Lay-Off and Retrenchment

(Sections 25A to 25J)

Synopsis
A. Scope Object and Applicability . . . . . . . . . . 2287
FI. Chapter VA not a complete code in itself on lay off
compensation hence compensation is payable even
in establishments to which neither Chapter VA
nor Standing Orders are applicable (S.C.2J) . . . 2287

XIII. Section when not applicable workmen

entitled to full wages for lay off as per
contract of service (Mad.DB). . . . . . . . . . . . 2289
XIV. Adjudication procedure to determine
disputes under Chapter VA . . . . . . . . . . . . 2290

II. Compliance with provisions of Chapter-VA not

a condition precedent to lay-off (Bom. DB) . . . . 2287

a) Dispute to be adjudicated as per provisions of

Chapter V-A though raised before a forum
constituted under State law (All.HC) . . . . . . . . 2290

III. Chapter VA does not confer beneficial rights on

employers but imposes obligations on them in
respect of lay-off and retrenchment in the
interests of labour (Bom.DB) . . . . . . . . . . . . 2287

B. Application of Sections 25-C to 25-E Sec. 25A . . 2290

IV. Rights of temporary employees under Chapter V-A

cannot prevail over the rights of Public Service
Commission recruits as it violates Art.16 and 320
(Ker.DB) . . . . . . . . . . . . . . . . . . . . . . . 2287
FV. Chapter VA confers retrenchment and layoff
benefits to temporary employees by virtue of
Sec. 25J (S.C.3J). . . . . . . . . . . . . . . . . . . 2288
VI. Chapter V-A will prevail over service regulations
entitling a budli worker to retrenchment
compensation terminated for unsatisfactory
work without enquiry (Karn.HC) . . . . . . . . . 2288
VII. Government instructions contrary to the
provisions of Chapter V-A cannot sustain
(P&H.DB) . . . . . . . . . . . . . . . . . . . . . . 2288

I. Industrial Establishment u/s. 25A . . . . . . . . . 2290

Fa) Expression Industrial Establishment does not lay
down any test for determining an industrial
establishment (S.C.3J) . . . . . . . . . . . . . . . . 2290
II. Expression Preceding calendar month in
sub-Sec. (1) means. . . . . . . . . . . . . . . . . . 2290
a) The point of time when right to claim lay off
compensation arose (Mad.DB) . . . . . . . . . . . . 2290
III. Burden of proof as to number of workmen
employed in an industrial establishment . . . . . 2291
a) Is on the employee who contends that more than 300
persons were engaged in the preceding 12 months
(Bom.DB). . . . . . . . . . . . . . . . . . . . . . . 2291
IV. Seasonal establishment. . . . . . . . . . . . . . . 2291

VIII. Provisions of chapter VA prevail over Sec. 7 of

Andhra Pradesh Act 1994 in the matter of
regularization hence daily wage workman who is
protected u/ Chapter VA cannot be terminated
u/ A.P. Act 1994 though the latter bars
regularization (AP.DB) . . . . . . . . . . . . . . . 2288
FIX. Chapter VA applies to cases of retrenchment under
A.P. Shops and Establishment Act (S.C.2J) . . . . 2289
X. Chapter V-A applicable to lay-off though initiated
under State law(All.HC) . . . . . . . . . . . . . . 2289

a) Determinative criteria . . . . . . . . . . . . . . . . 2291

1. Number of days an establishment in operation
during preceding 12 months is not determinative
but factors related to nature or employment
pattern are determinative (Mad.DB) . . . . . . . 2291
b) Seasonal establishment includes . . . . . . . . . . . 2292
1. Tile factory (Ker.DB) . . . . . . . . . . . . . . . 2292
c) Excludes . . . . . . . . . . . . . . . . . . . . . . . 2292

XI. Chapter V-A applicable to badli workmen since

covered under Sec. 25C (Karn.HC) . . . . . . . . 2289
XII. Applicable to temporary employees appointed
under Kerala State Service Rules entitling them
to protection under Chapter VA (Ker.DB). . . . . 2289

1. Sugar Factory when it engages itself in

permanent activities though its crushing
activity is seasonal (Guj.DB) . . . . . . . . . . . 2292
d) Authority to determine the question as to seasonal
character of an industrial establishment . . . . . . . 2292

2258

Chapter VA Lay-Off and Retrenchment

1. Appropriate Government to decide when question

is referred to it u/s. 25A (Ker.DB) . . . . . . . . . 2292

1. Meaning of Continuous service for one year

u/s. 25B(1) . . . . . . . . . . . . . . . . . . . . 2298

2. Decision of the Appropriate Government not

necessary when there is no dispute about
seasonal character (MP.DB) . . . . . . . . . . . 2293

i) In order to attract Sec. 25B(1) the person must have

been in service not only on days when he actually
worked, but also on days he could not work
(Karn.HC) . . . . . . . . . . . . . . . . . . . . . 2298

3. Reference of the dispute as to entitlement to lay

off compensation not vitiated by subsequent raising
of the question of seasonal character by
management (Mys.DB) . . . . . . . . . . . . . . 2293

ii) Performance of work in a different capacities is

immaterial if the employer is same (Raj.DB) . . . 2299

4. Appropriate Government acquires jurisdiction to

grant or deny exemption from Chapter VA as
seasonal establishment only when it arises as
an incidental question in a claim like
lay-off compensation (Mad.DB) . . . . . . . . . 2293
V. Reliefs when admissible. . . . . . . . . . . . . . . 2294
a) No relief is admissible u/s. 25C to 25E when workman
merely challenged his termination but not sought any
relief u/s. 25C to 25E (Bom.HC) . . . . . . . . . . . 2294
b) No lay-off compensation payable if factory is of
seasonal character (Ker.HC) . . . . . . . . . . . . . 2294
C. Definition of Continuous Service Sec. 25B . . . . 2294
I. Object . . . . . . . . . . . . . . . . . . . . . . . . 2294
a) The object of deeming provision is to mitigate
workmans hardship in being made to serve
intermittently or after periodical breaks (Mad.DB) . . 2294

iii) If workman was in continuous service for one year

in terms of Sec. 25B(1) uninterrupted by the
employer, it is immaterial whether he completed
240 days in a particular year (Guj.HC) . . . . . . 2299
iv) Expression cessation of work u/s. 25B(1)
excludes cessation of work on account of
employers inability to provide work for specific
reasons though employee is willing to work
(AP.DB). . . . . . . . . . . . . . . . . . . . . . 2299
v) When workman has put in long service in
successive years it is immaterial that he did
not complete 240 days some of those years
(Bom.HC) . . . . . . . . . . . . . . . . . . . . . 2300
2. When service is deemed to be continuous service
for a period of one year u/s. 25B(2) explanation
of deeming provision . . . . . . . . . . . . . . . 2300
i) Service is deemed to be continuous despite
periodical terminations and re-employment
during workmans service of 240 days in the
preceding twelve months (AP.DB) . . . . . . . . 2300

II. Applicability . . . . . . . . . . . . . . . . . . . . . 2295

Fa) Applicable if workman has actually worked for
240 days in a period of twelve months (S.C.CB) . . . 2295
b) Definition of continuous service is applicable to
Secs. 25FF and 25FFF (Raj.DB) . . . . . . . . . . . 2295
Fc) Not applicable to adhoc employees though completed
240 days (S.C.3J) . . . . . . . . . . . . . . . . . . . 2295
d) Not applicable to determine the status of workman
since non-completion of 240 days does not affect
the status (AP.HC) . . . . . . . . . . . . . . . . . . 2296
Fe) Not applicable to daily rated workmen employed
in a Government company since they cannot be on
par with Government servants enjoying status and
security of tenure (S.C.2J) . . . . . . . . . . . . . . 2296
III. Continuous service . . . . . . . . . . . . . . . . . 2296
a) Prior to amendment of Sec. 25B . . . . . . . . . . . 2296
F 1. Parties bound by meaning given to the expression
in the award (S.C.3J) . . . . . . . . . . . . . . . 2296
F 2. Employment for 12 months is a pre-condition
for determining number of days worked
(S.C.3J) . . . . . . . . . . . . . . . . . . . . . . 2297

F ii) When employee has worked for not less than

240 days in a period of twelve months (S.C.3J) . . 2300
F iii) When employee completed 240 days though he
is not in service for a period of twelve months
(S.C.2J) . . . . . . . . . . . . . . . . . . . . . . 2301
iv) When workman rendered 240 days service though
not continuously but in a period of preceding
twelve months or 365 days (Bom.HC) . . . . . . 2302
v) It is sufficient compliance of the section if
workman completes 240 days within eight
months and need not work for twelve months
(Guj.HC) . . . . . . . . . . . . . . . . . . . . . 2302
3. When not deemed to be in continuous service. . . 2302
F i) When employee has worked for less than
240 days (S.C.2J) . . . . . . . . . . . . . . . . . 2302
ii) When intervening breaks given to a daily wager
were not malafide (Raj.DB) . . . . . . . . . . . 2303
iii) Cannot be deemed only by relying on the
witnesses statement in the cross-examination
that employee has worked for 240 days
(Raj.HC) . . . . . . . . . . . . . . . . . . . . . 2303
4. Computation of continuous service u/s. 25B(2). . 2303

3. Need not necessarily mean completion of one

year of service but covers service of 240 days
in any particular year of 12 calendar months
(Bom.DB) . . . . . . . . . . . . . . . . . . . . . 2297

F i) Expression actually worked includes Sundays

and paid holidays (S.C.2J) . . . . . . . . . . . . 2303

F 4. Interruption is not relevant when employee has

worked for 240 days (S.C.CB) . . . . . . . . . . 2298

ii) Expression actually worked is to enable a

workman to get the benefit of fictional
service notwithstanding the interruptions
(Mad.DB) . . . . . . . . . . . . . . . . . . . . . 2305

b) After amendment of Sec. 25B by Act 36 of 1964 . . . 2298

Synopsis
iii) Preceding twelve months how to compute . . . 2305
F a) To be counted backwards just preceding the
relevant date (S.C.2J) . . . . . . . . . . . . . 2305

2259
r) All days when employee was in employment
and paid wages as per statute/contract
/Standing Orders (MP.DB) . . . . . . . . . . 2311

b) To consider a year immediately before his

termination (P&H.HC) . . . . . . . . . . . . 2306

s) Service rendered by workmen in different

categories like mason and khalasi to be
considered (Pat.DB). . . . . . . . . . . . . . 2311

F c) Expression preceding is absent in Sec. 2(g)

of U.P. Industrial Disputes Act (S.C.2J) . . . . 2306

t) The period of strike though illegal when it

does not constitute misconduct (Bom.DB) . . 2311

iv) Computation of 240 days includes . . . . . . . . 2307

u) To include the period of services in PWD

though employee was transferred to
Municipality since he was employed in the
industry (AP.HC) . . . . . . . . . . . . . . . 2312

a) The date on which a workman joined service

even on adhoc basis but not to compute
from the date of his regular recruitment
(P&H.HC) . . . . . . . . . . . . . . . . . . . 2307
b) The period of fresh appointment on workmans
re-employment but not from the date on which
he was temporarily employed when there is
a clear break (Bom.HC) . . . . . . . . . . . . 2307
c) All those days for which wages paid under
express or implied contract of service
(MP.HC). . . . . . . . . . . . . . . . . . . . 2307
d) Service rendered pursuant to interim order
(Guj.HC) . . . . . . . . . . . . . . . . . . . 2307
e) The period of service rendered under
different schemes under the same employer
(Bom.HC) . . . . . . . . . . . . . . . . . . . 2308
f) Service rendered in different projects but
under one sub-division (P&H.DB) . . . . . . 2308
g) The period between the date on which he
was terminated and the date of his reinstatement
if he is reinstated as per terms of settlement
(P&H.HC) . . . . . . . . . . . . . . . . . . . 2308
h) Service of 20 days rendered every month by
workman when paid for the whole month
(Ker.HC). . . . . . . . . . . . . . . . . . . . 2309
i) Period of service interrupted on account of
accident during the course of job (P&H.DB) . 2309

v) Service rendered in a sub-division to the

service at Divisional Office since sub-divisional
office is functioning under Divisional Office
(Bom.HC) . . . . . . . . . . . . . . . . . . . 2312
v) Computation of 240 days excludes . . . . . . . . 2312
F a) The period of service rendered in different
units when there is no integrality between
them though they are under the same PWD
(S.C.2J) . . . . . . . . . . . . . . . . . . . . 2312
b) Notice period indicating intention to terminate
services of workman (Mad.DB). . . . . . . . 2313
c) Service rendered by employee in separate
establishments (Raj.DB) . . . . . . . . . . . 2313
F d) The service rendered in different establishments
though of same employer when administrative
set up of the establishments are different
(S.C.2J) . . . . . . . . . . . . . . . . . . . . 2314
F e) Broken spells of temporary employment under
different units of an employer (S.C.2J) . . . . 2314
f) All artificial breaks in service (Mad.DB) . . . 2315
g) Sundays and holidays in case of daily wager
for which no wages paid (P&H.HC) . . . . . . 2315

j) Service rendered during probation (Raj.HC) . 2309

h) Holidays and Sundays even if paid since

the words actually worked exclude it
(Mad.DB) . . . . . . . . . . . . . . . . . . . 2316

k) The period interrupted due to sickness or

authorized leave (AP.DB). . . . . . . . . . . 2309

i) Service rendered by workman due to interim

orders of the High Court (Guj.DB) . . . . . . 2316

l) Paid holidays such as public festival holidays,

Sundays and leave with pay (Raj.DB) . . . . . 2309

j) Training period as an apprentice (All.HC). . . 2317

m) Period of leave with pay (All.DB) . . . . . . . 2310

k) Period of continuous absence

for three years (Raj.HC). . . . . . . . . . . . 2317

n) Service with the same employer though not in

the same capacity (Raj.DB) . . . . . . . . . . 2310

l) The period of apprenticeship (Guj.HC). . . . 2317

o) Service rendered by the employee in the

transferee company in case of transfer of
his department to a different body (Del.HC). . 2310

c) Burden of proof as to 240 days of continuous

service . . . . . . . . . . . . . . . . . . . . . . . . 2317
F 1. Lies on the employee (S.C.3J) . . . . . . . . . . 2317

p) Period of casual service rendered prior to

regularization (Raj.DB) . . . . . . . . . . . . 2310

i) When the workman discharges original

burden . . . . . . . . . . . . . . . . . . . . . . . 2322

q) Period of service by daily wager employed

through employment exchange after
termination of earlier contracts for fixed tenure
(P&H.DB) . . . . . . . . . . . . . . . . . . . 2311

F a) When employee proved 240 days service in a

period of 12 months, no further proof of 240
days service in each of the 8 years necessary
(S.C.2J) . . . . . . . . . . . . . . . . . . . . 2322

2260

Chapter VA Lay-Off and Retrenchment

b) By adducing records in support of service of
240 days (AP.HC). . . . . . . . . . . . . . . 2323

iii)When breaks in service/termination can be

unfair labour practice . . . . . . . . . . . . . . . 2331

F c) By producing certificate of employment

(S.C.3J) . . . . . . . . . . . . . . . . . . . . 2323

a) When breaks given to prevent the completion

of 240 days (P&H.DB) . . . . . . . . . . . . 2331

2. Is on the employer . . . . . . . . . . . . . . . . 2324

IV. Reliefs/benefits available to workmen under

various provisions of the Act on completion of
continuous service . . . . . . . . . . . . . . . . . . 2332

i) As per the doctrine of Non est factum and

res ipsa loquitor (AP.DB) . . . . . . . . . . . . 2324

a) Relief of reinstatement . . . . . . . . . . . . . . . . 2332

ii) Burden of proof on the employer would arise
subsequently after workman discharging his
burden (Bom.DB). . . . . . . . . . . . . . . . . 2324

1. When can be . . . . . . . . . . . . . . . . . . . 2332

d) Inference as to service of 240 days . . . . . . . . . . 2324

i) When employer terminates services without

complying Sec. 25-F (P&H.DB) . . . . . . . . . 2332

1. When can be drawn . . . . . . . . . . . . . . . . 2324

2. When cannot be . . . . . . . . . . . . . . . . . . 2333

i) When employer refused to provide records

and witnesses made evasive statements
(Raj.DB) . . . . . . . . . . . . . . . . . . . . . 2324

i) When employee had not completed

240 days and failed to prove violation of
Sec. 25G & 25H(Raj.DB) . . . . . . . . . . . . 2333

ii) When employer failed to produce muster roll

(P&H.DB). . . . . . . . . . . . . . . . . . . . . 2325

ii) When there is no proof of completion of

240 days (Ori.DB) . . . . . . . . . . . . . . . . 2333

iii) When employer failed to produce attendance

register/muster roll (P&H.DB) . . . . . . . . . . 2325

iii) When there is no finding in the award as to

completing continuous service in one year since
award holding termination as illegal is not
sustainable (MP.HC) . . . . . . . . . . . . . . . 2333

iv) When employer fails to specifically deny

workmans claim (Raj.HC) . . . . . . . . . . . . 2325

b) Relief of continuity of service can be . . . . . . . . . 2333

2. When cannot be drawn . . . . . . . . . . . . . . 2325
1. When termination is void ab initio (MP.DB) . . . . 2333
F i) When there is no evidence on either side except
written statements (S.C.2J) . . . . . . . . . . . . 2325
F ii) No adverse inference on employers failure to
produce relevant muster rolls when the burden
of proof is on workman (S.C.2J) . . . . . . . . . 2326

2. Continuity of service to be taken into account

for granting special grade or stagnation
increments (AP.HC) . . . . . . . . . . . . . . . 2334
c) Relief of regularisation . . . . . . . . . . . . . . . . 2334

iii) When workman engaged is a daily wager and

dispute raised after two years (Del.HC) . . . . . . 2328

1. Regularization means . . . . . . . . . . . . . . . 2334

e) Evidence in proof of continuous service . . . . . . . 2329

1. What can be . . . . . . . . . . . . . . . . . . . . 2329

F i) The expression regular and regularisation

does not imply regularization but meant only
to cure defects of procedural irregularities
(S.C.3J) . . . . . . . . . . . . . . . . . . . . . . 2334

i) Log sheet, and attendance registers (Raj.HC) . . . 2329

2. What amounts to regularisation. . . . . . . . . . 2335

ii) Attendance register and recruitment rules

(Bom.HC) . . . . . . . . . . . . . . . . . . . . . 2329

i) Mere granting regular salary to workman

performing similar work as that of regular
workmen does not amount to regularization
(Guj.HC) . . . . . . . . . . . . . . . . . . . . . 2335

F iii) Letter of appointment and termination letter

(S.C.2J) . . . . . . . . . . . . . . . . . . . . . . 2330

3. Factors to be considered for regularisation . . . . 2335

iv) Vouchers by which wages were paid (Jhar.HC). . 2330
v) Charts containing service details can be evidence
(P&H.HC). . . . . . . . . . . . . . . . . . . . . 2330
vi) Workmans assertion that he had worked for 240
days in each of ten years though not corroborated
is sufficient to grant absorption (P&H.DB) . . . . 2330

i) Number of posts and funds, the need for retention

of employee and nature of appointment whether on
daily wage basis or adhoc basis etc. are to be
considered (All.DB) . . . . . . . . . . . . . . . 2335
ii) Reservation policy of the Government to be
considered while regularizing workmen
(Pat.HC). . . . . . . . . . . . . . . . . . . . . . 2335

2. What cannot be . . . . . . . . . . . . . . . . . . 2331

4. When can be granted . . . . . . . . . . . . . . . 2335
F i) Affidavit by workman is insufficient to prove
continuous service of 240 days (S.C.2J) . . . . . 2331
ii) Bonus register and attendance certificate since
secondary evidences and cannot be proof of the
date of entry into service (Bom.HC). . . . . . . . 2331

F i) When causal labour working for 30 long years

was terminated (S.C.2J). . . . . . . . . . . . . . 2335
ii) To be granted to contract workmen when
employer maintained muster roll, attendance,
and supervised the workmen (P&H.HC) . . . . . 2336

Synopsis

2261

iii) Can be granted only as per the prevailing

scheme (HP.DB) . . . . . . . . . . . . . . . . . 2336

F x) When employees are appointed on a time bound

project and not in sanctioned posts (S.C.2J). . . . 2347

iv) When workmen rendered service for longer period

ranging from seven years to 15 years service
on contingent basis and service rules contained
clause regarding absorption (Karn.DB) . . . . . 2337

xi) Regularisation cannot be granted if employer

himself ceases to exist (Del.DB) . . . . . . . . . 2348

v) Can be granted from initial date of appointment

since there was no dispute regarding appointment
(Ori.HC). . . . . . . . . . . . . . . . . . . . . . 2337
F vi) Regularisation cannot be from anterior date
when services were regularised in reasonable
time and there was delay in filing the claim and
wrong criterion of Sec. 25B applied (S.C.2J) . . . 2338
vii)Can be granted to contract worker when
establishment is prohibited from engaging
contract labour and on the evidence of his
employment in the company (All.HC) . . . . . . 2338
viii) When workmen engaged through contractor have
completed 240 days and the contract is sham
(Jhar.HC) . . . . . . . . . . . . . . . . . . . . . 2338
F ix) Temporary driver to be absorbed if pilot plant
continued on permanent basis and post is not
abolished (S.C.2J). . . . . . . . . . . . . . . . . 2339

xii) Regularisation cannot be of daily wagers

but Labour Court or Tribunal can only
direct consideration of cases against
vacancies (Jhar.HC). . . . . . . . . . . . . . . . 2348
xiii) Regularization of an ineligible person cannot be
on the ground that some ineligible persons
were previously regularized (AP.HC) . . . . . . 2349
F xiv) Regularization cannot be of an employee under-aged
on the date of appointment but attained required
age later (S.C.2J) . . . . . . . . . . . . . . . . . 2349
F xv)Regularisation cannot be of an employee unless
he submits original certificate or certified copy
of passing the qualifying examination requisite
for the post (S.C.2J). . . . . . . . . . . . . . . . 2349
xvi) Regularization cannot be if workman is not
appointed against any existing vacancy or
appointed through any selection process
(AP.HC). . . . . . . . . . . . . . . . . . . . . . 2350

x) Whether regularization can be denied on the

ground of HIV status . . . . . . . . . . . . . . . 2339

F xvii) Regularisation cannot be of a workman who

is appointed on the basis of fixed tenure
(S.C.2J) . . . . . . . . . . . . . . . . . . . . . . 2350

a) Cannot be denied on the said ground if

certified physically fit and no risk to others
by medical opinion (Bom.DB) . . . . . . . . 2339

xviii) Regularisation cannot be of casual workmen

though completed 240 days of service
(Cal.DB) . . . . . . . . . . . . . . . . . . . . . 2351

5. When cannot be granted . . . . . . . . . . . . . 2340

F xix) Regularisation cannot be of daily rated workmen

of a Government company since they do not
enjoy any status or security of tenure as
Government servants u/Art. 311 and have only
limited protection (S.C.2J) . . . . . . . . . . . . 2351

i) When appointments are violative of cadre strength

or educational qualifications (Mad.DB) . . . . . 2340
ii) When there is no cogent evidence
of completing 240 days (Bom.HC) . . . . . . . . 2340
F iii) Cannot be granted where company is sick and
Government is making efforts to present for
revival proposal (S.C.2J) . . . . . . . . . . . . . 2340

F xx) When claimants are empanelled to meet

temporary requirement and such panel is in
force only for one year (S.C.2J) . . . . . . . . . . 2352
d) Relief of pension . . . . . . . . . . . . . . . . . . . 2353

iv) When workmen appointed under contract without

sanction of posts and compliance of selection
procedures (Cal.DB) . . . . . . . . . . . . . . . 2341

1. Not available to daily wagers who had not

completed 240 days in any of the 10 years
they had worked (Guj.DB) . . . . . . . . . . . . 2353

F v) When workmen who are temporary, contractual,

casual or adhoc are employed dehors the rules
and against constitutional scheme of public
employment (S.C.CB) . . . . . . . . . . . . . . 2342

e) Relief of closure compensation u/s. 25FFF . . . . . . 2354

F vi) Regularisation can not be granted on completion

of 240 days if the appointment is contrary to
statutory rules (S.C.2J) . . . . . . . . . . . . . . 2343

f) Relief of retrenchment compensation . . . . . . . . 2354

vii)When claimants are contract workers though

contract labour system is abolished (Mad.HC) . . 2344
F viii) When workmen are seasonal employees and
can not be fitted into permanent employment or
it would be iniquitous to perennial employees
(S.C.2J) . . . . . . . . . . . . . . . . . . . . . . 2345
ix) When workman is the casual employee though
completed 240 days since recruitment is to be
through Public Service Commission or
Employment Exchange as per stipulated procedure
(Cal.DB) . . . . . . . . . . . . . . . . . . . . . 2347

1. Available to workman if he has been in

continuous service for one year (Mad.DB) . . . . 2354

1. Available to workman who is in continuous

service and terminated violating Sec. 25F
(Pat.DB). . . . . . . . . . . . . . . . . . . . . . 2354
g) Service benefits. . . . . . . . . . . . . . . . . . . . 2355
1. Workman entitled to pay scale and other
allowances when granted under Government
resolution (Guj.HC). . . . . . . . . . . . . . . . 2355
F 2. Wages payable to casual workers for the intervening
period between termination and re-absorption
when done so with a view to prevent
completion of 240 days service (S.C.2J) . . . . . 2355

2262

Chapter VA Lay-Off and Retrenchment

F 3. Back wages admissible to daily wagers from the

date of regularization but not from the date of
initial engagement (S.C.CB) . . . . . . . . . . . 2355

IV. Quantum of Compensation . . . . . . . . . . . . 2362

a) Labour Court can determine whether lay-off is in
accordance with standing orders (Mad.DB) . . . . . 2362

V. Appropriate forum to grant relief . . . . . . . . . 2356

Fa) Appropriate forum is Industrial Court and not
Apex Court (S.C.2J) . . . . . . . . . . . . . . . . . 2356
b) Labour Court to record finding as to master
servant relationship and on the issue of service
of 240 days before granting any relief
of reinstatement (Chh.HC) . . . . . . . . . . . . . . 2357
c) Civil Court cannot adjudicate matter falling
u/s. 25B (P&H.HC). . . . . . . . . . . . . . . . . . 2357
Fd) High Court cannot grant interim relief directing
the employer to consider the case of the workman
by creating supernumerary post since it is in the
nature of final relief (S.C.2J) . . . . . . . . . . . . . 2357

b) Last drawn wages is proper when lay off is not

authorized or justified and Sec. 25C is not
applicable (Gau.DB) . . . . . . . . . . . . . . . . . 2362
Fc) Compensation not restricted to Sec. 25C when
lay-off is malafide (S.C.3J). . . . . . . . . . . . . . 2363
Fd) Compensation can be full wages in case of an
establishment to which neither standing orders nor
Chapter VA applicable or can be lesser if lay-off
is justified (S.C.2J) . . . . . . . . . . . . . . . . . . 2363
e) Lay-off compensation u/s. 25C to be given but not
as per Standing Orders since the Central Act prevails
over Standing Orders (All.HC). . . . . . . . . . . . 2363
f) Burden of proof. . . . . . . . . . . . . . . . . . . . 2363

VI. Settled law on the issues under this section . . . . 2358

Fa) Burden of proof as to 240 days of continuous service
lies on the employees (S.C.3J) . . . . . . . . . . . . 2358

1. Is on the employer to produce muster rolls

to prove status of workmen (Karn.DB) . . . . . . 2363
V. When payable . . . . . . . . . . . . . . . . . . . . 2364

Fb) Temporary, contractual, casual or adhoc employees

employed dehors the rules not entitled to
regularisation (S.C.CB) . . . . . . . . . . . . . . . 2358
Fc) No adverse inference can be drawn on employers
failure to produce relevant muster rolls since the
burden of proof is on workman (S.C.3J) . . . . . . . 2358
Fd) Mere affidavit by workman is not sufficient to
prove continuous service of 240 days (S.C.2J) . . . . 2359
D. Right of workmen laid off for compensation
Sec. 25C . . . . . . . . . . . . . . . . . . . . . . 2359
I. Attributes of Layoff compensation . . . . . . . . 2359
a) Lay-off compensation does not fall within the
definition of wages since not being remuneration
or paid for employment (Bom.DB). . . . . . . . . . 2359
b) Secs. 25C and 25F are independent and
Sec. 25F can be invoked without recourse
to lay-off (Bom.DB) . . . . . . . . . . . . . . . . . 2360
c) Lay off compensation counts for bonus (Ker.DB) . . 2360
d) Payment of lay off compensation is not a
condition precedent to laying off workmen
(Bom.DB). . . . . . . . . . . . . . . . . . . . . . . 2360

Fa) When lay off is justified and not malafide

(S.C.3J) . . . . . . . . . . . . . . . . . . . . . . . . 2364
b) When lay off is due to shortage of electricity
(Bom.DB). . . . . . . . . . . . . . . . . . . . . . . 2364
Fc) Even when an establishment has only 30 employees
to which neither standing orders nor Chapter VA
applicable (S.C.2J) . . . . . . . . . . . . . . . . . . 2365
Fd) When temporary closure of establishment is not
due to reasons beyond the control of management
like detention order of central excise authorities
(S.C.2J) . . . . . . . . . . . . . . . . . . . . . . . . 2366
Fe) Payable only for 45 days even though lay off is
continuous by single notification (S.C.3J) . . . . . . 2366
Ff) Payable even though Lay off is by mutual
agreement (S.C.3J) . . . . . . . . . . . . . . . . . . 2367
Fg) When lay off is resorted to in retaliation to
strike (S.C.3J). . . . . . . . . . . . . . . . . . . . . 2367
Fh) Can not be avoided on the ground that company
incurred losses on account of half days strike
(S.C.3J) . . . . . . . . . . . . . . . . . . . . . . . . 2368

e) Lay off compensation ranks in priority over the

claim of secured creditor like bank (Karn.DB) . . . . 2360

i) When workmen could not be given work due

to dismantling of machines and installation
of the same (Mad.HC) . . . . . . . . . . . . . . . . 2368

II. Who are exempted. . . . . . . . . . . . . . . . . . 2361

Fj) Only when lay-off falls u/s. 2(kkk) (S.C.3J) . . . . . 2368

Fa) Badli employees since they have no right to

claim employment (S.C.2J). . . . . . . . . . . . . . 2361

VI. When not payable . . . . . . . . . . . . . . . . . 2369

b) Seasonal workers since not granted under Industrial

Disputes Act (MP.DB) . . . . . . . . . . . . . . . . 2361
III. Badli worker when can claim . . . . . . . . . . . 2362

Fa) When lay-off not malafide and due to shortage

of raw materials (S.C.3J) . . . . . . . . . . . . . . . 2369
Fb) If amenities like quarters and medical relief are
provided during the suspension (S.C.CB) . . . . . . 2369

a) When he completes 240 days of continuous service

as per explanation to the section (Mad.DB). . . . . . 2362

Fc) Not payable beyond 45 days when there is

agreement regarding payment of lay off
compensation to that effect (S.C.2J) . . . . . . . . . 2370

b) When his name is found in the muster roll and

completed one year of service (Mad.HC) . . . . . . . 2362

VII. When can be reduced . . . . . . . . . . . . . . . 2370

Synopsis
Fa) When there are justifiable reasons for lay-off
(S.C.2J) . . . . . . . . . . . . . . . . . . . . . . . . 2370
VIII. Remedy for recovery . . . . . . . . . . . . . . . 2371

2263

b) Does not create pre-existing right in workman to

claim retrenchment compensation but subjects the
power of employer to retrench to certain limitations
(Guj.DB) . . . . . . . . . . . . . . . . . . . . . . . 2376

a) Recoverable u/s. 33C(2)since it is capable of being

computed in terms of money (Bom.DB) . . . . . . . 2371

c) Section would form implied terms of contract of

service (Bom.DB) . . . . . . . . . . . . . . . . . . 2376

b) Recovery certificate obtained under the Industrial

Disputes Act will prevail over SICA. (Karn.DB) . . . 2371

d) Standing Order can not be inconsistent with

Sec. 25F and termination based on it is not
valid (Bom.HC). . . . . . . . . . . . . . . . . . . . 2376

c) Recovery certificate issued if not after enquiry

is bad (Karn.HC) . . . . . . . . . . . . . . . . . . . 2371

e) Provisions of Sec. 25F prevail over service

regulations (Guj.HC) . . . . . . . . . . . . . . . . . 2377

E. Duty of an employer to maintain muster rolls of

workmen Sec. 25D. . . . . . . . . . . . . . . . . 2371

f) Section cannot be construed to enforce private rights

or deal with domestic disputes but statutory
rights compelling Courts interference (Cal.DB) . . 2377

F. Workmen not entitled to compensation

in certain cases Sec. 25E . . . . . . . . . . . . . . 2372
I. Alternative employment means . . . . . . . . . . 2372
a) Alternative employment offered by employer means
a suitable employment commensurate with the status
and nature of the duties performed by the
employee (Bom.HC) . . . . . . . . . . . . . . . . . 2372
II. Sec. 25E when can be invoked to deny
compensation . . . . . . . . . . . . . . . . . . . . 2372
a) When lay-off was declared by employer in response
to strike by workers (Ker.HC) . . . . . . . . . . . . 2372
Fb) When lay- off of some workers is due to strike by
others in the same establishment since they belong
to same class (S.C.3J) . . . . . . . . . . . . . . . . 2372
c) When workers deliberately slowed down the
production to pressurize management to concede
to their demands (Mad.HC) . . . . . . . . . . . . . 2373
Fd) When lay-off in cement factory is due to strike
in limestone quarry since both constitute one
establishment due to functional integrality
though the Appropriate Governments are separate
for both of them (S.C.3J) . . . . . . . . . . . . . . . 2373
III. Sec. 25E when cannot be invoked . . . . . . . . . 2373
a) When go-slow cannot be proved by employer to
have affected production (All.HC) . . . . . . . . . . 2373
Fb) When it is resorted as vindictive measure by
employer to retaliate strike (S.C.3J) . . . . . . . . . 2374

g) Provisions of the section are mandatory and prevail

over the conditions in appointment letter that provide
for termination of service of workman by one month
wages (P&H.DB) . . . . . . . . . . . . . . . . . . . 2377
h) Conditions precedent to retrenchment are
mandatory (MP.DB) . . . . . . . . . . . . . . . . . 2377
i) Conditions under clause (a) and (b) are obligatory
and are conditions precedent to retrenchment
while that under clause (c) is not obligatory
(Pat.DB) . . . . . . . . . . . . . . . . . . . . . . . 2378
j) Order of retrenchment payment of wages in lieu of
notice and retrenchment compensation shall constitute
same or single transaction to comply with conditions
of retrenchment 1356 (Mys.DB) . . . . . . . . . . . 2378
k) Sec. 25F & 25C are independent and resorting to
lay-off is not a condition precedent to attract
Sec. 25F (Bom.DB). . . . . . . . . . . . . . . . . . 2378
l) Probationary period cannot be for two years as it
defeats the object of Sec. 25F (Karn.HC) . . . . . . . 2379
m) Benefits u/s. 25F can be claimed by employees
against the company even though the unit is sold by
previous owner to the company (MP.HC) . . . . . . 2379
III. Applicability of sections . . . . . . . . . . . . . . 2379
a) Applicable irrespective of the status of the employee
whether casual or daily wager (P&H.HC) . . . . . . 2379
Fb) Applicable to daily rated employee who had
completed more than 240 days of service (S.C.2J) . . 2379

IV. One establishment or separate establishment

Sec. 25E(iii) . . . . . . . . . . . . . . . . . . . . . 2374

Fc) Applicable to termination which is not punitive in

nature and amounts to retrenchment and illegal if
conditions not complied (S.C.2J) . . . . . . . . . . 2380

Fa) Determinative factors are unity of ownership,

supervision and control, finance,
functional integrality etc. (S.C.3J) . . . . . . . . . . 2374

Fd) Applicable to termination of surplus labour due to

recession in work being retrenchment and not
closure (S.C.3J). . . . . . . . . . . . . . . . . . . . 2380

G. Conditions precedent to retrenchment of

workmen Sec. 25F . . . . . . . . . . . . . . . . . 2375

Fe) Applicable to workmen in coal units though can

relocate but opted for closure, as they are deemed
to have been retrenched (S.C.2J) . . . . . . . . . . . 2381

FI. Object is to enable employer to retrench surplus

deadweight as he has discretion to organize his
business (S.C.3J) . . . . . . . . . . . . . . . . . . 2375
II. Scope and attributes of the section . . . . . . . . . 2376
a) Section has no retrospective effect (Ker.DB) . . . . . 2376

Ff) Applicable to termination of employees by

transferee even prior to transfer since he is in
de facto possession of tea estate even prior to
transfer (S.C.2J) . . . . . . . . . . . . . . . . . . . 2382
g) Applicable to discontinuance of employee when
it is substitute for termination as per evidence
(Del.HC) . . . . . . . . . . . . . . . . . . . . . . . 2383

2264

Chapter VA Lay-Off and Retrenchment

h) Applicable to a daily rated workman who worked

for 240 days in a year (Guj.DB) . . . . . . . . . . . . 2383

zd)Not applicable to termination of workmen employed

for less than 12 calendar months (Pat.DB) . . . . . . 2391

i) Applicable to workman who is employed in an industry

for a period of not less than one year (Raj.HC) . . . . 2383

ze) Not applicable to compulsory retirement of workmen

as per service regulation being not a retrenchment
(Ori.DB) . . . . . . . . . . . . . . . . . . . . . . . 2392

j) Applicable to termination of services of an employee

whose tenure is extended after breaks of 29 days
to go beyond 240 days (Guj.DB) . . . . . . . . . . . 2383
k) Applicable to workmen even though they did not
complete 240 days in the immediate preceding
12 months when his past service is also
considered (Karn.DB) . . . . . . . . . . . . . . . . 2384
l) Applicable to termination of the services of
the casual railway workers discharged as
surplusage (Ori.DB) . . . . . . . . . . . . . . . . . 2384
m) Applicable to telephone department being an industry
under the Act (Guj.DB) . . . . . . . . . . . . . . . 2384
n) Applicable to Statutory body performing non-sovereign
functions (AP.HC) . . . . . . . . . . . . . . . . . . 2384

zf) Not applicable to termination if employment is

through backdoor in public service (P&H.DB) . . . . 2392
Fzg) Not applicable if the termination is for
misconduct (S.C.2J) . . . . . . . . . . . . . . . . . 2392
zh)Not applicable to a case of refusal by employer to
allow employee to rejoin duty after unauthorised
absence (MP.HC). . . . . . . . . . . . . . . . . . . 2393
zi) Not applicable to a case of non-resumption of duty
on transfer since it amounts to abandonment of
service (Raj.HC) . . . . . . . . . . . . . . . . . . . 2393
zj) Not applicable if appointment is void ab initio
(Ker.HC) . . . . . . . . . . . . . . . . . . . . . . . 2393

o) Applicable to contract labour against unlawful

termination (Karn.HC) . . . . . . . . . . . . . . . . 2385

zk)Not applicable to establishments to which Chapter V-B

is applicable (AP.HC) . . . . . . . . . . . . . . . . 2393

p) Applicable to part time workmen (Guj.HC) . . . . . 2385

zl) Not applicable to an apprentice appointed under

Apprentices Act since not a workman (Ker.DB) . . . 2394

q) Applicable to termination due to surplusage

on account of introduction of new machinery
(Raj.HC) . . . . . . . . . . . . . . . . . . . . . . . 2385

zm) To apprentice though completes 240 days since he

cannot be a permanent employee (Mad.HC) . . . . . 2394

Fr) Provisions of Section not applicable to cases of

retrenchment effected prior to its enactment
(S.C.3J) . . . . . . . . . . . . . . . . . . . . . . . . 2386

Fzn) Not applicable to casual employees who are not

recruited as per recruitment rules (S.C.2J) . . . . . . 2394
IV. Expressions and Meanings. . . . . . . . . . . . . 2395

Fs) Not applicable to workmen who did not complete

240 days (S.C.2J) . . . . . . . . . . . . . . . . . . . 2386

a) Expression until means . . . . . . . . . . . . . . . 2395

Ft) Not applicable to post office since not an industry

(S.C.2J) . . . . . . . . . . . . . . . . . . . . . . . . 2387

1. Conditions like notice pay, retrenchment

compensation or payment of wages are necessary
for compliance (Mys.DB). . . . . . . . . . . . . 2395

u) Not applicable to a case of re-employment of an

employee after superannuation (Mad.HC) . . . . . . 2387

V. Conditions precedent to retrenchment. . . . . . . 2395

Fv) Not applicable to a case of termination of Contract

Labour in the absence of master and servant
relationship (S.C.CB). . . . . . . . . . . . . . . . . 2387

a) The three conditions stipulated u/s. 25F are necessary

pre-conditions for retrenchment (AP.HC) . . . . . . 2395

Fw) Not applicable to discharge of workmen on

closure (S.C.CB) . . . . . . . . . . . . . . . . . . . 2388

b) Conditions like notice pay, retrenchment

compensation or payment of wages are necessary
for compliance (Mys.DB) . . . . . . . . . . . . . . 2395

Fx) Not applicable to a case of re-deployment of senior

workman on lower post without continuity of service
since it is not retrenchment (S.C.2J) . . . . . . . . . 2389

c) The condition of completing continuous service

of one year . . . . . . . . . . . . . . . . . . . . . . 2395

Fy) Not applicable to discharge of workmen on grounds

of medical unfitness since not retrenchment
(S.C.3J) . . . . . . . . . . . . . . . . . . . . . . . . 2389

1. Workman to be in continuous service though less

than one year but should have worked atleast for
240 days in a calender year preceding his
termination (AP.DB) . . . . . . . . . . . . . . . 2396

z) Not applicable to a case of resignation since it falls

u/s. 2(oo)(a) (Jhar.DB) . . . . . . . . . . . . . . . . 2390
za) Not applicable to seasonal employees on daily wage
basis even if they complete 240 days (MP.HC) . . . . 2390
zb) Not applicable to abandonment of service by
workman (Guj.HC) . . . . . . . . . . . . . . . . . . 2391
zc) Not applicable to workmen whose names were struck
off the rolls on the dismissals of their applications
challenging their termination effected after
complying with the section (Pat.DB) . . . . . . . . 2391

2. Workman has to put in 240 days of service in

the immediate preceding year though in spells
(AP.DB). . . . . . . . . . . . . . . . . . . . . . 2396
d) The condition of serving notice as per Clause (a) . . . 2396
1. Attributes of Notice . . . . . . . . . . . . . . . . 2396
i) Notice u/s. 25F(a) is different from notice u/s. 9A
which is confined to items in Sch. IV of the Act
(Bom.DB) . . . . . . . . . . . . . . . . . . . . . 2396

Synopsis
ii) Notice has to specifically indicate that termination
is due to retrenchment failing which termination
becomes termination simpliciter (Bom.HC) . . . 2397
iii) It is mandatory but not directory to mention
reasons for termination in the notice (Ori.DB) . . 2397

2265

F iii) Similar payment on closure does not bring closure

within ambit of retrenchment (S.C.CB) . . . . . 2404
F iv) Gratuity is not substitute for retrenchment
compensation since the objects of both are
different (S.C.3J) . . . . . . . . . . . . . . . . . 2404

2. Service of Notice . . . . . . . . . . . . . . . . . 2397

F v) Retrenchment compensation need not be paid

again u/s. 25F(b) when the same is paid in the
name of gratuity under the scheme of the
company (S.C.3J) . . . . . . . . . . . . . . . . . 2405

i) Notice pasted on notice board is not a substitute

for individual notice u/s. 25F(a) (Ori.DB). . . . . 2397

vi) Compensation to be offered at the time of

termination but not subsequent to it (Del.HC). . . 2406

ii) Notice given on penultimate day of retrenchment

is valid (MP.DB) . . . . . . . . . . . . . . . . . 2398

vii) Defect of non payment of retrenchment

compensation cannot be cured by employers
subsequent offer of any sum in full and final
settlement (AP.HC) . . . . . . . . . . . . . . . . 2406

iv) Notice under Clause (a) of Sec. 25F to precede

termination (All.HC) . . . . . . . . . . . . . . . 2397

iii) Presumption of service of notice cannot be when

employer admitted that no notice was sent to
workman (Bom.HC) . . . . . . . . . . . . . . . 2398
iv) Notice is invalid if served after retrenchment
(Bom.HC) . . . . . . . . . . . . . . . . . . . . . 2398
v) Notice though valid becomes void if retrenchment
compensation was also not paid (Cal.HC). . . . . 2398
F vi) Notice given even before two days instead of one
month in advance as per Rule 77(1) of W.B. I.D
Rules is sufficient service since the employees
were put on notice (S.C.3J) . . . . . . . . . . . . 2398
3. When not required . . . . . . . . . . . . . . . . 2399
F i) Notice is not required on termination by expiry
of term under an agreement (S.C.3J) . . . . . . . 2399
ii) When the discharge of employees took place
more than one month after the order of winding
up was passed since the order itself operated as
notice (Ker.DB) . . . . . . . . . . . . . . . . . . 2400
iii) When the workman is engaged for a fixed
period (Del.DB). . . . . . . . . . . . . . . . . . 2400
4. Wages in lieu of notice . . . . . . . . . . . . . . 2401
i) Notice not compulsory when wages paid in lieu
thereof since both are independent (Ori.DB) . . . 2401
F ii) To be paid time of termination when employee
was asked to leave forthwith (S.C.3J) . . . . . . . 2401
F iii) Worker held to be terminated on the date when
wages paid in lieu of notice (S.C.3J) . . . . . . . 2401
5. Wages for one month does not always mean wages
for 30 days and wages for the month of February
to be computed on the basis of 28 days but not
30 days (Bom.HC) . . . . . . . . . . . . . . . . 2402
e) The condition of Retrenchment Compensation
as per clause (b) . . . . . . . . . . . . . . . . . . . 2402

viii) Compensation to be paid either before or at the

time of retrenchment (P&H.HC) . . . . . . . . . 2406
ix) Compensation not required to be paid
simultaneously with the notice (HP.DB) . . . . . 2407
x) Payable even in case of termination on ground of
loss of confidence (Bom.DB). . . . . . . . . . . 2407
xi) Retrenchment compensation cannot be set off
against gratuity since the two benefits arise under
two different laws (Mad.DB) . . . . . . . . . . . 2407
xii) Not payable in case of simple discharge for loss
of confidence (Bom.HC) . . . . . . . . . . . . . 2407
xiii) Retrenchment compensation is allowable
deduction as business expenditure as per
Income Tax Act (Ori.DB) . . . . . . . . . . . . 2407
F xiv) Retrenchment compensation being not an
expenditure cannot be debited to profit and
loss A/c (S.C.3J) . . . . . . . . . . . . . . . . . 2408
xv) Recovery of loan amount from the legal dues
such as retrenchment compensation permissible
(Bom.HC) . . . . . . . . . . . . . . . . . . . . . 2408
xvi) There cannot be settlement for lesser amount
of compensation than that provided under
Industrial Disputes Act (Guj.HC) . . . . . . . . 2408
xvii) Additional compensation of one months wages
granted can be ordered by Court if retrenchment
justified (Cal.HC) . . . . . . . . . . . . . . . . . 2409
F xviii) Retrenchment compensation cannot be claimed
from parent company once services transferred
to subsidiary company with workmans consent
(S.C.3J) . . . . . . . . . . . . . . . . . . . . . . 2409
f) Payment / Acceptance of compensation effect on the
rights of workman . . . . . . . . . . . . . . . . . . 2409
1. Does not bar industrial dispute . . . . . . . . . . 2409

1. Attributes . . . . . . . . . . . . . . . . . . . . . 2402
F i) Compliance of Clause (b) mandatory since
retrenchment means ending, concluding and
cessation of employment and failure to pay
renders retrenchment illegal (S.C.3J). . . . . . . 2402
ii) Payment of dues was a condition precedent
(Raj.DB) . . . . . . . . . . . . . . . . . . . . . 2404

F i) Acceptance of compensation is not a bar casual

worker to raise a dispute on illegal termination
(S.C.2J) . . . . . . . . . . . . . . . . . . . . . . 2409
F ii) Acceptance and utilisation of retrenchment
compensation does not take away rights of
Union Government employees against termination
which is punitive in nature (S.C.2J) . . . . . . . . 2410

2266

Chapter VA Lay-Off and Retrenchment

2. Does not bar re-employment . . . . . . . . . . . 2410

F i) Payment of compensation is not a bar to
re-employment of retrenched workmen on
subsequent nationalisation of colliery (S.C.2J). . 2410
3. Employer cannot adduce evidence in the absence
of averment that sufficient amount was offered
(Bom.DB) . . . . . . . . . . . . . . . . . . . . . 2411

F 4. If compensation is paid at the time of retrenchment

instead at the time of notice (S.C.2J) . . . . . . . 2417
F 5. When 3 months salary as compensation was
paid to employees by compromise pursuant to
compromise formula by Supreme Court
(S.C.2J) . . . . . . . . . . . . . . . . . . . . . . 2417
6. Deemed paid from the date of tender by cheque
(Mad.DB) . . . . . . . . . . . . . . . . . . . . . 2418

g) Computation of retrenchment compensation. . . . . 2411

1. Number of working days what should be to arrive
at one day wage . . . . . . . . . . . . . . . . . . 2411
F i) To be computed on the basis of 30 working days
instead of 26 working days in a month in terms of
Sec. 2(aaa) of the Industrial Disputes Act
(S.C.2J) . . . . . . . . . . . . . . . . . . . . . . 2411
ii) In the case of wages paid per working day the
computation shall be as per provisions of
Sec. 2(aaa)(iii) on the basis of 26 days
(Mad.HC) . . . . . . . . . . . . . . . . . . . . . 2412
iii) A month is to be taken as 26 days for calculating
one day wages (Pat.DB) . . . . . . . . . . . . . 2412

7. Deemed paid from the date of tender by cheque

and non-realisation of it on the same day will not
affect retrenchment (Raj.HC) . . . . . . . . . . . 2418
8. Deemed paid even if cheque is undated
(Raj.HC) . . . . . . . . . . . . . . . . . . . . . 2418
9. Deemed paid if sent by cheque on the date of
retrenchment through registered post
with acknowledgement due (Cal.HC) . . . . . 2418
10.When sent by money order though workman
refused to receive notice and compensation
personally (Del.HC) . . . . . . . . . . . . . . . 2418
11.When sent prior to termination though received
after termination by the employee (Bom.HC) . . . 2419

iv) Retrenchment compensation was to be computed

on the basis of 26 working days (Bom.DB) . . . . 2413

12.When sent by Registered Post (Bom.HC) . . . . . 2419

v) Computation shall be on the basis of 15 days

wages but not half months wages for each
completed year of service (Pat.DB) . . . . . . . 2413

13.When employee asked by letter to collect his

dues from office after striking his name from
muster roll (AP.HC) . . . . . . . . . . . . . . . 2419

2. Wages what payments to be considered . . . . . 2414

14.When employee is offered retrenchment

compensation but declined to accept it
(Bom.HC) . . . . . . . . . . . . . . . . . . . . . 2420

F i) Concessional payments forming part of basic wages

taken in determination of wages for compensation
(S.C.3J) . . . . . . . . . . . . . . . . . . . . . . 2414
ii) To include travelling allowance since it is part
of wages (Raj.HC) . . . . . . . . . . . . . . . . 2414

15.Deemed paid even if the word gratuity was

mistakenly written in place of retrenchment
compensation in the receipt (Raj.HC) . . . . . . 2420

iii) Value of house accommodation must be included

(Raj.HC) . . . . . . . . . . . . . . . . . . . . . 2414

F 16.Deemed paid when the same is paid in the name

of gratuity under the scheme of the company
(S.C.3J) . . . . . . . . . . . . . . . . . . . . . . 2420

F iv) Income earned from gainful employment to

be excluded (S.C.2J) . . . . . . . . . . . . . . . 2415

17.When money and ex-gratia paid in lieu of notice

and retrenchment compensation (Cal.DB) . . . . 2421

h) Who can claim . . . . . . . . . . . . . . . . . . . . 2415

18.Though work man collects dues

on 8.8.1972 i.e. Monday instead of
7.7.1972 i.e. Sunday (All.DB) . . . . . . . . . . 2421

1. Temporary workman has also right to receive

retrenchment compensation (Mad.DB) . . . . . . 2415
2. Members of Co-operative Motor Transport Society
not entitled to claim since they are not workmen
(Mad.DB) . . . . . . . . . . . . . . . . . . . . . 2415
i) When deemed paid/when substantially
complied . . . . . . . . . . . . . . . . . . . . . . . 2416
F 1. When drafts of compensation amount forwarded
in advance to divisional authority for workmen
to receive is sufficient compliance (S.C.3J) . . . . 2416
2. When sent by bank drafts through registered post
though the workman avoids receipt of the same
(Raj.HC) . . . . . . . . . . . . . . . . . . . . . 2416
3. When demand draft and retrenchment notice were
sent on the same day though served three days
after retrenchment (P&H.HC) . . . . . . . . . . 2416

j) When not deemed paid/when not substantially

complied with. . . . . . . . . . . . . . . . . . . . . 2421
F 1. When letter of termination offers employee his
dues but does not specify that it is compensation
u/s. 25F it does not amount to compliance
(S.C.2J) . . . . . . . . . . . . . . . . . . . . . . 2421
2. When sent by crossed cheque through post
(Del.HC) . . . . . . . . . . . . . . . . . . . . . 2422
3. When sent by demand draft after terminating
workman (Raj.HC) . . . . . . . . . . . . . . . . 2422
4. Deemed not paid by showing mere readiness to pay
unless there is an offer or tender or actual payment
(Raj.HC) . . . . . . . . . . . . . . . . . . . . . 2423
5. If workman is merely asked to collect amount from
office (Mad.HC) . . . . . . . . . . . . . . . . . 2423

Synopsis

2267

6. Mere notice to collect payment on a particular

date cannot be equivalent to payment if workman
for good reason fails to turn up to collect
(P&H.HC). . . . . . . . . . . . . . . . . . . . . 2423

m) The condition of serving notice on Appropriate

Government / notified authority as per Clause (c) . . 2429

7. When paid by cheque though on the date of

retrenchment but after banking hours (Mad.HC) . 2423

i) Is to inform State Government to make it aware

of the existence of conciliation proceedings or
reference (Cal.DB) . . . . . . . . . . . . . . . . 2429

8. When compensation was paid on the basis of

wages drawn prior to earlier retrenchment
(MP.HC) . . . . . . . . . . . . . . . . . . . . . 2423

2. Attributes of the clause . . . . . . . . . . . . . . 2429

F 9. When gratuity is paid since object of both are

different (S.C.3J) . . . . . . . . . . . . . . . . . 2424
10.When compensation offered not at the time
of termination but subsequent to it (Del.HC) . . . 2424
11.If lay-off compensation is deducted from
retrenchment compensation (Bom.HC). . . . . . 2424
12.When notice to collect it was sent first and money
order was sent later (P&H.DB) . . . . . . . . . . 2424
13.When there is mere recital in notice of termination
that efforts will be made to pay retrenchment
compensation (Bom.DB) . . . . . . . . . . . . . 2424
14.When amount due from employee is adjusted
against compensation payable u/s. 25F(a) and
25F(b) (Ori.DB). . . . . . . . . . . . . . . . . . 2424
15.When it was not possible for workmen to be
present to receive retrenchment compensation on
the same day on which the letter so requiring, was
posted (Cal.HC). . . . . . . . . . . . . . . . . . 2424
16.When retrenchment compensation falls short due
to non-inclusion of HRA and travelling allowance
when paid as part of wages (Raj.HC) . . . . . . . 2425
17.When the offer is made at the close of the day
or bit earlier since the offer cannot be said to be
genuine (AP.HC) . . . . . . . . . . . . . . . . . 2425
k) Retrenchment compensation vis--vis extra/additional
compensation whether admissible . . . . . . . . . 2425
F 1. Compensation awarded by Tribunal at its
discretion before introduction of Chapter V-A,
held valid (S.C.CB) . . . . . . . . . . . . . . . . 2425

1. Object of Clause (c). . . . . . . . . . . . . . . . 2429

F i) Clause (c) being only informative is not mandatory

nor condition precedent (S.C.3J) . . . . . . . . . 2429
F ii) Notice u/s. 25F(c) is only directory and not
mandatory, hence non-compliance is not fatal
(S.C.3J) . . . . . . . . . . . . . . . . . . . . . . 2430
F iii) Requirement of notice is treated as a condition
subsequent, hence failure will not lead to any
infirmity in retrenchment order (S.C.3J) . . . . . 2431
iv) Notice to Government required u/s. 25F(c) is not
an empty formality and non-compliance results
in vitiating termination (Ker.HC). . . . . . . . . 2432
v) Non-issuance of notice by the employer to State
Government being not an invasion of workmans
right can not be raised in writ (Cal.DB) . . . . . . 2432
VI. When termination is not violative of Sec. 25F . . . 2432
Fa) When a daily wage worker who failed to establish
that he worked for 240 days and employer refused to
employ him can be terminated (S.C.2J) . . . . . . . . 2432
b) When Services of workman terminated for absence
with notice pay as permissible under Sastry Award
(All.HC) . . . . . . . . . . . . . . . . . . . . . . . 2434
c) When workman was retired for disablement due to
electric shock and received adequate compensation
and pensionary benefits (MP.HC) . . . . . . . . . . 2434
d) When appointment order itself was forged and
fabricated and void ab-initio (Raj.DB). . . . . . . . 2434
e) When terminated on the expiry of the term as per
contract of employment (Guj.HC) . . . . . . . . . . 2434
Ff) When workman voluntarily abandoned the service
(S.C.2J) . . . . . . . . . . . . . . . . . . . . . . . . 2435

F 2. Tribunal cannot grant retrenchment compensation

and compensation for premature termination of
service when it decides to grant it in lieu of
reinstatement (S.C.3J) . . . . . . . . . . . . . . 2426

g) When employer deposits the short payment of

compensation at the earliest, when such mistake
was bonafide (Bom.HC) . . . . . . . . . . . . . . . 2436

F 3. When retrenchment is proper Tribunal is not

justified in awarding 50% of wages as compensation
in addition to statutory compensation (S.C.3J) . . 2426

h) Retrenchment not vitiated for small and insignificant

shortfall in payment of retrenchment compensation
(Mad.HC) . . . . . . . . . . . . . . . . . . . . . . . 2436

F 4. Ex-gratia payable over and above compensation

to legal heir of deceased employee (S.C.3J) . . . . 2427

i) Termination of apprentice held valid since 240 days

service was not rendered by him (Mad.HC). . . . . . 2436

F 5. Additional compensation of six years wages paid

when retrenchment is due to closure on account
of environmental protection (S.C.2J) . . . . . . . 2427

Fj) When Apprentice terminated has no right to post

(S.C.2J) . . . . . . . . . . . . . . . . . . . . . . . . 2437

l) Recovery of compensation . . . . . . . . . . . . . . 2427

k) When services terminated on reaching the age of

superannuation (J&K.HC) . . . . . . . . . . . . . . 2437

1. Can be recovered u/s. 33C(2) (Pat.DB) . . . . . . 2427

l) Even though workman who is terminated completed

240 days but not in the preceding year (Bom.HC) . . 2438

2. Can be recovered under Payment of Wages Act

(Bom.DB) . . . . . . . . . . . . . . . . . . . . . 2428

2268

Chapter VA Lay-Off and Retrenchment

m) When appointment is not consistent with standing

orders and service was less than 240 days (Cal.DB) . 2438
n) When employee terminated is not employed in
industry and has not completed 240 days of
service (Karn.HC) . . . . . . . . . . . . . . . . . . 2438
o) When the employer is a Government company and
workman was not sponsored by Employment
Exchange as per recruitment rules and there is no
evidence of 240 days of his service (Bom.HC) . . . . 2439
p) If employee is purely temporary and termination is
for want of Government grants and due to closure
of few divisions (Guj.HC) . . . . . . . . . . . . . . 2439
q) When probationer whose services were terminated
was paid Rs.5000 as retrenchment compensation
and one month wages (Guj.HC) . . . . . . . . . . . 2439
r) When probationer terminated could not establish that
he is a workman (Guj.HC) . . . . . . . . . . . . . . 2440
s) When workmans services were terminated as per
settlement for non-selection (Guj.HC) . . . . . . . . 2440
t) When there is no proof of employer-employee
relationship (Raj.DB). . . . . . . . . . . . . . . . . 2440
Fu) When termination effected falls under the purview
of Clause (bb) of Sec. 2(oo) or on account of expiry
of fixed tenure (S.C.2J). . . . . . . . . . . . . . . . 2441
v) When notice served on the workman indicating that
pay and other dues would be paid to him on the same
day but he failed to collect the same (Bom.HC) . . . . 2442
w) When termination is valid even in the absence of
notice u/s. 25F when there is no work and one month
salary paid (Mad.HC) . . . . . . . . . . . . . . . . 2442
x) When services were terminated under the provisions
of a statute which prohibits continuance of
temporary employees beyond six months
(Karn.HC) . . . . . . . . . . . . . . . . . . . . . . 2443
y) Though notice under Clause 25F(c) is not given
since it is only a condition not condition precedent
(Bom.DB). . . . . . . . . . . . . . . . . . . . . . . 2443
Fz) When workmen failed to prove that they have
worked for 240 days service (S.C.2J) . . . . . . . . . 2443
za) When workman accepted compensation &
ex-gratia etc. (Pat.DB) . . . . . . . . . . . . . . . . 2444
zb)Though retrenchment compensation is short of small
amount of Rs. 552.87 when workman accepted it,
and did not raise any objection in his pleadings
(Cal.DB) . . . . . . . . . . . . . . . . . . . . . . . 2444
zc) When workers did not opt for alternative employment
and accepted compensation u/s. 25F (Cal.HC) . . . . 2444
zd)When money and ex-gratia paid in lieu of notice and
retrenchment compensation (Cal.DB) . . . . . . . . 2445
ze) When services of trainee who was not in regular
employment were terminated (Bom.DB). . . . . . . 2445
zf) When workman declined to receive notice pay and
retrenchment compensation (Del.DB) . . . . . . . . 2445

zg)When employer issued notice and paid compensation

and interim relief on terminating a probationer
for unsuitability and thus complied with Sec. 25F
(Karn.DB) . . . . . . . . . . . . . . . . . . . . . . 2445
zh)When Clauses (a) and (c) of Sec. 25F complied with
one months salary in lieu of notice paid despite error
in the date of notice (Ass.DB). . . . . . . . . . . . . 2446
zi) When the letter offering him to collect his compensation
and notice pay is definite & genuine (Del.DB) . . . . 2446
zj) When employee terminated completed 240 days of
service due to interim order of Writ Court (HP.DB) . 2446
zk)When notice of termination served on the workmen
on 15.4.1982 and dues were not accepted (All.DB). . 2446
zl) When workman offered compensation and one month
wages though arrears of wages not paid as demanded
since it has no relationship with compliance of
Sec. 25F (Cal.DB) . . . . . . . . . . . . . . . . . . 2447
zm) When employer terminated is a daily wager not entitled
to regular post and there is delay of 8-9 years in
raising dispute (Bom.DB) . . . . . . . . . . . . . . 2447
zn)When notice of retrenchment is accompanied by a
sheet containing detailed calculations for payment
of retrenchment compensation (Mys.DB) . . . . . . 2447
zo)When service rendered by a daily wager in two spells
cannot be clubbed to arrive at 240 days (AP.HC) . . . 2447
Fzp) When services of probationer employee terminated for
unsuitability as per letter of appointment (S.C.2J) . . 2448
zq)When pleadings of employer that workman is a
daily wager is not controverted by workman
(P&H.DB) . . . . . . . . . . . . . . . . . . . . . . 2448
Fzr) When discharged due to medical unfitness since it
does not amount to retrenchment (S.C.3J) . . . . . . 2448
Fzs) When workman appointed for 88 days on temporary
basis was terminated since banks policy
forbids appointment for 90 days (S.C.2J) . . . . . . . 2449
VII. Sec. 25F when violated or when required
to be complied . . . . . . . . . . . . . . . . . . . . 2449
Fa) When Termination is effected without compliance of
any of the Clauses (a) (b) & (c) are not complied
since they are all independent (S.C.3J) . . . . . . . . 2449
Fb) If one month notice or one month salary in lieu of
notice is not given (S.C.2J). . . . . . . . . . . . . . 2451
c) When notice was served fifteen minutes before
closing of work (Bom.HC) . . . . . . . . . . . . . . 2452
Fd) When termination is from back date since it
amounts to termination without notice (S.C.2J) . . . 2452
e) When services of employees terminated by notice
under Service Rules or terms of appointment order
but not by notice u/s. 25F (Ori.DB) . . . . . . . . . . 2452
f) Termination of service for any reason in violation of
Sec. 25F prior to March 2, 1982 is void ab initio
(P&H.DB) . . . . . . . . . . . . . . . . . . . . . . 2453
g) If lay-off compensation is deducted from
retrenchment compensation (Bom.HC) . . . . . . . 2453

Synopsis

2269

h) When the termination is in non-compliance of

Sec. 25F though it is oral (Pat.DB) . . . . . . . . . . 2453

Ft) When temporary workmen terminated after completion

of probation period (S.C.2J) . . . . . . . . . . . . . 2464

i) When appointment letter mentions only the words

contract basis without mentioning the period and
nature of work (P&H.DB) . . . . . . . . . . . . . . 2454

u) When termination effected during probationary period

without paying compensation (P&H.HC) . . . . . . 2465

j) When an overaged employee is terminated

without compliance of Sec. 25F (Ori.DB) . . . . . . 2454
Fk) When the workman who had worked for 240 days
is terminated (S.C.3J). . . . . . . . . . . . . . . . . 2454
1. In respect of apprentice . . . . . . . . . . . . . . 2456
i) If apprentice who was continued beyond the initial
period of appointment and worked for 240 days as
staff reporter terminated (Guj.HC) . . . . . . . . 2456
2. In respect of temporary workman . . . . . . . . 2456
F i) If temporary workmen with 240 days service for
not passing test for absorption is terminated
(S.C.3J) . . . . . . . . . . . . . . . . . . . . . . 2456

Fv) Temporarily appointed daily wage workman terminated

on account of surplusage (S.C.3J) . . . . . . . . . . 2465
w) When notice to collect retrenchment compensation was
sent first and money order later since Sec. 25F(b)
deemed not complied (P&H.DB). . . . . . . . . . . 2465
x) When there is mere recital in notice of termination
that efforts will be made to pay retrenchment
compensation since Sec. 25F(b) deemed not
complied (Bom.DB) . . . . . . . . . . . . . . . . . 2466
y) When retrenchment compensation of 15 days wage
paid for service of 2 years since Sec. 25F(b) deemed
not complied (Raj.DB) . . . . . . . . . . . . . . . . 2466
z) When Amount due from employee is adjusted against
compensation payable u/s. 25F(a) & 25F(b) since
Sec. 25F(b) deemed not complied (Ori.DB) . . . . . 2466

3. In respect of casual workman/daily wager . . . . 2457

i) When a casual worker with more than 240 days
of service in preceding 12 months terminated
(Cal.DB) . . . . . . . . . . . . . . . . . . . . . 2457
4. In respect of probationer . . . . . . . . . . . . . 2458
i) When probationer with continuous service of one
year or more terminated (Karn.DB) . . . . . . . 2458
ii) When Probationers even appointed invalidly but
terminated in non-compliance of Sec. 25F since
their termination does not fall under any of the
exceptions (MP.DB) . . . . . . . . . . . . . . . 2459
Fl) When contractors employees under previous direct
payment system discontinued due to reintroducing
of contract system to deny the status of workman
(S.C.3J) . . . . . . . . . . . . . . . . . . . . . . . . 2459
m) When contract workers employed without license by
principal employer were terminated since they are
deemed to be terminated by principal employer
(P&H.DB) . . . . . . . . . . . . . . . . . . . . . . 2460
Fn) When the name of daily rated worker on passing
of matriculation exam is struck-off in the absence of
any such condition of service (S.C.2J) . . . . . . . . 2460
o) When terminated without enquiry for continued
absence unauthorisedly by invoking Standing Orders
(MP.DB) . . . . . . . . . . . . . . . . . . . . . . . 2461
p) When terminated on grounds of abandoning service
(Jhar.DB) . . . . . . . . . . . . . . . . . . . . . . . 2461
q) When employee refuses to work on a lower post in
night shift but attends office during normal hours
and employer treats him to have abandoned the
service (P&H.HC) . . . . . . . . . . . . . . . . . . 2462
r) When name was removed for absence as per service
rules due to arrest since conditions u/s. 25F mandatory
(All.HC) . . . . . . . . . . . . . . . . . . . . . . . 2463
s) When termination is for misconduct without enquiry
or where despite enquiry the charges were not proved
(Pat.DB) . . . . . . . . . . . . . . . . . . . . . . . 2463

za) When service terminated without retrenchment

compensation though terms of employment render
service terminable without notice (Karn.HC) . . . . 2466
zb)When it was not possible for workmen to be present
to receive retrenchment compensation on the same
day on which the letter so requiring, was posted since
Sec. 25F(b) deemed not complied (Cal.HC) . . . . . 2466
zc) When bank drafts carrying retrenchment compensation
were remitted at 6 P.M. on the date of retrenchment as
well as on the next day since Sec. 25F(b) deemed
not complied (Raj.HC) . . . . . . . . . . . . . . . . 2467
zd)When retrenchment compensation falls short at the
time of retrenchment due to non-inclusion of HRA
and travelling allowance when paid as part of
wages (Raj.HC). . . . . . . . . . . . . . . . . . . . 2467
Fze)When employee who completes 240 days or more even
with artificial breaks after 89 days or with intermittent
breaks, terminated with malafide intention to deprive
workman of benefits u/s. 25F (S.C.2J) . . . . . . . . 2467
zf) When terminated without counting the services
rendered by an employee in the previous organisation
from which he was transferred (Raj.DB) . . . . . . . 2469
zg)When workman under contractual service in a project
terminated before completion of it in non-compliance
of Sec. 25F (AP.DB) . . . . . . . . . . . . . . . . . 2469
zh)When surplus railway employee terminated though as
per Indian Railway Establishment Code but in violation
of Sec. 25F (Ker.DB). . . . . . . . . . . . . . . . . 2470
zi) When employee with 8 years of service terminated
without compliance of Sec. 25F (P&H.DB) . . . . . 2470
zj) When employee with longer tenure of service
terminated when the work is of perennial nature or
after a long tenure of service (Guj.HC) . . . . . . . . 2470
zk)When correspondent in a newspaper was terminated to
avoid financial burden and not for misconduct
in non-compliance of Sec. 25F (MP.DB) . . . . . . . 2471

2270

Chapter VA Lay-Off and Retrenchment

zl) When employees in irrigation department of public

works of State Government were terminated
in non-compliance of section (Guj.DB) . . . . . . . 2472

c) Proper forum is under Industrial Disputes Act but not

under writ jurisdiction (All.DB) . . . . . . . . . . . 2484

Fzm) When senior was terminated retaining his junior in

violation of the principle of last come-first go
u/s. 25G (S.C.2J) . . . . . . . . . . . . . . . . . . . 2472

d) Workman on his reappointment for one month which

does not include his previous service can challenge
his previous termination in violation of Sec. 25F
(Raj.DB) . . . . . . . . . . . . . . . . . . . . . . . 2485

zn)When employee who completes 240 days terminated

for not accepting certain conditions of service
(Raj.HC) . . . . . . . . . . . . . . . . . . . . . . . 2472

e) Employer deemed acquiesced into findings of award

when he never challenged award which thus becomes
final (All.DB). . . . . . . . . . . . . . . . . . . . . 2485

zo)When driver terminated while employer maintains

three vehicles and employs a casual driver
(Bom.HC). . . . . . . . . . . . . . . . . . . . . . . 2473

f) Scope of powers of the Tribuna/Labour Court

under Industrial Disputes Act . . . . . . . . . . . . 2485

zp)If terminated for disobedience of transfer orders

without enquiry since it amounts to punishment
(P&H.HC) . . . . . . . . . . . . . . . . . . . . . . 2473
zq)When termination is ostensibly due to closer of one
unit since functional integrality exists between the
unit closed and other unit (Del.DB) . . . . . . . . . . 2473
zr) When workmen terminated for pressing their charter
of demands since actuated by victimisation
(Karn.HC) . . . . . . . . . . . . . . . . . . . . . . 2473
zs) When some workmen were terminated in view
of proposed closure and others are retained
(Mad.HC) . . . . . . . . . . . . . . . . . . . . . . . 2474
zt) When terminated without compliance of the section
and employer-employee relationship exists
(Bom.HC). . . . . . . . . . . . . . . . . . . . . . . 2474
zu)When workmen terminated for not possessing requisite
qualification after serving more than two years
(P&H.DB) . . . . . . . . . . . . . . . . . . . . . . 2474
zv)When terminated on the ground of loss of confidence
for remaining absent continuously (MP.HC) . . . . 2474
zw) When terminated in the absence of proof of
appointment for fixed term (Del.HC) . . . . . . . . 2475
Fzx) When terminated on non-renewal of contract
of employment (S.C.3J) . . . . . . . . . . . . . . . 2475
Fzy) Termination not proper if employer fails
to disclose grounds and nor is it examined
by the Labour Court (S.C.2J). . . . . . . . . . . . . 2476
zz) When Extra Departmental Branch Post Master was
terminated after enquiry without an opportunity of
hearing (CAT) . . . . . . . . . . . . . . . . . . . . 2476

