MANU/SC/0474/2014

Equivalent/Neutral Citation: AIR2014SC 2258, 2014(4) ALJ 535, 2014 (5) AWC 5366 (SC ), [2014(142)FLR20], 2014 INSC 335, JT2014(6)SC 190,
2014LabIC 2643, (2014)IIILLJ478SC , 2014LLR673, 2015(1)RLW208(SC ), 2014(6)SC ALE119, (2014)11SC C 85, (2014)2SC C (LS)437, 2014 (6) SC J 33,
[2014]12SC R1080, 2014(3)SC T661(SC ), 2014(2)SLJ423(SC )

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 4883-4884 of 2014 (Arising out of SLP Nos. 554-555 of 2012)
Decided On: 25.04.2014
Bhuvnesh Kumar Dwivedi Vs. Hindalco Industries Ltd.
Hon'ble Judges/Coram:
Gyan Sudha Misra and V. Gopala Gowda, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: Bharat Sangal and R.R. Kumar, Advs.
For Respondents/Defendant: Chander Uday Singh, Sr. Adv. and Syed Shahid Hussain
Rizvi, Adv.
Case Category:
LABOUR MATTERS - DISMISSAL
JUDGMENT
V. Gopala Gowda, J.
1. Leave granted.
2 . These appeals are filed against the final judgment and order dated 10.03.2011
passed by the High Court of Judicature at Allahabad in Civil Misc. Writ Petition No. 8784
of 2002 and also against judgment and order dated 12.10.2011 passed by the High
Court of Allahabad in Civil Misc. Review/Recall Application No. 118006 of 2011 by
allowing the writ petition filed by the Respondent-employer and setting aside the award
passed by the Labour Court which substituted the same by issuing direction to the
Respondent-employer (for short "the employer") to pay a sum of ' 1,00,000/- as
damages to the Appellant-workman. The direction issued by the High Court in its
judgment further states that the amount shall either be paid through draft to the
workman or deposited before the Labour Court within three months for immediate
payment to the workman. In case of default, 12% interest per annum shall be payable
on ' 1,00,000/- after three months till actual payment/deposit/realisation.
3 . However, the backdrop of industrial dispute between the parties is briefly stated
hereunder to find out whether the Appellant is entitled for the relief as prayed in these
appeals.
It is the case of the Appellant-workman that he was appointed as Labour Supervisor in
the employer's factory on 30.12.1992 and he worked continuously in terms of Section
25B of the Industrial Disputes Act, 1947 (for short "the I.D. Act") in the said post till
28.7.1998- the day on which his services were terminated. It is the case of the
Appellant-workman that he has worked for six calendar years from the date of his
appointment till the termination of his service and he has rendered more than 240 days
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of continuous service in every calendar year before his termination. The Respondent-
employer terminated the services of Appellant-workman on 27.7.1998 as per practice
with the reason 'sanction expired'. The Respondent-employer neither paid retrenchment
compensation nor issued any notice or paid wages in lieu of the same to the Appellant-
workman as mandated Under Section 6N of the U.P. Industrial Disputes Act (for short
"the U.P.I.D. Act"). The Respondent-employer engaged the Appellant-workman for work
against a post which was permanent in nature but his appointment was made only for a
temporary period from 1992 to 1998 with oblique motive to deprive his statutory rights.
At the end of every working year, the workman was handed over a receipt of 'relieved
from work' and after 4-6 days, he was again engaged for three or six months but
without proper procedure and in this manner, he was continuously made to work for full
one year and each time the annual increase in wages was shown in the fresh
appointment letter. During the entire period of service of the Appellant-workman with
the Respondent-employer, the management followed the process of annually
terminating him from service and again reappointing him in the same post by assigning
the same Badge No., ID No. in the same department of Construction Division with the
marginal increase of salary and dearness allowance per month.
4 . It is the further case of the Appellant-workman that during the course of his
employment with the Respondent-employer, he had noticed that very few workmen
were actually made permanent by the management and rest of the work force was
deprived from the benefit of permanent post by being kept on temporary basis or
emergency basis, on daily wage basis or on contract basis. Even though the
Construction Division of the employer has been in existence ever since the beginning of
its establishment and is necessary for continuous productions in factory, thousands of
workmen are employed in the said division in the above mentioned manner and very
few of them are made permanent. It is the further case of the Appellant-workman that
in accordance with the regular orders passed in the practice of the Company, the
concerned workman always fell in the category of workman but due to the improper and
unfair labour practice as mentioned in Schedule V Under Section 2(ra) of the I.D. Act it
has kept the Appellant as temporary workman for the period 'of employment, which is
opposed to law.
5. It is the further case of the Appellant-workman that he falls within the definition of
workman Under Section 2(s) of the I.D. Act and has been rendering service since the
day of his appointment on 30.12.1992. Therefore, termination of his contract is a clear
case of retrenchment as opposed to the provision in Section 6N of the U.P.I.D. Act. The
employer on the other hand, did not comply with the mandatory provision of Section 6N
of the U.P.I.D. Act which sets the conditions precedent to be fulfilled prior to
retrenchment of workmen which is in pari materia with Section 25N of the I.D. Act. The
Respondent-employer neither complied with the aforesaid mandatory provisions nor did
the Respondent pay retrenchment compensation or issue three months notice or notice
pay in lieu of the same. Therefore, as per the Appellant-workman, termination from his
service is in contravention of the provisions of the U.P.I.D. Act and the legal principle
laid down by this Court in catena of cases in this regard which will be adverted into the
reasoning portion of the judgment. Therefore, the Appellant-workman had raised an
industrial dispute with a request to the state government to make reference for
adjudication of existing industrial dispute regarding the termination of service of the
Appellant workman from his service by the employer. The Assistant Labour
Commissioner made Reference Order No. 1454 CP 15/98 dated 24.9.1999 to the Labour
Court at Varanasi. The reference was registered in Case No. 59 of 1999 by the Labour
Court, Varanasi, U.P. The Labour Court, after conducting enquiry has adjudicated the
industrial dispute between the parties by answering the points of dispute and passed an
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award in favour of the Appellant-workman holding that the termination of his service is
not justified since the Respondent has not produced any material evidence on record to
justify the order of termination. Further, the Labour Court has held that the Appellant is
entitled to reinstatement with back wages and other consequential benefits as if his
services were never terminated.
6. Aggrieved by the said award, the Respondent-employer filed Civil Misc. Writ Petition
No. 8784 of 2002 before the learned single Judge of the High Court of Judicature at
Allahabad questioning the correctness, legality and validity of the award passed by the
Labour Court taking the following pleas:
(i) It is pleaded by the Respondent that the Appellant was employed purely on
temporary basis in the project jobs in the Construction Division of the Company
for specific periods and finally he was employed with effect from 23.1.1998 for
six months and his services automatically came to an end as per terms of the
contract of employment in the appointment letter with effect from 28.7.1998 as
a result of non renewal of his contract of employment with the Respondent.
