dated 31.1.2000 issued by the fourth respondent. It was stated therein that due to mounting loss, it has become economically non-
viable and as such it has been decided to close down the theatre and that the services of the petitioners were no more required and their services
will be terminated with effect from 1.5.2000. Though an application was filed before the Central Administrative Tribunal, the same was
subsequently withdrawn in view of of the fact that the Tribunal does not have jurisdiction to entertain any application with reference to the Defence
Personnel and hence the above writ petitions.
The petitioners contend that Rules 24 and 25 of the Terms and Conditions of Service of Non-Public Fund Employees were unconstitutional and
invalid. It was therefore, not possible to go before the Appellate Authority. The said Rules are violative of Articles 14 and 16 of the Constitution of
India. The clauses enable the employer to terminate the services of a permanent employee by giving three months pay or giving notice in lieu
thereof, are violative of Article 14 of the Constitution of India. The respondents cannot throw out the employees who have put in long number of
years of service. Hence the above writ petitions.
Though separate counter affidavits have been filed in each of the writ petitions, it is sufficient to refer to the counter affidavit filed in
W.P.No.3105 of 2001, considering that identical defence has been taken in all the writ petitions. The respondents contend that the Cinema theatre
was not established or run with a profit motive. The only purpose was to entertain the Air Force personnel and the Civilians were also allowed to
augment the income required for the survival of the theatre. The employees were paid from a Non-public fund made of its own limited earnings and
voluntary contributions from the members and not from the public exchequer. The fund was collected only through voluntary contributions from Air
Force uniformed personnel. The marginal profits which were earned by the Cinema were utilized for off-setting the losses incurred in subsequent
years. During the financial year 1999-2000 the Cinema theatre ran into a loss to the tune of Rs.78,000/- and the theatre did not show any sign of
improvement. There was no chance of improving the situation. Therefore, after exploring all possibilities for reclamation as regards viability, the
respondents were constrained to wind up the theatre due to administrative exigencies. Posts were abolished as the said posts were not necessary.
Hence, the petitioners cannot claim any alternative employment; nor are they entitled for any compensation. The petitioners have misconceived
their rights and the grounds raised by them for holding Rules 24 and 25 as unconstitutional, cannot be sustained. The said Rules do not have
anything to do with Articles 14 or 16 of the Constitution. The said Articles can be invoked only where the petitioners were discriminated against
their equals. No individual has been shown any priority or preference to the petitioners. It is further stated that the Cinema was not an
instrumentality of the State within the meaning of Article 12 of the Constitution of India and hence the above writ petition was not maintainable.
4-A. On a consideration of the above pleadings and hearing both sides, the following facts are not in dispute.
(i)The writ petitioners were the employees of the respondent in various capacities having put long number of years of service ranging from five
years (W.P.No.3107 of 2001) to 34 years (W.P.Nos.3106 of 2001, 5866 of 2001).
(ii)Their services were terminated on the ground that the theatre where they were working was not economically viable and had to be closed
down.
(iii)No permission had been obtained either as provided u/s 25(N) or 25(O) of the Industrial Disputes Act for the closure of an undertaking or for
retrenchment as contemplated under Chapter-V-A or V-B.
Learned counsel for the petitioners contends that there is no dispute over the fact that the provisions of the Industrial Disputes Act (hereinafter
referred to as ""the Act"") are applicable. The petitioners have put in service of more than six years at the minimum and some of them have put in
service of more than 22 years and 34 years. Therefore, the permanent status of the employees cannot be disputed by the respondent though there
is an attempt in the counter affidavit to deny their permanent status.
Learned counsel for the petitioners refers to Rules 24 and 25 of the Terms and Conditions of Service of Non-public Fund employees. Under
Rule 24 the authority may terminate the service of an employee by giving notice in writing or pay lieu thereof without assigning any reason. Under
Rule 25, the period of notice is specified as three months on either side for termination if the employee has rendered more than five years of
service. Learned counsel for the petitioners therefore, contends that the petitioners being permanent employees, can be sent out of service or
retrenched only in terms of the provisions of the Industrial Disputes Act and not by sending a mere notice. Though according to the respondents,
the terms of agreement contain clauses by which the services of employee can be terminated by giving notice, they are invalid and arbitrary having
regard to the various decisions of this Court and the Supreme Court. Learned counsel also contends that originally notice dated 31.1.2000 was
issued informing the petitioners that their services are no more required and that their services would be terminated with effect from 1.5.2000.
However, this notice was not given effect to and all of a sudden the impugned notices have been issued much later only on 25-1-2001. The
petitioners are entitled to succeed in view of non-compliance of Section 25-F and 25-O of the Act.
Learned counsel appearing for the respondents however, contends that the theatre was being run only from and out of Non-Public Fund and not
the funds belonging to the Air Force. Therefore, according to learned counsel, the petitioner has to approach the Central Administrative Tribunal.
For this proposition learned counsel relies on a judgment in Union of India and Another Vs. Chotelal and Others, . Learned counsel for the
respondents however, contends that the petitioners being parties to the agreement and the Terms and Conditions and having been put on notice
even while joining duty, cannot be heard to question the validity of the same. Having accepted the Terms and Conditions of employment, it was not
proper for them to raise a contention that the terms and conditions of agreement were not enforceable against them. For the said proposition
learned counsel relies on the judgment of the Supreme Court in Union of India (UOI) and Others Vs. Lieut (Mrs) E. Iacats, .