1. Labour Court is not barred by Haryana State

Co-op. Societies Act to grant relief (P&H.DB) . . 2485
2. Delay cannot be ground for Labour Court to
decline relief to workman (P&H.DB) . . . . . . 2485
3. Labour Court cannot question managements right
to retrench but to examine whether the same is
justified (All.HC) . . . . . . . . . . . . . . . . . 2486
4. Industrial Tribunal but not Administrative Tribunal
can adjudicate on termination in violation of
Sec. 25F (HP.DB). . . . . . . . . . . . . . . . . 2486
5. Tribunal cannot interfere with termination if union
fails to submit evidence despite ample opportunities
(Raj.HC) . . . . . . . . . . . . . . . . . . . . . 2486
6. Labour Court to give positive finding on
justification of termination failing which
award stands vitiated (Ori.DB) . . . . . . . . . . 2486
7. Labour Court not justified in granting
reinstatement, when workman claimed
re-employment (Bom.HC) . . . . . . . . . . . . 2487
8. Labour Court must find out whether employee is
a workman and he has completed 240 days of
service to decide the question of retrenchment
compensation (Karn.HC) . . . . . . . . . . . . . 2487
9. Tribunal to give declaration that workman
terminated has continued in service when
termination becomes void and non-est
(Guj.HC) . . . . . . . . . . . . . . . . . . . . . 2487
10.The decision of High Court though was a summary
dismissal operates as res judicata against the
same cause of action for the same relief
before Labour Court (P&H.DB) . . . . . . . . . 2487
g) Remedy under civil jurisdiction . . . . . . . . . . . 2488

VIII. Effect of violation of Sec. 25F. . . . . . . . . . . 2482

a) Employer-employee relationship exists when
retrenchment is bad due to non-compliance of
Sec. 25F (Raj.DB) . . . . . . . . . . . . . . . . . . 2482

1. Civil Court is not proper forum for recovery of

retrenchment compensation and remedy lies
u/s. 33C(2) of Industrial Disputes Act (All.HC). . 2488
h) Remedy under Central Administative Tribunal . . . 2488

b) Termination becomes void (Bom.DB) . . . . . . . . 2483

IX. Remedies for violation of the section . . . . . . . . 2483

F 1. CAT cannot interfere with the relief granted by

the Tribunal since not vested with power of
superintendence over the latter (S.C.3J) . . . . . 2488

a) Workman can elect his remedy either by challenging

retrenchment or claiming retrenchment compensation
by accepting retrenchment (Del.HC). . . . . . . . . 2483

i) Remedy under writ jurisdiction for violation

of Sec. 25F . . . . . . . . . . . . . . . . . . . . . . 2489

b) Legal heirs can enforce the claim for retrenchment

compensation and the right survives even though
the workman dies (LAT) . . . . . . . . . . . . . . . 2484

1. When can be . . . . . . . . . . . . . . . . . . . 2489

Synopsis
i) High Court can directly entertain writ over matters
falling under Chapter V-A since it does not contain
disputes referable to Labour Court or Tribunal
u/s. 10 (All.HC) . . . . . . . . . . . . . . . . . 2489

2271
a) Not a proper remedy to decide questions of
appointment on vacancy and violation of rules
and benefits u/s. 25F (MP.DB) . . . . . . . . 2495

j) Prosecution . . . . . . . . . . . . . . . . . . . . . . 2495
ii) High Court can entertain dispute of termination if
Sec. 25F is violated since it amounts to violation
of natural justice (Mad.HC) . . . . . . . . . . . 2489

1. Can be initiated for violation of Sec. 25F

(Ori.HC). . . . . . . . . . . . . . . . . . . . . . 2495

iii) High Court not barred by availability of alternate

remedy to grant relief for retrenchment u/Art. 226
(Cal.DB) . . . . . . . . . . . . . . . . . . . . . 2489

k) Appropriate Government-whether competent to

determine workmans claim . . . . . . . . . . . . . 2496

iv) When contravention of sec. 25F is an admitted fact

but not a dispute for adjudication (Ori.DB) . . . . 2490

1. Cannot determine the question of retrenchment

compensation claimed by discharged workman
(Mad.HC) . . . . . . . . . . . . . . . . . . . . . 2496

v) When services of casual workers were

terminated on completion of work without any
written order (Cal.HC) . . . . . . . . . . . . . . 2490

X. Pleadings by either party-what can be and

appropriate forum where can be made. . . . . . . 2496

vi) High Court can modify the relief granted u/s. 25F
if industry is closed or is in severe financial
condition (Bom.HC) . . . . . . . . . . . . . . . 2490
2. When cannot be . . . . . . . . . . . . . . . . . . 2490
i) High Court cannot interfere where no
jurisdictional error/procedural irregularity is
committed (Guj.HC) . . . . . . . . . . . . . . . 2490
ii) High Court cannot decide questions of fact like
whether or not the workman completed 240 days
of service (All.HC) . . . . . . . . . . . . . . . . 2490
iii) When alternate remedy is available under Industrial
Disputes Act (All.DB) . . . . . . . . . . . . . . 2491
iv) Writ not maintainable in case of non-compliance
of Sec. 25F unless there is proof of legal injury
or infringement of legal right of the employee
(Pat.HC). . . . . . . . . . . . . . . . . . . . . . 2491
F v) When writ involves pure question of facts like
whether employee worked for 240 days
(S.C.2J) . . . . . . . . . . . . . . . . . . . . . . 2492

a) Pleading as to non-payment or inadequacy of

compensation to be made to challenge retrenchment
(P&H.DB) . . . . . . . . . . . . . . . . . . . . . . 2496
Fb) Plea of non-compliance of section to be
raised before the lower Courts but not before
Higher Courts (S.C.2J) . . . . . . . . . . . . . . . . 2496
c) Plea disputing the status of employer as an industry
to be taken before Labour Court but not before
High Court for first time (P&H.HC) . . . . . . . . . 2497
d) Plea of probationer that he was workman and
completed 240 days raised for first time in writ
appeal is untenable (AP.DB) . . . . . . . . . . . . . 2497
e) Workman to specifically plead that he put in 240 days
or more in preceding 12 months to claim relief
(Bom.HC). . . . . . . . . . . . . . . . . . . . . . . 2497
Ff) Pleading that employment is tenure based cannot be
taken by the employer for the first time in the appeal
before Apex Court (S.C.2J) . . . . . . . . . . . . . 2497
g) Plea that employee was irregular to be taken to
justify termination before Labour Court (Raj.HC) . . 2498

vi) When fresh issues were raised before High Court

but not before Industrial Tribunal (Guj.HC) . . . 2492

h) Plea that department is closed is to be taken before

Labour Court but not High Court (Mad.HC) . . . . . 2498

vii) Cannot be for contesting ex-parte award when

employer failed to contest the reference before
Tribunal (Del.HC) . . . . . . . . . . . . . . . . 2492

i) Plea of non-payment of retrenchment compensation

can not be raised by employee who obtained stay on
the service of notice of retrenchment (Pat.HC) . . . . 2499

F viii) When order dismissing the writ against Labour

Courts order of reinstatement operates as
resjudicata in the subsequent writ appeal filed
by management against writ for back wages by
workman (S.C.3J). . . . . . . . . . . . . . . . . 2493

j) Plea of non-payment of compensation at the time

of retrenchment not sustainable once the fact of
receiving is admitted by the workman (Raj.HC) . . . 2499

F ix) High Court cannot dismiss a writ on grounds of

delay without ascertaining facts for delay like
agitating in wrong forum ignorantly (S.C.2J) . . . 2494
x) Single Judge cannot analyse the issue whether
qualification was misrepresented to obtain
employment but only to examine applicability
of the section (Raj.DB) . . . . . . . . . . . . . . 2494
F 3. High Court to pass speaking order while
upholding order of reinstatement (S.C.2J) . . . . 2495
i) Remedy of Letters patent appeal . . . . . . . . . 2495

Fk) Plea that calculation of compensation was as per

previous wages instead of wage board award to be
raised initially before Tribunal (S.C.2J) . . . . . . . 2499
l) Plea of non-compliance of Sec. 25F can be raised
by workman in writ appeal though not raised in writ
petition since it involves question of law (Raj.DB) . . 2500
m) Plea of non-service of notice and non-payment of
retrenchment compensation cannot be raised by
workman who avoids to take drafts (Raj.HC). . . . . 2500
Fn) Plea of infirmity in notice to be specific and
precise and not in the form of a general plea (S.C.3J) . 2500
o) Pleadings by management as to abandonment of
services and retrenchment being inconsistent not
acceptable (Del.HC) . . . . . . . . . . . . . . . . . 2501

2272

Chapter VA Lay-Off and Retrenchment

p) Management cannot adduce evidence as to payment

of retrenchment compensation if no averment made
to that effect in its reply (Bom.DB) . . . . . . . . . 2501

xi) Reinstatement cannot be denied on the ground of

strained relationship between management and
retrenched workman (Mad.HC) . . . . . . . . . 2508

q) Plea of invalidity of retrenchment cannot be takenby

employer to deny his liability to pay it (Mys.DB) . . . 2501

xii) Reinstatement proper when one workman not taken

back while other delinquent workmen were taken
back after strike (Del.HC) . . . . . . . . . . . . 2509

XI. Reliefs available for violation of the sections . . . 2502

a) Who can claim . . . . . . . . . . . . . . . . . . . . 2502

xiii) Reinstatement proper when probationer terminated

in violation of Sec. 25F as he rendered service of
22 years (P&H.HC) . . . . . . . . . . . . . . . . 2509

1. Only aggrieved employees (MP.DB) . . . . . . . 2502

2. Employees who worked for 240 days during the
period of 12 calendar months preceding
termination (Del.HC) . . . . . . . . . . . . . . . 2502
3. Legal heirs in case of death of the workman
(Del.HC) . . . . . . . . . . . . . . . . . . . . . 2502
b) Who cannot claim . . . . . . . . . . . . . . . . . . 2502
1. Workmen working in different units under
different employers if failed to complete 240 days
in any of the units (Raj.DB) . . . . . . . . . . . . 2502

xiv) Reinstatement cannot be denied on the ground of

delay even if it is unexplained (Pat.HC) . . . . . . 2509
xv)Reinstatement cannot be denied when Labour Court
gave a clear finding that termination was illegal
(Del.HC) . . . . . . . . . . . . . . . . . . . . . 2509
xvi) Reinstatement proper when workman was
terminated in violation of Sec. 25F as a measure
of pruning (Cal.HC) . . . . . . . . . . . . . . . 2510
xvii) Reinstatement cannot be denied when termination
does not fall within the purview of exceptions
u/s. 2(oo) (All.HC) . . . . . . . . . . . . . . . . 2510

c) Relief of Reinstatement . . . . . . . . . . . . . . . 2503

1. The expression deemed to be in service in the
award means reinstatement (Ker.HC) . . . . . . 2503

xviii) When a workmans services are terminated even

after completion of 240 days by oral orders while
that of similarly placed employees were continued
(Raj.DB) . . . . . . . . . . . . . . . . . . . . . 2510

2. Conditional Reinstatement by employer is invalid

and he cannot contend the same against grant of
50% back wages (Bom.HC) . . . . . . . . . . . 2503

4. When reinstatement cannot be . . . . . . . . . . 2510

3. When can be . . . . . . . . . . . . . . . . . . . 2503

i) Reinstatement cannot be of casual workman in

the absence of proof of retrenchment or
appointment letter or completion of 240 days
(Guj.HC) . . . . . . . . . . . . . . . . . . . . . 2510

F i) When workman proved having worked 240 days

with the help of muster roll (S.C.2J). . . . . . . . 2503
ii) When a workman even a casual one worked for
5 years (AP.DB) . . . . . . . . . . . . . . . . . 2503

F ii) Reinstatement unjustified when no work is

available (S.C.2J) . . . . . . . . . . . . . . . . . 2511

F iii) When workman after 240 days of continuous

service terminated in non-compliance of Sec. 25F
(S.C.3J) . . . . . . . . . . . . . . . . . . . . . . 2504

F iii) Reinstatement cannot be in case of closure of

business or severe financial constraints or in
case of better employment of workman
elsewhere (S.C.3J) . . . . . . . . . . . . . . . . 2511

iv) When retrenchment not bonafide as effected to

enable employer subsequently to raise salaries of
other employees (Mad.DB) . . . . . . . . . . . . 2506

F iv) Reinstatement cannot be when workman did not

complete 240 days (S.C.2J). . . . . . . . . . . . 2512

v) When there is violation of the section though

the appointment is dehors the Act (Raj.DB). . . . 2506
vi) When termination of employees is due to closure
of mechanical workshop since it is not a separate
undertaking being adjunct to manufacturing
activity (Guj.DB) . . . . . . . . . . . . . . . . . 2506

v) When termination though violative of Sec. 25F is

for loss of confidence that is justified (Bom.DB) . 2513
vi) When workman is found to be indulging in
smuggling activities (Bom.DB). . . . . . . . . . 2513
vii) When workmans capacity to work is impaired
(Bom.DB) . . . . . . . . . . . . . . . . . . . . . 2514

vii) Reinstatement is the relief for non-compliance of

Sec. 25F though services were terminated under
standing orders (Bom.DB) . . . . . . . . . . . . 2507

viii) When employee is superannuated during

pendency of proceedings (Ori.DB) . . . . . . . . 2514

viii) Reinstatement proper if employee completed

240 days in a year though in spells of 89 days
(P&H.DB). . . . . . . . . . . . . . . . . . . . . 2507

ix) Reinstatement cannot be granted when workman

worked for short period and attained the age
of superannuation on date of retrenchment
(Raj.HC) . . . . . . . . . . . . . . . . . . . . . 2514

ix) Reinstatement proper when workman terminated

for unsatisfactory work in violation of Sec. 25F
(Guj.HC) . . . . . . . . . . . . . . . . . . . . . 2508
x) Reinstatement cannot be denied on the ground of
closure when the same not pleaded by the
employer (Bom.HC) . . . . . . . . . . . . . . . 2508

x) Reinstatement not justified when tribunal did not

decide the question of voluntarily leaving the job
when raised by the employer (Raj.DB) . . . . . . 2515
xi) Reinstatement not proper for casual workmen when
not entitled to regular post and not completed 240
days (Bom.DB) . . . . . . . . . . . . . . . . . . 2515

Synopsis
xii) Reinstatement cannot be of daily wagers though
terminated in violation of Sec. 25F since the posts
they worked on were not sanctioned (Mad.HC) . . 2515
xiii) Reinstatement cannot be if there was unexplained
delay of 13 years on the part of workman
(Mad.HC) . . . . . . . . . . . . . . . . . . . . . 2516
xiv) If termination is by way of acceptance of
voluntary resignation (Bom.HC) . . . . . . . . . 2516
xv) When workman abandons service of his own
volition (Raj.HC) . . . . . . . . . . . . . . . . . 2516
xvi) Reinstatement cannot be awarded on the ground
of workman completing 240 days without
discussing the evidence on record (P&H.HC). . . 2516
xvii) Reinstatement not proper when employment
is for fixed period (Raj.HC). . . . . . . . . . . . 2517
F xviii) When retrenchment is valid on facts though
Sec. 25F violated as retrenchment compensation
was not paid (S.C.2J) . . . . . . . . . . . . . . . 2517
d) Relief of back wages . . . . . . . . . . . . . . . . . 2518
1. General principles to determine quantum of
back wages . . . . . . . . . . . . . . . . . . . . 2518
F i) There is no starightjacket formula to grant
back wages and Labour Court has discretion
to decide the qunatum on facts and circumstances
(S.C.3J) . . . . . . . . . . . . . . . . . . . . . . 2518
F ii) No law in absolute terms can be laid down to
grant full back wages but it is not automatic
since industry cannot be compelled to pay for the
period during which the employee contributed
nothing (S.C.2J). . . . . . . . . . . . . . . . . . 2519
iii) Quantum of back wages to be determined on the
basis of nature of work, employment and
appointment (Raj.HC) . . . . . . . . . . . . . . 2519
iv) Quantum of back wages to be determined having
regard to financial implications on public
functionary (All.HC) . . . . . . . . . . . . . . . 2520
F v) Quantum of back wages to be determined on the
basis of apportionability of burden due to delay
not attributable to either party (S.C.2J) . . . . . . 2520
vi) Labour Court to record the basis of evidence for
granting back wages and mere absence of plea
of employer raising objection to back wages does
not entitle workman to back wages (Del.HC) . . . 2520
F vii) Reinstatement entitles employee to wages of the
post from which he was terminated but not of
fresh post to be considered (S.C.3J) . . . . . . . . 2521
viii) Back wages to be at the rate commensurate
to the status of a daily rated workman but not
at the scale of the post i.e. driver (Gau.HC) . . . . 2521
F ix) The factor of gainful employment of the
workman to be considered while examining the
admissibility of back wages or deciding
quantum of back wages (S.C.3J) . . . . . . . . . 2521
x) The factor of delay to be considered in determinig
the quantum of back wages (Guj.HC) . . . . . . . 2523
xi) The principle of no work-no pay to be considered
to decide the quantum of back wages (Ori.HC) . . 2523

2273

2. Quantum of back wages when can be in

full/when can be reduced . . . . . . . . . . . . . 2523
F i) Back wages in full payable if gainful employment
of workman not proved (S.C.2J) . . . . . . . . . 2523
ii) Burden of proof as to gainful employment . . . . 2524
F a) Is on the employer to have the issue of gainful
employment framed by the Tribunal to
determine admissibility of back wages
(S.C.3J) . . . . . . . . . . . . . . . . . . . . 2524
F b) On the employee to prove that he is not
gainfully employed (S.C.2J) . . . . . . . . . 2525
iii) Plea of gainful employment to be raised
before Tribunal by employer but not before
Writ Court (Chh.HC) . . . . . . . . . . . . . . 2525
iv) Full back wages payable when the Labour Court
fails to furnish reasons for reducing them to 50%
(P&H. DB) . . . . . . . . . . . . . . . . . . . . 2525
v) Back wages in full payable when the workman
even after termination made a representation to
the employer to allow him to work (Bom.DB) . . 2526
vi) Back wages cannot be denied on the plea that it
would affect public exchequer for payment of
back wages (Guj.HC) . . . . . . . . . . . . . . . 2526
vii) Back wages as a lumpsum granted when
workman is a daily wager (Guj.HC) . . . . . . . 2527
viii) 25% granted inspite of gainful employment
when the same is not substantially better
(Bom.HC) . . . . . . . . . . . . . . . . . . . . . 2527
F ix) 25% garnted since employer cannot be saddled
with burden of full back wages for no work
rendered (S.C.2J) . . . . . . . . . . . . . . . . . 2528
x) Back wages to the tune of only 30% payable
when project workman terminated six years
before the project came to an end (Guj.HC). . . . 2528
xi) Only 50% back wages admissible from the date
of filing claim statement till passing of award in
view of delay in raising the dispute (Bom.HC) . . 2529
xii) 50% back wages granted on no work no pay
basis though employee was wrongfully denied
work by the employer (All.HC) . . . . . . . . . 2529
xiii) Backwages of 50% granted since employer is
public instituition and the employee was not
employed after termination (Mad.HC) . . . . . . 2530
xiv) Only 50% backwages granted as the employer
being the State cannot be saddled with full back
wages (Guj.HC). . . . . . . . . . . . . . . . . . 2530
xv) 60% granted to probationer who was terminated
for misconduct without enquiry and terminated
without enquiry (Guj.HC) . . . . . . . . . . . . 2530
xvi) Full back wages from the date of termination to
the date of reference not admissible since not
appropriate to burden the exchequer meant for
public benefit and 60% back wages permissible
for the period of pendency of reference since
employee is not at fault (Guj.HC) . . . . . . . . . 2531

2274

Chapter VA Lay-Off and Retrenchment

3. Back wages when can be denied . . . . . . . . . 2531

F iii) When the employee is not interested in

continuing the job (S.C.3J). . . . . . . . . . . . 2537

F i) Back wages not payable in case of a daily wager

who completed only 264 days in his short
employment under a year (S.C.3J) . . . . . . . . 2531

iv) When post itself is abolished (Ori.DB) . . . . . . 2538

ii) Back wages not payable since the employee

remained absent without bonafide reasons
though reinstated for non-compliance of
Sec. 25F (Bom.HC) . . . . . . . . . . . . . . . . 2532
iii) Back wages denied for unauthorized absence
on the principle of no work-no pay (Ori.HC) . . . 2532
iv) Back wages not payable when employee is not
joining duty on reinstatement but working
elsewhere (Mad.HC) . . . . . . . . . . . . . . . 2533
v) Back wages not payable merely on acquittal of
criminal charges when they are fairly serious
and employee did not work during pendency of
criminal proceedings (Del.HC) . . . . . . . . . . 2533
vi) Back wages denied for long delay in raising dispute
and employee earning Rs. 800 p.m. (Bom.HC) . . 2533
e) Relief of re-employment can be . . . . . . . . . . . 2533
F 1. When new recruitment was made by employer
subsequent to termination of the workman
(S.C.3J) . . . . . . . . . . . . . . . . . . . . . . 2533
f) Relief of re-appointment whether can be . . . . . . . 2534
1. Cannot be when provisional employees were
retrenched and replaced by Public Service
Commission recruits (Ker.DB) . . . . . . . . . . 2534
g) Relief of continuity of service . . . . . . . . . . . . 2534
1. Continuity of service means . . . . . . . . . . . 2534
i) The intervening period to count for seniority and
back wages on pay revised during the intervening
period (Raj.HC) . . . . . . . . . . . . . . . . . . 2534

v) When retrenchment is bonafide though in

violation of Sec. 25F (Mad.DB) . . . . . . . . . 2538
vi) When employee does not have prescribed
qualification to carry out or discharge duties of
the post (Bom.DB) . . . . . . . . . . . . . . . . 2538
vii) When workman offered to take employment afresh
through selection process and he worked only for
230 days (P&H.DB) . . . . . . . . . . . . . . . 2539
F viii) When termination is set aside on technical
reason of miscalculation of compensation and
since 14 years lapsed (S.C.3J) . . . . . . . . . . 2539
F ix) When there is lapse of longer period after
retrenchment more so when work man was
appointed on temporary basis/daily wage
basis/adhoc basis and also they can be
gainfully employed (S.C.2J) . . . . . . . . . . . 2540
F x) When workmen terminated were casual
employees and did not work for 240 days
(S.C.3J) . . . . . . . . . . . . . . . . . . . . . . 2542
xi) When employee was a daily wager and the
company is engaged in manufacture of missiles
which is a sensitive one requiring verification
of antecedents (AP.HC). . . . . . . . . . . . . . 2543
xii) When workman reached superannuation
(P&H.DB). . . . . . . . . . . . . . . . . . . . . 2543
xiii) When workman is a temporary supervisor and
termination is illegal for mere technical violation
of the section by non-payment of retrenchment
compensation (Bom.HC) . . . . . . . . . . . . . 2544
xiv) When reinstatement is not insisted by workman
in his petition (Raj.DB) . . . . . . . . . . . . . . 2544

ii) If reinstated pending final result of writ petition,

increments falling due during the period of
employment to be paid along with wages
(P&H.HC). . . . . . . . . . . . . . . . . . . . . 2535

F xv) When the job performed by employees in fast

food centers is such that they can easily find
other jobs (S.C.2J) . . . . . . . . . . . . . . . . 2544

2. When can be . . . . . . . . . . . . . . . . . . . 2535

xvi) Mere compensation for truck driver proper when

the truck driven by him was sold (P&H.DB) . . . 2545

i) When retrenchment and suspension are declared

void employee entitled to be in continuous
service (P&H.HC) . . . . . . . . . . . . . . . . 2535

xvii) Compensation is proper when establishment was

sold out (Karn.HC) . . . . . . . . . . . . . . . . 2545

ii) When workman without giving notice or wages

in lieu of it is terminated (Ori.DB). . . . . . . . . 2535

xviii) When workman is part-timer and irregular in

attendance (Raj.HC) . . . . . . . . . . . . . . . 2545

F iii) When termination in violation of Sec. 25F is

deemed to be non-est or void ab-initio (S.C.2J) . . 2535

xix) Proper for just reasons like establishment is a

defence establishment (AP.HC) . . . . . . . . . 2546

h) Relief of Compensation in lieu of reinstatement

is proper . . . . . . . . . . . . . . . . . . . . . . . 2536

xx) Proper when establishment is running into

losses (P&H.HC) . . . . . . . . . . . . . . . . . 2546

1. When can be . . . . . . . . . . . . . . . . . . . 2536

xxi) When workman is engaged elsewhere after

termination (P&H.HC) . . . . . . . . . . . . . . 2546

F i) When termination is as a result of closure of unit

(S.C.2J) . . . . . . . . . . . . . . . . . . . . . . 2536
F ii) When employee worked only for one year and
not appointed as per recruitment rules (S.C.2J) . . 2537

xxii) Mere compensation proper when appointment

itself is not as per relevant rules (Raj.HC) . . . . . 2546
xxiii) Proper when only consultant office was
functioning at skeletal level (Jhar.HC) . . . . . . 2547

Synopsis

2275

xxiv) Proper when workers are not interested to

be reinstated to the post last held (Mad.HC). . . . 2547

H. Compensation to workmen in case of transfer

of undertaking - Sec. 25FF . . . . . . . . . . . . . 2552

F xxv) Mere compensation proper in case of termination

of project employee though illegal (S.C.2J) . . . . 2547

I. Scope object and applicability of section . . . . . . 2552

xxvi) When employer cannot provide continuous

work (Bom.DB). . . . . . . . . . . . . . . . . . 2547
xxvii) When terminated for unsatisfactory work
(Bom.HC) . . . . . . . . . . . . . . . . . . . . . 2548
xxviii) When employer loses confidence in the
concerned employee when employer loses a
customer by the conduct of workman (AP.HC) . . 2548
xxix) Mere compensation proper though Sec. 25F
was violated if worker abandons service by not
joining at the place of transfer (Mad.HC) . . . . . 2548
F xxx) When employer lost his confidence and
termination though violative of Sec. 25F
was as per service rules (S.C.2J) . . . . . . . . . 2548
F xxxi) When reinstatement is not possible due to
peculiar circumstances like cancellation of
work permit which is necessary to enter port
area (S.C.3J) . . . . . . . . . . . . . . . . . . . 2549
xxxii) When employee suffered from paralysis
(Gau.DB) . . . . . . . . . . . . . . . . . . . . . 2549
F xxxiii) When employee dies during pendency of
proceedings (S.C.2J) . . . . . . . . . . . . . . . 2550
2. Compensation in lieu of reinstatement when
not proper . . . . . . . . . . . . . . . . . . . . . 2550
i) Ten times the retrenchment compensation not
proper when retrenchment compensation was duly
sent and termination is lawful (Bom.DB) . . . . . 2550
ii) When granted without any cogent reasons by
diluting its own findings (Mad.HC) . . . . . . . 2550
iii) When work man did not complete 240 days
(Del.HC) . . . . . . . . . . . . . . . . . . . . . 2550
iv) Regularization cannot be . . . . . . . . . . . . . 2550
a) In the absence of any posts (Ori.DB) . . . . . 2550
b) Cannot be of a casual employee in a local
body if Government instructions prohibit it
(Cal.DB) . . . . . . . . . . . . . . . . . . . . 2551

Fa) Transfer does not end workmens contract of

service (S.C.2J) . . . . . . . . . . . . . . . . . . . . 2552
Fb) Inter-departmental transfers are not within the ambit
of the section (S.C.3J) . . . . . . . . . . . . . . . . 2553
c) Sec. 25FF does not compel employees to accept
transfer but only ensures compensation to them
(Bom.HC). . . . . . . . . . . . . . . . . . . . . . . 2554
Fd) Transfer of undertaking cannot be assumed but to
be proved on evidence (S.C.2J) . . . . . . . . . . . 2554
Fe) Sec. 25FF does not stipulate notice or payment of
compensation as condition precedent to transfer nor
any time limit for their payment (S.C.2J) . . . . . . . 2554
f) Section is applicable prospectively (AP.DB) . . . . 2555
g) Applicable to all undertakings covered both under
Chapter VA and VB (Mad. HC) . . . . . . . . . . . 2555
h) Section not applicable to take over of undertakings if
it is not for acquiring ownership (Pat.DB) . . . . . . 2555
Fi) Sec. 25FF has no application in case where transfer
of an industrial concern is fictitious or benamidar
(S.C.CB) . . . . . . . . . . . . . . . . . . . . . . . 2555
II. Transfer of Undertaking vis-a-vis splitting of
existing firm into two firms-Whether to be
considered to be two different employers . . . . . 2556
Fa) It cannot be two different employers if company is
split dividing functions and liabilities between them
when workmen are not aware of such split or
contracted separately with them and there is no
change in their service conditions (S.C.3J) . . . . . . 2556
III. Transfer of undertakingEntering into
partnership-whether same . . . . . . . . . . . . . 2556
a) Entering into a partnership business requires no
consent of employees and legally no transfer takes
place (Mad.HC). . . . . . . . . . . . . . . . . . . . 2556
b) Sec. 25FF not applicable to a change of constitution
of partnership firm or conversion of partnership firm
into a proprietorship firm (Mad.HC) . . . . . . . . . 2557
IV. Transfer of undertaking . . . . . . . . . . . . . . 2557

c) Cannot be when workman agitated for the relief

after a delay of 12 years (Mad.HC) . . . . . . 2551

a) Includes . . . . . . . . . . . . . . . . . . . . . . . . 2557

i) Relief of bonus . . . . . . . . . . . . . . . . . . . . 2551

1. Sale of a bus together with the permit since it

involves transfer of ownership (Mad.HC) . . . . 2557

1. Can be granted to the retrenched workmen for

the period prior to their retrenchment (Cal.DB) . . 2551

b) Excludes . . . . . . . . . . . . . . . . . . . . . . . 2557

j) Relief of fringe benefits and gratuity . . . . . . . . . 2552

1. Joint venture between two companies for better

functioning and technical cooperation (All.HC) . 2557

1. Workman deemed to be in employment and entitled

to all the benefits till employer tenders the due
amount of gratuity (All.HC) . . . . . . . . . . . 2552

V. Transfer is valid . . . . . . . . . . . . . . . . . . . 2557

XII. Settled law on the issues under this section . . . . 2552

Fa) Retrenchment compensation to be calculated on the
basis of 30 days instead of 26 days (S.C.2J). . . . . . 2552

a) When business of transferor and transferee is the

same (Bom.DB) . . . . . . . . . . . . . . . . . . . 2557
Fb) Though workmens consent is absent (S.C.2J) . . . 2557

2276

Chapter VA Lay-Off and Retrenchment

c) When workmen had tacitly consented to it

(Mad.DB) . . . . . . . . . . . . . . . . . . . . . . . 2558

b) Transferee not liable to reinstate employees of

transferor when no such relief is prayed (AP.DB) . . 2567

d) When factory sold is functioning as a separate

undertaking (Mad.DB) . . . . . . . . . . . . . . . . 2559

Fc) In the absence of any express or implied undertaking,

transferee entitled to treat the discharged employees
on their absorption as fresh hands (S.C.3J) . . . . . . 2568

VI. Transfer is not valid . . . . . . . . . . . . . . . . 2559

a) If there is no express consent of the workmen
(Bom.DB). . . . . . . . . . . . . . . . . . . . . . . 2559
Fb) When the transfer is inter-departmental and
departments are interdependent (S.C.3J). . . . . . . 2560
c) If resorted to as a colourable exercise of power to
discharge workmen (Ker.DB) . . . . . . . . . . . . 2560

d) Transferee entitled to cross-examine witnesses when

impleaded as a party to the proceedings before the
Tribunal (Del.HC) . . . . . . . . . . . . . . . . . . 2568
e) Transferee when not undertaken to retain workmen
of the transferor is not liable to pay the same wages
drawn prior to transfer to workmen in case
of re-employment (P&H.HC) . . . . . . . . . . . . 2569
X. Obligations of transferee . . . . . . . . . . . . . . 2569

Fd) If transfer is fictitious or benami or despite transfer,

the management continues to be in the same set of
persons organised differently (S.C.3J) . . . . . . . . 2561

a) Undertaking given by transferor company to

employees of its subsidiaries are binding on
transferee (Bom.DB) . . . . . . . . . . . . . . . . . 2569

VII. Successor-in-interest . . . . . . . . . . . . . . . 2562

Fa) No single conclusive factor but to be determined by
various factors like whether whole business was
purchased or is it a going concern etc. (S.C.CB) . . . 2562
b) Who can be Successor-in-interest . . . . . . . . . . 2562
F1. A purchaser can be when he carries on same business
without appreciable break at same place and its very
object of sale transaction was to carry on business of
vendor company (S.C.CB) . . . . . . . . . . . . . . 2562
2. A new company can be when the same business was
carried on by new company and identity of business
is not destroyed by interruption (Ker.DB) . . . . . . 2563

b) If all the conditions in the proviso to Sec. 25FF

complied, transferor stands absolved of obligations,
transferee liable to employees about their conditions
of service (Mad.DB) . . . . . . . . . . . . . . . . . 2569
Fc) Employee illegally terminated liable to be reinstated
by the transferee since he was deemed to continue in
service on the date transferee corporation came
into existence (S.C.2J) . . . . . . . . . . . . . . . . 2569
d) If made a party to the dispute, transferee liable to
reinstate the workmen if retrenchment is illegal
(Guj.HC) . . . . . . . . . . . . . . . . . . . . . . . 2570

c) Who cannot be a successor-in-interest . . . . . . . . 2563

e) Transferee taking over transferor corporation liable to

pay the benefits to which employees were entitled
(Mad.HC) . . . . . . . . . . . . . . . . . . . . . . . 2570

1. A transferee company cannot be in respect of an

employee whose services were terminated at the
time of transfer if it has liberty not to absorb all
(Cal.DB) . . . . . . . . . . . . . . . . . . . . . 2563

f) Transferee company liable to give notice pay and

compensation to workman whose dismissal it effected
was set aside even after retransfer to original owner if
bound by an agreement (Bom.HC). . . . . . . . . . 2571

2. A transferee company is not when it took over

only assets but not liabilities and sale was free
from encumbrances (Bom.DB) . . . . . . . . . . 2563

Fg) Clause in memorandum of agreement or the sale deed

giving discretion to the purchaser to employ or not
to employ or give fresh employment to workmen
is prejudicial to the workmen and cannot be considered
as bonafide (S.C.CB) . . . . . . . . . . . . . . . . . 2571

F 3. Purchaser of equity redemption of assets cannot be

as it does not amount to transfer or it being
transferee (S.C.3J) . . . . . . . . . . . . . . . . 2564
4. Purchaser cannot be where the business is not taken
over but only land and buildings were purchased
to start a new business (Karn.HC) . . . . . . . . . 2564
VIII. Obligations of Transferor . . . . . . . . . . . . 2565
Fa) Transferor is liable to pay compensation u/s. 25FF
(S.C.CB) . . . . . . . . . . . . . . . . . . . . . . . 2565
b) Transferor liable to pay retrenchment compensation
in the absence of any agreement between him and
the transferee on the liability to pay the same
(Raj.HC) . . . . . . . . . . . . . . . . . . . . . . . 2566
Fc) Sec. 25FF does not stipulate notice or payment of
compensation as condition precedent to transfer nor
any time limit for their payment (S.C.2J) . . . . . . . 2566
IX. Rights of Transferee . . . . . . . . . . . . . . . . 2567
a) Transferee not liable to absorb retrenched
workmen (Guj.DB) . . . . . . . . . . . . . . . . . . 2567

XI. Effect of transfer of undertaking . . . . . . . . . . 2572

Fa) Workman entitled to receive retrenchment
compensation as per legal fiction envisaged under
the section (S.C.2J) . . . . . . . . . . . . . . . . . . 2572
b) Benefits of Sec. 25FF cannot be claimed if transfer
of undertaking is not proved (Mad.DB). . . . . . . . 2572
c) Tribunal has jurisdiction to give effect to obligations
arising out of transfer (Ker.DB) . . . . . . . . . . . 2572
d) Relationship between transferor and workmen gets
terminated by reason of deemed retrenchment and
discretion to continue employees lies with transferee
as per agreement (Bom.DB) . . . . . . . . . . . . . 2573
F 1. Tribunal not to focus on automatic end of service
since it is an abstract question of law but on
diverse issues arising out of contractual
relations between parties since it answers the
said question (S.C.CB) . . . . . . . . . . . . . . 2574

Synopsis
Fe) Employee opting to serve transferee is bound by
transferees service conditions (S.C.3J) . . . . . . . 2574
f) In the absence of uninterrupted service, employees
terminated by transferor cannot claim reinstatement
or compensation from transferee (AP.DB). . . . . . 2575
g) Workmen of transferor company have no claim barring
right to compensation u/s. 25FF when services
terminated prior to transfer (Mad.DB) . . . . . . . . 2576
h) The employee becomes entitled for retrenchment
compensation and need wait for the formal orders
of termination (All.HC) . . . . . . . . . . . . . . . 2576
Fi) Compensation at the rate provided in Sec. 25F is
payable when conditions of Proviso not satisfied as
service conditions of transferee are less favourable
(S.C.2J) . . . . . . . . . . . . . . . . . . . . . . . . 2576
Fj) Compensation under the section is payable by the
transferor only when employees are reemployed
afresh by transferee (S.C.2J) . . . . . . . . . . . . . 2577
Fk) Compensation payable is as per Sec. 25F and not
u/s. 25FF or 25FFF when the illegally terminated
employee was either transferred to the Electricity
Board as employee of the transferor or the company
never closed down but continued on transfer
(S.C.CB) . . . . . . . . . . . . . . . . . . . . . . . 2578

2277

XII. Remedy for violation of the section . . . . . . . . 2584

Fa) Right to retrenchment compensation is exercisable
not against the transferee company but accrues
against the owner at the time of actual transfer
(S.C.2J) . . . . . . . . . . . . . . . . . . . . . . . . 2584
Fb) Remedy lies u/s. 33C (2) for recovery of
compensation (S.C.2J) . . . . . . . . . . . . . . . . 2584
I. Sixty days notice to be given of intention to close
down any undertaking Sec. 25FFA . . . . . . . . 2585
I. Scope and Object . . . . . . . . . . . . . . . . . . 2585
a) The object of 60 days notice is to prevent sudden
closure and to enable the Government to take any
measure including reference (Cal.DB) . . . . . . . . 2585
b) Provisions of Sec. 25FFA and 25-O since imposed in
public interest, are not unconstitutional (Bom.DB). . 2585
c) Expiry of 60 days will not render reference made
thereafter as to validity of closure invalid since
no limitation for the same stipulated in the Act
(Cal.DB) . . . . . . . . . . . . . . . . . . . . . . . 2586
II. Applicability . . . . . . . . . . . . . . . . . . . . . 2586
a) Applicable only to establishments employing
less than 100 employees (Jhar.DB) . . . . . . . . . 2586

l) Compensation u/s. 25FF is payable to workmen since

it is not closure but transfer as the company is taken
by MPEB (MP.DB). . . . . . . . . . . . . . . . . . 2578

b) Section not applicable to cases falling u/s. 25-O

(Cal.DB) . . . . . . . . . . . . . . . . . . . . . . . 2586

Fm) No compensation is payable for benefit of earned

leave not availed before the transfer (S.C.2J) . . . . . 2578

III. Notice of closure . . . . . . . . . . . . . . . . . . 2587

Fn) Claim of seniority over transferees employees is

not maintainable (S.C.3J). . . . . . . . . . . . . . . 2579

a) Closure will not result in termination of services

unless notice of closure was given and
compensation paid (Guj.DB) . . . . . . . . . . . . . 2587

Fo) Reinstatement of employee not maintainable if there

is agreement not to transfer the employees
concerned (S.C.CB) . . . . . . . . . . . . . . . . . 2580

b) Notice u/s. 25FFA mandatory failing which

closure becomes invalid (Bom.HC) . . . . . . . . . 2587

Fp) Re-employment u/s. 25H can be sought when employees

were retrenched prior to the transfer and not
paid compensation u/s. 25FF but u/s. 25F (S.C.2J) . . 2580

Fc) Though notice was issued closure will not be justified

when it results in the unemployment to sizeable
number of workmen and affects producers of
Sugarcane (S.C.3J) . . . . . . . . . . . . . . . . . . 2587

Fq) Permanent employees are entitled to be absorbed

subsequent to the transfer in the same status when
so directed (S.C.2J). . . . . . . . . . . . . . . . . . 2581
r) Workman entitled to retrenchment compensation as
per Sec. 25FF though reinstated for invalid
retrenchment (AP.DB) . . . . . . . . . . . . . . . . 2581
Fs) Double benefit of compensation and re-employment
u/s. 25H not envisaged by the section in case of
genuine transfer (S.C.CB) . . . . . . . . . . . . . . 2581
Ft) Reinstatement can be claimed when no notice or
compensation paid as their services are deemed to
have been not interrupted by transfer (S.C.2J) . . . . 2582
Fu) Transferee becomes real owner if in de facto possession
of tea estate and termination by him is retrenchment
u/s. 25 F and not u/s. 25FF (S.C.2J) . . . . . . . . . . 2582
v) Transfer of undertaking when affected during the
pendency of a dispute about termination, workers
entitled to wages till the date of transfer and
compensation from seller (transferor) u/s. 25FF
(Karn.HC) . . . . . . . . . . . . . . . . . . . . . . 2583

IV. Effect of violation of Section . . . . . . . . . . . . 2588

a) Closure becomes invalid when requirements of
Sec. 25FFA are not fulfilled (Bom.HC). . . . . . . . 2588
b) Closure will not result in termination of service
of employees unless notice of closure has
been given (Guj.DB) . . . . . . . . . . . . . . . . . 2588
c) Does not render closure illegal but workman is
entitled to 60 days wages (Bom.HC) . . . . . . . . . 2588
V. Remedy for violation of Sec. 25FFA . . . . . . . . 2589
a) Writ of Mandamus will lie even against a private
company (Guj.DB) . . . . . . . . . . . . . . . . . . 2589
Fb) Workman not entitled to any other relief u/s. 25-N
once Sec. 25FFA complied since termination due to
closure excludes retrenchment (S.C.2J) . . . . . . . 2589
c) Functional integrality of unit with the factory to
be determined before deciding applicability of
Sec. 25FFA (Ori.DB). . . . . . . . . . . . . . . . . 2590

2278

Chapter VA Lay-Off and Retrenchment

d) Labour Court cannot draw inference as to closure

without recording findings on the factum of closure
on the basis of evidence (Mad.HC) . . . . . . . . . . 2590
e) Employer liable to pay interest on the closer
compensation due to workmen (Cal.DB) . . . . . . 2591
J. Compensation to workmen in case of closing down
of undertaking Sec. 25FFF . . . . . . . . . . . . 2591

Fb) Discharge due to closure is not due to surplusage

(S.C.CB) . . . . . . . . . . . . . . . . . . . . . . . 2598
c) The legal fiction envisaged as to applicability of
Sec. 25F is limited only to notice or payment of wages
in lieu of notice and does not render termination
as retrenchment (Pat.DB). . . . . . . . . . . . . . . 2599
d) Closure may be of part of undertaking and not
whole business (Raj.DB) . . . . . . . . . . . . . . . 2599

I. Object of the Section . . . . . . . . . . . . . . . . 2591

a) To provide for involuntary unemployment, a sense
of security in a worker and to standardize his right in
relation to industry (MP.DB). . . . . . . . . . . . . 2591
II. Scope of the section . . . . . . . . . . . . . . . . . 2591
Fa) Retrospective application of amendment of
the section is not unconstitutional (S.C.CB) . . . . . 2591

e) Closure leads to severance of employer employee

relationship and employee cannot be treated as
continued in service even if undertaking is
restarted (All.DB) . . . . . . . . . . . . . . . . . . 2599
f) Closure does not automatically terminate contract of
service and hence nominees can claim benefits
under Employees Deposit Linked Insurance
Scheme (Guj.DB). . . . . . . . . . . . . . . . . . . 2600

Fb) Retrospective application of the section by an

amendment is not violative of Art. 20(1) since
non-payment of compensation does not amount to
an offence (S.C.CB) . . . . . . . . . . . . . . . . . 2592

V. Criteria determinative for closure . . . . . . . . . 2600

Fc) No additional compensation like ex-gratia is payable

when not payable under law (S.C.2J) . . . . . . . . . 2592

Fb) Closure should be real and bonafide (S.C.CB) . . . 2600

Fa) Winding up the company and transferring machinery

are not determinative of closure (S.C.3J) . . . . . . . 2600

VI. Notice of closure (Sec. 25FFF(1)) . . . . . . . . . . 2601

Fd) Liability under the section is not violative of
Art. 19(1)(g) (S.C.CB) . . . . . . . . . . . . . . . . 2593
Fe) Compensation in addition to wages does not violate
Art. 19(1)(g) (S.C.CB) . . . . . . . . . . . . . . . . 2594
Ff) Standardisation of compensation is not in
violation of Art. 19(1)(g) (S.C.CB) . . . . . . . . . 2594
g) Restrictions u/s. 25FFF on the right of employer to
close down his business are not unreasonable nor
violative of Constitution (MP.DB) . . . . . . . . . . 2595
III. Applicability . . . . . . . . . . . . . . . . . . . . 2595
a) Applicable to cases where there is closure of
independent undertaking (Del.HC) . . . . . . . . . 2595
b) Applicable to termination of temporarily appointed
workman appointed for definite period (MP.DB). . . 2595

a) Excludes . . . . . . . . . . . . . . . . . . . . . . . 2601
1. Scheme of leasing (Mad.DB) . . . . . . . . . . . 2601
b) Effect of absence of notice on validity of
termination . . . . . . . . . . . . . . . . . . . . . . 2601
1. Absence of notice does not affect validity of
termination (Raj.DB) . . . . . . . . . . . . . . . 2601
c) When notice is required . . . . . . . . . . . . . . . 2601
1. When Chapter V-A is applicable to the workman
he is entitled to one months notice & not 3
months notice on closure (P&H.DB) . . . . . . 2601
2. Notice of closure required even in case of
closure due to Force Majeure (Ker.HC) . . . . . 2602
VII. Compensation on closure . . . . . . . . . . . . . 2602

c) Reference as to applicability of proviso to Sec. 25FFF

does not become inaccurate merely because it refers
to entitlement of compensation u/s. 25F (Pat.DB) . . 2596

a) Attributes of closure compensation . . . . . . . . . 2602

Fd) Not applicable when notice indicating termination

cites recession and not closure as reason (S.C.3J). . . 2596

F 1. Expression as if the workman had been

retrenched means workmen are entitled
to compensation and notice pay and not
re-employment (S.C.CB) . . . . . . . . . . . . . 2602

e) Not applicable to an undertaking where there are

only 14 workmen (All.HC). . . . . . . . . . . . . . 2597
f) Not applicable if a specific project is discontinued
which is not a separate and distinct activity
(Bom.HC). . . . . . . . . . . . . . . . . . . . . . . 2597
g) Applicable to an independent project which is
completed since it amounts to bonafide closure
(Raj.HC) . . . . . . . . . . . . . . . . . . . . . . . 2597

2. Compensation to accompany order of discharge

of workman (P&H.DB) . . . . . . . . . . . . . . 2602
3. Payment is not a condition precedent to closure
u/s. 25FFF and need not be paid with discharge
notice (Pat.FB) . . . . . . . . . . . . . . . . . . 2603
F 4. Sec. 25F is a yardstick for standardizing
compensation while u/s. 25FFF, it is by way of
equitable relief (S.C.CB) . . . . . . . . . . . . . 2603

IV. Attributes of the section . . . . . . . . . . . . . . 2597

Fa) Paying compensation and notice are not pre-conditions
for the section since Sec. 25F and 25FFF are not pari
materia (S.C.CB) . . . . . . . . . . . . . . . . . . . 2597

5. Compensation does not fall within the definition

of wages u/Payment of Wages Act & authority
there under cannot adjudicate claims (MP.DB) . . 2604

Synopsis

2279

F 6. Compensation but not reinstatement is the relief

to workmen in case of genuine closure (S.C.3J). . 2604

Fh) Payable even in the absence of provision for closure

compensation in the State Act by virtue of Sec. 25J
(S.C.3J) . . . . . . . . . . . . . . . . . . . . . . . . 2611

7. If closure is not due to fraud but for circumstances

beyond control of employer, compensation
u/s. 25FFF and not u/s. 25F (Ker.HC) . . . . . . . 2604

Fi) When termination is due to closure of department

but not amounting to retrenchment (S.C.2J) . . . . . 2612

F 8. Closure compensation as per Sec. 25F will not

make termination as retrenchment since procedure
u/s. 25F adopted as a yardstick to compute
closure compensation (S.C.CB) . . . . . . . . . 2605
9. Not being business expenditure cannot be deducted
from profit of the relevant year (Mad.DB) . . . . 2605
VIII. Computation of period of service for purpose
of compensation . . . . . . . . . . . . . . . . . . . 2606

Fj) If closure is due to financial difficulties which is

not beyond employers control (S.C.2J) . . . . . . . 2612
Fk) Payable even if single unit is closed since the word
undertaking covers even closure of a single unit
(S.C.3J) . . . . . . . . . . . . . . . . . . . . . . . . 2613
Fl) Payable when project work comes to an end
(S.C.2J) . . . . . . . . . . . . . . . . . . . . . . . . 2613
m) Closure compensation when deemed paid . . . . . . 2613

a) Definition of Continuous service u/s. 25B

applicable in case of closure (Raj.DB) . . . . . . . . 2606

F 1. When workmen offered though refused

to accept it (S.C.3J). . . . . . . . . . . . . . . . 2613

b) Continuous service is to be determined before workman

can be held entitled to compensation (Mad.DB) . . . 2606

n) Effect of payment of closure compensation. . . . . . 2613

Fc) Length of service to be the basis for compensation

to compensate the workman who is to be content with
jobs at lower level after termination (S.C.CB) . . . . 2606

1. Employer-employee relationship comes to an

end (Cal.HC) . . . . . . . . . . . . . . . . . . . 2613
o) Effect of non-payment of closure compensation . . . 2614

Fd) Period of illegal strike to be excluded in computing

240 days (S.C.2J) . . . . . . . . . . . . . . . . . . . 2607
e) Period of closure is to be included in length of
service for calculation of closure compensation
(Guj.HC) . . . . . . . . . . . . . . . . . . . . . . . 2607
f) When an establishment was closed twice, the period of
service rendered by an employee prior to first closure
cannot be considered for computing continuous service
for the purpose of compensation on second closure
(Raj.DB) . . . . . . . . . . . . . . . . . . . . . . . 2607
IX. Burden of proof in respect of claim for
closure compensation . . . . . . . . . . . . . . . . 2608

1. Closure does not become illegal by non-payment

of compensation to four out of 59 workmen
(Cal.DB) . . . . . . . . . . . . . . . . . . . . . 2614
XI. Closure compensation when not payable . . . . . 2614
a) When workmen were retrenched before
Sec. 25FFF came into force (Pat.DB) . . . . . . . . . 2614
Fb) On termination or retrenchment but not when
employee is continued de facto in other section
(S.C.2J) . . . . . . . . . . . . . . . . . . . . . . . . 2614
c) When closure is genuine and not malafide
(Raj.DB) . . . . . . . . . . . . . . . . . . . . . . . 2615

a) Is on the workman . . . . . . . . . . . . . . . . . . 2608

F 1. To prove 240 days of service in a year
immediately preceding closure (S.C.2J) . . . . . 2608
X. Closure compensation when payable . . . . . . . 2608
a) When date of discharge is after date of Sec. 25FFF
becoming enforceable (Punj.DB) . . . . . . . . . . 2608
b) Payable as per first part of Sec. 25FFF but not as per
proviso where establishment is not closed for
circumstances beyond the control of employer
(Mad.DB) . . . . . . . . . . . . . . . . . . . . . . . 2608

d) When undertaking is leased out as a going concern

and employer continued to have ownership
(Mad.DB) . . . . . . . . . . . . . . . . . . . . . . . 2615
e) Though Letter Press Section was closed since it is
not an independent part of the establishment as
workmen were interchangeable between Letter
Press section and Offset Press unit (Del.HC) . . . . . 2615
Ff) When claimant is a badli workman (S.C.2J) . . . . . 2615
XII. Closure compensation whether refundable . . . 2616

c) When services of an employee were terminated on

dissolution of Khadi Board (Ori.DB) . . . . . . . . 2609

a) Closer compensation not to be refunded, when fresh

employment is not at the instance of undertaking
closing down (Guj.HC). . . . . . . . . . . . . . . . 2616

Fd) When there is mere gherao but no threatening speech

or physical injury as proof of circumstances beyond
control to carry business (S.C.3J) . . . . . . . . . . 2609

XIII. Whether any other compensation can be set off

against closer compensation . . . . . . . . . . . . 2616

Fe) If workman has worked for 240 days of service and

after deducting illegal strike period (S.C.2J) . . . . . 2610

a) Employer can set off any compensation paid to

workman against closure compensation
(Ker.HC) . . . . . . . . . . . . . . . . . . . . . . . 2616

Ff) Payable under Proviso to Sec. 25FFF even if closed

for unavoidable circumstances/reasons beyond
employers control (S.C.2J) . . . . . . . . . . . . . 2610

XIV. Closure on account of unavoidable

circumstances beyond the control
Sec. 25FFF(1) Proviso. . . . . . . . . . . . . . . . 2617

Fg) When society goes into liquidation (S.C.2J) . . . . 2610

2280

Chapter VA Lay-Off and Retrenchment

a) To claim benefit of proviso employer to act with

mere diligence but need not put extra effort or
incur extraordinary expenses to prevent closure
(Bom.DB). . . . . . . . . . . . . . . . . . . . . . . 2617

g) Unavoidable circumstances excludes . . . . . . . . 2623

Fb) The issue whether complete lawlessness in industry

is a circumstance beyond the control cannot be
decided in writ (S.C.2J) . . . . . . . . . . . . . . . 2617

F 2. Financial difficulties resulting in the company

being taken over by corporation (S.C.2J) . . . . . 2623

Fc) Tribunal to determine whether closure was due to

unavoidable circumstances beyond employers
control (S.C.CB) . . . . . . . . . . . . . . . . . . . 2617
d) Benefit of proviso cannot be availed unless evidence
of circumstances beyond control placed before
Labour Court (P&H.HC) . . . . . . . . . . . . . . . 2618
e) Burden of proof in respect of unavoidable
circumstances beyond employers control . . . . . . 2618
F 1. Is on the employer (S.C.3J) . . . . . . . . . . . . 2618
f) Unavoidable circumstances beyond the
control includes . . . . . . . . . . . . . . . . . . . 2619
F 1. Refusal of a workman to work and preventing
others from working (S.C.2J). . . . . . . . . . . 2619
2. Governments refusal to grant license to
manufacture spirit and supply raw material
(Cal.DB) . . . . . . . . . . . . . . . . . . . . . 2619

F 1. Gherao and mere threatening speech without any

evidence of physical injury (S.C.3J) . . . . . . . 2623

3. Stopping of credit by financing bank and

accumulation of stocks (Mad.DB) . . . . . . . . 2624
4. workers indiscipline, delayed deliveries and
defective workmanship contributing to the
financial difficulties by causing decline in orders
(Pat.DB). . . . . . . . . . . . . . . . . . . . . . 2624
F 5. Closure due to financial difficulties and
mismanagement (S.C.CB) . . . . . . . . . . . . 2624
6. Serious illness since it is not a reason connected
with the running of the business (Bom.HC) . . . . 2625
7. Closure brought about by the pressure of workmen
for leasing it out to another company due to
financial losses and shortage of raw nuts
(Ker.HC) . . . . . . . . . . . . . . . . . . . . . 2625
F 8. Non-availability of orders for supply of goods and
non co-operation of workmen and high percentage
of rejection (S.C.2J). . . . . . . . . . . . . . . . 2626

3. Adverse trade conditions like restrictions imposed

by importing countries (Ker.HC) . . . . . . . . . 2620

9. Winding up order of the Court resulting in closure

when it is due to non-repayment of debts
(Bom.HC) . . . . . . . . . . . . . . . . . . . . . 2626

4. Compulsive vacation of rented premises by

company running bidi factory (IT) . . . . . . . . 2620

XV. Rights of workmen to dues over those of other

creditors of the company whether protected in
the absence of liquidation proceedings . . . . . . 2626

5. Division of workers into two camps indulging in

mutual assault, throwing hand bombs and
indulging in go-slow tactics (Cal.HC) . . . . . . 2620
6. Want of accommodation for running factory
(Cal.HC) . . . . . . . . . . . . . . . . . . . . . 2621

a) Rights of pledgee/pawnee of goods of sugar mill will

prevail over rights of workmen u/s. 33C since they
rank as secured creditors in the absence of
liquidation proceedings (S.C 2J) . . . . . . . . . . . 2626
XVI. Closure when valid . . . . . . . . . . . . . . . . 2627

7. Termination of agency as in the case of a petrol

pump compelling retrenchment of a salesman
(Mad.HC) . . . . . . . . . . . . . . . . . . . . . 2621
8. Closure of bank due to winding up order of
Court (Ker.DB) . . . . . . . . . . . . . . . . . . 2621
9. Closure due to increase in production costs, total
disappearance of orders and business and refusal
by workmen to do work besides financial
difficulties (Mys.DB) . . . . . . . . . . . . . . . 2621
10.Obstructive activities of workmen compelling
closure (Cal.DB) . . . . . . . . . . . . . . . . . 2622
11.Closure of sugar factory due to non-availability
of sugarcane (Bom.DB). . . . . . . . . . . . . . 2622
12.Governments refusal to grant license to manufacture
spirit and to supply raw material i.e. molasses etc.
(Cal.DB) . . . . . . . . . . . . . . . . . . . . . 2622
13.Statutory prohibition on Trust to carry on any
business coupled with financial compulsion of
substantial corpus of the Trust to clear liabilities
(Mad.HC) . . . . . . . . . . . . . . . . . . . . . 2623
14.Inability to produce standardized products with
available machinery compelling closure
(Mad.DB) . . . . . . . . . . . . . . . . . . . . . 2623

Fa) The factum of closure by whatever reasons financial,

business or hazards to staff or management etc.
shall be the focal point of consideration by Courts
(S.C.3J) . . . . . . . . . . . . . . . . . . . . . . . . 2627
Fb) Closure is valid when effected due to gherao
endangering the safety of the staff continued for
several hours (S.C.3J) . . . . . . . . . . . . . . . . 2628
Fc) Closure is valid even if a single unit is closed since
the word undertaking covers even closure of a
single unit (S.C.3J) . . . . . . . . . . . . . . . . . . 2628
Fd) Closure is valid though all branches are not closed
down (S.C.2J) . . . . . . . . . . . . . . . . . . . . 2629
Fe) Closure is valid even if products are outsourced after
closure (S.C.2J). . . . . . . . . . . . . . . . . . . . 2629
Ff) Closure is valid even though the same activity is
resumed after some time (S.C.2J) . . . . . . . . . . 2630
g) Closure of tool workshop is valid when closure of
main section is bonafide (Mys.DB) . . . . . . . . . 2630
h) Closure of the bank valid when it is due to
compulsory liquidation (Cal.DB) . . . . . . . . . . 2631

Synopsis

2281

i) Closure is valid when due to inability to produce

standardized products with available machinery
(Mad.DB) . . . . . . . . . . . . . . . . . . . . . . . 2631

XX. Closure and its effect on workmans right to

re-employment u/s. 25H . . . . . . . . . . . . . . 2639

j) Closure is valid when due to unavoidable circumstances

of stoppage of raw material supply (Mad.DB) . . . . 2631

a) Retrenched workers though after a valid closure are

entitled to be re-employed if the same employer
restarts manufacturing activity even after a lapse of
thirteen years (Bom.HC) . . . . . . . . . . . . . . . 2639

k) When employer was unable to produce goods that can

be marketed (Mad.HC) . . . . . . . . . . . . . . . . 2632
l) Closure valid though machinery is leased out to sister
concern which is a separate unit (Mad.HC) . . . . . . 2632
Fm) Closure of maternity hospital run by Red Cross society
valid despite running other centres like Family Planning
and Vikalang Centre when there is no functional
integrality among them (S.C.2J) . . . . . . . . . . . 2632
Fn) Closure of unit of an establishment which is distinct
from and does not enjoy functional integrality with
other units is valid (S.C.3J). . . . . . . . . . . . . . 2633
o) Closure valid inspite of non-compliance since it
merely entitles workmen to notice and
compensation (AP.HC). . . . . . . . . . . . . . . . 2633
Fp) Closure valid despite fraught with malafides since
it does not render the closure unreal (S.C.2J) . . . . . 2634
XVII. Closure excludes . . . . . . . . . . . . . . . . . 2634
a) Taking over of a power company by MPEB on expiry
of its licence (MP.DB). . . . . . . . . . . . . . . . 2634
b) Leasing of undertaking as going concern and
employer continued to have ownership (Mad.DB) . . 2635
c) Closure which is subjected to conditions stipulated
in a scheme that are discriminatory and arbitrary
(Guj.HC) . . . . . . . . . . . . . . . . . . . . . . . 2635
XVIII. When closure is not genuine or not valid. . . . 2636
Fa) Workmen continue to be workmen as before
(S.C.3J) . . . . . . . . . . . . . . . . . . . . . . . . 2636
b) When branch retail outlet which is functionally
integral with head office and other branches is closed
(Del.DB) . . . . . . . . . . . . . . . . . . . . . . . 2636
c) When mechanical workshop is closed since not being
a separate undertaking but being adjunct to
main manufacturing activity (Guj.DB). . . . . . . . 2637

XXI. Remedy for violation of the section Jurisdiction

of Courts . . . . . . . . . . . . . . . . . . . . . . . 2639
Fa) Tribunal can decide issue of closure compensation
while adjudicating on closure (S.C.3J). . . . . . . . 2639
b) Workman receiving closure compensation in full and
final settlement of claims deemed to have waived his
right to remedy (Mad.HC) . . . . . . . . . . . . . . 2640
c) Closure cannot be challenged, after accepting the dues
and compensation since employer-employee relation
comes to an end (Cal.HC) . . . . . . . . . . . . . . 2640
d) Discharged workmen can apply to Labour Court
u/s. 33C(2) for compensation without raising dispute
(Pat.DB) . . . . . . . . . . . . . . . . . . . . . . . 2641
e) Tribunals findings on the fact of closure not to be
interfered with since it involves mixed questions of
law and fact (Cal.DB) . . . . . . . . . . . . . . . . 2641
f) Tribunal to determine the status of employees as
workmen and their entitlement to compensation
while adjudicating on justifiability of closure
(Cal.HC) . . . . . . . . . . . . . . . . . . . . . . . 2641
g) Writ of mandamus can lie against a private company
when resorted to wholesale termination of work force
in violation of Secs. 25FFA and 25FFF (Guj.DB) . . 2641
h) Civil Court is barred from adjudicating claim of
workman removed on closure of factory, when
relief is available under Chapter V-A (Bom.DB) . . . 2642
Fi) On fresh employment subsequent to closure, increment
and higher salary cannot be claimed (S.C.2J) . . . . . 2642
Fj) Re-employment of Government servants can be on
same terms as per directions consequent up on
termination (S.C.3J) . . . . . . . . . . . . . . . . . 2643
k) Employee terminated on closure in violation of
Sec. 25FFF entitled to re-employment (All.HC) . . . 2643

d) When closure is without any grounds being established

for it (Ori.DB) . . . . . . . . . . . . . . . . . . . . 2637

Fl) No relief of regularization when compensation as

per section is paid (S.C.2J) . . . . . . . . . . . . . . 2643

e) When Letter Press Section is closed since it is not

an independent part of establishment as workmen
were interchangeable between Letter Press section
and Offset Press Unit (Del.HC) . . . . . . . . . . . 2637

m) Principle of last come first go of Sec. 25G not

applicable to termination due to closure since it is
not retrenchment (Ker.DB) . . . . . . . . . . . . . . 2644

f) When closure is subjected to conditions stipulated

in a scheme that are discriminatory and arbitrary
(Guj.HC) . . . . . . . . . . . . . . . . . . . . . . . 2637

Fn) Sec. 25G is not applicable when closure of a unit

was genuine having no functional integrality to other
units (S.C.2J) . . . . . . . . . . . . . . . . . . . . . 2644

XIX. Closure Lock-out distinction. . . . . . . . . . . 2638

K. Procedure for Retrenchment Sec. 25G . . . . . . 2645

Fa) Closure though effected in stages will not amount to

lock-out (S.C.2J) . . . . . . . . . . . . . . . . . . . 2638

I. Object and Scope . . . . . . . . . . . . . . . . . . 2645

Fb) Closure is not lock-out when board of directors

ratified notice of closure and employees discharged
in large numbers retaining a few permanent employees
and no orders executed in the matter of sales
(S.C.3J) . . . . . . . . . . . . . . . . . . . . . . . . 2638

Fa) To safeguard the workmen against discrimination,

victimisation and unfair labour practice (S.C.3J) . . . 2645
b) Sec. 25G and 25F are regarding statutory rights &
right to livelihood u/Art. 21 (Cal.DB). . . . . . . . . 2645

2282

Chapter VA Lay-Off and Retrenchment

c) Sec. 25G & 25F form implied part of Contract of

Service (Bom.DB) . . . . . . . . . . . . . . . . . . 2646

IV. Procedure for implementing last come-first go

principle . . . . . . . . . . . . . . . . . . . . . . . 2653

d) Sec. 25G is independent of Sec. 25F (Bom.DB) . . . 2646

Fa) Employer to maintain category wise seniority

list when different categories of workmen
were appointed (S.C.2J) . . . . . . . . . . . . . . . 2653

II. Principle of last come first go . . . . . . . . . . . . 2646

a) When applicable . . . . . . . . . . . . . . . . . . . 2646
1. Applicable when employees are retrenched
(Del.HC) . . . . . . . . . . . . . . . . . . . . . 2646

b) Seniority List to be common for workers of both the

yards when they have same pay scales and their
services were transferable between the two (Pat.DB). 2653

2. Applicable while terminating employees even on

closure of industry (Ker.DB) . . . . . . . . . . . 2646

c) Seniority list maintained by Divisional Executive

Engineer to include service only at divisional level
but not entire period of service is proper (P&H.DB) . 2654

F 3. Applicable to workmen within the same category

of the same establishment and not of different
branches unless inter-transfer of workmen is
permissible among them (S.C.CB) . . . . . . . . 2647

d) Seniority of watchman promoted to the post of driver

is to be computed from the date of confirmation
in that post (Bom.HC) . . . . . . . . . . . . . . . . 2654

4. Applicable not only to permanent employees but

also to temporary reserve conductors (Ker.DB). . 2647

e) Reason for departure of seniority principle must be

shown on the face of order, mere recording reason in
the file of employer is not sufficient (Ker.HC) . . . . 2654

5. Sec. 25G is an independent provision and is

applicable even where an employee did not
complete 240 days of service or put in
continuous service in terms of Sec. 25B
(Raj.HC) . . . . . . . . . . . . . . . . . . . . . 2647

f) Each branch of the company/concern to be a separate

establishment, hence seniority of workmen employed
in a particular branch but not at all branches to be
considered (Mad.HC). . . . . . . . . . . . . . . . . 2654

F 6. Sec. 6P of U.P. I.D. Act which is pari materia to

Sec. 25G is applicable though the workman is not
in a continuous service within the meaning of
Sec. 6N of U.P. I.D. Act (S.C.2J) . . . . . . . . . 2648
7. Applicable only in the case of surplusage
(AP.HC). . . . . . . . . . . . . . . . . . . . . . 2648

g) Combined seniority of two units owned by the same

employer to be considered if transfer of employees
from one unit is permitted to another unit (Bom.HC) . 2654
V. Deviation of principle last-come first go
when can be . . . . . . . . . . . . . . . . . . . . 2655
Fa) Expression ordinarily in the Section allows deviation
for justified reasons (S.C.2J) . . . . . . . . . . . . . 2655

8. Applicable to daily wagers also (Pat.HC) . . . . . 2649

F 9. Applicability to be examined with reference to
each branch as a seperate entity but not with
reference to the whole establishment as one entity
when there does not exist functional integrality
(S.C.CB) . . . . . . . . . . . . . . . . . . . . . 2649
10.All units to be considered as one entity for the
purpose of applicability of Sec. 25G when
functional integrality exists among them
(AP.DB). . . . . . . . . . . . . . . . . . . . . . 2650
11.Applicable to F.C.I godown since industry
(Cal.HC) . . . . . . . . . . . . . . . . . . . . . 2651
III. Principle last come first go when not
applicable . . . . . . . . . . . . . . . . . . . . . . 2651
Fa) Not applicable in case of closure of establishment
(S.C.CB) . . . . . . . . . . . . . . . . . . . . . . . 2651

b) Principle not absolute and can be deviated on valid

grounds (Guj.HC) . . . . . . . . . . . . . . . . . . 2655
Fc) Reasons for deviation from the principle to be
recoded (S.C.2J) . . . . . . . . . . . . . . . . . . . 2655
d) When services of an employee well versed with
the activities of a corporation and working knowledge
is retained at the time of winding up of company
(P&H.HC) . . . . . . . . . . . . . . . . . . . . . . 2655
e) Deviation can be justified when employees belong
to any special category (Cal.DB) . . . . . . . . . . 2656
Ff) When there is lack of efficiency on the part of
employee and loss of confidence in him (S.C.2J) . . . 2656
Fg) When special skills, aptitude and specific
experience justify deviation (S.C.3J). . . . . . . . . 2656

b) Protection of seniority u/s. 25G not available in case

of break-in-service (Ker.DB). . . . . . . . . . . . . 2652

h) When female workers in mines are terminated due

to working conditions & statutory provisions
(MP.DB) . . . . . . . . . . . . . . . . . . . . . . . 2656

Fc) Not applicable to termination of temporary

Government employee (S.C.3J) . . . . . . . . . . . 2652

i) When workman whose appointment itself is void

ab initio is terminated (Jhar.HC) . . . . . . . . . . . 2656

d) To an apprentice appointed under Apprenticeship

Act even though his apprenticeship training is
extended as per the terms of agreement (Raj.HC). . . 2652

j) Burden of proof in case of deviation . . . . . . . . . 2656

e) Not applicable when retrenched employee is the

only employee of the department (Bom.DB) . . . . . 2653

F i) To prove that the deviation is based on sound

and valid reasons (S.C.3J) . . . . . . . . . . . . 2656

f) Not applicable to termination on loss of confidence

(AP.HC) . . . . . . . . . . . . . . . . . . . . . . . 2653

ii) To prove the existence of special circumstances

(Raj.DB) . . . . . . . . . . . . . . . . . . . . . 2657

1. Is on employer . . . . . . . . . . . . . . . . . . 2656

Synopsis

2283

iii) To prove lack of efficiency and trustworthy

character of the employee (Mad.HC). . . . . . . 2658

Fh) When special skills aptitude and specific experience

justify deviation (S.C.3J) . . . . . . . . . . . . . . . 2664

F 2. Deviation that junior was retained is to be pleaded

in the written statement (S.C.3J) . . . . . . . . . 2658

i) When female workers in mines terminated due to

adverse working conditions and statutory provisions
(MP.DB) . . . . . . . . . . . . . . . . . . . . . . . 2665

