SC ruling on retrenchment of workmen

By T. Padmanabha Rao

NEW DELHI, JULY 10. The conditions precedent to `retrenchment' of workmen contained in Section 25 F of the Industrial Disputes Act, 1947 - ID Act - would not apply to ``contracts of service for a fixed term'' (of the workmen concerned), the Supreme Court has ruled.

Citing an earlier Apex Court ruling in the `Uptron case' (1998), the Bench said that ``the principles of natural justice are not applicable where the termination takes place on the expiry of the contract''.

The Bench, therefore, held as `erroneous' a decision of the Punjab and Haryana High Court (HC) in `Balbir Singh's case' (1990) ``to the extent that it holds to the contrary''. Delivering the judgment, Ms. Justice Ruma Pal, - on the facts and circumstances of the case, affirmed a verdict of the Punjab and Haryana HC which held that para 3A of the `standing orders' of a non-profit social welfare institution running a canteen for defence personnel at Ambala Cantt. (respondent-employer) was binding on the appellant (workman) and it was nobody's case that the termination (of the appellant from service) was not in terms thereof.

Para 3A of the `standing orders' provided a) Maximum age limit for an employee is 60 years. b) Maximum permissible service for an employee is 15 years. c) The service of an employee will be automatically relinquished based on completion of age limit or maximum permissible service whichever occurs first. d) One month pay and allowance will be given to the individual once his services are relinquished.

The Bench which included Mr. Justice D.P. Mohapatra pointed out that Section 25F of the ID Act, 1947 would not apply to para 3A of the `standing orders' (in issue) because of the definition of `retrenchment' in Section 2(oo)(bb) of the ID Act which expressly excludes ``termination of the service of a workman as a result of the non-renewal of the contract of employment between the employer and the workman concerned on its expiry or of such contract being terminated under a stipulation in that behalf contained thereon''.

The Bench noted that the introduction of a `retirement age' (in para 3A of the `standing orders') is neither a `lay off' nor a `retrenchment' within the meaning of these terms under chapter V- A of the ID Act. ``There is no substantive provision in Chapter V-A of the ID Act which pertains to the period of service of an employee'' and ``consequently, Section 25J of the ID Act has no application at all to the present case,'' the Bench held.

(As far as Section 25J is concerned it provides that the provisions of Chapter V-A of the ID Act, 1947 would have overriding effect irrespective of any other law including `standing orders' made under the Industrial Employment (Standing Orders Rules 1956).

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