(ii) It is further pleaded by the Respondent that in the Construction Division of
the Company, time bound specific project construction work was being
undertaken from time to time and thus no regular work force could be
maintained for such project work. However, as a gesture of goodwill and to
maintain harmonious industrial relations, the employees who worked in a
project work were given preference for employment in other project work on
their own request. In the instant case, the service of the Appellant came to an
end as per terms of his employment in the specific project job in the
Construction Division and after completion of the term of aforesaid
employment, the Appellant has also taken clearance of his dues.
(iii) It is further pleaded by the Respondent that temporary workmen working in
such specific projects are also given preference for employment in the main
plant project subject to availability of vacancies and their suitability. After
completion of the terms of contract of employment, the Appellant was offered
fresh employment as Badli worker against vacancies in Potroom Department of
the Company. He applied for the same on 22.10.1998 and after completion of
necessary formalities he was selected against the said vacancy and was issued
appointment letter dated 23.10.1998. He joined his duties in Potroom Plant-II
Department as substitute workman but did not report to duty on his own and on
the other hand he raised baseless industrial dispute for unlawful gain.
(iv) It is further pleaded by the Respondent that the service of the Appellant has
not been terminated by the Company but because the Appellant did not report
for duty on his own after joining duty as mentioned above. Therefore, there is
no industrial dispute between the parties and the reference made by the
appropriate authorities at the instance of the workman to the Labour Court is
bad in law. However, the Respondent craves leave of the Labour Court to add,
amend, alter and rescind its written statement and to produce evidence oral or
documentary, if found expedient at the relevant stages of the hearing. However,
no plea was made by the Respondent in written form on the provision of
Section 2(oo)(bb) of the I.D. Act that the termination of the Appellant from his
service falls within this provision. Nonetheless, this legal ground without any
factual foundation was pressed into operation before the Labour Court at the
time of addressing its rights. The same has been addressed by the Labour Court

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 rejecting the contention on the basis of recording its reasons which will be
dealt with in the reasoning portion of this judgment.
7 . On the other hand, the Appellant, by filing a detailed counter statement before the
High Court has sought to justify the finding and reasons recorded by the Labour Court
contending that the Labour Court, being a fact finding court, on appreciation of all
pleadings and undisputed facts regarding the periodical years of service rendered by the
Appellant with the Respondent, held that he had rendered continuous service of 240
days in 12 calendar months. Therefore, the Labour Court has held that the termination
order was issued by the Respondent without complying with the mandatory statutory
provisions of Section 6N of U.P.I.D. Act. The Appellant pleaded that neither the
compensation for retrenchment was given to him nor was he issued the three months
notice nor notice pay in lieu of the same as mandated Under Section 6N of the U.P.I.D.
Act. The Appellant further sought to justify the finding of the Labour Court that
periodical appointment of the Appellant for the very same post in the Construction
Division of the Respondent's Plant with the same Badge Number and marginal increase
of basic pay and D.A. is unfair labour practice in terms of Section 25T of the I.D. which
is punishable Under Section 25U of the I.D. Act. The High Court concurred with the
finding of the Labour Court wherein it has held that the Respondent's action is in
contravention of Section 6N of the U.P.I.D. Act.
8 . The Respondent, on the other hand, contends that the finding on the question of
retrenchment is factual and legally not correct in view of the fact that the termination of
the service of the Appellant falls within the provision of Section 2(oo)(bb) of the I.D.
Act. The High Court has exercised its judicial review power Under Articles 226 and 227
of the Constitution of India and also referred to the facts that after termination of the
service of the Appellant from the post of Labour Supervisor, he was offered with
employment in the Potroom department w.e.f. 23.10.1998, which he joined and later
resigned from that post. Therefore, though the Labour Court came to the conclusion on
facts, evidence on record and law on this aspect that keeping the workman as Badli
worker was unfair labour practice, the High Court has erroneously held that engagement
of some workers as Badli workers is a standard practice in several establishments and is
quiet permissible under law. The High Court further came to erroneous conclusion that
the Appellant did resign and having stated so, the High Court further made observation
that the least which was required from the Respondent under such circumstance, was to
pay retrenchment compensation to the Appellant in terms of Section 6N of the U.P.I.D.
Act which was admittedly not done. It was further held by the High Court that an
employee engaged for a particular project cannot be directed to be retained after the
completion of the project. However, since it was not stated by the Respondent that for
which particular project or projects the Appellant was employed, despite the fact that he
had been continuously working for six years on different projects, the Appellant was
conferred with some rights since he had been rendering permanent nature of work.
9. The High Court also referred to the resignation of the Appellant from the job of Badli
worker and held that the same mitigates against his claim. If he wanted permanent job
and had been assured the same, he should not have first applied to be selected as Badli
worker and then resigned just after selection. Having said so, the High Court with
reference to the facts and circumstances of the case, opined that it was not a case of
reinstatement with full back wages. However, by placing reliance upon the judgment of
this Court in the case of Harjinder Singh v. Punjab State Warehousing
Corporation MANU/SC/0060/2010 : (2010) 3 SCC 192, the correctness of the said
substituted award by the High Court is challenged in this appeal by the Appellant urging
various facts and legal contentions.
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10. The learned Counsel Mr. Abdhesh Chaudhary appearing on behalf of the Appellant-
workman submits that the finding and reasons recorded by the High Court in reversing
and setting aside the award of reinstatement with back wages and other consequential
benefits and substituting its award with award of ' 1,00,000/- as damages is erroneous
in law since the action of the Respondent in terminating the services of the Appellant is
in contravention of Section 6N of the U.P.I.D. Act. While exercising judicial review
power by the High Court Under Articles 226 and 227 of the Constitution of India, though
it has concluded on the points of dispute in favour of the workman it has erroneously
interfered with the award of reinstatement with back wages and consequential benefits
which by the Labour Court. This finding by High Court is in violation of the decision of
this Court in the case of Harjinder Singh (supra) in which this Court after adverting to
the entire case law on the question of social justice has examined the conferment of
power upon the High Court and held that the Labour Court in exercise of its original
jurisdiction is the final court of facts and grants of relief and the same cannot be
interfered with in exercise of its supervisory jurisdiction unless the award is shown to
be vitiated as erroneous in law. Therefore, the impugned judgment and order is vitiated
in law and is liable to be set aside.
1 1 . Further, it is contended that the High Court has further failed to take into
consideration the relevant aspect of the matter namely, that the Labour. Court on
appreciation of pleadings and evidence on record with reference to undisputed fact of
nonpayment on retrenchment compensation recorded that the Company neither obtained
permission from the appropriate Government to retrench the Appellant from his services
nor did it issue any notice or wages in lieu of the same to him. The action of
termination of the service of the Appellant on the ground that it is an automatic
termination for non-renewal of contract of the employment is in contravention to the
statutory provisions of the U.P.I.D. Act and the law laid down by this Court in catena of
cases, the relevant paragraphs of which will be adverted to in the reasoning portion of
this judgment. On this ground also the impugned judgment is liable to be set aside and
the impugned award of the Labour Court is entitled to be restored.