VI. Last come first go (Sec. 25G) when violated . . . . 2658

Fa) When juniors retained as against seniors (S.C.2J) . . 2658
b) When casual workers completing 240 days service
with artificial breaks terminated in violation of
principle of last come first go (Raj.DB) . . . . . . . 2659
c) When deviation cannot be justified in the absence
of evidence as to any special category within the
category of employees to justify retention of juniors
(Cal.DB) . . . . . . . . . . . . . . . . . . . . . . . 2659
d) When casual labour employed in normal course were
retrenched and those employed out of turn were
retained without valid reasons (Ker.HC). . . . . . . 2660
e) If one employee retrenched and other retained when
both were doing clerical job and not having technical
skill (Cal.HC). . . . . . . . . . . . . . . . . . . . . 2660
f) When workman in a hospital run by Municipal
Corporation terminated without considering seniority
of workmen of all hospitals run by it (Del.HC) . . . . 2660
Fg) When junior most employee spared on the ground of
being in a different grade when the employees placed
in different grades only on the basis of pay scales do
the same work (S.C.2J) . . . . . . . . . . . . . . . . 2660
VII. Burden of proof in case of allegation of
violation . . . . . . . . . . . . . . . . . . . . . . . 2660

j) When workman terminated was due to his

appointment being void ab initio though other
illegal appointees retained (Jhar.HC) . . . . . . . . 2665
k) If employee terminated was selected not through
regular selection process and the junior employee
retained was appointed through selection process
(Raj.HC) . . . . . . . . . . . . . . . . . . . . . . . 2666
l) When termination is on the expiry of the period of
contract (All.HC) . . . . . . . . . . . . . . . . . . . 2666
m) When employee terminated due to bad performance
(Raj.HC) . . . . . . . . . . . . . . . . . . . . . . . 2666
n) When seniority list is prepared as per grades and not
as per category but in accordance with the settlement
with the union and accepted by the employees
(Bom.HC). . . . . . . . . . . . . . . . . . . . . . . 2666
o) If terminated on the basis of seniority list published
if its correctness was not disputed by union
(Cal.HC) . . . . . . . . . . . . . . . . . . . . . . . 2667
p) When the departure is made for the sake of efficiency
and trustworthy character of the employee
(Mad.HC) . . . . . . . . . . . . . . . . . . . . . . . 2667
q) When establishment was closed some juniors were
retained as caretaker staff since they have
knowledge of different activities (P&H.DB) . . . . 2667
X. Reliefs for violation . . . . . . . . . . . . . . . . . 2667

a) Lies on the workman (Del.HC) . . . . . . . . . . . 2660

a) Who cannot claim . . . . . . . . . . . . . . . . . . 2667
VIII. Effect of violation. . . . . . . . . . . . . . . . . 2661
a) Renders bad termination of services of temporary
railway employee (Del.DB) . . . . . . . . . . . . . 2661

1. Employee who worked with intermittent breaks

cannot when similarly situated other employees
were also terminated (Raj.DB) . . . . . . . . . . 2667

b) Retrenchment can be held as invalid (Bom.DB) . . . 2661

2. Employee who had failed to prove violation of

Sec. 25H and 25G (Raj.DB) . . . . . . . . . . . 2667

IX. Last come first go (Sec. 25G) when not violated . . 2662
a) When there is no proof that juniors were continued
in service (Ori.DB) . . . . . . . . . . . . . . . . . . 2662

3. Government servants employed temporarily in

construction division (Ori.DB) . . . . . . . . . . 2668
b) Relief of reinstatement . . . . . . . . . . . . . . . . 2668

Fb) When reasons for deviation from the principle are

recorded (S.C.2J) . . . . . . . . . . . . . . . . . . . 2662

1. When can be granted . . . . . . . . . . . . . . . 2668

c) When retrenched employee is the only employee

of the Department (Bom.DB) . . . . . . . . . . . . 2663

F i) Reinstatement of workman with 240 days service

is justified when principle is violated (S.C.2J) . . 2668

d) When list is prepared category-wise and not for

whole project (All.DB) . . . . . . . . . . . . . . . . 2663

ii) If workman is terminated in violation of

seniority norm even if he did not complete
240 days (Raj.HC) . . . . . . . . . . . . . . . . 2668

e) When Seniority list of only the division closed is

considered since it is separate from other division
having no functional integrality (AP.DB) . . . . . . 2663
Ff) When the termination of workmen of a department
was due to closure for economic reasons and its
work distributed among other employees (S.C.3J) . . 2663
Fg) When there is lack of efficiency on the part of
employee and loss of confidence in him (S.C.2J) . . . 2664

F iii) Reinstatement can be of retrenched casual labour

when the scheme of railways permits absorption
(S.C.2J) . . . . . . . . . . . . . . . . . . . . . . 2669
iv) Reinstatement can be of temporary conductor
terminated in breach of rule (P&H.DB) . . . . . . 2669
v) Reinstatement with 50% back wages proper even
if workmen who refused to accept new posting
on transfer were terminated in violation of the
Section (Guj.HC) . . . . . . . . . . . . . . . . . 2670

2284

Chapter VA Lay-Off and Retrenchment

2. When cannot be granted . . . . . . . . . . . . . 2670

i) Reinstatement is not mandatory relief in case of
breach of Sec. 25F & 25G when employee does not
have prescribed qualification (Bom.DB) . . . . . 2670
F ii) Mere violation of Sec. 25G and H of the Act does
not warrant reinstatement in public employment
when job was not of perennial in nature (S.C.2J) . 2670
F iii) When workman was appointed under a scheme
and the scheme itself came to an end (S.C.2J) . . . 2671
c) Relief of compensation in lieu of reinstatement. . . . 2671
F 1. Proper when establishment is not in existence
(S.C.2J) . . . . . . . . . . . . . . . . . . . . . . 2671

e) Section does not bar claim by workmen for bonus

declared by company after their retrenchment
(Cal.DB) . . . . . . . . . . . . . . . . . . . . . . . 2677
f) Sec. 25H does not prescribe any time limit for
employment (Ker.DB) . . . . . . . . . . . . . . . . 2678
g) Retrenched employees to be preferred over others
in re-employment but not entitled to reinstatement
with back-wages (P&H.HC) . . . . . . . . . . . . . 2678
II. Applicability . . . . . . . . . . . . . . . . . . . . . 2678
a) Sec. 25H has only prospective in effect and not
applicable to retrenchment effected prior to
introduction of the section (Cal.HC) . . . . . . . . . 2678

2. When workman failed to prove that juniors are

retained (Del.HC) . . . . . . . . . . . . . . . . . 2672

Fb) Section applies to the transferee even if employee

receives retrenchment compensation prior to transfer
of undertaking (S.C.2J). . . . . . . . . . . . . . . . 2679

XI. Jurisdiction and procedural issues connected with

the disputes under the Section . . . . . . . . . . . 2672

Fc) Applicable to retrenched employee having

240 days of continuous service (S.C.3J) . . . . . . . 2680

a) Tribunal to arrive at conclusion on compliance

after examining lists and verifying documentary
evidence (Pat.DB) . . . . . . . . . . . . . . . . . . 2672

Fd) Applicable to continuing industries (S.C.CB). . . . 2680

Fb) Tribunal cannot decide violation if same is not

disputed (S.C.2J) . . . . . . . . . . . . . . . . . . . 2672
c) Dispute as to whether retrenchment was as per
Sec. 25G cannot be decided in proceedings
u/s. 33C (Mys.DB) . . . . . . . . . . . . . . . . . . 2673
d) Retrenchment whether as per Sec. 25F & 25G,
can be determined by appellate authority u/A.P
Shops Act (AP.DB). . . . . . . . . . . . . . . . . . 2673
e) Writ Court cannot decline to interfere with disputes
as to violation of Sec. 25F & 25G as they are
regarding statutory rights and right to livelihood
involving factual investigation (Ori.DB). . . . . . . 2673
Ff) Labour Court can draw adverse inference when
management failed to produce documentary evidence
or cross examine workmen (S.C.2J) . . . . . . . . . 2674
Fg) Tribunal cannot set aside termination as violative of
Sec. 25G when the reference does not contain the
said question (S.C.2J) . . . . . . . . . . . . . . . . 2674

Fe) Section is not restricted to retrenchment only

under Sec. 25F (S.C.2J) . . . . . . . . . . . . . . . 2680
f) Applicable to retrenched temporary workmen
(P&H.HC) . . . . . . . . . . . . . . . . . . . . . . 2681
Fg) Not attracted in case of termination on account of
closure since the compensation paid is not one
u/s. 25F (S.C.2J) . . . . . . . . . . . . . . . . . . . 2681
h) Not applicable unless the offer of reemployment is
clear and unambiguous (Bom.HC) . . . . . . . . . . 2682
Fi) Not applicable in case of genuine transfer of
establishment where workmen are paid
compensation (S.C.CB) . . . . . . . . . . . . . . . 2682
j) Not applicable to an apprentice appointed under
Apprenticeship Act even though his apprenticeship
training is extended as per the terms of agreement
(Raj.HC) . . . . . . . . . . . . . . . . . . . . . . . 2683
III. Re-employment means . . . . . . . . . . . . . . . 2683
a) Taking back a retrenched worker in same category to
which he belonged before retrenchment (Pat.DB) . . 2683

XII. Settled law on the issues under this section . . . . 2675

a) Burden of proof to justify deviation of principle of
Last come first go is on the employer . . . . . . . . 2675

Fb) Does not mean resumption of work by workmen

after discharge during lock-out (S.C.3J) . . . . . . . 2683
IV. When Sec. 25H attracted. . . . . . . . . . . . . . 2684

L. Re-employment of retrenched workmen

Sec. 25H . . . . . . . . . . . . . . . . . . . . . . 2676

a) When workmen terminated in violation of the

seniority principle (Ker.HC) . . . . . . . . . . . . . 2684

I. Attributes of the section . . . . . . . . . . . . . . 2676

Fa) Re-employment is the generally recognized
principle of the Courts even prior to introduction
of chapter V-A (S.C.3J) . . . . . . . . . . . . . . . 2676
Fb) Benefit granted by the section is prospective and
not retrospective (S.C.CB) . . . . . . . . . . . . . . 2676

Fb) When new employment was made subsequent to

retrenchment (S.C.3J) . . . . . . . . . . . . . . . . 2684
c) If employer after termination retained similarly placed
employees and appointed new candidates with
similar qualifications (Raj.HC). . . . . . . . . . . . 2685

Fc) Section prevails over Nationalization Act (S.C.2J) . 2677

Fd) When vacancy arises in other projects for the

retrenched project employee and the same is not
offered to him (S.C.2J) . . . . . . . . . . . . . . . . 2685

d) Sec. 25H contains no provision stipulating that

re-employment should be on the former terms
and conditions (Bom.DB) . . . . . . . . . . . . . . 2677

e) When workmen worked for 240 days terminated

and vacancy is available (MP.DB) . . . . . . . . . . 2685

Synopsis

2285

f) Even though the termination of the workmen does

not fall under Sec. 25F (Del.DB) . . . . . . . . . . . 2686

i) When workman is terminated for unsuitability for

employment (Karn.DB) . . . . . . . . . . . . . . . 2692

g) Even though no pleading as to violation of 25H

is made. (Guj.DB) . . . . . . . . . . . . . . . . . . 2686

Fj) Re-employment cannot be claimed against

successor-in-interest when workman ceased to
be in employment prior to the date of acquisition
(S.C.2J) . . . . . . . . . . . . . . . . . . . . . . . . 2692

h) When employer failed to prove that workmans

tenure is fixed and new appointments were made
subsequent to his termination (MP.HC) . . . . . . . 2686
i) When liquidation of the establishment leading to
termination of employees set aside (Raj.DB) . . . . . 2686
j) Re-employment for want of required qualification
cannot be denied when the new post does not require
any technical qualification considering his length of
service (AP.HC) . . . . . . . . . . . . . . . . . . . 2686
k) Part-time sweeper who worked for ten years shall
have preference in regular vacancy to the outsiders
(AP.HC) . . . . . . . . . . . . . . . . . . . . . . . 2687
l) If Termination is due to closure consequent to
financial difficulties but not due to
unavoidable circumstances (Bom.HC) . . . . . . . . 2687
m) When an employee terminated and others were
appointed on the same post subsequently
(P&H.HC) . . . . . . . . . . . . . . . . . . . . . . 2687
n) When fresh advertisement was issued to recruit fresh
hands while temporary workman was discharged from
duty in vioation of section (Guj.DB) . . . . . . . . . 2687
o) When retrenched workers are not intimated of
vacancy and juniors are employed instead (Guj.DB) . 2687
p) When retrenched workers though after a valid
closure were not re-employed by the same employer
when he restarted manufacturing activity even after
a lapse of thirteen years (Bom.HC) . . . . . . . . . . 2688
q) Even though the workman who did not serve for
one year since it covers all cases of retrenchment
(Del.DB) . . . . . . . . . . . . . . . . . . . . . . . 2688
V. When not attracted/not violated . . . . . . . . . . 2689
Fa) When compensation is paid consequent up on
transfer (S.C.CB) . . . . . . . . . . . . . . . . . . . 2689
b) When new persons were appointed as per rules but
not to posts identical to that of daily wagers who
were retrenched (Raj.HC) . . . . . . . . . . . . . . 2689
c) When workmen unable to prove that management
re-employed others in their category (Jhar.DB). . . . 2689

k) When consequent upon closure employer-employee

relationship is severed (Del.HC) . . . . . . . . . . . 2692
l) When intimation to ex-employees is given in
newspapers when it is not practical to intimate
each worker through registered post (P&H.DB) . . . 2692
VI. Procedure for re-employment . . . . . . . . . . . 2692
a) Offer of re-employment to be clear and
unambiguous (Bom.HC) . . . . . . . . . . . . . . . 2692
Fb) Casual employees who were terminated to be given
preference (S.C.2J) . . . . . . . . . . . . . . . . . . 2693
c) Workmen on labour register to be preferred to
outsiders for engaging them as casual labour
(Ori.DB) . . . . . . . . . . . . . . . . . . . . . . . 2693
Fd) Right of re-employment accrues to workmen when
terminated u/s. 25F before transfer of management
but not u/s. 25FF (S.C.2J) . . . . . . . . . . . . . . 2693
Fe) Re-employment to be as per the category of work
performed by the employee but not as per the
designation born by him (S.C.3J) . . . . . . . . . . 2693
Ff) Re-employment cannot be granted by Labour Court
where the reference is about determination of
violation of the section (S.C.2J) . . . . . . . . . . . 2693
g) Workman need not fulfill age criterion on
re-employment if he was within the prescribed age
limit at initial recruitment (AP.HC) . . . . . . . . . 2694
h) Sec. 25H does not prescribe any order in which the
workmen are to be re-employed and employer not
bound to offer re-employment on the basis of
length of the service or seniority of retrenched
workmen (IC). . . . . . . . . . . . . . . . . . . . . 2694
VII. Admissibility of Benefits on re-employment . . . 2695
Fa) Higher salary of past employment is not admissible
when re-employment is on fresh conditions
(S.C.2J) . . . . . . . . . . . . . . . . . . . . . . . . 2695
b) Retrenched workers are entitled to emoluments
prevailing at the time of retrenchment (AP.DB) . . . 2695

d) When workmen give up their right to re-employment

on revival of the undertaking by virtue
of a settlement u/s. 18 (Karn.DB) . . . . . . . . . . . 2690

c) Back wages not admissible on re-employment

(Jhar.DB) . . . . . . . . . . . . . . . . . . . . . . . 2695

e) When employees retrenched consequent upon

closure (Ori.DB) . . . . . . . . . . . . . . . . . . . 2690

d) Back wages not admissible when workers refrained

from joining work of their own accord due to lower
wages (AP.DB) . . . . . . . . . . . . . . . . . . . . 2696

f) When workmen who had not completed 240 days of

service failed to prove violation of Sec. 25H and 25G
(Raj.DB) . . . . . . . . . . . . . . . . . . . . . . . 2691

VIII. Remedy for violation of the section . . . . . . . 2696

g) When workman terminated due to non-renewal of

contract of service (Mad.DB) . . . . . . . . . . . . 2691
h) If employee appointed on fixed tenure was terminated
on expiry of term (Raj.HC). . . . . . . . . . . . . . 2691

Fa) Workman aggrieved can raise an industrial dispute

(S.C.3J) . . . . . . . . . . . . . . . . . . . . . . . . 2696
b) High Court can direct reference of the dispute if
conciliation report fails to mention violation of the
section (Pat.DB) . . . . . . . . . . . . . . . . . . . 2697

2286

Chapter VA Lay-Off and Retrenchment

c) Reference cannot be rejected when there is clear

finding of conciliation officer that section was
violated (Pat.DB) . . . . . . . . . . . . . . . . . . . 2697

Fd) Does not apply if termination is due to retirement

as per Standing Orders (S.C.2J) . . . . . . . . . . . 2702
III. Expressions and meanings. . . . . . . . . . . . . 2703

d) Writ will not lie when employees did not respond

to employers advertisement and delayed in applying
for writ (Pat.DB) . . . . . . . . . . . . . . . . . . . 2698

Fa) Expression Any other law in the section

does not include any other provisions of the
Industrial Disputes Act (S.C.2J) . . . . . . . . . . . 2703

e) Workmen entitled to reinstatement since termination

of workmens services become illegal if
Sec. 25F and 25H violated (AP.DB) . . . . . . . . . 2698

IV. Consequence of Sec. 25J . . . . . . . . . . . . . . 2704

Ff) Does not entitle workman appointed under a scheme

to reinstatement when scheme itself came to an end
(S.C.2J) . . . . . . . . . . . . . . . . . . . . . . . . 2698

Fa) Lay-off and retrenchment compensation payable

u/Central Act when the State Act does not make
provision for lay-off and retrenchment compensation
(S.C.CB) . . . . . . . . . . . . . . . . . . . . . . . 2704

IX. Issues pertaining to jurisdiction and proceedings

under the Section . . . . . . . . . . . . . . . . . . 2698

b) Lay-off compensation u/s. 25C to be given but not

as per Standing Orders since the Central Act
prevails over Standing Orders (All.HC) . . . . . . . 2704

a) Proceedings regarding validity of retrenchment would

not operate as res judicata in the complaint of unfair
labour practice (Bom.DB) . . . . . . . . . . . . . . 2698
b) Civil Court has no jurisdiction to give relief to
illegally removed workman, which is available
under Chapter VA (Bom.DB) . . . . . . . . . . . . 2699
M. Recovery of Moneys due from employers under
this Chapter Sec. 25-I . . . . . . . . . . . . . . . . 2699
N. Effect of laws inconsistent with this chapter
Sec. 25J. . . . . . . . . . . . . . . . . . . . . . . 2699
I. Scope and ambit of the section . . . . . . . . . . . 2699
a) Provisions of the chapter prevail over rules made
under Article 309 (MP.DB) . . . . . . . . . . . . . 2699
Fb) Central Act overrides Sec. 2(s) of U.P. Industrial
Disputes Act (S.C.2J). . . . . . . . . . . . . . . . . 2699

Fc) Standing Orders providing for lesser lay-off

compensation will not prevail over the Central Act
(S.C.CB) . . . . . . . . . . . . . . . . . . . . . . . 2705
d) Provisions of Chapter VA prevail over Sec. 7 of
Andhra Pradesh Act, 1994 in the matter of
regularization hence daily wage workman who is
protected under Chapter VA cannot be terminated
under A.P. Act, 1994 though the latter bars
regularization (AP.DB). . . . . . . . . . . . . . . . 2705
e) Sec. 25F has overriding effect over REC (Railway
Establishment Code) provisions on retrenchment of
railway workman (All.DB) . . . . . . . . . . . . . . 2706
f) Benefits of Sec. 25F, 25G and 25H available to
employees of shops and establishments even
after commencement of Punjab Shops &
Commercial Establishments Act (P&H.DB) . . . . . 2706
V. Proviso to sub-Section (1) of Sec. 25J . . . . . . . . 2706

c) Government instructions contrary to the provisions

of Chapter V-A cannot sustain (P&H.DB) . . . . . . 2700
Fd) Sec. 25J does not grant compensation in addition to
gratuity in the nature of retrenchment compensation
payable under a scheme (S.C.3J) . . . . . . . . . . . 2700
Fe) Non-obstante clause is not applicable
to the whole of Chapter VB (S.C.2J) . . . . . . . . . 2701
II. Applicability . . . . . . . . . . . . . . . . . . . . . 2701
Fa) Chapter VA applies to cases of retrenchment under
A.P. Shops and Establishment Act (S.C.2J) . . . . . 2701
Fb) Section renders Chapter VA applicable to
retrenchment and lay-off benefits to temporary
employees (S.C.3J) . . . . . . . . . . . . . . . . . . 2702
c) Section extends the benefits of retrenchment and
lay-off to establishments covered by Bombay
Industrial Relations Act (Bom.HC) . . . . . . . . . 2702

Fa) Benefits favourable under the Standing Orders will

prevail over the Central and State Acts (S.C.CB) . . . 2706
b) Wages under Minimum Wages Act to be granted but
not those fixed under an award since the wages under
the latter are lower (Cal.HC) . . . . . . . . . . . . . 2707
VI. Rights and liabilities of employers and
workmen relating to lay-off and retrenchment
compensation to be as per Chapter VA. . . . . . . 2708
a) Agreement between employer and employees not
to be dehors the provisions of Chapter VA
(Mad.HC) . . . . . . . . . . . . . . . . . . . . . . . 2708

Temporary employees rights not to prevail over public service commission recruits

2287

A. Scope Object and Applicability

I. Chapter VA not a complete code in itself on lay off compensation hence
compensation is payable even in establishments to which neither Chapter VA
nor Standing Orders are applicable (S.C.2J)
The Workmen of M/s. Firestone Tyre and Rubber Co. of India Pvt. Ltd. v. The Firestone Tyre and Rubber
Co., AND Thiru J. N. George & Anr. v. Management of M/s. Firestone Tyre and Rubber Co. of India (P)
Ltd. & Anr., 1976 I LLJ 493 : 1976 (49) FJR 177 : 1976 (32) FLR 170 : 1976 II LLN 176 : 1976 LIC 1154
: 1976 SCC (L&S) 504 : 1976 AIR (SC) 1775 : 1976 (3) SCC 819 (S.C.2J)
Note: Please see related ratio/s under the above citation in Sec. 25C

II. Compliance with provisions of Chapter-VA not a condition precedent to

lay-off (Bom. DB)
5A.1 Compliance with provisions of Chapter-VA not condition precedent-non-payment of
lay-off compensation does not amount to change u/s41 of Berar Act
Central India Spinning, Weaving & Manufacturing Co. Ltd. (Empress Mills), Nagpur v. State Industrial
Court, Nagpur, 1959 I LLJ 468 (Bom.DB)
Note: Please see related ratio/s under the above citation in Sec. 25C

III.Chapter VA does not confer beneficial rights on employers but imposes

obligations on them in respect of lay-off and retrenchment in the interests of
labour (Bom.DB)
5A.2 Since the whole industrial law is enacted in the interest of labour, it is erroneous to view
Chapter V-A as conferring rights on the employers in respect of lay-off and retrenchment and on
the other hand, it imposes an obligation on the employer to continue the services of the employee
during lay off without paying full wages except the compensation, prescribed by the act and
reinstate him as and when the crisis is over or pay him full wages, as the suspension of contract
comes to an end or to dismiss him by paying him retrenchment compensation except in the case of
misconduct.
M.A. Veiyra v. C.P. Fernandes & Anr., 1956 I LLJ 547 : 1955-56 (9) FJR 449 (Bom.DB)
It is clear.resumed.the expression.obligation. (Page: 451, Para: 1)
.what.employees. (Page: 452, Para: 2)
Then section 25-J(2) provides
.the rights and liabilities.this chapter. (Page: 453, Para: 3)
Therefore.lay-off it self. (Page: 454, Para: 4)

IV. Rights of temporary employees under Chapter V-A cannot prevail over the
rights of Public Service Commission recruits as it violates Art.16 and 320
(Ker.DB)
5A.3 Though the employees appointed under Rule 9 of the Kerala State and Subordinate
Service Rules on a temporary basis are entitled to the protection of Chapter V- A of the
Industrial Disputes Act their rights cannot defeat the rights of Public Service Commission
recruits as this will be violative of Art. 16 and Art. 320. Hence their appointments cannot be

2288

Chapter VA Lay-Off and Retrenchment

perpetuated since this would nullify the Constitutional protection with regard to public service
appointment. The petition of the workmen referred by the single judge being without merits is
dismissed by the division bench.
O.M. Viswambharan & Ors. v. State of Kerala & Ors., 1983 II LLJ 309 : 1983 II LLN 428 : 1983 LIC 369
(Ker.DB)
The State.eligibility. (Page: 312, Para: 6)
The problem.the applicants. (Page: 312, Para: 7)
To perpetuate.Act. (Page: 313, Para: 8)
Therefore.in limine. (Page: 313, Para: 9)
Note: Also refer to sections .25A to 25E for more elaborate under standing of the scope of the
Chapter VA

V. Chapter VA confers retrenchment and layoff benefits to temporary

employees by virtue of Sec. 25J (S.C.3J)
Jaswant Singh & Ors. v. Union of India & Ors., 1979 II LLJ 371 : 1980 I LLN 44 : 1979 LIC 1362 : 1980
SCC (L&S) 36 : 1980 AIR (SC) 115 : 1979 (4) SCC 440 (S.C.3J)
Note: Please see related ratio/s under the above citation in Sec. 25J

VI. Chapter V-A will prevail over service regulations entitling a budli worker to
retrenchment compensation terminated for unsatisfactory work without
enquiry (Karn.HC)
5A.4 The services of conductors working as badlis under corporation were terminated on
grounds of unsatisfactory work and unsuitability, without holding any enquiry and their names
were removed from the Badli list. The High Court held that badli conductors are workman u/s. 2(s)
and if retrenchment is effected in violation of provisions of Sec. 25F, Chapter V-A would be
applicable as Sec. 25-C provides that badli workmen are covered under the said Chapter V-A. The
workmen are thus entitled to retrenchment compensation if they satisfy requirement of Sec. 25
B(2)(a)(ii). The regulations relating to service conditions will have to make way for the provisions
of Chapter V-A in view of the provisions of Sec. 25J. The calculation of 240 days be done by
including the days of rest and compensatory holidays as they could have availed under the
settlement.
Mukunda v. Managing Director, K.S.R.T.C., 1986 I LLJ 470 (Karn.HC)

VII. Government instructions contrary to the provisions of Chapter V-A cannot

sustain (P&H.DB)
Senior Medical Officer, Incharge, Primary Health Centre, Dudhan Sadan, Patiala v. Sukhwinder Singh
& Anr., 2007 (112) FLR 1135 (P&H.DB)
Note: Please see related ratio/s under the above citation in Sec. 25J

VIII. Provisions of chapter VA prevail over Sec. 7 of Andhra Pradesh Act, 1994 in
the matter of regularization hence daily wage workman who is protected
u/Chapter VA cannot be terminated u/ A.P. Act 1994 though the latter bars
regularization (AP.DB)
Maize Beedar Agriculture Research Station Hyderabad & Anr. v. Smt. Silar Bee, 1996 LIC 1776
(AP.DB)

Workmen entitled to fullwages for lay-off when section not applicable

2289

Note: Please see related ratio/s under the above citation in Sec. 25J

IX. Chapter VA applies to cases of retrenchment under A.P. Shops and

Establishment Act (S.C.2J)
The Krishna Dist. Co-operative Marketing Society Ltd. , Vijayawada, Petitioner v. N.V. Purnachandra
Rao & Anr., 1987 II LLJ 365 : 1987 (71) FJR 482 : 1987 (55) FLR 498 : 1987 II LLN 671 : 1987 LIC 1651
: 1987 AIR (SC) 1960 : 1987 (4) SCC 99 (S.C.2J)
Note: Please see related ratio/s under the above citation in Sec. 25J

X. Chapter V-A applicable to lay-off though initiated under State law (All.HC)
5A.5 A dispute regarding lay-off though initiated under a State law and pending before a forum
constituted under the Sate law shall be adjudicated in accordance with the provisions of Chapter
V-A. Thus, the workers are entitled to favourable benefits in addition to lay-off compensation as
per Sec. 25J and the proviso and Chapter V-A.
Hind Lamps Ltd. v. State of U.P. & Ors., 1988 (57) FLR 703 (All.HC)

XI. Chapter V-A applicable to badli workmen since covered under Sec. 25C
(Karn.HC)
Mukunda v. Managing Director, K.S.R.T.C., 1986 I LLJ 470 (Karn.HC)
Note: Please see related ratio/s under the above citation in this section (supra)

XII. Applicable to temporary employees appointed under Kerala State Service

Rules entitling them to protection under Chapter VA (Ker.DB)
5A.6 Though the employees are appointed under Rule 9 of the Kerala State and Subordinate
Service Rules on a temporary basis they are entitled to the protection of Chapter V- A of the
Industrial Disputes Act
O.M. Viswambharan & Ors. v. State of Kerala & Ors., 1983 II LLJ 309 : 1983 II LLN 428 : 1983 LIC 369
(Ker.DB)
The State.eligibility. (Page: 312, Para: 6)
The problem.the applicants. (Page: 312, Para: 7)
To perpetuateAct. (Page: 313, Para: 8)
Thereforein limine. (Page: 313, Para: 9)

XIII. Section when not applicable workmen entitled to full wages for lay off as per
contract of service (Mad.DB)
5A.7 The Labour Court has jurisdiction to decide u/s. 33C(2), the amount of compensation
which workers are liable to get and in the instant case it held that since Sec. 25A is not attracted as
the number of employees are less than 50, nor reasons for lay off are covered under Standing
orders, hence the workmen are entitled to full wages as per contract of service.
Tansi Leather Works, Madras (by Superintendent) v. G. Gowri & Ors., 1986 II LLJ 263 : 1986 II LLN
594 (Mad.DB)
Mr. M. R. Narayanaswamy learned.under the Standing Order. (Page: 264, Para: 5)
When the matter.wages of compensation.(Page: 266, Para: 9)

2290

Chapter VA Lay-Off and Retrenchment

Sec. 25A

XIV. Adjudication procedure to determine disputes under Chapter VA

a) Dispute to be adjudicated as per provisions of Chapter V-A though raised
before a forum constituted under State law (All.HC)
5A.8 A dispute regarding lay-off though initiated under a State law and pending before a forum
constituted under the Sate law shall be adjudicated in accordance with provisions of Chapter V-A.
Thus, the workers are entitled to favourable benefits in addition to lay-off compensation as per Sec.
25-J and the proviso and Chapter V-A.
Hind Lamps Ltd. v. State of U.P. & Ors., 1988 (57) FLR 703 (All.HC)

B. Application of Sections 25-C to 25-E Sec. 25A

I. Industrial Establishment u/s. 25A
a) Expression Industrial Establishment does not lay down any test for
determining an industrial establishment (S.C.3J)
F 5A.9 Explanation to Sec. 25-A only gives the meaning of the expression Industrial
Establishment for certain sections of the Act and explains what categories of a factory, mine or
plantation come within the expression, it does not deal with what constitutes one as establishment
nor lays any test for determination of that question and hence a factory, mine and a mine
which supplies the raw material to the factory, can also form one establishment for purposes
of Sec. 25E(iii) of the Act.
Associated Cement Companies, Ltd. (Chaibasa Cement Works, Jhinkpani) v. Their Workmen, 1960 I LLJ
1 : 1959-60 (17) FJR 166 : 1960 AIR (SC) 56 (S.C.3J)
.The explanation only gives the meaning of the expression Industrial establishment for certain
section of the Act; it does not purport to lay down any test as to what constitutes one
establishment.In our view, the true scope and effect of the explanation is that it explains, come
within the meaning of the expression Industrial establishment; it does not deal with the question as to
what constitutes one establishment and lay down no tests for determining that question. We cannot
therefore, accept the arguments of learned counsel for the respondent that a factory and a mine, a mine
which supplies the raw material to the factory, can never be one establishment under the Act; that we do
not thinks is the effect of the explanation to S.25A. (Page: 8, Para: 1)

II. Expression Preceding calendar month in sub-Sec. (1) means

a) The point of time when right to claim lay off compensation arose (Mad.DB)
5A.10 The period Preceding Calendar Month shall be reckoned with reference to the point of
time when the statutory right to claim lay-off compensation arose.
Kohinoor Saw Mill Co. Ltd. v. State of Madras.,1957 II LLJ 210 (Mad.DB)
One class of establishments.calendar
arose. (Page: 214, Para: 1)

month.section

25-A(1)(a).25C

Sec. 25A

Seasonal establishment

2291

III. Burden of proof as to number of workmen employed in an industrial

establishment
a) Is on the employee who contends that more than 300 persons were engaged in
the preceding 12 months (Bom.DB)
5A.11 In a case where employee has raised an industrial dispute on an issue that more than 300
persons were engaged in an establishment within preceding 12 months and the employer had
disputed it, the burden of proof lies on employee and not employer.
Arvind Anand Gaikwad v. Uni Abex Alloy Products, Ltd., & Ors., 1994 III LLJ 684 : 1988 I LLN 239 :
1988 I CLR 26 (Bom.DB)
.The Labour Court.discharge that burden.we are unable.a gospel
truth.the findings recorded.in writ jurisdiction. (Page: 686/687, Para: 4)

IV. Seasonal establishment

a) Determinative criteria
1. Number of days an establishment in operation during preceding 12 months
is not determinative but factors related to nature or employment pattern
are determinative (Mad.DB)
5A.12 The expression seasonal and intermittent are not synonymous and they should be
either normal seasonal or normal intermittent and the seasonal character of an establishment can
be determined either by the factors of nature like floods or the employment pattern of the
industrial establishment like permanent workers, casual workers and badli workers but not by the
number of days an establishment worked during the preceding twelve months and hence it was
held that the order of the Government refusing to grant exemption on the ground that the
establishment worked for 240 days at normal strength was held to be based on irrelevant
consideration and hence vitiated.
Kohinoor Saw Mill Co. Ltd. v. State of Madras.,1957 II LLJ 210 (Mad.DB)
It should be.synonymous.we.S.25-A(2).In
S.25-A(2). (Page: 216, Para: 4)

the

contact.

Neither the expression.it self. (Page: 218, Para: 5)

we have.oral. (Page: 218, Para: 4)
Seasonal.employer. (Page: 218, Para: 5)
Another factor.provides.The patterns of employment.Seasonal cle.
(Page: 219, Para: 2)
.apart.irrelevant. (Page: 219, Para: 3)
the sole test.exemption.he adoption.Act.whether.year.
(Page: 219, Para: 3)
Had.vitiated. (Page: 220, Para: 3)

2292

Chapter VA Lay-Off and Retrenchment

Sec. 25A

b) Seasonal establishment includes

1. Tile factory (Ker.DB)
5A.13 The order of the State Government u/s. 25A(2) declaring that the Tile factories of the
petitioner did not come under industrial establishments of a seasonal character was unsustainable.
The decision of the Government was a quasi-judicial decision and the petitioners did not have the
necessary opportunity to adduce evidence and make their representation in rebuttal of the
information on which the order of the Government was apparently based. Hence the order being in
violation of the principles of natural justice is quashed.
Tile Manufacturers Association Quilon & Ors. v. Travancore-Cochin State & Ors.,1957 I LLJ 637
(Ker.DB)
We entertain no doubt.is apparently based. (Page: 638, Para: 6)
The rules of natural Justice.no costs. (Page: 638/639, Para: 7)

c) Excludes
1. Sugar Factory when it engages itself in permanent activities though its
crushing activity is seasonal (Guj.DB)
5A.14 In view of the fact that Government had ignored significant number of permanent
employees and the permanent nature of work in different sections of the sugar factory while
declaring it as establishment of seasonal character and had only considered seasonal activity of
crushing department, order of the Government was held as patently wrong which could be
interfered with and set aside u/Art. 226 and also considering delay that would result the matter was
not remanded.
Saurashtra Majoor Mahajan Sangh v. Union of India & Ors., 1994 I CLR 518 (Guj.DB)
While considering the.the Government. (Page: 523, Para: 19)
.In the instant.be in operation. (Page: 527, Para: 22)
.However, while.all other sections. (Page: 525, Para: 25)
.If the quasi.of the, constitution. (Page: 526, Para: 27)
.we do not.to be adopted. (Page: 526, Para: 28)
.The impugned decision.and set aside. (Page: 526, Para: 30)

d) Authority to determine the question as to seasonal character of an industrial

establishment
1. Appropriate Government to decide when question is referred to it u/s. 25A
(Ker.DB)
5A.15 Workman employed in a cashew nut factory raised an industrial dispute for 3 months
wages for closure period, which was objected on the ground that it is a seasonal factory but
rejecting the plea Tribunal held closure not bonafide whereas rejecting the award, it was held that
Tribunal ought to have referred the question to Government or directed the parties to move
Appropriate Government to decide u/s. 25A(2).
Dalmia International, Kundara v. Industrial Tribunal, Alleppey & Anr., 1974 II LLJ 90 : 1975 LIC 976
(Ker.DB)

Sec. 25A

Seasonal establishment

2293

In the instant.the Tribunal. (Page: 93, Para: 4)

The plea of.in the year. (Page: 94, Para: 2)
.But in.Disputes Act. (Page: 92, Para: 3)

2. Decision of the Appropriate Government not necessary when there is no

dispute about seasonal character (MP.DB)
5A.16 Court observed that when there is no dispute between employer and workmen as regards
seasonal character of industry, a decision of Appropriate Government is not necessary to give that
character to the industry though Sec. 25A(2) states that decision of Government shall be final when
a question arises as to seasonal character of industry.
Harris Mineral Supply Co. & Ors. v. Salim M. Merchant & Ors., 1965-66 (29) FJR 420 (MP.DB)
.Sub section (2) of Section.mining industry is seasonal. (Page: 428, Para: 1)

3. Reference of the dispute as to entitlement to lay off compensation not

vitiated by subsequent raising of the question of seasonal character by
management (Mys.DB)
5A.17 Issue of seasonal character of the establishment or intermittent nature of work u/s. 25A(2)
was raised by management after reference of the dispute of lay-off compensation and hence
application of the management that reference should be rejected and the proceedings regarding
claim for lay-off compensation be postponed was rejected by Labour Court and the same was
upheld by the Bench.
M.A. Mohamad Basha Tannery v. Their Workmen & Ors., 1964 II LLJ 449 : 1964-65 (26) FJR 218
(Mys.DB)
The State Government.1 December 1962. (Page: 450, Para: 2)
.When the matter came.to its notice. (Page: 450, Para: 2)
It is undisputed that.heaving before respondent 2.in other words.by the
petitioner. (Page: 450/451, Para: 3)
.this writ.with costs. (Page: 451, Para: 3)

4. Appropriate Government acquires jurisdiction to grant or deny exemption

from Chapter VA as seasonal establishment only when it arises as an
incidental question in a claim like lay-off compensation (Mad.DB)
5A.18 Once the conditions u/s. 25A(1)(a) or (b) are fulfilled, the exemption from the Chapter V-A
is a statutory one and automatic but the Government intervenes to decide the question of
exemption only when it arises in a claim like lay-off compensation made by a workman and hence
the Government was held without jurisdiction to pass an order refusing exemption to the petitioner
mill as the petitioners letter did not refer to any lay off or any claim for compensation but merely
sought a declaration that his saw mill was only a factory of seasonal character.
Kohinoor Saw Mill Co. Ltd. v. State of Madras., 1957 II LLJ 210 (Mad.DB)
.the Government..exemption. (Page: 212, Para: 6)
The petitioner.certiorari. (Page: 212, Para: 7)
The summary.25 A(2). (Page: 213, Para: 2)

2294

Chapter VA Lay-Off and Retrenchment

Sec. 25B

Sec. 25-A.intermittently. (Page: 214, Para: 2)

.when does a Question.that Question. (Page: 214, Para: 3)
When we find.dispute. (Page: 214, Para: 4)
If a workman.S. 25-C and 25E.but it is possible.dispute.one of
the.dispute.could be.25A(2).total.Government.
(Page: 214/215, Para: 5)
.A dispute.function.it will then.a decision. (Page: 215, Para: 6)
If that is the.25A(2). (Page: 215, Para: 7)
In our opinion.jurisdiction. (Page: 216, Para: 2)

V. Reliefs when admissible

a) No relief is admissible u/s. 25C to 25E when workman merely challenged his
termination but not sought any relief u/s. 25C to 25E (Bom.HC)
5A.19 Workman challenged his order of termination but did not claim any relief u/s. 25C to Sec.
25E of the Industrial Disputes Act and hence the provisions of Sec. 25A of the Act which apply to
establishment of seasonal character is not attracted.
Vasant Sahkari Sakhar Karkhana Ltd. v. Ramesh Eknath Shinde & Anr., 1988 (57) FLR 636 (Bom.HC)

b) No lay-off compensation payable if factory is of seasonal character (Ker.HC)

5A.20 Factories engaged in industry are of seasonal nature. The management was not in a
position to give work to the concerned workmen for more than 10 months. The tribunal award
granting layoff compensation to such workmen on the ground of social justice was negatived by
High Court as in such a case employer was exempted from such an obligation u/s. 25A of the Act.
The Industrial Tribunal had no jurisdiction to award such compensation in cases not governed by
the Act also the statute cannot be circumvented by calling it unemployment compensation.
South India Corporation & Ors. v. All Kerala Cashewnut Factory workers Federation & Anr., 1960 II
LLJ 103 (Ker.HC)

C. Definition of Continuous Service Sec. 25B

I. Object
a) The object of deeming provision is to mitigate workmans hardship in being
made to serve intermittently or after periodical breaks (Mad.DB)
5A.21 The object of the deeming provision introduced by the legislature treating a workman who
served for 240 days during the period of 12 calendar months also to be in continuous service was to
mitigate his hardship in being made to serve intermittently or after periodical breaks and hence the
contention that there shall exist a subsisting contract of employment during the entire period of 12
months for calculating 240 days or the re-employment after the breaks shall be treated as separate
appointments was held to be unsustainable.
State Bank of India (rep. By its Chief General Manager), Madras v. Central Government Industrial
Tribunal, Madras, Its workmen, Madras, 1991 I LLJ 155 : 1990 II LLN 365 : 1991 I CLR 540 : 1990 LLR
693 (Mad.DB)

Sec. 25B

Applicability

2295

Section 25-B(1).25-B.Thus.terminated. (Page: 160, Para: 18)

We are unable.district.of course.25F.. (Page: 162, Para: 24)
We therefore.Judge. (Page: 162, Para: 25)

II. Applicability
a) Applicable if workman has actually worked for 240 days in a period of twelve
months (S.C.CB)
F 5A.22
It is not necessary to read the definition of continuous service u/s. 2(eee) into Sec. 25-B
because the fiction envisaged u/s. 25-B converts the service of 240 days in a period of 12 calendar
months into continuous service for one complete year therefore Sec. 25-F can be invoked even if
workmen has actually worked for 240 days during a period of 12 calendar months.
Employers in relation to the Digwadih Colliery v. Their Workmen, 1965 II LLJ 118 : 1964-65 (27) FJR
364 : 1965 (11) FLR 99 : 1966 AIR (SC) 75 (S.C.CB)
The definitions in S. 2 of the Act do not apply if there is anything repugnant in the subject or context and
the question is whether the definition of continuous service can at all apply in considering S. 25F when
what is meant by the expression one year of continuous service in S. 25F is, by S. 25B, specially stated.
If S. 25B had not been enacted the contention of the Employers would have been unanswerable for the
words of S. 25F would then have plainly meant that the service should be for a period of 12 months
without interruptions other than those stated in S. 2 (eee) itself. But S. 25B says that for the purpose of S.
25F a workman who, in a period of twelve calendar months has actually worked for not less than 240 days
shall be deemed to have completed one year of continuous service. Service for 240 days in a period of
twelve calendar months is equal not only to service for a year but is to be deemed continuous service even
if interrupted. Therefore, though S. 25F speaks of continuous service for not less than one year under the
employer, both conditions are fulfilled if the workman has actually worked for 240 days during a period
of twelve calendar months. It is not necessary to read the definition of continuous service into S. 25B
because the fiction converts service of 240 days in a period of twelve calendar months into continuous
service for one complete year. (Page: 120, Col.: II)
Note: Sec. 2(eee) omitted by Act 36 of 1964 w.e.f. 19-12-1964.

b) Definition of continuous service is applicable to Secs. 25FF and 25FFF (Raj.DB)

5A.23 The definition of continuous service u/s. 25B applies also to Secs. 25FF and 25FFF as these
sections introduced by an amendment are to be read as a whole with Sec. 25F. Hence the part of the
award of the Tribunal granting compensation u/s. 25FFF to workmen who had completed 240 days
services prior to the second closure, is maintained.
Shri Bijay Cotton Mills, Ltd. v. Rashtriya Mill Mazdoor Sangh, Bijaynagar & Ors., 1965 II LLJ 83 :
1965-66 (28) FJR 489 (Raj.DB)
It is obvious that.provisions of S.25. (Page: 91, Para: 3)

c) Not applicable to adhoc employees though completed 240 days (S.C.3J)

F 5A.24
Where the Education Board had given some assignment on ad hoc basis without any
sanctioned posts for preparation of pending certificates and engaged a few personnel to clear back
log on payment ad quantum and later their services were discontinued although they had put up
more than a years service it is held that although they had completed 240 days of work, they
cannot be assigned the status of workmen by importing the incidence of completion of 240 days of
work the assignment being adhoc which spend itself out and does not confer any right for
regularization and the orders of High Court to continue their services in consequence set aside.
Madhyamik Siksha Parishad, Uttar Pradesh v. Anil Kumar Mishra & Ors., 1994 II LLJ 977 : 1994 I LLN
851 : 1994 LIC 1197 : 1994 AIR (SC) 1638 (S.C.3J)

2296

Chapter VA Lay-Off and Retrenchment

Sec. 25B

.In the year 1986, appellant engaged the respodents for the work of preparing certificates to be
issued by the appellant to the successful candidates at the examinations conducted by it.It would
appear that there was a back-log of certificates to be cleared and the services of the respondents were
engaged to clear that back-log on payment ad quantum.of the back-log for a period ranging from
one to two years before the assignment was discontinued. (Page: 977, Para: 2)
.The High Court was persuaded to the view that respondents were casual workmen who had
completed 240 days of work.Accordingly, the High Court directed the appellant to take
respondents back to service as casual workers and continue their service upon payment of wages
admissible to the regular employees doing similar work. (Page: 978, Para: 3)
.The assignment was an ad hoc one which anticipatedly spent itself out. It is difficult to envisage
for them the status of Workmen on the analogy of the provisions of Industrial disputes Act. 1947,
importing the incidence of completion of 240 days work. The legal consequences that flow from work for
that duration under the Industrial Disputes Act, 1947 are entirely different form what, by way of analogy.
The completion of 240 days work does not under that law import the right to regularisation. It merely
imposes certain obligations on the employer at the time of termination of the service. It is not appropriate
to import and apply that analogy, in an extended or enlarged from here. (Page: 978, Para: 4)
.the orders of the High Court under appeal are set aside. (Page: 978, Para: 7)

d) Not applicable to determine the status of workman since non-completion of

240 days does not affect the status (AP.HC)
5A.25 The Conductor in a road transport corporation was dismissed from service after domestic
enquiry on non-issuance of tickets to some passengers. On reference, the Industrial Tribunal held
that the employee has not completed 240 days of continuous service u/s. 25B, hence he is not a
workman and dismissal was justified. High Court held that Sec. 25B was applicable only to cases of
lay off and retrenchment of employees. The number of days fixed for taking action u/s. 25B had no
application to cases like removal from service on the ground of misconduct for which a
departmental enquiry had been held. The finding of Tribunal was not correct; hence matter was
remanded back for disposal afresh.
R. Mallesham v. Additional Industrial Tribunal-cum-Additional Labour Court, 1990 (77) FJR 275 : 1990
II LLN 952 : 1990 LIC (Sum) 158 : 1990 LLR 719 (AP.HC)

e) Not applicable to daily rated workmen employed in a Government company

since they cannot be on par with Government servants enjoying status and
security of tenure (S.C.2J)
Hindustan Aeronautics Ltd. v. Dan Bahadur Singh & Ors., 2007 LIC 3209 : 2007 (2) SCC (L&S) 441 :
2007 AIR (SC) 2733 : 2007 (6) SCC 207 (S.C.2J)
Note: Please see related ratio/s under the above citation in this section

III. Continuous service

a) Prior to amendment of Sec. 25B
1. Parties bound by meaning given to the expression in the award (S.C.3J)
F 5A.26
When the award using the expression continuous service defines the same, parties
are bound by it but if award does not explain the same and other Act having same expression does
not give any assistance then the same would be decided on principle to find the meaning given in the
award.
M/s. Jeewanlal (1929) Ltd., Calcutta v. Its Workmen, 1961 AIR (SC) 1567 : 1961 I LLJ 517 : 1961-62
(20) FJR 182 : 1961 (2) FLR 537 (S.C.3J)

Sec. 25B

Continuous service

2297

.In other words, the expression continuous service may be statutorily defined in which case the
definition will prevail. An award using the said expression may itself give a definition of that expression
and that will bind parties in dealing with claim arising from the award. Where, however, the award does
not explain the said expression and statutory definitions contained in other Acts are of no material
assistance it would be necessary to examine the question on principle and decide what the expression
should mean in any given award; and that is precisely what the tribunal had to do in the present case.
(Page: 1569, Para: 5)
Note: The definition of continuous service in this case was u/s. 2(eee) which was omitted by Act 36 of
1964 w.e.f. 19-12-1964 and incorporated for academic interest

2. Employment for 12 months is a pre-condition for determining number of

days worked (S.C.3J)
F 5A.27
In interpretation of the Sec. 25B, it has been held that where the employee has not
worked continuously for full 12 calendar months but worked for less than 11 months, then it
cannot be held that merely because he had worked for 240 days he can satisfy the requirement of
Sec. 25B of the Act.
Sur Enamel & Stamping Works, Ltd. v. Their Workmen, 1963 AIR (SC) 1914 : 1963 II LLJ 367 : 196364
(25) FJR 88 : 1963 (7) FLR 236 (S.C.3J)
.The position therefore is that during a period of employment for less than 11 calendar months
these two persons worked for more than 240 days. In our opinion that it would not satisfy the
requirement: of S.25-B. Before a workmen can be considered to have completed one year of continuous
service in an industry it must be shown first that he was employed, for a period of not less than 12 calendar
months and, next that during those 12 calendar months had worked for not less than 240 days. Where, as
in. the present case, the workmen have not at all been employed for a period of 12 calendar months it
becomes unnecessary to examine whether the actual days of work numbered 240 days or more. For, in
any case, the requirements of S. 25-B would not be satisfied by the mere fact of the number of working
days being not less than 240 days. (Page: 1917, Para: 8)
We have therefore come to the conclusion that the Tribunal was wrong in thinking that these two
workmen were entitled to the benefit of S. 25-F. Accordingly we set aside the direction that the Tribunal
made for payments to Nagen Bora and Monoharan by way of compensation. (Page: 1917, Para: 9)
Note: Sec. 2(eee) omitted by Act of 1964 and the position as to continuous service for less than one year
also now holds good subject to 240 days of work.

3. Need not necessarily mean completion of one year of service but covers
service of 240 days in any particular year of 12 calendar months (Bom.DB)
5A.28 The word Continuous Service in Sec. 25F read with Sec. 25-B, means continuity of
service but does not necessarily mean that he must have completed one year of service but it is
sufficient if he completes 240 days in any particular year of 12 calendar months to be deemed as
continuous service within the meaning of the section and hence the period from the date of
recruitment i.e. 24th January 1945 to the date of retrenchment i.e. 15th October 1954 which
includes the period of illegal strike from 6th October 1951 to 24th November 1951 was held to be
taken into account for computing retrenchment compensation as the employee did not suffer
dismissal on that account and therefore the period of strike despite interruption in service is
deemed to have been continuous by virtue of the definition as enumerated in categories of cases in
the second part of the said definition, so long as the viniculam juris is not severed on that account.
Jairam Sonu Shogale v. New India Rayon Mill Co., Ltd. 1958 I LLJ 28 : 1958-59 (14) FJR 371 (Bom.DB)
The petitioner was.with effect from 15th October 1954. (Page: 28, Para: 2)
On this petition.claimed by him. (Page: 29, Para: 2)

2298

Chapter VA Lay-Off and Retrenchment

Sec. 25B

The Second question.compensation.then section 25-F also refers.compensation.

(Page: 30, Para: 2)
.one has to.six months.so that.than one year.But this
is.Industry.it is sufficient.service.the principal.12 Calendar
months.and where.for 240 days. (Page: 31/32, Para: 2)
In other words.set aside. (Page: 32, Para: 2)
Note: This case is prior to Amendment Act of 1964

4. Interruption is not relevant when employee has worked for 240 days
(S.C.CB)
F 5A.29
Interpreting the expression one year of continuous service Apex Court held that the
person who has worked for 240 days during the period of twelve months is entitled to the benefit of
Sec. 25-F of the Act even though his work during the twelve months was interrupted hence upheld
the order of Tribunal in awarding relief for the non-compliance of Sec. 25-F in terminating the
workmen and even now after amendment of 1964, situation has not changed except the change that
the service must be during a period of 12 calendar months preceding the date with reference to
which the calculation is to be made.
Employers in relation to the Digwadih Colliery v. Their Workmen, 1965 II LLJ 118 : 1964-65 (27) FJR
364 : 1965 (11) FLR 99 : 1966 AIR (SC) 75 (S.C.CB) CA 43 of 1964 dt.22 -3 -1965.
.But S. 25B says that for the purpose of S. 25F a workman who, in a period of twelve calendar
months has actually worked for not less than 240 days, shall be deemed to have completed one year of
continuous service. Service for 240 days in a period of twelve calendar months is equal not only to service
for a year but is to be deemed continuous service even if interrupted. Therefore, though S. 25F speaks of
continuous service for not less than one year under the employer, both conditions are fulfilled if the
workman has actually worked for 240 days during a period of twelve calendar months. It is not necessary
to read the definition of continuous service into S. 25B because the fiction converts service of 240 days in
a period of twelve calendar months into continuous service for one complete year.
(Page: 120, Para: Last)
The explanation to S. 25 B is the same, mutatis mutandis as before. Sri Sen contended that the change in
the law brought out his contention. We do not agree. The amended S. 25B only consolidates the previous
S. 25B and 2(eee) in one place, adding some other matters which are not relevant to the present purpose;
but the purport of the new provisions is not different. In fact the amendment of S. 25F of the principal Act
by substituting in Cl. (b) the words for every completed year of continuous service for the words for
every completed year of service now removes a discordance between the unamended S. 25B and the
unamended Cl. (b) of S. 25F. Neither before these several changes nor after these in uninterrupted service
necessary if the total service is 240 days in a period of twelve calendar months. The only change in the
new Act is that this service must be during a period of twelve calendar months preceding the date with
reference to which calculation is to be made. The last amendment now removes a vagueness which
existed in the unamended S. 25B. (Page: 121, Para: Last)

b) After amendment of Sec. 25B by Act 36 of 1964

1. Meaning of Continuous service for one year u/s. 25B(1)
i) In order to attract Sec. 25B(1) the person must have been in service not only
on days when he actually worked, but also on days he could not work
(Karn.HC)
5A.30 The Badli workmen were given work only on the days when regular workmen were
remaining absent, they raised dispute of termination of their services. Their contention was that
their case falls u/s. 25B(1) of the Act as they were given work and as the work was not given on other
days for no fault of theirs, they must be deemed to be in continuous service. High Court held that it

Sec. 25B

Continuous service

2299

would be a travesty of law to say that if a person is given work for one or for a few days in a year by
an employer, either as a leave substitute or to meet the extra work, the rest of the days on which no
work is given amounts to cessation of employment within the meaning of Sec. 25B(1). In order to
attract Sec. 25B(1) the person must have been in service during the period i.e. not only on days
when he actually worked, but also on days he could not work under circumstances set out in Sec.
25B(1). Petition dismissed. Therefore to be in employment is sine qua non for the application of the
provision.
Honnayya & Ors. v. Karnataka State Road Transport Corporation & Anr., 1985 II LLJ 487 : 1985 (66)
FJR 293 : 1985 I LLN 669 (Karn.HC)

ii) Performance of work in a different capacities is immaterial if the employer

is same (Raj.DB)
5A.31 To determine continuous service, performance of work in different capacity is immaterial
since requirement is that employer must be one and the same.
Prabhu Dayal Jat v. Alwar Sahakar Bhumi Vikas Bank Ltd. & Ors.,1991 II LLJ 130 : 1990 (60) FLR 9 :
1990 LLR 136 : 1991 II LLN 1042 : 1991 LIC 944 : 1991 II CLR 526 (Raj.DB)
The contention.Mr. Lodha. (Page: 132, Para: 7)
The definition.of the Act. (Page: 132, Para: 8)
If he is.credit. (Page: 132, Para: 8)

iii) If workman was in continuous service for one year in terms of Sec. 25B(1)
uninterrupted by the employer, it is immaterial whether he completed 240
days in a particular year (Guj.HC)
5A.32 The workmen who were working for over 12 years as daily wagers were terminated
without notice and for which Labour Court awarded reinstatement with back wages for violation
of Sec. 25F of the Act. The award was challenged by filing a writ petition in the High Court
contending that the workmen did not complete 240 days in one year. The High Court held that the
question is whether the said workmen had put in continuous service in one year as Sec. 25B(1)
contemplates. Once it is proved that the workman is in continuous service for more than one year
and the service is not interrupted by employer during this period and even if interrupted, it is not
due to the fault of the employee, it is wholly immaterial that they had not worked for 240 days in
some years. And so there is no infirmity in the award of the Labour Court.
Moti Ceremic Industries v. Jivuben Rupabhai, 2000 II LLJ 735 : 2000 LIC 1921 : 2000 II CLR 156
(Guj.HC)

iv) Expression cessation of work u/s. 25B(1) excludes cessation of work on

account of employers inability to provide work for specific reasons though
employee is willing to work (AP.DB)
5A.33 The Court rejected the contention that the words cessation of work occurring in
sub-Sec. (1) should be interpreted with reference to the workman and not from the point of view of
the company and held that the same should instead be interpreted ejusdem generis with other
factors which leads to cessation of work such as a strike or lock out, power failure, imposition of
curfew, declaration of bandhs, break down of law and order and such other related matters etc.
Therefore held that merely a casual worker is willing to work, there is no obligation on the part of
the company to provide him with work even if there is no work and hence rejected the claim of
workmen based on Sec. 25B(1).
G. Yadi Reddy v. Brooke Bond India Ltd., Ghatkesar & Anr., 1994 LIC 186 : 1994 (68) FLR (Sum) 44 :
1994 (69) FLR 25 : 1994 I LLN 282 : 1994 I CLR 207 : 1994 LLR 328 (AP.DB)

2300

Chapter VA Lay-Off and Retrenchment

Sec. 25B

.The phrase Continuous Service for a period occurring in sub section (1).sub section
(1) therefore has no application to the appellants case. (Page: 188, Para: 6)

v) When workman has put in long service in successive years it is immaterial

that he did not complete 240 days in some of those years (Bom.HC)
5A.34 A mill worker resigned from service under Voluntary Retirement Scheme. On retirement,
company paid an amount of Rs. 3,260 towards the retrenchment compensation. However, he filed
an application u/s. 33C(2) claiming that he was entitled to receive a sum of Rs. 8,100. The employer
resisted his claim on the ground that employee had not worked for a period of 240 days every year
in the years 1948, 1958, 1961 and 1971 therefore, he could not be deemed to be in continuous service
as contemplated in Sec. 25B of the Act. Labour Court passed the award in employers favour.
Aggrieved, a writ petition was filed. High Court held that Sec. 25B provides that workman shall be
said to be in continuous service for a period if he is for that period, in uninterrupted service. The
continuous service would be interrupted only by two modes and that is by workman leaving the
employment or the employer terminating his service by dismissal or discharge and the mere fact
that during some years in the long period of service the workman had not worked for 240 days is
not a sufficient answer to deprive him of the retrenchment compensation by ignoring the entire
period and quashed the impugned award.
Ramasamuz Narsing Upadhyaya v. Vinubhai M. Mitra, 1982 II LLJ 186 : 1982 (44) FLR 406 : 1982 II
LLN 385 (Bom.HC)

2. When service is deemed to be continuous service for a period of one year

u/s. 25B(2) explanation of deeming provision
i) Service is deemed to be continuous despite periodical terminations and
re-employment during workmans service of 240 days in the preceding
twelve months (AP.DB)
5A.35 The period of 240 days of service in preceding 12 months from the date of termination of
service even if interrupted by periodical terminations and re-appointment by fresh order, it will
deemed to be continuous service and employer will have to comply with Sec. 25F.
Y. Narender & Ors. v. Central Bank of India (by its Divisional Manager, Hyderabad), 1978 II LLN 436
(AP.DB)
According to.by S. 25F. (Page: 442, Para: 13)
It is on that.of the Act. (Page: 444, Para: 15)
Note: Also refer to the following case
Tata Consulting Engineers v. Ms. Valsala K. Nair & Ors., 1998 I LLN 525 : 1998 LLR 66 : 1997 II CLR
1099 (Bom.HC)

ii) When employee has worked for not less than 240 days in a period of twelve
months (S.C.3J)
F 5A.36
Workmen who has actually worked under the employer for not less than 240 days
during the period of twelve months shall be deemed to have been in continuous service for a period
of one year u/s. 25B by virtue of Act 36 of 1964 whether or not he has in fact been in such continuous
service for a period of one year and as in the instant case appellants were in employment from May
4, 1974 to Jan. 29, 1975 have completed more than 240 days during the period of 12 months and are
entitled for reinstatement with full back wages for violation of Sec. 25F.
Surendra Kumar Verma etc. v. The Central Government Industrial Tribunal-cum-Labour Court, New
Delhi & Anr., 1981 I LLJ 386 : 1980 (57) FJR 67 : 1980 II LLN 456 : 1980 LIC 1292 : 1981 SCC (L&S)
16 : 1981 AIR (SC) 422 : 1980 (4) SCC 443 (S.C.3J)

Sec. 25B

Continuous service

2301

.It appears that Usha Kumari and Madhu Bala were in the employment of the Bank from May 4,
1974 to January 29, 1975 and had worked for 258 and 266 days respectively during that period. As the
period from May 4, 1974 to January 29, 1975 was not one year, it was conceded before the Labour Court
that there was no violation of the provisions of S. 25F of the Industrial Disputes Act.
(Page: 390, Para: 8)
Act 36 of 1964 has drastically changed the position. Section 2(eee) has been repealed and S. 25 B(2)
now begins with the clause where a workman is not in continuous service.for a period of one
year. These changes brought about by Act 36 of 1964 appear to be clearly designed to provide that a
workman who has actually worked under the employer for not less than 240 days during a period of
twelve months shall be deemed to have been in continuous service for a period of one year whether or not
he has in fact been in such continuous service for a period of one year. It is enough that he has worked for
240 days in a period of 12 months; it is not necessary that he should have been in the service of the
employer for one whole year. We hold that Usha Kumari and Madhubala are in the same position as the
other appellants. (Page: 391, Para: 9)
In the result, all the appeals are allowed and the workmen-appellants are directed to be reinstated with
full back wages. (Page: 391, Para: 10)

iii) When employee completed 240 days though he is not in service for a period
of twelve months (S.C.2J)
F 5A.37
Negativing managements contention that concerned workmans case is not satisfied
by Sec. 25B Apex Court held that for the purpose of sub-Sec. (2) of Sec. 25B it is not necessary that a
workman should have been in service for a period of one year as it provides that a workman shall
be deemed to be in continuous service for a period of one year if in a period of twelve calendar
months just preceding the relevant date with reference to which calculation is to be made, the
workman has rendered service for a period of 240 days and hence in instant case since the
workman has worked for more than 240 days from his appointment date i.e. 8th Dec. 1973 till his
termination on 19th Oct. 1974 his termination without compliance of Sec. 25F is illegal.
Mohan Lal v. The Management of M/s. Bharat Electronics, Ltd., 1981 II LLJ 70 : 1981 (58) FJR 467 :
1981 (42) FLR 389 : 1981 II LLN 23 : 1981 LIC 806 : 1981 SCC (L&S) 478 : 1981 AIR (SC) 1253 : 1981
(3) SCC 225 (S.C.2J)
.It is not necessary for the purposes of sub-section (2) (a) that the workman should be in service
for a period of one year. If he is in service for a period of one year and that if that service is continuous
service within the meaning of sub-section (1) his case would be governed by sub-section (1) and his case
need not be covered by sub-section (2). Sub-section (2) envisages a situation not governed by sub-section
(1). And sub-section (2) provides for a fiction to treat a workman in continuous service for a period of one
year despite the fact that he has not rendered uninterrupted service for a period of one year but he has
rendered service for a period of 240 days during the period of 12 calendar months counting backwards
and just preceding the relevant date being the date of retrenchment. (Page: 77, Para: 12)
Reverting to the facts of this case, admittedly the appellant was employed and was on duty from
December 8, 1973 to October 19, 1974 when his service was terminated. The relevant date will be the
date of termination of service, i. e. October 19, 1974 Commencing from that date and counting
backwards, admittedly he had rendered service for a period of 240 days within a period of 12 months and,
indisputably, therefore, his case falls within Section 25B (2) (a) and he shall be deemed to be in
continuous service for a period of one year for the purpose of Chapter VA. (Page: 78, Para: 15)
Appellant has thus satisfied both the eligibility qualifications prescribed in Section 25F for claiming
retrenchment compensation. He has satisfactorily established that.he has rendered continuous
service for one year. Therefore, termination of his service would constitute retrenchment. As
precondition for a valid retrenchment has not been satisfied the termination of service is ab initio void,
invalid and inoperative. He must, therefore, be deemed to be in continuous service. (Page: 78, Para: 16)
Accordingly, this appeal is allowed and the Award of the Labour Court dated may 31, 1980, is set
aside. (Page: 79, Para: 18)

2302

Chapter VA Lay-Off and Retrenchment

Sec. 25B

iv) When workman rendered 240 days service though not continuously but in
a period of preceding twelve months or 365 days (Bom.HC)
5A.38 The period of 240 days may not be a period of continuous 240 days and it is sufficient if
total number of 240 days is calculated with reference to a period of 12 months. In other words, an
employee should render a service for total number of any 240 days in a period of continuous 365
days.
Union of India through Divisional Railway Manager, Mumbai v. Jairaj N. Shetty, 2003 (99) FLR 671 :
2003 LLR 1142 : 2003 III CLR 374 (Bom.HC)
5A.39 On termination, matter referred to Labour Court. It held that since the workman not
completed 240 days of continuous service, he is not entitled to any relief. On being challenged, High
Court held that continuous service as per Sec. 25B of Industrial Disputes Act means 240 days of
employment preceding twelve months to the date of termination and on the basis of evidence it is
clear that the employee in the twelve months preceding to the termination worked for a period of
more than 240 days. It is not the requirement of law that a person has to work continuously for a
period of 240 days in a calendar year. Hence award of Labour Court liable to be set aside and he is
entitled to reinstatement without back-wages.
Rajeev Sinha v. Sardar Vallab Bhai Government Polytechnic College, Bhopal & Anr., 2006 (111) FLR
571 : 2006 III CLR 1034 : 2007 I LLJ 577 : 2007 II CLR 47 : 2007 LLR 44 (MP.HC)
On the basis of the.Industrial Dispute Act, 1947. (Page: 572, Para: 5)

v) It is sufficient compliance of the section if workman completes 240 days

within eight months and need not work for twelve months (Guj.HC)
5A.40 In a dispute for termination of his services without complying with Sec. 25F raised after a
period of 4 years, the Labour Court reinstated him with 70% back-wages, excluding the wages for
those four years period. Though the employer pleaded that he was not in a continuous service as
required u/s. 25B of the Act, but did not produce any documents such as muster roll, pay register
etc. on the plea that the burden of proof lies on the employee and that the employee had abandoned
the service. But the Labour Court did not accept the contention. On assailing the award, the High
Court upheld the award and held that it was not necessary for the employee to work for 12 months
of continuous service and if within eight months, he had completed 240 days of continuous service,
then also he would be entitled to the benefit of Sec. 25F of the Act. Regarding production of
documents in proof of continuous service was concerned, the High Court held that if the workman
was having documents and yet failed to produce the same, then the burden of proof of continuous
service would be on the employee. But if the workman had not been given any documents by the
employer, then the employer had to disprove the facts by producing documentary evidence in his
possession which were not produced, Labour Court has rightly drawn an adverse inference in
favour of the employee.
State of Gujrat & Anr. v Jitendra M.Raval & Anr., 2005 (106) FLR 97 (Guj.HC)
Note: Relied on
Mohan Lal v. The Management of M/s. Bharat Electronics, Ltd., 1981 II LLJ 70 : 1981 (58) FJR 467 :
1981 (42) FLR 389 : 1981 II LLN 23 : 1981 LIC 806 : 1981 SCC (L&S) 478 : 1981 AIR (SC) 1253 : 1981
(3) SCC 225 (S.C.2J)

3. When not deemed to be in continuous service

i) When employee has worked for less than 240 days (S.C.2J)
F 5A.41
Workman who is a temporary godown Darban whose service was terminated, when
subsequently appointed as messenger after period of 12 years, demanded back wages for that
period on the basis of settlement between union and management providing for payment of back

Sec. 25B

Continuous service

2303

wages to temporary employee in view of judgement of State Bank of India v. N. Sundara Money.
But since he was not in continuous service for 240 days as per Sec. 25-B he was held to be not
entitled to back wages.
State Bank of India v. Presiding officer & Anr., 1999 III LLJ 320 : 1998 SCC (L&S) 1725 : 1998 (8) SCC
576 (S.C.2J)
This fact is not disputes by Respondent 2. This shows that Respondent 2 had admittedly not worked for
more than 240 days continuously in a year as required under section 25-B of the Act. The Tribunal has
proceeded in he basis that the benefit of the settlement dated August 22, 1977 was available to all
temporary employees irrespective of the fact whether they had put in 240 days continuous service or not
and has directed the payment of back wages to Respondent 2 on the view that Respondent 2 had worked
for more than 90 days in a year. This view of the Tribunal cannot be upheld because, as a pointed out
earlier, Para 1 of the settlement dated August 22, 1977, clearly refers to temporary employees
concerned and temporary employees concerned are only those who satisfy the requirements of the
section 25-B of the Act having worked for more than 240 days continuously in a year so as to take the
benefits of the decision in Sundara Money case. Since Respondent 2 did not put in 240 days service in any
year, he cannot be regarded as a temporary employee concerned and he could not be extended the benefit
under Para 1 of the settlement dated August 22, 1977. The order passed by the Tribunal cannot, therefore,
be upheld and has to be set aside and for the same reason the impugned order of the High Court dismissing
the write petition field by the appellant has also to be set aside. (Page: 321/322, Para: 6)

ii) When intervening breaks given to a daily wager were not malafide
(Raj.DB)
5A.42 Breaks given to daily wager, whose appointment is made when shortage of staff arises or
seasonal increase of work, being not malafide, employee was held to be not in continuous
employment and hence termination was not in violation of Sec. 25F.
Pali Central Co-operative Bank Ltd., Pali v. Sunil Kumar Sharma., 1994 LIC 1370 (Raj.DB)
From.the Act. (Page: 1373, Para: 8)
It is thus.this case. (Page: 1374, Para: 9)

iii) Cannot be deemed only by relying on the witnesses statement in the

cross-examination that employee has worked for 240 days (Raj.HC)
5A.43 Mere reliance on the witnesses statement in the cross-examination that the workman had
worked for 240 days and thereby declaring that the termination of workman to be illegal is not
sufficient. The significant point is that the workman must have worked for 240 days in a year
immediately preceding the termination of the workman.
Garrison Engineer MES v. Central Industrial Tribunal & Anr., 1993 II LLJ 850/883 (Raj.HC)

4. Computation of continuous service u/s. 25B(2)

i) Expression actually worked includes Sundays and paid holidays (S.C.2J)
F 5A.44
The expression actually worked under the employer u/s. 25B(2)(a) comprehends all
those days when workman was in the employment of the employer and for which he has been paid
wages under express or implied contract of service or under statute thus Sundays and other paid
holidays should be included while computing days of Actual work, u/s. 25(B). Hence Supreme
Court set aside the decision of the Industrial Tribunal to the contrary and granted reinstatement
with full back wages. The Court rejected the contention that only days which are mentioned in the
explanation should be taken in to account on the ground that explanation is only clarificatory and
cannot be used to restrict the expanse of the main provision of the Act.

