w w w . L a w y e r S e r v i c e s . i n



M.K.Padmavathy v/s The Institute of Hotel Management, Catering Technology and Applied Nutrition represented by the Principal and Secretary, Madras

    W.P.No.5899 of 1986

    Decided On, 17 June 1996

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE N.V. BALASUBRAMANIAN

    Mrs.Anna Mathew, for Petitioner.



Judgment Text

The petitioner was appointed as a laboratory attendant by the respondent by an order dated 17.9.1984 and the salary was fixed at consolidated sum of Rs.75 per month. The services of the petitioner were terminated by the respondent by an order dated 14.12.1984 with effect from 22.12.1984. The petitioner was again reinstated in service by the respondent by an order dated 21.1.1985, along with four other persons. The order of reinstatement was with effect from 21.1.1985, and the order also states that the services of five persons were re-instated with effect from 21.1.1985. The salary of the petitioner was fixed at Rs.5 per day on all working days by an order dated 23.7.1985. On 19.12.1985, the services of the petitioner were terminated with effect from 31.12.1985. The petitioner has challenged the order of termination dated 19.12.1985 on the ground that the order is illegal and unjust and the petitioner is a workman in the respondent institution within the meaning of Sec.2(j) of the Industrial Disputes Act, 1947, and the respondent is bound to follow the mandatory conditions precedent before terminating the service of the petitioner. The respondent erred in terminating the services of the petitioner without following the procedure prescribed under Sec.25-F of the Industrial Disputes Act, 1947 (hereinafter referred to as the Act), and the order of termination is illegal.


2. The respondent has filed a counter-affidavit denying the allegations made in the affidavit filed in support of the writ petition. The principal ground that has been raised in the counter-affidavit is that the respondent- institute is not an industry within the meaning of the Industrial Disputes Act and the petitioner is not entitled to notice as the termination of the services of the petitioner is not a retrenchment under Sec.2(oo) (bb) of the Industrial Disputes Act and hence, the provisions under Sec.25-F of the Act does not apply to the case. The respondent also raised a ground to the effect that an alternative remedy is available to the petitioner, to raise an industrial dispute, and hence, the writ petition is not maintainable. It has been stated that the termination of the services of the petitioner had been validly made and therefore, the petitioner is not entitled to any relief as prayed for.


3. Learned counsel for the petitioner submitted that the respondent- Institute is an industry within the meaning of the Industrial Disputes Act and it cannot also be said that the termination of the petitioner is not a retrenchment. Learned counsel further submitted that it is a termination within the meaning of Sec.2(oo) (bb) of the Industrial Disputes Act and the provisions of Sec.25-F were not followed before terminating the services of the petitioner. Learned counsel submitted that since the termination of the- services of the petitioner was done in violation of the provisions of Sec.25-F of the Industrial Disputes Act, the termination is void and hence, the petitioner is entitled to be reinstated with backwages.


4. Though this writ petition was posted for several dates, none appeared for the respondent.


5. Learned counsel for the petitioner strongly placed reliance to a decision of the Supreme Court in the case of Bangalore Water Supply and Drainage Board v. A.Rajappa, (1978)2 S.C.C. 213: A.I.R. 1978 S.C. 548: I978 Lab.I.C. 467: 36 Fac.L.R. 268: (1978)1 Lab. L.J. 349: 52 F.J.R. 197: (1978)1 Lab.L.N. 376: (1978)1 S.C.J. 481 and contended that the respondent- Institute is an industry. The Supreme Court in the abovesaid case has approved the views of Issacs J., in The Federated State School Teachers? Association of Australia v. The State of Victoria and others, (1920)41 C.L.R. 569. The Supreme Court held that an educational institution has to be treated as an industry within the meaning of the Industrial Disputes Act. The Supreme Court further held that if the triple tests of systematic activity, co-operation between the employer and employee and production of goods and service are applied, a University, a college a research institute or a teaching institution will be an industry.