12. It is further urged that the High Court has further failed to take into consideration
the fact that the award of damages as against reinstatement without consequential
benefits to the Appellant while having concurred with the finding of fact recorded by
Labour Court after adjudication of the dispute and also the holding by the Labour Court
the order of termination is a case of retrenchment and is done in non-compliance of the
mandatory requirements as provided under the statute of U.P.I.D. Act is erroneous in
law. Therefore, the impugned judgment of the High Court is liable to be set aside.
13. Mr. Chander Udai Singh, the learned senior Counsel for the Respondent-employer
sought to justify the award of damages and setting aside the order of reinstatement
with consequential benefits by the High Court by contending that the Appellant is not a
permanent workman. He was engaged on a temporary basis periodically and he had no
permanent status as worker and his services could not be continued by the employer.
His termination from service from the Respondent Company was on account of the
condition of automatic termination w.e.f. 28.7.1998, whereby the contract employment
has come to an end. Therefore, according to the learned senior Counsel for the
Respondent, no order of termination was passed by the Respondent. On the other hand,
the present case was a situation of automatic termination due to non-renewal of
contract which is covered Under Section 2(oo)(bb) of the I.D. Act and the same is an
exception to retrenchment. This legal aspect, according to the learned senior Counsel
has not been appropriately appreciated by the Labour Court. The same has not been
accepted by the Division Bench of High Court in exercise of its jurisdiction Under
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Articles 226 and 227 of the Constitution of India. Therefore, the award of damages
could not have been awarded by the Labour Court. However, the same has been paid to
the Appellant and which is accepted by him. Therefore, he would submit that the
Appellant is not entitled to the relief as prayed in this appeal for the reason that if
automatic termination of services on account of the operation of the contract of
employment Clause is contained in the appointment order, then the claim of the
Appellant is not a case of retrenchment and compliance of the requirement Under
Section 6N of the U.P. Act does not arise. The same aspect has not been taken into
proper perspective both by the Labour Court as well as the High Court. Though the
Appellant has not challenged separately by filing SLP the correctness of the impugned
judgment can be challenged by the Respondent as it has got the right under the
provisions of Order 41 Rule 33 Code of Civil Procedure to question the correctness of
the finding recorded on the question of the termination by the Labour Court and the
High Court which made concurrent finding holding that it is a case of retrenchment and
the same is in contravention of Section 6N of the U.P.I.D. Act.
The High Court while passing the judgment and order and substituting the award of the
Labour Court has already granted damages of ' 1,00,000/- as retrenchment
compensation. The Appellant is not entitled to the relief as prayed for in this appeal for
another reason namely, that he had accepted the damages awarded in the impugned
judgment by the High Court. Therefore, this Court need not interfere with the impugned
judgment.
14. Another legal contention urged by the learned senior Counsel for the Respondent is
that the Appellant is not entitled to back wages since he is not employed with the
Respondent-Company and has not even filed application Under Section 17B before the
High Court when the award passed by the Labour Court was challenged by the
Respondent. Further, the Appellant admitted that he did not claim wages under the Act
which would clearly go on to show that the Appellant was not employed and therefore,
he is not entitled to back wages as awarded by the Labour Court. Hence, the award of
the back wages by the Labour Court is bad in law and the same has been modified by
the High Court having regard to the facts of the case which need not be interfered with
by this Court in exercise of its power Under Article 136 of the Constitution of India.
15. With reference to the above legal contentions the following points would arise for
our consideration:
(1) Whether the exercise of power by the High Court Under Articles 226 and
227 of the Constitution and setting aside the award of reinstatement, back
wages and other consequential reliefs and awarding ' 1,00,000/- towards
damages is legal and valid?
(2) Whether the concurrent finding recorded by the Labour Court and High
Court on the question of termination of services of the workman holding that
the case of retrenchment falls Under Section 6N of the U.P.I.D. Act is void ab
initio and not accepting the legal plea that the case falls Under Section 2(oo)
(bb) of the Act is correct, legal and valid?
(3) Whether the workman is entitled for reinstatement with full back wages and
other consequential reliefs?
(4) What Award?
Answer to point No. 1
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16. The Appellant has claimed that the High Court has modified the award passed by
the Labour Court which has awarded reinstatement of the Appellant with full back wages
and other consequential benefits to simply awarding compensation to the tune of '
1,00,000/- by the High Court in lieu of reinstatement with back wages and
consequential benefits which order is bad in law in the light of the legal principles laid
down by this Court in the catena of cases. In the case of Heinz India (P) Ltd. v.
Union of India MANU/SC/0229/2012 : (2012) 5 SCC 443, this Court, on the issue of
the power of the High Court for judicial review Under Article 226, held as under:
60. The power of judicial review is neither unqualified nor unlimited. It has its
own limitations. The scope and extent of the power that is so very often
invoked has been the subject-matter of several judicial pronouncements within
and outside the country. When one talks of 'judicial review' one is instantly
reminded of the classic and oft-quoted passage from Council of Civil Service
Unions (CCSU) v. Minister for the Civil Service (1984) 3 All ER 935, where Lord
Diplock summed up the permissible grounds of judicial review thus:
Judicial Review has I think developed to a stage today when, without
reiterating any analysis of the steps by which the development has
come about, one can conveniently classify under three heads the
grounds on which administrative action is subject to control by judicial
review. The first ground I would call 'illegality', the second
'irrationality' and the third 'procedural impropriety'.
By 'illegality' as a ground for judicial review I mean that the decision-maker
must understand correctly the law that regulates his decision-making power and
must give effect to it. Whether he has or not is par excellence a justiciable
question to be decided, in the event of dispute, by those persons, the judges,
by whom the judicial power of the State is exercisable.
By 'irrationality' I mean what can by now be succinctly referred to as
'Wednesbury unreasonableness'. It applies to a decision which is so outrageous
in its defiance of logic or of accepted moral standards that no sensible person
who had applied his mind to the question to be decided could have arrived at it.
Whether a decision falls within this category is a question that judges by their
training and experience should be well equipped to answer or else there would
be something badly wrong with our judicial system....
I have described the third head as 'procedural impropriety' rather than failure to
observe basic rules of natural justice or failure to act with procedural fairness
towards the person who will be affected by the decision. This is because
susceptibility to judicial review under this head covers also failure by an
administrative tribunal to observe procedural rules that are expressly laid down
in the legislative instrument by which its jurisdiction is conferred, even where
such failure does not involve any denial of natural justice.