2304

Chapter VA Lay-Off and Retrenchment

Sec. 25B

The Workmen of American Express International Banking Corporation v. The Management of American
Express International Banking Corporation, 1985 II LLJ 539 : 1985 (67) FJR 189 : 1985 (51) FLR 481 :
1985 II LLN 817 : 1986 LIC 98 : 1985 II CLR 269 : 1985 SCC (L&S) 940 : 1986 AIR (SC) 458 : 1985 (4)
SCC 71 (S.C.2J)
.According to the workman excluding the breaks in service, he actually worked under the
employer for 275 days during the period of 12 months immediately preceding October 31, 1975 whereas
according to the employer he actually worked for 220 days only. (Page: 540, Para: 2)
.In the present case, the provision which is of relevance is S. 25B(2)(a)(ii) which to the extent
that it concerns us, provides that a workman who is not in continuous service for a period of one year shall
be deemed to be in continuous service for a period one year if the workman, during a period of twelve
calendar months preceding the date with reference to which the calculation is to be made, has actually
worked under the employer for not less than 240 days. The expression which we are required to construe
is actually worked under the employer. This expression, according to us, cannot mean those days only
when the workman worked with hammer, sickle or pen, but must necessarily comprehend all those days
during which he was in the employment of the employer and for which he had been paid wages either
under express or implied contract of service or by compulsion of statute, standing orders, etc. The learned
counsel for the Management would urge that only those days which are mentioned in the Explanation to
S. 25B(2) should be taken into account for the purpose of calculating the number of days on which the
workmen had actually worked though he had not so worked and no other days. We do not think that we
are entitled to so constrain the Construction of the expression actually worked under the employer. The
explanation is only clarificatory, as all explanations is only clarificatory, as all explanations are, and
cannot be used to limit the expanse of the main provision. If the expression actually worked under the
employer is capable of comprehending the days during which the workman was in employment and was
paid wages and we see no impediment to so construe the expression there is no reason why the
expression should be limited by the explanation. To give in any other meaning then what we have done
would bring the object of S. 25F very close to frustration. (Page: 542, Para: 5)
On our interpretation of S. 25F read with S.25B, the workmen must succeed. The workman Shri. B.
Ravichandran is therefore directed to be reinstated in service with full back wages.
(Page: 543, Para: 7)
F 5A.45
Sundays and paid holidays should be included in determining the number of days on
which a workman has actually worked under the employer for the purpose of computing
continuous service.
Management of Standard Motor Products of India Ltd. v. A. Parthasarathy & Anr., 1985 (67) FJR 417 :
1985 (51) FLR 459 : 1985 II LLN 830 : 1985 II CLR 274 : 1986 LIC 101 : 1985 SCC (L&S) 934 : 1986
AIR (SC) 462 : 1985 (4) SCC 78 (S.C.2J)
.submission of Shri Pai that the number of days on which the workmen actually worked under
the employer would be less than 240 days if Sundays and other holidays for which the workmen were
paid wages were excluded has already been answered by us in the case of The Workmen of American
Express International Banking Corporation v. The Management of American Express International
Banking Corporation (Reported in 1986 Lab IC 98) in which judgment has just been pronounced by us.
In the circumstances, both the appeals are, dismissed with costs. (Page: 419, Para: 1)
Note: Also refer to the following cases
State of Uttaranchal, Through Collector v. Bhajan Singh, 2004 (102) FLR 283 (Uttar.HC)
Pawan Kumar Srivastava v. Municipal Corporation, 1999 II LLJ 21 : 1999 III LLN 266 (MP.DB)
Note: Please also refer to the case of
A. Parthasarathi & Anr. v. Management of Standard Motors Products of India Ltd. & Anr., 1979 LIC
(Sum) 136 (Mad.DB) where in it was held by some Madras High Court that Sundays and holidays for
which no wages paid are to be excluded while computing 240 days

Sec. 25B

Continuous service

2305

ii) Expression actually worked is to enable a workman to get the benefit of

fictional service notwithstanding the interruptions (Mad.DB)
5A.46 The implication of the expression actually worked is to enable a workman to get the
benefit of fictional service, if he actually worked for 240 days in a period of 12 calendar months
notwithstanding any number of interruptions in his service.
State Bank of India (rep. By its Chief General Manager), Madras v. Central Government Industrial
Tribunal, Madras, Its workmen, Madras, 1991 I LLJ 155 : 1990 II LLN 365 : 1991 I CLR 540 : 1990 LLR
693 (Mad.DB)
Under..S. 25F of the Act. (Page: 161, Para: 20)

iii) Preceding twelve months how to compute

a) To be counted backwards just preceding the relevant date (S.C.2J)
F 5A.47
The Sec. 25B(2) by a fiction brings within its scope the services rendered for 240 days
in a calendar year although literally the workman did not render uninterrupted service for a
period of one year. The Court said by fiction, one has to count 12 calendar months from backwards
just preceding the relevant date of retrenchment. In other words one has to ascertain the date of
retrenchment and then count backwards to a period of 12 months and ascertain whether the
workman had completed/rendered service for a period of 240 days. Thus within this deeming
fiction of 12calendar months counting backwards one has to ascertain the continuous service of 240
days so as to apply the section for purposes of Chapter VA.
Mohan Lal v. The Management of M/s. Bharat Electronics, Ltd., 1981 II LLJ 70 : 1981 (58) FJR 467 :
1981 (42) FLR 389 : 1981 II LLN 23 : 1981 LIC 806 : 1981 SCC (L&S) 478 : 1981 AIR (SC) 1253 : 1981
(3) SCC 225 (S.C.2J)
Sub-section (2) incorporates another deeming fiction for an entirely different fiction for an entirely
different situation. It comprehends a situation where a workman is not continuous service within the
meaning of sub-s. (1) for a period of one year or six months, he shall be deemed to be in continuous
service under an employer for a period for one year or six months, as the case may be, if the workman
during the period of 12 calendar months just preceding the date with reference to which calculation is to
be made, has actually worked under that employer for not less than 240 days. Sub-section (2) specifically
comprehends a situation where a workman is not in continuous service as per the deeming fiction
indicated in sub-s. (1) for a period of one year or six months. In such a case he is deemed to be in
continuous service for a period of one year if he satisfies the conditions in clause (a) of sub-s. (2). The
conditions are that commencing the date with reference to which calculation is to be made, in case of
retrenchment the date of retrenchment, if in a period of 12 calendar months just preceding such date the
workman has rendered service for a period of 240 days, he shall be deemed to be in continuous service for
a period of one year for the purposes of Chapter VA. It is not necessary for the purposes of sub-s. (2) (a)
that the workman should be in service for a period of one year. If he is in service for a period of one year
and that if that service is continuous service within the meaning of sub-s. (1) his case would be governed
by sub-section (1) and his case need not be covered by sub-s. (2). sub-section (2) envisages a situation not
governed by sub-s. (1). And sub-s. (2) provides for a fiction to treat a workman in continuous service for a
period of one year despite the fact that he has not rendered uninterrupted service for a period of one year
but he has rendered service for a period of 240 days during the period of 12 calendar months counting
backwards and just preceding the relevant date being the date of retrenchment. In other words, in order to
invoke the fiction enacted in sub-s. (2)(a) it is necessary to determine first the relevant date, i.e., the date
of termination of service which is complained of as retrenchment. After that date is ascertained, move
backward to a period of 12 months just preceding the date of retrenchment and then ascertain whether
within the period of 12 months, the workman has rendered service for a period of 240 days. If these there
facts are affirmatively answered if favour of the workman pursuant to the deeming fiction enacted in
sub-s. (2) (a) it will have to be assumed that the workman is in continuous service for a period of one year
and he will satisfy the eligibility qualification enacted in S. 25F. (Page: 76/77, Para: 12)

2306

Chapter VA Lay-Off and Retrenchment

Sec. 25B

5A.48 When the Supreme Court says that employee has to prove that he had worked for 240 days
during the period of twelve calendar months counting backward and just preceding the relevant
date, then there is no scope to hold that the words, just preceding, are otiose or superfluous or
have no importance. A judgment is a judgment for what it decides. Since, in the instant case, the
employee has not completed 240 days in just preceding twelve calendar months, he would not be
entitled to any benefits u/s. 25F r/w. Sec. 25B of the Industrial Dispute Act.
Executive Engineer (Mechanical) v. Chetan P. Oza, 2006 I LLJ 213 : 2005 (107) FLR 797 : 2006 II LLN
476 : 2005 III CLR 333 : 2006 LLR 864 (Guj.DB)
5A.49 Workman raised an industrial dispute alleging that he had served from the year 1990 and
his services terminated in 1999 illegally. Labour Court held that the workman had not completed
240 days of service in the twelve preceding months. He has failed to prove that any worker junior to
him was retained or fresh recruitment made by the department, hence dismissed the claim. High
Court held that, the period of twelve months to be counted from the date of termination and if the
workman completed 240 days it will have to be assumed that the workman is in continuous service,
but in the present case workman has not completed 240 days of continuous service preceding 12
months, Sec. 25F of the Act does not come to his rescue.
Waryam v. Presiding Officer, Labour Court & Ors., 2007 (112) FLR 261 : 2007 II LLJ 157 : 2007 II LLN
937 : 2007 LLR 236 : 2007 I CLR 70 (P&H.DB)
.The petitioner, at one.were denied. (Page: 262, Para: 1)
In order to qualify.come to his rescue. (Page: 262, Para: 6)
Note: Also refer to the following case
Logaiyan v. First Additional Labour Court, Madras, & Anr., 1988 I LLN 695 (Mad.HC)
Shri Pal S/o Chander Bhan v. P.O. Industrial-cum-Labour Court & Anr., 2002 (95) FLR 401 : 2002 II
LLN 667 : 2002 LLR 371 : 2002 LIC 227 (P&H.HC)
Eicher Goodearth Ltd. v. Industrial Tribunal Haryana, & Anr., 1986 (68) FJR 73 : 1986 (52) FLR 441 :
1986 I LLN 219 (P&H.HC)

b) To consider a year immediately before his termination (P&H.HC)

5A.50 On a reference of dispute as to termination of service the Labour Court did not favour the
workman. Hence this writ petition. The High Court observed that the employee had worked for
240 days in a year immediately before his termination. Also, the submission of the employer that
the workman had left of his own accord cannot be accepted for the industrial dispute was raised by
the workman the very next month and there is nothing in evidence to show that the workman was
gainfully employed during the intervening period. So, considering the period of service rendered
by him the workman was awarded 75% back wages and reinstatement with continuity of service.
Shri Pal S/o Chander Bhan v. P.O. Industrial-cum-Labour Court & Anr., 2002 (95) FLR 401 : 2002 II
LLN 667 : 2002 LLR 371 : 2002 LIC 227 (P&H.HC)

c) Expression preceding is absent in Sec. 2(g) of U.P. Industrial Disputes

Act (S.C.2J)
F 5A.51
The word preceding is not used in Sec. 2(g) of U.P. Act under the definition of
continuous service though the same was introduced in Industrial Dispute Act to give complete
and meaningful benefit of welfare legislation to the working class.
M/s. U. P. Drugs and Pharmaceuticals Co. Ltd. v. Ramanuj Yadav & Anr., 2004 SCC (L&S) 46 : 2003 III
LLJ 1064 : 2003 (99) FLR 331 : 2003 LIC 3491 : 2003 LLR 1097 : 2003 AIR (SC) 3337 : 2003 (8) SCC
334 (S.C.2J)

Sec. 25B

Continuous service

2307

.Section 2(g) of the UP Act does not require a workman, to avail the benefit of the deeming
provision of completion of one year of continuous service in the industry, to have worked for 240 days
during preceding period of 12 calendar months. The word preceding has been used in S. 25-B of the
ID Act as incorporated in the year 1964. Section 2(g) does not use the word preceding..
(Page: 51, Para: 10)

iv) Computation of 240 days includes

a) The date on which a workman joined service even on adhoc basis but
not to compute from the date of his regular recruitment (P&H.HC)
5A.52 In order to count the period of 240 days for continuous service, the day when the workman
had joined service even though on ad-hoc basis is to be considered and not the date on which he was
regularly recruited into service.
Haryana State Electricity Board, Chandigarh v. Sh. Randhir Singh, Assistant Line man, & Anr., 1994 I
LLJ 1120 : 1993 II LLN 750 : 1993 II CLR 806 (P&H.HC)

b) The period of fresh appointment on workmans re-employment but not

from the date on which he was temporarily employed when there is a
clear break (Bom.HC)
5A.53 Employees temporary services were terminated but later there was a settlement whereby
he was re-employed as a fresh employee from 4.12.1985 and again his services were terminated on
2.9.1986 Labour Court by taking into account the period prior to settlement, held that the
employee had completed 240 days of service and passed award in favour of the employee. High
Court held that there was a clear break in service and earlier service could not have been taken into
account. Sec. 25F of the Act is mandatory and proof of continuous service of 240 days must be
strictly proved.
Prav Plast Pvt. Ltd. v. Kaluram A. Choudhari & Anr., 2001 III LLJ 513 : 2000 (84) FLR 122 : 2000 I LLR
420 : 1999 IV LLN 884 : 1999 LIC 3749 : 1999 II CLR 995 (Bom.HC)

c) All those days for which wages paid under express or implied contract
of service (MP.HC)
5A.54 Employees services were terminated without following the provisions of Sec. 25F of the
Act and it was found by the Labour Court that the employee had not worked for 240 days in a year.
But High Court held that working for 240 days does not mean only those days during which he was
in employment and working with pen, hammer or sickle but also includes all those days for which
he was paid wages under express or implied contract of service or by compulsion of statute or
standing order. Therefore the matter is remanded.
R.K. Shrivastava v. P.O. Labour Court & Anr., 1999 (82) FLR 429 : 1999 III LLN 1114 : 1998 LLR 802
(MP.HC)

d) Service rendered pursuant to interim order (Guj.HC)

5A.55 The service which was rendered by the workman because of the interim order in favour of
the workman was held to be considered as continuous service, without any break and workman
was entitled to get benefit of that continuity period as per the service rules.
Udaykumar Thakorbhai Bhat v. Industries Commissioner & Ors., 2003 LIC 3600 : 2004 LLR 236
(Guj.HC)
In view of.service rules. (Page: 3603, Para: 6)
Therefore according .service rules. (Page: 3604, Para: 9)

2308

Chapter VA Lay-Off and Retrenchment

Sec. 25B

Note: An opposite view is given by Gujarat High Court in

Medical Officer, Primary Health Centre & Anr. v. Jikubhai R. Saparia, 2006 (109) FLR 321 : 2006 I
CLR 569 (Guj.DB)

e) The period of service rendered under different schemes under the same
employer (Bom.HC)
5A.56 Workman raised industrial dispute for illegal termination without complying with Sec.
25F and for contravention of Sec. 25G as his juniors were retained. Labour Court awarded
reinstatement with 15% back wages on the ground that the workman was in continuous
employment for more than 240 days after taking into account days when he was paid by employer
and when he was paid from Employment Guarantee Scheme Fund. It was upheld by High Court
and it held that for the purpose of determining continuous employment it makes no difference if
during the period in contemplation the workman was paid from the Employment Guarantee
Scheme Fund as long as he is under the same employer.
Executive Engineer, Irrigation Division, Gondia & Ors. v. Anandroa Ramchandra Khobragade, 2004
LIC 1034 (Bom.HC)
The petitioners who are.back wages. (Page: 1034, Para: 2)
The condition.employer. (Page: 1035, Para: 7)
.Therefore in the.same employer. (Page: 1036, Para: 10)
Hence in view.unimpeachable. (Page: 1036, Para: 11)

f) Service rendered in different projects but under one sub-division

(P&H.DB)
5A.57 Though the workman worked under various projects but all of them were executed only
under Verka Drainage sub-division and the employers witness besides the records before
Tribunal affirm the same and therefore it is held that the employer has no case to disprove the
continuous service of the workman and the plea that service rendered by the workman under
various projects cannot be clubbed together to extend the benefit of Sec. 25F of the Act cannot be
accepted and the High Court upheld the award of Labour Court that Sec. 25F attracts to the case.
Executive Engineer, Bari Doad Drainage Division, Amritsar v. Tarsem Singh & Anr., 2007 (112) FLR
1188 : 2007 LLR 509 (P&H.DB)

g) The period between the date on which he was terminated and the date of
his reinstatement if he is reinstated as per terms of settlement
(P&H.HC)
5A.58 Workman joined service on 25.9.1986 and was not allowed to work from 1.10.1987 and
finally after a settlement he was reinstated on 9.2.1988 with continuity of service but he was again
terminated on 30.3.1988. It was held that the period between 1.10.1987 to 9.2.1988 would be
counted towards his service and ordered reinstatement as the workman thus completed 240 days of
service.
State of Punjab & Anr. v. Chhedi Lal & Anr., 1995 (86) FJR 663 : 1996 (72) FLR 407 : 1995 II LLN 433
:1995 LLR 513 (P&H.HC)

Sec. 25B

Continuous service

2309

h) Service of 20 days rendered every month by workman when paid for the
whole month (Ker.HC)
5A.59 Bus driver on an average worked for 20 days in a month but was paid for whole month. It
was held that workman worked for more than 240 days.
C.K. Kumaran v. Idukki Jilla Motor Mazdoor Sangh (BMS) & Anr., 1995 I LLJ 323 : 1994 (85) FJR 340 :
1995 (70) FLR 113 : 1994 LLR 528 (Ker.HC)

i) Period of service interrupted on account of accident during the course

of job (P&H.DB)
5A.60 Uninterrupted service includes interruption in service on account of accident occurring
during the course of job.
Durga Parsad, Faridabad v. P.O. Industrial Tribunal-cum-Labour Court-1, Faridabad & Anr., 2001 II
LLJ 549 : 2001 III LLN 1137 : 2001 LLR 1036 (P&H.DB)
.The Labour Court.on the point. (Page: 550, Para: 1)

j) Service rendered during probation (Raj.HC)

5A.61 Service rendered by workman during probation period should be taken into consideration
for computing 240 days service and if it was found that 240 days service was rendered compliance
of Sec. 25F would be mandatory.
Mohd. Yusuf v. Labour Court & Ors., 2001 (90) FLR 517 : 2001 I LLN 424 (Raj.HC)

k) The period interrupted due to sickness or authorized leave (AP.DB)

5A.62 For the purpose of regularisation, interruption of service due to sickness or authorised
leave shall be considered for computing continuous service hence the workmen whose
appointments though made as casual employees, having worked for a decade and more, were held
entitled to regularisation.
P. Murali & Ors. v. Management of Hindustan Machine Tools Ltd., 1998 I LLJ 784 : 1997 II LLN 383
(AP.DB)
Chapter V-B.regular employees. (Page: 786, Para: 6)

l) Paid holidays such as public festival holidays, Sundays and leave with
pay (Raj.DB)
5A.63 While calculating 240 days, Holidays and Sundays shall be considered for calculating
working days.
Babulal Sharma v. University of Ajmer & Anr., 1990 LLR 211 (Raj.DB)
.This is a.writ petition. (Page: 212, Para: 9)
5A.64 For calculating 240 days of continuous service Sundays should be considered as actual
working days.
Ram Kishan Gurjar v. State of Rajasthan & Anr., 2006 LIC 56 : 2006 I CLR 607 : 2006 LLR 301
(Raj.DB)
Note: The High Courts in recent cases (see below) ruled that Sundays and holidays for which wages are
not paid are not to be included for computing continuous service

2310

Chapter VA Lay-Off and Retrenchment

Sec. 25B

m) Period of leave with pay (All.DB)

5A.65 Days on which workman has actually not worked but wages are paid, such as public and
festival holidays and leave with pay are to be counted for determining 240 days.
Naresh Chandra Srivastava v. Scooters India Ltd. Lucknow & Anr., 1987 (54) FLR 22 : 1987 I LLN 186
(All.DB)
The petitioner.Disputes Act. (Page: 27, Para: 1)
Note: Also refer to the following cases in this regard
Execuive Engineer, PHED & Ors. v. Manoj Kumar & Anr., 2001 III LLJ 787 : 2000 (86) FLR 505 : 2000
LIC 1178 : 2000 II CLR 583 : 2000 LLR 947 (Raj.HC)
Prathma Bank v. P.O. Central Government Industrial Tribunal-cum-Labour Court, Pandu Nagar,
Kanpur, 2002 II LLJ 1000 : 2002 (93) FLR 197 : 2002 II CLR 197 : 2002 LLR 524 (All.HC)
Municipal Corporation of Delhi v. Sanjay Kumar & Ors., 2004 (105) FJR 884 : 2004 (100) FLR 938 :
2004 I LLN 861 : 2004 LIC (Sum) 2 : 2004 LLR 162 (Del.HC)
Babulal Sharma v. University of Ajmer & Anr., 1990 (60) FLR 265 (Raj.HC)
Chaggan Lal v. Panchayat Samiti & Anr., 1992 I LLJ 419 : 1990 (61) FLR 467 : 1990 LIC 1463 : 1992 I
CLR 552 (Raj.HC)
Deputy Chief Life Warden, Bharatpur v. Labour Court, Bharatpur, & Anr., 1999 III LLN 376 (Raj.HC)

n) Service with the same employer though not in the same capacity (Raj.DB)
5A.66 A workman who has worked as Lower Division Clerk (LDC) and later as peon and has
rendered 240 days service, his termination was held as invalid on the basis that he has worked
continuously with the same employer although he may not have worked in same capacity.
Hardeo Lal Jat v. Alwar Sahakari Bhumi Vikas Bank Ltd. & Anr., 1990 (61) FLR 264 : 1990 LLR 576
(Raj.DB)
The definition of.at his credit. (Page: 266, Para: 4)
Admittedly, the provisions.not complied with. (Page: 267, Para: 1)
In the result.reinstate the petitioner. (Page: 267, Para: 2)

o) Service rendered by the employee in the transferee company in case of

transfer of his department to a different body (Del.HC)
5A.67 Workman was employed under Delhi Municipal Corporation Management. After some
time he was transferred to D.D.A. and then again re-transferred to Delhi Municipal Corporation.
Thereafter, his services were terminated. High Court held that he had worked for more than 240
days and he cannot be denied relief of reinstatement on the ground that department in which he
was employed stood transferred to D.D.A., his termination amounted to retrenchment and as such
he was entitled to reinstatement and back wages consolidated to an award of Rs. 20000.
Workmen of Municipal Corp. of Delhi & Anr. v. Mgnt. Of Municipal Corp. of Delhi & Anr., 1986 (53)
FLR 223 (Del.HC)

p) Period of casual service rendered prior to regularization (Raj.DB)

5A.68 For assessing compensation u/s. 25-F calculating 240 days continuous service period
between 19.11.80 when he was initially appointed as work charged employee to 1.1.82 when he was
regularized would be counted because workman had worked continuously and it is immaterial that
he was temporarily employed on purely casual basis during this period.
Sri Girdhari v. The State of Rajasthan & Ors., 1989 (59) FLR 565 (Raj.DB)

Sec. 25B

2311

Continuous service

.The reason for.prescribed for employment. (Page: 566, Para: 2)

.the petitioner has.purely
compensation. (Page: 567, Para: 4)

casual

basis.The

period.assessing

.The language.continuous service.The impugned order.by the employer.

(Page: 568, Para: 1)

q) Period of service by daily wager employed through employment exchange

after termination of earlier contracts for fixed tenure (P&H.DB)
5A.69 A daily wager was appointed for various fixed periods under separate contracts and on
termination of aforesaid contract he was employed through employment exchange for 30 days, in
absence of any reasons, the period of 30 days of employment cannot be excluded while calculating
his continuous service.
S.D.O. Cum-Authority, Ambala Improvement Trust v. P.O. Labour Court & Anr., 2001 II LLJ 1610 :
2002 (92) FLR 834 : 2001 (99) FJR 232 (P&H.DB)
If we consider.days of service. (Page: 1612, Para: 4)

r) All days when employee was in employment and paid wages as per
statute/contract/Standing Orders (MP.DB)
5A.70 The expression actually worked under the employer not only includes those days where
the workman worked with hammer, sickle and pen but all those days during which he was in the
employment of the employer and paid wages as per contract of service, statute or standing orders
and hence Sundays and paid holidays to be counted to determine 240 days.
Pawan Kumar Srivastava v. Municipal Corporation, 1999 II LLJ 21 : 1999 III LLN 266 (MP.DB)
In view.standing orders. (Page: 25, Para: 10)

s) Service rendered by workmen in different categories like mason and

khalasi to be considered (Pat.DB)
5A.71 It is not incumbent on the workmen to do the same work for 240 days to claim the benefit
of the section and the service rendered by them in different categories shall also be considered and
hence the termination in violation of Sec. 25-F and 25-B, of casual workmen who were initially
appointed as masons was held illegal as they worked for 240 days including in mason and khalasi
categories.
Kailash Paswan & Ors. v. Union of India & Ors., 1985 LIC 433 (Pat.DB)
.A.B. Ojha.Khalasi. (Page: 436, Para: 8)
Section 25F.with. (Page: 437, Para: 11)

t) The period of strike though illegal when it does not constitute

misconduct (Bom.DB)
5A.72 The word Continuous Service in Sec. 25F read with Sec. 25-B, means continuity of
service but does not necessarily mean that he must have completed one year of service but it is
sufficient if he completes 240 days in any particular year of 12 calendar months to be deemed as
continuous service for the purpose of the section and hence the period from the date of recruitment
i.e. 24th January 1945 to the date of retrenchment i.e. 15th October 1954 which includes the period
of illegal strike from 6th October 1951 to 24th November 1951 was held to be taken into account for
computing retrenchment compensation.
Jairam Sonu Shogale v. New India Rayon Mill Co., Ltd., 1958 I LLJ 28 : 1958-59 (14) FJR 371 (Bom.DB)

2312

Chapter VA Lay-Off and Retrenchment

Sec. 25B

The petitioner was.with effect from 15th October 1954. (Page: 28, Para: 2)
On this petition.claimed by him. (Page: 29, Para: 2)
The Second question.compensation.then section 25-F also refers.compensation.
(Page: 30, Para: 2)
.one has to.six months.so that.than one year.But this
is.Industry.it is sufficient.service.the principal.12 Calendar
months.and where.for 240 days. (Page: 31/32, Para: 2)
In other words.set aside. (Page: 32, Para: 2)

u) To include the period of services in PWD though employee was

transferred to Municipality since he was employed in the industry
(AP.HC)
5A.73 Workman working in water works department under PWD which was eventually
transferred to the municipality, was terminated from services. The issue was whether services
under PWD can be counted for calculating 240 days in one year. The High Court held that this
section lays emphasis on employment in the industry for a continuous period of one year and is
not concerned with change in the employer, therefore, the findings of Industrial Tribunal in favour
of the workman is held correct.
Commissioner, Ongole Municipality v. Kunchala Sreenu & Ors., 2000 III LLJ 543 : 2000 (85) FLR 836 :
2000 I LLN 911 : 2000 I CLR 771 : 2000 I LLR 316 (AP.HC)
Note: Also refer to the following case/s
M.P. Rajya Beej Evam Farm Vikas Nigam v. P.O. Labour Court & Anr., 1997 (76) FLR 193 (MP.HC)

v) Service rendered in a sub-division to the service at Divisional Office

since sub-divisional office is functioning under Divisional Office
(Bom.HC)
5A.74 Workmen challenged his termination on ground that he had put in continuous service of
more than 240 days and was terminated without complying with Sec. 25F. Labour Court found
that part of his service was under Executive Engineer, Ratnagiri, and part of service under
Executive Engineer, Chiplun Sub-Division where termination occurred but that part did not
exceed 240 days therefore Sec. 25F was not applicable. However High Court held that Divisional
Office was at Ratnagiri and Chiplun was mere Sub Division and therefore if this fact was taken into
consideration one cannot escape from concluding that employee worked for more than 240 days in
a year and Sec. 25F was attracted. Employee entitled to reinstatement and full back-wages.
Rajaram Dhakatu Gaikar v. State of Maharashtra & Ors., 1998 (78) FLR 730 : 1998 I CLR 306
(Bom.HC)

v) Computation of 240 days excludes

a) The period of service rendered in different units when there is no
integrality between them though they are under the same PWD (S.C.2J)
F 5A.75
A daily wager worked for 145 days in sub-division-2 from Oct. 1994 to Feb. 1995 and
for 90 days in sub-division-3 from March 1995 to July 1995 where after he was terminated. The
Labour Court considered the service rendered in both the sub-divisions for the purpose of Sec. 25B
and held that there is violation of Sec. 25F and granted reinstatement with full back wages. The
writ petition against this order was dismissed as a consequence of which employer filed a special
leave petition in Supreme Court which held that the Labour Court erred in clubbing the service in

Sec. 25B

Continuous service

2313

the two sub-divisions as they are separate and distinct and wrongly granted the reliefs. Hence the
award was set aside and employer was directed to pay an amount of Rs. 25000 only.
Haryana Urban Development Authority v. Om Pal, 2007 II LLJ 1030 : 2007 (113) FLR 831 : 2007 II
LLN 995 : 2007 II CLR 856 : 2007 LLR 582 : 2007 (2) SCC (L&S) 255 : 2007 (5) SCC 742 (S.C.2J)
The Industrial Tribunal-cum-Labour Court unfortunately did not go into the said question at all. If both
the establishments are treated to be one establishment, for the purpose of reckoning continuity of service
within the meaning of Section 25B of the Act, as was held by the Tribunal, a person working at different
point of time in different establishments of the statutory authority, would be entitled to claim
reinstatement on the basis thereof. However, in that event, one establishment even may not know that the
workman had worked in another establishment. In absence of such a knowledge, the authority
retrenching the workman concerned would not be able to comply with the statutory provisions contained
in Section 25F of the Act. Thus, once two establishments are held to be separate and distinct having
different cadre strength of the workmen, if any, we are of the opinion that the period during which the
workman was working in one establishment would not enure to his benefit when he was recruited
separately in another establishment, particularly when he was not transferred from one Sub-Division to
the other. In this case he was appointed merely on daily wages. (Page: 1031/1032, Para: 4)
Respondent worked for a very short period. He only worked, as noticed hereinbefore, in 1994-95. The
Industrial Tribunal-cum-Labour Court, therefore, in our opinion committed an illegality, while passing
an award in the year 2003, directing the reinstatement of the respondent with full back-wages. Although
we are of the opinion that the respondent was not entitled to any relief, whatsoever, we direct the
appellant to pay him a sum of Rs. 25,000/-. (Page: 1032, Para: 7)
5A.76 Workman had worked from 1.11.1990 to 31.12.1992 in different units of PWD and
department contended that he worked in different units which is independent and separate and
seniority of workman is maintained unitwise. So he has not completed 240 days of continuous
service in each department. Labour Court however awarded reinstatement on the ground that
termination was in contravention to Sec. 25-F. High Court held that evidence on record proves that
units though under the same department cannot be said to have any integrality with one another
and the employee was agitating the same without evidence so award of Labour Court cannot be
sustained and period of employment under different units cannot be clubbed together for the
purpose of completion of statutory period of 240 days.
State of Rajasthan & Ors. v. Arun Kumar & Ors., 2000 III LLJ 1439 : 2000 (87) FLR 501 (Raj.HC)

b) Notice period indicating intention to terminate services of workman

(Mad.DB)
5A.77 In the case of termination of services of a temporary clerk a notice period which was of 14
days in instant case cannot be added to period of service rendered even if the stand of workman of
having worked for 233 days is accepted over the stand of the management of his having worked for
226 days specially if during the said period employee was not in employment at all and hence Sec.
25-F r/w. Sec. 25B(2) is not attracted.
State Bank of India (rep. By Chief General Manager), Madras v. Industrial Tribunal Madras & Anr.,
1990 I LLN 272 : 1993 (67) FLR 18 (Sum) (Mad.DB)
.learned counsel appearing.days as required. (Page: 274, Para: 2)
.expressions actually.standing orders, etc.we do not.of the Act.
(Page: 274, Para: 2)

c) Service rendered by employee in separate establishments (Raj.DB)

5A.78 The service rendered by an employee in various establishments which are separate and
have no functional integrality cannot be clubbed to arrive at 240 days in a year of service.
Karan Singh Saktawat v. State of Rajasthan & Ors., 2002 I LLN 1230 : 2002 I LLJ 937 : 2002 (92) FLR
431 : 2002 LLR 320 (Raj.DB)

2314

Chapter VA Lay-Off and Retrenchment

Sec. 25B

We are of the opinion that the judgement of the learned Single Judge is correct and the learned judge is
right in placing reliance upon the decision rendered in Workmen of Straw Board Manufacturing
Company Ltd., v. Straw Board Manufacturing Company Ltd., (1974 (2) LLN 102) where in applying the
test of functional integrality while considering the provisions relating to retrenchment in the context of
two factories situated in the same compound and owned by the same company were held to be distinct
Separate establishments notwithstanding unity of the employer and unit of financial management
because of absence of functional integrality in the sense functioning or working of one was not dependent
on the other notwithstanding unity of ownership and unity of Management. There is no dispute before us
that if different sub-divisions of the Irrigation Department are considered to be separate establishment the
appellant workman does to fulfil the criteria of continuous employment for one year or more on an
establishment under an employer for the purpose of invoking the provisions of S. 25-F of the Act.
(Page: 1233, Para: 9)

d) The service rendered in different establishments though of same

employer when administrative set up of the establishments are different
(S.C.2J)
F 5A.79
When casual employee is employed in different establishments, may be under the
same employer, having different administrative set ups, the concept of continuous service cannot
be applied. It is held that his recruitment in the said establishment would constitute a fresh
employment every time.
Union of India & Ors. v. Jummasha Diwan, 2006 (111) FLR 895 : 2007 I LLJ 225 : 2007 I LLN 83 : 2007
I CLR 134 : 2007 LLR 6 : 2006 SCC (L&S) 2037 : 2006 (8) SCC 544 (S.C.2J)
Respondent was appointed as a daily wager in the Railway Electrification Project at Vadodara Ratlam
section. He was granted a temporary status. He is said to have joined the Railway Electrification Project
as a skilled worker under the Divisional Electrical Engineer, Western Railway (Overhead Equipment)
Railway Electrification Railway Yard, Pratapnagar, Baroda, Appellant No. 3 herein. He was retrenched
purportedly on the premise that railway electrification works at Vadodara Ratlam section came to an end.
He was paid retrenchment compensation in terms of Section 25F of the Industrial Disputes Act, 1947 (for
short the Act). (Page: 896, Para: 1)
If a workman voluntarily gives up his job in one of the establishments and joins another, the same would
not amount to his being in continuous service. When a casual employee is employed in different
establishments, maybe under the same employer, e.g., the Railway Administration of India as a whole,
having different administrative set up, different requirements and different projects, the concept of
continuous service cannot be applied and it cannot be said that even in such a situation he would be
entitled to a higher status being in continuous service. It is not in dispute that the establishment of
Appellant No. 3 herein had started a project. His recruitment in the said establishment would, therefore,
constitute a fresh employment. In a case of this nature, Respondent would not be entitled to his seniority.
If the project came to a close, the requirements of Section 25N of the Act were not required to be complied
with. (Page: 897, Para: 7)
Note: Also refer to the following case
Sarvajanik Nirman Mazdoor Sangh, Bhilwara & Ors v. Labour Court, Udaipur & Anr., 1995 LIC 2012
(Raj.HC)

e) Broken spells of temporary employment under different units of an

employer (S.C.2J)
F 5A.80
The Employee was terminated from service and reference was made u/s. 10(1)(c) to
the Industrial Court, which held that as the employee had worked in different units under different
administrations of the appellant corporation these units cannot be considered as single unit and
hence the days put in by the employee in different units cannot be counted for the purpose of
determining whether the employee worked for 240 days continuously hence Sec. 25F did not apply.
It also held that the employee did not have requisite qualification in that he had not passed 7th class
and also that his last appointment was as water supply contractor. The Tribunal therefore,
rejected the claim of the employee. On writ petition by the employee, the Single Judge took a

Sec. 25B

Continuous service

2315

contrary view holding that the employee had worked continuously for 240 days under the same
employer. The appeal against this order also came to be dismissed. On appeal by the employer, the
Supreme Court finally concluded that the Industrial Tribunal was correct in that the employee
went in search of employment at different places and wherever temporary employment was
available he accepted the employment. The records also showed that the employee was not
qualified for a permanent job. Hence, the Supreme Court held that the number of days of work put
in by the employee in broken periods cannot be taken as continuous employment for the purpose of
Sec. 25F of the Act and hence allowed the appeal.
DGM., Oil & Natural Gas Corporation Ltd. & Anr v. Ilias Abdulrehman, 2005 I LLJ 554 : 2005 (104)
FLR 300 : 2005 I LLN 659 : 2005 I CLR 488 : 2005 (2) SCC 183 : 2005 AIR (SC) 660 : 2005 SCC (L&S)
195 (S.C.2J)
A perusal of the evidence adduced by the workman himself shows that he went in search of employment
to different places and whenever there was a temporary employment available in different Departments
of the appellant-Corporation; be it the field work or the work in the Chemistry Department, he accepted
the employment and worked in these Departments not in one place alone but at different places like
Baroda and Mehsana. It has come on record that the Management did try to accommodate the appellant in
a permanent job but could not do so because of lack of qualification. In such circumstances we think the
Industrial Tribunal was justified in coming to the conclusion that the number of days of work put in by the
respondent in broken periods, cannot be taken as a continuous employment for the purpose of section 25F
of the Act, as has been held by this Court in the case of Indian Cable Co. Ltd. (supra). We are aware that
the judgment of this Court in Indian Cable Co. Ltd (supra) was rendered in the context of section 25G of
the Act, still we are of the opinion that the law for the purpose of counting the days of work in different
Departments controlled by an apex Corporation will be governed by the principles laid down in the
judgment of Indian Cable Co. Ltd (supra), and the Industrial Tribunal was justified in dismissing the
Reference. (Page: 556, Para: 8)

f) All artificial breaks in service (Mad.DB)

5A.81 All artificial breaks given in service shall be ignored and excluded to compute the period of
continuous employment.
Government of Tamil Nadu v. Tamil Nadu Race Course General Employees Union & Anr., 1992 LIC
2004 : 1993 I CLR 11 (Mad.DB)
It should.be ignored. (Page: 2009, Para: 14)
5A.82 Where a daily wage earner worked from time to time for a period exceeding 240 days and
during 1982-1984 he worked for 485 days. It was held that it is clear that whatever breaks were
given were all artificial breaks and therefore he is entitled to the benefits of Sec. 25-F of the
Industrial Disputes Act, 1947.
Madho Shankar Dave v. The State of Rajasthan & Ors., 1991 (62) FLR 683 : 1991 LLR 468 (Raj.HC)

g) Sundays and holidays in case of daily wager for which no wages paid
(P&H.HC)
5A.83 Where the Labour Court excluded Sunday and other holidays to determine continuous
service and held that the daily wagers not entitled to any retrenchment compensation, the
workman moved High Court, which upheld the Labour Courts order and held that the Sunday
and other holidays for which no wages paid could not be counted for the purpose of determining
continuous service of 240 days.
Malkiat Singh v. Labour Commissioner & Anr., 1997 I CLR 524 (P&H.HC)

2316

Chapter VA Lay-Off and Retrenchment

Sec. 25B

5A.84 The services of a Clerk were terminated on which dispute was raised. On reference,
Tribunal held that workman had rendered continuous service of more than 240 days inclusive of
Sundays and Holidays, also held the order of termination was bad as having not issued
charge-sheet, hence granted reinstatement with full back wages. High Court held that unpaid
Sundays and Holidays cannot be taken into account while calculating actual working days in a
calendar year. It was also held that payment of bonus, provident fund scheme, cannot be treated as
relevant factors, Labour Court made wrong calculation of actual working days. Order cannot be
sustained in law.
Balmer Lawrie & Co. Ltd. v. First Industrial Tribunal of West Bengal & Ors., 2007 I CLR 110 : 2007 II
LLJ 81 : 2007 (112) FLR 787 : 2007 III LLN 761 : 2007 LLR 260 (Cal.HC)
The respondent.for adjudication. (Page: 111, Para: 2)
While considering.other benefits. (Page: 112, Para: 5)
In my view.sustained in law. (Page: 113, Para: 12)
Note: Also refer to the following case/s
Karnal Co.op. Sugar Mill Ltd. v. Presiding Officer, Labour Court, Panipat & Anr., 2007 I CLR 976
(P&H.DB)

h) Holidays and Sundays even if paid since the words actually worked
exclude it (Mad.DB)
5A.85 The words actually worked were not held to include holidays or even Saturdays and
Sundays which were paid holidays and days provided the explanation can be included while
calculating 240 days in addition to the actual working days.
A. Parthasarathi & Anr. v. Management of Standard Motors Products of India Ltd. & Anr., 1979 LIC 136
(Sum) (Mad.DB)

i) Service rendered by workman due to interim orders of the High Court

(Guj.DB)
5A.86 The services of an employee was terminated but after a month, he was reappointed on
daily wages. He filed a writ for reinstatement with continuous service for violation of Sec. 25F and
came to continue in service by ad-interim order of the High Court. However the employer
terminated his service second time after regular appointment was made. On reference, Labour
Court gave an ex-parte award in his favour as the employer was absent The employee cleverly
suppressed the fact from the Labour Court that he was continuing in service only by virtue of
interim orders in his civil application pending against his earlier termination. The Labour Court
after hearing rejected employers application for recall and review. The Division Bench allowing
the appeal setting aside the award and decision of Single Judge remanded the matter to Labour
Court to be heard on merits holding that the employee could not have completed 240 days unless
the period of service rendered by him due to interim order of the High Court which should not be
taken to be a period for determination of continuous service. The Labour Court also committed an
error in not granting the review, the above facts have material bearing on the merits of the case
before it.
Medical Officer, Primary Health Centre & Anr. v. Jikubhai R. Saparia, 2006 (109) FLR 321 : 2006 I
CLR 569 (Guj.DB)
Note: Also refer to the following case
Panipat Thermal Power Project Station v. State of Haryana & Ors., 1996 III LLJ (Sum) 64 : 1996 (88)
FJR 465 : 1996 (73) FLR 1142 : 1996 II LLN 735 : 1995 LIC 2630 (P&H.HC)

Sec. 25B

Continuous service

2317

j) Training period as an apprentice (All.HC)

5A.87 The workman was appointed as an apprentice. He was terminated for not reporting for
duty. On workmans application, Labour Court directed his reinstatement holding that he
completed 240 days of service by including the period of training. Employer challenged the order
contending that the workman had worked for 204 days only and training period should be
excluded. High Court remanded the matter to Labour Court for fresh adjudication because
Labour Courts calculation regarding 240 days service was not appeared to be proper and sound.
U.P. State Spinning Mills Co. (No.II) Ltd. v. Labour Court, Allahabad & Anr., 1997 (75) FLR 237 : 1997
I LLN 774 (All.HC)

k) Period of continuous absence for three years (Raj.HC)

5A.88 The Tribunal on appreciation of evidence clearly found that workman (daily rated
employee) has completely failed to prove that he ever worked for 240 days in any calendar year.
The view taken by the Tribunal has been confirmed by High Court which observed that first of all
he was not a regular employee, and the very concept of daily wage is that if there is work, then only
workman is to be employed for doing work otherwise not. Further the person was suffering from
arthritis, continuously remaining absent for a period of 3 years, and this type of medical leave
cannot be included in calculating 240 day of service Hence he can never be reinstated in service.
Bhura Ram v. S.D.O. Telephone & Telegraphs & Ors., 2001 (88) FLR 38 (Raj.HC)
.It is clear that the.u/A. 226. (Page: 39, Para: 3)
This submission has.reinstated in service. (Page: 40, Para: 5)

l) The period of apprenticeship (Guj.HC)

5A.89 Workman was appointed as an apprentice for the period 27.9.1988 to 30.9.1989, on
completion of apprenticeship he was assigned work of typing from 30.9.1989 to 28.2.1990 and was
assigned census work from 1.3.1990 to 31.8.1990.The appointment letter stated that posts will be
abolished on the work of census being over and later on extended the period stating workman may
continue on ad hoc basis till March 1991 as census work is likely to continue beyond 31.8.1990.
Since typing work was over workman was terminated by 21.9.1990. Labour Court awarded
reinstatement with 40% back wages holding that workman has completed 240 days. High Court
held while calculating 240 days of service, apprenticeship period should not be considered, 240
days has to be calculated only from the period of appointment i.e. 30.9.1989. Moreover, the
appointment was also for a specific period which came to an end on 28.2.1990, Labour Court erred
in granting reinstatement. On the above said grounds Labour Courts award was quashed.
Commissioner, Rajkot Municipal Corporation v. Geetaben Anilkumar Tank, 2002 LIC 301 (Guj.HC)

c) Burden of proof as to 240 days of continuous service

1. Lies on the employee (S.C.3J)
F 5A.90
The workman was engaged as Ticca Mazdoor and his service was not permanent in
nature. On his termination, he moved Tribunal, which ordered his reinstatement with back wages
as Sec. 25F was not complied with. Single Judge rejected the writ petition filed by employer and
Division Bench modified the order of Tribunal so far as back wages only. Being aggrieved,
employer moved Supreme Court, which set aside all orders of lower Courts because no evidence
was produced by workman to prove his 240 days service and initial burden of proof was on
workman to prove 240 days service.
Manager R.B.I. Bangalore v. S. Mani & Ors., 2005 (105) FLR 1067 : 2005 II LLN 952 : 2005 LIC 2598 :
2005 II CLR 3 : 2005 LLR 737 : 2005 SCC (L&S) 609 : 2005 AIR (SC) 2179 : 2005 (5) SCC 100 (S.C.3J)

2318

Chapter VA Lay-Off and Retrenchment

Sec. 25B

Pleadings are no substitute for proof. No workman, thus, took an oath to state that they had worked for
240 days. No document in support of the said plea was produced. It is, therefore not correct to contend
that the plea raised by the Respondents herein that they have worked continuously for 240 days was
deemed to have been admitted by applying the doctrine of non-traverse. It any event the contention of the
Respondents having been denied and disputed, it was obligatory on the part of the Respondents to add
new evidence. The contents raised in the letters of the Union dated 30th May, 1988 and 11th April, 1990
containing statements to the effect that the workmen had been working continuously for 240 days might
not have been replied to, but the same is of no effect as by reason thereof, the allegations made therein
cannot be said to have been proved particularly in view of the fact that the contents thereof were not
proved by any witness. Only by reason of non-response to such letters, the contents thereof would not
stand admitted. The Evidence Act does not say so. (Page: 1073, Para: 18)
We have noticed hereinbefore that the Appellant herein raised a specific plea denying or disputing the
claim of the Respondents that they had completed 240 days of work. Such a plea having been raised both
before the Industrial Tribunal as also before the High Court, we cannot accept that the Appellant had
abandoned such a plea. Even in this Special Leave Petition, it is contended:
(3)For that the High Court ought to have held that the disengagement of the Ticca Mazdoors
(Respondents), who were daily wage casual workers, did not involve any retrenchment and as such there
was no question of reinstatement of Respondents will full backwages from 23.7.1993.
(Page: 1081, Para: 59)
The contention of Mr. Phadke that they have abandoned the said plea cannot be accepted. Similarly, the
contention of Mr. Phadke raised before us that the order passed by the Division Bench was a consent
order is unacceptable. The Division Bench does not say so. Such a contention has been raised only on the
basis of a statement made by the Respondents in the Counter-affidavit wherein the reference had been
made to one order of the Division Bench asking the parties to make endeavour for settlement. The
Respondents contend that the order of the Division Bench is virtually a consent order. No settlement
admittedly had been arrived at. A party to the lis, in absence of a statutory interdict, cannot be deprived of
his right of appeal. The High Court has passed the judgment upon consideration of the rival contentions
raised at the Bar. It arrived at specific findings on the issues framed by it. It has, for the reasons stated in
the impugned judgment, affirmed the findings of the Industrial Tribunal as also the learned Single Judge.
The impugned order of the Division Bench, in our opinion, by no stretch of imagination, can be said to
have been passed with consent of the parties. However, we agree with the opinion of the Tribunal that the
plea of abandonment of service by the Respondents in the facts and circumstances of the case was wholly
misconceived. (Page: 1081, Para: 60)
Note: As regards the question on whom lies the burden to prove 240 days of service, the three Judge
Bench of the Apex Court in the above case and other cases referred here settle as of to-day the legal
position on the question as to on whom the burden to prove 240 days of service lies as of to-day
F 5A.91
Claimant workman unless proves in evidence that he has worked for 240 days in
preceding year to his termination, no onus of proof lies on employer to prove that he has not
worked for 240 days.
Range Forest Officer v. S. T. Hadimani, WITH State of Karnataka & Anr. v. S. T. Hadimani, 2002 AIR
(SC) 1147 : 2002 I LLJ 1053 : 2002 (100) FJR 397 : 2002 (93) FLR 179 : 2002 (94) FLR 622 : 2002 II
LLN 391 : 2002 LLR 339 : 2002 LIC 987 : 2002 SCC (L&S) 367 : 2002 (3) SCC 25 (S.C.2J)
.In our opinion the Tribunal was not right in placing the onus on the Management without first
determining on the basis of cogent evidence that the respondent had worked for more than 240 days in the
year preceding his termination. It was the case of the claimant that he had so worked but this claim was
denied by the Appellant. It was then for the claimant to lead evidence to show that he had in fact worked
for 240 days in the year preceding his termination. Filing of an affidavit is only his own statement in his
favour and that cannot be regarded as sufficient evidence for any Court or Tribunal to come to the
conclusion that a workman had, in fact, worked for 240 days in a year. No proof of receipt of salary or
wages for 240 days or order or record of appointment or engagement for this period was produced by the
workman. On this ground alone, the award is liable to be set aside. (Page: 1148, Para: 3)

Sec. 25B

Continuous service

2319

F 5A.92
The workman was reinstated by Labour Court as Sec. 25F was not followed and
employer did not produce attendance register to prove that the workman did not complete 240
days service. High Court upheld Labour Courts order. On appeal, Supreme Court held that
burden of proof to establish completion of 240 days of work within a period of 12 months preceding
the termination as well as the burden of proof that he was not gainfully employed after the
termination was on the workman and not an the management.
Municipal Council, Sujanpur v. Surinder Kumar, 2006 II LLJ 768 : 2006 (110) FLR 198 : 2006 III LLN
806 : 2006 II CLR 643 : 2006 LLR 662 : 2006 (5) SCC 173 : 2006 SCC (L&S) 967 (S.C.2J)
The Labour Court and the High Court also proceeded wrongly on the premise that the burden of proof to
establish non-completion of 240 days of work within a period of twelve months preceding the
termination, was on the management. The burden was on the workman. (Page: 770, Para: 12)
Equally well settled is the principle that the burden of proof, having regard to the principles analogus to
Section 106 of the Evidence Act that he was not gainfully employed, was on the workman.
(Page: 770, Para: 13)
Apart from the aforementioned error of law, in our considered opinion, the Labour Court and
consequently the High Court completely misdirected themselves insofar as they failed to take into
consideration that relief to be granted in terms of Section 11A of the said Act being discretionary in
nature, a Labour Court was required to consider the facts of each case therefor. Only because relief by
way of reinstatement with full back wages would be lawful, it would not mean that the same would be
granted automatically. (Page: 770, Para: 15)
F 5A.93
The services of a daily wage employee was terminated upon reference of the dispute,
the Labour Court held that the termination was illegal for non-compliance of Sec. 25F of the Act.
By an award, it set aside the termination, reinstated him with full back-wages. The Single Judge set
aside the award on the ground that the workman had not discharged the initial onus of proving
that he had worked for more than 240 days. The Division Bench however allowed the appeal of the
workman and restored the award setting aside the judgment of Single Judge. The Supreme Court
setting aside the award of Labour Court and the judgment of Division Bench held that the High
Court proceeded on the basis as if the period of employment of workman has to be established by
the employer. The Court emphasized the repeated view taken that the burden of proof is on the
claimant to show that he had worked for 240 days in a given year.
Krishna Bhagya Jala Nigam Ltd. v. Mohammed Rafi, 2006 IV LLN 208 : 2006 (110) FLR 1212 : 2006
LLR 1080 : 2007 (1) SCC (L&S) 679 (S.C.2J)
.According to the learned single Judge, the workman had not discharged the initial onus of
proving that he had worked for more than 240 days with the Jala Nigam and therefore the award directing
his reinstatement was illegal. The writ petition was allowed and the award of the Labour Court set aside. It
is against this order of the learned single Judge that a writ appeal was filed before the Division Bench. By
the impugned judgment, the writ appeal was allowed. (Page: 209, Para: 2)
In R.M. Yellatti v. The Asst. Executive Engineer MANU/SC/1607/2005, the decisions referred to above
were noted and it was held as follows:
Analyzing the above decisions of this Court, it is clear that the provisions of the Evidence Act in terms do
not apply to the proceedings under section 10 of the Industrial Disputes Act. However, applying general
principles and on reading the aforestated judgments, we find that this Court has repeatedly taken the view
that the burden of proof is on the claimant to show that he had worked for 240 days in a given year. This
burden is discharged only upon the workman stepping in the witness box. This burden is discharged upon
the workman adducing cogent evidence, both oral and documentary. In cases of termination of services of
daily waged earner, there will be no letter of appointment or termination. There will also be no receipt or
proof of payment. Thus in most cases, the workman (claimant) can only call upon the employer to
produce before the Court the nominal muster roll for the given period, the letter of appointment or
termination, if any, the wage register, the attendance register etc. Drawing of adverse inference ultimately
would depend thereafter on facts of each case. The above decisions however make it clear that mere
affidavits or self-serving statements made by the claimant/workman will not suffice in the matter of
discharge of the burden placed by law on the workman to prove that he had worked for 240 days in a

2320

Chapter VA Lay-Off and Retrenchment

Sec. 25B

given year. The above judgments further lay down that mere non-production of muster rolls per se
without any plea of suppression by the claimant workman will not be the ground for the tribunal to draw
an adverse inference against the management. Lastly, the above judgments lay down the basic principle,
namely, that the High Court under Article 226 of the Constitution will not interfere with the concurrent
findings of fact recorded by the Labour Court unless they are perverse. This exercise will depend upon
facts of each case. (Page: 211, Para: 6)
The above position was again re-iterated in ONGC Ltd. and Anr. v. Shyamal Chandra Bhowmik
MANU/SC/2039/2005 and Chief Engineer, Ranjit Sagar Dam and Anr. v. Sham Lal, 2006 AIR SCW
3574.
Above being the position, impugned order of the High Court cannot be maintained and is set aside.
(Page: 211, Para: 7)
F 5A.94
The services of the employees were terminated by oral intimation on the ground that
they were daily wagers and there was no work. The employees challenged it as illegal since they
claimed to have worked for 240 days in each of the years right from the beginning. The Labour
Court set aside the termination as violative Sec. 25F on the basis of the zerox copies of attendance
and salary register produced by the employer holding that the burden of proof lies on the
employer. Rejecting the orders of the Labour Court and High Court, the Apex Court held that the
burden of proof lies on the employee that he worked for 240 days for the preceding one year and he
must adduce evidence apart from examining himself to prove the said factum and since the
workmen have not adduced any evidence except making oral statements that they worked for more
than 240 days, the award and judgement of High Court are set aside.
Surendranagar Distt. Panchayat & Anr. v. Gangaben Laljibhai & Ors., 2006 III LLJ 320 : 2006 (110)
FLR 548 : 2006 LLR 887 : 2006 SCC (L&S) 1623 (S.C.2J)
In a recent judgment in R.M. Yellatti v. The Asst. Executive Engineer MANU/SC/1607/2005, the
decisions referred to above were noted and it was held as follows:
Analyzing the above decisions of this Court, it is clear that the provisions of the Evidence Act in terms do
not apply to the proceedings under Section 10 of the Industrial Disputes Act. However, applying general
principles and on reading the aforestated judgments, we find that this Court has repeatedly taken the view
that the burden of proof is on the claimant to show that he had worked for 240 days in a given year. This
burden is discharged only upon the workman stepping in the witness box. This burden is discharged upon
the workman adducing cogent evidence, both oral and documentary. In cases of termination of services of
daily waged earner, there will be no letter of appointment or termination. There will also be no receipt or
proof of payment. Thus in most cases, the workman (claimant) can only call upon the employer to
produce before the Court the nominal muster roll for the given period, the letter of appointment or
termination, if any, the wage register, the attendance register etc. Drawing of adverse inference ultimately
would depend thereafter on facts of each case. The above decisions however make it clear that mere
affidavits or self-serving statements made by the claimant/workman will not suffice in the matter of
discharge of the burden placed by law on the workman to prove that he had worked for 240 days in a
given year. The above judgments further lay down that mere non-production of muster rolls per se
without any plea of suppression by the claimant workman will not be the ground for the tribunal to draw
an adverse inference against the management. Lastly, the above judgments lay down the basic principle,
namely, that the High Court under Article 226 of the Constitution will not interfere with the concurrent
findings of fact recorded by the Labour Court unless they are perverse. This exercise will depend upon
facts of each case. (Page: 323, Para: 9)
It was held in all these cases that the burden of proof lies on the workman to show that he had worked
continuously for 240 days for the preceding one year and it is for the workman to adduce evidence apart
from examining himself to prove the factum of being in employment of the employer.
(Page: 323, Para: 11)
In the instant case the Labour Court and the High Court also lost sight of the fact that the zerox copies of
the appellants attendance and salary registers were produced. The respondents have not adduced any
evidence except making oral statement that they had worked for more than 240 days.
(Page: 323, Para: 12)

Sec. 25B

Continuous service

2321

F 5A.95
The services of the employee was terminated on 13.11.1990. The employer contended
that he did not complete 240 days immediately preceding termination. The Labour Court held that
the termination was illegal holding that the burden of proof that the employee did not work for 240
days was on the employer which was confirmed by the High Court. The Apex Court holding that
the burden of proof that he worked for 240 days lies on the employee, set aside the order of the High
Court.
Chief Engineer, Ranjit Sagar Dam & Anr. v. Sham Lal, 2006 III LLJ 326 : 2006 (110) FLR 552 : 2006 III
LLN 751 : 2006 LIC 3048 : 2006 LLR 881 : 2006 SCC (L&S) 1617 : 2006 AIR (SC) 2682 (S.C.2J)
In our opinion the Tribunal was not right in placing the onus on the management without first
determining on the basis of cogent evidence that the respondent had worked for more than 240 days in the
year preceding his termination. It was the case of the claimant that he had so worked but this claim was
denied by the appellant. It was then for the claimant to lead evidence to show that he had in fact worked
for 240 days in the year preceding his termination. Filing of an affidavit is only his own statement in his
favour and that cannot be regarded as sufficient evidence for any Court or tribunal to come to the
conclusion that a workman had, in fact, worked for 240 days in a year. No proof of receipt of salary or
wages for 240 days or order or record of appointment or engagement for this period was produced by the
workman. On this ground alone, the award is liable to be set aside. (Page: 327/328, Para: 2)
F 5A.96
The burden to prove that the employee has completed 240 of days service is on the
workman and having failed to do so his termination without compliance of Sec. 25F was valid,
hence reversal of the order of Labour Court by the High Court was held to be manifest error and
was set aside.
M/s. Essen Deinki v. Rajiv Kumar, 2002 III LLJ 1111 : 2002 (95) FLR 949 : 2002 IV LLN 1176 : 2002
LIC 3563 : 2002 III CLR 943 : 2003 LLR 113 : 2003 SCC (L&S) 13 : 2003 AIR (SC) 38 : 2002 (8) SCC
400 (S.C.2J)
.The requirement of the Statute of 240 days cannot be disputed and it is for the employee
concerned to prove that he has in fact completed 240 days in the last preceding 12 months period. As
noticed hereinbefore, it has been the definite case of the workman concerned whilst at the stage of
evidence that he has not worked for 240 days, as noticed hereinbefore in this judgment more fully. And it
is on this score Mr. Ranjit Kumar has been rather emphatic that the High Court has thus fallen into a grave
error in reversing the order of the Labour Court. It is a finding of fact which the High Court cannot
possibly overturn without assailing the order of the Labour Court as otherwise perverse. The High Court
unfortunately has not dealt with the matter in that perspective. (Page: 1114/1115, Para: 14)
.The High Court, in our view, has thus committed a manifest error in reversing the order of the
Labour Court. (Page: 1115, Para: 16)
5A.97 The burden of proof is on the workman to establish before the Court that he has worked
for the required number of days to attract the section, hence in absence thereof Tribunal has
erroneously held it as retrenchment.
Employers in Relation to the Management, Kuya Colliery of M/s. Bharat Coking Coal Ltd. v. P.O.
Central Government Industrial Tribunal 2, Dhanbad & Ors., 2003 (98) FLR 718 : 2004 LIC 947 : 2003
LLR 954 (Jhar.DB)
We find that.the year 1976.In the face.the muster rolls.
(Page: 719, Para: 2)
.In our view.to be quashed. (Page: 720, Para: 3)

2322

Chapter VA Lay-Off and Retrenchment

Sec. 25B

5A.98 Workman challenged his termination since Sec. 25F was not complied with Labour Court
refused to grant any relief because workman failed to prove that he had worked for 240 days in the
year preceding his termination. Labour Courts order upheld by Division Bench holding that once
the workman fails to lead any cogent evidence to prove the continuous service then management
cannot be burdened with any liability to prove the same.
Babu Ram v. Divisional Forest Officer, U.T. Chandigarh, & Anr., 2006 II LLJ 486 : 2005 IV LLN 725
(P&H.DB)
5A.99 The workman was appointed against leave vacancy. On termination, he moved Labour
Court which reinstated him as Sec. 25F was not followed. Single Judge set aside Labour Courts
order since workman did not adduce any evidence before Labour Court to prove his 240 days
service and Labour Court wrongly shifted the burden on employer to prove that workman did not
work for 240 days.
Smt. Kanta (Deceased) through LRS. v. MTNL, 2006 I LLJ 573 : 2005 LLR 1110 (Del.DB)
5A.100 The services of workman was terminated. She contested the termination in a writ petition
before High Court alleging that the termination was illegal in violation of Sec. 25F of the Act,
having worked continuously for 240 days in terms of Sec. 25B(1). The High Court dismissing the
petition upheld the termination and held that she miserably failed to discharge her burden of proof
that she worked for 240 days. The employer cannot be held to have deliberately withheld the
relevant documents sought by the employee due to transfer of his company.
Smt. Shakuntala Pravinbhai Saraiya v. Union Carbide India Ltd. (Now known as Eveready Industries
Ltd.) & Ors., 2006 (110) FLR 1060 : 2006 LLR 1012 : 2006 II CLR 1082 (Bom.DB)
Note: Also refer o the following case
N.S. Ravichandran v. Management of Thanthai Periyar Transport Corpn. & Ors., 2003 I LLJ 1015 :
2003 (102) FJR 53 : 2003 I LLN 415 : 2003 LLR 380 (Mad.HC)
Daji Dada Pawar & Ors., Umapati Chauhan of Mumbai v. Ornate Multi-Model Carriers Pvt. Ltd., 2003
(103) FJR 810 : 2003 III CLR 307 (Bom.HC)
Note: Also refer to the following case/s
Burden to prove that whether workman has completed 240 days is on the workman.
Pramod Kumar v. State of Bihar & Ors., 2001 (91) FLR 824 (Pat.HC)
Goutam Chatterjee v. State of West Bangal & Ors., 2001 II LLJ 282 : 2001 (89) FLR 181 : 2001 III LLN
1021 : 2001 I CLR 781 : 2001 LLR 431 (Cal.HC)
Bharatiya Dak Tar Mazdoor Manch (through its President) v. General Manager, Kalyan Telecom
District, & Anr., 2003 (99) FLR 457 : 2003 III LLN 612 (Bom.HC)

i) When the workman discharges original burden

a) When employee proved 240 days service in a period of 12 months, no
further proof of 240 days service in each of the 8 years necessary
(S.C.2J)
F 5A.101 When a company was closed down u/s. 25FFF and where the workman had actually
discharged her burden to prove that she had worked for not less than 240 days during a period of
12 calendar months immediately preceding the retrenchment, the Court held that the provisions of
Sec. 25B does not further impose any burden on the workman to prove that she had also worked for
240 days in each of the 8 years she was in service of the company.
Ramakrishna Ramnath v. The Presiding Officer, Labour Court, Nagpur & Anr., 1970 II LLJ 306 : 1972
(41) FJR 209 : 1970 (21) FLR 159 : 1973 LIC 87 : 1970 (3) SCC 67 (S.C.2J)
.under S. 25-B has further to show that he has worked during all the period he has been in the
service of the employer for 240 days in the year. (Page: 314, Para: 2)

Sec. 25B

Continuous service

2323

b) By adducing records in support of service of 240 days (AP.HC)

5A.102 It is clear that the management by producing earlier records for 1989-1993 and not
producing records for the period 1994-1995 due to efflux of time had wantonly evaded to produce
records. The workman had in fact discharged his earlier burden by adducing evidence and
therefore the burden now shifted to the management which has the custody of relevant documents
to prove that the workmen had not worked for 240 days continuously. Hence, the award given by
the Tribunal that the workman failed to produce satisfactory evidence to the effect that they
worked for 240 days was set aside and the matter remanded back to the Tribunal for adjudication
afresh.
Dena Bank Employees Union, Hyderabad v. Industrial Tribunal-I A.P., Hyderabad & Anr., 2005 I LLJ
200 : 2005 (104) FLR 434 : 2004 LLR 1157 (AP.HC)
It is understandable.continuously for 240 days. (Page: 204, Para: 10)

c) By producing certificate of employment (S.C.3J)

F 5A.103 The daily wager was terminated without complying with Sec 25F. Labour Court
awarded reinstatement with 50% back wages. Single Judge upheld the award but Division Bench
reversed the award holding that the letter on the basis of which Labour Court granted the relief
was fabricated and 240 days service was not proved by workman. On appeal, Supreme Court set
aside Division Benchs order and upheld Single Judges order because workman had entered
witness box and testified that he rendered 240 days service and no reason given by Division Bench
while discarding certificate of employment produced by workman.
R.M. Yellatti v. The Asst. Executive Engineer, 2006 I LLJ 442 : 2006 (108) FLR 213 : 2006 I LLN 7 : 2006
LIC 143 : 2005 III CLR 1028 : 2006 LLR 85 : 2006 SCC (L&S) 1 : 2006 (1) SCC 106 : 2006 AIR (SC)
355 (S.C.3J)
Now applying the above decision to the facts of the present case, we find that the workman herein had
stepped in the witness box. He had called upon the management to produce the nominal muster rolls for
the period commencing from 22-11-1988 to 20-6-1994. This period is the period borne out by the
certificate (Ex.W1) issued by the former Asstt. Executive Engineer The evidence in rebuttal from the side
of the management needs to be noticed. The management produced five nominal muster rolls (NMRs),
out of which 3 NMRs, Ex.M1, Ex.M2 and Ex.M3, did not even relate to the concerned period. The
relevant NMRs produced by the management were Ex.M4 and Ex.M5, which indicated that the workmen
had worked for 43 days during the period 21-1-1994 to 20-2-1994 and 21-3-1994 to 20-4-1994
respectively. There is no explanation from the side of the management as to why for the remaining period
the nominal muster rolls were not produced. The Labour Court has rightly held that there is nothing to
disbelieve the certificate (Ex.W1). The High Court in its impugned judgment has not given reasons for
discarding the said certificate. In the circumstances, we are of the view that the Division Bench of the
High Court ought not to have interfered with the concurrent findings of fact recorded by the Labour Court
and confirmed by the learned single Judge vide order dated 7-6-2000 in writ petition No.17636 of 2000.
This is not, therefore, a case where the allegations of the workman are founded merely on an affidavit. He
has produced cogent evidence in support of his case. The workman was working in SD-1, Athani and
Ex.W1 was issued by the former Asstt. Executive Engineer, Hipparagi Dam Construction Division No.1,
Athani-591304. In the present case, the defence of the management was that although Ex.W1 refers to the
period 22-11-1988 to 20-6-1994, the workman had not worked as a daily wager on all days during that
period. If so, the management was duty bound to produce before the Labour Court the nominal muster
rolls for the relevant period, particularly when it was summoned to do so. We are not placing this
judgment on the shifting of the burden. We are not placing this case on drawing of adverse inference. In
the present case, we are of the view that the workman had stepped in the witness box and his case that he
had worked for 240 days in a given year was supported by the certificate (Ex.W1). In the circumstances,
the Division Bench of the High Court had erred in interfering with the concurrent findings of fact.
(Page: 449, Para: 18)

2324

Chapter VA Lay-Off and Retrenchment

Sec. 25B

2. Is on the employer
i) As per the doctrine of Non est factum and res ipsa loquitor (AP.DB)
5A.104 Applying the doctrine of Non est factum and res ipsa loquitor in case of illiterate
sweeper woman who was terminated, the burden of proof that she had not worked for 240 days lies
on employer.
K. Chandramma v. Labour Court-I, Hyderabad & Ors., 1997 (77) FLR 538 : 1997 II LLN 685 : 1997
LLR 811 (AP.DB)
.Courts in India.illiterate women.even though.non est factum.
(Page: 539, Para: 3)
.The learned single.Act without help. (Page: 542, Para: 4)
.another principle.res ipsa loquito. (Page: 542, Para: 5)
The above two.to be reinstated. (Page: 543, Para: 2)
Note: The Apex Court in recent judgments (supra) has fixed the burden on the workman

ii) Burden of proof on the employer would arise subsequently after workman
discharging his burden (Bom.DB)
5A.105 Burden to prove that workmen worked for a shorter period will arise only subsequent to
the discharge of burden of proof by workman about his employment for minimum period of 240
days, even if it is framed as an additional issue.
Indian Silk Manufacturing Company Pvt. Ltd. v. Gamprasad R. Jaiswal & Ors., 1997 IV LLN 718 : 1997
II CLR 468 : 1997 LLR 1126 (Bom.DB)
Thus it.appellant company. (Page: 719, Para: 8)
Note: Also refer to the following case
Keshod Nagar Palika v. Pankajgiri Javergiri, 2000 (85) FLR 488 : 2000 III LLN 724 : 2000 I LLR 416
(Guj.HC)

d) Inference as to service of 240 days

1. When can be drawn
i) When employer refused to provide records and witnesses made evasive
statements (Raj.DB)
5A.106 Labour Court can draw inference of continuous employment of the workman and grant
reinstatement in view of the refusal of the employer to provide records requested by the workmen
and evasive statements of witnesses.
State of Rajasthan v. Sher Singh & Anr., 2003 IV LLN 954 : 2004 I LLJ 752 : 2004 LLR 157 (Raj.DB)
In view of.shorter period. (Page: 954, Para: 3)
In the totality.single judge. (Page: 955, Para: 4)

Sec. 25B

Continuous service

2325

ii) When employer failed to produce muster roll (P&H.DB)

5A.107 The adverse inference drawn against the employer with regard to tenure of service of 240
days in the absence of production of muster rolls was held valid.
State of Punjab v. Puran Singh & Anr., 2001 IV LLN 1156 (P&H.DB)
So far as.274. (Page: 1156, Para: 3)
Regarding.appointed. (Page: 1157, Para: 5)

iii) When employer failed to produce attendance register/muster roll

(P&H.DB)
5A.108 Where the employer withheld the muster rolls and attendance record pertaining to the
workman and also payment register of casual workers, although mandated u/s. 25D of the Act, it is
held that the Tribunal can draw adverse inference, regarding continuous service of the workman,
against the employer.
Executive Engineer, Bari doad Drainage Division, Amritsar v. Tarsen Singh & Anr., 2007 (112) FLR
1188 : 2007 LLR 509 (P&H.DB)
Note: Also refer to the following case
Shihor Nagar Palika through Chief Officer v. Natvarlal Maganlal Trivedi, 2006 III CLR 503 (Guj.HC)
Maharashtra State Electricity Board v. Neelkanth Kawadooji Gire & Anr., 2005 LIC 3225 (Bom.HC)
Executive Engineer, PWD, Rajkot v. Prakash Laxmidas Gujjar, 2003 LIC 1793 (Guj.HC)
5A.109 An employee appointed as a daily wager in a Bank worked from time to time in its
different Branches. The employee had submitted before the Labour Court that he was working for
a period of ten years but was employed intermittently. However, since the bank failed to produce
the attendance register of the employee the Labour Court drew adverse inference that the
employee had worked continuously for a period of 240 days preceding to his termination. The
employee was granted only compensation instead of reinstatement. On writ petition filed by the
employee, praying to be reinstated, the High Court held that there was no case for interference
with the decision of the Labour Court.
Pramod Kumar v. Presiding Officer, Central Government Industrial Tribunal-cum-Labour Court,
Kanpur & Anr., 2005 LIC 2806 (All.HC)

iv) When employer fails to specifically deny workmans claim (Raj.HC)