I have considered the submissions of both sides. The fact that the provisions of the Industrial Disputes Act would be applicable to the
petitioners, is not seriously disputed. Nor has any contention been raised before me that the provisions of the Act will not apply. The petitioners are
employees of a theatre and they are definitely workers within a meaning of workmen u/s 2(s) of the Industrial Disputes Act. Therefore, it follows
that any establishment covered under the Act if it is to be closed down or if the employee is to be retrenched or his services be terminated, the
employer is bound to obtain approval from the Government as contemplated u/s 25-O of the Act. Section 25-O of the Act requires an employer
who intends to close down an undertaking of an industrial establishment, shall apply for prior permission at least 90 days before the date on which
intended closure is to become effective, to the appropriate Government. He shall seek for such prior permission only after clearly stating the
reasons for the intended closure. u/s 25-F of the Act, no workman employed in any industry who has been in service for not less than one year,
shall be retrenched unless the employer complies with the conditions laid down under Clauses (a), (b),(c) of Section 25-F.
Therefore, there being no dispute over the fact that in this case, there has been no compliance of the statutory provisions, this Court is required
only to consider as to what is relief to which the petitioners could be entitled to.
The reliance placed upon the clauses providing for termination of service by mere service of notice, cannot at all also be sustained in view of
the well accepted proposition that any such provision, clauses in the Standing Orders providing for automatic termination of service of a permanent
employee would be bad if it does not provide an opportunity of hearing, nor their services can be treated to have come to an end automatically
vide judgment of the Supreme Court in UPTRON INDIA LTD. v. SHAMMI BHAN AIR 1998 S.C.W. 1447.
Even in an earlier judgment in West Bengal State Electricity Board and Others Vs. Desh Bandhu Ghosh and Others, , it was held by the
Supreme Court that termination simpliciter of permanent employees by issuing three months notice or pay in lieu thereof as contemplated under
Regulation 34 of the Electricity Board, was violative of Article 14 of the Constitution of India.
Therefore, I am inclined to hold that the contention that the employer can terminate the services of the employees by merely issuing notices
cannot at all be sustained. Reliance placed on the judgment of the Supreme Court in Union of India (UOI) and Others Vs. Lieut (Mrs) E. Iacats, ,
cannot at all be sustained. That was a case where at the time of the appointment itself, the terms and conditions did not visualise the grant of
pension. The grant of pension being a condition or benefit of service, the Supreme Court held that the employee cannot complain of discriminatory
treatment as there was no provision for the grant of pension while the petitioner was appointed and which position the petitioner herself had
accepted. But the employer''s right to terminate, cannot be equated to the issue of pension and as pointed out earlier it is settled proposition of law
that a Standing order which contemplates an automatic termination of service cannot be held to be valid.
Section 25-O of the Industrial Disputes Act deals with the procedure for closing down an undertaking and admittedly in this case, no such
prior permission was sought for much less obtained from the appropriate Government. It is also not in dispute that the conditions precedent for
retrenchment of the workmen as envisaged u/s 25-F of the Act were also not complied with. In the said circumstances, learned counsel for the
petitioner rightly relies on the judgment of the Supreme Court in Narotam Chopra Vs. Presiding Officer, Labour Court and Others, in support of
his contention that termination without compliance of Section 25-F would render the termination void ab initio and that the employee would be
entitled to reinstatement with full backwages and allowances.
Reference is also made to the judgment of a Division Bench of Andhra Pradesh High Court in Narottam Ram Vs. Conciliation Officer and Jt.
Commr. of Labour, Visakhapatnam Steel Plant and Others, . The Division Bench held that if the employer intends to close down an undertaking
and has not applied for prior permission for closure, there was no closure of undertaking in the eye of law and that the employer cannot on its own
authority terminate the service of the employees.
Therefore, having regard to the aforesaid admitted facts and the legal position, I have no hesitation in holding that the termination of the
petitioners cannot be sustained.
The contention of learned counsel for the respondents that the theatre was a non-profit establishment and that the same was run by Non-Public
Fund and only by contribution etc., cannot result in ignoring the statutory provisions as referred to above. The provisions of the Industrial Disputes
Act have been enacted for the welfare of the working classes and being a welfare legislation cannot be treated as subject to the institution being
profit earning establishment ignoring welfare of the employees.
Now coming to the relief to which the petitioners would be entitled to, though it is true that the order of termination has to be declared as void
ab initio, this Court has to also take into account that it is the public exchequer which is concerned and in the present case as a fact the theatre
which was closed in the year 1999 was never revived. It is not the case of the petitioners that the theatre is being run by the respondents through
any other employees. That being so, the mere failure on the part of the officials to comply with the statutory requirement u/s 25-O of the Act,
cannot result in an unfair drain of the public money. The officials of the respondents ought to have followed the procedure as contemplated under
Chapter V-A, Chapter V-B of the Industrial Disputes Act. If the officials had done so, the petitioners would have been entitled to receive the
retrenchment compensation as contemplated u/s 25-F of the Act. There is also no scope of re-employing the petitioners as the entire establishment
had been closed down. Therefore, though the petitioners are entitled to succeed in the above writ petition, I am inclined to mould the relief to be
granted to them only in terms of the compensation which they could have received u/s 25-F of the Act.
In the result, the writ petitions are partly allowed in favour of the petitioners. Rules 24 and 25 as mentioned above are held as invalid and the
respondents are directed to calculate retrenchment compensation which will be payable for each of the petitioners in terms of Section 25-F(b) of
the Act. On such calculation, each of the petitioners shall be paid the said amount with interest at the rate of 12 per cent per annum from the date
of termination till the date of payment of the amount. The said exercise shall be completed within a period of eight weeks from the date of receipt
of a copy of this order. The writ petitions are ordered accordingly. No costs.