Further, in the case of Devinder Singh v. Municipal Council, Sanaur
MANU/SC/0426/2011 : (2011) 6 SCC 584, it was held that:
22....A careful analysis thereof reveals that the High Court neither found any
jurisdictional infirmity in the award of the Labour Court nor it came to the
conclusion that the same was vitiated by an error of law apparent on the face of
the record. Notwithstanding this, the High Court set aside the direction given by

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 the Labour Court for reinstatement of the Appellant by assuming that his initial
appointment/engagement was contrary to law and that it would not be in public
interest to approve the award of reinstatement after long lapse of time. In our
view, the approach adopted by the High Court in dealing with the award of the
Labour Court was ex facie erroneous and contrary to the law laid down in Syed
Yakoob v. K.S. Radhakrishnan MANU/SC/0184/1963 : AIR (1964) SC 477,
Swaran Singh v. State of Punjab MANU/SC/0060/1975 : (1976) 2 SCC
8 6 8 , P.G.I. of Medical Education and Research, Chandigarh v. Raj
Kumar MANU/SC/0829/2000 : (2001) 2 SCC 54,Surya Dev Rai v. Ram
Chander Rai MANU/SC/0559/2003 : (2003) 6 SCC 675 andShalini Shyam
v. Rajendra Shankar Path MANU/SC/0508/2010 : (2010) 8 SCC 329.
23. In Syed Yakoob v. K.S. Radhakrishnan (supra), this Court identified the
limitations of certiorari jurisdiction of the High Court Under Article 226 of the
Constitution in the following words:
The question about the' limits of the jurisdiction of High Courts in
issuing a writ of certiorari Under Article 226 has been frequently
considered by this Court and the true legal position in that behalf is no
longer in doubt. A writ of certiorari can be issued for correcting errors
of jurisdiction committed by inferior courts or tribunals: these are
cases where orders are passed by inferior courts or tribunals without
jurisdiction, or is in excess of it, or as a result of failure to exercise
jurisdiction. A writ can similarly be issued where in exercise of
jurisdiction conferred on it, the court or tribunal acts illegally or
improperly, as for instance, it decides a question without giving an
opportunity to be heard to the party affected by the order, or where the
procedure adopted in dealing with the dispute is opposed to principles
of natural justice. There is, however, no doubt that the jurisdiction to
issue a writ of certiorari is a supervisory jurisdiction and the court
exercising it is not entitled to act as an appellate court. This limitation
necessarily means that findings of fact reached by the inferior court or
tribunal as result of the appreciation of evidence cannot be reopened or
questioned in writ proceedings. An error of law which is apparent on
the face of the record can be corrected by a writ, but not an error of
fact, however grave it may appear to be. In regard to a finding of fact
recorded by the tribunal, a writ of certiorari can be issued if it is shown
that in recording the said finding, the tribunal had erroneously refused
to admit admissible and material evidence, or had erroneously admitted
inadmissible evidence which has influenced the impugned finding.
Similarly, if a finding of fact is based on no evidence, that would be
regarded as an error of law which can be corrected by a writ of
certiorari. In dealing with this category of cases, however, we must
always bear in mind that a finding of fact recorded by the tribunal
cannot be challenged in proceedings for a writ of certiorari on the
ground that the relevant and material evidence adduced before the
tribunal was insufficient or inadequate to sustain the impugned finding.
The adequacy or sufficiency of evidence led on a point and the
inference of fact to be drawn from the said finding are within the
exclusive jurisdiction of the tribunal, and the said points cannot be
agitated before a writ court. It is within these limits that the jurisdiction
conferred on the High Courts Under Article 226 to issue a writ of
certiorari can be legitimately exercised.
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 In the second judgment - Swaran Singh v. State of Punjab (supra),
this Court reiterated the limitations of certiorari jurisdiction indicated in
Syed Yakoob v. Radhakrishnan (supra) and observed:
In regard to a finding of fact recorded by an inferior tribunal, a writ of
certiorari can be issued only if in recording such a finding, the tribunal
has acted on evidence which is legally inadmissible, or has refused to
admit admissible evidence, or if the finding is not supported by any
evidence at all, because in such cases the error amounts to an error of
law. The writ jurisdiction extends only to cases where orders are
passed by inferior courts or tribunals in excess of their jurisdiction or
as a result of their refusal to exercise jurisdiction vested in them or
they act illegally or improperly in the exercise of their jurisdiction
causing grave miscarriage of justice.
17. The judgments mentioned above can be read with the judgment of this Court in
Harjinder Singh's case (supra), the relevant paragraph of which reads as under:
2 1 . Before concluding, we consider it necessary to observe that while
exercising jurisdiction Under Articles 226 and/or 227 of the Constitution in
matters like the present one, the High Courts are duty-bound to keep in mind
that the Industrial Disputes Act and other similar legislative instruments are
social welfare legislations and the same are required to be interpreted keeping
in view the goals set out in the Preamble of the Constitution and the provisions
contained in Part IV thereof in general and Articles 38, 39(a) to (e), 43 and 43A
in particular, which mandate that the State should secure a social order for the
promotion of welfare of the people, ensure equality between men and women
and equitable distribution of material resources of the community to subserve
the common good and also ensure that the workers get their dues. More than
41 years ago, Gajendragadkar, J. opined that:
10. ...The concept of social and economic justice is a living concept of
revolutionary import; it gives sustenance to the rule of law and
meaning and significance to the ideal of welfare State.
(State of Mysore v. Workers of Gold Mines AIR p. 928, para 10.)
18. A careful reading of the judgments reveals that the High Court can interfere with an
Order of the Tribunal only on the procedural level and in cases, where the decision of
the lower courts has been arrived at in gross violation of the legal principles. The High
Court shall interfere with factual aspect placed before the Labour Courts only when it is
convinced that the Labour Court has made patent mistakes in admitting evidence
illegally or have made grave errors in law in coming to the conclusion on facts. The
High Court granting contrary relief Under Articles 226 and 227 of the Constitution
amounts to exceeding its jurisdiction conferred upon it. Therefore, we accordingly
answer the point No. 1 in favour of the Appellant.
Answer to point No. 2
1 9 . No plea was made by the Respondent in its written statement filed before the
Labour Court with regard to the provision of Section 2(oo)(bb) of the I.D. Act.
Nonetheless, this legal ground without any factual foundation was pressed into
operation before the Labour Court by the learned Counsel for the Respondent. The same
has been addressed by the Labour Court by rejecting the said contention by assigning
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its own reasons. Before we record our finding on this contention, it is pertinent to
mention the provision of Section 2(oo)(bb) of the I.D. Act, which reads thus:
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-
[(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 the stipulation in that behalf contained therein; or]
20. It is argued by the learned Counsel for the Appellant that there is no provision in
pari materia to this provision in the U.P.I.D. Act. Therefore, even if the service of the
Appellant is terminated on expiry of the contract period of service, it would fall within
the definition of retrenchment under the U.P.I.D. Act for non compliance of the
mandatory requirement Under Section 6N of the U.P.I.D. Act. The order of termination
against the Appellant is rendered void ab initio in law, therefore, the Appellant is
entitled to be reinstated with back wages and consequential benefits. In support of this
contention, the learned Counsel has aptly relied upon the decision of this Court in U.P.
State Sugar Corporation Ltd. v. Om Prakash Upadhyay : (2002) 10 SCC 89, with
regard to the applicability of the provision of Section 2(oo)(bb) of the I.D. Act which
was amended provision after the U.P.I.D. Act, the relevant paragraphs of which read as
under:
3 . On the application of the State Act or the Central Act to the case on hand,
the High Court followed the Division Bench ruling in Jai Kishun v. U.P. Coop.