5A.110 In a claim by workman, which was based on working for 240 days, employer did not
specifically deny that workman worked for 240 days. Held that such an evasive reply on the part of
the employer amounts to admission of facts. Also the Labour Courts finding that workman
worked for 240 days is just and proper.
Doongar, College, Principal v. Om Prakash & Anr., 1999 LIC 97 (Raj.HC)

2. When cannot be drawn

i) When there is no evidence on either side except written statements (S.C.2J)
F 5A.111 The Labour Court can come to the conclusion that the workman worked for 240 days by
taking into account the period for which the muster rolls were not produced by the employer since
it was for the workman to lead evidence by producing salary receipt etc. which he failed to do
except filing an affidavit which being his own statement cannot be a sufficient evidence and hence
matter was remanded to Labour Court for determining the question of having worked for 240 days

2326

Chapter VA Lay-Off and Retrenchment

Sec. 25B

in the face of the fact that even if the period mentioned in the affidavit and days for non production
of muster roll are taken into account the requirement prima facie does not appear to be fulfilled.
Rajasthan State Ganganagar S. Mills Ltd. v. State of Rajasthan & Anr., 2004 III LLJ 832 : 2004 (107)
FJR 264 : 2004 (103) FLR 192 : 2004 IV LLN 845 : 2004 SCC (L&S) 1055 : 2004 (8) SCC 161 (S.C.2J)
Though specific direction was given to the employer to produce the muster roll for the period from
17.6.1991 to 12.11.1991, the same was not produced. Accordingly it was held that the sanctioned days
and the days covered by the muster roll, which was not produced, taken together indicated that the
workman had worked for more than 240 days. Accordingly direction was given to reinstate the workman
and for paying 30% of the back wages. (Page: 833, Para: 1)
It was the case of the workman that he had worked for more than 240 days in the concerned year. This
claim was denied by the appellant. It was for the claimant to lead evidence to show that he had in fact
worked up to 240 days in the year preceding his termination. He has filed an affidavit. It is only his own
statement which is in his favour and that cannot be regarded as sufficient evidence for any Court or
Tribunal to come to the conclusion that in fact the claimant had worked for 240 days in a year.No
proof of receipt of salary or wages for 240 days or order or record in that regard was produced. Mere
non-production of the muster roll for a particular period was not sufficient for the Labour Court to hold
that the workman had worked for 240 days as claimed. Even if that period is taken into account with the
period as stated in the affidavit filed by the employer the requirement prima facie does not appear to be
fulfilled. (Page: 833, Para: 5)
We, therefore, remit the matter to the Labour Court to consider the evidence and come to a definite
conclusion as to whether the workman had worked for 240 days during the period claimed..
(Page: 834, Para: 7)

ii) No adverse inference on employers failure to produce relevant muster

rolls when the burden of proof is on workman (S.C.2J)
F 5A.112 Presumption as to adverse inference for non-production of evidence is optional and shall
take into account the background of the facts involved in lis and hence when the burden of proof is
on the workman to prove that he worked for 240 days and he failed to adduce any evidence such as
offer of appointment, indicating the terms and conditions and his remuneration etc, though not
muster rolls which were in the custody of the employer or examine any witness in his support, an
adverse inference cannot be drawn for mere non-production of muster rolls by the employer and
hence the order of the High Court granting reinstatement and awarding 75% back wages on the
basis of adverse inference drawn was held unsustainable.
Municipal Corporation, Faridabad v. Siri Niwas, 2004 (107) FJR 248 : 2004 (103) FLR 187 : 2004 IV
LLN 785 : 2004 III CLR 543 : 2004 LLR 1022 : 2004 SCC (L&S) 1062 : 2004 (8) SCC 195 (S.C.2J)
The basic fact of the matter is not much in dispute. The respondent herein allegedly worked with the
appellant herein from 5.8.1994 to 31.12.1994 as Tubewell Operator. He allegedly further worked from
1.1.1995 to 16.5.1995 at Sector 37, Old Zone II. His services were terminated on or about 17.5.1995
whereupon an industrial dispute was raised. (Page: 250/251, Para: 3)
The tribunal upon considering all the materials placed on records by the parties to the dispute came to the
conclusion that the total number of working days of the workman was 184 days and, thus, he having not
completed 240 days of working in a year was not entitled to any relief. The learned tribunal noticed that
neither the management nor the workman cared to produce the muster rolls with effect from August, 1994
which was their joint liability. It was further observed that the workman even did not summon the same
although the management had not produced the muster rolls. (Page: 251, Para: 6)
The High Court, however, was of the view that as the appellant herein did not produce the relevant
documents before the Industrial Tribunal, an adverse inference should be drawn against it, as it was in
possession of the best evidence and, thus, it was not necessary for the first respondent herein to call upon
the appellant to do so.Only on that basis the writ petition was allowed.
(Page: 251, Para: 6)

Sec. 25B

Continuous service

2327

.As noticed hereinbefore, the burden of proof was on the workman. From the award it does not
appear that the workman adduced any evidence whatsoever in support of his contention that he complied
with the requirements of section 25B of the Industrial Disputes Act. Apart from examining himself in
support of his contention he did not produce or call for any document from the office of the appellant
herein including the muster rolls. It is improbable that a person working in a local authority would not be
in possession of any documentary evidence to support his claim. (Page: 252, Para: 11)
.Presumption as to adverse inference for non-production of evidence is always optional and one
of the factors which is required to be taken into consideration in the background of facts involved in the
lis. The presumption, thus, is not obligatory because notwithstanding the intentional non-production,
other circumstances may exist upon which such intentional non-production may be found to be justifiable
on some reasonable grounds. In the instant case, the Industrial Tribunal did not draw any adverse
inference against the appellant. It was within its jurisdiction to do so particularly having regard to the
nature of the evidence adduced by the respondent. (Page: 253, Para: 12)
.The High Court, therefore, proceeded to pass the impugned judgment only on the basis of the
materials relied on by the parties before the tribunal. The High Court, in our opinion committed a
manifest error in setting aside the award of the tribunal only on the basis of adverse inference drawn
against the appellant for not producing the muster rolls. (Page: 254, Para: 17)
For the foregoing reasons the impugned judgments are not sustainable in law and they are set aside
accordingly. (Page: 254, Para: 18)
F 5A.113 The workmen made application for production of muster rolls for the period 1987-92 to
prove their continuous employment for 240 days and the employer produced muster rolls for the
period 1987-90 and when the workmen were not able to establish that they worked continuously
for 240 days during the period 87-90 it was held not proper for the Industrial Court and High
Court to draw an adverse inference against the employer to the effect that the workmen were
employed for 240 days continuously during the period 1990-92 for which the muster rolls were not
produced especially in the absence of specific pleading by them and such adverse inference was
held to be erroneous and hence the orders of the Industrial Court and High Court being based on
the said erroneous adverse inference were held not sustainable and set aside especially because the
factum of the burden rests not on the employer but on the workmen.
M.P. Electricity Board v. Hariram, 2004 (8) SCC 246 : 2004 IV LLN 839 : 2004 LIC 4041 : 2004 SCC
(L&S) 1092 (S.C.2J)
Facts necessary for the disposal of these appeals are as follows :
2.1 The respondents herein were engaged by the appellant-Board on daily wages for the purpose of
digging pits for erecting electric poles. It is the case of the appellant that on completion of the said project
of drawing electric lines from point to point, the employment of the respondents was terminated and
whenever a similar occasion arose for digging pits they were re-employed on daily wages. Hence their
employment was not permanent in nature nor in any one of the cases the respondents had completed 240
days of continuous work in any given year. The said project jobs have come to an end in 1991 and
respondents were never re-employed by the Board. (Page: 247, Para: 2)
Being aggrieved by the said non employment, the respondents herein filed applications.before
the Labour Court, Bhopal seeking permanent employment .on the ground that they have completed
240 working days in a year and their discontinuation of service amounted to retrenchment without
following the legal requirements. (Page: 247, Para: 3)
..The Labour Court after examining the entries in the Muster Rolls came to the conclusion that the
respondents-applicants had not worked for 240 days continuously in any given year, hence, they cannot
claim permanency nor could they term their non-employment as a retrenchment. On the said basis, it
rejected the applications of the respondents. (Page: 247/248, Para: 4)
Being aggrieved by the said rejection of their application, the respondents preferred an appeal before the
Industrial Court at Bhopal Bench. The Industrial Court noticing the fact that though the application for
production of the Muster Rolls was for the years 1987 to 1992, the appellant had only produced the
Muster Rolls for the year ending 1990. Therefore, an adverse inference against the appellant was drawn

2328

Chapter VA Lay-Off and Retrenchment

Sec. 25B

and solely based on the said adverse inference it accepted the case of the respondents that they had
worked for 240 days continuously in a given year, hence, proceeded to grant relief, as stated herein
above. (Page: 248, Para: 5)
However, while considering the case of grant of back wages both the Industrial Court as well as the High
Court came to the conclusion that the respondents had not worked continuously at any given point of time
and were not engaged on all working days and their employment was punctuated by short periods when
they had not been engaged. Hence, it confined the back wages to 50% only and with the above
modification reinstatement of the respondents was ordered. (Page: 248, Para: 7)
In these appeals, learned counsel appearing on behalf of the appellant-Board contended that the Courts
below could not have drawn any adverse inference against the Board lor not having produced the Muster
Rolls for the year 1990-1992. (Page: 248, Para: 8)
.It is an accepted finding of the Courts below that the employment of the respondents have been
discontinuous and intermittent during the period from 1982 till their employment was
discontinued.Therefore, employment of people in that local area for the limited job cannot be
construed as an employment for a continuous and regular work of the Board.This clearly shows
the fact that the employment of the respondent was on a job required basis and was not for any continuous
services required by the Board. The appellant, therefore, cannot claim either permanency or
regularisation since there is no such permanent post to which he could stake his claim nor could he claim
the benefit of completion of 240 days.that the respondents whose particulars are referred to herein
above or the other respondents for that matter have worked for 240 days. In such a factual background, in
our opinion, the Industrial Court or the High Court could not have drawn an adverse inference for the
non-production of the Muster Rolls for the years 1990 to 1992 in the absence of specific pleading by the
respondents-applicants that atleast during that period they had worked for 240 days continuously in a
given year. The application calling for the production of the documents was for the years 1987 to 1992.
As stated above, between the period 1987 to 1990, as a matter of fact, till end of the year 1990 the
respondents have not been able to establish the case of continuous work for 240 days. Considering these
facts in our view drawing of an adverse inference for the non-production of the Muster Rolls for the years
1991-92, is wholly erroneous on the part of the Industrial Court and the High Court. We cannot but bear
in mind the fact that the initial burden of establishing the factum of their continuous work for 240 days in
a year rests with the applicants-respondents. (Page: 249/250, Para: 10)
For the reasons stated above, these appeals succeed. The impugned orders of the High Court as well as
the Industrial Court are set aside and that of the Labour Court is restored. (Page: 251, Para: 13)

iii) When workman engaged is a daily wager and dispute raised after two years
(Del.HC)
5A.114 Mali/ Beldar was employed as daily wager and worked as and when work was available.
He raised dispute on his disengagement. Tribunal directed reinstatement drawing adverse
inference on failure of employer to produce muster roll holding that the workman completed 240
days but denied back wages as dispute was raised after two years. On being challenged, High Court
held that as dispute was raised after two years employer was not supposed to retain muster rolls of
employee who was engaged from time to time in perpetuity. Court should not encourage back door
entry. The order of Labour Court was perverse liable to be set aside.
Municipal Corporation of Delhi v. Krishna Pal, 2007 (112) FLR 984 : 2007 LLR 76 (Del.HC)
Briefly the facts.in following terms. (Page: 985, Para: 1)
Tribunal observed.has worked for 240 days. (Page: 985, Para: 3)
In this case.in perpetuity. (Page: 986, Para: 6)

Sec. 25B

Continuous service

2329

e) Evidence in proof of continuous service

1. What can be
i) Log sheet, and attendance registers (Raj.HC)
5A.115 The workman was terminated. On workmans application, Labour Court awarded
reinstatement with 50% back wages as workman had worked for more than 240 days and
employer did not follow Sec. 25F. Employer challenged the award before High Court contending
that workman failed to prove 240 days service before Labour Court. High Court upheld the award
of Labour Court as the workman proved his continuous service by producing documents before
Labour Court whereas the employer failed to produce the log sheet or the attendance register.
Chief Executive Officer, Zila Parishad, Jhunjhunu & Anr. v. Pala Ram & Anr., 2004 II LLN 904 : 2004 I
LLJ 445 : 2004 (105) FJR 1112 (Raj.HC)
Petitioner has challenged.of the back wages. (Page: 904, Para: 1)
The Labour Court.of back wages. (Page: 905, Para: 3)
Sri Manish Bhandari.a calendar year. (Page: 905, Para: 4)
Since the.concerned workmen. (Page: 905, Para: 6)
After having.having no merits. (Page: 905, Para: 8)

ii) Attendance register and recruitment rules (Bom.HC)

5A.116 During the pendency of conciliation regarding the issue of regularization of 43 temporary
workmen, employer terminated 29 workmen. Two references were made i.e. one for regularization
and other for termination. Taking both the references together Labour Court awarded
regularization and reinstatement of the workmen on the basis of workmens 240 days service.
Before High Court employer contended that most of the workmen did not complete 240 days and
workmen could not be absorbed in absence of vacancy. High Court upheld the award of Labour
Court as the employer failed to produce any attendance register or documents to show workmens
appointments, recruitment rules, strength of staffs before Labour Court.
ANZ Grindlays Bank Ltd. v. Grindlays Bank Employees Union & Anr., 2000 III LLJ 629 (Bom.HC)
The award passed.A.N.Z. Grindlays Ltd. (Page: 630, Para: 1)
ANZ, Grindlays Bank.to any reliefs. (Page: 631, Para: 2)
Mr. Rele, the.not be sustained.Mr. Rele contended.be set aside.
(Page: 632, Para: 4)
In response to.Constitution of India. (Page: 632, Para: 5)
The said statement.of the bank. (Page: 636, Para: 7)
.Moreover, the petitioner.upon to produce.Bank did not.on monthly
basis. (Page: 636, Para: 8)
Mr. Rele, the.the concerned workmen. (Page: 638, Para: 9)
The Bank is.time to time.the unions.Constitution of India. (Page: 638/639, Para: 10)
Mr. Rele, sought.to be rejected. (Page: 640, Para: 12)
Mr. Rele, then.is therefore rejected. (Page: 640, Para: 13)

2330

Chapter VA Lay-Off and Retrenchment

Sec. 25B

Mr. Rele, lastly.as withdrawn. (Page: 640, Para: 14)

All in all.Constitution of India. (Page: 641, Para: 15)

iii) Letter of appointment and termination letter (S.C.2J)

F 5A.117 Where no material was placed before the Labour Court either by company or by
workmen except an appointment and termination letter by the workmen so as to prove that
whether workmen had completed 240 days in a year, Labour Court was proper in coming to the
conclusion by appreciating the material on record that he had completed 240 days and holding that
termination was illegal and in reinstating the workmen.
M/s. Tannery and Footwear Corpn. of India v. Raj Kumar & Anr., 2002 SCC (L&S) 1088 : 2001 II LLJ
256 : 2001 (90) FLR 708 : 2002 AIR (SC) 508 : 2002 (9) SCC 623 (S.C.2J)
Learned counsel for the appellant submitted that the burden of proof lay upon the respondent to establish
that he was in the employment of the appellant and had worked for a period of 240 days in a year before
termination of his services and no such material was made available. It is clear that neither the respondent
produced any material in support of his case, nor to rebut the claim made by him any material was
produced by the appellant. It is in these circumstances that the Labour Court came to the conclusion that
on appreciation of the material on record such as Exhibit E-1 (Appointment letter) and Exhibit E-4 (the
order of termination that the services of the respondent are not required from 20-7-1976) that the
respondent had worked with the appellant for 240 days in a year. If that was the material on which the
Labour Court placed reliance as no other material was placed by the appellant in rebuttal of the same, we
think that the view taken by the Labour Court is in order. Therefore, the High Court was justified in not
interfering with the award made by the Labour Court. (Page: 1089, Para: 3)

iv) Vouchers by which wages were paid (Jhar.HC)

5A.118 Workman working as Auto Electrician stopped coming to work without any notification
and justifiable cause. He contended that during his period of service he was paid wages on vouchers
and therefore claimed reinstatement and payment of wages. However management contended that
he was working on contract. On reference Labour Court ordered in favour of workman. High
Court dismissed the petition on the ground that findings of the Tribunal was based on facts and
documents and High Court cannot substitute its own findings unless the evidence was erroneous
and perverse in law and there was no reason to reverse the finding of the Tribunal.
Employers, Management, Amlabad Colliery of Bharat Coking Coal Ltd. v. Prisiding Officer, Central
Government Industrial Tribunal No. 2, Dhanbad & Anr., 2001 II LLJ 1287 : 2001 (89) FLR 1044 : 2001
LIC 2910 : 2001 LLR 788 (Jhar.HC)

v) Charts containing service details can be evidence (P&H.HC)

5A.119 The charts produced by workmen showed that none of them had worked for 240 days in a
year and so the termination was not retrenchment and compliance of Sec. 25F was not necessary, so
termination of service cannot be said to be bad on that account.
Punjab State Electricity Board v. P.O. Labour Court, & Anr., 1996 I LLJ 373 (P&H.HC)

vi) Workmans assertion that he had worked for 240 days in each of ten years
though not corroborated is sufficient to grant absorption (P&H.DB)
5A.120 The statement of the workman that he worked for 240 days in every year during the
period of ten years though not corroborated by the employee or rebutted by the employer and in
view of the Apex Courts decision in Dharma Pals case and Sec. 25B is sufficient to grant
absorption as per Government policy.
Gurmail Singh v. State of Punjab & Ors., 2003 I LLN 502 (P&H.DB)
No particular.petition. (Page: 503/504, Para: 4)

Sec. 25B

Continuous service

2331

For the reasons.Annexure P1. (Page: 504, Para: 6)

Note: This runs counter to the Supreme Court judgement in
Range Forest Officer v. S. T. Hadimani, WITH State of Karnataka & Anr. v. S. T. Hadimani, 2002 II LLN
391 : 2002 LLR 339 : 2002 LIC 987 : 2002 SCC (L&S) 367 : 2002 AIR (SC) 1147 (S.C.2J) and also in
Rajasthan State Ganganagar S. Mills Ltd. v. State of Rajasthan & Anr., 2004 III LLJ 832 : 2004 (107)
FJR 264 : 2004 (103) FLR 192 : 2004 IV LLN 845 : 2004 SCC (L&S) 1055 : 2004 (8) SCC 161 (S.C.2J)

2. What cannot be
i) Affidavit by workman is insufficient to prove continuous service of 240
days (S.C.2J)
F 5A.121 Filing of affidavit by workmen being a statement in favour of his own that he has worked
for 240 days in preceding year to his termination cannot be regarded as sufficient evidence to
arrive at conclusion unless the claimant-workmen proves with other material in support and it was
held that tribunal was not right in placing the onus on the Management without any cogent
evidence from workmans side.
Range Forest Officer v. S. T. Hadimani, WITH State of Karnataka & Anr. v. S. T. Hadimani, 2002 AIR
(SC) 1147 : 2002 I LLJ 1053 : 2002 (100) FJR 397 : 2002 (93) FLR 179 : 2002 (94) FLR 622 : 2002 II
LLN 391 : 2002 LLR 339 : 2002 LIC 987 : 2002 SCC (L&S) 367 : 2002 (3) SCC 25 (S.C.2J)
.In our opinion the Tribunal was not right in placing the onus on the Management without first
determining on the basis of cogent evidence that the respondent had worked for more than 240 days in the
year preceding his termination. It was the case of the claimant that he had so worked but this claim was
denied by the Appellant. It was then for the claimant to lead evidence to show that he had in fact worked
for 240 days in the year preceding his termination. Filing of an affidavit is only his own statement in his
favour and that cannot be regarded as sufficient evidence for any Court or Tribunal to come to the
conclusion that a workman had, in fact, worked for 240 days in a year. No proof of receipt of salary or
wages for 240 days or order or record of appointment or engagement for this period was produced by the
workman. On this ground alone, the award is liable to be set aside. (Page: 1148, Para: 3)

ii) Bonus register and attendance certificate since secondary evidences and
cannot be proof of the date of entry into service (Bom.HC)
5A.122 A workman appointed on daily wages was terminated. The High Court upheld the
decision of the Labour Court that the employer despite his contention that the workman has not
worked for 240 days has failed to prove it by production of attendance register and that the bonus
register and attendance certificate are only secondary evidence and cannot be conclusive to prove
the date of entry. Also the Labour Court has satisfied itself from other records that the employee
has worked for 240 days. Hence, the writ petition was dismissed.
Maharashtra State Electricity Board v. Neelkanth Kawadooji Gire & Anr., 2005 LIC 3225 (Bom.HC)

iii) When breaks in service/termination can be unfair labour practice

a) When breaks given to prevent the completion of 240 days (P&H.DB)
5A.123 Termination of the services of a workmen when he has just completed 230 days of work
with a view to prevent them from completing 240 days thereby depriving them the benefit of
Chapter V-A is held as an unfair labour practice.
Kapurthala Central Co-operative Bank Ltd. v. Labour Court, Jullundur, & Ors., 1984 (65) FJR 95 : 1984
II LLN 180 : 1984 LIC 974 (P&H.DB)
.If a workman.230 days limit.It is thus crystal.long term.It
was.available.so there was.Act. (Page: 100, Para: 1)

2332

Chapter VA Lay-Off and Retrenchment

Sec. 25B

To conclude.unsatisfactory. (Page: 102, Para: 2)

5A.124 Giving breaks of two days each time in a spell of two years service to prevent completion
of 240 days in a period of 12 months is unfair Labour practice
Presiding, Zilla Parishad v. P.O. Industrial Tribunal-cum-Labour Court, Panipat, & Anr., 2002 I LLN
420 (P&H.DB)
He Labour Court.Labour practice.. (Page: 421, Para: 4)
In view.dismissed. (Page: 421, Para: 10)

IV. Reliefs/benefits available to workmen under various provisions of the Act on

completion of continuous service
a) Relief of reinstatement
Note: Readers can refer to Secs. 25F, 25G and 25H for more ratios on reinstatement

1. When can be
i) When employer terminates services without complying Sec. 25-F (P&H.DB)
5A.125 Although workman was employed for fixed period of 89 days with break of 6 or more days
intermittently each time but since he had completed 240 days of work and also his work was found
satisfactory as per his experience certificate, award of the Labour Court reinstating him with back
wages on account of non-compliance with Sec. 25-F was upheld.
The Chief Administrator, Haryana Urban Development Authority, Manimajra Chandigarh & Anr. v.
P.O. Industrial Tribunal-cum-Labour Court, Rohtak, & Anr., 1994 (84) FJR 428 : 1994 (69) FLR 35 :
1994 LLR 454 : 1995 LLR 54 (P&H.DB)
.there is no.for 265 days.Admittedly the workman.according to
law. (Page: 431/432, Para: 1)
.the respondent workman.of this Court. (Page: 434, Para: 1)
5A.126 Court held that mistake was made by management in calculating continuous service of
workmen and as per facts 240 days of service was rendered and hence termination in violation of
Sec. 25F was illegal.
Chief Administrator, Haryana Urban Development Authority, Chandigarh v. P.O. Labour Court,
Gurgaon & Anr., 2001 II LLJ 12 : 2001 III LLN 1142 : 2001 LIC 837 (P&H.DB)
The mistake.instead of Mahabir. (Page: 13, Para: 6)
Considering the date.25F of the Act. (Page: 13, Para: 7)
5A.127 Once it was shown that workman had actually worked for 240 days during period of 12
calendar months, both conditions u/s. 25B i.e. service for 240 days and employment for 12 months
were fulfilled and also the employer failed to prove the special circumstances as claimed by him in
which principle of last come first go u/s. 25G was not required to be adhered and it was held that
even if appointment was de hors the Act, termination must conform to the law and hence
termination in violation of Sec. 25F was rightly set aside by Labour Court and Single judge and
reinstatement with 40% back wages was upheld.
State of Rajasthan & Ors. v. Mahendra Joshi & Anr., 2003 I LLJ 256 : 2002 (95) FLR 595 : 2003 III LLN
484 (Raj.DB)
.the termination was.Industrial Disputes Act 1947. (Page: 257, Para: 4)

Sec. 25B

Reliefs/benefits to workman on complition of continuous service

2333

The Tribunal found.dispute about that. (Page: 257, Para: 6)

.the workman was.50% backwages. (Page: 257, Para: 10)
The special circumstances.any ground whatever. (Page: 259, Para: 26)
Learned.1947. (Page: 259, Para: 27)
If the.retrenchment. (Page: 260, Para: 29)

2. When cannot be
i) When employee had not completed 240 days and failed to prove violation of
Sec. 25G & 25H (Raj.DB)
5A.128 As employee had worked for less than 240 days and failed to prove violation of Sec. 25H
and 25G employee was not held to be entitled for any relief.
Ram Gopal Saini v. Labour Court No. II, Jaipur & Ors., 2001 I LLJ 1230 : 2001 (89) FLR 778 : 2001 LIC
610 : 2001 I CLR 907 : 2001 LLR 747 (Raj.DB)
In this.employee. (Page: 1230, Para: 2)
We are.the purpose. (Page: 1231, Para: 8)

ii) When there is no proof of completion of 240 days (Ori.DB)

5A.129 In the absence of any proof that workman had worked for more than 240 days in preceding
12 months or that his juniors were continued in service, his termination was held as proper.
Gangadhar Labala v. P.O. Labour Court & Ors., 2002 I CLR 812 : 2002 I LLJ 484 : 2002 I LLN 452
(Ori.DB)
.The petitioner has not.had rendered service. (Page: 815, Para: 5)
.The fact that Sri.not been established. (Page: 815, Para: 6)
.We do not.calling for interference. (Page: 815, Para: 7)

iii) When there is no finding in the award as to completing continuous service in

one year since award holding termination as illegal is not sustainable (MP.HC)
5A.130 When there is no finding as to continuous service in one year, the award holding
termination as contravening Sec. 25F of the Act is set aside.
State of M.P. v. P.O. Labour Court & Ors., 1999 (81) FLR 315 (MP.HC)

b) Relief of continuity of service can be

Note: Readers can refer to Secs. 25F, 25G & 25H for more ratios on reinstatement

1. When termination is void ab initio (MP.DB)

5A.131 When the termination of service of a workman who completed 240 days of work is void ab
initio, he is deemed to be in continuous service from the date of termination without back wages
since it requires enquiry as to his gainful employment by appropriate forum.
Pawan Kumar Srivastava v. Municipal Corporation, 1999 II LLJ 21 : 1999 III LLN 266 (MP.DB)

2334

Chapter VA Lay-Off and Retrenchment

Sec. 25B

In view.standing orders. (Page: 25, Para: 10)

As the appellant.appellant. (Page: 25, Para: 11)
As the order.service. (Page: 27, Para: 22)
As a result.wages. (Page: 27, Para: 22)

2. Continuity of service to be taken into account for granting special grade or

stagnation increments (AP.HC)
5A.132 The workman though removed from service but he was reinstated when Labour Court
awarded reinstatement with continuity of service and all other attendant benefits. However,
employer denied special grade to workman, on the ground that the persons who were in
employment by virtue of any award of Labour Court were not entitled to any special grade, it was
held that the workman should be treated equally with all workmen and the period during which the
workman was out of service prior to his reinstatement should be counted for continuous service for
the purpose of sanction of special grade or stagnation increments.
M.D. Rahamatullah v. Depot Manager, APSRTC & Ors., 1999 LIC 2946 (AP.HC)
The petitioner.attendant benefits. (Page: 2946, Para: 1)
.Tracing the.Memorandum. (Page: 2947, Para: 3)
Turing to the.suspension. (Page: 2948, Para: 12)
In the light.Constitution. (Page: 2948, Para: 13)

c) Relief of regularisation
1. Regularization means
i) The expression regular and regularisation does not imply
regularization but meant only to cure defects of procedural irregularities
(S.C.3J)
F 5A.133 The expression regular and regularisation does not imply regularization but meant
only to condone and cure defects of procedural irregularities and defects attributable to
methodology in making appointments and thus deal with methods of appointment.
B.N. Nagarajan v. State of Karnataka, 1979 II LLJ 209 : 1979 LlC 1206 : 1980 SCC (L&S) 4 : 1979 AIR
(SC) 1676 : 1979 (4) SCC 507 (S.C.3J)
.The argument however is unacceptable to us for two reasons. Firstly the words regular or
regularisation do not connote permanence. They are terms calculated to condone any procedural
irregularities and are meant to cure only such defects as are attributable to the methodology followed in
making the appointments. They cannot be construed so as to convey an idea of the nature of tenure of the
appointments. (Page: 214, Para: 4)
Note: Also refer to the case of
State of Uttaranchal v. Prantiya Sinchai Avam Bandh Yogana Sharamik Mahaparishad, 2007
SCCL.Com. (S.C.2J)

Sec. 25B

Reliefs/benefits to workman on complition of continuous service

2335

2. What amounts to regularisation

i) Mere granting regular salary to workman performing similar work as that
of regular workmen does not amount to regularization (Guj.HC)
5A.134 Workman was denied regular salary for which he was performing similar nature of work
with similar responsibility for twenty years, and he was appointed on the post by following due
procedure. Labour Court granted regular salary without arrears of salary. High Court held that
Labour Court rightly granted the salary and the same does not amount to regularisation of his services.
Gujarat State Rural Development Corpn. Ltd. v. Upendrakumar J. Rao, 2006 LIC 3429 (Guj.HC)
In this case.respondent workman. (Page: 3433/3434, Para: 8)

3. Factors to be considered for regularisation

i) Number of posts and funds, the need for retention of employee and nature
of appointment whether on daily wage basis or adhoc basis etc. are to be
considered (All.DB)
5A.135 The factors to be considered for regularisation are availability of posts and funds, the
need for retention of the employee and whether the appointment is on daily and ad hoc basis or
against leave or casual vacancies and hence a workman is not entitled automatically to
regularisation on completion of 240 days and therefore the workman was directed to make
representation to the employer who is only held competent to take a decision having regard to the
above factors.
Zakir Hussain v. Engineer-in-Chief, Irrigation Department, & Ors., 1994 I LLJ 5 : 1994 I LLN 606 :
1993 LIC 836 (All.DB)
petitioner.terminated. (Page: 5, Para: 1)
A person.service. (Page: 6, Para: 3)
The question.service. (Page: 10, Para: 13)
This writ petition.to day. (Page: 12, Para: 16)

ii) Reservation policy of the Government to be considered while regularizing

workmen (Pat.HC)
5A.136 Reservation policy of the Government to be considered while regularizing.
Satyadeo Prasad v. Union of India & Ors., 1999 III LLJ (Sum) 859 (Pat.HC)

4. When can be granted

i) When causal labour working for 30 long years was terminated (S.C.2J)
F 5A.137 A large number of casual labourers were not regularized years together. The union
raised a demand for regularizing them, but instead, the management terminated the services of 125
labourers. They raised an industrial dispute of which reference was made to the Tribunal. The
Tribunal held that a part of these workforce is to be regularized after an year with due regard to
their attendance. The management contested the same in High Court and Supreme Court,
unsuccessfully. The Supreme Court held that the casual labourers are working for the last 30 odd
years and therefore their services are be regularized expeditiously to create a happy and healthy
relationship between employer and employee.
The Workmen, Bhurkunda Colliery of M/s. Central Coalfields Ltd. v. The Management, Bhurkunda Colliery,
2006 II LLN 23 : 2006 (108) FLR 826 : 2006 LIC 960 : 2006 I CLR 635 : 2006 (3) SCC 297 (S.C.2J)

2336

Chapter VA Lay-Off and Retrenchment

Sec. 25B

According to the Tribunal, on scrutiny, out of 104 casual workmen, only 74 of them in Repairs and
Maintenance (Civil) Section of Bhurkunda Colliery of M/s CCL could justify their claim. As such, the
management was directed to enlist those 74 workers as casual workmen and be provided with different
jobs in Category-I and they may be regularized after they have fulfilled the condition of attendance in a
year. The Award of the Tribunal was challenged. The management filed C.W.J.C. No.1175 of 1989 and
labour union filed C.W.J.C. No.1083 of 1991 and Koyla Mazdoor Sabha on behalf of 51 persons, who
were not granted any relief in the award, also filed C.W.J.C. No.680 of 1999 and all the three writ
petitions were heard together by the learned Single Judge. The learned Single Judge, who heard these
three writ petitions did not interfere with the Award of the Tribunal. The Division Bench of the Jharkhand
High Court upheld the judgment of the Learned Single Judge and consequently as directed by the
Tribunal, cases of 74 workmen were required to be considered for regularization of their services after
they have fulfilled the condition of attendance in a year. (Page: 25, Para: 7)
When we modulate our thinking process and attitude according to the underlying philosophy of
industrial and labour jurisprudence and apply the laws meant for industrial peace and harmony, then the
conclusion becomes irresistible that the employees who have been working since 1973-74 required to be
regularized as expeditiously as possible. (Page: 28, Para: 20)
Both employers and employees have their respective obligations. They must have the appreciation of
each others responsibilities, duties and obligations. The trade union and labour union should understand
and appreciate the fact that labour is not a commodity nor is it a mere supply of labour force at the
managements disposal. Essentially, labour is the real basis that underlines the production of goods and
services. Through the work should the human personality and its sense of responsibility be able to unfold,
the management should appreciate this and always attribute its success to the trained and effective labour
force. It must be understood by all concerned that both the employees and employers are vital for any
industry and unless there is proper co-ordination, the smooth functioning of any industry would be
difficult. (Page: 28, Para: 21)
Note: Also refer to the following case
Gujarat State Road Transport Corporation v. A.M. Shaikh, 2002 III CLR 581 (Guj.HC)
Satrughana Mishra & Anr. v. Water & Land Management Institute (WALMI), Cuttack, & Anr., 2001 III
LLN 699 : 2001 LIC 1195 : 2001 II CLR 498 : 2001 LLR 713 (Ori.HC)

ii) To be granted to contract workmen when employer maintained muster

roll, attendance, and supervised the workmen (P&H.HC)
5A.138 The workmen who were initially recruited with the assistance of contractor were
terminated by employer when they demanded regularization. On a reference by workmen, Labour
Court directed their regularization. Being aggrieved, employer moved High Court which upheld the
order of the Labour Court on the ground that the Labour Courts record revealed that the employer
used to maintain the record of attendance of the workmen and the workmen were terminated by
employer himself which established that the workmen were managed by the employer.
Panipat Co-operative Sugar Mills Ltd v. Industrial Tribunal-cum-Labour Court, Rohtak & Anr., 1997 II
LLN 295 (P&H.HC)

iii) Can be granted only as per the prevailing scheme (HP.DB)

5A.139 The workman was a temporary mazdoor. He was unauthorizedly absent from duty for 2
years. But, the employer took no action against him nor sent him any notice and he continued to be
on the rolls of temporary status. Later on, being refused by the employer to join duty, the workman
moved Administrative Tribunal which held that the employer should allow the workman to join
duty since no enquiry was conducted nor any opportunity of hearing was given to him. Division
Bench also upheld the order of the Tribunal but rejected the prayer of workman regarding
regularization as the Tribunal had rightly observed that the question of regularization could only
be decided by competent authority in accordance with the scheme under which the workman was
claiming regularization.
Union of India & Ors. v. Balbir Singh, 2005 LIC 3247 (HP.DB)

Sec. 25B

Reliefs/benefits to workman on complition of continuous service

2337

iv) When workmen rendered service for longer period ranging from seven
years to 15 years service on contingent basis and service rules contained
clause regarding absorption (Karn.DB)
5A.140 As the workmen had been working as Ticca Mazdoor for long period of time ranging
from seven to thirteen years and this fact was not disputed by the Bank, Tribunal is justified for
awarding regularisation of them and failure by the Bank to regularise them as permanent
Mazdoor will amount to unfair labour practice.
Chief General Manager, Reserve Bank of India v. P.O. & Anr., 2002 (101) FJR 849 : 2000 III LLJ 6 :
2001 (88) FLR (Sum) 13 (Karn.DB)
.The Tribunal.workmen. (Page: 860, Para: 1)
.It is further.now. (Page: 860, Para: 1)
.at paragraph 13.ULP. (Page: 861, Para: 1)
.it has.respective posts. (Page: 862, Para: 1)
5A.141 Workmen who were engaged for 10 to 15 year continuously on casual and contingent
basis and was in continuous service, they could not be denied regularization on the ground that
there was no post under recruitment rules since the same amounts to unfair labour practice and
was violative of Certified Standing orders which itself contained the regulations regarding
regularization of employees.
O.N.G.C. Mazdoor Union & Ors v. Oil & Natural Gas Commission & Ors., 2000 III LLJ 192 : 2000 LIC
2571 (Cal.HC)
Note: Also refer to the following case
Keshav Tripathi & Ors. v. District Judge, Faizabad & Ors., 2006 (108) FLR 436 (All.HC)
Union of India & Anr. v. Central Government Industrial Tribunal & Anr., 2001 I LLJ 1557 : 2001 II LLN
290 (Cal.HC)

v) Can be granted from initial date of appointment since there was no dispute
regarding appointment (Ori.HC)
5A.142 The workman was working as a casual employee from 1985. He was terminated without
following Sec. 25F, however, on 1990 he was reinstated by employer as per the award of Labour
Court. As the employer ignored the initial appointment of the workman in the gradation list and
regularized services of some juniors, the workman moved High Court. Employer contended that
regularisation of the workman from back date would affect seniority of those who were regularly
appointed and regularized. High Court directed employer to calculate seniority of workman from
initial date of appointment and directed workmans regularization, as a regular employee since
there was no dispute regarding initial appointment.
Mahendra Kumar Sahoo v. Orissa Lift Irrigation Corporation Ltd. & Ors., 2002 I LLJ 1150 (Ori.HC)
The petition in.since 1985. (Page: 1150, Para: 1)
The case of the.has been filled. (Page: 1150, Para: 2)
A counter has.as claimed. (Page: 1151, Para: 3)
From the averments.N.M.R workers. (Page: 1151, Para: 4)
.in the event.and not retrospectively. (Page: 1152, Para: 5)
From the decision.be regularised.there being no.by corporation. (Page: 1152, Para: 6)

2338

Chapter VA Lay-Off and Retrenchment

Sec. 25B

I, therefore.his service. (Page: 1152, Para: 7)

vi) Regularisation cannot be from anterior date when services were

regularised in reasonable time and there was delay in filing the claim and
wrong criterion of Sec. 25B applied (S.C.2J)
F 5A.143 Employees claim for regularisation from anterior date i.e. right from date of
appointment was held to be unsustainable, as service of the employees were to be regularised
subject to availability of posts and which was done within a reasonable time and that they
approached the Court long after their regularization, thereby unsettling the settled position
besides wrong criterion of Sec. 25B was applied in which the Court held that when the section was
applicable to the provisions of lay-off and retrenchment contained in Chapter V-A of the Act,
importing that concept of regularization is nothing but alien and hence the employers have the
legal right to be regularized from date of initial appointment what is already regularized cannot be
legally faulted.
Divisional Manager, Andhra Pradesh State Road Transport Corporation, & Ors. v. P. Lakshmoji Rao &
Ors., 2004 I LLN 1154 : 2004 I LLJ 1045 : 2004 (100) FLR 951 : 2004 LIC 893 : 2004 SCC (L&S) 416 :
2004 AIR (SC) 1503 : 2004 (2) SCC 433 (S.C.2J)
.Perhaps, what the learned Judges meant was that the employees claim for regularization should
be considered on completion of 240 working days and if they are otherwise eligible, they should be
absorbed on regular basis to the extent of vacancies available. In the event of such regularization, it would
take effect from the date of initial appointment. (Page: 1159, Para: 14)
In the light of above discussion, we are of the view that the law laid down or the directions given in
various writ petitions/writ appeals are not legally sustainable for more than one reason. Firstly, wrong
criterion based on Section 25B of the ID Act was applied in case after case. Secondly, the respondents
and other similarly situated employees approached the Court under Article 226 long after their
regularization, thereby unsettling the settled position. Thirdly, on the facts of these cases, it is evident that
the services of the employees who were recruited as conductors were regularized within a reasonable
time. The respondent employees were therefore treated fairly. No service rule of regularization or any
other principle of law has been pressed into service by the respondents to claim regularization from an
anterior date i.e. right from the date of their initial appointment as dailywage employees.
(Page: 1159, Para: 16)

vii) Can be granted to contract worker when establishment is prohibited from

engaging contract labour and on the evidence of his employment in the
company (All.HC)
5A.144 The employer challenged the Labour Courts award before High Court contending that
the Labour Court awarded reinstatement of the workman who was not his employee but was a
contract worker. High Court upheld the award of Labour Court since the establishment was
prohibited by Government to engage contract labour and workman had adduced enough evidence
before Labour Court to show that he was engaged by employer.
M/s. Muir Mills, Kanpur v. P.O. Labour Court, (IV) Kanpur & Ors., 1997 (76) FLR 503 (All.HC)
Note: Also refer to the Judgment in
Steel Authority of India Ltd. & Anr. v. National Union Water Front Workers & Ors., 2001 (99) FJR 332 :
2001 LIC 3656 : 2001 SCC (7) 1 : 2001 AIR (SC) 3527 : 2001 SCC (L&S) 1121 (S.C.CB)

viii) When workmen engaged through contractor have completed 240 days and
the contract is sham (Jhar.HC)
5A.145 Workmen were employed for water supply through contractor by management and
dispute regarding regularization was raised. Tribunal held workmen were employed for more than
240 days under direct control and supervision of management. Their work was of continuous

Sec. 25B

Reliefs/benefits to workman on complition of continuous service

2339

nature and employment of contractor- supplier is not permissible under Contract Labour
(Regulation and Abolition) Act, 1970. It directed reinstatement and regularisation with arrears of
back wages from the date of issuance of reference with 40% back wages and other benefits as
engagement of contractor was paper arrangement which was a camouflage done by the
management to deprive the workmen from their due wages. The said order was upheld by High
Court.
Employees in Relation to the Management of Kunju Pundi Project of M/s. C.C.L., Dhanbad v. Presiding
Officer, Central Government Industrial Tribunal No. 1 & Ors., 2004 (102) FLR 117 : 2004 LLR 775
(Jhar.HC)
The learned Tribunal.due wages.The action of the management.and other
benefit. (Page: 118, Para: 6)
The aforesaid.has been challenged. (Page: 119, Para: 7)
The Tribunal has.claim. (Page: 119, Para: 12)
.Accordingly.is dismissed. (Page: 119, Para: 13)
Note: Also refer to the following case/s
Swapan Mondal & Ors. v. State of West Bengal & Ors., 1995 II LLJ 153 : 1994 LIC 2548 (Cal.HC)

ix) Temporary driver to be absorbed if pilot plant continued on permanent

basis and post is not abolished (S.C.2J)
F 5A.146 Concerned person was employed as temporary jeep driver in a factory which was an
experimental pilot plant for manufacturing dehydrated vegetables and this pilot plant was later set
on permanent basis and accordingly area supervisors and block supervisors were made
permanent. Apex Court held that since the plant was set on a permanent footing conceivably the
job would continue in future for indefinite period and also since abolition of job was not in
contemplation, Labour Court had rightly directed the employees confirmation.
The Hindustan Lever Ltd. v. Their Workmen, 1974 LIC 465 : 1974 (28) FLR 89 : 1974 AIR (SC) 769 :
1974 (3) SCC 514 (S.C.2J)
.Kailash Kumar was employed in this experimental pilot plant in 1962. He was employed as a
temporary hand. In 1965 the appellant decided to place the pilot plant on a permanent basis. Accordingly
the area supervisors and block supervisors were made permanent. No decision could be taken in regard to
Kailash Kumar. It is not disputed by the appellant that the job in which Kailash Kumar is employed will
continue in future for an indefinite period. The abolition of the job is not in contemplation. Conceivably,
the job would continue in future for an indefinite period because the plant is now set on a permanent
footing. On these facts we agree with Labour Court that the job in which Kailash Kumar is employed is a
permanent job. Accordingly, the incumbent of the job should also be permanent. (Page: 466, Para: 4)
.The pilot plant was set on a permanent footing in 1959 and the post held by Kailash Kumar
became a permanent job then. But no surplus hand has so far been absorbed in the post. Labour Court has
doubted that there were any surplus hands to be absorbed. This view of Labour Court could not be and has
not been challenged before us. So Kailash Kumar is the only eligible hand for the post. Refusal to confirm
him is an unfair labour practice. In our view Labour Court has rightly directed the appellant to confirm
him on the post. (Page: 466, Para: 6)

x) Whether regularization can be denied on the ground of HIV status

a) Cannot be denied on the said ground if certified physically fit and no
risk to others by medical opinion (Bom.DB)
5A.146.1 The workman who was working as a casual labour in the employers corporation was
interviewed for a vacancy in a regular post. When he subjected himself to medical examination as
instructed by the corporation, it was found that he was HIV positive but presently asymptomatic

2340

Chapter VA Lay-Off and Retrenchment

Sec. 25B

and was certified as physically fit for duty. However the Corporation deleted by notice his name
from the selection panel which was challenged by him by writ petition. Negativing the contention of
the employer that the workman is certain to deteriorate in health progressively and thus certainly
cannot be fit to perform duties over a span of time, the High Court considering the medical opinion
that the workman does not incur symptoms immediately, that he is fit to work and that the
government guidelines are not for sacking a workman for his HIV status, set aside corporations
order and directed the corporation to consider his employability on the basis of medical test again
and pay the wages due to him in the intervening period.
MX of Bombay Indian Inhabitant v. M/S ZY & Anr., 1997 AIR (3) Bom 406 : 1997 (3) BCR 354 : 1997 (2)
Bom LR 504 (Bom.DB)

5. When cannot be granted

i) When appointments are violative of cadre strength or educational
qualifications (Mad.DB)
5A.147 Employees appointed illegally i.e. in violation of cadre strength or the prescriptions of
educational qualifications outside the employment exchanges cannot claim regularisation as their
appointments are null and void and also in such case, provisions of Industrial Disputes Act cannot
be pressed into service by relying on Sec. 25B or for that matter even on the settlements if any
purporting to be entered either u/s. 12 or Sec. 18 between management and staff and hence the
decision of Single Judge was upheld.
L. Justine & Anr. v. Registrar of Co-op. Soc, Chennai & Ors., 2003 I LLJ 284 (Mad.DB)
.it should be.Section 18 there of. (Page: 287, Para: 4)
.the learned single.the said order. (Page: 287, Para: 5)
.we hold that.fall to ground. (Page: 298, Para: 19)

ii) When there is no cogent evidence of completing 240 days (Bom.HC)

5A.148 In a case where the Tribunal directed to accord permanency to 18 workers by virtue of
their alleged completion of 240 days of continuous service, it is held that in the absence of any
cogent evidence on record that the workmen had completed the bench mark of 240 days, the award
of Tribunal cannot be sustained.
Permanent Magnets Ltd. v. Workmen Employed & Anr., 2006 III CLR 801 (Bom.HC)
The claim of the.in their place. (Page: 803, Para: 2)
The Industrial Tribunal.reference was made. (Page: 803, Para: 3)
In the circumstances.cannot be sustained. (Page: 805, Para: 9)

iii) Cannot be granted where company is sick and Government is making

efforts to present for revival proposal (S.C.2J)
F 5A.149 Ten employees were appointed as casual workers on daily rate basis for the reason that
they were dependants of employees died in harness. When the services of these employees were
terminated due to bad financial conditions of the company, and they were over staffed, the
reference was made to Labour Court. It held that the employees entitled to regularization hence
ordered to pay the wages and benefits. But in petition, High Court did not agree with the tribunal
so for as regularization is concerned although in other respects it did not interfere in the decision.
Supreme Court however held that, when the company was declared as a sick company and when

Sec. 25B

Reliefs/benefits to workman on complition of continuous service

2341

the Government is making an effort to present a revival proposal, the order to continue the
workmen and to pay wages till superannuation would be unjustifiable and hence orders of Labour
Court and High Court were set aside.
Indian Drugs & Pharmaceuticals, Ltd. v. Workmen, Indian Drugs and Pharmaceuticals, Ltd., 2007 (112)
FLR 474 : 2007 I LLN 37 : : 2007 I CLR 48 : 2007 SCC (L&S) 270 : 2007 (1) SCC 408 (S.C.2J)
We have heard the learned Counsel for the parties and perused the record.
The facts of the case are that the appellant is a Public Sector Undertaking which has a plant in Rishikesh
where it was manufacturing pharmaceuticals. The present dispute relates to the ten concerned employees
who were appointed as casual workers on daily rate basis for the reason that they were dependants of
employees dying in harness. Such appointments were made by the appellant due to the persistent and
prolonged agitation by the trade union since the appellant wanted to maintain industrial harmony,
although there was no rule/policy for such compassionate appointment in the service of the appellant
company, which was already over-staffed. As against 1049 sanctioned posts, there were already 1299
employees working in the company at the relevant time. (Page: 477, Para: 2)
Before the Labour Court, only 10 out of the 22 workmen appeared and filed written statement and
therefore the award was passed only in respect of the said ten persons. The Labour Court held that
although the said persons were employed as casual daily rated employees by the company, yet in view
of their having continued for a long time, they were entitled to regularization and the action of the
management in not regularizing them was unjustified and consequentially they should be paid the wages
and benefits as given to other regular employees from the date of the award i.e. 25.7.1996.
(Page: 478, Para: 5)
In the present case it is relevant to state that the Government in effort to revive the company drastically
reduced the manpower of the appellant-company from 1991 onwards and the petitioner which at one
point of time had a total of about 13000 employees in all its units in India, have at present, in total, only
about 9 employees at the Hyderabad plant i.e. supervisors and managers, 29 at Gurgaon in which there are
only 4 in the workers category, 15 employees at the Bihar plant i.e. only supervisors and managers, 30
employees at the Tamil Nadu plant i.e. supervisors and managers and about 200 odd employees at the
Rishikesh plant including only about 39 regular workers. It is relevant to state the Government is still
pursuing the plans of reduction in manpower under a VRS Scheme. Thus, in the scenario as stated above,
the impugned directions of the Courts below were, in our opinion, wholly uncalled for and in violation of
settled legal principles. (Page: 479, Para: 10)
In view of the above discussion, we are of the opinion that the orders of the Labour Court as well as the
High Court were wholly unjustified and cannot be sustained for the reasons already mentioned above.
The appeal is, therefore, allowed. The impugned judgment of the High Court and the Labour Court are set
aside and the Reference made to the Labour Court is answered in the negative. There shall be no order as
to costs. (Page: 489, Para: 35)

iv) When workmen appointed under contract without sanction of posts and
compliance of selection procedures (Cal.DB)
5A.150 Since appointment was on contract basis only for particular purpose, without any
compliance with selection process under Municipal Act and in absence of sanction of posts by state
it was held that merely rendering 240 days service will not entitle workmen to regularisation and
they cannot continue to work on completion of purpose.
Chairman, Midnapore Municipality v. Prabir Kumar Nag & Ors., 2001 II LLJ 1153 : 2001 LIC 1946
(Cal.DB)
The writ petitioners.any such post. (Page: 1156, Para: 11)
The appellant is.employed is completed. (Page: 1156, Para: 12)

2342

Chapter VA Lay-Off and Retrenchment

Sec. 25B

v) When workmen who are temporary, contractual, casual or adhoc are

employed dehors the rules and against constitutional scheme of public
employment (S.C.CB)
F 5A.151 Some daily wage workers engaged for more that 10 years in the Sales Tax Department of
Karnataka State Government claimed regularization. The Administrative Tribunal declined to
grant relief but upon challenging the same, the High Court ordered their regularization with back
wages on par with the regular employees. This order was challenged by the State Government
before the Supreme Court. In another set of appeals, some other Daily Wagers engaged in various
Government Departments challenged the order of the High Court declining to grant the relief of
regularization to those employed after 1st July 1984. The Apex Court held that merely because a
temporary employee or casual worker is continued for a time beyond the term of his appointment,
he would not be entitled to be absorbed in regular service or made permanent, if the original
appointment is not made by following a due process of selection as envisaged by the relevant rules
or the Constitutional scheme of public employment, applicable not only to Central or State
Governments but also to their instrumentalities. The daily wagers constitute a class by themselves
and hence their non-absorption is not discriminatory. Order of High Court set aside.
Secretary, State of Karnataka & Ors. v. Umadevi (3) & Ors., 2006 II LLJ 722 : 2006 (109) FLR 826 :
2006 III LLN 78 : 2006 II CLR 261 : 2006 (4) SCC 1 : 2006 AIR (SC) 1806 : 2006 SCC (L&S) 753
(S.C.CB)
It was then contended that the rights of the employees thus appointed, under Articles 14 and 16 of the
Constitution, are violated. It is stated that the State has treated the employees unfairly by employing them
on less than minimum wages and extracting work from them for a pretty long period in comparison with
those directly recruited who are getting more wages or salaries for doing similar work. The employees
before us were engaged on daily wages in the concerned department on a wage that was made known to
them. There is no case that the wage agreed upon was not being paid. Those who are working on daily
wages formed a class by themselves, they cannot claim that they are discriminated as against those who
have been regularly recruited on the basis of the relevant rules. No right can be founded on an
employment on daily wages to claim that such employee should be treated on a par with a regularly
recruited candidate, and made permanent in employment, even assuming that the principle could be
invoked for claiming equal wages for equal work. There is no fundamental right in those who have been
employed on daily wages or temporarily or on contractual basis, to claim that they have a right to be
absorbed in service. As has been held by this Court, they cannot be said to be holders of a post, since, a
regular appointment could be made only by making appointments consistent with the requirements of
Articles 14 and 16 of the Constitution. The right to be treated equally with the other employees employed
on daily wages, cannot be extended to a claim for equal treatment with those who were regularly
employed. That would be treating unequals as equals. It cannot also be relied on to claim a right to be
absorbed in service even though they have never been selected in terms of the relevant recruitment rules.
The arguments based on Articles 14 and 16 of the Constitution are therefore overruled.
(Page: 740, Para: 39)
In cases relating to service in the commercial taxes department, the High Court has directed that those
engaged on daily wages, be paid wages Page 1951 equal to the salary and allowances that are being paid
to the regular employees of their cadre in Government service, with effect from the dates from which they
were respectively appointed. The objection taken was to the direction for payment from the dates of
engagement. We find that the High Court had clearly gone wrong in directing that these employees be
paid salary equal to the salary and allowances that are being paid to the regular employees of their cadre in
Government service, with effect from the dates from which they were respectively engaged or appointed.
It was not open to the High Court to impose such an obligation on the State when the very question before
the High Court in the case was whether these employees were entitled to have equal pay for equal work so
called and were entitled to any other benefit. They had also been engaged in the teeth of directions not to
do so. We are, therefore, of the view that, at best, the Division Bench of the High Court should have
directed that wages equal to the salary that are being paid to regular employees be paid to these daily wage
employees with effect from the date of its judgment. Hence, that part of the direction of the Division
Bench is modified and it is directed that these daily wage earners be paid wages equal to the salary at the
lowest grade of employees of their cadre in the Commercial Taxes Department in Government service,
from the date of the judgment of the Division Bench of the High Court. Since, they are only daily wage
earners, there would be no question of other allowances being paid to them. In view of our conclusion,

Sec. 25B

Reliefs/benefits to workman on complition of continuous service

2343

that Courts are not expected to issue directions for making such persons permanent in service, we set
aside that part of the direction of the High Court directing the Government to consider their cases for
regularization. We also notice that the High Court has not adverted to the aspect as to whether it was
regularization or it was giving permanency that was being directed by the High Court. In such a situation,
the direction in that regard will stand deleted and the appeals filed by the State would stand allowed to that
extent. If sanctioned posts are vacant (they are said to be vacant) the State will take immediate steps for
filling those posts by a regular process of selection. (Page: 742/743, Para: 46)
Note: The above case settles the legal position as of to-day on the rights of temporary, casual or adhoc
workmen to regularization in Government employment or its instrumentalities despite completing 240
days by disentitling them to the same

vi) Regularisation can not be granted on completion of 240 days if the

appointment is contrary to statutory rules (S.C.2J)
F 5A.152 An Assistant engineer who is a daily rated employee was not made permanent though
worked for 6 months as per standing orders upon which he filed an application before Labour
Court under M.P.I.R. Act which ordered the employer to categorise him as per standing orders in
the permanent category. This was challenged by the employer unsuccessfully in the Industrial
Court as well as in High Court. On his appeal, the Supreme Court setting aside the orders of lower
Courts held that merely because an employee worked for 240 days under Sec. 25-B or 6months
under relevant clause of standard standing orders, he does not become entitled to regularization
and in order to be so entitled, he must be appointed as per statutory rules against a vacant post duly
sanctioned.
M.P. Housing Board & Anr. v. Manoj Shrivastava, 2006 II LLJ 119 : 2006 (109) FLR 194 : 2006 II LLN
84 : 2006 (2) SCC 702 : 2006 SCC (L&S) 422 (S.C.2J)
A person with a view to obtain the status of a permanent employee must be appointed in terms of the
statutory rules. It is not the case of the Respondent that he was appointed against a vacant post which was
duly sanctioned by the statutory authority or his appointment was made upon following the statutory law
operating in the field. (Page: 121, Para: 7)
It has not been found by the Labour Court that the Respondent was appointed by the Appellant herein,
which is a State within the meaning of Article 12 of the Constitution of India, upon compliance of the
constitutional requirements as also the provisions of the 1972 Act or the rules and regulations framed
thereunder. (Page: 121, Para: 10)
It is now well-settled that only because a person had been working for more than 240 days, he does not
derive any legal right to be regularized in service. [See Madhyamik Shiksha Parishad, U.P. v. Anil Kumar
Mishra and Ors. MANU/SC/0390/1994, Executive Engineer, ZP Engg. Divn. And Anr. v. Digambara
Rao and Ors. MANU/SC/0825/2004, Dhampur Sugar Mills Ltd. v. Bhola Singh MANU/SC/0088/2005,
Manager, Reserve Bank of India, Bangalore v. S. Mani and Ors. MANU/SC/0204/2005 and Neeraj
Awasthi. (Page: 123, Para: 14)
For the foregoing reasons, the impugned judgment cannot be sustained which is set aside
accordingly. (Page: 124, Para: 19)
F 5A.153 A person appointed as typist on daily wages by Branch Manager who is not authorised to
appoint cannot claim to have been appointed in terms of provisions of the Act and Rules framed
thereunder and thus he does not acquire any legal right. Merely because an employee had been
working for more than 240 days it does not mean that it would confer any legal right upon him to be
regularised in service. However, Supreme Court granted compensation instead of reinstatement in
the interest of justice.
M.P. State Agro Industries Development Corpn. & Anr. v. S.C. Pandey, 2006 II LLJ 215 : 2006 (109)
FLR 204 : 2006 II LLN 89 : 2006 I CLR 1066 : 2006 (2) SCC 716 : 2006 SCC (L&S) 434 (S.C.2J)

2344

Chapter VA Lay-Off and Retrenchment

Sec. 25B

.when the conditions of service are governed by two statutes; one relating to selection and
appointment and the other relating to the terms and conditions of service, an endeavour should be made to
give effect to both of the statutes; (2) A daily wager does not hold a post as he is not appointed in terms of
the provisions of the Act and Rules framed thereunder and in that view of the matter he does not derive
any legal right; (3) Only because an employee had been working for more than 240 days that by itself
would not confer any legal right upon him to be regularized in service; (4) If an appointment has been
made contrary to the provisions of the statute the same would be void and the effect thereof.
(Page: 217, Para: 16)
F 5A.154 Regarding regularization of the services of contract workers are concerned, it has been
reiterated by Supreme Court citing the case of secretary, State of Karnataka and Ors. v. Umadevi
Ors. (2006 II LLJ 722) that absorption, regularization or permanent continuance of temporary,
contractual, casual, daily wage or adhoc employees de hors the rules and constitutional scheme of
public employment can not be granted by the Courts. Even if the contract labour or casual workers
or adhoc employees have worked for a long period they cannot be regularized de hors the rules for
selection, and the impugned judgements of Division Bench and Single Judge are set aside.
APSRTC & Ors. v. K.V. Ramana & Ors., 2007 I LLJ 1042 : 2007 LLR 338 (S.C.2J)
In our opinion these appeals have to be allowed. It has been held by a Constitution Bench of this Court in
Secretary, State of Karnataka and Ors. v. Uma Devi (3) and Ors. MANU/SC/1918/2006 that absorption,
regularization or permanent continuance of temporary, contractual, casual, daily-wage or ad hoc
employees dehors the rules and constitutional scheme of public employment cannot be granted by the
Courts. As regards the circular dated 31.3.1998 the same cannot override Article 16 of the Constitution,
and hence regularization cannot be granted under the said circular. Even if the contract labourers or
casual workers or ad hoc employees have worked for a long period they cannot be regularized dehors the
rules for selection, as has been held in Uma Devis case. (Page: 1043, Para: 9)
Note : Also refer to the following case
Contract Laghu Udyog Kamgar Union v. S.N. Saundankar, 2007 LIC 283 : 2007 LLR 782 (Bom.HC)
F 5A.155 In the absence of any service rules entitling the employees recruited on daily wages to the
status of regular employees with pay scale from the date of joining or any finding that daily wage
employment was a ploy or a colourable exercise, no proposition of service law entitling them to the
status of regular employees can be laid down.
Divisional Manager, Andhra Pradesh State Road Transport Corporation, and Ors. v. P. Lakshmoji Rao
and Ors., 2004 I LLN 1154 : 2004 I LLJ 1045 : 2004 (100) FLR 951 : 2004 LIC 893 : 2004 SCC (L&S)
416 : 2004 AIR (SC) 1503 : 2004 (2) SCC 433 (S.C.2J)
Thus, the performance of duties carried out by regular employees, was taken to be the basis for directing
regularization. The fact that they underwent a process of selection was also relied on. Insofaras the
decision purports to lay down a proposition of service law that the employees selected on dailywage
basis after selection automatically become regular employees from day one if they perform the duties
similar to regular employees, it is utterly untenable. In the absence of any service rules entitling the
employees recruited on daily wages to get the status of regular employees with pay scale form the very
date of joining, it would be difficult to countenance such proposition especially when there is no finding
that the daily wage employment was a ploy or a colourable device to postpone regularization
indefinitely. (Page: 1158, Para: 8)

vii) When claimants are contract workers though contract labour system is
abolished (Mad.HC)
5A.156 There is no express provision in the Act for absorption of contract workers whose
contract labour system stood abolished by way of publication of notification u/s. 10(1) of Contract
Labour Act. Hence the principal employer cannot be forced to absorb the employees from the date
on which the contractor has employed him. Moreover, the provisions of Sec. 25FF of Industrial

Sec. 25B

Reliefs/benefits to workman on complition of continuous service

2345

Disputes Act cannot be applied as there is no transfer of ownership or management of an

undertaking either by agreement or by operation of law.
Madras Aluminium Co. v. Regional Labour Commissioner & Ors., 1999 II LLJ 1329 (Mad.HC)
Note: Also refer to the Judgment in
Steel Authority of India Ltd. & Anr. v. National Union Water Front Workers & Ors., 2001 (99) FJR 332 :
2001 LIC 3656 : 2001 SCC (7) 1 : 2001 AIR (SC) 3527 : 2001 SCC (L&S) 1121 (S.C.CB)

viii) When workmen are seasonal employees and can not be fitted into
permanent employment or it would be iniquitous to perennial employees
(S.C.2J)
F 5A.157 Apex Court set aside the Industrial Courts order affirmed by High Court directing the
employer to absorb and make permanent seasonal employees completing 240 days of service in
compliance with Patankar Award, since under Patankar Award directions were issued to confirm
temporary perennial employees as permanent who have put in 240 days of continuous service and
made no reference to seasonal employees and the issue regarding permanency of seasonal
employees was never called upon for adjudication, also such a direction would have been highly
inequitous and discriminatory to perennial employees hence aforesaid direction issued under
Patankar Award was held to be inapplicable to seasonal employees.
Maharashtra State Co-operative Cotton Growers Marketing Federation Ltd. & Anr. v. Maharashtra
State Co-operative Cotton Growers Marketing Federation Employees Union & Anr., WITH State of
Maharashtra v. Maharashtra State Co-operative Cotton Growers Marketing Federation Employees
Union & Anr., 1995 I LLJ 53 : 1994 (84) FJR 454 : 1994 (68) FLR 579 : 1994 LIC 959 : 1995 SCC (L&S)
36 : 1994 AIR (SC) 1046 : 1994 (3) SCC 385 (Suppl.) (S.C.2J)
.an industrial dispute having arisen between the employees and the Marketing Federation, the
same was referred by the State Government for adjudication to the Industrial Tribunal consisting of Shri
G. K. Patankar by the reference order of May 30, 1973.None of the demands referred to the.
Tribunal including the aforesaid demand No. 4 suggested that they related to the seasonal employees. All
the demands were in relation to the perennial employees. The statement of claim filed in the Reference by
the Union on behalf of the workmen did not also refer anywhere to the seasonal employees. On the other
hand, in relation to the aforesaid demand for permanency, it referred to all temporary workmen.
(Page: 55, Para: 3)
.There is also no dispute that as per the Patankar Award, the temporary perennial employees
were made permanent but the seasonal employees on the date of the award continued as such without
demur. (Page: 56, Para: 5)
.The grievance made in the complaint was that those seasonal employees who had worked for
240 days in 1982-83 and 1983-84 were not made permanent and inasmuch as the Patankar Award had
directed the Marketing Federation to make permanent seasonal employees who had completed 240 days
of service.The Industrial Court by its impugned order of 14-9-1990 (i) allowed the said
complaint.directed the appellants to absorb and make permanent the said employees in
compliance with the provisions of the Patankar Award. (Page: 59, Para: 11)
.The learned single Judge dismissed the petition holding that the Patankar Award had become
final and since it had given the direction to make permanent even the seasonal employees who had put in
more than 240 days of service, the writ petition had no merit. (Page: 59, Para: 12)
.Award does not even refer to the seasonal employees. It also does not make any distinction
between the two and give reasons either to accept or reject the contentions of the parties. it merely
summarises the arguments of the parties and gives a direction which is quoted above. The operative
portion reads considering, therefore, the arguments advanced on both sides, it appears that it would be
proper to direct that those employees who have put in 240 days of continuous service be treated as
permanent employees. The direction can be read either as a direction to make the temporary perennial
employees and temporary seasonal employees as permanent perennial employees and permanent

2346

Chapter VA Lay-Off and Retrenchment

Sec. 25B

seasonal employees respectively or as a direction relating only to the temporary perennial employees. But
in no case, it can be read as a direction to make seasonal employees as permanent employees as in the
nature of things such a direction could not have been given. There are other reasons why the Tribunal
could not have given such a direction and if such a direction was given, it would have been highly
inequitous and discriminatory to the perennial employees whether temporary or permanent. On the
undisputed fact, that the procurement and processing operations under the Cotton Scheme do not last for
more than 4 to 6 months and in any case not more than 8 months, to make the seasonal employees
permanent and give them all the benefits of the perennial employees would mean that they would get the
salary and all other benefits throughout the year as the perennial employees do, without putting in work
throughout the year as the latter have to do. (Page: 62, Para: 16)
.we allow the appeals and set aside the decisions of the Industrial Court and of the High
Court. (Page: 66, Para: 25)
F 5A.158 The public sector undertaking was recruiting casual workmen for specified period and
was terminating their services at the end of the field season. Union of workmen raised industrial
dispute for regularization of casual workmen. In considering the question who would be eligible to
be considered for appointment to the regular posts, Tribunal held that a casual workman who has
put in attendance of 180 days or more in 12 consecutive months would automatically become a
temporary workman who would after completion of 240 days of attendance in any period of 12
consecutive months and possessing requisite qualifications, be considered for conversion as a
regular employee. Single judge modified the decision and extended the benefits given by the
Tribunal even to persons who were not parties before the Tribunal while Division Bench directed
that the workman concerned should be notionally treated as regularized, appeal was filed before
Supreme Court. It was held that having regard to the nature of employment and the period during
which field workers were employed, it would create difficulty if seasonal workmen were treated at
par with regular employees. It would be even more difficult to adjust workmen in permanent
employment when need for them was only seasonal. Tribunals order restored and it was directed
to management not to make any recruitment from outside till all those who figured in the list put up
before the Tribunal are regularized.
Oil & Natural Gas Corporation, Ltd. v. Engineering Mazdoor Sangh, 2007 I LLN 85 : 2007 I CLR 61 :
2007 SCC (L&S) 157 : 2007 AIR (SC) 920 : 2007 (1) SCC 250 (S.C.2J)
In view of the aforesaid phenomenon relating to employment of seasonal workers, the Engineering
Mazdoor Sangh on behalf of its members who had been recruited as such casual/contingent/temporary
workmen, raised an industrial dispute in the form of a demand for regularization of such
workmen. (Page: 87, Para: 3)
On the basis of the above, the Tribunal held that a casual workman who put in attendance of 180 or more
days in 12 consecutive months automatically became a temporary workman who could after completion
of 240 days of attendance in any period of 12 consecutive months and possessing qualifications be
considered for conversion as a regular employee. (Page: 88, Para: 7)
Having regard to the nature of employment and the period during which these field workers are
employed, it would create various difficulties if the seasonal workmen were to be treated at par with
regular employees as directed by the learned Single Judge. It would be even more difficult for the
appellant to adjust the workmen in permanent employment when the need for them was only seasonal.
Admittedly, these workmen who are employed for field survey work are employed for about six months
in a year between November and May. If at all they are to be regularized, the appellant will have to find
work for them during the months when their services would otherwise have not been required. As pointed
out by Mr. Salve, previously the appellant had monopolistic control over geological survey work for oil
and natural gas but today the scene had changed and it is just another competitor along with others,
notwithstanding the fact that they are a Government company. The appellant is now required to compete
with others in securing exploration work and can only recruit field workers as and when required. Even
then the learned Tribunal found a via media in directing that Page 5129 the 153 workmen who had
admittedly completed 240 days and had acquired a temporary status be regularized against vacancies as
and when such vacancies became available. (Page: 90, Para: 14)

