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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPEALLATE JURISDICTION

CIVIL APPEAL NO.  5498  OF 2013 (Arising out of SLP(C) No.5387 of 2012)

Bhavnagar Municipal Corporation Appellant

Versus

Salimbhai Umarbhai Mansuri     Respondent

with

CIVIL APPEAL NO.  5510    OF 2013 (Arising out of SLP(C) No.5390 of 2012)

J U D G M E N T

K.S. Radhakrishnan, J.

Leave granted.

1. We are concerned in  this  case with the question whether  

termination of  services of  the respondent on the expiry of  the  

contract  period  would  amount  to  retrenchment  within  the

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meaning of Section 2(oo) of the Industrial Disputes Act, 1948 (for  

short “the ID Act”).   We may refer to the facts in Civil  Appeal  

arising out of  SLP(C) No.5390 of  2012 for  disposal  of  both the  

appeals, since the question of law involved in both the appeals is  

the same.

2. The respondent in Civil  Appeal @ SLP(C) No.5390 of 2012  

was appointed on daily wages as a helper in the Water Works  

Department  in  the  appellant  Corporation  for  two  fixed  periods  

from 02.05.1988 to 30.06.1988 and 04.07.1988 to 15.07.1988,  

under  two  separate  office  orders  dated  19.05.1988  and  

01.07.1988.  The service of the respondent stood terminated on  

15.07.1988  after  serving  a  total  period  of  54  days.   The  

respondent raised an industrial  dispute on 07.12.1989 and the  

same was referred to Labour Court  for  adjudication which was  

registered as Reference (LCB) No.606 of 1989.

3. The Labour Court on 18.10.2003 passed an award holding  

that the Corporation had violated Section 25G and H of the ID Act  

by  not  calling  the  respondent  for  work  before  appointing  new

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workmen.   The  Labour  Court  then  directed  the  Corporation  to  

reinstate the respondent with continuity in service.  Aggrieved by  

above-mentioned  order  the  Corporation  preferred  Writ  Petition  

SCA No.3290 of 2004 before the Gujarat High Court.  The High  

Court vide its judgment dated 12.08.2010 set aside the award of  

the Labour Court and remanded the matter to the Labour Court  

for fresh consideration.  The Labour Court on 15.11.2010 held that  

the Corporation had violated the provisions of Sections 25G and H  

of  the  ID  Act  and  directed  the  Corporation  to  reinstate  the  

respondent with continuity in service with consequential benefits.  

The  Corporation  then  preferred  Writ  Petition  SCA  No.7918  of  

2011,  which  was  dismissed  by  the  learned  Single  Judge  vide  

judgment dated 29.06.2011 against which Corporation preferred  

LPA No.1275 of 2011 which was also dismissed.  Aggrieved by the  

same the Corporation has preferred this appeal.

4. Shri  Jatin  Zaveri,  learned  counsel  appearing  for  the  

Corporation submitted that the Labour Court as well as the High  

Court has failed to appreciate the various terms and conditions of  

appointment  and  committed  a  grave  error  in  holding  that  the

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Corporation had violated the provisions of Section 25G and H of  

the ID Act.  Learned counsel submitted that going by the terms  

and conditions of the appointment order would clearly indicate  

that the provisions of Section 2(oo) and (bb) would apply to the  

facts of the case, consequently, the respondent cannot be said to  

have been retrenched and hence the provisions of Section 25G  

and H of the ID Act would not be attracted.   

5. Mr.  O.P.  Bhadani,  learned  counsel  appearing  for  the  

respondent, on the other hand, pointed out that there has been a  

clear violation of the provisions of Section 25G and H of the ID Act  

by not  reinstating the respondent in  service.   Learned counsel  

submitted that the Labour Court has elaborately considered the  

rival contentions of the parties and rendered a reasoned award  

which has been affirmed by the learned Single Judge as well as  

the Division Bench of the High Court and, therefore, calls for no  

interference by this Court under Article 136 of the Constitution of  

India.

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6. We are of the view that the Labour Court as well as the High  

Court have completely misunderstood the scope of Section 2(oo),  

(bb), as well as Section 25G and H of the ID Act.  The contract of  

employment and the terms and conditions contained therein are  

crucial  in  the  application  of  the  above-mentioned  provisions.  

Facts would clearly indicate that the respondent had worked only  

for 54 days in two fixed periods and on expiry of the second term  

his  service stood automatically  terminated on the basis  of  the  

contract of appointment.  A reference to the contract would be  

useful  to  understand  the  nature  of  appointment  of  the  

respondent.  Clause 1, 2 and 7 to 10 of the office order dated  

19.05.1988 are  relevant,  which  are extracted herein  below for  

ready reference:

“1. With reference to your application dated _____,  a  meeting was held with us/the Commissioner and subject  to  the  following  conditions  arrived  at  with  mutual  consent  you  are  being  appointed  as  a  Daily  Wager  Helper in the Water Works Department from 1.5.88 to  30.6.88  at  a  daily  minimum  wages  of  Rs.12/13  and  dearness allowance, daily special allowance of Rs.10/20  aggregating to Rs.22/33 in accordance with the Approval  No.Commi  O/CPO/M.No.204  dated  16.5.88  and  upon  completion of  last  duty  on 30.6.88,  your  service  shall  stand automatically terminated.