6. The view of the Supreme Court has been reiterated by several High Courts, with regard to the Educational Institutions. The notable cases are as under: The Punjab and Haryana High Court in Sumer Chand v. Labour Court, Ambala and another, (1990)1 L.L.N. 934 (P. & H.), held that the University is an industry and the petitioner working in the University can be treated as a workman as enunciated by the Industrial Disputes Act. The same view is reiterated by a decision of the Madhya Pradesh High Court in Ram Kishan v. Samrat Ashok Technical Institute Vidisha, (1995)1 L.L.J. 994. The Madhya Pradesh High Court in this case was dealing with the case of the institute and the High Court following the decision of the Supreme Court in Bangalore Water Supply and Drainage Board v. A.Rajappa. (1978)2 S.C.C. 213: A.I.R. 1978 S.C. 548:1978 Lab.I.C. 467:36 Fac.L.R. 268: (1978)1 Lab. L.J. 349: 52 F.J.R. 197: (1978)1 Lab.L.N. 376: (1978)1 S.C.J. 481, held that the educational serivce is not only an industry but is the mother of industries and the respondent- Industry was held to be an industry, within the meaning of Sec.2(j) of the Industrial Disputes Act, 1947. In Sundaramabal v. Government of Goa Daman and Diu and others, (1988)4 S.C.C. 42, the Supreme Court again reiterated the view that an educational institution should be treated as an industry. In the case of Suresh Chandra Mathe v. Jiwaji University Gwalior and others, (1994)2 L.L.J. 462, the Madhya Pradesh High Court held that education is a kind of service, although sublime service, and that university is an industry within the meaning of Sec.2(i) of the Industrial Disputes Act. It was also held therein that a new definition of ?industry? was introduced by the Central Act 46 of 1982 whereby a new clause will take the place of clause (i) from a date to be notified, upon enforcement of Sec.2(c) of the Act, and when that new definition will get substituted, educational, scientific, research and training institutions will cease to fall within the purivew of ?industry? by virtue of clause (3) of that definition. Till that happens, a University or an educational institution will continue to be held to be an industry. This clearly shows the legislature intend to treat the educational institution as an industry. The Supreme Court in Chief Conservator of Forests and another v. Jagannath Maruti Kondhare and others, (1996)2 S.C.C. 293 held as under:


"We may not go by the labels. Let us reach the hub. And the same is that the dichotomy of sovereign and non-sovereign functions does not really exist-it would all depend on the nature of the power and manner of its exercise, as observed in para 23 of Nagendra Rao v. State of A.P., (1994)6 S.C.C. 205: J.T. (1994)5 S.C. 572. As per the decision in this case, one of the tests to determine whether the executive function is sovereign in nature is to find out whether the State is answerable for such action in courts of law. It was stated by Sahai, J. that acts like defence of the country, raising armed forces and maintaining it, making peace or war, foreign affairs, power to acquire and retain territory, are functions which are indicative of external sovereignty and are political in nature. They are, therefore, not amenable to the jurisdiction of ordinary civil court inasmuch as the State is immune from being sued in such matters. But then, according to this decision the immunity ends there. It was then observed that in a welfare State, functions of the State are not only the defence of the country or administration of justice or maintaining law and order but extends to regulating and controlling the activities of people in almost every sphere, educational, commercial, social, economic, political and even marital. Because of this the demarcating line between sovereign and non-sovereign powers has largely disappeared.


The aforesaid shows that if we were to extend the concept of sovereign function to include all welfare activities as contended on behalf of the appellants, the ratio in Bangalore Water Supply and Drainage Board v. Rajappa, (1978)2 S. C. C. 213: A.I.R. 1978 S.C. 548: 1978 Lab.I.C. 467: 36 Fac.LR. 268: (1978)1 Lab.L.J. 349: 52 F.J.R. 197: (1978)1 Lab.L.N. 376: (1978)1 S.C.J. 481, would get eroded, and substantially. We would demur to do so on the face of what was stated in the aforesaid case according to which except the strictly understood sovereign function, welfare activities of the State would come within the purview of the definition of industry; and, not only this, even within the wider circle of sovereign function, there may be an inner circle encompassing some units which could be considered as industry if substantially severable.?