Sec. 25B

Reliefs/benefits to workman on complition of continuous service

2347

We are of the view that the directions given by the learned Tribunal are reasonable and should be
allowed to stand as against the directions given by the High Court, firstly to treat the said 153 workmen at
par with the regular employees and thereafter to treat their services as having been notionally regularized
from 1st May, 1999. We can, of course, add a few further safeguards in order to protect the interests of the
said 153 workmen so that they are assured of employment as before. (Page: 90, Para: 15)

ix) When workman is the casual employee though completed 240 days since
recruitment is to be through Public Service Commission or Employment
Exchange as per stipulated procedure (Cal.DB)
5A.159 Zilha Parishad being State under Art. 12 is bound to comply with State Government
circular which stipulates that all recruitments to local bodies should be made either through Public
Service Commission or through Employment Exchange, therefore a casual employee who has
competed 240 days of service is not entitled for absorption but to only benefits of Sec. 25F.
Birmhum Zila Parishad & Ors. v. Nitya Hari Chaterjee & Ors., 1997 (75) FLR 482 : 1997 III LLJ 1293 :
1996 II LLN 906 (Cal.DB)
As State.employment. (Page: 482, Para: 1)
5A.160 The fact that casual workmen had completed 240 days of continuous service would not
entitle them to any right of regularisation, such workmen have right to claim only retrenchment
compensation u/s. 25F and hence claim of workmen for regularisation was refused by Court.
Sarama Das & Ors. v. The Superintendent, Durgapur Sub-divisional Hospital & Ors., 1997 (75) FLR
945 (Cal.DB)
.There cannot be.permanently in service. (Page: 947, Para: 3)
Note: Also refer to the following case
Prakash Chandra Panda v. Institute of Life Science & Ors., 2003 LIC 1048 (Ori.HC)

x) When employees are appointed on a time bound project and not in

sanctioned posts (S.C.2J)
F 5A.161 Certain Engineers were appointed on daily wage basis on a Government project without
issue of any appointment letters. They were, however, continued in service and they received
monthly salary and provident fund etc. were deducted from the same. The Government failed to
regularise the services of the engineers, hence they raised an industrial dispute. The Labour Court
gave award in favour of the employees. The Government filed writ petition in the High Court
which allowed the same on the ground that the employees were not appointed in any sanctioned
posts and the project for which they were working having been completed then services could not
be regularized. On appeal the Supreme Court held that the Government being a state within the
meaning of Article 12 of the constitution of India, therefore, it was obliged to strictly comply with
Art. 14 and 16 thereof before making any appointment. Hence Supreme Court held that the service
could not be regularized.
Mahendra L. Jain & Ors. v. Indore Development Authority & Ors., 2005 SCC (L&S) 154 : 2005 (1) SCC
639 (S.C.2J)
We have noticed the provisions of the Act and the Rules. No case was made out by the Appellants herein
in their statements of claim that they became permanent employees in terms thereof. There is also nothing
on records to show that such a claim was put forward even in the demand raising the industrial dispute.
Presumably, the Appellants were aware of the statutory limitations in this behalf. Furthermore, the
Labour Court having derived its jurisdiction from the reference made by the State Government, it was
bound to act within the four-corners thereof. It could not enlarge the scope of the reference nor could
deviate therefrom. A demand which was not raised at the time of raising the dispute could not have been
gone into by the Labour Court being not the subject-matter thereof. (Page: 166, Para: 34)

2348

Chapter VA Lay-Off and Retrenchment

Sec. 25B

As noticed hereinbefore, the High Courts observation remained unchallenged, that the project was to be
financed by ODA. The project was indisputably to be executed by the Indore Development Authority;
and for the implementation thereof, the appointments had to be made by it. If the Appellants were
appointed for the purpose of the project, they would be deemed to have been appointed therefor and only
because such appointments had been made by the Respondent would by itself not entitle them to claim
permanency. The life of the project came to an end on 30.6.1997. The maintenance job upon completion
thereof had been taken over by Indore Municipal Corporation. The Appellants were aware of the said fact
and, thus, raised an alternative plea in their statements of claims. The Labour Court could not have
granted any relief to them as prayed for, as Indore Municipal Corporation is a separate juristic person
having been created under a statute. Such a relief would have been beyond the scope and purport of the
reference made to the Labour Court by the State Government. Furthermore, the Indore Municipal
Corporation was not a party and, thus, no employee could be thrust upon it without its consent.
(Page: 166/167, Para: 37)
It is furthermore evident that the persons appointed as daily wagers held no posts. The appointments,
thus, had been made for the purpose of the project which, as indicated hereinbefore, came to an end. The
plea of Dr. Dhawan to the effect that the Appellants in Civil Appeal No. 337 of 2002 were asked to
perform other duties also may not be of much significance having regard to our foregoing findings.
However, it has been seen that even services of one of them had been requisitioned only for the project
work. The High Court, in our opinion, was right in arriving at the conclusion that the Appellants were not
entitled to be regularized in service. (Page: 167, Para: 39)
The Appellants having been employed on daily wages did not hold any post. No post was sanctioned by
the State Government. They were not appointed in terms of the provisions of the statute. They were not,
therefore, entitled to take the recourse of the doctrine of equal pay for equal work as adumbrated in
Articles 14 and 39(d) of the Constitution of India. The burden was on the Appellants to establish that they
had a right to invoke the said doctrine in terms of Article 14 of the Constitution of India. For the purpose
of invoking the said doctrine, the nature of the work and responsibility attached to the post are some of the
factors which were bound to be taken into consideration. Furthermore, when their services had not been
regularized and they had continued on a consolidated pay on ad hoc basis having not undergone the
process of regular appointments, no direction to give regular pay scale could have been issued by the
Labour Court. (Page: 168/169, Para: 43)
Note: This arose under M.P. Industrial Employment Standing Orders Act

xi) Regularisation cannot be granted if employer himself ceases to exist

(Del.DB)
5A.162 A temporary employee was terminated when Government declared ban on the Bhatti
Mines. The employee demanded regularization of service. Division Bench held that the employer
concerned no more exist as such the question of creating a regular post and absorbing employee
does not arise.
Sunil Kumar v. Delhi State Mineral Development Corporation & Anr., 2006 III LLJ 67 : 2006 LIC 1152
(Del.DB)

xii) Regularisation cannot be of daily wagers but Labour Court or Tribunal

can only direct consideration of cases against vacancies (Jhar.HC)
5A.163 Some of the daily wage workers of Damodar Valley Corporation were in continuous
service for long periods. On making grievance that their services should be regularized, the
Government referred the dispute to the Labour Court. The Labour Court answered the reference
in favour of the workmen. On writ petition by the employer, the High Court held that it is well
settled that a Court or Tribunal cannot issue direction for regularization or absorption in service of
daily wage employees merely because of their continuation in employment for a long time. The
Court or the Tribunal can, at best, direct the management to consider the cases of workmen for
appointment against the existing or future vacant posts. The High Court modified the decision of
the Labour Court accordingly.
Damodar Valley Corporation v. The State of Bihar & Ors., 2005 LIC 2774 (Jhar.HC)

Sec. 25B

Reliefs/benefits to workman on complition of continuous service

2349

Note: Also refer to the following case

Ahmedabad Municipal Corporation v. Meghajibhai Sanabhai Bhimsuriya & Ors., 2002 LIC 370
(Guj.HC)

xiii) Regularization of an ineligible person cannot be on the ground that some

ineligible persons were previously regularized (AP.HC)
5A.164 If some ineligible persons were previously regularized by employer, it would not be a
ground for regularizing other ineligible persons.
B. Satyanarayana & Ors v. Tirumala Tirupathi Devasthanam & Ors., 1999 LIC 2428 (AP.HC)
Lastly, adverting.Supreme Court. (Page: 2430, Para: 9)

xiv) Regularization cannot be of an employee under-aged on the date of

appointment but attained required age later (S.C.2J)
F 5A.165 Employees who were under-aged on the date of appointment but attained the required
age on the date of the judgment, are not entitled to regularization as their right of appointment
accrues on the date of initial appointment and not on the date of judgment.
Employer in relation to the Management of G.C. of M/s. BCCL v. Their Workmen, rep. by Bihar Colliery
Kamgar Union, 2002 AIR (SC) 2343 : 2002 LIC 2184 (S.C.2J)
The appellant has challenged the order of the High Court which has dismissed the Letters Patent Appeal
through holding the questioned appointment of 11 persons were medically examined and were found to
be underage in the year 1973 the year of their appointment. In spite of this it further held, underage
disability now vanishes. We do not find such a finding could be sustainable in the eyes of law. Once this is
found, they were underage in the year 1973, their regularisation based on such appointment cannot be
upheld, specially when there is specific provision, no person can work in the mines who is underage. If
this be so there is no justification for upholding the order as their age now is 30 years. The question is not
of their employment on compassionate ground after attaining the requisite age. The right which is
claimed is the right from the date of initial appointment, namely, in 1973. (Page: 2343, Para: 3)

xv) Regularisation cannot be of an employee unless he submits original

certificate or certified copy of passing the qualifying examination requisite
for the post (S.C.2J)
F 5A.166 Employee appointed on contract basis was denied extension and regularization on the
ground that he did not possess requisite educational qualification, which he did not prove by
producing original certificate, High Court directed regularization by holding that he possessed
required qualification whereas the Apex Court directed the employee to produce original
certificate issued by the institute or certified copy thereof in order to get the benefit of his claim.
M/s. National Aluminium Co. Ltd. v. Deepak Kumar Panda & Anr., 2002 LIC 2627 : 2002 III LLJ 258 :
2002 (94) FLR 753 : 2002 AIR (SC) 2498 : 2002 (6) SCC 223 (S.C.2J)
.stand taken by the petitioner-company was that the respondent did not produce satisfactory
proof of possessing the requisite educational qualification for being appointed as French Interpreter or to
the post of Assistant and, therefore, the question of extension of service or regularisation did not
arise. (Page: 2628, Para: 2)
.The reason for his inability to produce the certificate has not been explained. He is only harping
on the secondary evidence in the form of testimonial/letter issued by the Registrar bearing the date
19-11-1980. In these circumstances, the High Court ought not to have entered into the factual finding that
the respondent possessed the necessary qualification. The High Court clearly misdirected itself in doing
so.It is pertinent to note, at this juncture, that the petitioner-company failed to produce, either
before the High Court or before this Court.In this fluid state of things, the proper course would be

2350

Chapter VA Lay-Off and Retrenchment

Sec. 25B

to give a final opportuntiy to the respondent to produce the original or authenticated certificate issued by
the competent authority of Sri Aurobindo International Centre, Pondicherry. For this purpose, two
months time is granted to the respondent to produce the same. On approach being made by the
respondent, we do hope that the authorities of Sri Aurobindo International Centre would take expeditious
steps to verify the concerned record and issue the certificate in original or a certified copy
thereof.As the respondent has to partly blame himself for the situation in which he is placed, we
are not inclined to grant the benefit of retrospective regularisation from an earlier date or to award any
backwages. (Page: 2629, Para: 5)
The impugned order of the High Court is set aside. (Page: 2629, Para: 6)

xvi) Regularization cannot be if workman is not appointed against any existing

vacancy or appointed through any selection process (AP.HC)
5A.167 The workman was appointed on casual/daily wage basis. In his claim regarding
regularization, it was held that the employer could dispense with the services of the workman if he
found that there was no need to continue his services because he was not appointed against any
existing vacancy or appointed through any selection process. Further, the writ of mandamus could
not be issued unless the workmen had any enforceable right against the employer.
B. Satyanarayana & Ors v. Tirumala Tirupathi Devasthanam & Ors., 1999 LIC 2428 (AP.HC)
Although the.in nature. (Page: 2428, Para: 2)
.Since the.in law. (Page: 2430, Para: 7)
.The Court.instant cases. (Page: 2430, Para: 8)

xvii) Regularisation cannot be of a workman who is appointed on the basis of

fixed tenure (S.C.2J)
F 5A.168 Where workmen were engaged for project work, as soon as the project was over they
cannot claim as a matter of right to be permanent employees or to be regularized in the company.
The services of project employees come to an end as soon as the project is over and they cannot be
given permanent status and their services have to be terminated after completion of the project. In
this context, there is no violation of Articles 14, 16 or 21 of the Constitution as they are the
employees of the project and at the end of project they are entitled to take their benefits as are
admissible in accordance with the provisions of Industrial Disputes Act.
Lal Mohammad & Ors. v. Indian Railway Construction Co. Ltd. & Ors., AND Ravindra Nath Mishra v.
Indian Railway Construction Co. Ltd. & Anr., 2007 I LLJ 773 : 2007 (112) FLR 847 : 2007 II LLN 31 :
2007 LIC 2783 : 2007 I CLR 688 : 2007 (1) SCC (L&S) 725 : 2007 AIR (SC) 2230 : 2007 (2) SCC 513
(S.C.2J)
A distinction has to be borne in mind who is employee of the company and who is employee of the
Project. The services of project employees come to an end as soon as the project is over and they cannot
be given permanent status. Since they were employees of the project their services have to be terminated
after completion of the project. In this connection the Full Bench has considered the necessary provisions
of the rules and after a detailed discussion on the matter has rightly come to the conclusion that they are
employees of the project and they are not the employees of the company. There is no question of violation
of Articles 14, 16 & 21 of the Constitution of India in the matter as they were employees of the project and
at the end of the project they have taken their benefits as are admissible in accordance with the Industrial
Disputes Act. (Page: 784, Para: 15)
So far as the termination of the incumbents is concerned after completion of the project they have no
right to continue. They are only entitled to notice and compensation to be determined under Section 25-F.
Shortfall of period of notice or compensation will not render termination bad on that count.
(Page: 787, Para: 19)

Sec. 25B

Reliefs/benefits to workman on complition of continuous service

2351

Therefore, in the light of discussion made above, we are of the opinion that the view taken by the Full
Bench is correct. The petitioners are not entitled to be regularise their services in the Company and they
are not employees of Company. They are only entitled to compensation as indicated above. The above
appeals and writ petitions filed by workers are dismissed. (Page: 789, Para: 28)
5A.169 Plea of workman for regularization was dismissed on the ground that there was
overwhelming evidence to show that the workman was appointed on a fixed term of one year on
contract basis on a temporary appointment, which could be terminated without assigning any
reason. An agreement was also executed between the parties stating the nature of appointment
hence, the contention that having completed 240 days of service he is entitled to be considered, as a
permanent employee cannot be accepted.
Group General Manager, O.N.G.C. Ltd. v. Nareshkumar Manilal Parmar & Anr., 2001 LIC 2619 : 2002
II LLJ 494 : 2002 LLR 840 (Guj.HC)
.The petitioner was.the interview. (Page: 2620, Para: 5)
There is thus.is disclosed.If this is so.permanent employee.
(Page: 2622, Para: 14)

xviii) Regularisation cannot be of casual workmen though completed 240 days

of service (Cal.DB)
5A.170 The fact that casual workmen had completed 240 days of service would not entitle them to
any right of regularisation, such workmen have right to claim only retrenchment compensation
u/s. 25F and hence claim of workmen for regularisation was refused by Court.
Sarama Das & Ors. v. The Superintendent, Durgapur Sub-divisional Hospital & Ors., 1997 (75) FLR
945 (Cal.DB)
.There cannot be.permanently in service. (Page: 947, Para: 3)
Note: Also refer to the follwing cases
Shri Pal S/o Chander Bhan v. P.O. Industrial-cum-Labour Court & Anr., 2002 (95) FLR 401 : 2002 II
LLN 667 : 2002 LLR 371 : 2002 LIC 227 (P&H.HC)

xix) Regularisation cannot be of daily rated workmen of a Government

company since they do not enjoy any status or security of tenure as
Government servants u/Art. 311 and have only limited protection (S.C.2J)
F 5A.171 The daily rated Malis and some individual workmen working in a Government company
filed petitions before the High Court seeking a direction to the company to regularize their services
on the ground that they have completed 240 days in each year during the past many years and they
were given artificial breaks with a view to deny them permanency and continuity in service. The
Single Judge allowing their petition directed the company to regularize them and pay them regular
scales of pay. The Division Bench too upheld the said direction. This was challenged by the
Government company before the Apex Court before which the company contended that the
claimants were not Government servants who enjoy constitutional protection but governed by the
provisions of Industrial disputes Act and other allied Acts. The Apex Court held that the employer
is a Government company within the meaning of Sec. 617 of Companys Act and is an industrial
establishment. The position of a Government servant is different from that of an employee in an
industrial establishment in that he enjoys status and security of tenure and governed by rules
framed u/Art. 309and entitled to hold the post and cannot be removed without complying with the
provisions of Art. 311, where as an employee working in an industrial establishment enjoys limited
kind of protection where his tenure may be cut short not on account of any disciplinary action
taken against him but on account of unilateral act of the employer attracting Section like 25E, 25F,

2352

Chapter VA Lay-Off and Retrenchment

Sec. 25B

25FFF etc. Where notice or wages in lieu and compensation is given and hence regularization or
permanency is not contemplated under the Act.
Hindustan Aeronautics Ltd. v. Dan Bahadur Singh & Ors., 2007 LIC 3209 : 2007 (2) SCC (L&S) 441 :
2007 AIR (SC) 2733 : 2007 (6) SCC 207 (S.C.2J)
The legal position is that identity of the Government Company remains distinct from the Government.
The Government Company is not identified with the Union but has been placed under a special system of
control and conferred certain privileges by virtue of the provisions contained in Sections 619 and 620 of
the Companies Act. Merely because the entire share holding is owned by the Central Government will not
make the incorporated company as Central Government. It is also equally well settled that the employees
of the Government Company are not civil servants and so are not entitled to the protection afforded by
Article 311 of the Constitution (See Pyare Lal Sharma v. Managing Director MANU/SC/0428/1989).
An employee working in an industrial establishment enjoys a limited kind of protection. He may lose his
employment in various contingencies which are provided under the Industrial Disputes Act such as lay
off as provided in Section 25C, retrenchment as provided in Section 25F, transfer of industrial
establishment or management of an undertaking as provided in Section 25FF, closure of undertaking as
provided in Section 25FFF. He may be entitled to notice or wages in lieu of notice and monetary
compensation depending upon the length of service put in by him. But the type of tenure of service
normally enjoyed by a permanent employee in Government Service, namely, to continue in service till the
age of superannuation, may not be available to an employee or workman working in an industrial
establishment on account of various provisions in the Industrial Disputes Act where his tenure may be cut
short not on account of any disciplinary action taken against him, but on account of a unilateral act of the
employer. Therefore, the claim for permanency in an industrial establishment has to be judged from a
different angle and would have different meaning. (Page: 3213, Para: 17)
The next question which requires consideration is whether completion of 240 days in a year confers any
right on an employee or workman to claim regularization in service. In Madhyamik Shiksha Parishad v.
Anil Kumar Mishra and Ors. MANU/SC/0390/1994 it was held that the completion of 240 days work
does not confer the right to regularization under the Industrial Disputes Act. It merely imposes certain
obligations on the employer at the time of termination of the services. In M.P. Housing Board & Anr. v.
Manoj Shrivastava MANU/SC/8059/2006 (paragraph 17) after referring to several earlier decisions it
has been reiterated that it is well settled that only because a person had been working for more than 240
days, he does not derive any legal right to be regularized in service. This view has been reiterated in
Gangadhar Pillai v. Siemens Ltd. MANU/SC/8652/2006. The same question has been examined in
considerable detail with reference to an employee working in a Government Company in Indian Drugs
and Pharmaceuticals Ltd. v. Workman, Indian Drugs & Pharmaceuticals Ltd. MANU/SC/4993/2006
and paragraphs 34 and 35 of the reports are being reproduced below:
Thus, it is well settled that there is no right vested in any daily wager to seek regularization.
Regularization can only be done in accordance with the rules and not de hors the rules. In the case of E.
Ramakrishnan and Ors. v. State of Kerala and Ors. MANU/SC/1651/1996 this Court held that there can
be no regularization de hors the rules. The same view was taken in Dr. Kishore v. State of Maharashtra
MANU/SC/1090/1997 and Union of India and Ors. v. Bishambar Dutt MANU/SC/1734/1996. The
direction issued by the Services Tribunal for regularizing the services of persons who had not been
appointed on regular basis in accordance with the rules was set aside although the petitioner had been
working regularly for a long time. (Page: 3213, Para: 33)

xx) When claimants are empanelled to meet temporary requirement and such
panel is in force only for one year (S.C.2J)
F 5A.172 For recruitment of Attenders, eligible candidates were empanelled by getting sponsored
names from Local Employment Exchange for their temporary recruitment. The panel will be in
force for one year. The candidates so empanelled cannot claim as right to seek permanent
appointment in the service of Bank.
Syndicate Bank & Anr. v. Shankar Paul & Anr., 1997 II LLJ 814 : 1997 LIC 2913 : 1997 AIR (SC) 3091 :
1997 (6) SCC 584 (S.C.2J)

Sec. 25B

Reliefs/benefits to workman on complition of continuous service

2353

The Deputy General Manager in charge of Calcutta Zone of the appellant bank wrote to the
Sub-Regional Employment Exchange, North Calcutta, sometime in July, 1986, to send a list of
candidates for selection arid empanelment for the post of attenders for some of its branches in Calcutta.
The empanelled candidates were to be appointed in the temporary vacancies which were likely to arise on
account of absence of or casual leave taken by the regular attenders. (Page: 816, Para: 3)
.Considering the object with which the panel was prepared and the fact that it was an yearly panel
expiring on 6.2.1988, we are of the opinion that the respondents did not get any right, because of
inclusion of their names in the said panel, for permanent absorption in the service of the Bank. Whatever
conditional right they had came to an end with the expiry of the panel. (Page: 817, Para: 7)
Note: Also refer to the following cases in the above context
Heavy Engineering Mazdoor Union v. State of Bihar & Anr., 1969 II LLJ 549 : 1969 (19) FLR 27 : 1970
LIC 212 : 1970 AIR (SC) 82 : 1969 (1) SCC 765 (S.C.2J)
B.N. Nagarajan v. State of Karnataka, 1979 (4) SCC 507 : 1980 SCC (L&S) 4 (S.C.3J)
Pyare Lal Sharma v. Managing Director, 1989 (3) SCC 448 : 1989 SCC (L&S) 484 (S.C.2J)
Dr. Surinder Singh Jamwal v. State of J&K, 1996 II LLJ 795 : 1996 II CLR 956 : 1996 (9) SCC 619 : 1996
SCC (L&S) 1296 : 1996 AIR (SC) 2775 (S.C.2J)
E. Ramakrishnan v. State of Kerala, 1997 I LLJ 1215 : 1996 (10) SCC 565 : 1997 SCC (L&S) 331
(S.C.2J)
Union of India v. Bishamber Dutt, 1997 II LLJ 381 : 1996 (11) SCC 341 : 1997 SCC (L&S) 478 (S.C.2J)
Dr. Kishore v. State of Maharashtra, 1997 (3) SCC 209 : 1997 SCC (L&S) 779 (S.C.2J)
P.U. Joshi v. Accountant General, 2003 (2) SCC 632 : 2003 SCC (L&S) 191 (S.C.2J)
A.K. Bindal v. Union of India, 2003 II LLJ 1078 : 2003 (5) SCC 163 : 2003 SCC (L&S) 620 (S.C.2J)
Madhyamik Shiksha Parishad v. Anil Kumar Mishra, 2005 (5) SCC 122 : 2005 SCC (L&S) 628 (S.C.3J)
Union Public Service Commission v. Girish Jayanti Lal Veghela & Ors., 2006 (2) SCC 482 : 2006 SCC
(L&S) 339 (S.C.2J)
Secretary, State of Karnataka & Ors. v. Umadevi (3) & Ors., 2006 II LLJ 722 : 2006 (109) FLR 826 :
2006 III LLN 78 : 2006 II CLR 261 : 2006 (4) SCC 1 : 2006 AIR (SC) 1806 : 2006 SCC (L&S) 753
(S.C.CB)
M.P. Housing Board & Anr. v. Manoj Shrivastava, 2006 II LLJ 119 : 2006 (109) FLR 194 : 2006 II LLN
84 : 2006 (2) SCC 702 : 2006 SCC (L&S) 422 (S.C.2J)
Indian Drugs & Pharmaceuticals Ltd. v. Workman, Indian Drugs & Pharmaceuticals Ltd., 2007 (112)
FLR 474 : 2007 I LLN 37 : 2007 I CLR 48 : 2007 SCC (L&S) 270 : 2007 (1) SCC 408 (S.C.2J)
Gangadhar Pillai v. Siemens, Ltd., 2007 I LLJ 717 : 2007 I LLN 139 : 2007 LIC 590 : 2007 II CLR 139 :
2007 LLR 325 : 2007 (1) SCC (L&S) 346 : 2007 (1) SCC 533 (S.C.2J)

d) Relief of pension
1. Not available to daily wagers who had not completed 240 days in any of the
10 years they had worked (Guj.DB)
5A.173 As the daily wage employees engaged for cleaning canals had not worked for more than 10
years and more than 240 days in a year, they were not entitled to benefit of pension as per the
Government resolution.
Shankerji Cheljaji Thakor v. State of Gujarat, 2000 II LLJ 239 : 2000 III CLR 86 : 2000 III CLR 86
(Guj.DB)
Looking.resolution. (Page: 243, Para: 9)
Looking to the aforesaid.to get certain benefit. (Page: 243, Para: 10)
Locking to.benefits. (Page: 243, Para: 10)
.It is very.dismissed. (Page: 245, Para: 19)

2354

Chapter VA Lay-Off and Retrenchment

Sec. 25B

e) Relief of closure compensation u/s. 25FFF

Note: Also refer to Sec. 25FFF for more ratios on closure compensation

1. Available to workman if he has been in continuous service for one year

(Mad.DB)
5A.174 Whether an employee has been in continuous service for one year from the date of entry is
to be determined before he can be held to be entitled for compensation u/s. 25FFF and compliance
with other conditions of continuous service and period of illegal strike cannot be considered.
A. Parthasarathi & Anr. v. Management of Standard Motors Products of India Ltd. & Anr., 1979 LIC 136
(Sum) (Mad.DB)

f) Relief of retrenchment compensation

1. Available to workman who is in continuous service and terminated
violating Sec. 25F (Pat.DB)
5A.175 The workmen who was terminated from service had been employed for less than 12
calendar months and since they were not in continuous service in accordance with Sec. 25-B, the
Tribunal has rightly denied the retrenchment benefits claimed by them.
Workmen of Pure Kustore Colliery (represented by Khan Mazdoor Congress) v. Central Government
Industrial Tribunal-cum-Labour Court, Jabalpur & Anr., 1969 I LLJ 126 : 1969 (18) FLR 297 (Pat.DB)
.the approach.years service. (Page: 128, Para: 1)
.before the workmen.rightly failed. (Page: 128, Para: 1)
5A.176 Workman who had worked for not more than 89 days claimed retrenchment
compensation since they were not in continuous service of 240 days, as per Sec. 25-B were held not
entitled to retrenchment compensation and benefit of Sec. 25H.
Indian Airlines v. Sebastian, 1994 III LLJ 498 : 1991 (62) FLR 755 : 1991 I LLN 247 : 1991 I CLR 43 :
1991 LLR 488 (Ker.DB)
Thus it is.S. 256. (Page: 503, Para: 8)
In our opinion.unsustainable. (Page: 506, Para: 15)
5A.177 In the present case, the Labour Court recorded a finding that the workmen were in
continuous service for the years 1978-1985, so their case falls under Clause (1) of Sec. 25-B, not
Clause (2) and they are entitled to be dealt with under the provision of Sec. 25F irrespective of the
fact that the workmen did not actually work for 240 days in the last calender year therefore, the
Labour Court has rightly held that there was non-compliance of Sec. 25-F and the retrenchment of
the workmen was illegal and void.
Chief Engineer, Irrigation v. Kamlesh & Ors., 1996 II LLJ 316 : 1996 I LLN 941 : 1996 I CLR 1128 :
1996 LLR 218 (Raj.HC)
Note: Refer to the following case also
Management of the Food Corporation of India v. Union of India Through Labour Secretary, Government
of India & Ors., 2005 (106) FLR 1171 : 2005 LLR 1112 (Jhar.HC)

Sec. 25B

Reliefs/benefits to workman on complition of continuous service

2355

g) Service benefits
1. Workman entitled to pay scale and other allowances when granted under
Government resolution (Guj.HC)
5A.178 The Government by Resolution granted benefits of pay scale and other allowances to the
daily wagers working continuously within the meaning of Sec. 25B of the Industrial Disputes Act.
But the workman was not given the benefit of the said two circulars in spite of working for 20 years,
though other similarly situated employees were getting the benefits. On representation the
authority rejected the request. On appeal, Division Bench held that workman was entitled to all the
benefits under resolution dated 17.10.1988, 19.9.1991, 24.4.1998, and 24.3.2006 as permanent
employee on par with Government employee.
Devraj Punjabhai Makwana v. State of Gujarat & Ors., 2006 LIC 3619 (Guj.HC)
The State of Gujarat.benefit of both the circulars. (Page: 3619/3620, Para: 3)
Ultimately, Division Bench.21 years service. (Page: 3627, Para: 12)

2. Wages payable to casual workers for the intervening period between

termination and re-absorption when done so with a view to prevent
completion of 240 days service (S.C.2J)
F 5A.179 Where pending reference regarding status of the employees, workers were jettisoned for
a few days and later re-absorbed with a view to prevent a continuous run of 240 days of work,
Tribunal awarded wages for the said period which was upheld by the Supreme Court.
Municipal Corporation of Delhi v. Rasal Singh etc., 1976 II LLJ 96 : 1976 (32) FLR 283 : 1976 II LLN
578 : 1976 LIC 1560 : 1976 SCC (L&S) 217 : 1976 AIR (SC) 2454 : 1976 (2) SCC 179 (S.C.2J)
The facts in the single dispute spread out into a hundred appeals are that the workers were jettisoned for a
few days and, later re-absorbed, thus depriving the workers of the small wages for short spells. An
industrial dispute was pending at this time relating to the status of the workers as regular employees or
only casual workers though continuously on the muster rolls. Discharge of these workers during the
pendency of the dispute before the Tribunal attracted Section 33 of the Industrial Disputes Act which was
invoked by the affected workmen. The plea of the Municipal Corporation of budgetary provision having
petered out as justifying the non-employment was disbelieved by the Tribunal.But, having heard
counsel on both sides, we are happy to hold that since the award is essentially just it must
stand.Tribunal had read more into the mind of the Commissioner than was warranted by the
record.The workmen have since been held in the Industrial Dispute to be only casual labourers
although we hope this will be no weapon in the hands of the employer to breach fair norms. The wages for
the broken period will be paid by the appellant within one month.These conclusions are mutually
satisfactory as attested by counsel on both sides and we too share in the happy ending to a forensic saga of
misfortune. (Page: 96, Para: 2)

3. Back wages admissible to daily wagers from the date of regularization but
not from the date of initial engagement (S.C.CB)
F 5A.180 The Supreme Court not only set aside the judgement of Division Bench to regularize the
daily wage workers appointed in Commercial Taxes Department in deficiency of the rule, but also
modified the order as to the effective date at the most of making payment of wages equal to the
salary that are being paid to regular employees that also not from date of engagement but from the
date of judgement of High Court.
Secretary, State of Karnataka & Ors. v. Umadevi (3) & Ors., 2006 II LLJ 722 : 2006 (109) FLR 826 :
2006 III LLN 78 : 2006 II CLR 261 : 2006 (4) SCC 1 : 2006 AIR (SC) 1806 : 2006 SCC (L&S) 753
(S.C.CB)

2356

Chapter VA Lay-Off and Retrenchment

Sec. 25B

In cases relating to service in the commercial taxes department, the High Court has directed that those
engaged on daily wages, be paid wages Page 1951 equal to the salary and allowances that are being paid
to the regular employees of their cadre in Government service, with effect from the dates from which they
were respectively appointed. The objection taken was to the direction for payment from the dates of
engagement. We find that the High Court had clearly gone wrong in directing that these employees be
paid salary equal to the salary and allowances that are being paid to the regular employees of their cadre in
Government service, with effect from the dates from which they were respectively engaged or appointed.
It was not open to the High Court to impose such an obligation on the State when the very question before
the High Court in the case was whether these employees were entitled to have equal pay for equal work so
called and were entitled to any other benefit. They had also been engaged in the teeth of directions not to
do so. We are, therefore, of the view that, at best, the Division Bench of the High Court should have
directed that wages equal to the salary that are being paid to regular employees be paid to these daily wage
employees with effect from the date of its judgment. Hence, that part of the direction of the Division
Bench is modified and it is directed that these daily wage earners be paid wages equal to the salary at the
lowest grade of employees of their cadre in the Commercial Taxes Department in Government service,
from the date of the judgment of the Division Bench of the High Court. Since, they are only daily wage
earners, there would be no question of other allowances being paid to them. In view of our conclusion,
that Courts are not expected to issue directions for making such persons permanent in service, we set
aside that part of the direction of the High Court directing the Government to consider their cases for
regularization. We also notice that the High Court has not adverted to the aspect as to whether it was
regularization or it was giving permanency that was being directed by the High Court. In such a situation,
the direction in that regard will stand deleted and the appeals filed by the State would stand allowed to that
extent. If sanctioned posts are vacant (they are said to be vacant) the State will take immediate steps for
filling those posts by a regular process of selection. But when regular recruitment is undertaken, the
respondents in C.A. No. 3595-3612 and those in the Commercial Taxes Department similarly situated,
will be allowed to compete, waiving the age restriction imposed for the recruitment and giving some
weightage for their having been engaged for work in the Department for a significant period of time. That
would be the extent of the exercise of power by this Court under Article 142 of the Constitution to do
justice to them. (Page: 742/743, Para: 46)
Coming to Civil Appeal Nos. 1861-2063 of 2001, in view of our conclusion on the questions referred to,
no relief can be granted, that too to an indeterminate number of members of the association. These
appointments or engagements were also made in the teeth of directions of the Government not to make
such appointments and it is impermissible to recognize such appointments made in the teeth of directions
issued by the Government in that regard. We have also held that they are not legally entitled to any such
relief. Granting of the relief claimed would mean paying a premium for defiance and insubordination by
those concerned who engaged these persons against the interdict in that behalf. Thus, on the whole, the
appellants in these appeals are found to be not entitled to any relief. These appeals have, therefore, to be
dismissed. (Page: 743, Para: 47)

V. Appropriate forum to grant relief

a) Appropriate forum is Industrial Court and not Apex Court (S.C.2J)
F 5A.181 The claim for regularisation made in the appeal before Apex Court involved disputed
questions of fact and hence it was held that the appropriate forum to adjudicate was the Industrial
Court and thus State was directed to make the reference.
Bhagwan Singh Rana & Ors. v. U.P. State Food and Essential Commodities Corp. Ltd. & Ors., 1989 (58)
FLR 132 : 1989 I LLN 842 (S.C.2J)
Having heard learned counsel for the parties, we are of the opinion that the petition involves disputed
question of fact which cannot adequately be decided in the present proceedings. It would be convenient
and proper if the dispute raised by the petitioners is adjudicated by an Industrial Court. Learned counsel
for the parties are agreeable to this proposal. (Page: 132, Para: 2)

Sec. 25B

Appropriate forum to grant relief

2357

b) Labour Court to record finding as to master servant relationship and on the

issue of service of 240 days before granting any relief of reinstatement
(Chh.HC)
5A.182 A mechanic was terminated from service. Aggrieved, he moved Labour Court. Labour
Court held his termination illegal and awarded reinstatement with full back-wages and
consequential relief. Aggrieved, employee moved High Court which held that the Labour Courts
award was not sustainable as it did not record any finding in regard to master and servant
relationship and about working of 240 days and remanded the matter back to Labour Court for
fresh disposal.
M/s. Shivam Motors Pvt. Ltd., Chhattisgarh v. (1) State of Chhattisgarh & Ors. (2) Kand Kumar Verms,
2006 (108) FLR 274 (Chh.HC)
Note: Also refer to the following case
Jurisdiction u/s. 11A Labour Court can deal with incidental questions if a larger question is
before it, is within the scope of Industrial Tribunal
M/s. Indian Farmers Fertiliser Co-op. Ltd. v. Industrial Tribunal Allahabad & Ors., 1992 (65) FLR
(Sum) 10 : 1991 LIC 1747 (All.HC)

c) Civil Court cannot adjudicate matter falling u/s. 25B (P&H.HC)

5A.183 An employee who hadcompleted 240 days of employment was terminated in a summary
manner made an application in the Trial Court which was dismissed. However the Appellate Court
granted decree in his favour. When the aggrieved employer appealed further the Court held that
the Civil Court had no jurisdiction since the workman invoked the benefit u/s. 25B and therefore
only the Labour Court had the jurisdiction.
State of Punjab v. Dawarka Dass, 1976 (49) FJR 430 : 1977 I LLN 120 (P&H.HC)

d) High Court cannot grant interim relief directing the employer to consider the
case of the workman by creating supernumerary post since it is in the nature of
final relief (S.C.2J)
F 5A.184 A writ petition was filed by a daily wager for his regularization. The Single Judge passed
interim order to consider the case of workman and to create supernumerary post till regular posts
fall vacant which was affirmed by Division Bench. Supreme Court held that Single Judge granted
interim relief on very first day which was not justified. Relief which was required to be granted
only at the final hearing of the matter, should not ordinarily be granted by way of an interim order.
It is also doubtful as to whether the impugned direction could have been issued even at the final
hearing of the matter which would amount to creation of supernumerary post in purported
compliance with the regularization rules because under the settled law as laid down in secretary,
State of Karnataka and Ors. v. Umadevi and Ors. (2006 II LLJ 722) it is impermissible to regularize
in derogation to the statutory or constitutional scheme. Hence the said orders were set aside.
State of U.P. & Ors. v. Desh Raj, 2007 I LLJ 616 : 2007 (112) FLR 456 : 2007 (1) LLN 585 : 2007 SCC
(L&S) 163 (S.C.2J)
A writ petition was filed by the respondent herein, inter alia, praying for his regularisation. A learned
Single Judge of the Lucknow Bench of the Allahabad High Court on the day of preliminary hearing while
issuing rule passed the following order:
In the meantime, the opposite parties No. 3 to 5 shall examine the petitioners claim for regularization
under the Regularization Rules 2001 and pass appropriate orders. However his claim shall not be rejected
on the ground of the post being not available. Supernumerary posts have to be created to comply with the
provisions of the Regularization Rules and kept alive until regular posts fall vacant. Till a decision is
taken, the petitioner shall be paid wages equivalent to the minimum of pay scale admissible to a Mate
working in the department with effect from 1st January, 2004. (Page: 617, Para: 4)

2358

Chapter VA Lay-Off and Retrenchment

Sec. 25B

A bare perusal of the impugned order could show that the learned Single Judge for all intent and purport
had allowed the writ petition on the very first day, which in our opinion, was not justified. It is now
well-settled that a relief which can be granted only at the final hearing of the matter, should not ordinarily
he granted by way of an interim order. It is also doubtful as to whether the impugned directions could
have been issued even at the final hearing of the matter which would amount to creation of supernumerary
post in purported compliance of the regularisation rules. (Page: 617, Para: 4)

VI. Settled law on the issues under this section

a) Burden of proof as to 240 days of continuous service lies on the employees
(S.C.3J)
Issue Burden of proof as to 240 days of continuous service lies on the employees
Case Law Manager R.B.I. Bangalore v. S. Mani & Ors., 2005 (105) FLR 1067 : 2005 II LLN 952 :
2005 LIC 2598 : 2005 II CLR 3 : 2005 LLR 737 : 2005 SCC (L&S) 609 : 2005 AIR (SC) 2179 : 2005 (5)
SCC 100 (S.C.3J)
Please see related ratio/s under the above citation in this section
Note : As regards the question on whom lies the burden to prove 240 days of service, the three Judge
Bench of the Apex Court in the above case and other cases referred here settle as of to-day the legal
position on the question as to on whom the burden to prove 240 days of service lies as of to-day

b) Temporary, contractual, casual or adhoc employees employed dehors the rules

not entitled to regularisation (S.C.CB)
Issue Workmen who are temporary, contractual, casual or adhoc employees employed dehors the
rules and against constitutional scheme of public employment are not entitled to regularization despite
completing 240 days of service
Case Law Secretary, State of Karnataka & Ors. v. Umadevi (3) & Ors., 2006 II LLJ 722 : 2006 (109)
FLR 826 : 2006 III LLN 78 : 2006 II CLR 261 : 2006 (4) SCC 1 : 2006 AIR (SC) 1806 : 2006 SCC
(L&S) 753 (S.C.CB)
Please see related ratio/s under the above citation in this section
Note: The above case settles the legal position as of to-day on the rights of temporary, casual or adhoc
workmen to regularization in Government employment or its instrumentalities despite completing 240
days by disentitling them to the same

c) No adverse inference can be drawn on employers failure to produce relevant

muster rolls since the burden of proof is on workman (S.C.3J)
Issue No adverse inference can be drawn on employers failure to produce relevant muster rolls since
the burden of proof is on workman
Case law- Manager R.B.I. Bangalore v. S. Mani & Ors., 2005 (105) FLR 1067 : 2005 II LLN 952 :
2005 LIC 2598 : 2005 II CLR 3 : 2005 LLR 737 : 2005 SCC (L&S) 609 : 2005 AIR (SC) 2179 : 2005 (5)
SCC 100 (S.C.3J)
Municipal Corporation, Faridabad v. Siri Niwas, 2004 (107) FJR 248 : 2004 (103) FLR 187 : 2004 IV
LLN 785 : 2004 III CLR 543 : 2004 LLR 1022 : 2004 SCC (L&S) 1062 : 2004 (8) SCC 195 (S.C.2J)
Please see related ratio/s under the above citation in this section
Note : The above cases indicate the latest legal position on adverse inference

Sec. 25C

Attributes of Layoff compensation

2359

d) Mere affidavit by workman is not sufficient to prove continuous service of 240

days (S.C.2J)
Issue Mere affidavit by workman is insufficient to prove continuous service of 240 days
Case Law Range Forest Officer v. S. T. Hadimani, with State of Karnataka & Anr. v. S. T. Hadimani,
2002 II LLN 391 : 2002 LLR 339 : 2002 LIC 987 : 2002 SCC (L&S) 367 : 2002 AIR (SC) 1147 (S.C.2J)
Case Law Rajasthan State Ganganagar S. Mills Ltd. v. State of Rajasthan & Anr., 2004 III LLJ 832 :
2004 (107) FJR 264 : 2004 (103) FLR 192 : 2004 IV LLN 845 : 2004 SCC (L&S) 1055 : 2004 (8) SCC
161 (S.C.2J)
Please see related ratio/s under the above citation in this section
Note: The Supreme Court judgement in Range Forest Officer v. S. T. Hadimani, with State of
Karnataka & Anr. v. S. T. Hadimani, 2002 II LLN 391 : 2002 LLR 339 : 2002 LIC 987 : 2002 SCC
(L&S) 367 : 2002 AIR (SC) 1147 (S.C.2J) and also in Rajasthan State Ganganagar S. Mills Ltd. v.
State of Rajasthan & Anr., 2004 III LLJ 832 : 2004 (107) FJR 264 : 2004 (103) FLR 192 : 2004 IV
LLN 845 : 2004 SCC (L&S) 1055 : 2004 (8) SCC 161 (S.C.2J) indicate the present legal position on the
subject

D. Right of workmen laid off for compensation Sec. 25C

(Note: Please refer to Sections 2(kkk) and 25E for related ratios on lay-off)

I. Attributes of Layoff compensation

a) Lay-off compensation does not fall within the definition of wages since not
being remuneration or paid for employment (Bom.DB)
5A.185 Lay off compensation is payable on account of inability to provide work and not for
services rendered, therefore it cannot be held to be remuneration, nor is it in respect of employment
hence it is not within the definition of wages.
Anusuyabai Vital v. J.H. Mehta, 1959 II LLJ 742 (Bom.DB)
The question.Wages Act. (Page: 743, Para: 1)
.It is however.resumed. (Page: 744, Para: 1)
.When no services are.the definition. (Page: 745, Para: 1)
Compensation which.employment. (Page: 745, Para: 1)
.The compensation for.employment. (Page: 745, Para: 2)
As, therefore.definition. (Page: 746, Para: 2)
Note: Kerala Division Bench differs in the case of Mohankumar v. Dy. Labour Commissioner, 1996 II
LLJ 484 : 1996 II LLN 793 (Ker.DB) (infra)

2360

Chapter VA Lay-Off and Retrenchment

Sec. 25C

b) Secs. 25C and 25F are independent and Sec. 25F can be invoked without
recourse to lay-off (Bom.DB)
5A.186 Secs. 25C and 25F are independent and resorting to lay-off is not a condition precedent to
attract provisions of Sec. 25F.
Bhartiya Kamgar Sena v. Indabrator Ltd. & Anr., 1987 (55) FLR 615 : 1987 II LLN 648 (Bom.DB)
It must be.by the employer. (Page: 616, Para: 2)

c) Lay off compensation counts for bonus (Ker.DB)

5A.187 Lay off compensation being wages to be counted for determining the bonus payable to
workman.
Mohankumar v. Dy. Labour Commissioner, 1996 II LLJ 484 : 1996 II LLN 793 (Ker.DB)
Under sec 25C.of the Bonus Act. (Page: 486, Para: 7)
We, therefore.petitioner. (Page: 487, Para: 11)

d) Payment of lay off compensation is not a condition precedent to laying off

workmen (Bom.DB)
5A.188 Where the Standing Orders of the company provided lay off on account of shortage of
process without any compensation, and where due to absenteeism of workmen in preparatory
department, workmen in connected departments were laid off, it was held that compliance with
provisions of Chapter VA, not being a condition precedent for lay off, union cannot contend that
lay off amounted to illegal change u/s. 41 of Berar Act because of non-payment of compensation
and hence allowing the petition of management, order of State Industrial Court that there was an
illegal change was set aside.
Central India Spinning, Weaving & Manufacturing Co. Ltd. (Empress Mills), Nagpur v. State Industrial
Court, Nagpur, 1959 I LLJ 468 (Bom.DB)
.After recording evidence.Industrial Dispute Act. (Page: 470, Para: 3)
.Standing Orders 19(1).in lieu of notice. (Page: 473, Para: 4)
.No doubt, the standing.by the petitioner. (Page: 474, Para: 1)
.The omission of.in an illegal change. (Page: 474, Para: 4)
upon this view..the State Industrial Court. (Page: 474, Para: 5)

e) Lay off compensation ranks in priority over the claim of secured creditor like
bank (Karn.DB)
5A.189 A sick company is liable to pay lay-off compensation to the workers who have priority
over the claim of the Bank which is a secured creditor. Even the remaining amount cannot be paid
over to the Bank as claim of workmen, for lay-off compensation is a recurring claim in case of a
sugar factory.
Siruguppa Sugars & Chemicals Ltd. Gauribidanur v. Commissioner of Labour, Government of
Karnataka & Ors., 2002 (101) FJR 430 : 2002 (95) FLR 171 : 2002 II CLR 668 (Karn.DB)

Sec. 25C

Who are exempted

2361

II. Who are exempted

a) Badli employees since they have no right to claim employment (S.C.2J)
F 5A.190 As Badli workman gets work only in the absence of regular employees for temporary
period without any right to claim employment, therefore they are excluded from benefit of layoff
compensation.
Prakash Cotton Mills Pvt. Ltd. v. Rashtriya Mills Mazdoor Sangh, 1987 I LLJ 97 : 1986 (69) FJR 254 :
1986 (53) FLR 310 : 1986 II LLN 459 : 1986 LIC 1361 : 1986 SCC (L&S) 682 : 1986 AIR (SC) 1514 :
1986 (3) SCC 588 (S.C.2J)
.It has been rightly submitted by the learned Counsel for the appellant that the Badli employees
could not be said to have been deprived of any work to which they had no right and, consequently they are
not entitled to any compensation for the closure.In this connection, we may refer to section 25C of
the Industrial Disputes Act, 1947 which excludes a Badli workman or a casual workman from the benefit
of compensation in the case of layoff. (Page: 101, Para: 14)
5A.191 Badli worker who is kept on work when permanent operator or probationer is
temporarily absent cannot claim lay off compensation on the days he is not kept on work whereas
workman is entitled to lay off compensation when he has a right to be given work but is refused
employment on that day for any reason falling u/s. 2(kkk) and hence application u/s. 33C(2) by
Badli worker is not maintainable and his application by Labour Court was rejected which was
upheld by Bench.
Girdharlal Laljibhai v. M.N. Nagrashna & Anr., 1964 II LLJ 235 (Guj.DB)
.the petitioner filed an.for those days.in that application the.application
was dismissed. (Page: 236, Para: 1)
.lay-off must.or analogous reason.a badli workers.or a probationer was
absent. (Page: 237, Para: 2)
.we, therefore hold thatdays in question.the order of the..and is
dismissed. (Page: 238, Para: 1)
5A.192 In view of provision of Sec. 25C which specifically excludes badli workers to claim lay-off
compensation High Court held that where the statute wanted Badli workers exclusion, it expressly
did the same and that is indicative of the fact that they will be workmen for other sections and
hence termination of a Badli worker completing 240 days of service in violation of Sec. 25F
amounts to illegal retrenchment and upholding Labour Courts decision, High Court directed
reinstatement with back wages.
Sarabhai Chemicals v. Subhas N. Pandya, 1984 II LLJ 75 : 1984 (49) FLR 244 : 1984 I LLN 601 (Guj.DB)
.In fact, it is.what was done. (Page: 75, Para: 3)
Section 25C, it.be workmen otherwise. (Page: 76, Para: 5)
.we find no.it does fall. (Page: 77, Para: 6)
.we give three.of back wages. (Page: 77, Para: 8)

b) Seasonal workers since not granted under Industrial Disputes Act (MP.DB)
5A.193 If under Industrial Disputes Act lay-off compensation cannot be granted to workers in
seasonal industry on grounds of social justice or any other description such as retention
allowance.
Harris Mineral Supply Co. & Ors. v. Salim M. Merchant & Ors., 1965-66 (29) FJR 420 (MP.DB)

2362

Chapter VA Lay-Off and Retrenchment

Sec. 25C

In directing that those.is not applicable to it.If under section 25A read.workers
cannot be sustained. (Page: 427/428, Para: 2)

III.Badli worker when can claim

a) When he completes 240 days of continuous service as per explanation to the
section (Mad.DB)
5A.194 Since, if badli worker is employed continuously for more than 240 days he qualifies
himself to be a workman under the explanation to Sec. 25C, thereby nullifies the exclusion
provided by that section and can claim lay off compensation in terms of explanation thereto.
P. Joseph & Ors. v. Loyal Textile Mills, Kovilpatti & Anr., 1975 I LLJ 498 : 1975 (31) FLR 232 : 1974
(46) FJR 294 : 1974 II LLN 433 (Mad.DB)
Section 25C.retrenched. (Page: 500, Para: 3)
.Only if a.and 25C. (Page: 500, Para: 4)
Note: the following cases may be referred
Lakshmi Mills Company, Ltd. v. Labour Court & Ors., 1965 I LLJ 92 (Mad.HC)

b) When his name is found in the muster roll and completed one year of service
(Mad.HC)
5A.195 A worker whose name is found in the muster roll as badli worker and who has
completed one year of continuous service was held entitled to lay-off compensation because Sec.
25C provides that a workman is entitled to lay-off compensation if his name is found in the muster
rolls and the manner in which the name is described does not affect the right.
Vijayakumar Mills Ltd. v. Labour Court, Madurai & Anr., 1960 II LLJ 567 : 1960-61 (18) FJR 286 (Mad.HC)

IV. Quantum of Compensation

a) Labour Court can determine whether lay-off is in accordance with standing
orders (Mad.DB)
5A.196 When workmen claimed full wages for the period of lay-off under contract of service, they
could contend that lay-off was not in pursuance of standing orders when management had relied
on the Standing orders in support of the lay-off and Labour Court can go into the question whether
lay-off was in accordance with standing orders in order to determine the quantum of compensation
payable to the workmen.
Tansi Leather Works, Madras (by Superintendent) v. G. Gowri & Ors., 1986 II LLJ 263 : 1986 II LLN
594 (Mad.DB)
It being the categorical.dependent on that. (Page: 264, Para: 5)

b) Last drawn wages is proper when lay off is not authorized or justified and
Sec. 25C is not applicable (Gau.DB)
5A.197 As the number of workmen employed was less than fifty, Sec. 25C was not applicable to
them. The employer was not authorised to lay off employees as there were no standing orders or
terms of contract to that effect and illness of the Assistant Managing Director is not a ground for
lay off u/s. 2(kkk) and hence Labour Court finding that lay off is not justified and its award of
wages at the rates prevailing at the time of lay-off for the period in which they remained
unemployed by way of compensation, is proper.
Management of Gauhati Press Pvt. Ltd. v. P.O. Labour Court, Gauhati, & Ors., 1983 II LLN 105 : 1983
LIC 824 (Gau.DB)

Sec. 25C

Quantum of Compensation

2363

In our present.the case. (Page: 109, Para: 8)

By the same.interfered with. (Page: 109, Para: 9)
When the.it is rejected. (Page: 109, Para: 9)

c) Compensation not restricted to Sec. 25C when lay-off is malafide (S.C.3J)

Tatangar Fountry Co. v. Their workmen, 1962 I LLJ 382 : 1962 (4) FLR 470 : 1962-63 (22) FJR 79 :
1962 AIR (SC) 1533 (S.C.3J)
Note: Please see related ratio/s under the above citation in this section

d) Compensation can be full wages in case of an establishment to which neither

standing orders nor Chapter VA applicable or can be lesser if lay-off is
justified (S.C.2J)
F 5A.198 Supreme Court held that Chapter VA of Industrial Disputes Act is not a complete code
in itself regarding payment of lay off compensation. In industrial establishments to which Chapter
VA applies, where the management has power to lay-off, then the payment of compensation will be
governed by the provisions of chapter VA but in the instant case where the total number of
workmen being 30, neither chapter VA nor standing orders were not applicable, it was held by
Apex Court that in such case the layoff compensation will be equal to full wages but the Tribunal
can award lesser amount of compensation if the lay-off is held justified.
The Workmen of M/s. Firestone Tyre and Rubber Co. of India Pvt. Ltd. v. The Firestone Tyre and Rubber
Co., AND Thiru J. N. George & Anr. v. Management of M/s. Firestone Tyre and Rubber Co. of India (P)
Ltd. & Anr., 1976 I LLJ 493 : 1976 (49) FJR 177 : 1976 (32) FLR 170 : 1976 II LLN 176 : 1976 LIC 1154
: 1976 SCC (L&S) 504 : 1976 AIR (SC) 1775 : 1976 (3) SCC 819 (S.C.2J)
Note: Please see related ratio/s under the above citation in this section

e) Lay-off compensation u/s. 25C to be given but not as per Standing Orders since
the Central Act prevails over Standing Orders (All.HC)
5A.199 The High Court held that the workmen are entitled to only compensation as per the
provisions of Sec. 25C which has already been paid because Sec. 25-J provides that Sec. 25C
supersedes the standing orders of the establishment.
British India Corporation, Ltd., Kanpur v. B.P. Singh, P.O. Labour Court, Kanpur, & Ors.,1964 I LLJ
601 : 1964 (8) FLR 256 (All.HC)
Note: Also refer to Sec. 25-J for additional ratios on lay-off compensation

f) Burden of proof
1. Is on the employer to produce muster rolls to prove status of workmen
(Karn.DB)
5A.200 It is open to the employer to produce muster rolls to substantiate its case regarding
workers to be badli or casual, but since in this case evidence regarding the same was not produced,
the workmen were held entitled to lay-off compensation u/s. 25C of the Act.
Siruguppa Sugars & Chemicals Ltd. Gauribidanur v. Commissioner of Labour, Government of
Karnataka & Ors., 2002 (101) FJR 430 : 2002 (95) FLR 171 : 2002 II CLR 668 (Karn.DB)

2364

Chapter VA Lay-Off and Retrenchment

Sec. 25C

V. When payable
Note: Also refer to Sec. 25J for additional ratios on lay-off compensation

a) When lay off is justified and not malafide (S.C.3J)

F 5A.201 Where the lay off was found to be malafide or has been declared to victimize the
workmen or for some other ulterior purpose, in the sense that the employer has deliberately and
maliciously brought about a situation where the lay off became necessary then such lay off u/s.
2(kkk) was held does not amount to lay off and held that relief given will not be merely restricted to
what is prescribed u/s. 25C but entitled for additional compensation. However in the instant case,
the tribunal while arriving at a finding that the company was passing through financial difficulties
at the relevant time and the lay-off was not actuated by malafides, came to the conclusion that the
management could have avoided the lay-off by better management and far-sight which finding is
not within the jurisdiction of the tribunal and hence its order granting 75% of consolidated wages
as compensation was set aside.
Tatanagar Fountry Co. v. Their workmen, 1962 AIR (SC) 1533 : 1962 I LLJ 382 : 1962 (4) FLR 470 :
1962-63 (22) FJR 79 (S.C.3J)
It is also not in dispute that if the lay-off is malafide in the sense that the employer has deliberately and
maliciously brought about a situation where lay off became necessary, then it would not be a lay-off
which is justified under s. 2(kkk) and the relief provided to the laid-off workmen under s. 25C would not
be the only relief to which they are entitled. Malafides of the employer in declaring a lay-off really mean
that no lay-off, as contemplated by the definition, has in law taken place and so, a finding as to malafides
of the employer in declaring a lay-off naturally takes the lay-off out of the definition of s. 2(kkk) and as
such s. 25C cannot be held to be applicable to it so as to confine the workmens right to the compensation
therein prescribed. If the lay-off has been declared in order to victimise the workmen or for some other
ulterior purpose, the position would be the same. It would not be a lay-off as contemplated by s. 2(kkk)
(Page: 1536, Para: 12)
.The Tribunal has found that the appellant was in financial difficulties at the relevant time; it has
found that the appellant was not actuated by any malafide intention, it has come to the conclusion that the
lay-off was not the result of any ulterior motive, and yet it has finally come to the conclusion that if the
affairs of the appellant had been better managed and more foresight had been shown by the appellant
prior to the time when the crisis was reached, pig iron could have been secured and lay-off could have
been avoided. Apart from the fact that this conclusion does not appear to be borne out by any evidence on
record, it seems to us that the Tribunal exceeded its jurisdiction in trying to decide whether better
management could have avoided the crisis.......... (Page: 1536, Para: 13)
The result is, the appeal succeeds and the order passed by the Tribunal for the payment of compensation
of 75% of the consolidated wages is set aside. There would be no order as to costs.
(Page: 1536, Para: 14)
Note: The following case/s also be referred
Kundan Iron & Steel Industrial v. State of Punjab & Ors., 1961 II LLJ 599 : 1961-62 (20) FJR 370
(Punj.HC)

b) When lay off is due to shortage of electricity (Bom.DB)

5A.202
The workmen who had been laid off for half an hour for seven days due to shortage of
electric power were rightly granted lay off compensation by the Labour Court as the definition of
lay-off is general and does not state the extent of the period of lay-off.
Rai Saheb Rekchand Mohota Spinning & Weaving Mills Pvt. Ltd. v. Labour Court, Nagpur, & Ors., 1968
I LLJ 610 : 1968 LIC 480 (Bom.DB)
The admitted facts of.of lay off. (Page: 612, Col.: 2, T.L.: 18)
There was nothing in.not been retrenched. (Page: 613, Col.: 2, T.L.: 22)

Sec. 25C

When payable

2365

As adumbrated the .stated therein. (Page: 614, Col.: 2, B.L.: 15)

A perusal of the.not ruled out. (Page: 615, Para: 1)
It is unfortunate.his normal. (Page: 615,616, Col.: 2, B.L.: 2)
In our opinion.dismissed with costs. (Page: 616, Para: 2)

c) Even when an establishment has only 30 employees to which neither standing

orders nor Chapter VA applicable (S.C.2J)
F 5A.203 Supreme Court held that Chapter VA of Industrial Disputes Act is not a complete
code in itself regarding payment of lay off compensation. In industrial establishments to which
Chapter VA applies, where the management has power to lay-off, then the payment of
compensation will be governed by the provisions of Chapter VA but in the instant case where the
total number of workmen being 30, neither Chapter VA nor standing orders were not applicable, it
was held by Apex Court that in such case the lay-off compensation will be equal to full wages but
the Tribunal can ward lesser amount of compensation if the lay-off is held justified.
The Workmen of M/s. Firestone Tyre and Rubber Co. of India Pvt. Ltd. v. The Firestone Tyre and Rubber
Co., AND Thiru J. N. George & Anr. v. Management of M/s. Firestone Tyre and Rubber Co. of India (P)
Ltd. & Anr., 1976 I LLJ 493 : 1976 (49) FJR 177 : 1976 (32) FLR 170 : 1976 II LLN 176 : 1976 LIC 1154
: 1976 SCC (L&S) 504 : 1976 AIR (SC) 1775 : 1976 (3) SCC 819 (S.C.2J)
The lay-off of the 17 workmen whose names were mentioned in the notice was recalled by the
management on the 22nd April 1968. The workmen were not given their wages or compensation for the
period of lay-off. An industrial dispute was raised and referred by the Delhi Administration.
(Page: 494, Para: 3)
The Presiding officer of the Additional Industrial Tribunal, Delhi has held that the workmen are not
entitled to any lay-off compensation. Hence this is an appeal by their union. (Page: 494/ 495, Para: 4)
Under the general law of master and servant, an employer may discharge an employee either temporarily
or permanently but that cannot be without adequate notice. Mere refusal or inability to give employment
to the workmen when he reports for duty on one or more grounds mentioned in cl. (kkk) of S. 2 is not a
temporary discharge of the workman. Such a power, therefore, must be found out from the terms of
contract of service or the standing orders governing the establishment. In the instant case the number of
workmen being only 30, there were no standing orders certified under the Industrial Employment
(Standing Orders) Act, 1946. Nor was there any term of contract of service conferring any such right of
lay-off. In such a situation the conclusion seems to be inescapable that the workmen were laid off without
any authority of law or the power in the management under the contract of service. In Industrial
Establishments where there is a power in the management to lay-off a workman and to which the
provisions of Chapter VA apply, the question of payment of compensation will be governed and
determined by the said provisions. Otherwise Chapter VA is not a complete Code as was argued on behalf
of the respondent company in the matter of payment of lay-off compensation. This case, therefore, goes
out of Chapter VA. (Page: 497, Para: 12)
In the case of the Delhi Office of the respondent the Tribunal has held that the lay-off was justified. It
was open to the Tribunal to award a lesser amount of compensation than the full wages. Instead of
sending back the case to the Tribunal, we direct that 75% of the basic wages and dearness allowance
would be paid to the workmen concerned for the period of lay-off. (Page: 500, Para: 19)

2366

Chapter VA Lay-Off and Retrenchment

Sec. 25C

d) When temporary closure of establishment is not due to reasons beyond the

control of management like detention order of Central Excise authorities
(S.C.2J)
F 5A.204 Even though there was a temporary closure of the mill caused by detention order of
central excise authorities it cannot be said to be beyond the control of management as per standing
order, hence regular employees are entitled to lay off compensation u/s. 25C of the Act as such
closure amounts to layoff.
Prakash Cotton Mills Pvt. Ltd. v. Rashtriya Mills Mazdoor Sangh, 1987 I LLJ 97 : 1986 (69) FJR 254 :
1986 (53) FLR 310 : 1986 II LLN 459 : 1986 LIC 1361 : 1986 SCC (L&S) 682 : 1986 AIR (SC) 1514 :
1986 (3) SCC 588 (S.C.2J)
It appears that on account of the alleged failure of the appellant to pay the Central Excise duty, certain
detention orders were passed by the Assistant Collector of Central Excise detaining the goods of the
appellant like cotton fabrics, cotton yarn and cotton bales and, consequently, there was a disruption in
the functioning of the appellants mill compelling the appellant to stop the working of the
mill.The respondent-Sangh demanded that the employees who were affected by the said closure
from March 29, 1964 to June 10, 1964 should be paid their wages for the entire period.
(Page: 99, Para: 3)
.It was contended on behalf of the appellant that as the closure was due to certain circumstances
beyond the control of the appellant, the appellant was not liable to pay any compensation for such
closure. (Page: 99, Para: 4)
There is no substance in the contention of the appellant that as the closure had to be made under certain
compelling circumstances, the appellant was not liable to pay compensation to any of its employees. The
Standing Order 16 provides that such closure can be made without notice and no compensation would be
required to be paid in lieu of notice. It is clear from Standing Order 16 that it does not contemplate that
when there has been a closure on account of some unavoidable circumstances, no compensation is
required to be paid to the employees. Under the circumstances, there is no substance in the contention of
the appellant that as the closure had been made in accordance with Standing Orders. The contention is,
accordingly, overruled. We, therefore, uphold the order of the Industrial Court directing payment of
compensation to the employees of the appellant for the above period of closure. (Page: 101, Para: 13)

e) Payable only for 45 days even though lay off is continuous by single notification
(S.C.3J)
F 5A.205 Continuous lay off under a single notification cannot be split into first period of 45
days covered by proviso (a) and the remaining period by proviso (b) and hence the demand of
employees that they should also be paid for remaining period as per proviso (b) in addition to
compensation offered by employer for first 45 days as per proviso (a) was rejected and hence
Tribunals order granting compensation for entire lay off period was set aside.
Modi Food Products & Co. Ltd. v. Faquir Chand Sharma & Ors., 1956 I LLJ 749 : 1956-57 (10) FJR 391
: 1956 AIR (SC) 628 (S.C.3J)
.there is no dispute that the compensation payable for the first 45 days has to be determined in
accordance with proviso (a) to S. 25-C. The dispute is only as to whether for the rest of the period of lay
off the workmen are entitled to compensation under proviso (b) to S. 25-C. That proviso would apply
only if the workmen had been paid compensation for 45 days were again laid off for further periods of
more than one week at a time. On the wording of the section, it is clear that the lay off which falls within
the proviso (b) to S. 25-C must be distinct from that for which compensation had been paid in accordance
with proviso (a) to S.25-C and subsequent thereto in point of time. And as, in the present case there was
one continuous lay off for the entire period, proviso (b) could have no application. (Page: 752, Para: 2)
.in the present case, there was only one notification, and the period specified therein was up to
the next season. By no straining of the language of proviso (b) to S. 25-C can such a lay off be brought
within its purview.We are accordingly of opinion that the respondents are entitled to
compensation only for the 45 days as provided in proviso (a), and that as the appellant had offered to pay

Sec. 25C

When payable

2367

the same by its notice dated 12-7-1954, there was no alteration of the conditions of the service within S.22
of the Act, and that, in consequence, the petition of the respondents was liable to be rejected.
(Page: 752, Para: 2)
We accordingly allow the appeal, set aside the order of the Tribunal. (Page: 752, Para: 3)

f) Payable even though Lay off is by mutual agreement (S.C.3J)

F 5A.206 As per the agreement the tea gardens where there was a lock out was reopened and
those employees who could not be kept in employment were to be laid off as per the law therefore
even though the parties had entered into an agreement and mutually agreed to lay off some
employees lay off compensation was payable as the agreement expressly says lay off would be as
per the law.
Northern Dooars Tea Co. Ltd. (In both the Appeals) v. Workmen of Demdima Tea Estate (In both the
Appeals), 1967 AIR (SC) 560 : 1964 I LLJ 436 : 1963 (7) FLR 469 (S.C.3J)
.this dispute relates to the laying off the workmen by the appellant from October 7, 1957. The
appellant has filed a list Ex. 1 showing the details of this laying off and how it was lifted and giving the
number of workmen with respect to whom the lay-off operated and the period for which it so operated. In
other words, the facts in regard to the 1ay-off are not in dispute. The Tribunal has ordered that the lay-off
compensation should be paid by the appellant to its workmen under the provisions of S. 25C of the
Industrial Disputes Act. Mr. Sastri attempted to raise two contentions against this award. His first
argument was that the appellant was not liable to pay any lay-off compensation because this lay-off was
the result of a settlement between the parties reached on October 4, 1957 We have already noticed how
this settlement brought the closure or lock- out of the garden to an end One of the terms of this settlement
was that the management will reopen the garden with effect from October 7, 1957 and provide immediate
employment to as many workers as possible and will lay-off the remainder of the labour force in
accordance with 1aw. The argument is that since this lay-off was agreed to by the parties, no
compensation can be claimed by the respondents. In our opinion, there is no substance in this argument. It
is true that the parties contemplated and agreed that some workmen may have to be laid-off and so, the
agreement postulated that no dispute would be raised by the workmen in regard to such a lay-off. But the
parties also agreed expressly that the lay-off will be in accordance with law and that necessarily involves
the payment of compensation as provided by S. 25C. (Page: 564, Para: 13)

g) When lay off is resorted to in retaliation to strike (S.C.3J)

F 5A.207 When only 27 workmen had gone on half days strike and next day the entire body of
workmen including the 27 striking workmen presented themselves for work, the Court held that
the refusal to provide work by the management to all of them on the ground of lay off applying
Sec. 25E(iii) of Industrial Disputes Act even when only 27 workers have actually gone on strike,
was not justified and upheld the finding of Tribunal that it was due to retaliatory or vindictive
measure against factory workers and eschewing the other contention that strike had resulted in
losses, the Supreme Court agreed with the Tribunal that 3 hours token strike by only 27 workmen
would not have resulted in any loss to the company and found no error in ordering wages for the
period of lay off.
Management of Churakulam Tea Estate (P) Ltd. v. Workmen & Anr., 1969 AIR (SC) 998 : 1969 II LLJ
407 : 1970 (37) FJR 202 : 1969 (19) FLR 203 : 1969 LIC 1396 (S.C.3J)
.On the very day that the factory workers went on strike i.e., November 30, 1961, the
management put up a notice, Ex. M-15, to the effect that since all the factory workers had gone on strike at
1 P. M. without previous intimation, the management was forced to lay-off without compensation all the
workmen in the entire establishment as from December 1, 1961. (Page: 1004, Para: 25)
.the plea of the workers is that all of them reported for duty on December 1, 1961, but they were
not given any work by the management on the ground that there was a lay-off. This plea has been found to
be true, by the Tribunal; but, according to the management, the lay-off, in this case, during this period, is
justified, under the provisions ofSection25E (iii) and hence the workmen are not entitled to
compensation. According to the management, inasmuch as there was a strike in the factory section, work

2368

Chapter VA Lay-Off and Retrenchment

Sec. 25C

in the other sections could not be carried on; and, as the management were not sure whether the workmen
would turn up for work, lay-off, in the circumstances, was justified. We are not inclined to accept this
contention advanced on behalf of the management. We have already referred to the finding of the
Tribunal that twenty-seven factory workmen alone went on strike on November 30, 1961, and the entire
body of workmen presented themselves for work on December 1, 1961, but they were declined work by
the management on the ground of lay-off. The plea of the management that they suffered loss, on account
of the half a days strike on November 30, 1961, justifying the lay-off, has not been accepted by the
Tribunal. In fact the Tribunal has accepted the plea of the workmen that the effect of the three hours
token strike on November 30, 1961, would not have resulted in any loss to the management, if they had
allowed the workmen to do work on December 1, 1961. The Tribunal has also held that the lay-off, by the
management, was as a retaliatory or vindictive measure against the factory workers, who went on strike
on November 30, 1961. We are in agreement with the findings, recorded by the Tribunal in this behalf
and the award by the Tribunal of wages to the workmen for this period is justified.
(Page: 1004, Para: 26)

h) Can not be avoided on the ground that company incurred losses on account of
half days strike (S.C.3J)
F 5A.208 Management laid off all the workmen who presented themselves for work subsequent
to half days protest strike by 27 workers. It was held that Managements plea of incurring losses as
a result of half day strike did not justify lay off for about 8 days and Sec. 25E(iii) was inapplicable
hence lay off being retaliatory and vindictive in nature workmen are entitled to claim wages for lay
off period.
Management of Churakulam Tea Estate Pvt. Ltd. v. Workmen & Anr., 1969 AIR (SC) 998 : 1969 II LLJ
407 : 1970 (37) FJR 202 : 1969 (19) FLR 203 : 1969 LIC 1396 (S.C.3J)
Note: Please see related ratio/s under the above citation in this section

i) When workmen could not be given work due to dismantling of machines and
installation of the same (Mad.HC)
5A.209
Workmen who were not given work in a textile mill owing to dismantling of the
preparatory machines and installation of the same were held to be entitled to lay-off compensation
as there was inability on the part of the employer to provide work to the workmen.
R. Narayanaswami v. The P.O. Labour Court, Coimbatore & Anr., 1965 II LLJ 677 : 1966-67 (30) FJR
341 : 1968 LIC 509 (Mad.HC)

j) Only when lay-off falls u/s. 2(kkk) (S.C.3J)

F 5A.210 The workmen who can claim the benefit of Sec. 25C, lay off must be defined u/s.
2(kkk) of Industrial Disputes Act and therefore the lay off permitted by the standing order was
held to satisfy the requirements of Sec. 2(kkk) of the Act and there is no inherent common law right
dehors the section, available to the employer to declare lay off for reasons he deems fit.
Workers of Dewan Tea Estate & Ors. v. Their Management, 1964 I LLJ 358 : 196364 (25) FJR 386 :
1964 (8) FLR 167 : 1964 AIR (SC) 1458 (S.C.3J)
.The question which we are concerned with at this stage is whether it can be said that S. 25C
recognizes a common law right of the industrial employer to lay off his workmen. This question must, in
our opinion, be answered in the negative. When the laying off of the workmen is referred to in S.25C. it is
the laying off as defined by S.2 (kkk), and so, workmen who can claim the benefit of S.25C must be
workmen who are laid off and laid off for reasons contemplated by S.2(kkk); that is all that S. 25C means.
If any case is not covered by the standing orders, it will necessarily be governed by the provisions of the
Act, and lay-off would be permissible only where one or the other of the factors mentioned by S.2(kkk) is
present, and for such lay-off compensation would be awarded under S.25G. Therefore we do not think
that the tribunal was right in holding that S. 25C recognizes the inherent right of the employer to declare
lay-off for reasons which he may regard as sufficient or satisfactory in that behalf. No such common law
right can be spelt out from the provisions of S.25C (Page: 363, Para: 1)