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2. Since a definite date of termination of your service  has been specified, the Municipal Corporation shall not  be  liable  and you shall  not  be  entitled to  any notice,  wages in lieu of notice, retrenchment compensation etc. 3.  x x x x 4.  x x x x 5.  x x x x 6. x x x x 7. If you are transferred as provided in Clause 6 above  and if you fail to perform you duty at the appointed time  then it would tantamount to that you are not willing to  work  and  this  contract  of  service  shall  automatically  come to an end and as such your services shall  stand  terminated. 8. As per the aforesaid para no.1 of the Office Order  you are being appointed as a daily wager from 2.5.88 to  30.6.66 subject to the condition that you have to come  for  work  as  and  when  required  by  the  Municipal  Corporation,  that  is,  if  the Municipal  Corporation does  not  require  your  service  during  the  aforesaid  period,  then the Municipal Corporation is not bound to give you  the work and you shall not be entitled to demand work  for that day, of which you may take a special note. 9. Upon  termination  of  your  contract  on  the  date  specified above, you are not entitled to claim any right  of seniority for the period for which you work nor are you  entitled  to  be  reinstated  or  make  such  a  claim  on  account of the new appointment of daily wagers. 10. the  Corporation  shall  be  entitled  to  relieve  you  before the prescribed period if it no longer requires your  services.”

7. The  above  order  was  signed  by  the  respondent  and,  

therefore, bound by the terms and conditions of the office order.  

The question is, termination of the service of the respondent on

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the  expiry  of  the  periods  mentioned  above  would  amount  to  

retrenchment?  Facts in this case clearly show, so found by the  

Labour  Court  itself  that  the  respondent  had  not  worked  

continuously  for  240  days  in  an  year  to  claim  the  benefit  of  

Section 25F, G and H of the ID Act.  Therefore, the only question  

to  be  considered  is  whether  termination  of  service  of  the  

respondent on the basis  of  the contract  of  appointment would  

amount to retrenchment within the meaning of Section 25H of the  

ID Act so as to claim reinstatement.

8. A reference to Section 2(oo) and (bb) of the Act would be  

apposite.   

“2 Definitions:-  

(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-

xxx xxx xxx xxx xxx xxx

(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

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its  expiry  or  of  such  contract  being  terminated  under  a  stipulation  in  that  behalf contained therein."

9. Section 2(bb) says that if the termination of the service of  

workman is as a result of non-renewal of the contract between  

the  employer  and the workman on  its  expiry  of  such  contract  

being  terminated  under  a  stipulation  in  that  behalf  contained  

therein, the same would not constitute retrenchment.   

10. Facts  would  clearly  indicate that  the respondent’s  service  

was terminated on the expiry of the fixed periods mentioned in  

the office orders and that he had worked only for 54 days.    The  

mere fact that the appointment orders used the expression “daily  

wages” does not make the appointment “Casual” because it  is  

the  substance  that  matters,  not  the  form.  The  contract  of  

appointment consciously entered into by the employer and the  

employee would, over and above the specific terms of the written  

agreement, indicates that the employment is short-lived and the  

same is liable to termination, on the fixed period mentioned in the  

contract of appointment.  

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11. Learned  counsel  appearing  for  the  respondent  submitted  

that the respondent is entitled to the benefit of Section 25G & H,  

the same are extracted herein below:

“25G.  Procedure  for  retrenchment.-  Where  any  workman in an industrial establishment, who is a citizen  of India, is to be retrenched and he belongs to a particular  category  of  workmen  in  that  establishment,  in  the  absence of any agreement between the employer and the  workman  in  this  behalf,  the  employer  shall  ordinarily  retrench  the  workman  who  was  the  last  person  to  be  employed  in  that  category,  unless  for  reasons  to  be  recorded the employer retrenches any other workman.

25H.  Re-  employment  of  retrenched  workmen.-  Where any workmen are retrenched,  and the employer  proposes to take into his employ any persons, he shall, in  such manner as may be prescribed, give an opportunity  2[ to the retrenched workmen who are citizens of India to  offer themselves for re- employment and such retrenched  workman] who offer themselves for re- employment shall  have preference over other persons.”

12. Section 25H will apply only if the respondent establishes that  

there  had  been  retrenchment.   Facts  will  clearly  indicate  that  

there was no retrenchment under Section 2(oo) read with Section  

2(bb) of the ID Act.  Consequently, Section 25H would not apply to

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the facts of the case.  Similar is the factual and legal situation in  

the civil appeal arising out of SLP(C) No.5387 of 2012 as well.

13. We are sorry to note that the Labour Court, learned Single  

Judge and the Division Bench have not properly appreciated the  

factual and legal position in this case.  When rights of parties are  

being adjudicated, needless to say, serious thoughts have to be  

bestowed by the Labour Court as well as the High Court.    For the  

above-mentioned reasons we allow both the appeals,  set aside  

the award passed by the Labour Court and confirmed by the High  

Court.  However, there will be no order as to costs.

….…….…….……………J. (K.S. Radhakrishnan)

………..………………….J. (Pinaki Chandra Ghose)

New Delhi, July 16, 2013