Bank Ltd. and made it plain that the provision of Section 2(oo)(bb) of the
Central Industrial Disputes Act would not apply in respect of proceedings
arising under the U.P. Industrial Disputes Act. The High Court also noticed the
contrary view in this regard in the case of Pushpa Agarwal v. Regional
Inspectress of Girls Schools, Meerut but held that in Jai Kishun case the relevant
provisions had been duly considered which are not taken note of in Pushpa
Agarwal case and on that basis, it followed the decision in Jai Kishun case. It is
this judgment that is brought in appeal before us in these proceedings.
...
5 . The law is settled that under the Central Act every case of retrenchment
would not include a case of contractual termination which came to be
introduced under the Central Act by amending Act 49 of 1984 which purports to
exclude from the ambit of definition "retrenchment" inter alia: (i) termination of
service of a workman as a result of the non-renewal of contract of employment
between the employer and the workman concerned on its expiry, or (ii)
termination of the contract of employment in terms of a stipulation contained in
the contract of employment in that behalf. Such a case is not available under
the U.P. Industrial Disputes Act. If the U.P. Industrial Disputes Act covers the
present case then termination of the services of the Respondent would certainly
result in retrenchment while it is not so under the Central Industrial Disputes
Act in view of the exceptional clauses referred to above. While the former
situation results in retrenchment, the latter situation does not amount to
retrenchment if the same case would arise under the State Industrial Disputes
Act. Thus operation of the two enactments would bring to the forefront the

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 obvious repugnancy between them. In such a case as to how the question is to
be resolved needs to be considered in the present case.
6. Inasmuch as the enactments, both by the State and the Centre, are under the
Concurrent List, we are urged to look to Article 254(2) of the Constitution of
India. If we view from that angle, the U.P. Industrial Disputes Act also covers
the same field as the Central Industrial Disputes Act. However, Section 2(oo)
(bb) is obviously a special provision enacted under in order to understand the
meaning of "retrenchment" and that is the law made by Parliament subsequent
to State enactment and naturally falls within the proviso to Article 254(2). If
that is so, the Central Industrial Disputes Act. Therefore, we would have taken
that view but for the special provisions in the Central Act which we will advert
to hereinafter.
7. Section 1(2) of the Central Act provides that the Act 'extends to the whole of
India' and this Sub-section was substituted for the original Sub-section (2) by
the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956
(36 of 1956) with effect from 29-8-1956. Under that Act, Section 31 (which
came into force from 7-10-1956) has been introduced which reads as follows:
31. Act not to override State laws.- (1) If, immediately before the
commencement of this Act, there is in force in any State any Provincial
Act or State Act relating to the settlement or adjudication of disputes,
the operation of such an Act in that State in relation to matters covered
by that Act shall not be affected by the Industrial Disputes Act, 1947 as
amended by this Act.
Sub-section (1) of the said section makes it clear that the operation of the State
Act will not be affected by the Central Act....
2 1 . The learned Counsel for the Appellant therefore, rightly submitted that Section
2(oo)(bb) of the I.D. Act will not be attracted in the present case and on the other
hand, the provision of Section 6N of the U.P.I.D. Act is required to be fulfilled
mandatorily by the Respondent to retrench the, Appellant from his service.
22. The learned senior Counsel for the Respondent has not brought in his argument to
counter the above legal contention except contending that the provision of Section
2(oo)(bb) of the I.D. Act would be applicable to the fact situation of the case as the
Appellant has been in contract employment in the project. But, we are inclined to hold
that Section 2(oo)(bb) of the I.D. Act is not attracted in the present case on two
grounds:
Firstly, in the light of the legal principle laid down by this Court in the case of
U.P. State Sugar Corporation Ltd. (supra), the provisions of the U.P.I.D. Act
remain unaffected by the provision of the I.D. Act because of the provision in
Section 31 of the Industrial Disputes (Amendment and Miscellaneous
Provisions) Act, 1956. Hence, Section 2(oo)(bb) is not attracted in the present
case.
Secondly, the claim of the Respondent that the Appellant was a temporary
worker is not acceptable to us. On perusal of facts, it is revealed that his
service has been terminated several times and he was subsequently employed
again till his service was finally terminated on 27.7.1998. His brief periods of
contracts with the Respondent have been from 28.12.1992 to 28.12.1993 for
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 the first time, from 3.4.1994 to 29.12.1994 for the second time, from
10.1.1995 to 5.1.1996 for the third time, from 16.1.1996 to 11.1.1997 for the
fourth time, from 20.1.1997 to 21.1.1998 for the fifth time and from 27.1.1998
to 27.7.1998 for a final time at the end of which his service was terminated.
2 3 . Very interestingly, the periods of service extends to close to 6 years save the
artificial breaks made by the Respondent with an oblique motive so as to retain the
Appellant as a temporary worker and deprive the Appellant of his statutory right of
permanent worker status. The aforesaid conduct of the Respondent perpetuates 'unfair
labour practice as defined Under Section 2(ra) of the I.D. Act, which is not permissible
in view of Sections 25T and 25U of the I.D. Act read with entry at Serial No. 10 in the
Vth Schedule to the I.D. Act regarding unfair labour practices.
Section 2(ra) reads thus:
unfair labour practice" means any of the practices mentioned in the Vth
Schedule.
Further, Entry 10 of Vth Schedule reads as under:
5. To discharge or dismiss workmen-
....
(10). To employ workmen as 'badlis', casuals or temporaries and to continue
them as such for years, with the object of depriving them of the status and
privileges of permanent workmen.
24. The Respondent, in order to mitigate its conduct towards the Appellant has claimed
that the Appellant was appointed solely on contract basis, and his service has been
terminated in the manner permissible Under Section 2(oo)(bb) of the I.D. Act. However,
we shall not accept this contention of the Respondent for the following reasons:
(i) Firstly, the Respondent has not produced any material evidence on record
before the Labour Court to prove that it meets all the required criteria under the
Contract Labour (Regulation and Abolition) Act, 1970, to be eligible to employ
employees on contractual basis which includes license number etc.
(ii) Secondly, the Respondent could not produce any material evidence on
record before the Labour Court to show that the Appellant was employed for
any particular project(s) on the completion of which his service has been
terminated through non-renewal of his contract of employment.
25. Therefore, we deem it fit to construe that the Appellant has rendered continuous
service for six continuous years (save the artificially imposed break) as provided Under
Section 25B of the I.D. Act and can therefore be subjected to retrenchment only through
the procedure mentioned in the I.D. Act or the state Act in pari materia.
26. Therefore, we answer the point No. 2 in favour of the Appellant holding that the
Labour Court was correct in holding that the action of the Respondent/employer is a
clear case of retrenchment of the Appellant, which action requires to comply with the
mandatory requirement of the provision of Section 6N of the U.P.I.D. Act. Undisputedly,
the same has not been complied with and therefore, the order of retrenchment has
rendered void ab initio in law.