Sec. 25C

When not payable

2369

VI. When not payable

a) When lay-off not malafide and due to shortage of raw materials (S.C.3J)
F 5A.211 Where the lay-off was not attributable to reasons of malafide but due to shortage of
raw materials, then thereafter the Tribunal was not justified to hold by embarking into the domain
of the management function and to opine that by foresight, prudence and better management the
lay off could have been avoided and held that it is not the function of the Tribunal to sit in
judgement over the managerial actions of company and therefore it is held that the Tribunal held
exceeded its jurisdiction and even on facts the Supreme Court held that the evidence on record did
not support the findings of the Tribunal and therefore compensation of 75% of the consolidated
wages awarded, in the instant case was set aside.
Tatangar Fountry Co. v. Their workmen, 1962 AIR (SC) 1533 : 1962 I LLJ 382 : 1962 (4) FLR 470 :
1962-63 (22) FJR 79 (S.C.3J)
.Apart from the fact that this conclusion does not appear to be borne out by any evidence on
record, it seems to us that the Tribunal exceeded its jurisdiction in trying to decide whether better
management could have avoided the crisis. The appellant is no doubt, expected to manage affairs
prudently, but it would, we think, not be reasonable or fair to hold that if the employer is faced with a
situation under which for lack of raw materials he has to lay-off his workmen, it is necessary that he must
submit to an enquiry by the Industrial Tribunal about the prudence of the management and the
fore-thought displayed by it in anticipating and avoiding the difficulties. That is why we think in
embarking upon in enquiry as to whether the apparent had shown sufficient foresight in managing its
affairs, the Tribunal has exceeded its jurisdiction. Besides as we have just, indicated, its finding on the
question of negligence is not supported by any evidence on record nor by probabilities in the case. In that
connection, it is significant that subsequently the section in question has been closed and the retrenched
workmen have been paid the retrenchment compensation due to them. (Page: 1536, Para: 13)

b) If amenities like quarters and medical relief are provided during the
suspension (S.C.CB)
F 5A.212 As amenities like undisturbed possession of quarters, khet lands, medical relief, fuel
and forest produce were given during suspension, employees were held to be not entitled for lay off
compensation and for those employees on short work hours, ex-gratia payment was held to be
sufficient and since error of law or legal principle in deciding compensation amount was not shown
the Apex Court refused to interfere with the computation.
Cachar Chah Sramik Union, Silchar, Assam v. The Management of Tea Estate of Cachar Assam & Anr.,
1966 AIR (SC) 987 : 1966 I LLJ 420 : 1965-66 (28) FJR 320 : 1966 (12) FLR 153 (S.C.CB)
As regards the compensation to retrenched workmen, the Tribunal has stated in para 185 of the Award
that the amenities granted to them included undisturbed possession of residential quarters and khet lands.
They were also granted medical relief, fuel and other forest produce even during the period of suspension
of work. The Tribunal did not attempt to evaluate accurately the pecuniary value of all these concessions
but it has expressed the view that the value of these concessions would be roughly equal to one weeks
wages for every four months of unemployment and therefore the retrenched workmen were not entitled to
any compensation in cash apart from any right to wages in lieu of a weeks notice under Cl. 9 of the
Standing Orders. On behalf of the appellant Mr. Aggarwala said that the retrenched workmen were
entitled to get a larger amount of compensation than that awarded by the Tribunal. The quantum of
compensation is, however, a matter primarily for the Tribunal to estimate and it is not open to this Court to
go into this question unless it is shown that Tribunal has committed any error of law or legal principle in
deciding it. As regards the workmen who were subjected to short hours of work, the Tribunal has
observed that they have been granted ex gratia payments which were, in several cases in excess of the
total loss of wages by reason of the revision of the daily wages under the notification of February 9, 1953
under the Minimum Wages Act. On behalf of the appellant reference was made by Mr. Aggarwala to the
deposition of Mr. R. M. Bipan at page 97, Part-I that the ex gratia payment compensated merely for the
minimum wages cut and not the loss to labour by the short work-week. But the Tribunal having examined
the entire evidence reached the conclusion that the ex gratia payment was in several cases in excess of
total loss of remuneration on account of the notification under the Minimum Wages Act. There is also

2370

Chapter VA Lay-Off and Retrenchment

Sec. 25C

undisputed evidence in this case to show that even in normal times short hours had to be imposed by
employers upto a period of three days in a week in Cachar tea gardens. In this state of facts it is not
possible for us to hold that the Tribunal was in error in holding that the ex gratia payment made by the
management was sufficient compensation to the workmen who were not retrenched outright but who
were put on short hours of work. (Page: 991, Para: 7)
Note: Judgment before introduction of Ch. VA

c) Not payable beyond 45 days when there is agreement regarding payment of lay
off compensation to that effect (S.C.2J)
F 5A.213 In the event the workmen are laid off for more than 45 days during the period of 12
months and if there is an agreement u/s. 12(3) r/w. Sec. 18(3) between the employer and the
workmen that the workmen are not entitled to layoff compensation for more than 45 days such an
agreement will have binding effect on all the workmen even though some of the workmen are not
members of the said union.
P. Virudhachalam & Ors. v. The Management of Lotus Mills & Anr., 1998 I LLJ 389 : 1998 (92) FJR 562
: 1998 (78) FLR 107 : 1998 I LLN 977 : 1998 LIC 834 : 1998 I CLR 1 : 1998 LLR 240 : 1998 SCC (L&S)
342 : 1998 AIR (SC) 554 : 1998 (1) SCC 650 (S.C.2J)
.Learned Counsel for the appellants submitted that for attracting the first proviso to Section
25-C(1), there should be independent agreement between the workman and the employer to that effect
agreeing not to demand lay-off compensation beyond 45 days of the starting of the lay-off period. It is
difficult to appreciate this contention. An agreement restricting the claim of lay-off compensation beyond
the available period of 45 days can be said to be arrived at between the workman on the one hand and the
employer on the other as there is such an agreement embedded in a binding settlement which has a legal
effect of binding all the workmen in the institution as per Section 18(3) of the Act. Such binding effect of
the embedded agreement in the written settlement arrived at during the conciliation proceedings would
get telescoped into the first proviso to Section 25-C(1) and bind all workmen even though individually
they might not have signed the agreement with the management or their union might not have signed such
agreement with the management on behalf of its member workmen. The first proviso to Section 25-C(1)
clearly lays down that if there is an agreement for not paying any more lay-off compensation beyond 45
days between the workman and the employer, such an agreement has binding effect both on the employer
and the workman concerned. Such binding force gets clearly attracted in the case of the appellants by
virtue of operation of section 12(3) read with Section 18 of the Act emanating from the settlement arrived
at during the conciliation proceeding as aforesaid. (Page: 397, Para: 12)

VII. When can be reduced

a) When there are justifiable reasons for lay-off (S.C.2J)
F 5A.214 Generally workmen are entitled to full wages during lay off period as compensation,
but in a reference u/s. 10(1) Industrial Tribunal or Labour Court can grant a lesser sum after
considering justifiability of lay off and hence Tribunals grant of lesser compensation was justified.
The Workmen of M/s. Firestone Tyre and Rubber Co. of India (P) Ltd. v. The Firestone Tyre and Rubber
Co., AND Thiru J. N. George & Anr. v. Management of M/s. Firestone Tyre and Rubber Co. of India (P)
Ltd. & Anr., 1976 I LLJ 493 : 1976 (49) FJR 177 : 1976 (32) FLR 170 : 1976 II LLN 176 : 1976 LIC 1154
: 1976 SCC (L&S) 504 : 1976 AIR (SC) 1775 : 1976 (3) SCC 819 (S.C.2J)
Ordinarily and generally the workmen would be entitled to their full wages but in a reference
made under Section 10 (i) of the Act. It is open to the Tribunal or the Court to award a lesser sum finding
the justifiability of the lay-off. (Page: 497/498, Para: 12)
In the case of the Delhi Office of the respondent the Tribunal has held that the lay-off was justified. It
was open to the Tribunal to award a lesser amount of compensation than the full wages.
(Page: 500, Para: 19)

Sec. 25C

Remedy for recovery

2371

VIII. Remedy for recovery

a) Recoverable u/s. 33C(2) since it is capable of being computed in terms of money
(Bom.DB)
5A.215
Expression any benefit which is capable of being computed in terms of money
occurring in Sec. 33C(2) would also include a claim for monetary benefits such as claim for lay-off
compensation under Chapter V-A of the Act and thus the contention of employer that Labour
Court had no jurisdiction to deal with the matter was rejected and petition filed by it was
dismissed.
Shree Amarsinhji Mills, Ltd. v. M.N. Nagrashna & Ors., 1961 I LLJ 581 : 1960-61 (18) FJR 225
(Bom.DB)
.it was contended that.entertain the applications.the Labour Court.
petition before us. (Page: 582, Para: 1)
It is urged by counsel.include any money claim.in the petition.of the Labour
Court. (Page: 582, Para: 3)
.one thing is certainly.terms of money.it seems to us.of any elaboration.
(Page: 582/583, Para: 4)
.the petition fails. (Page: 584, Para: 5)

b) Recovery certificate obtained under the Industrial Disputes Act will prevail
over SICA. (Karn.DB)
5A.216
Recovery certificate in respect of lay off compensation issued against a Sick Company
is enforceable and provisions of the Industrial Disputes Act will prevail over SICA as the said Act is
a special enactment.
Siruguppa Sugars & Chemicals Ltd. Gauribidanur v. Commissioner of Labour, Government of
Karnataka & Ors., 2002 (101) FJR 430 : 2002 (95) FLR 171 : 2002 II CLR 668 (Karn.DB)

c) Recovery certificate issued if not after enquiry is bad (Karn.HC)

5A.217
Company laid-off its workmen. A recovery notice was issued followed by a recovery
certificate, towards lay-off compensation payable to the workmen. It was held that recovery
certificate was bad in law as the same was not preceded by an enquiry, hence recovery certificate
and notice were quashed. As there was no agreement that lay-off compensation was not liable to be
paid beyond 45 days, the employer had to pay lay-off compensation.
Kap Steel Ltd. v. State of Karnataka & Ors., 2000 III LLJ 1079 : 2000 (96) FJR 493 : 1999 LIC 2650 :
2000 I LLR 38 : 1999 (83) FLR 945 (Karn.HC)

E. Duty of an employer to maintain muster rolls of workmen Sec. 25D

2372

Chapter VA Lay-Off and Retrenchment

Sec. 25E

F. Workmen not entitled to compensation in certain cases Sec. 25E

I. Alternative employment means
a) Alternative employment offered by employer means a suitable employment
commensurate with the status and nature of the duties performed by the
employee (Bom.HC)
5A.218
When an offer for alternative employment is made in case of lay-off the alternative
employment must be a suitable employment which is commensurate with the status and nature of
the duties of the employee and cannot be meant to be any sort of employment which the employer
offers because the bracketed clause after the expression alternative employment is merely
illustrative and cannot affect the requirement that the employment offered must be a suitable one
i.e. the employer cannot offer an employment which is not commensurate with the status and
nature of duties performed by workman.
Firth (India) Steel Co. Ltd. v. Industrial Court, Maharashtra & Ors., 1994 III LLJ (Sum) 469 : 1990 (60)
FLR (Sum) 38 : 1990 I LLN 172 : 1990 I CLR 97 (Bom.HC)

II. Sec. 25E when can be invoked to deny compensation

a) When lay-off was declared by employer in response to strike by workers
(Ker.HC)
5A.219
The management refused to give work to some workmen as a result of strike by some
workmen in one part of the establishment. The Tribunal directed the management to pay
compensation on the ground that the action amounted to lock-out. The High Court quashed the
order passed by the Tribunal on the ground that employers step being the antithesis of strike is
fully justified under the circumstances.
Superintendent, Lonetree Estate v. Industrial Tribunal Alleppey & Anr., 1962 II LLJ 319 : 1961 (3) FLR
506 (Ker.HC)

b) When lay-off of some workers is due to strike by others in the same

establishment since they belong to same class (S.C.3J)
F 5A.220 Clause (iii) of Sec. 25E treats workmen of one establishment as a class and therefore
strike or slow down by some workers resulting in lay off of others would disentitle laid off workmen
from claiming compensation in instant case since quarry and cement factory were held one
establishment, factory workmen were disentitled to lay off compensation as lay-off was a result of
strike by quarry workers.
Associated Cement Companies, Ltd. (Chaibasa Cement Works, Jhinkpani) v. Their Workmen, 1960 I LLJ
1 : 1959-60 (17) FJR 166 : 1960 AIR (SC) 56 (S.C.3J)
.There are three disqualifying clauses in S. 25E. They show that the basis of the right to
unemployment compensation is that the unemployment is involuntary; in other words, due to no fault of
the employees themselves.the last clause treats the workmen in one establishment as one class and
a strike or slow-down by some resulting in the laying-off of other workmen disqualifies the workmen laid
off from claiming unemployment compensation, the reason being that the unemployment is not really
involuntary. (Page: 9/10, Para: 2)
.We are of the view that the learned chairman of the Industrial Tribunal wrongly held that the
limestone quarry at Rajanka and the factory at Jhinkpani were separate establishment. In our view, they
constitution one establishment within the meaning of Cl. (iii) of S. 25E of the Act..The Workmen
at the factory were not entitled to claim lay-off compensation. (Page: 13, Para: 2)

Sec. 25E

Sec. 25E when cannot be invoked

2373

c) When workers deliberately slowed down the production to pressurize

management to concede to their demands (Mad.HC)
5A.221
Management justified in laying-off the workers who slowed down the production
deliberately to pressurise concede their demand. Laid-off employee not entitled to claim lay-off
compensation.
Management of India Radiators, Ltd. Madras v. P.O. Second Labour Court, Madras, Workman Of India
Radiators, Ltd., 1998 III LLN 411 : 1998 LLR 956 (Mad.HC)

d) When lay-off in cement factory is due to strike in limestone quarry since both
constitute one establishment due to functional integrality though the
Appropriate Governments are separate for both of them (S.C.3J)
F 5A.222 The company runs a cement factory for which raw material was supplied by quarry
located adjacent to it. There is common accounts and employees were transferable between the two
units though the Appropriate Government for cement factory is State Government and that for
limestone quarry is Central Government. No provision of Industrial Disputes Acts says that
existence of two jurisdictions in an establishment would make them two separate establishments
for purpose of Sec. 25E and hence such an implication or inference would be at variance with the
scheme and object of unemployment compensation as provided in Chap. VA of the Act. and hence
the Apex Court held that cement factory and quarry constitute same establishment and
consequently the workmen are not entitled to lay-off compensation for the lay-off in cement factory
declared due to strike in limestone quarry.
Associated Cement Companies, Ltd.(Chaibasa Cement Works, Jhinkpani) v. Their Workmen, 1960 I LLJ
1 : 1959-60 (17) FJR 166 : 1960 AIR (SC) 56 (S.C.3J)
.It is indeed true that in the matter of constitution of boards of conciliation, Courts of inquiry,
Labour Courts and Tribunals and also in the matter of reference of Industrial Disputes to them, and
perhaps for certain other limited purpose, the Act gives jurisdiction to two distinct authorities, the Central
Government in respect of the limestone quarry and the State Government in respect of the factory. The
Short question is does this quality of jurisdiction, dichotomy one may call it, necessarily imply that for all
purpose of the Act, and particularly for payment of unemployment compensation as per the provision in
Chap VA, the factory and the quarry must be treated as separate establishment. We are unable to find any
such necessary implication. There is no provision in the Act which says that the existence of two
jurisdiction has the consequence contended for by learned counsel for the respondent; nor do we find
anything in the provision creating two jurisdiction which by reasons of the principle underlying them or
by their very nature give rise to an implication in law that the existence of two jurisdiction means the
existence of two separate establishments. On the contrary, such an implication or inference will be at
variance with the scheme and object for by the provisions in chap. VA of the Act.
(Page: 11, Para: 2)

III. Sec. 25E when cannot be invoked

a) When go-slow cannot be proved by employer to have affected production
(All.HC)
5A.223
On account of low production in the warping section the average earning of the
workmen in the weaving section were affected for a certain period for which the workmen
demanded compensation from management which caused an industrial dispute. On reference, the
Industrial Tribunal passed an award in favour of workmen. Aggrieved, management moved High
Court contending that on the analogy of the principles contained in Sec. 25E of Industrial Disputes
Act or Sec. 6M of U.P. Industrial Disputes Act, the concerned workmen were not entitled to any
compensation as the management could not be made responsible for the consequences which

2374

Chapter VA Lay-Off and Retrenchment

Sec. 25E

followed from the go-slow move adopted by the workmen in the warping section. However, the
High Court rejected the contention and upheld the award of Tribunal because the management
has not proved their allegation in regard to go-slow move adopted by workmen in warping section.
Lord Krishna Sugar Mills, Ltd. v. Industrial Tribunal (Textiles) & Ors., 1962 II LLJ 708 (All.HC)

b) When it is resorted as vindictive measure by employer to retaliate strike

(S.C.3J)
F 5A.224 Management laid off all the workmen who presented themselves for work subsequent
to half days protest strike by 27 workers. It was held that Managements plea of incurring loss as a
result of half day strike did not justify lay off for about 8 days and Sec. 25E(iii) was inapplicable
hence lay off being retaliatory and vindictive in nature workmen are entitled to claim wages for lay
off period.
Management of Churakulam Tea Estate Pvt. Ltd. v. Workmen & Anr., 1969 AIR (SC) 998 : 1969 II LLJ
407 : 1970 (37) FJR 202 : 1969 (19) FLR 203 : 1969 LIC 1396 (S.C.3J)
.On the very day that the factory workers went on strike i.e., November 30, 1961, the
management put up a notice, Ex. M-15, to the effect that since all the factory workers had gone on strike at
1 P. M. without previous intimation, the management was forced to lay-off without compensation all the
workmen in the entire establishment as from December 1, 1961. (Page: 1004, Para: 25)
.the plea of the workers is that all of them reported for duty on December 1, 1961, but they were
not given any work by the management on the ground that there was a lay-off. This plea has been found to
be true, by the Tribunal; but, according to the management, the lay-off, in this case, during this period, is
justified, under the provisions of Section 25E (iii) and hence the workmen are not entitled to
compensation. According to the management, inasmuch as there was a strike in the factory section, work
in the other sections could not be carried on; and, as the management were not sure whether the workmen
would turn up for work, lay-off, in the circumstances, was justified. We are not inclined to accept this
contention advanced on behalf of the management. We have already referred to the finding of the
Tribunal that twenty-seven factory workmen alone went on strike on November 30, 1961, and the entire
body of workmen presented themselves for work on December 1, 1961, but they were declined work by
the management on the ground of lay-off. The plea of the management that they suffered loss, on account
of the half a days strike on November 30, 1961, justifying the lay-off, has not been accepted by the
Tribunal. In fact the Tribunal has accepted the plea of the workmen that the effect of the three hours
token strike on November 30, 1961, would not have resulted in any loss to the management, if they had
allowed the workmen to do work on December 1, 1961. The Tribunal has also held that the lay-off, by the
management, was as a retaliatory or vindictive measure against the factory workers, who went on strike
on November 30, 1961. We are in agreement with the findings, recorded by the Tribunal in this behalf
and the award by the Tribunal of wages to the workmen for this period is justified.
(Page: 1004, Para: 26)

IV. One establishment or separate establishment Sec. 25E(iii)

a) Determinative factors are unity of ownership, supervision and control,
finance, functional integrality etc. (S.C.3J)
F 5A.225 Setting aside tribunals award it was held that in order to determine one
establishment, regard must be had to provisions of a statute and in their absence, tests such as
unity of ownership, management, supervision and control, finance, employment, labour, condition
of service, functional integrality, general unity of purpose and geographical proximity should be
applied and hence in the s instant case lime stone quarry and factory were held to constitute one
establishment.
Associated Cement Companies, Ltd. (Chaibasa Cement Works, Jhinkpani) v. Their Workmen, 1960 I LLJ
1 : 1959-60 (17) FJR 166 : 1960 AIR (SC) 56 (S.C.3J)

Sec. 25F

Employer to retrench surplus workmen since entitled to organize his business

2375

.We must have regard to the provision of the statute under which the question falls to be
considered; if the statute itself says what is one establishment, then there is no difficulty. If the statute
does not, however, say what constitutes one establishment, then the usual tests have to be applied to
determine the true relation between the parts, branches etc., namely, whether they constitute one
integrated whole or not. (Page: 12/13, Para: 3)
The Act not having prescribed any specific tests for determining what is one establishment, we must
fall back on such consideration as in the ordinary Industrial or business sense determine the unity of an
Industrial establishment. (Page: 8, Para: 2)
.The quarry is indeed a feeder of the factory and without limestone from the quarry, the factory
cannot function. Ours is a case where all the tests are fulfilled, as shown from the evidence given on
behalf of the appellant to which we have earlier referred. There are unity of ownership, unity of
management, supervision and control, unity of finance and employment, unity of labour and condition of
service of Workmen, functional integrality, General unity of purpose and geographical
proximity. (Page: 9, Para: 2)
.We are of the view that the learned chairman of the Industrial Tribunal wrongly held that the
limestone quarry at Rajanka and the factory at Jhinkpani were separate establishment. In our view, they
constitute one establishment within the meaning of Cl. (iii) of S. 25E of the Act...
(Page: 13, Para: 2)
Note: For additional ratios on functional integrality, please refer to Sec. 2(ka)

G. Conditions precedent to retrenchment of workmen Sec. 25F

I. Object is to enable employer to retrench surplus deadweight as he has
discretion to organize his business (S.C.3J)
F 5A.226 It is within the managerial discretion of an employer to organise and arrange his
business in the manner he considers best. While doing so, bonafide, surplus labour is bound to be
retrenched because no employer is expected to keep and carry the burden of such economic dead
weight. The legislature realising. This unfortunate consequence has provided by Sec. 25F
compensation to such retrenched workman so that the blow of hardship could be softened while he
is thrown out of employment. This is the objective behind introducing Sec. 25F in the Act.
M/s. Parry and Co., Ltd. v. P. C. Pal, Judge on the Second Industrial Tribunal, Calcutta & Anr., 1970 II
LLJ 429 : 1970 (38) FJR 164 : 1970 (21) FLR 266 : 1970 LIC 1071 : 1970 AIR (SC) 1334 (S.C.3J)
It is well established that it is within the managerial discretion of an employer to organise and arrange his
business in the manner he considers best. So long as that is done bona fide it is no competent to a tribunal
to question its propriety. If a scheme for such reorganization results in surplusage of employees no
employer is expected to carry the burden of such economic dead-weight and retrenchment has to be
accepted as inevitable, however unfortunate it is. The legislature realised this position and therefore
provided by S. 25-F compensation to soften the blow of hardship resulting from an employee being
thrown out of employment through no fault of his. It is not the function of the Tribunal, therefore, to go
into the question whether such a scheme is profitable or not and whether it should have been adopted by
the employer. (Page: 438, Para: 14)

2376

Chapter VA Lay-Off and Retrenchment

Sec. 25F

II. Scope and attributes of the section

a) Section has no retrospective effect (Ker.DB)
5A.227
The amended Sec. 25F by Act 43 of 1953 which came into force on 24th October 1953
cannot be given retrospective effect and hence award of compensation by the Tribunal in instant
case was quashed.
Vallabhdas Kanji Pvt. Ltd. v. Industrial Tribunal, Alleppey, 1959 I LLJ 616 : 1959-60 (16) FJR 91
(Ker.DB)
Section 25F was.order accordingly. (Page: 617, Para: 4)

b) Does not create pre-existing right in workman to claim retrenchment

compensation but subjects the power of employer to retrench to certain
limitations (Guj.DB)
5A.228
Sec. 25F does not create pre-existing right in workman to claim retrenchment
compensation, it merely subjects the power of employer to retrench to certain limitations and
conditions and hence no such claim can be entertained by Labour Court u/s. 33C(2).
Ambalal Shivlal v. D.M. Vin & Ors., 1964 II LLJ 271 : 1964-65 (26) FJR 297 : 1964 (9) FLR 328
(Guj.DB)
.the correct interpretation.directly u/s. 25F.all that we.an existing right.
(Page: 279, Para: 2)
.The only finding.with the matter. (Page: 280, Para: 1)

c) Section would form implied terms of contract of service (Bom.DB)

5A.229
Sec. 25F and 25G of the Industrial Disputes Act would form implied terms of contract
of service of the workmen and failure to comply with the same amounts to breach of agreement
within the meaning of Item 9 of Sch. IV of MRTU and PULP Act, 1971.
Dattatraya Shankarrao Kharde, Arun Tukaram Wankhede v. Executive Engineer, Chief Gate Erection
Unit No.2, Nagpur, & Anr., 1994 I LLJ 395 : 1994 I LLN 297 (Bom.DB)
Turning then.Act also. (Page: 400, Para: 17)
It is thus clear.accepted. (Page: 411, Para: 54)
It has.under appeal. (Page: 412, Para: 57)

d) Standing Order cannot be inconsistent with Sec. 25F and termination based on
it is not valid (Bom.HC)
5A.230
Services of an employee were terminated after one year without any notice or without
following any procedure of law. The High Court held that a badli workman if works for more than
240 days in a preceeding year, Sec. 25F needs to be complied with before termination of his services.
Mere failure to mention provision of Sec. 25F in an application by employee, does not amount to
improper pleading. Standing Order which is inconsistent with the provisions of Sec. 25F does not
have any force in law and termination effected based on provisions of such order is not proper.
Such employee be reinstated and back wages are to be paid after deducting the amount earned by
him during the period of forced unemployment.
The Raymond Woollen Mills Ltd. v. C.S. Sonawane & Anr., 1993 I LLJ 1162 : 1993 (67) FLR 94 : 1993
LIC 1494 : 1993 II CLR 112 (Bom.HC)

Sec. 25F

Scope and attributes of the section

2377

e) Provisions of Sec. 25F prevail over service regulations (Guj.HC)

5A.231
Sec. 25F provides for payment of retrenchment compensation and one months notice
or pay in lieu of notice by the employer to the employee at the time of his termination. Management
relying on Service Regulations, contended that appointment of the workman was illegal or
irregular, and the plea was held not tenable. The Service Rules, as introduced/made by the
employer will not supersede the provisions of the Industrial Disputes Act.
Bhavnagar Jilla Sahakari Sangh Ltd. v. Dhiren P. Parekh, 2007 (112) FLR 435 : 2007 LLR 133
(Guj.HC)

f) Section cannot be construed to enforce private rights or deal with domestic

disputes but statutory rights compelling Courts interference (Cal.DB)
5A.232
Disputes about termination of service in violation of Sec. 25F and 25G are not cases to
enforce private rights or contractual rights or obligations but statutory rights and also right to
livelihood u/Art. 21 and hence the writ Court cannot decline to interfere with them on the ground
that they are domestic disputes under private law.
Pancha Mayurakashi Cotton Mills Employees Union & Ors. v. State of West Bengal & Ors., 1995 I LLN
1222 : 1996 LIC 328 : 1995 LLR 749 (Cal.DB)
.In our view.pleases. (Page: 1226/1227, Para: 8)
That apart.writ jurisdiction. (Page: 1228, Para: 12)

g) Provisions of the section are mandatory and prevail over the conditions in
appointment letter that provide for termination of service of workman by one
month wages (P&H.DB)
5A.233
Conditions in the appointment letter contrary to the provisions of Sec. 25F Act can not
debar the rights of workman hence appointment letter providing termination of service of
workman by one month wages was held to be unsustainable.
District Red Cross Society, Hisar v. P.O. Labour Court-cum-Industrial Tribunal,hissar, & Anr., 2001 II
LLN 554 (P&H.DB)
Regarding the.be accepted. (Page: 556, Para: 9)

h) Conditions precedent to retrenchment are mandatory (MP.DB)

5A.234
Mandatory provisions of the section cannot be by-passed on ground that workman
had failed to pass test or has not been sponsored by Employment exchange for regular post.
Steel Authority of India Ltd. v. Kumari Vandana Singh & Anr., 1992 I LLJ 64 (MP.DB)
Shri Gupta has.by Shri Gupta. (Page: 72, Para: 19)
5A.235
The conditions precedent to retrenchment are mandatory and hence termination in
violation there of, is void ab initio entitling the workman to reinstatement with back wages and
hence the order of the single Judge granting only 25% back wages in lieu of reinstatement on the
ground that the employee appointed on affixed tenure basis but extended from time to time was
given three months notice thus dispensing with requirement of retrenchment compensation was
quashed and reinstatement with 50% back wages ordered.
Om Prakash Raigar v. State of Rajasthan, 1997 III LLJ 439 (Raj.DB)
In view of.benefits. (Page: 441, Para: 3)

2378

Chapter VA Lay-Off and Retrenchment

Sec. 25F

Note: Also refer to the following case

Tribhuvan v. Madhya Pradesh Administration, 2005 (106) FLR 586 : 2005 LLR 548 (Del.HC)

i) Conditions under clause (a) and (b) are obligatory and are conditions
precedent to retrenchment while that under clause (c) is not obligatory
(Pat.DB)
5A.236
While conditions u/Cl. (a) and (b) of the Section are obligatory and are conditions
precedent to retrenchment, issuing notice u/Cl. (c) to Appropriate Government is not a condition
precedent to retrenchment and not obligatory and hence retrenchment order passed by the railway
was held illegal for not complying with condition u/Cl. (b) as to payment of retrenchment
compensation but not for non-service of notice on Appropriate Government.
Somu Kumar Chatterjee & Anr. v. District Signal Tele-Communication Engineer & Anr.,
179 : 1970 (21) FLR 37 : 1970 LIC 629 (Pat.DB)

1970 II LLJ

In the.this score. (Page: 189, Para: 17)

The aforesaid.to go. (Page: 190, Para: 18)
In the.bad in law. (Page: 190, Para: 19)
Note: Also refer to the following case/s
Chief Engineer, Irrigation v. Kamlesh & Ors., 1996 II LLJ 316 : 1996 I LLN 941 : 1996 I CLR 1128 :
1996 LLR 218 (Raj.HC)

j) Order of retrenchment payment of wages in lieu of notice and retrenchment

compensation shall constitute same or single transaction to comply with
conditions of retrenchment 1356 (Mys.DB)
5A.237
Order of retrenchment, payment of wages in lieu of notice and retrenchment
compensation shall constitute single transaction to comply with conditions of retrenchment under
the section and hence in the instant case issuance of notice accompanied by sheet containing
detailed calculation and particulars with direction to draw wages together with compensation and
other statutory dues was held to be one and entire single transaction and in compliance with Sec. 25F
of the Act.
Workmen of Davangere Cotton Mills Ltd. v. Industrial Tribunal, Bangalore & Anr., 1973 I LLJ 306 :
1973 (43) FJR 107 : 1974 (28) FLR 162 : 1974 II LLN 154 : 1973 LIC 1356 (Mys.DB)
The question.in law. (Page: 311, Para: 16)
In this.constitution. (Page: 311, Para: 19)

k) Sec. 25F & 25C are independent and resorting to lay-off is not a condition
precedent to attract Sec. 25F (Bom.DB)
5A.238
Sec. 25C and 25F are independent and resorting to lay-off is not a condition precedent
to attract provisions of Sec. 25F.
Bhartiya Kamgar Sena v. Indabrator Ltd. & Anr., 1987 (55) FLR 615 : 1987 II LLN 648 (Bom.DB)
It must be.by the employer. (Page: 616, Para: 2)

Sec. 25F

Applicability of sections

2379

l) Probationary period cannot be for two years as it defeats the object of Sec. 25F
(Karn.HC)
5A.239
Management discharged employee and justified the discharge on the ground that the
service conditions governing its employees provided for a probation of two years and therefore,
discharge of the workman in question was in accordance with the stipulation in the contract of
employment and therefore, fell into the exempted category u/s. 2(oo)(bb) of the Industrial Dispute
Act. However, in reference, Labour Court passed an award in favour of workman, which was
challenged in High Court by management. High Court relied upon the judgment of 1986 II LLN
355 and observed that if the contention of the management is accepted it would enable
unscrupulous employer to provide a stipulation in the contract of service for terminating the
employment of employees to avoid the rigour of Sec. 25F of the Act resulting in the conferment of
arbitrary powers on the employers which would be destructive of the protection granted by the Act
to the employees and dismissed the writ of the management upholding the impugned award of
Labour Court.
Karnataka State Tourism Development Corp. v. T. Narayana Bhat & Ors., 1987 (55) FLR 223 : 1987 II
LLN 170 (Karn.HC)

m) Benefits u/s. 25F can be claimed by employees against the company even
though the unit is sold by previous owner to the company (MP.HC)
5A.240
Sale of a unit by earlier owner to company is of no consequence so far as right of
workmen are concerned, they continue to be in employment of the unit. Labour Court was justified
in holding termination as an illegal retrenchment.
Kuber Extrusions Pvt. Ltd. v. Laxminarayan Bhailal & Anr., 2003 (97) FLR 351 : 2003 II LLN 662 : 2003
LLR (Sum) 508 (MP.HC)

III. Applicability of sections

a) Applicable irrespective of the status of the employee whether casual or daily
wager (P&H.HC)
5A.241
Status of workman, whether as temporary or casual or daily wager is of no material
for applying Sec. 25F of the Act.
Punjab State Seeds Corporation, Chandigarh v. Labour Court, Jullundhar & Anr., 1995 II LLJ 333 :
1995 (87) FJR 630 : 1996 (72) FLR 554 : 1995 I LLN 606 : 1995 I CLR 895 (P&H.HC)

b) Applicable to daily rated employee who had completed more than 240 days of
service (S.C.2J)
F 5A.242 Termination of employee was set aside as he had rendered more than 240 days of
service and therefore was held to be entitled to protection u/s. 25F even though he was a daily rated
employee.
Rattan Singh v. Union of India & Anr., 1998 III LLJ 714 : 1998 SCC (L&S) 170 : 1997 (11) SCC 396
(S.C.2J)
.From the dates mentioned in the judgement of the first Appellate Court dated January 22, 1985,
it appears that the appellant had continuously worked for more than 240 days in a year. Since he was a
Workmen, he was entitled to the protection of Section 25-F of the Act and the said protection could not be
denied to him on the ground that he was a daily-rated worker. It is not the case of the respondents that the
provisions of Section 25-F of the Act were complied with while terminating the services of the appellant.
In these circumstances, the termination of services of the appellant cannot be upheld and has to be set
aside. (Page: 715, Para: 3)

2380

Chapter VA Lay-Off and Retrenchment

Sec. 25F

Note: Also refer to the following case

Municipal Board, Pratapgarh & Anr. v. Labour Court, Bhilwara & Anr., 2003 (97) FLR 747 : 2003 IV
LLN 810 : 2003 LIC 528 : 2003 I CLR 952 : 2003 LLR 663 (Raj.HC)
5A.243
Workman is entitled to benefits of Sec. 25F, if he has completed more than 240 days of
continuous service in the preceding date of termination in a calendar year, including intermittent
breaks and since it is a question of fact required to be determined the matter was remanded.
Yogendra Kumar v. Municipal Council, 1997 IV LLN 751 : 1997 II CLR 1182 (MP.DB)
The law.of the Act. (Page: 751, Para: 2)
In view of.the Act. (Page: 752, Para: 3)
This appeal.or not. (Page: 752, Para: 9)
5A.244
Benefit of Sec. 25F of the Act is also available to casual worker who has worked for 260
days within a course of 12 months preceding date of termination.
Employer in realtion to the Management of Calcutta Telephones & Anr. v. P.O. Central Government
Industrial Tribunal, Calcutta & Ors., 2001 II LLJ 165 : 2001 (89) FLR 979 : 2001 II LLN 972 : 2001 II
CLR 110 : 2001 LLR 792 (Cal.HC)

c) Applicable to termination which is not punitive in nature and amounts to

retrenchment and illegal if conditions not complied (S.C.2J)
F 5A.245 Termination which is not punitive in nature amounts to retrenchment and thus
attracts Sec. 25F of the Act and in the instant case since employees termination was violative of
Sec. 25F it was held null and void.
Management of M.C.D. v. Prem Chand Gupta & Anr., 2000 I LLJ 533 : 2000 (96) FJR 288 : 2000 I LLN
358 : 2000 LIC 250 : 2000 AIR (SC) 454 : 2000 SCC (L&S) 404 : 2000 AIR (SC) 454 (S.C.2J)
. In Section 2(oo) the word termination for any reason whatsoever is the key word. Whatever
the reason, every termination spells retrenchment. A termination takes place where a term expires either
by the active step of the master or the running out of the stipulated term. In view of this settled
legal position, therefore, it must be held that termination of services of the respondent-workman on April
29, 1966 which was admittedly not by way of punishment clearly amounted to retrenchment attracting
Sec. 25-F of the I.D. Act. (Page: 541, Para: 18)
.it must be held that termination of the respondent-workmans service on April 29, 1966 was
violative of Section 25F of the I.D. Act and was, therefore, null and void. (Page: 542, Para: 19)

d) Applicable to termination of surplus labour due to recession in work being

retrenchment and not closure (S.C.3J)
F 5A.246 The Supreme Court held that as the notice mentioned that termination was due to
recession in work, the termination was to be due to surplus labour and it was retrenchment and
also as the notice does not mention closure of the office, Sec. 25F and not Sec. 25FFF is applicable
and set aside the orders of High Court which had held the same as one of closure.
M/s. Gammon India Ltd. v. Sri Niranjan Dass, 1984 I LLJ 233 : 1984 (64) FJR 60 : 1984 (48) FLR 310 :
1984 I LLN 90 : 1983 LIC 1865 : 1984 SCC (L&S) 144 : 1984 AIR (SC) 500 : 1984 (1) SCC 509 (S.C.3J)
.Respondent continued to serve in that capacity when on September 14, 1967, he was served
with a notice terminating his services. The notice reads as under:

Sec. 25F

Applicability of sections

2381

Due to the reduction in the volume of business of the company as a result of the recession in (sic)
services will not be required by the company after the 14th October, 1967, and this may be treated as
statutory notice of one month of termination of your service. (Page: 234, Para: 1)
.The question, however, is whether the learned Single Judge, who interfered with the award of
the Tribunal was justified in coming to the conclusion that the case was one of closure covered by
S.25FFF or the Industrial Tribunal was right in holding that it is a case of retrenchment covered by S.25F
of Industrial Disputes Act. This point can be answered by mere reference to the notice served by the
appellant-company on the respondent intimating to him that his services will no more be required
effective from October 14, 1967. The notice as a whole recites that as a result of recession in the volume
of work of the company, services of the respondent would no more be required by the company after
October 14, 1967 and this notice may be treated as a statutory notice as contemplated by S.25F(a). There
is not even a whisper in the notice that as the Delhi office is being closed down, the services of the
respondent would not be required. (Page: 234, Para: 2)
.The recitals and averments in the notice leave no room for doubt that the service of the
respondent was terminated for the reason that on account of recession and reduction in the volume of
work of the company, respondent has become surplus. Even apart from this, the termination of service for
the reasons mentioned in the notice is not covered by any of the clauses (a), (b) and (c) of S.2(oo) which
defines retrenchment and it is by now well-settled that where the termination of service does not fall
within any of the excluded categories, the termination would be ipso facto retrenchment. It was not even
attempted to be urged that the case of the respondent would fall in any of the excluded categories. It is
there indisputably a case of retrenchment (Page: 236, Para: 2)

e) Applicable to workmen in coal units though can relocate but opted for closure,
as they are deemed to have been retrenched (S.C.2J)
F 5A.247 Workmen employed in 292 coke/coal using industries located in Agra who do not
intend to relocate/ obtain natural gas necessary to prevent degradation of Taj Mahal and opted for
closure, shall be deemed to have been retrenched subject to their being in continuous service of one
year as per Sec. 25B and will be paid compensation u/s. 25F(b) and in addition six year wages as
additional compensation.
M.C. Mehta v. Union of India & Ors., 1997 LIC 667 : 1997 AIR (SC) 734 : 1997 (2) SCC 353 (S.C.2J)
The workmen employed in the above-mentioned 292 industries shall be entitled to the rights and
benefits as indicated hereunder :(a) The workmen shall have continuity of employment at the new town and place where the industry is
shifted. The terms and conditions of their employment shall not be altered to their detriment.
(b) The period between the closure of the industry in Agra and its restart at the place of relocation shall be
treated as active employment and the workmen shall be paid their full wages with continuity of service.
(c) All those workmen who agree to shift with the industry shall be given one years wages as shifting
bonus to help them settle at the new location. The said bonus shall be paid before January 31, 1998.
(Page: 696, Para: 13)
The workmen employed in the industries who do not intend to relocate/obtain natural gas and opt for
closure, shall be deemed to have been retrenched by May 31, 1997, provided they have been in
continuous service (as defined in Section 25-B) of the Industrial Disputes Act, 1947) for not less than one
year in the industries concerned before the said date. They shall be paid compensation in terms of Section
25-F(b) of the Industrial Disputes Act. These workmen shall also be paid, in addition, six years wages as
additional compensation. (Page: 696, Para: 13(d))

2382

Chapter VA Lay-Off and Retrenchment

Sec. 25F

f) Applicable to termination of employees by transferee even prior to transfer

since he is in de facto possession of tea estate even prior to transfer (S.C.2J)
F 5A.248 The deed of conveyance was finalized on 28.12.1959 but before that on 17.12.1959 the
transferee was put in de facto possession subject to certain conditions of transfer and during this
period transferee was taking all the decision in consultation with transferor hence it was held that
the transferee was the real owner and employer and termination of eight employees by transferee
on 1.10.1959 has been held as retrenchment as per Sec. 25F and not termination as per Sec. 25FF.
Workmen of Subong Tea Estate (Indian Tea Employees Union) v. Subong Tea Estate & Anr., 1964 I LLJ
333 : 1964-65 (26) FJR 18 : 1964 (8) FLR 91 : 1967 AIR (SC) 420 (S.C.2J)
The industrial dispute which has given rise to this appeal arose between the appellants, the workmen of
Subong Tea Estate, and the management of Subong Tea Estate represented by respondents 1 and 2.
Respondent No. 1, M/s. Macneill and Barry Ltd., who managed the Subong Tea Estate, has transferred
the said estate to respondent No. 2, M/s. Gungaram Tarachand otherwise known as Hindustan Tea
Company. (Page: 334, Para: 1)
.It was agreed between the parties that when the agreement was completed, it would take effect
from January 1, 1959. This agreement was subject to the approval of the Reserve Bank of India. The said
approval was accorded on July 15, 1959, and the conveyance was actually executed on December 28,
1959. Pending the execution of the conveyance, on February 17, 1959, the Vendee was put in possession
of the tea garden. These facts are not in dispute. (Page: 335, Para: 1)
On August 31, 1959, Mr. Hammond, the Manager of the Vendor Company served notices on the 8
employees in question intimating to them that their services would be terminated with effect from
October 1. 1959.In pursuance of these notices, the eight employees were paid retrenchment
compensation due to them on August 31, 1959. On September 1, 1959. the Union representing the said
employees protested against the retrenchment in question. (Page: 335, Para: 2)
Shri Sastri for the vender.His case is that the transfer which is evidenced by the conveyance
executed between the parties on December 28, 1959 clearly shows that it was subject to two C0nditions; it
had to receive the sanction of the Reserve Bank and the Vendee held made it clear that the staff whom the
Vendee regarded as surplus had to be retrenched by the Vendor before the Vendee could take over the
undertaking as an owner. Since these two conditions can be treated as conditions precedent to the transfer
there can be no question of the transfer of the undertaking having taken place before the date of
retrenchment. (Page: 339, Para: 3)
.It is common ground that on July 15, 1959, the approval of the Reserve Bank was obtained, and
so, there can he no doubt whatever that as from July 15, 1959, the essential condition precedent having
been satisfied, the Vendee became the owner of the property. We have already noticed that the main
stipulation in the conveyance was that whenever the conveyance may be actually registered, it was agreed
to take effect from January 1, 1959. Even taking into account the fact that the approval of the Reserve
Prank was a condition precedent, there can be no escape from the conclusion that after the approval was
obtained, the operative clause in the conveyance came into play and the Vendee who had already
obtained possession of the estate became the owner of the property and his possession became the
possession of the owner. Therefore, whatever may be the character of the Vendees possession from
February 17, to July 15, 1959, as from the latter date it would be impossible to accept the Vendees case
that it continued manage the property as the Agent of the Vendor. That is one important point which
cannot be ignored. (Page: 340, Para: 3)
.We are therefore, satisfied that at least from July 15, 1959, the tea estate was in the possession
and management of the Vendee as an owner and that the conduct of the parties clearly shows that the
Vendee was the employer and the workmen working in the garden including the 8 retrenched workmen
were the Vendees employees. If that be so, whether or not the transfer of management took place on
February 17, 1959, there can be little doubt that after July 15, 1959 the Vendee accepted the employees as
its workmen and became answerable to them in that character. The impugned retrenchment cannot,
therefore, be taken to attract the operation of S. 25FF at all. It is not retrenchment consequent upon
transfer; it is retrenchment effected after the transfer was made. (Page: 341, Para: 1)

Sec. 25F

Applicability of sections

2383

.It is conceded that if the retrenchment is held to be effected by the Vendee, it has not complied
with S. 25F or S. 25G of the Act, and there can be little doubt that failure to comply with S. 25F would
make the retrenchment invalid, and so would the failure to comply with S. 25G, because no reasons have
been recorded by the Vendee for departing from the rule prescribed by S. 25G.
(Page: 341, Para: 3)

g) Applicable to discontinuance of employee when it is substitute for termination

as per evidence (Del.HC)
5A.249
Service of the workman who had completed 240 days of service was discontinued. It
was held that discontinuance is nothing but a substitute for terminations as the finding is based
on admission of the employee. High Court held that it cannot interfere as reinstatement award by
Labour Court was proper.
Director, Ministry of Information & Broadcasting v. Sopali, 2003 (99) FLR 912 : 2003 IV LLN 293 :
2003 LLR 1002 (Del.HC)

h) Applicable to a daily rated workman who worked for 240 days in a year
(Guj.DB)
5A.250
A daily rated workman who worked for 240 days in a year is entitled to the benefits of
Sec. 25F and hence reinstated.
Rajiben Prabhatbhai v. Executive Engineer, Una Irrigation Project Division, 1999 II LLJ 158 (Guj.DB)
When the matter.implemented. (Page: 159, Para: 2)
5A.251
Whose appointment was not on a particular job and who has worked for 240 days in
preceding 12 month is entitled for retrenchment compensation.
State of Haryana & Anr. v. P.O. Labour Court, Rohtak & Anr., 2000 I LLJ 66 : 2000 I LLN 713
(P&H.DB)
According to. of Service. (Page: 68, Para: 6)
We are.his Service. (Page: 68, Para: 8)
.In the Present.be accepted. (Page: 69, Para: 12)

i) Applicable to workman who is employed in an industry for a period of not less

than one year (Raj.HC)
5A.252
For applicability of Sec. 25F it is necessary that the workman should be employed in
the industry for a period of not less than one year.
Subhash Purohit & Ors. v. The State of Rajasthan & Ors., 1981 LIC 719 (Raj.HC)

j) Applicable to termination of services of an employee whose tenure is extended

after breaks of 29 days to go beyond 240 days (Guj.DB)
5A.253
Termination of services of an employee who was appointed temporarily for a fixed
period of 29 days and thus extending the service period beyond 240 days and also considering that
the work continued to exist, was held to be unfair labour practice and hence compliance with Sec.
25F is necessary.
Surat Mahila Nagrik Sahakari Bank Ltd. v. Mamtaben Mahendrabhai Joshi, 2001 II LLJ 567 : 2001 (90)
FLR 666 : 2001 III LLN 469 : 2001 II CLR 505 (Guj.DB)

2384

Chapter VA Lay-Off and Retrenchment

Sec. 25F

.we are of.services were terminated.to continue a.Disputes Act,

1947.Therefore in our.and genuine.we are not.not bonafide.
(Page: 578, Para: 27)

k) Applicable to workmen even though they did not complete 240 days in the
immediate preceding 12 months when his past service is also considered
(Karn.DB)
5A.254
Workmans service rendered in the past because of which he would be entitled to
notice and pay prescribed u/s. 25F would not be wiped out by mere fact that in the year immediate
preceding to date of his termination he had not worked for 240 days.
Hutchiah v. Karnataka State Road Transport Corporation & Ors., 1983 I LLJ 30 : 1982 (61) FJR 207 :
1983 I LLN 205 (Karn.DB)
Another submission.wiped out. (Page: 43, Para: 22)

l) Applicable to termination of the services of the casual railway workers

discharged as surplusage (Ori.DB)
5A.255
Retrenchment implies discharge of surplus labour for any reason whatsoever
otherwise than as punishment and the termination of the services of the casual railway workers
discharged as surplusage when candidates selected through recruitment are appointed amounts to
retrenchment. The retrenched workmen are entitled to the benefits of Sec. 25F and this not being
complied with the orders of retrenchment are quashed.
Duryodhan Naik & Ors. v. Union of India & Anr., 1969 LIC 1282 (Ori.DB)
Their Lordships.running industry. (Page: 1287, Para: 10)
Applying the.of the Act. (Page: 1288, Para: 11)
Having regard.the Act. (Page: 1288, Para: 12)
All the petitioners.of the Act. (Page: 1289, Para: 13)

m) Applicable to telephone department being an industry under the Act (Guj.DB)

5A.256
The workman of telephone department was terminated in violation of Sec. 25F. On
workmans application, the CAT dismissed the petition and also his review petition holding that
workman was not entitled to protection under Industrial Disputes Act. On appeal, Division Bench
set aside order of CAT since it was established that the workman had completed 240 days and
Telephone department being an industry under Industrial Disputes Act, the employer has to follow
provisions of section and thus ordered workmans reinstatement with back wages and
consequential benefits.
S.R. Bharai v. Union of India, 2006 (109) FLR 184 : 2005 LIC 3499 : 2006 II CLR 167 (Guj.DB)

n) Applicable to Statutory body performing non-sovereign functions (AP.HC)

5A.257
Vishakhapatnam Urban Development Authority was constituted under an Act of
Legislature but it had been discharging or undertaking certain functions which were
non-sovereign in nature, hence the Authority was under obligation to follow Sec. 25F of Industrial
Disputes Act. High Court upheld the award of Labour Court directing reinstatement without back
wages for non-compliance of Sec. 25F of the Act.
Visakhapatnam Urban Development Authority, Visakghapatnam v. Kambari Gowri Naidu & Anr., 2003
II LLJ 256 : 2002 LIC 3441 (AP.HC)

Sec. 25F

Applicability of sections

2385

o) Applicable to contract labour against unlawful termination (Karn.HC)

5A.258
The writ petition by the workmen employed by the labour contract or of the FCI for a
declaration that the action of the corporation in retrenching 450 workmen who have been working
continuously and rendering services to the corporation for several years in its various godowns in
Bangalore District was illegal violative of Industrial disputes Act and for a writ of mandamus
directing the corporation not to retrench the workmen without complying with the mandatory
provisions of Sec. 25N and 25F of the Act was resisted by the corporation. The High Court held that
the Contract Labour Act does not contain any provision for protecting the workmen against
unlawful termination of their services by their immediate employer and the said Act does not
override the provisions of Industrial Disputes Act, hence, the validity of the termination of their
services can only be tested under Industrial Disputes Act
FCI Loading & Unloading Workers Union, Bangalore v. Food Corpn. of India & two Ors., 1987 (71)
FJR 79 (Karn.HC)

p) Applicable to part time workmen (Guj.HC)

5A.259
Clerk was appointed by Co-operative Society on temporary period. His services were
terminated on which he raised dispute. Labour Court granted reinstatement with 40%
back-wages. Society moved High Court with the plea that the employee was engaged on part time
basis hence there is no need to follow mandatory provision. High Court held that there is no
distinction given between full time and part time employee and can not be distinguished for
compliance of Sec. 25F and also rejected the plea that appointment was not legal as it was
inconsequential.
Bhavnagar Jilla Sahakari Sangh Ltd. v. Dhiren P. Parekh, 2006 III CLR 828 : 2006 LIC 3785 : 2007
(112) FLR 435 : 2007 LLR 133 (Guj.HC)
.the Labour Court.consequential benefits. (Page: 829, Para: 1)
Provisions of Sec. 25F.of the I.D. Act, 1947. (Page: 830, Para: 6)

q) Applicable to termination due to surplusage on account of introduction of new

machinery (Raj.HC)
5A.260
Management retrenched 27 workmen working in composing section of a press stating
services of workman were no more required since new machines were installed. Labour Court held
that retrenchment order is valid since the management has complied with provisions of Sec. 25F
and has paid compensation and documentary evidence regarding the same was produced and
union failed to produce any evidence whatsoever and were not able to prove their case, Labour
Court has no other option other than to uphold the termination. High Court upheld Labour
Courts order and stated since there is no reason to interfere with the Labour Court award writ
petition stands dismissed.
Rajasthan Samachar Patra Karmachari Sangh v. Judge Industrial Tribunal, 2004 (105) FJR 980
(Raj.HC)
.the management.services of the workmen. (Page: 980, Para: 2)
Mr. Kala.dated 15-1-1985. (Page: 981, Para: 6)
Since the.terminated is valid. (Page: 981, Para: 7)
In view of the.dated 15-1-1996. (Page: 981, Para: 10)

2386

Chapter VA Lay-Off and Retrenchment

Sec. 25F

r) Provisions of Section not applicable to cases of retrenchment effected prior to

its enactment (S.C.3J)
F 5A.261 The section was not held to apply to cases of retrenchment occurring prior to the
enactment of the section and employee who was given one month pay in lieu of notice on 30.9.1953
was held to be terminated on such date unlike in cases where termination occurs after the notice
period but as Tribunal awarded retrenchment compensation even prior to the enactment the
payment of one months salary as compensation was not interfered with.
Management of M/s. May & Baker India Ltd. v. Their Workmen, 1961 II LLJ 94 : 1961-62 (20) FJR 147 :
1961 (2) FLR 594 : 1967 AIR (SC) 678 (S.C.3J)
Note: Please see related ratio/s under the above citation in this section

s) Not applicable to workmen who did not complete 240 days (S.C.2J)
F 5A.262 As the order of the Labour Court, upholding the termination was based on facts and
on the employees statement that he did not complete 240 days in service, it was not perverse and
therefore the High Court was held to have exceeded its jurisdiction by interfering with the same.
U.P. Avas Evam Vikas Parishad v. Kanak & Anr., 2003 I LLJ 497 : 2003 (96) FLR 492 : 2003 I LLN 834 :
2003 LLR 1 (S.C.2J)
.The requirement of the Statute of 240 days cannot be disputed and it is for the employees
concerned to prove that he has in fact completed 240 days in the last preceding 12 months period. As
noticed hereinbefore, it has been the definite case of the workman concerned whilst at the stage of
evidence that he has not worked for 240 days, as noticed hereinbefore in this judgment more fully. And it
is on this score Mr. Ranjit Kumar has been rather emphatic that the High Court has thus fallen into a grave
error in reversing the order of the Labour Court. It is finding of which the High Court cannot possibly
overturn without assailing the order of the Labour Court as otherwise perverse. The High Court
unfortunately has not dealt with the matter in that perspective (Page: 500, Para: 15)
Having regard to the opinion of this Court in the last noted decision, question of affirmance of the
impugned judgment cannot and does not arise more so by reason of the fact that even this Court searched
in vain in regard to the availability of such an evidence. The High Court, in our view, has thus committed
a manifest error in reversing the order of the Labour Court (Page: 501, Para: 17)
5A.263
Workman who had worked for not more than 89 days claimed retrenchment
compensation since they were not in continuous service of 240 days, as per Sec. 25B were held not
entitled to retrenchment compensation and benefit of Sec. 25H.
Indian Airlines v. Sebastian., 1994 III LLJ 498 : 1991 (62) FLR 755 : 1991 I LLN 247 : 1991 I CLR 43 :
1991 LLR 488 (Ker.DB)
Thus it is.S. 256. (Page: 503, Para: 8)
In our opinion.unsustainable. (Page: 506, Para: 15)
5A.264
Order of reinstatement was not sustainable as employee who was on ad-hoc basis had
put in only 60 days of service, therefore Sec. 25F was not held to be applicable.
State Bank of India v. Industrial Tribunal, Hyderabad & Anr., 2002 (94) FLR 1030 : 2002 LLR 890 :
2002 IV LLN 909 (AP.DB)
.The reason.be sustained. (Page: 1033, Para: 8)

Sec. 25F

Applicability of sections

2387

Note: Also refer to the following case/s

Management of Mahadev Textile Mills, Hubli v. Additional Industrial Tribunal., Bangalore & Anr., 1976
(33) FLR 313 : 1976 I LLN 367 : 1976 LIC 1284 (Karn.HC)
Bank of Baroda v. Presiding Officer, Central Government Industrial Tribunal & Labour Court, 2003 III
LLJ 198 : 2004 (106) FJR 509 : 2003 (98) FLR 385 (Raj.HC)
Housing Urban Development Corpn. v. Joginder Kumar & Ors., 2003 II LLJ 791 : 2003 (97) FLR 782 :
2003 II LLN 535 : 2003 II CLR 691 : 2003 LLR 580 (Del.HC)
Gujarat State Co-operative Agriculture & Rural Development Bank Ltd. v. Yoginiben Anilkumar Joshi,
2004 (106) FJR 727 (Guj.HC)

t) Not applicable to post office since not an industry (S.C.2J)

F 5A.265 In view of Judgement of Sub-divisional Inspector of Post v. Theyyam Joseph it was held
that post office is not an industry and hence termination of extra departmental delivery agent will
not attract Sec. 25F.
Union of India and Anr. v. Kamlesh Kumar Bharti., 1998 SCC (L&S) 1535 : 1998 (9) SCC 727 (S.C.2J)
The respondent was appointed temporarily as Extra-Departmental Delivery Agent in Ghazipur on
1-1-1993. He was relieved of the said post. (Page: 1535, Para: 3)
The learned Additional Solicitor General has invited our attention to the judgement of this Court in
Sub-divisional Inspector of Post v. Theyyam Joseph where in this Court has laid down that post office is
not Industry under section 2(j) of the Industrial Disputes Act, 1947. In view of the said decision of this
Court the provisions of Section 25-F of the Industrial Disputes Act could not be invoked to set aside the
termination of the services of the respondent. (Page: 1536, Para: 4)
Note: Also refer to the following case
Department of municipality not an industry, hence Sec. 25F was not applicable
Nagar Palika, Dehradun & Anr. v. The State of U.P. & Anr., 2001 III LLJ 459 : 1999 (82) FLR 260 : 1999
III LLN 906 : 1999 II CLR 110 : 1999 II LLR 705 (All.HC)

u) Not applicable to a case of re-employment of an employee after

superannuation (Mad.HC)
5A.266
A person who has attained the age of superannuation, if given a fresh employment
thereafter cannot claim the benefits of the standing orders and such appointment is only
contractual and the termination of his services will not amount to retrenchment within the
meaning of Sec. 25F of the Industrial Dispute Act.
Edwin A. Daniel & Anr. v. Labour Court, Coimbatore & Anr., 1993 I LLN 169 : 1993 LLR 356
(Mad.HC)

v) Not applicable to a case of termination of Contract Labour in the absence of

master and servant relationship (S.C.CB)
F 5A.267 Tribunals grant of retrenchment compensation after holding that master-servant
relationship existed between company and concerned workmen relying for its decision on
documents wherein employer had merely agreed to introduce the system of permanent direct
employment in future and undertook liability to pay wages at prescribed rates was set aside as
there was no evidence to show that contract labour were companys employees.
India General Navigation & Railway Co. Ltd. & Anr. v. Their workmen, 1966 I LLJ 735 : 1966 (12) FLR
223 (S.C.CB)

Sec. 25F

Applicability of sections

2389

Once it is held that Section 25F will have no application in a case of transfer of an undertaking or closure
thereof as contemplated in Section 25F and 25FFF of the 1947 Act, the logical corollary would be that in
such an event Section 25H will have no application. (Page: 859, Para: 25)
Note: Also refer to the following case/s
Sathiarthy v. New Era Manufacturing Co. Ltd., 1971 (39) FJR 457 (Ker.HC)
J.K. Hosiery Factory v. Labour Appellate Tribunal of India and Ors., 1956 II LLJ 04 : 1956-57 (11) FJR
67 (All.HC)
Ratnam & Company v. Their Workmen & Anr., 1957-58 (12) FJR 156 (Mad.HC)
Retrenchment is on account of closure.
Ramesh S/o. Pandharinath Taharabadkar v. Executive Engineer, Jayakwadi Project Stage No. 2
Division No. 1, Beed & Ors., 2001 III LLJ 889 : 2001 LIC 1255 : 2000 (86) FLR 885 : 2000 IV LLN 986 :
2000 III CLR 92 : 2000 II LLR 1156 (Bom.HC)

x) Not applicable to a case of re-deployment of senior workman on lower post

without continuity of service since it is not retrenchment (S.C.2J)
F 5A.270 Re-deployment of the seniormost welder on lower salary without continuity of service
can not be considered as retrenchment on the ground of surplusage hence Supreme Court held that
his re-deployment to a lower post was held was invalid.
Suraj Prakash Bhandari v. Union of India, 1986 AIR (SC) 958 : 1986 I LLN 706 : 1986 (52) FLR 376 :
1986 LIC 671 : 1986 (2) SCC 83 (S.C.2J)
.The specious explanation given by the High Court to justify the declaration of surplusage of the
appellant that the appellant was not the only person singled out does not impress us because, the fact on
the evidence available is, that the appellant was the only Senior Welder who was singled out for this
adverse treatment. The further justification discovered by the High Court that the appellant was
re-deployed as a welder in Jullundur Cantonment also does not impress us since that post carried lesser
pay, that it was a new appointment, denying him continuity of service. (Page: 959, Para: 3)

y) Not applicable to discharge of workmen on grounds of medical unfitness since

not retrenchment (S.C.3J)
F 5A.271 Upholding Tribunals decision and dismissing the appeal of workmen discharged on
grounds of ill health demanding gratuity under the terms of a consent award or under the terms of
Central Ordinance 5 of 1953 it was held that reading the consent award along with the dispute
referred in its connection, it was obvious that the dispute was concerned with payment to be made
to surplus workmen otherwise fit whereas discharge on the ground of medical unfitness cannot be
considered as services no longer required but service they were bound to render under the
contracts of service but were unable to do so due to physical condition, hence their discharge not
being retrenchment does not entitle them to compensation under the said ordinance.
The Workmen of Bangalore Wollen, Cotton & Silk Mills Co. Ltd. v. Bangalore Woollen, Cotton & Silk
Mills Co. Ltd., 1962 I LLJ 213 : 196162 (21) FJR 538 : 1962 (4) FLR 298 : 1962 AIR (SC) 1363 (S.C.3J)
.Mr. Jhas contention is that retrenchment means termination of service for any reason other
than by way of disciplinary action and therefore all workmen whose services had been terminated except
by way of disciplinary action were entitled to the compensation under S. 25-F in view of the award. To
clear the ground it may be stated that even if Mr. Jha is right, then thirteen of the twenty-three- persons
would not be entitled, to any gratuity under the award. As we have stated earlier, one of them was
discharged for misconduct, that is, that was a case of termination of service by way of disciplinary action
and therefore not retrenchment within the definition. Another of these twenty-three persons had been
discharged before January 1, l953 and the award only applied to workmen whose services had been
terminated as from that date. This workman also was therefore not entitled to the benefit of the award.
Seven had died and four had resigned. These eleven therefore had not been retrenched for their services
could not be said to have been terminated. That leaves only ten workmen who had been discharged on

2390

Chapter VA Lay-Off and Retrenchment

Sec. 25F

grounds of health. As we understood Mr. Jha, he fairly conceded that he could not press the case of any
workman excepting these ten. (Page: 216, Para: 1)
.The award has first to be read along with the dispute referred in connection with which it had
been made. That dispute concerned payment of bonus to workmen as discharged as being no longer
required. It therefore clearly contemplated workmen who were surplus but who were otherwise fit and
willing to continue in service if their service had been needed. The award settled this dispute. Therefore it
seems to us that the company agreed by it to pay gratuity only to workmen who had been discharged on
the ground that their services were no longer required and not to any whose services had been terminated
for any other reason. Now when a workman is discharged on the ground that he is medically unfit as
happened in the case of the ten workmen with whom alone we are concerned in this appeal, it cannot be
said that they had been discharged on the ground that their services were no longer required; on the
contrary they were not in a fit condition of health to continue in service at all. Their physical condition
prevented them from rendering the service for which they had been employed. The reason for their
discharge was that they could not render the services required of them and which under the contracts of
service they were bound to render. Their services cannot be said to have been terminated on the ground
that such services were not required. (Page: 216, Para: 3)
We therefore think that the ten persons who had been discharged on grounds of health-and as to this
there does not appear to be any dispute-were not persons who were entitled to any payment under
Ordinance No. 5 of 1953. (Page: 217, Para: 2)

z) Not applicable to a case of resignation since it falls u/s. 2(oo)(a) (Jhar.DB)

5A.272
Where voluntary resignation tendered by workman was accepted by Management, in
absence of any fraud, coercion or duress being proved by workmen, termination would not amount
to retrenchment and Sec. 25F is not applicable and also the burden is on workmen to prove that
their resignation was obtained as a result of fraud, coercion etc. and not on Management.
Employers in Management, Kusunda Area of M/s. BCCL v. P.O. Central Government & Ors., 2003 (97)
FLR 262 : 2003 LLR 618 (Sum) (Jhar.DB)
.The Management discharged.or duress etc.The onus of.will not
apply. (Page: 265, Para: 6)
.In the instant.duress or coercion. (Page: 266, Para: 7)
.the finding of.in this case. (Page: 266, Para: 11)
5A.273
Labour Court granted workman compensation on the ground that though the
workman had resigned, his dues were not paid. Held that as the workman had resigned, he falls
u/s. 2(oo)(a) and hence the compensation u/s. 25F of the Act does not arise.
Roxy Industrial Corporation v. State of Punjab & Ors., 2001 III LLJ 1456 : 2001 (99) FJR 121 : 2001 (91)
FLR 1029 : 2001 III LLN 1134 : 2001 LLR 1001 (P&H.HC)

za) Not applicable to seasonal employees on daily wage basis even if they complete
240 days (MP.HC)
5A.274
The daily wager seasonal employee, who worked for more than 240 days in the
preceding year, was terminated. Labour Court ordered employees reinstatement, as Sec. 25F was
not followed. High Court held that employee was employed on seasonal basis and not against any
clear vacancy. Therefore, could not claim permanency even if he worked for more than 240 days.
Krishi Upaj Mandi Samiti, Dabra & Anr. v. P.O. Labour Court No.1, Gwaliar, & Ors., 2001 II LLN 1093
: 2001 LIC 3032 : 2001 LLR 708 (MP.HC)

Sec. 25F

Applicability of sections

2391

zb) Not applicable to abandonment of service by workman (Guj.HC)

5A.275
Where the Labour Court held that the workman was not terminated but abandoned
his service, the same was upheld by High Court as before passing award Labour Court observed
that the workman after gaining adequate experience as salesman by putting number of years of
service in his employers shoe shop, abandoned his employment to start his own business and got
Municipality license in his name which he subsequently transferred to his brother to show that the
business which he had started was of his brother there by he is precluded from invoking the
provisions of Sec. 25F of the Act.
Jitendra Kumar Babubhai Parmar v. Shoe land, 1997 III LLJ 692 (Sum) (Guj.HC)

zc) Not applicable to workmen whose names were struck off the rolls on the
dismissals of their applications challenging their termination effected after
complying with the section (Pat.DB)
5A.276
When the workmen who were terminated from service in accordance with Sec. 25F
were retained on the rolls in deference to a High Court order maintaining status quo and their
names were subsequently struck off the rolls on dismissal of their applications, it does not amount
to fresh retrenchment and compliance with Sec. 25F again, is not required.
Parsuram Mishra & Ors. v. Union of India & Ors., 1979 II LLJ 117 : 1979 II LLN 347 : 1979 LIC 776
(Pat.DB)
But in the.absolutely irrelevant. (Page: 119, Para: 5)
It is therefore.be rejected. (Page: 122, Para: 10)

zd) Not applicable to termination of workmen employed for less than 12 calendar
months (Pat.DB)
5A.277
The workmen who had been terminated from service had been employed for less than
12 calendar months and since they were not in continuous service as per Sec. 25B, the Tribunal has
rightly denied the retrenchment benefits claimed by them.
Workmen of Pure Kustore Colliery (represented by Khan Mazdoor Congress) v. Central Government
Industrial Tribunal-cum-Labour Court, Jabalpur & Anr., 1969 I LLJ 126 : 1969 (18) FLR 297 (Pat.DB)
.the approach.years service. (Page: 128, Para: 1)
.before the workmen.rightly failed. (Page: 128, Para: 1)
5A.278
The retrenched workmen who had not been employed for 12 calendar months will not
be entitled for compensation u/s. 25F even though they had worked for 240 days, as they were not in
continuous service within the meaning of Sec. 25B.
General Manager, K.S.R.T. Corpn. Trivandrum v. C. Sundra Raj Trivandrum & Ors., 1976 (33) FLR 303
(Ker.DB)
He must.Court. (Page: 308, Para: 8)
These appeals.compensation. (Page: 309, Para: 11)
Note: However Supreme Court in the case of Mohanlal v. Management of M/s. Bharat Electronics Ltd.,
1981 II LLJ 70 held that the employee need not be in service for 12 months if he completion 240 days in a
lesser period for Ratio Sec. 25B

2392

Chapter VA Lay-Off and Retrenchment

Sec. 25F

ze) Not applicable to compulsory retirement of workmen as per service regulation

being not a retrenchment (Ori.DB)
5A.279
Compulsory retirement of service of workmen in terms of the service regulation being
not a retrenchment, compliance of Sec. 25F is not necessary.
Purna Chandra Giri v. Orissa Khadi & Village Industries Board, 1981 I LLJ 411 : 1981 I LLN 536
(Ori.DB)
We are.would be hit. (Page: 414, Para: 3)

zf) Not applicable to termination if employment is through backdoor in public

service (P&H.DB)
5A.280
No relief of reinstatement can be granted to an employee who was employed through
back-door in public service like Haryana Road Ways in violation of Employment Exchange Act,
1959 prejudicing the interests of more qualified persons, even if his services were terminated in
violation of Sec. 25F.
Brij Bhushan v. Industrial Tribunal-cum-Labour Court, Pantipat, & Anr., 1998 IV LLN 470 : 1998 LIC
2043 : 1998 LLR 896 (P&H.DB)
No doubt.statutes. (Page: 473, Para: 8)
.the Officer.Constitution. (Page: 474, Para: 9)

zg) Not applicable if the termination is for misconduct (S.C.2J)

F 5A.281 The question of payment of compensation will arise only where the termination is on
any ground other than misconduct and in the instant case, since the services of the driver were
terminated for unauthorised absence which is a misconduct, the question of violating the
mandatory requirements of compensation and notice does not arise, even though such termination
was effected without disciplinary proceedings.
State of Punjab v. Jagir Singh, 2004 (107) FJR 611 : 2004 (103) FLR 416 : 2004 LLR 1131 : 2004 IV
LLN 739 : 2004 LIC 3740 : 2004 SCC (L&S) 1109 : 2004 (8) SCC 129 (S.C.2J)
The workman herein joined the service in Punjab Roadways, Taran Taran, in the year 1965 as a driver. It
is not in dispute that he absented himself from duty from 2-5-1979 to 3-8-1979. The workman did not
apply for any grant of leave. He was asked to report for duty by a registered letter dated 22-6-1979 but
despite the same he did not comply with the said request. As regards his absence from duty, a notice was
published in the newspapers but despite the same he did not join his duties within the time specified
therein. The State, therefore, on the ground of his being absent from duty, terminated his services with
effect from 3-8-1979. Questioning the legality of the said order, a purported demand was raised by the
workman to reinstate him in service by a letter dated 5-3-1981. An industrial dispute was raised, in
relation whereto conciliation proceedings were held. Consequent upon failure of the parties to arrive at an
amicable settlement therein, the dispute was referred to the Labour Court by the State.
(Page: 614, Para: 3)
The said reference was answered in favour of the workman and against the State by an award dated
2-5-1997. In terms of the award, the State was directed to reinstate the workman with continuity in service
and full back wages stating :
In view of my findings on the aforesaid issues the workman is entitled to be reinstated with continuity in
service and since the workman has stated that he had remained unemployed throughout, and there being
no evidence contradicting above statement by management in this regard, workman shall be entitled to
full back wages. (Page: 614, Para: 3)