In view of the above decisions of the Supreme Court and various other High Courts and applying the test laid down by Bangalore Water Supply case, (1978)2 S.C.C. 213:A.I.R. 1978S.C. 548:1978 Lab.I.C. 467: 36 Fac.L.R. 268: (1978)1 Lab. L.J. 349: 52 F.J.R. 197: (1978)1 Lab.LN. 376: (1978)1 S.C.J. 481, the respondent- institute can be safely held to be an industry, in a welfare State, and the functions of the State are not only the defence of the country or administration of justice or maintaining law and order but extends to regulating and controlling the activities of the people in almost every sphere. The welfare activity of the State in providing education to the public at large is a service and the institution or a university which renders such service would come wtihin the purview of the definition of industry within the meaning of Industrial Disputes Act. The respondent- institute, which is rendering service by way of education to the students in the hotel management and catering technology, should be regarded as an industry. It is not the case of the respondent that the petitioner was employed as a teacher. But, the case of the petitioner is that she was employed as laboratory attendant (Stores) for House Keeping Department. Hence, she must be regarded only as a workman in the industry.


7. Ms.Anna Mathew next contened that when the services of the petitioner were terminated, it was a retrenchment within the meaning of Sec.2(oo) of the Industrial Disputes Act and the retrenchment of the petitioner without following the procedure prescribed under Sec.25-F of the Act is void in effect and hence, the petitioner is entitled to be reinstated by this Court. Learned counsel for the petitioner referred to the order of appointment dated 17.9.1984 wherein it has been stated that the appointment of the petitioner is purely temporary and is liable to be terminated at any time without notice. Learned counsel for the petitioner also referred to the subsequent order of appointment dated 21.1.1985 wherein the service of the petitioner was reinstated with effect from 21.1.1985. Learned counsel therefore, contended that it is not the Journal Reports [1996 case where the contract of appointment contained a stipulation by which the service of the petitioner was terminated. Learned counsel placed reliance on decisions in K.G. Reddy and others v. A.P. Engg., A.P.Dairy Devt.Co.Op.Fed. and others, (1990)1 L.L.J. 439, R.Srinivasa Rao v. Labour Court, Hyderabad and another, (1990)2 L.L.J. 577 and Balbir Singh v. Kurushetra Central Co-operative Bank Limited and others, (1990)1 L.L.J. 443.


8. The question that has to be decided is whether the termination of the petitioner would amount to retrenchment within the meaning of Sec.2(oo) (bb) of the Act. defines retrenchment in the following terms:


?Sec.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 include


(a) xxxx xxxx


(b) xxxx xxxx


(bb) termination of the service of the workman as a result of the non-renewal of the contract of the employment between the employer and the workman concerned on the expiry or of such contract being terminated under a stipulation in that behalf contained therein.?


The Supreme Court in the case of M. Venugopal v. Divisional Manager, Life Insurance Corporation of India, Machilipatnam and another, A.I.R. 1994 S.C.1343, held as under:


?Regulation 14 aforesaid has to be read as a statutory term of the contract of employment between the Corporation and the appellant. The order of appointment had fixed a target in respect of the performance of the appellant, which admittedly the appellant failed to achieve within the period of probation which was extended upto two years. As such the Corporation was entitled not to confirm the appellant in terms of the order of appointment and to terminate his service during the period of probation without any notice in term of Regulation 14(4) aforesaid. Clauses 10 and 11 of the order of appointment alone with Regulation 14 shall be deemed to be stipulations of the contract of employment, under which the service of the appellant has been terminated. Any such termination, even if the provisions of the Industrial Disputes Act were applicable in the case of the appellant, shall not be deemed to be retrenchment? within the meaning of Sec.2(oo), having been covered by exception (bb). Before the introduction of clause (bb) in Sec.2 (oo), there were only three exceptions so far termination of the service of the workman was concerned, which had been excluded from the ambit of retrenchment (a) voluntary retirement; (b) retirement on reaching age of superannuation; and (c) on ground of continued ill-health. This Court from time to time held that the definition of retrenchment? being very wide and comprehensive in nature shall cover, within its ambit termination of service in any manner and for any reason, otherwise than as a punishment inflicted by way of disciplinary action. The result was that even discharge simpliciter, was held to fall within the purview of the definition of "retrenchment? State Bank of Indiav. N.Sundaramoney, A.I.R. 1976S.C. 1111: (1976)1 S.C.C. 822, Santosh Gupta v. State Bank of Patiala, A.I.R. 1980 S.C. 1219: (1980)3 S.C.C. 340. Now with introduction of one more Exception to Sec.2(oo) under clause (bb) the legislature has excluded from the purview of the "retrenchment? (i) 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; (ii) such contract being terminated under a stipulation in that behalf contained in contract of employment. It need not be impressed that if in the contract of employment to such stipulation is provided or prescribed, then such contract shall not be covered by clause (bb) of Sec.2(oo). In the present case, the termination of service of the appellant is as a result of the contract of employment having been terminated under the stipulations specifically provided under Regulation 14 and the order of the appointment of the appellant. In this background the non-compliance of the requirement of Sec.25-F shall not vitiate or nullify the order of termination of the appellant."