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Answer to Point No. 3
27. Having answered point No. 2 in favour of the Appellant, we also answer the point
No. 3 in his favour since we construe that the Appellant is a worker of the Respondent
Company providing continuous service for 6 years except for the artificial breaks
imposed upon him with an oblique motive by the Respondent Company. We hold that
the termination of service of the Appellant amounts to "retrenchment" in the light of the
principle laid down by three judge bench decision of this Court in State Bank of India
v. Shri N. Sundara Money MANU/SC/0315/1976 : AIR 1976 SC 1111 and attracts
the provision of Section 6N of the U.P.I.D. Act. The case mentioned above illustrates the
elements which constitute retrenchment. The relevant paragraphs read as under:
9 . A break-down of Section 2(oo) unmistakably expands the semantics of
retrenchment. 'Termination...for any reason whatsoever' are the keywords.
Whatever the reason, every termination spells retrenchment. So the sole
question is has the employee's service been terminated? Verbal apparel apart,
the substance is decisive. A termination takes place where a term expires either
by the active step of the master or the running out of the stipulated term. To
protect the weak against the strong this policy of comprehensive definition has
been effectuated. Termination embraces not merely the act of termination by
the employer, but the fact of termination howsoever produced. May be, the
present may be a hard case, but we can visualise abuses by employers, by
suitable verbal devices, circumventing the armour of Section 25F and Section
2(00). Without speculating on possibilities, we may agree that 'retrenchment' is
no longer terra incognita but area covered by an expansive definition. It meats
'to end, conclude, cease'. In the present case the employment ceased,
concluded, ended on the expiration of nine days automatically maybe, but
cessation all the same. That to write into the order of appointment the date of
termination confers no moksha from Section 25F(b) is inferable from the
proviso to Section 25F(1). True, the section speaks of retrenchment by the
employer and it is urged that some act of volition by the employer to bring
about the termination is essential to attract Section 25F and automatic
extinguishment of service by effluxion of time cannot be sufficient. An English
case R.V. Secretary of State (1973) 2 ALL E.R. 103; was relied on, where Lord
Denning, MR observed:
I think the word ' terminate' or 'termination' is by itself ambiguous. It
can refer to either of two things-either to termination by notice or
termination by effluxion of time It is often used in that dual sense in
landlord and tenant and in master and servant cases. But there are
several indications in this paragraph to show that it refers here only to
termination by notice.
Buckley L. J., concurred and said:
In my judgment the words are not capable of bearing that meaning. As
counsel for the Secretary of State has pointed out, the verb 'terminate'
can be used either transitively or intransitively. A contract may be said
to terminate when it comes to an end by effluxion of time, or it may be
said to be terminated when it is determined at notice or otherwise by
some act of one of the parties. Here in my judgment the word
'terminated' is used in this passage in para 190 in the transitive sense,
and it postulates some act by somebody which is to bring the

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 appointment to an end, and is not applicable to a case in which the
appointment comes to an end merely by effluxion of time Words of
multiple import have to be winnowed judicially to suit the social
philosophy of the statute. So screened, we hold that the transitive and
intransitive senses are covered in the current context. Moreover, an
employer terminates employment not merely by passing an order as the
service runs. He can do so by writing a composite order one giving
employment and the other ending or limiting it. A separate, subsequent
determination is not the sole magnetic pull of the provision. A
preemptive provision to terminate is struck by the same vice as the
post-appointment termination. Dexterity of diction cannot defeat the
articulated conscience of the provision.
28. Section 6N of the U.P.I.D. Act which is in pari materia to Section 25N of the I.D.
Act reads thus:
[6-N. Condition precedent to retrenchment of workmen.- No workman
employed in any industry who has been in continuous service for not less than
one year under an employer shall be retrenched by 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 for
the period of the notice;
Provided that no such notice shall be necessary if the retrenchment is under an
agreement which specifies the date of termination of service;
(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 service or any part thereof in excess of six
months; and
(c) notice in the prescribed manner is served on the State Government]
Evidently, the above said mandatory procedure has not been followed in the present
case. Further, it has been held by this Court in the case of Anoop Sharma v. Executive
Engineer, Public Health Division No. 1 Panipat MANU/SC/0281/2010 : (2010) 5
SCC 497 as under:
3...no workman employed in any industry who has been in continuous service
for not less than one year under an employer can be retrenched by that
employer until the conditions enumerated in Clauses (a) and (b) of Section 25F
of the Act are satisfied. In terms of Clause (a), the employer is required to give
to the workman one month's notice in writing indicating the reasons for
retrenchment or pay him wages in lieu of the notice. Clause (b) casts a duty
upon the employer to pay to the workman at the time of retrenchment,
compensation equivalent to fifteen days' average pay for every completed year
of continuous service or any part thereof in excess of six months. This Court
has repeatedly held that Section 25F(a) and (b) of the Act is mandatory and
non-compliance thereof renders the retrenchment of an employee nullity -
State of Bombay v. Hospital Mazdoor Sabha MANU/SC/0200/1960 : AIR
1960 SC 610, Bombay Union of Journalists v. State of Bombay
MANU/SC/0135/1963 : (1964) 6 SCR 22,State Bank of India v. N.
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 Sundara Money MANU/SC/0315/1976 : (1976) 1 SCC 822,Santosh Gupta
v. State Bank of Patiala MANU/SC/0313/1980 : (1980) 3 SCC 340,Mohan
Lal v. Management of Bharat Electronics Ltd. MANU/SC/0327/1981 :
(1981) 3 SCC 225, L. Robert D'Souza v. Executive Engineer, Southern
Railway MANU/SC/0152/1982 : (1982) 1 SCC 645,Surendra Kumar
Verma v. Industrial Tribunal MANU/SC/0316/1980 : (1980) 4 SCC 443,
Gammon India Ltd. v. Niranjan Das MANU/SC/0237/1983 : (1984) 1 SCC
509, Gurmail Singh v. State of Punjab MANU/SC/0640/1990 : (1991) 1
SCC 189 and Pramod Jha v. State of Bihar MANU/SC/0179/2003 : (2003)
4 SCC 619. This Court has used different expressions for describing the
consequence of terminating a workman's service/employment/engagement by
way of retrenchment without complying with the mandate of Section 25F of the
Act. Sometimes it has been termed as ab initio void, sometimes as illegal per
se, sometimes as nullity and sometimes as non est. Leaving aside the legal
semantics, we have no hesitation to hold that termination of service of an
employee by way of retrenchment without complying with the requirement of
giving one month's notice or pay in lieu thereof and compensation in terms of
Section 25F(a) and (b) has the effect of rendering the action of the employer as
nullity and the employee is entitled to continue in employment as if his service
was not terminated.
(Emphasis laid by this Court)
Therefore, in the light of the law provided in the I.D. Act and its state counterpart
through the U.P.I.D. Act and also on the basis of the legal principle laid down by this
Court, we hold that the termination of service of the Appellant was illegal and void ab
initio.
29. Therefore, the Labour Court was correct on factual evidence on record and legal
principles laid down by this Court in catena of cases in holding that the Appellant is
entitled to reinstatement with all consequential benefits. Therefore, we set aside the
Order of the High Court and uphold the order of the Labour Court by holding that the
Appellant is entitled to reinstatement in the Respondent-Company.
30. On the issue of back wages to be awarded in favour of the Appellant, it has been
held by this Court in the case of Shiv Nandan Mahto v. State of Bihar and Ors.
MANU/SC/0730/2013 : (2013) 11 SCC 626 that if a workman is kept out of service
due to the fault or mistake of the establishment/company he was working in, then the
workman is entitled to full back wages for the period he was illegally kept out of
service. The relevant paragraph of the judgment reads as under:
5. ...In fact, a perusal of the aforesaid short order passed by the Division Bench
would clearly show that the High Court had not even acquainted itself with the
fact that the Appellant was kept out of service due to a mistake. He was not
kept out of service on account of suspension, as wrongly recorded by the High
Court. The conclusion is, therefore, obvious that the Appellant could not have
been denied the benefit of back wages on the ground that he had not worked
for the period when he was illegally kept out of service. In our opinion, the
Appellant was entitled to be paid full back wages for the period he was kept out
of service.
3 1 . Further, in General Manager, Haryana Roadways v. Rudhan Singh
MANU/SC/0408/2005 : (2005) 5 SCC 591, the three Judge Bench of this Court
considered the question whether back wages should be awarded to the workman in each
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and every case of illegal retrenchment. The relevant paragraph reads as under:
There is no rule of thumb that in every case where the Industrial Tribunal gives
a finding that the termination of service was in violation of Section 25F of the
Act, entire back wages should be awarded. A host of factors like the manner
and method of selection and appointment i.e. whether after proper
advertisement of the vacancy or inviting applications from the employment
exchange, nature of appointment, namely, whether ad hoc, short term, daily
wage, temporary or permanent in character, any special qualification required
for the job and the like should be weighed and balanced in taking a decision
regarding award of back wages. One of the important factors, which has to be
taken into consideration, is the length of service, which the workman had
rendered with the employer. If the workman has rendered a considerable period
of service and his services are wrongfully terminated, he may be awarded full
or partial back wages keeping in view the fact that at his age and the
qualification possessed by him he may not be in a position to get another
employment. However, where the total length of service rendered by a
workman is very small, the award of back wages for the complete period i.e.
from the date of termination till the date of the award, which our experience
shows is often quite large, would be wholly inappropriate. Another important
factor, which requires to be taken into consideration is the nature of
employment. A regular service of permanent character cannot be compared to
short or intermittent daily-wage employment though it may be for 240 days in a
calendar year.
3 2 . Subsequently, in the case of Deepali Gundu Surwase v. Kranti Junior
Adhyapak Mahavidyalaya MANU/SC/0942/2013 : (2013) 10 SCC 324 it was held by
this Court as under:
The propositions which can be culled out from the aforementioned judgments
are:
i) In cases of wrongful termination of service, reinstatement with
continuity of service and back wages is the normal rule.
iii) Ordinarily, an employee or workman whose services are terminated
and who is desirous of getting back wages is required to either plead or
at least make a statement before the adjudicating authority or the Court
of first instance that he/she was not gainfully employed or was
employed on lesser wages. If the employer wants to avoid payment of
full back wages, then it has to plead and also lead cogent evidence to
prove that the employee/workman was gainfully employed and was
getting wages equal to the wages he/she was drawing prior to the
termination of service. This is so because it is settled law that the
burden of proof of the existence of a particular fact lies on the person
who makes a positive averments about its existence. It is always easier
to prove a positive fact than to prove a negative fact. Therefore, once
the employee shows that he was not employed, the onus lies on the
employer to specifically plead and prove that the employee was
gainfully employed and was getting the same or substantially similar
emoluments.
...

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 vi) In a number of cases, the superior Courts have interfered with the
award of the primary adjudicatory authority on the premise that
finalization of litigation has taken long time ignoring that in majority of
cases the parties are not responsible for such delays. Lack of
infrastructure and manpower is the principal cause for delay in the
disposal of cases. For this the litigants cannot be blamed or penalised.
It would amount to grave injustice to an employee or workman if he is
denied back wages simply because there is long lapse of time between
the termination of his service and finality given to the order of
reinstatement. The Courts should bear in mind that in most of these
cases, the employer is in an advantageous position vis-�-vis the
employee or workman. He can avail the services of best legal brain for
prolonging the agony of the sufferer, i.e., the employee or workman,
who can ill afford the luxury of spending money on a lawyer with
certain amount of fame. Therefore, in such cases it would be prudent to
adopt the course suggested in Hindustan Tin Works Private Limited v.
Employees of Hindustan Tin Works Private Limited (supra)....
(Emphasis laid by this Court)
33. In the present case, the Respondent has made a vague submission to the extent
that:
the conduct of the workman throughout the proceedings before the High Court
during 2002 to 2011 shows that he is continuously gainfully employed
somewhere. Admittedly even in the counter affidavit in the said Writ Petition, it
has not been stated that the workman was not employed.
Therefore, on the basis of the legal principle laid down by this Court in the Deepali
Gundu Surwase case (supra), the submission of the Respondent that the Appellant did
not aver in his plaint of not being employed, does not hold since the burden of proof
that the Appellant is gainfully employed post termination of his service is on the
Respondent. The claim of the Respondent that the Appellant is gainfully employed
somewhere is vague and cannot be considered and accepted. Therefore, we hold that
the Appellant is entitled to full back wages from the date of termination of his service
till the date of his reinstatement.
Answer to point No. 4
3 4 . The present case is a clear case of violation of the constitutional principles
expressly mentioned in the text. Before we make our concluding findings and reasons,
we wish to revisit the Harjinder Singh case (supra) which made some pertinent points
as under:
22. I n Y.A. Mamarde v. Authority under the Minimum Wages Act, this Court,
while interpreting the provisions of the Minimum Wages Act, 1948, observed:
(SCC pp. 109-10)
The anxiety on the part of the society for improving the general
economic condition of some of its less favoured members appears to be
in supersession of the old principle of absolute freedom of contract and
the doctrine of laissez faire and in recognition of the new principles of
social welfare and common good. Prior to our Constitution this

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 principle was advocated by the movement for liberal employment in
civilised countries and the Act which is a pre-Constitution measure was
the offspring of that movement. Under our present Constitution the
State is now expressly directed to endeavour to secure to all workers.
(whether agricultural, industrial or otherwise) not only bare physical
subsistence but a living wage and conditions of work ensuring a decent
standard of life and full enjoyment of leisure. This directive principle of
State policy being conducive to the general interest of the nation as a
whole, merely lays down the foundation for appropriate social structure
in which the labour will find its place of dignity, legitimately due to it
in lieu of its contribution to the progress of national economic
prosperity.