In R.Srinivasa Rao v. Labour Court, Hyderabad and another, (1990)2 L.L.J. 577, the Andhra Pradesh High Court considered the case of termination of the casual labourers and the question that arose before the Andhra Pradesh High Court was whether the discontinuance of the casual labourers who were engaged on daily wages would amount to retrenchment under Sec.2(oo) of the Act. The Andhra Pradesh High Court interpreted Sec.2(oo) (bb) of the Act as under-


"The main part of Sec.2(oo) speaks of termination for any reason as amounting to retrenchment.


In the absence of clear intention, the first part of sub-cl.(bb) cannot be interpreted to take in the termination of the services of the casual labour on daily wages. In my view, per se termination of causal labour on daily wages is clearly outside the first part of sub-cl.(bb) of Sec.2(oo) and was never intended to be excluded from the definition of "retrenchment?. The contract of employment? contemplated therein is, in my view, referable to contracts other than engagement as casual labour on daily wages. Any other view would reduce the content of the main part of Sec.2(oo) to such a state of shrinkage which, in my opinion, the legislature would never have contemplated. Which in common parlance, retrenchment? given as impression of termination for want of work, the Act has given a very wide definition of retrenchment by including termination "for any reason whatsoever? (except the limited categories falling under sub-cls.(a), (b) which are not attributable to acts of the employer). But if the sub-cl.(bb) is not restricted as stated by me in this case or by Jeevan Reddy, J. in D.Chennaiah?s case, there will be little scope for preserving and maintaining a substantial part of the width of the main part of Sec.2(oo)."


The same view has been expressed by the Punjab and Haryana High Court in Balbir Singh v. Kurushetra Central Co-operative Bank Limited and others, (1990)1 L.L.J. 443, wherein it is held as under:


"Clause (bb) is an exception which must be interpreted narrowly. It cannot be given meanings which may nullify or curtail the ambit of the principal clause. No doubt, the intention of the Parliament in enacting clause (bb) was to exclude certain categories of workers from the term of retrenchment but there is nothing in this clause which allows an outlet to unscrupulous employer to shunt out workers in the garb of non-renewal of their contract even when the work subsists. This clause as a whole has to be construed strictly in favour of the workman as far as possible as to ensure that the act is implemented in letter and spirit. If the termination is meant to exploit an employee or to increase the bargaining power of the employer, then it has to be excluded from the ambit of clause (bb) and the definition of term "retrenchment? has to be given full meaning. The contractual clause enshrined in clause (bb) cannot be resorted to frustrate the claim of the employee against his uncalled for retrenchment or for denying other benefits. It cannot be so interpreted as to enable an employer to resort to the policy of hire and fire and to confer unguided power on the employer to renew or not to renew the contract irrespective of circumstances in which it was entered into or ignore the nature and extent of work for which eh was employed. In fact clause (bb), which is an exception, is to be so interpreted as to limit it to cases where the work itself has been accomplished and the agreement of hiring for a specific period was genuine. If the work continues the non-renewal of the contract on the fact of it has to be dubbed as mala fide. It would be fraud in law if it is interpreted otherwise."


The Bombay High Court in D.H. Shirke and others v. Zilla Parishad, Yavatmal and others, (1990)1 L.L.J.


445, held as under: "The amended sub-clause (bb) would apply only to such cases where the work ceases with the employer or the post itself ceases to exist or such other analogous cases where the contract of employment is found to be fair, proper and bona fide. To a certain extent, I am also supported in my view by the decision reported in the case of Shailendra Nathe Shukla v. Vice-Chancellor, Allahabad University and others, 1987 Lab.I.C. 1607?.


9. The Madhya Pradesh High Court in S. C. Mathe v. Jiwaji University and others, (1994)2 L.L.J. 462, held as under:


"Hence, it must be held that for the applicability of the latter part of sub-clause (bb), it is not open to say that it will apply even when the stipulation about termination is contained elsewhere or because the same is necessarily implied. It is absolutely necessary that such stipulation must be one which is "contained therein?, i.e., one which is contained in the contract of employment itself. Since the stipulation about termination in the present case is said to be contained else-where, i.e., in certain clause of a statute of Jiwaji University , the provision in question i. e., sub-clause (bb) is not applicable."