27. In 70s, 80s and early 90s, the courts repeatedly negated the doctrine of
laissez faire and the theory of hire and fire. In his treatise: Democracy, Equality
and Freedom, Justice Mathew wrote:
The original concept of employment was that of master and servant. It
was therefore held that a court will not specifically enforce a contract of
employment. The law has adhered to the age-old rule that an employer
may dismiss the employee at will. Certainly, an employee can never
expect to be completely free to do what he likes to do. He must face
the prospect of discharge for failing or refusing to do his work in
accordance with his employer's directions. Such control by the
employer over the employee is fundamental to the employment
relationship. But there are innumerable facets of the employee's life
that have little or no relevance to the employment relationship and over
which the employer should not be allowed to exercise control. It is no
doubt difficult to draw a line between reasonable demands of an
employer and those which are unreasonable as having no relation to
the employment itself. The rule that an employer can arbitrarily
discharge an employee with or without regard to the actuating motive
is a rule settled beyond doubt. But the rule became settled at a time
when the words 'master' and 'servant' were taken more literally than
they are now and when, as in early Roman Law, the rights of the
servant, like the rights of any other member of the household, were not
his own, but those of his paterfamilias. The overtones of this ancient
doctrine are discernible in the judicial opinion which rationalised the
employer's absolute right to discharge the employee. Such a
philosophy of the employer's dominion over his employee may have
been in tune with the rustic simplicity of bygone days. But that
philosophy is incompatible with these days of large, impersonal,
corporate employers. The conditions have now vastly changed and it is
difficult to regard the contract of employment with large-scale
industries and government enterprises conducted by bodies which are
created under special statutes as mere contract of personal service.
Where large number of people are unemployed and it is extremely
difficult to find employment, an employee who is discharged from
service might have to remain without means of subsistence for a
considerably long time and damages in the shape of wages for a certain
period may not be an adequate compensation to the employee for non-
employment. In other words, damages would be a poor substitute for
reinstatement. The traditional rule has survived because of the
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 sustenance it received from the law of contracts. From the contractual
principle of mutuality of obligation, it was reasoned that if the
employee can quit his job at will, then so too must the employer have
the right to terminate the relationship for any or no reason. And there
are a number of cases in which even contracts for permanent
employment i.e. for indefinite terms, have been held unenforceable on
the ground that they lack mutuality of obligation. But these cases
demonstrate that mutuality is a high-sounding phrase of little use as an
analytical tool and it would seem clear that mutuality of obligation is
not an inexorable requirement and that lack of mutuality is simply, as
many courts have come to recognise, an imperfect way of referring to
the real obstacle to enforcing any kind of contractual limitation on the
employer's right of discharge i.e. lack of consideration. If there is
anything in contract law which seems likely to advance the present
inquiry, it is the growing tendency to protect individuals from contracts
of adhesion from overreaching terms often found in standard forms of
contract used by large commercial establishments. Judicial disfavour of
contracts of adhesion has been said to reflect the assumed need to
protect the weaker contracting part against the harshness of the
common law and the abuses of freedom of contract.
The same philosophy seems to provide an appropriate answer to the
argument, which still seems to have some vitality, that the servant
cannot complain, as he takes the employment on the terms which are
offered to him.
(emphasis added)
28. In Govt. Branch Press v. D.B. Belliappa, the employer invoked the theory of
hire and fire by contending that the Respondent's appointment was purely
temporary and his service could be terminated at any time in accordance with
the terms and conditions of appointment which he had voluntarily accepted.
While rejecting this plea as wholly misconceived, the Court observed: (SCC p.
486, para 25)
25. ...It is borrowed from the archaic common law concept that
employment was a matter between the master and servant only. In the
first place, this rule in its original absolute form is not applicable to
government servants, Secondly, even with regard to private
employment, much of it has passed into the fossils of time. 'This rule
held the field at the time when the master and servant were taken more
literally than they are now and when, as in early Roman law, the rights
of the servant, like the rights of any other member of the household,
were not his own, but those of his paterfamilias.' The overtones of this
" ancient doctrine are discernible in the Anglo-American jurisprudence
of the 18th century and the first half of the 20th century, which
rationalised the employer's absolute right to discharge the employee.
'Such a philosophy', as pointed out by K.K. Mathew, J. (vide his
treatise: Democracy, Equality and Freedom, p. 326), 'of the employer's
dominion over his employee may have been in tune with the rustic
simplicity of bygone days. But that philosophy is incompatible' with
these days of large, impersonal, corporate employers.' To bring it in
tune with vastly changed and changing socioeconomic conditions and

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 mores of the day, much of this old, antiquated and unjust doctrine has
been eroded by judicial decisions and legislation, particularly in its
application to persons in public employment, to whom the
constitutional protection of Articles 14, 15, 16 and 311 is available. The
argument is therefore overruled.
29. The doctrine of laissez faire was again rejected in Glaxo Laboratories (I)
Ltd. v. Presiding Officer, in the following words:
12. In the days of laissez faire when industrial relation was governed
by the harsh weighted law of hire and fire the management was the
supreme master, the relationship being referable to contract between
unequals and the action of the management treated almost sacrosanct.
The developing notions of social justice and the expanding horizon of
socio-economic justice necessitated statutory protection to the unequal
partner in the industry, namely, those who invest blood and flesh
against those who bring in capital. Moving from the days when whim of
the employer was suprema lex, the Act took a modest step to compel
by statute the employer to prescribe minimum conditions of service
subject to which employment is given. The Act was enacted as its long
title shows to require employers in industrial establishments to define
with sufficient precision the conditions of employment under them and
to make the said conditions known to workmen employed by them. The
movement was from status to contract, the contract being not left to be
negotiated by two unequal persons but statutorily imposed. If this
socially beneficial Act was enacted for ameliorating the conditions of
the weaker partner, conditions of service prescribed thereunder must
receive such interpretation as to advance the intendment underlying the
Act and defeat the mischief.
35. We therefore conclude and hold that the Labour Court was correct on legal and
factual principles in reinstating the Appellant along with full back wages after setting
aside the order of termination. The High Court on the other hand, has erred by
exceeding its jurisdiction Under Article 227 of the Constitution of India in holding that
the Appellant has in fact, resigned by not joining his duty as a Badly worker and also
awarding that retrenchment compensation to the tune of ' 1,00,000/- will do justice to
the Appellant without assigning reasons which is wholly unsustainable in law.
36. The learned Counsel for the Respondent had mentioned before this Court about a
settlement between the parties in this matter after the judgment was reserved.
Therefore, we have not taken into consideration such plea from the learned Counsel of
the Respondent since it was taken up after the hearing was over. Also the documentary
evidence on record produced by the parties required us to reject the subsequent plea
made by the Respondent in this case. We therefore set aside the finding of the High
Court in the impugned judgment and hold that the Appellant is entitled to reinstatement
with full back wages from the date of the termination of his service till the date of his
reinstatement and other consequential benefits which accrue to him by virtue of his
employment with the Respondent company. The appeals are allowed, with no order as
to costs.
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