10. The Supreme Court in State of Rajasthan v. Rameshwar Lalgahiot, (1996)1 S.C.C. 595: A.I.R. 1996. S.C. 1001, considering the provisions of Sec.2(oo) (bb) of the Act held that where the termination is in terms of letter of appointment, it is saved by clause (bb) and neither reinstatement nor fresh appointment will be made. The Supreme Court further held that when the appointment is for a fixed period, unless there is a finding that the power under clause (bb) of Sec.2 (oo) was misused or vitiated by its mala fide exercise, it cannot be held that the termination is illegal. In its absence, the employer can terminate the service in terms of the letter of appointment unless it is a colourable exercise of the power. The Supreme Court further held that it must be established in each case that the power was misused by the management or the appointment for a fixed period was a colourable exercise of power.


11. The question that has to be decided is whether the termination of the petitioner would amount to retrenchment as stated but the respondent in his counter-affidavit. The respondent in his counter-affidavit has stated that the termination of the petitioner was not retrenchment under Sec.2(oo) (bb) of the Act. It was stated that the termination was strictly under the terms of the enactment and in confirmity with the rules and regulations of the institute. The rules and regulations of the institute were not placed before the court. It is only left with the order of appointment of the petitioner. The first order of appointment clearly says that the appointment was purely temporary and liable to be terminated at any time without any notice. When the petitioner was reinstated on 21.1.1985 even the clause that the appointment was purely temporary and was liable to be terminated without notice was absent in the order dated 21.1.1985. The salary was no doubt paid on contingent basis of Rs.5 per day of work. Can it be inferred that the order of appointment contained a specific stipulation that there will be a termination of the services of the petitioner as a result of the non-renewal of the contract. It is not possible to construe from the letter of appointment that the appointment is for a fixed period. The order of appointment does not show that it is for a specific or a fixed or a definite period. The petitioner was appointed as a laboratory attendant and it cannot also be assumed that the

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work for which she was appointed also came to an end on the termination of the services of the petitioner. There is also no evidence to show that the post itself has been abolished. There is no express stipulation in the contract of employment about the termination of the petitioner, and hence the exclusionary clause (bb) of Sec.2(oo) does not apply to the facts of the case. If the exception clause does not apply the termination of the petitioner would amount to retrenchment within the meaning of Sec.2(oo) of the Act. The petitioner as seen from the order of appointment has worked for more than 240 days before her services were terminated with effect from 31.12.1985. It is a clear case of violation of Sec.25-F of the Industrial Disputes Act and the order of termination has to be declared as void and the petitioner is also entitled to back wages. 12. The petitioner in the present case did not avail the alternative remedy provided under the Industrial Disputes Act, but approached the court directly under Art.226 of the Constitution of India challenging the order of the respondent. In such a situation, while holding that the order of termination is void, it cannot be proper for this Court to direct payment of back wages to the petitioner and the petitioner must be directed to the proper court for the quantification of the correct amount of back wages to her. In Managing Director v. Vijay Narain Vajpayee, (1980)1 L.L.J. 222, the Supreme Court deleted the direction for the payment of backwages ordered by the High Court, but upheld the order of reinstatement of service. Learned counsel for the petitioner no doubt relied upon the decision of the Supreme Court in Dhari Gram Panchayat v. Saurashtra Mazdoor Mahajan Sangh and another, (1988)1 L.L.J. 468 and Surendra Kumar Verma v. Central Government Industrial Tribunal, (1981)1 L.L.J. 386. But the decision in Managing Director v. Vijayanarayan Vajpayee?s case, is a case directly on the point relating to the case of the petitioner approaching this Court challenging the order of termination. The Supreme Court ordered reinstatement but directed the parties to approach the proper forum for the determination of the backwages. Respectfully following the views of the Supreme Court in Managing Director v. Vijay Narayan Vajpayee?s case, I hold that the order of termination is void and the petitioner is directed to approach the proper forum for the quantification of the backwages. With these observations, the writ petition is allowed. There will be no order as to costs.
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