Sec. 25F

Applicability of sections

2393

The State thereafter filed a writ petition questioning the said award before the Punjab and Haryana High
Court on 2-6-1999. The High Court by reason of its impugned judgment dated 7-12-2000 allowed the
writ petition in part to the limited extent that instead and place of full back wages, the workman was held
to be entitled to 60% of the back wages. (Page: 614, Para: 3)
It is not in dispute that the workman did not perform any duty since 2-5-1979. The Labour Court made
its award only on the ground that before issuing the order of termination dated 3-8-1979, no disciplinary
proceeding was held in terms of the Punjab Civil Services (Punishment and Appeal) Rules and
furthermore the mandatory requirements of Section 25-F of the Industrial Disputes Act, 1947 were not
complied with. The findings of the Labour Court are inconsistent and self-contradictory. If the services of
the workman were terminated for misconduct, the question of payment of any retrenchment
compensation or service of any statutory notice would not arise. The question of compliance with the
provisions of Section 25-F of the Industrial Disputes Act would arise, if the services of the workman
concerned were terminated on a ground other than misconduct. (Page: 615, Para: 9)
Note: Also refer to the following case
F.A. Ahmedababi v. Dharam Estates & Investments Ltd., 2006 (110) FLR 327 : 2006 III LLN 534 : 2006
LLR 902 : 2006 (3) BCR 618 (Bom.HC)

zh) Not applicable to a case of refusal by employer to allow employee to rejoin duty
after unauthorised absence (MP.HC)
5A.282
Refusal by the employer to allow employee to rejoin the post after being
unauthorisedly absent, cannot be held to be a case of retrenchment to attract provisions of Sec. 25F
of Industrial Disputes Act.
Ramashanker Srivastava v. State Industrial Court & Ors., 1999 (82) FLR 348 (MP.HC)

zi) Not applicable to a case of non-resumption of duty on transfer since it amounts

to abandonment of service (Raj.HC)
5A.283
On transfer a workman did not join the post, it was not a case of automatic
termination neither a retrenchment, hence, Sec. 25F was not attracted. A finding that the workman
had himself abandoned service was held to be not incorrect and that the termination if it is by way
of punishment would not amount to retrenchment.
Vijay Singh Charan v. Management, Shri Swatamber Nakoda Parshwanth Tirth & Anr., 1999 (83) FLR
357 : 1999 III LLN 723 (Raj.HC)

zj) Not applicable if appointment is void ab initio (Ker.HC)

5A.284
The employee was appointed as salesman on temporary basis and such appointment
was subject to approval of the Registrar of Co-operative Societies and also the employee did not
even have the requisite qualification prescribed under the Rules. His services were terminated
because of non-approval of appointment and the High Court held that the order of appointment
was ab initio void, therefore, the employee is not entitled to benefits u/s. 25F.
Enanallor Service Co-operative Bank Ltd. v. Labour Court, Original, 1988 (56) FLR (Sum) 11 : 1987
(71) FJR 20 (Ker.HC)

zk) Not applicable to establishments to which Chapter V-B is applicable (AP.HC)

T. Gattaiah v. Commissioner of Labour, Hyderabad & Anr., 1981 II LLJ 54 : 1981 (43) FLR 202 : 1981
LIC 942 : 1981 (58) FJR 327 : 1981 I LLN 623 (AP.HC)
Note: Please see related ratio/s under the above citation in Sec. 25N

2394

Chapter VA Lay-Off and Retrenchment

Sec. 25F

zl) Not applicable to an apprentice appointed under Apprentices Act since not a
workman (Ker.DB)
5A.285
Registration of contract of apprenticeship was not necessary for the purpose of Sec. 18
of the Apprentice Act, therefore as the apprentices who were not registered were covered under it
were not workman under the Act and hence Sec. 25F of Industrial Disputes Act was not
attracted.
Bhaskaran v. Kerala State Electricity Board, 1986 II LLJ 346 (Ker.DB)
.On a plain reading.not illegal. (Page: 348, Para: 5)

zm) To apprentice though completes 240 days since he cannot be a permanent

employee (Mad.HC)
5A.286
Training period of apprentice who was appointed for one year was extended since he
was not upto the level of expectation and his services were terminated without notice or enquiry.
Dispute referred to Labour Court which held that since he has completed 240 days of service he has
become a permanent employee and management violated Sec. 25F of Industrial Dispute Act.
Hence, Labour Court granted reinstatement with back wages. High Court reversed the Labour
Courts finding and held merely because apprentice was allowed to work like a regular employee
he does not become a regular employee. Moreover, where standing order has provision for training
apprentice he has no right to get permanent status and set aside the order of Labour Court.
Management of Easun Reyrolle, Ltd. v. Presiding Officer, Labour Court, & Anr., 2004 I LLJ 932 : 2004
(100) FLR 990 : 2004 I LLN 564 (Mad.HC)
.The second.Labour Court Salem. (Page: 932, Para: 2)
In Industrial Dispute No. 439.has been filed. (Page: 933, Para: 4)
In the present.present case. (Page: 934, Para: 10)

zn) Not applicable to casual employees who are not recruited as per recruitment
rules (S.C.2J)
F 5A.287 The statute does not envisage application of the provisions of Industrial Dispute Act
and the Rules where both recruitment and termination is uncertain or when the workmen are not
required to be recruited category wise in service e.g. skilled, semiskilled or unskilled etc. such as a
casual employee who is not in continuous employment but keeps on coming and going having not
been appointed in accordance with recruitment rules.
Jaipur Development Authority v. Ram Sahai & Anr., 2007 I LLJ 429 : 2006 (111) FLR 1178 : 2007 I LLN
78 : 2007 LIC 274 : 2007 I CLR 221 : 2007 LLR 92 : 2007 (1) SCC (L&S) 518 (S.C.2J)
.The statute does not envisage application of the provisions of the Act and Rule where both
recruitment and termination is uncertain or when the workmen are not required to be recruited in a
category-wise service, e.g., skilled, semi-skilled or unskilled, etc. (Page: 431, Para: 15)
Before the Labour Court, muster rolls were produced by Appellant. It was noticed that in July, 1985
Respondent had worked regularly. He did not work in August, 1985. He worked for 25 days in
September, 1985, whereas, again in October, 1985 he did not work at all. He, however, worked regularly
in November and December of 1985. But in January, 1986 he worked only for 9 days. Again in February,
1986 he did not work at all. Yet again, in March, April, May and June of 1986, he worked for 26 days, 26
days, 27 days and 25 days respectively. In the months of July, August, September and October of 1986 he
did not work at all. Thereafter, in November, 1986, he worked for 27 days. (Page: 431, Para: 16)

Sec. 25F

Conditions precedent to retrenchment

2395

IV. Expressions and Meanings

a) Expression until means
1. Conditions like notice pay, retrenchment compensation or payment of
wages are necessary for compliance (Mys.DB)
5A.288
The word until used u/s. 25F and word unless used u/s. 33(2) of Industrial
Disputes Act have the same meaning as to mean that the conditions like notice pay, retrenchment
compensation or payment of wages are necessary for compliance and hence as the notice of
retrenchment itself having been accompanied by a sheet containing detailed calculations for
payment of retrenchment compensation on the same day, it is deemed to constitute a single
transaction and hence retrenchment made was held legal and valid.
Workmen of Davangere Cotton Mills Ltd. v. Industrial Tribunal, Bangalore & Anr., 1973 I LLJ 306 :
1973 (43) FJR 107 : 1974 (28) FLR 162 : 1974 II LLN 154 : 1973 LIC 1356 (Mys.DB)
The circumstance.S. 33(2)(b). (Page: 309, Para: 11)
Now so.S. 25F. (Page: 310, Para: 13/14)

V. Conditions precedent to retrenchment

a) The three conditions stipulated u/s. 25F are necessary pre-conditions for
retrenchment (AP.HC)
5A.289
It is well settled principle that 3 conditions u/s. 25F are necessary preconditions for
retrenchment and non-compliance of the same will render retrenchment invalid ab intio.
Therefore, it cannot be cured by employers subsequent offer for any sum in full and final
settlement nor can it disentitle the workman from challenging the order of retrenchment on the
ground of non-compliance of statutory requirements. Thus a workman can challenge the validity
of retrenchment during conciliation proceedings and even after receiving retrenchment
compensation.
Management of Oasis School, Hyderabad v. Labour Court, Himayatnagar, Hyderabad & Ors., 1992 I
LLJ 210 : 1991 (78) FJR 314 : 1991 LIC 428 : 1990 II LLN 954 : 1990 II CLR 506 (AP.HC)

b) Conditions like notice pay, retrenchment compensation or payment of wages

are necessary for compliance (Mys.DB)
Workmen of Davangere Cotton Mills Ltd. v. Industrial Tribunal, Bangalore & Anr., 1973 I LLJ 306 :
1973 (43) FJR 107 : 1974 (28) FLR 162 : 1974 II LLN 154 : 1973 LIC 1356 (Mys.DB)
Note: Please see related ratio/s under the above citation in this section

c) The condition of completing continuous service of one year

Note: reference can be had to Sec. 25B to understand as to what constitutes continuous service and
computation thereof

2396

Chapter VA Lay-Off and Retrenchment

Sec. 25F

1. Workman to be in continuous service though less than one year but should
have worked atleast for 240 days in a calendar year preceding his
termination (AP.DB)
5A.290
Though a casual worker was employed from 1969 to 1979 but since it was not proved
that he had worked for period of 240 days in any year it was held that Sec. 25B(2) was not
applicable hence disentitling him to claim any retrenchment compensation but considering the fact
that worker had met with an accident resulting in amputation of his right leg which led to his
termination company was directed to pay Rs. 10,000 on humanitarian grounds.
G. Yadi Reddy v. Brooke Bond India Ltd., Ghatkesar & Anr., 1994 (69) FLR 25 : 1994 (68) FLR (Sum) 44
: 1994 I LLN 282 : 1994 LIC 186 : 1994 I CLR 207 : 1994 LLR 328 (AP.DB)
.The appellant claimed.him employment. (Page: 26, Para: 2)
.The Learned Presiding.by the company. (Page: 26, Para: 4)
As regards the.and forty days. (Page: 28, Para: 4)
During the course.of the case.we direct.by the management.
(Page: 29, Para: 2)
5A.291
As long as an employee has worked for 240 days in any calendar year preceeding his
termination the employee would be entitled to the benefit of Sec. 25F.
Suraj Pal Singh & Ors. v. P.O. Labour Court No. III & Anr., 2002 III LLJ 885 : 2002 (95) FLR 521 : 2002
IV LLN 735 : 2002 III CLR 158 : 2002 LLR 975 : 2002 LIC 2897 (Del.HC)

2. Workman has to put in 240 days of service in the immediate preceding year
though in spells (AP.DB)
5A.292
If the workman merely put in more than 240 days of service is several spells during
several years but not in the immediately preceding previous year, it is held that fact itself would not
attract the petition Sec. 25F of the Act. It will attract only when it is established that on the date of
removal of the workman from service, if workman had put in 240 days of continuous service in the
pervious year.
Deputy Executive Engineer, I & P. RC Department, Vijayawada & Anr. v. Padamati Balaramiah & Anr.,
2003 LIC 574 : 2003 II LLJ 396 (AP.DB)
.therefore.negative.Ex W1.previous year. (Page: 575, Para: 4)

d) The condition of serving notice as per Clause (a)

1. Attributes of Notice
i) Notice u/s. 25F(a) is different from notice u/s. 9A which is confined to items
in Sch. IV of the Act (Bom.DB)
5A.293
Retrenchment of 19 workers engaged in hand composing was not a direct result of
installation of photo-composing machine as workmen had continued in service for years after
installation of the machine and actually the reason behind their retrenchment was non availability
of hand composing work, hence notice of change u/s. 9A was not required and also their
retrenchment as such is not covered by any item of Sch. IV of the Act and it was also observed that
notice of change u/s. 9A and notice u/s. 25F for effecting retrenchment are entirely different and
non co-related aspects.
Narkeshari Prakashan Ltd. v. Nagpur Press Kamgar Sangh & Anr., 1994 II LLJ 530 : 1994 (68) FLR 462
: 1994 II LLN 870 : 1994 LIC 114 : 1993 II CLR 1110 (Bom.DB)

Sec. 25F

Conditions precedent to retrenchment

2397

It is thus.in June, 1989. (Page: 539, Para: 40)

Even other wise.with each other. (Page: 539, Para: 41)
.we do not.illegal and void. (Page: 540, Para: 42)

ii) Notice has to specifically indicate that termination is due to retrenchment

failing which termination becomes termination simpliciter (Bom.HC)
5A.294
Where the employer terminated the services of a stenographer without indicating in
the notice that it was retrenchment under the provisions of Sec. 25F it was held that it amounts to
non-compliance of Sec. 25F(a) and amounts to a termination simplicitor. The High Court upheld
the award of Labour Court directed the employer to reinstate him. However, it observed that if is
still open to the employer to retrench him every after reinstatement following the correct
procedure prescribed u/s. 25F of the Act.
Manohar Bhatia Partner of M/s. Manohar Brothers, Mumbai v. P.K. Raghavan, 2004 (106) FJR 622 :
2004 (102) FLR 742 : 2004 IV LLN 469 : 2004 LIC 2876 : 2004 II CLR 613 : 2004 LLR 793 (Bom.HC)
The respondent was.effect from 14-1-93. (Page: 624, Para: 2)
Pursuant there to.Industrial Dispute Act 1947. (Page: 625, Para: 3)
It is therefore.respondent in service. (Page: 626, Para: 3)
.I find that.Act, 1947. (Page: 634, Para: 13)
.The only case.as to costs. (Page: 635, Para: 16)

iii) It is mandatory but not directory to mention reasons for termination in the
notice (Ori.DB)
5A.295
Mentioning of reasons of termination in a notice of termination of service is
mandatory and not directory hence notice issued in absence thereof being invalid was quashed.
Dhruba Singh v. Union of India & Anr., 1970 LIC 349 (Ori.DB)
The question.Section 25F(a). (Page: 350, Para: 5)

iv) Notice under Clause (a) of Sec. 25F to precede termination (All.HC)
5A.296
Retrenchment compensation is to be paid to a probationer also. A notice or salary in
lieu of notice is to be paid before the order of termination is passed therefore, termination of
chowkidar who was on probations without complying Sec. 25F of Industrial Disputes Act is illegal.
Zila Sahkari Bank Ltd. & Ors. v. P.O. Labour Court & Ors., 1994 (68) FLR 386 : 1994 II LLJ 941
(All.HC)

2. Service of Notice
i) Notice pasted on notice board is not a substitute for individual notice
u/s. 25F(a) (Ori.DB)
5A.297
Retrenchment notice pasted on notice board is not a substitute for individual notice
hence in such case it was held that one months pay in lieu of retrenchment notice as required
u/s. 25-F is necessitated.
Alumina Mazdoor Sangh Etc. v. Ratna Construction Co. & Ors., 2003 I LLJ 793 : 2003 (96) FLR 944 :
2002 LIC 3693 (Ori.DB)

2398

Chapter VA Lay-Off and Retrenchment

Sec. 25F

.There is no dispute.the notice board.for the aforesaid.according to

law. (Page: 794, Para: 4)

ii) Notice given on penultimate day of retrenchment is valid (MP.DB)

5A.298
When notice and wages prior to retrenchment were given to the workmen on 27th
January, on which day they were in service and retrenchment was to come into effect on 28th
January, the notice is proper and retrenchment is valid.
Nowrozabad Colliery Mazdoor Sangh v. F. Jeejeebhoy & Anr., 1970 (37) FJR 225 : 1970 (20) FLR 284
(MP.DB)
In the present.and genuine. (Page: 228, L: 37 to Page: 229, L: 13)

iii) Presumption of service of notice cannot be when employer admitted that no

notice was sent to workman (Bom.HC)
5A.299
Services of workmen were terminated without any notice or enquiry. Where the
employer has himself admitted that as no intimation was sent to workman, no question of
presumption of service of notice arises. Therefore findings by Labour Court in favour of the
employer were held to be perverse.
Rajaram Rama Harguel v. P.W. Bhuyar, P.O. & Anr., 2003 (96) FLR 115 (Bom.HC)

iv) Notice is invalid if served after retrenchment (Bom.HC)

5A.300
Notice of retrenchment served after retrenchment is ipso facto bad, invalid, and illegal
as Clauses (a) and (b) of Sec. 25F are not complied with. Therefore, reinstatement ordered.
Superitending Engineer, Urdhwa Painganga Project Circle & Anr. v. Yavatmal Zila Raste & Ors., 1993 I
LLJ 789 : 1992 II CLR 1106 : 1993 LLR 455 (Bom.HC)

v) Notice though valid becomes void if retrenchment compensation was also

not paid (Cal.HC)
5A.301
A person was working as a casual labourer in the railway and his services were
terminated by notice. He filed a writ petition and an interim order was passed allowing him to
continue in the service. Finally the decision went against the worker and the railway thereafter
issued a second notice with out paying retrenchment compensation. It was held that compensation
not having been offered the said notice, though valid, becomes inoperative and void.
Maheswar Thakur (2) Ram Chandra Das v. Union of India & Ors., 1978 II LLJ 379 : 1978 II LLN 95 :
1980 LIC (Sum) 4 (Cal.HC)

vi) Notice given even before two days instead of one month in advance as per
Rule 77(1) of W.B. I.D Rules is sufficient service since the employees were
put on notice (S.C.3J)
F 5A.302 Where notice of retrenchment u/s. 25F was given 2 days before the actual
retrenchment, it was held that it was substantial compliance of Rule 77(1) of West Bengal
Industrial Dispute Rules, 1958 although neither one months notice to commissioner and
conciliation officer before retrenchment nor with one months wages and a notice to the said
authorities given in as much as the object of the Rule was complied with.
M/s. Parry and Co., Ltd. v. P.C. Pal, Judge on the Second Industrial Tribunal, Calcutta & Anr., 1970 II
LLJ 429: 1970 (38) FJR 164 : 1970 (21) FLR 266 : 1970 LIC 1071 : 1970 AIR (SC) 1334 (S.C.3J)

Sec. 25F

Conditions precedent to retrenchment

2399

Equally the Tribunals decision on Rule 77 was contrary to its provisions. The Rule by sub-clause (1)
provides that when an employer finds it necessary to retrench any workman he shall at least one month
before the date of actual retrenchment give notice thereof to Labour Commissioner and to the
Conciliation Officer. The proviso to it states that where an employer retrenches any workman with
immediate effect by paying him wages in lieu of notice he shall immediately after such retrenchment give
notice thereof to the said officers. Obviously, sub-clause (1) did not apply to the facts of this case. It is true
that the notice was given two days before the actual retrenchment and was not given immediately. But
the Tribunal could not conclude that since the notice immediately after retrenchment the proviso did not
apply, and therefore, it would be sub-clause (1) which would be applicable and since one months notice
was not given the retrenchment was invalid. In our view such a conclusion was not only incorrect but
contrary to the very object of the rule. We are in agreement with the earned Single Judge that though the
notice was not given immediately after the retrenchment but two days before it, the company had
substantially complied with the requirements of the proviso. The object of the proviso clearly is that
where it is not possible for an employer to give one months notice to the two authorities concerned by
reason of his retrenching the employees with immediate effect, information should be supplied to the two
officers immediately after such retrenchment. It instead of giving such information after the retrenchment
it is given two days before the retrenchment takes place it is hardly possible to say that the requirement of
the proviso was not carried out. So long as the object underlying the proviso was satisfied it did not make
any difference that information was given a little earlier than the date when retrenchment took place.
(Page: 439/440, Para: 17)

3. When not required

i) Notice is not required on termination by expiry of term under an
agreement (S.C.3J)
Note: Proviso to Sec. 25F no more exists
F 5A.303 Proviso to Sec. 25F which says that no notice is required if retrenchment is under an
agreement specifying the date of termination of service would have been quite unnecessary if
retrenchment defined u/s. 2(oo) was intended not to include termination of service by efflux of time
and hence Court was right in holding that termination of service of workmen falls within Sec. 2(oo)
and he is entitled to reinstatement with back wages for non compliance of Sec. 25F. Even where the
termination was by efflux of time for which the Court relied on the case SBI v. Sunder Money.
Hindustan Steel Ltd., v. State of Orissa and Ors., 1977 I LLJ 1 : 1976 (49) FJR 397 : 1976 (33) FLR 257 :
1976 II LLN 479 : 1976 LIC 1766 : 1976 SCC (L&S) 583 : 1977 AIR (SC) 31 : 1976 (4) SCC 222
(S.C.3J)
Respondents Nos. 3, 4 and 5 had been employed as Head Time Keepers in the Rourkela Unit of
Hindustan Steel Limited, appellant herein, The third and the fourth respondents were appointed on
September 24, 1959 and September 14, 1959 respectively, each for a period of three years. The fifth
respondent was also appointed for a period of three years from July 15, 1957 but as Time Keeper, not
Head Time Keeper. In his case the period was extended after the expiry of three years from time to time
till October 15, 1962. In the meantime he had been promoted from Time Keeper to Head Time Keeper
with effect from 3-11-1960. Pursuant to an alleged policy to streamline the organisation and to effect
economies wherever possible, the appellant chose not to renew the contracts of service of the Head Time
keepers who were eight in number including these three respondents. There was no order terminating
their services; according to the appellant the termination was automatic on the expiry of the contractual
period of service. (Page: 2, Para: 1)
The main question in this appeal is whether the three respondents had been retrenched by their employer
as found by the Labour Court. (Page: 2, Para: 2)
This Decision, as conceded by the Solicitor general, goes against the contention of the appellant and is
conclusive on the main question that arises for consideration in this appeal. It may also be noted that
Section 25F(a) which lays down that no workman who has been in continuous service for not less than
one year under an employer shall be retrenched by that employer unless he has been given one months
notice or wages in lieu of such notice, has a proviso which says that no such notice shall be necessary if
the retrenchment is under an agreement which specifies a date for the termination of service. Clearly, the

2400

Chapter VA Lay-Off and Retrenchment

Sec. 25F

proviso would have been quite unnecessary if retrenchment as defined in Section 2(oo) was intended not
to include termination of service by efflux of time in terms of an agreement between the parties. This is
one more reason why it must be held that the Court Court was right in taking the view that the respondents
were retrenched contrary to the provisions of Section 25F. (Page: 3, Para: 3)
Note: Section amended by insertion of Sec. 2(oo)(bb) Proviso omitted by Act 49 of 1984

ii) When the discharge of employees took place more than one month after the
order of winding up was passed since the order itself operated as notice
(Ker.DB)
5A.304
When the winding up order was passed the business of the bank was stopped and the
order operated as a notice of discharge of employees u/s. 445(3) of the Companies Act. The winding
up work carried on under the liquidator was not a continuation of the business of the Bank nor did
it constitute a fresh employment in the absence of any agreement to that effect. Hence the
employees are not entitled to notice pay u/s. 25F(a) for their discharge, which had taken place more
than a month after the winding up order was passed.
Palai Central Bank Employees Union (by general secretary) v. Palai Central Bank, Ltd. (by Official
liquidator), 1966 I LLJ 533 (Ker.DB)
The third ground.is continued. (Page: 534, Para: 3)
.when the winding up.fresh employment. (Page: 534, Para: 4)
There is no evidence.also fails. (Page: 535, Para: 1)

iii) When the workman is engaged for a fixed period (Del.DB)

5A.305
The services of the employee being determined by contract for a fixed period came to
an end on the expiry of such period and notice of termination was not necessary. Hence termination
being proper, award of the Labour Court granting reinstatement with back wages is unjustified
and so is quashed.
The Management of Associated Traders & Engineers Pvt. Ltd. v. Its Workman Shri Basant Lal Bhambri
& Anr., 1972 LIC 126 (Del.DB)
It must be.period. (Page: 129, Para: 9)
It is therefore.of time. (Page: 129, Para: 12)
It was contended.be sustained. (Page: 129, Para: 13)
5A.306
When the workman is engaged for a fixed period, no notice is required to be served
before termination.
Amit Bhardwaj v. H.P.S.E.B. & Ors., 2001 I LLJ 241 : 2001 LLR 244 : 2000 LIC 2990 (HP.DB)
Incase of.traders. (Page: 244, Para: 8)
The result.as to cost. (Page: 245, Para: 12)

Sec. 25F

Conditions precedent to retrenchment

2401

4. Wages in lieu of notice

i) Notice not compulsory when wages paid in lieu thereof since both are
independent (Ori.DB)
5A.307
The two parts of Clause (a) relating to one month notice or one month salary are
completely independent and alternative and hence notice indicating the reasons for retrenchment
is not compulsory, when one month wages were paid prior to retrenchment.
Babaji Charan Swain v. Union of India & Ors., 1973 II LLJ 589 : 1974 (28) FLR 114 : 1973 I LLN 331 :
1973 LIC 742 (Ori.DB)
.The language.mandatory. (Page: 590, Para: 1)

ii) To be paid time of termination when employee was asked to leave forthwith
(S.C.3J)
F 5A.308 Workman was served with notice of termination on 15th November stating that their
services will be terminated from 17th November and in lieu of notice one month wages would be
paid and he was asked to collect the same on or after 20th November and it was held that u/s. 25F
when employer pays wages in lieu of notice he has to pay at the time when the employee is asked to
leave forthwith and not afterwards therefore in instant case as Sec. 25F was not complied
retrenchment was illegal or non-compliance of Sec. 25F.
M/s. National Iron & Steel Co. Ltd. & Ors. v. State of West Bengal & Anr., 1967 II LLJ 23 : 1966-67 (31)
FJR 425 : 1967 (14) FLR 356 : 1967 AIR (SC) 1206 (S.C.3J)
The third point raised by the Additional Solicitor General is also not one of substance. According to him,
retrenchment could only be struck down if it was mala fide or if it was shown that there was victimisation
of the workman etc. Learned counsel further argued that the Tribunal had gone wrong in holding that the
retrenchment was illegal as S. 25 F of the Industrial Disputes Act had not been complied with.The
notice in this case bears the date November 15, l958. It is to the effect that the addressees services were
terminated with effect from the 17th November and that he would get one months wages in lieu of notice
of termination of his service. The workman was further asked to collect his dues from the cash office on.
November 20, 1908 or thereafter during the working hours. Manifestly, S. 25 F, had not been complied
with under which it was incumbent on the employer to pay the workman, the wages for the period of the
notice in lien of the notice. That is to say, if he was asked to go forthwith he had to be paid at the time
when he was asked to go and could not be asked to collect his dues afterwards. As there was no
compliance with S. 25F, we need not consider the other points raised by the learned counsel.
(Page: 29, Para: 1)

iii) Worker held to be terminated on the date when wages paid in lieu of notice
(S.C.3J)
F 5A.309 If one months notice of termination is given then termination of service is effected on
the expiry of notice period but in case of termination made by payment of one month salary in lieu
of notice, his service will come to an end on the date on which his service is terminated. In the
instant case workman was terminated on 30th September 1953 with notice pay, it is not correct to
pay him compensation u/s. 25F as if the employee continued in service as has been done by Labour
Court since Sec. 25F had not come into operation when his services were terminated and it came
into force w.e.f. 24.10.1953 only hence the award of reinstatement made by Labour Court was set
aside since he was retrenched prier to coming into force of Sec. 25F.
Management of M/s. May & Baker India Ltd. v. Their Workmen, 1967 AIR (SC) 678 : 1961 II LLJ 94 :
1961-62 (20) FJR 147 : 1961 (2) FLR 594 (S.C.3J)
.Iqbal Singh who has been awarded retrenchment compensation as well as gratuity. So far as
retrenchment compensation is concerned, the tribunal has held that Iqbal Singh was entitled to
retrenchment compensation under S. 25-F of the Industrial Disputes Act. This view of the tribunal is in

2402

Chapter VA Lay-Off and Retrenchment

Sec. 25F

our opinion incorrect. Section 25-F came into force on October 24, 1953, while the services of Iqbal
Singh were terminated on September 30, 1953. He was informed that his service would be terminated
after September 30, 1953, and he was directed to take one months salary in lieu of notice, as he was
surplus. The tribunal was not right in holding that this meant that Iqbal Singh continued in service till
October 30, 1953, and was, therefore, entitled to the benefit of S. 25-F. This is a case where the services
were terminated from September 30, 1953, on payment of one months salary in lieu of notice. In such a
case the service comes to an end on the date from which it is terminated. The matter would be different if
one months notice had been given to Iqbal Singh and after that month his services had been terminated.
In that case he would be actually working for the month of notice and his services would have terminated
after the notice period. In the present case, however, he was not given one months notice; what was done
was that his services were terminated from September 30 and he was given one months pay in lieu of
notice. But, though the tribunal was wrong in holding that S. 25-F applied to Iqbal Singh, we see no
reason to interfere with the order allowing one months average pay as retrenchment compensation to
Iqbal Singh, for it is not disputed that industrial tribunals use of to give retrenchment compensation even
before S. 25-F was enacted and that Section merely standardised the practice which was generally
prevalent. In the circumstances, the order as to payment of one months average salary as retrenchment
compensation to Iqbal Singh must stand. (Page: 680, Para: 10)

5. Wages for one month does not always mean wages for 30 days and wages
for the month of February to be computed on the basis of 28 days but not 30
days (Bom.HC)
5A.310
In this case the employer in lieu of notice for the month of February made payment of
wages for 28 days. The employee submitted that retrenchment is illegal for want of wages of 30
days. The High Court held that when retrenchment had taken place on 30.1.1985 it would be the
duty of the employer to give notice on 30.1.1985 allowing the workman to work for the succeeding
month of February and to earn wages for 28 days and if holidays are not counted then for 24 days.
But in this case 28 days wages are paid in lieu of notice, hence, the company has paid wages of 4days
in excess. Therefore, it cannot be accepted that the company has violated Sec. 25F(a) of the Act.
Janata Mazdoor Union v. Tas Engineering Pvt. Ltd. & Ors., 2002 (95) FLR 739 : 2002 IV LLN 772 :
2002 LIC 2873 : 2003 LLR (Sum) 107 (Bom.HC)

e) The condition of Retrenchment Compensation as per clause (b)

1. Attributes
i) Compliance of Clause (b) mandatory since retrenchment means ending,
concluding and cessation of employment and failure to pay renders
retrenchment illegal (S.C.3J)
F 5A.311 The term retrenchment is no longer terra incognita but definitionally very expansive
to bring in its fold the ending, concluding and cessation of employment and merely because the date
of termination was read into the order of appointment, the employer cannot heave a sigh of relief
from the grip of Sec. 25F(b) and hence it can be said that employment of the temporary workmen
appointed between July 4, 1970 to Nov. 18, 1972 ceased, concluded, ended automatically may be
but cessation all the time on the expiry of time as stipulated in the appointment letter and since in
this case the employee had complied with Sec. 25B also, the stipulation in the order cannot prevent
him from swimming ashore to the safety of Sec. 25F.
The State Bank of India v. Shri N. Sundara Money, 1976 I LLJ 478 : 1976 (49) FJR 78 : 1976 (32) FLR
197 : 1976 II LLN 5 : 1976 LIC 769 : 1976 SCC (L&S) 132 : 1976 AIR (SC) 1111 : 1976 (1) SCC 822
(S.C.3J)
Without further ado, we reach the conclusion that if the workman swims into the harbour of Sec. 25F, he
cannot be retrenched without payment, at the time of retrenchment, compensation computed as
prescribed therein read with Section 25B (2). (Page: 481, Para: 9)

Sec. 25F

Conditions precedent to retrenchment

2403

.Without speculating on possibilities, we may agree that retrenchment is no longer terra

incognita but area covered by an expansive definition. It means to end, conclude, cease. In the present
case the employment ceased, concluded, ended on the expiration of nine days - automatically may be, but
cessation all the same. That to write into the order of appointment the date of termination confers no
moksha from Sec. 25F(b) is inferable from the proviso to Section 25F (1) (sic) (Section 25F (a) ?). 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. (Page: 482, Para: 10)
F 5A.312 Words used in Sec. 25F(b) are mandatory and hence retrenchment effected without
complying with its provision will be invalid, void and inoperative.
State of Bombay & Ors. v. Hospital Mazdoor Sabha & Ors., 1960 I LLJ 251 : 1959-60 (17) FJR 423 :
1960 AIR (SC) 610 (S.C.3J)
.Having regard to the fact that the words used in S. 25F (b) are mandatory and their effect is plain
and unambiguous.we see no substance in the arguments that the Court of Appeal has
misconstrued Sec. 25F(b). That being so, failure to comply with the said provision render the impugned
orders invalid and inoperative. (Page: 255, Para: 1)
F 5A.313 Retrenchment without complying with the requirement of payment of compensation
in terms of Clause (b) and also in violation of Rule 77-A of the West Bengal Industrial Dispute
Rules regarding maintaining seniority list of employees was held illegal since the compliance of
Clause (b) is mandatory hence the order of the Division Bench upholding the retrenchment was set
aside while restoring that of the Single Judge upholding the award of the Tribunal declaring the
retrenchment as illegal.
Krishna Bahadur v. Purna Theatre & Ors., 2004 LLR 969 : 2004 III LLJ 555 : 2004 (103) FLR 146 :
2004 LIC 3466 : 2004 III CLR 563 : 2004 SCC (L&S) 1086 : 2004 AIR (SC) 4282 : 2004 (8) SCC 229
(S.C.2J)
.The appellant herein was appointed in the post of Messenger-cum-Bearer in the establishment
of the respondent herein, a Cinema House.He was, however, retrenched from services within one
month from his joining i.e. May 30, 1991. A sum of Rs. 9,030 was paid as retrenchment compensation
which the appellant is said to have received under protest. A trade union known as Bengal Motion
Pictures Employees Union took up the cause of the appellant, inter alia, on the ground of contravention of
the legal requirements as contained in Section 25-G of the Industrial Disputes Act, 1947 as also
insufficiency of the amount of compensation paid to the appellant in terms of Section 25-F(b)
thereof.the appellant had also initiated a proceeding under Section 33-C(2) of the Industrial
Disputes Act, 1947 which ended in an amicable settlement in terms whereof the appellant allegedly
agreed to receive a sum of Rs. 39,000 as full and final settlement. He had accepted a cheque for the
aforementioned sum of Rs. 9,030 issued by the management allegedly as part payment of his
compensation of Rs. 39,000 which was deducted from the aforementioned settled amount of Rs. 39,000.
The Industrial Tribunal by its order dated December 28, 1995 held. (Page: 970, Para: 2)
A writ petition was filed by the respondent.The said writ petition was dismissed by a learned
single Judge. (Page: 970, Para: 3)
The respondent herein referred an appeal there against before a Division Bench of the Calcutta High
Court which was marked as Appeal No. 434 of 1996. A plea as regard substantial compliance of the
requirements of law on the part of the workman was raised for the first time. Accepting the said plea, the
Division Bench by reason of the impugned judgment allowed the appeal. (Page: 970, Para: 4)
The requirement to comply with the provision of Section 25-F(b) has been held to be mandatory before
retrenchment of a workman is given effect to. In the event of any contravention of the said mandatory
requirement, the retrenchment would be rendered void ab initio. (Page: 972, Para: 16)
We may furthermore notice that the learned Industrial Tribunal interfered with the retrenchment of the
appellant not only on the ground of non-compliance of the provisions of Section 25-F(b) of the Industrial
Disputes Act but also on the ground of contravention of Rule 77-A of the West Bengal Industrial Disputes
Rules, stating.

2404

Chapter VA Lay-Off and Retrenchment

Sec. 25F

.When there is such a controversy and when no such list was maintained by the company
although maintaining of such list can be said to be a compulsory compliance of the rules framed under the
Industrial Disputes Act on the part of the Company (vide Rule 77-A of the West Bengal Industrial
Disputes Rules) it must be held that the retrenchment was illegal. (Page: 972, Para: 16)
For the reasons aforementioned, the impugned judgment of the Division Bench cannot be upheld. It is
set aside accordingly and the judgment of the learned single Judge upholding the award passed by the
Industrial Tribunal is restored. (Page: 973, Para: 18)

ii) Payment of dues was a condition precedent (Raj.DB)

5A.314
In case of retrenchment, payment of compensation is condition precedent whereas in
case of closure it is not a condition precedent but can be made after closure.
Rajasthan Small Scale Industries Employees union v. State of Rajasthan & Ors., 1993 III LLJ 361 : 1990
(61) FLR 157 : 1990 II LLN 888 : 1990 LIC 1668 : 1990 II CLR 485 (Raj.DB)
There is.the closure. (Page: 366, Para: 22)
Note: Also refer to the following case in the above contexts
R.D. Pillay v. Indian Dyestuff Industries Ltd., 1993 III LLJ (Sum) 671 : 1992 (65) FLR 977 : 1992 I CLR
1005 : 1992 LLR 636 (Bom.HC)
Management of Sri Krishna Talkies, Madras v. P.O. Labour Court, Madras, & Anr., 1971 (40) FJR 250 :
1972 LLN 470 : 1972 LIC 1595 (Mad.HC)
Blackwoods India Ltd. v. First Labour Court, West Bengal & Ors., 1961 II LLJ 552 (Cal.HC)

iii) Similar payment on closure does not bring closure within ambit of
retrenchment (S.C.CB)
F 5A.315 Mere payment of compensation on closure as per Sec. 25F does not bring closure
within the purview of retrenchment since it is awarded as an equitable relief adopting the simple
yardstick of length of service to standardize the amount of compensation.
Hariprasad Shivshankar Shukla & Anr. v. A. D. Divelkar & Anr., AND Barsi Light Railway Co. Ltd. v. K.
N. Joglekar & Anr., 1957 I LLJ 243 : 1956-57 (11) FJR 317 :1957 AIR (SC) 121 (S.C.CB)
.Retrenchment means discharge of surplus workmen in an existing or continuing business; it had
acquired no special meaning so as to include discharge of workmen on bona fide closure of business,
though a number of Labour Appellate Tribunals awarded compensation to workmen on closure of
business as an equitable relief for a variety of reasons. It is reasonable to assume that in enacting S. 25-F,
the legislature standardised the payment of compensation to workmen retrenched in the normal or
ordinary sense in an existing or continuing industry; the legislature did away with the perplexing variety
of factors for determining the appropriate relief in such cases and adopted a simple yard stick of the length
of service of the retrenched workmen. If the intention of the legislature was to given statutory effect to
those decisions which awarded compensation on real and bona fide closure of business, the legislature
would have said so instead of being content by merely adding a definition clause, every requirement of
which is fulfilled by the ordinary, accepted meaning of the word retrenchment. (Page: 250, Para: 1)

iv) Gratuity is not substitute for retrenchment compensation since the objects
of both are different (S.C.3J)
F 5A.316 Since the object of granting gratuity is different from granting retrenchment
compensation and as claims for both the benefits are for entirely different reasons, there is no
conflict between the two and hence grant of one will not exclude the claim for grant of another and
the fact that they appear to constitute double benefit is immaterial.
Indian Hume Pipe Co. Ltd. v. Its workmen & Anr., 1959 II LLJ 830 : 1959-60 (17) FJR 273 : 1960 AIR
(SC) 251 (S.C.3J)

Sec. 25F

Conditions precedent to retrenchment

2405

.In fact the whole object of granting retrenchment compensation is to enable the workman to
keep his gratuity safe and unused so that it may be available to him after his retirement. Thus the object of
granting retrenchment compensation to the employee is very different from the object which gratuity is
intended to serve. That is why on principle the two schemes are not at all irreconcilable nor even
inconsistent; they really complement each other; and so, on considerations of social justice there is no
reason why both the claims should not be treated as legitimate. The fact that they appear to constitute a
double benefit does not affect their validity. (Page: 833, Para: 2)
.The claims for retrenchment compensation and gratuity proceed on different considerations and
it would be impossible to hold that the grant of one excludes the claim or grant of the other.
(Page: 835, Para: 2)
5A.317
Gratuity is a kind of retirement benefit like provident fund or pension and is intended
to help workmen after retirement, whether the retirement is the result of rules of superannuation
or physical disability. On the other hand, retrenchment compensation is a compensation paid to a
workman who has suddenly and without his fault to face unemployment on account of
retrenchment. The concept of retrenchment compensation is essentially different from gratuity.
They do not overlap but are really complementary and there is no reason why workmen should not
be entitled to the benefits. Therefore, merely because certain workmen are entitled to the benefit of
gratuity under their service regulation, it cannot be contended that they should not be entitled to
retrenchment compensation as provided in Sec. 25F of the Industrial Disputes Act, 1947.
M. Venkata Buchi Babu & Ors. v. Chief Engineer, Nagarjuna Sagar Dam & Anr., 1972 (41) FJR 602 :
1972 LLN 158 : 1972 LIC 383 (AP.HC)

v) Retrenchment compensation need not be paid again u/s. 25F(b) when the
same is paid in the name of gratuity under the scheme of the company
(S.C.3J)
F 5A.318 Where the company has already provided a scheme of compensation by name
gratuity to the retrenched employees, it is held that merely because of introduction of Sec. 25F
under Chapter V-A, the employees are not supposed to get the compensation once again and what
Sec. 25J has prescribed is a mere advantageous benefit either under the Act or by the companys
own gratuitous gesture and not both.
M/s. The Brahmachari Research Institute, Calcutta v. Their workmen, 1959 II LLJ 840 : 1959-60 (17)
FJR 282 : 1960 AIR (SC) 257 (S.C.3J)
It will be seen that the Award is a composite scheme providing for what is termed gratuity therein under
three conditions, namely, (I) where there is retrenchment, (ii) where there is termination of service for any
reason other than misconduct, and (iii) where there is resignation with the consent of the management.
Though the word gratuity has been used to cover all these three cases, it is clear that cases of
retrenchment as such are also covered by the Award and payment to workmen retrenched has been called
gratuity. The name given to the payment is, however, not material and it is the nature of the payment
that has to be looked into.on a fair and reasonable construction of the Award, what the retrenched
workman got is only compensation for retrenchment and not any amount by way of gratuity properly so
called. (Page: 842, Para: 3)
.it must be held that gratuity provided therein on retrenchment is nothing more nor less than
retrenchment compensation provided under S. 25F of the Act, and the workmen are only entitled to one or
the other, whichever is more advantageous to them in view of S. 25J.We therefore allow the
appeal, set aside, the decision of the Appellate Tribunal and restore that of the Industrial Tribunal in this
matter. (Page: 844, Para: 1)

2406

Chapter VA Lay-Off and Retrenchment

Sec. 25F

vi) Compensation to be offered at the time of termination but not subsequent

to it (Del.HC)
5A.319
Workman received the retrenchment compensation on 2nd April 1973 whereas he
was intimated that he would be retrenched from service with effect from 1st April 1973. In this
context it cannot be said that compensation was offered at the time of retrenchment.
Kanti Weekly v. D.D. Gupta & Ors., 1983 I LLN 771 (Del.HC)
.In their notice.1st April 1973.This clearly shows.1st April 1973.
Assuming that.of the statute. (Page: 775, Para: 13)
Note: Also refer to the following case/s
Naren Mahato & Ors. v. South Eastern Railway, Kharapur & Ors., 1985 II LLN 894 : 1985 LIC 1516
(Cal.HC)
Rajasthan State Road Transport Corporation & Anr. v. Industrial Tribunal, Rajasthan, Jaipur & Anr.,
1985 LIC 480 (Raj.HC)
Shambhu Dayal v. Rajasthan State Road Transport Corpn., 1988 II FLR 272
Note: Also refer to the case of Joginder Kumar Gautam & Anr. v. State Bank of India & Ors., 2003 II LLJ
401 : 2003 LIC 503 (HP.DB) for different view

vii) Defect of non payment of retrenchment compensation cannot be cured by

employers subsequent offer of any sum in full and final settlement
(AP.HC)
5A.320
It is well settled principle that 3 conditions u/s. 25F are necessary preconditions for
retrenchment and non-compliance of the same will render retrenchment invalid ab initio.
Therefore, it cannot be cured by employers subsequent offer for any sum in full and final
settlement nor can it disentitle the workman from challenging the order of retrenchment on the
ground of non-compliance of statutory requirements. Thus a workman can challenge the validity
of retrenchment during conciliation proceedings and even after receiving retrenchment
compensation subsequently.
Management of Oasis School, Hyderabad v. Labour Court, Himayatnagar, Hyderabad & Ors., 1992 I
LLJ 210 : 1991 (78) FJR 314 : 1991 LIC 428 : 1990 II LLN 954 : 1990 II CLR 506 (AP.HC)

viii) Compensation to be paid either before or at the time of retrenchment

(P&H.HC)
5A.321
The amount payable u/s. 25F of the Industrial Disputes Act has to be paid at the time
of retrenchment. Mere intimation to workman that he should collect his dues from office on any
working day is not enough compliance of provisions of Sec. 25F(a) and 25F(b) of the Act.
Roop Narain Shukla v. P.O. Industrial Tribunal, Haryana & Ors., 1998 I LLJ 186 : 1998 (93) FJR 92 :
1998 (80) FLR (Sum) 18 : 1997 (77) FLR 321 : 1997 III LLN 669 : 1997 II CLR 279 : 1997 LLR 924
(P&H.HC)
5A.322
Retrenchment compensation was not paid before retrenchment or at the time of
retrenchment. Therefore, termination was set aside and reinstatement ordered.
Lakshmi Pandit v. Industrial Tribunal, Faridabad & Ors., 1993 III LLJ (Sum) 133 : 1992 I LLN 212 :
1992 I CLR 571 : 1992 LLR 291 / 429 (P&H.HC)
Note: refer to the case of Joginder Kumar Gautam & Anr. v. State Bank of India & Ors., 2003 II LLJ 401 :
2003 LIC 503 (HP.DB) for different view

Sec. 25F

Conditions precedent to retrenchment

2407

ix) Compensation not required to be paid simultaneously with the notice

(HP.DB)
5A.323

Retrenchment compensation not required to be paid simultaneously with the notice.

Joginder Kumar Gautam & Anr. v. State Bank of India & Ors., 2003 LIC 503 : 2003 II LLJ 401 (HP.DB)
Learned.of the Act. (Page: 507, Para: 21)

x) Payable even in case of termination on ground of loss of confidence

(Bom.DB)
5A.324
Retrenchment compensation is payable even in case of termination on ground of loss
of confidence but as the workmen did not visit employer to collect the final dues which includes
retrenchment compensation, termination for loss of confidence was held not to be suffering from
any infirmity.
Srinarayan Mevalal Gupta v. Padamjee Pulp & Paper Mills, Ltd., & Ors., 1991 I LLN 479 (Bom.DB)
The Labour.and proper. (Page: 482, Para: 9)
Note: Refer to the recent case of Hotel Horizon Pvt. Ltd. v. Bhartiya Kamgar Karmachari Mahasangh &
Anr., 2002 I LLJ 186 : 2001 III LLN 1003 (Bom.HC) for different view in this section (Given below)

xi) Retrenchment compensation cannot be set off against gratuity since the
two benefits arise under two different laws (Mad.DB)
5A.325
Retrenchment compensation due to a workman cannot be set off against gratuity
payable as the entitlement to the two benefits arise on satisfaction of requirements under two
different laws and hence cannot be destructive of each other.
K. Subba Rao v. Deputy Dommissioner of Labour & Anr., 1998 II LLN 914 : 1998 (92) FJR 174 : 1998
(79) FLR 64 (Mad.DB)
Retrenchment.Payment of Gratuity Act. (Page: 917, Para: 6)

xii) Not payable in case of simple discharge for loss of confidence (Bom.HC)
5A.326
Workman was discharged without any enquiry as he failed to give explanation about
the money, which he had with him during duty hours. On reference, Labour Court awarded Rs.
1,50,000 in lieu of reinstatement as no enquiry was held nor the employee was charge sheeted.
Before High Court it was contended by the employer that the workman failed to show any reason
for such amount with him. High Court set aside the award of Labour Court on the ground that the
charge was admitted by workman and employer proved the charge before Labour Court and it
was also held that where the employer discharged the workman for loss of confidence, it would be a
case of simple discharge and employer was only required to justify the termination before Labour
Court and compliance of Sec. 25F was not required.
Hotel Horizon Pvt. Ltd. v. Bhartiya Kamgar Karmachari Mahasangh & Anr., 2002 I LLJ 186 : 2001 III
LLN 1003 (Bom.HC)

xiii) Retrenchment compensation is allowable deduction as business

expenditure as per Income Tax Act (Ori.DB)
5A.327
Retrenchment compensation is allowable deduction as business expenditure as per
Income Tax Act.
Commissioner of Income-Tax v. J.C. Budharaj & Co., 1994 I LLJ 589 : 1993 (83) FJR 595 (Ori.DB)

2408

Chapter VA Lay-Off and Retrenchment

The
determinative
factor
is.37(1).Payment
far.actual payment. (Page: 591, Para: 5)

Sec. 25F
of.liability.So

xiv) Retrenchment compensation being not an expenditure cannot be debited

to profit and loss A/c (S.C.3J)
F 5A.328 Retrenchment compensation payable due to transfer of business being a liability
having not arisen during the whole period of business does not fall within expression expenditure
and cannot be debited in Profit and Loss Account as a revenue item in determination of profits
under the Income Tax Act.
Commissioner of Income-tax, Kerala v. Gemini Cashew Sales Corporation Quilon, 1967 AIR (SC) 1559
(S.C.3J)
As already observed, the liability to pay retrenchment compensation arose for the first time after the
closure of the business and not before. It arose not in the carrying on of the business, but on account of the
transfer of the business. During the entire period that the business, was continuing, there was on liability
to pay retrenchment compensation. The liability which arose on transfer of the business was not of a
revenue nature. Profits of a business involve comparison between the state of the business at two specific
dates. Normally the liability which occurs after the last date, unless its source is in a pre-existing definite
obligation, cannot be regarded as a part of the outgoing of the business debitable in the profit and loss
account. A deduction which is proper and necessary for ascertaining the balance of profits and gains of
the business is undoubtedly properly allowable, but where a liability to make a payment arises not in the
course of the business, not for the purpose of carrying on the business, but springs from the transfer of the
business, it is not, in our judgment, a properly debitable item in its profit and loss account as a revenue
outgoing. The claim of the firm to treat it as an item in the determination of the profits of the firm under
S. 10(1) of the Income-tax Act cannot, therefore be sustained. (Page: 1563, Para: 11)
Under S. 10(2)(xv) of the Indian Income-tax Act in the computation of taxable profits (omitting parts of
the clause not material) any expenditure laid out or expended wholly and exclusively for the purpose of
such business, profession or vocation, i.e. business, profession or vocation carried on by the assessee, is
a permissible allowance. But to be a permissible allowance the expenditure must be for the purpose of
carrying on the business. Where accounts are maintained on the mercantile system, if liability to make the
payment has arisen during the time the business is carried on, it may appropriately be regarded as
expenditure. But where the liability is, during the whole of the period that the business is carried on,
wholly contingent and does not raise any definite obligation during the time that the business is carried
on, it cannot fall within the expression expenditure laid out or expended wholly and exclusively for the
purpose of the business. (Page: 1563, Para: 12)

xv) Recovery of loan amount from the legal dues such as retrenchment
compensation permissible (Bom.HC)
5A.329
There is no illegality in recovering the loan amount given to workman by deducting
the same from legal dues at the time of his retrenchment.
Engineering & Ancilliary Manufacturers v. Salim Khan., 2004 (102) FLR 194 : 2003 IV LLN 261 : 2004
II CLR 309 : 2004 LLR 685 (Bom.HC)

xvi) There cannot be settlement for lesser amount of compensation than that
provided under Industrial Disputes Act (Guj.HC)
5A.330
Retrenchment compensation cannot be a contracted for lesser amount between union
and employer than provided under the statute. It has to be worked as per the provisions of
Industrial Dispute Act.
Petlad Bulakhidas Mill Company Ltd., Petlad, Petitioner v. Ramabhai Bhikhabhai, Respondent, 1995 II
LLJ 1240 : 1995 (87) FJR 158 : 1995 II LLN 219 :1995 LIC 675 : 1995 II CLR 494 : 1995 LLR 1069
(Guj.HC)

Sec. 25F

Conditions precedent to retrenchment

2409

xvii) Additional compensation of one months wages granted can be ordered by

Court if retrenchment justified (Cal.HC)
5A.331
Retrenchment of certain workmen effected without complying requirements of Sec.
25F, the matter was referred for adjudication. Industrial Tribunal on finding that the
retrenchment was justified directed additional payment of 1 months wages to the concerned
workmen. Such order was held to be valid and justified. The concerned workmen were not
estopped from receiving such payment as estoppel cannot be applied against retrenched workmen
who had no freedom to refuse payment.
B.N. Elias & Co. Pvt. Ltd. v. Fifth Industrial Tribunal, West Bengal & Ors., 1965 II LLJ 324 : 1961 II LLJ
14 : 1965-66 (28) FJR 257 (Cal.HC)

xviii) Retrenchment compensation cannot be claimed from parent company

once services transferred to subsidiary company with workmans consent
(S.C.3J)
F 5A.332 In instant case services of an employee were placed in subsidiary company with his
consent and he later got confirmed therein subsequently his services were terminated after
payment of retrenchment compensation by subsidiary company, Supreme Court held that his
services with parent company came to an end on his confirmation by subsidiary company and he
cannot claim reinstatement or retrenchment compensation from parent company.
Sindhu Resettlement Corporation, Ltd. v. Industrial Tribunal, Gujarat, & Ors., 1968 I LLJ 834 : 1968
(16) FLR 307 : 1968 LIC 526 : 1967-68 (33) FJR 332 : 1968 AIR (SC) 529 (S.C.3J)
.though respondent No.3 did not cease to he an employee of the appellant when his services were
placed at the disposal of Sindhu Hotchief by the appellant with effect from 18th September, 1953, he
ceased to be an employee of the appellant later when he was confirmed in Sindhu Hotchief.at the
time of termination of the, employment of respondent No. 3 in Sindhu Hotchief, he was given
retrenchment compensation which he accepted. In case he had continued to be in the service of the
appellant, he would not have been entitled to retrenchment compensation from Sindhu
Hotchief.he took the service in Sindhu Hotchief and accepted permanent appointment there
willingly, it cannot be held that his services were retrenched by the appellant Corporation.it is
clear that the Tribunal committed an error in drawing the legal inference that respondent No. 3 continued
to be in the service of the appellant Corporation even after he had received permanent appointment in
Sindhu Hotchief. On a correct inference, it is clear that the services of respondent No. 3 under the
appellant Corporation had come to an end and, when he was retrenched by Sindhu Hotchief, he could not
claim reinstatement in the appellant Corporation. (Page: 837/838, Para: 1)

f) Payment / Acceptance of compensation effect on the rights of workman

1. Does not bar industrial dispute
i) Acceptance of compensation is not a bar casual worker to raise a dispute on
illegal termination (S.C.2J)
F 5A.333 Acceptance of retrenchment compensation will not bar the casual worker to raise a
dispute regarding reinstatement in respect of illegal termination.
Nar Singh Pal v. Union of India & Anr., 2000 I LLJ 1388 : 2000 (96) FJR 502 : 2000 (85) FLR 458 : 2000
II LLN 407 : 2000 LIC 1377 : 2000 SCC (L&S) 362 : 2000 AIR (SC) 1401 : 2000 (3) SCC 588 (S.C.2J)
.They intended to say that once retrenchment compensation was accepted by the appellant, the
chapter stands closed and it is no longer open to the appellant to challenge his retrenchment. Thus, we are
constrained to observe, was wholly erroneous and was not the correct approach. The appellant was a
casual labour who had attained the temporary status after having put in ten years of service. Like any
other employee, he had to sustain himself, or may be, his family members on the wages he got. On the

2410

Chapter VA Lay-Off and Retrenchment

Sec. 25F

termination of his services, there was no hope left for payment of salary in future. The retrenchment
compensation paid to him, which was only a meagre amount of Rs. 6,350/- was utilised by him to sustain
himself. This does not mean that he had surrendered all his constitutional rights in favour of the
respondents. Fundamental Rights under the Constitution cannot be bartered away. They cannot be
compromised nor can there be any estoppel against the exercise of Fundamental Rights available under
the Constitution. As pointed out earlier, the termination of the appellant from service was punitive in
nature and was in violation of the principles of natural justice and his constitutional rights. Such an order
cannot be sustained. (Page: 1392, Para: 13)

ii) Acceptance and utilisation of retrenchment compensation does not take

away rights of Union Government employees against termination which is
punitive in nature (S.C.2J)
F 5A.334 The acceptance and utilisation of retrenchment compensation paid as per the Act
cannot take away the fundamental right available under the Constitution to temporary employees
in service under Union of India against his dismissal in violation of Principles of Natural Justice.
Nar Singh Pal v. Union of India & Anr., 2000 I LLJ 1388 : 2000 (96) FJR 502 : 2000 (85) FLR 458 : 2000
II LLN 407 : 2000 LIC 1377 : 2000 SCC (L&S) 362 : 2000 AIR (SC) 1401 : 2000 (3) SCC 588 (S.C.2J)
.They intended to say that once retrenchment compensation was accepted by the appellant, the
chapter stands closed and it is no longer open to the appellant to challenge his retrenchment. Thus, we are
constrained to observe, was wholly erroneous and was not the correct approach. The appellant was a
casual labour who had attained the temporary status after having put in ten years of service. Like any
other employee, he had to sustain himself, or may be, his family members on the wages he got. On the
termination of his services, there was no hope left for payment of salary in future. The retrenchment
compensation paid to him, which was only a meagre amount of Rs. 6,350 was utilised by him to sustain
himself. This does not mean that he had surrendered all his constitutional rights in favour of the
respondents. Fundamental Rights under the Constitution cannot be bartered away. They cannot be
compromised nor can there be any estoppel against the exercise of Fundamental Rights available under
the Constitution. As pointed out earlier, the termination of the appellant from service was punitive in
nature and was in violation of the principles of natural justice and his constitutional rights. Such an order
cannot be sustained. (Page: 1392, Para: 13)

2. Does not bar re-employment

i) Payment of compensation is not a bar to re-employment of retrenched
workmen on subsequent nationalisation of colliery (S.C.2J)
F 5A.335 Since workmen were retrenched before the nationalisation of colliery and were paid
compensation u/s. 25F and not u/s. 25FF, the plea of employer that their re-employment would
result in double benefit in the form of payment of compensation and immediate re-employment
was held as not maintainable.
Workmen (represented by Akhil Bhartiya Koyla Kamgar Union) v. Employers in relation to Management
of Industry colliery of Bharat Coking Coal, Ltd. & Ors., 2001 AIR (SC) 1994 : 2001 I LLJ 1400 : 2001
(98) FJR 652 : 2001 (89) FLR 552 : 2001 II CLR 1 : 2001 II LLN 819 : 2001 LIC 1397 : 2001 SCC (L&S)
641 : 2001 SCC (4) 55 (S.C.2J)
Shri Sinha submitted that as soon as transfer has been effected under Section 25-FF of the Act all the
employees became entitled to claim compensation and thus who had been paid such compensation will
not be entitled to claim re-employment under Section 25-H of the Act as the same would result in double
benefit in the form of payment of compensation and immediate re-employment and, therefore, fair justice
means that such workmen will not be entitled to such conferment of double benefit. It is no doubt true that
this argument sounds good, but there has been no retrenchment as contemplated under Section 25-FF of
the Act in the present case. The workmen in question have been retrenched long before the colliery was
taken over by the respondents.The workmen had been paid compensation only under Section
25-F and not under Section 25-FF of the Act of transfer of the colliery to the present management. That

Sec. 25F

Conditions precedent to retrenchment

2411

case has not been pleaded or established. Hence, we do not think that the line upon which the High Court
has proceeded is correct. The order made by the High Court deserves to be set aside and the award made
by the Tribunal will have to be restored. (Page: 1997, Para: 9)

3. Employer cannot adduce evidence in the absence of averment that

sufficient amount was offered (Bom.DB)
5A.336
Where union specifically pleaded non-compliance of Sec. 25F(b) in statement of claim
and Management in its reply failed to make an averment that requisite amount was offered, it was
held that management cannot subsequently adduce evidence in this behalf before Tribunal.
Calama Industries Pvt. Ltd. v. Industrial Tribunal, Maharashtra, B.B. Tambe., & Ors., 1981 (42) FLR 50
: 1981 II LLN 255 (Bom.DB)
As held by.before the Tribunal. (Page: 52, Para: 6)

g) Computation of retrenchment compensation

1. Number of working days what should be to arrive at one day wage
i) To be computed on the basis of 30 working days instead of 26 working days
in a month in terms of Sec. 2(aaa) of the Industrial Disputes Act (S.C.2J)
F 5A.337 The question of computation of retrenchment compensation u/s. 25F(b) was the bone
of contention in which case the Labour Court and High Court had held that as the compensation
paid was short by virtue of not applying the method of computation of wages as prescribed u/s. 4(2)
of The Payment of Gratuity Act which adopts the principle of twenty six working days instead of
30 working days in a month for the purposes of computation, the retrenchment of the employee
was illegal in violation of Sec. 25F(b) of the Act. The Supreme Court setting the record straight had
held that the provisions of Sec. 4(2) of Gratuity Act do not apply while computing retrenchment
compensation under the provision of Sec. 25F(b) of the Act. The Apex Court held that the word
average pay occurring herein has been defined in Sec. 2(aaa) of the Act where the legislature has
not thought it necessary to bring in the concept of dividing monthly wages by 26 days for
determining the average pay unlike in Payment of Gratuity Act. Therefore by applying the plain
and ordinary meaning, the compensation paid in terms of Sec. 2(aaa) of the Act being legitimate,
there is no illegality and therefore the order of Courts below were set aside.
Guru Jambeshwar University, Hisar v. Dharam Pal, 2007 I LLJ 1006 : 2007 (112) FLR 880 : 2007 I LLN
740 : 2007 LIC 956 : 2007 I CLR 931 : 2007 LLR 297 : 2007 (1) SCC (L&S) 792 : 2007 AIR (SC) 1040 :
2007 (2) SCC 265 : 2007 (3) Mah.LJ 63 : 2007 SCCL.COM 59 (S.C.2J)
The language used in Section 2(aaa) is absolutely plain and clear and there is not the slightest ambiguity
in the same. It is well settled principle that the words of a Statute are first understood in their natural,
ordinary or popular sense and phrases and sentences are construed according to their grammatical
meaning, unless that leads to some absurdity or there is something in the context or in the object of the
statute to suggest to the contrary. The true way is to take the words as the legislature have given them, and
to take the meaning which the words given naturally imply, unless where the construction of those words
is, either by the preamble or by the context of the words in question, controlled or altered. As is often said
the golden rule is that the words of a statute must prima facie be given their ordinary meaning and natural
and ordinary meaning of the words should not be departed from unless it can be shown that the legal
context in which the words are used requires a different meaning. (Page: 1010/1111, Para: 9)
.The respondent was being paid wages amounting to Rs. 1642 per month in immediately three
preceding months before his retrenchment. Therefore, the average pay in accordance with Section
2(aaa)(i) would come to Rs. 1642. The respondent had worked for two years and one month and,
therefore, he was entitled to thirty (15x2) days of average pay by way of retrenchment compensation in
order to comply with requirement of Section 25F(b) of the Act. The average pay of the respondent
being Rs. 1642 per month and he being entitled to 30 days average pay by way of retrenchment

2412

Chapter VA Lay-Off and Retrenchment

Sec. 25F

compensation, he was required to be paid Rs. 1642 as retrenchment compensation. The University gave
him a cheque for Rs. 1642/- at the time of his retrenchment and, therefore, there was full compliance of
Section 25F(b) of the Act. (Page: 1010, Para: 10)
.Therefore, there is no warrant or justification for importing the principle of 26 working days for
determining the compensation which is payable in terms of Section 25F(b) of the Act.
(Page: 1012, Para: 13)
There is another important feature which deserves notice. Subsequent to the decision of this Court in
Jeevanlal (supra) an explanation has been added after second proviso to Section 4(2) of the Payment of
Gratuity Act, by Act No. 22 of 1987, which reads as under:Explanation:- In the case of a monthly rated employee, the fifteen days wages shall be calculated by
dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by
fifteen.
By adding the explanation, the legislature has brought the statute in line with the principle laid down in
the case of Jeevanlal (supra) and has given statutory recognition to the principle evolved, viz. that in case
of monthly rated employee the fifteen days wages shall be calculated by dividing the monthly rate of
wages by twenty six and multiplying the quotient by fifteen. But, no such amendment has been made in
the Industrial Disputes Act. If the legislature wanted that for the purposes of Section 25F(b) also the
average pay had to be determined by dividing the monthly wages by twenty-six, a similar amendment
could have been made. But the legislature has chosen not to do so. This is an additional reason for holding
that the principle of twenty-six working days is not to be applied for determining the retrenchment
compensation under Section 25F(b) of the Act. (Page: 1012/1013, Para: 14)
5A.338
For assessing retrenchment compensation, average monthly wages divided by 30
instead of by 26 and multiplied by 15 but for assessing 15 days wages, monthly wages need not be
divided by 26.
Parrys (Cal) Employees Union & Anr. v. Third Industrial Tribunal, West Bengal & Ors., 2001 II LLJ 39
: 2001 (89) FLR 192 : 2001 LLR 462 : 2001 II LLN 743 : 2001 I CLR 777 (Cal.HC)
Note: The following cases are based on computation of compensation on the basis of 26 days. The issue is
now settled by Apex Court in
Guru Jambeshwar University, Hisar v. Dharam Pal, 2007 I LLJ 1006 : 2007 (112) FLR 880 : 2007 I LLN
740 : 2007 LIC 956 : 2007 I CLR 931 : 2007 LLR 297 : 2007 (1) SCC (L&S) 792 : 2007 AIR (SC) 1040 :
2007 (2) SCC 265 : 2007 (3) Mah.LJ 63 : 2007 SCCL.COM 59 (S.C.2J)

ii) In the case of wages paid per working day the computation shall be as per
provisions of Sec. 2(aaa)(iii) on the basis of 26 days (Mad.HC)
5A.339
Where wages are fixed per working day, retrenchment should be calculated by
applying provisions of Sec. 2(aaa)(iii) of the Act, and such workman held entitled to 26 days wages
by way of notice pay u/s. 25F(a) of the Act and not for 30 days wages.
K. Palaniswami v. India Hume Pipe Company, Ltd., & Ors., 1965 II LLJ 541 (Mad.HC)

iii) A month is to be taken as 26 days for calculating one day wages (Pat.DB)
5A.340
In accordance with the industrial law applicable to mines, a month is calculated on a
26 day basis and so leave salary and retrenchment compensation is to be calculated on this basis.
The award of the Labour Court allowing the claims of the workman is not assailable.
M/s. Khas Joyrampur Colliery Co. Pvt. Ltd. v. Kailash Nath Shrivastava & Anr., 1969 LIC 1166
(Pat.DB)
Lastly I take.also not assailable. (Page: 1171, Para: 21)

Sec. 25F

Conditions precedent to retrenchment

2413

Note: Refer to Jeewanlal (1929) Ltd. etc v. Appellate Authority, Payment of Gratuity Act & Ors. etc.,
1984 AIR (SC) 1842 : 1984 (4) SCC 356 : 1984 II LLJ 464 (S.C.3J)

iv) Retrenchment compensation was to be computed on the basis of 26

working days (Bom.DB)
5A.341
The employer calculated retrenchment compensation with divider of 30 instead of 26.
Therefore, Tribunal directed reinstatement of the workman for short payment. Single Judge
dismissed the application filed by employer. Division Bench held that the award by Tribunal was
justified but in view of the closure of establishment granted compensation instead of reinstatement.
DBH International Ltd. V. Their Workmen, rep. By Transport and Dock Workers Union and Anr., 2005
III LLJ 434 : 2005 (106) FLR 735 : 2005 III LLN 414 2005 II CLR 679 (Bom.DB)
5A.342
Whether retrenchment compensation payable u/s. 25F(b) was to be computed on the
basis of 30 days a calendar month or 26 working days was the question. As the worker works only
for 26 days retrenchment compensation should be computed on the basis of workmans monthly
wages for 26 working days, moreover 15 days average pay has to be calculated on this basis, it
follows that retrenchment compensation paid in this case is a short payment which in law is no
payment at all. Hence retrenchment for want of proper retrenchment compensation was liable to
be quashed.
Trade Wings Ltd. v. Prabhakar Dattaram Phodkar Of Bombay & Ors., 1993 III LLJ (Sum) 299 : 1992
(64) FLR 978 : 1992 II LLN 500 : 1992 I CLR 480 (Bom.HC)
5A.343
To calculate 15 days average pay, the correct method is to first calculate 1 days
average by dividing monthly pay by 26 days and not by 30 days.
Management of Shadlow India Ltd. v. P.O. & Anr., 2000 II LLJ 208 : 2001 (98) FJR 114 : 2000 I LLN 418
: 2000 LIC 65 : 2000 I CLR 510 (Mad.HC)

v) Computation shall be on the basis of 15 days wages but not half months
wages for each completed year of service (Pat.DB)
5A.344
Payment of compensation under the section has to be calculated at 15 days wage and
not half month and one days wages shall be determined on basis of 26 days and not 30 days.
Bennet Coleman & Co. Ltd. v. P.O. Labour Court, Patna & Ors., 2003 (98) FLR 1032 : 2003 III LLJ 981
(Pat.DB)
The said decision.Calendar month. (Page: 1042, Para: 26)
Note: As observed from the above decisions from some High Courts, there is no unanimity as to the
number of days to be considered to arrive at one day wage for the purpose of computing retrenchment
compensation. However the Apex Court in the recent case of Guru Jambeshwar University, Hisar v.
Dharam Pal, 2007 I LLJ 1006 : 2007 (112) FLR 880 : 2007 I LLN 740 : 2007 LIC 956 : 2007 I CLR 931 :
2007 LLR 297 : 2007 (1) SCC (L&S) 792 : 2007 AIR (SC) 1040 : 2007 (2) SCC 265 : 2007 (3) Mah.LJ 63
: 2007 SCCL.COM 59 (S.C.2J) has settled the issue by holding that the number of working days to be
considered is 30 days but not 26 days

2414

Chapter VA Lay-Off and Retrenchment

Sec. 25F

2. Wages what payments to be considered

i) Concessional payments forming part of basic wages taken in determination
of wages for compensation (S.C.3J)
F 5A.345 As concessional payments were paid to the employees for some years it was held to
form part of their basic wages and as the financial condition of the company would improve on
substantial retrenchment, which was approved by the Tribunal the modification made by the
Appellate Tribunal was upheld.
M/s. Crown Aluminium Works v. Their Workmen, 1958 I LLJ 1 : 1957-58 (13) FJR 292 : 1958 AIR (SC)
30 (S.C.3J)
Mr. Sen is, however, not right in contending that the final decision of the appellate tribunal is based
solely or even chiefly on the alleged convention to which the appellate tribunal has referred. As we have
already pointed out, the tribunal has also found that substantial retrenchment which has been sanctioned
by both the tribunals would improve the financial position of the appellant. In the opinion of the appellate
tribunal, the downward tendency in the cost of living index on which the appellant partly relied could not
be considered in the present proceedings since no specific issue had been referred to the tribunal in that
behalf. Besides, enough material had not been produced to show to what extent the cost of living index
has fallen and whether this fall was temporary or had come to stay. The appellate tribunal, it appears,
thought that the wages paid by the appellant to its workmen are the irreducible minimum or may at best
be in the region of fair wages with a small margin over the minimum wage. If in, reaching its final
conclusions, the appellate tribunal has relied not only upon the alleged convention but also upon the other
circumstances just mentioned it would not be fair to say that its conclusion is vitiated in law or is
otherwise unsound. (Page: 7, Para: 2)

ii) To include travelling allowance since it is part of wages (Raj.HC)

5A.346
In this case the petitioner was paid Rs. 187 as House rent allowance and Rs. 40 as
Travelling concession which are included in the value of wages, but however this amount of House
rent allowance + travelling concession was not included while paying wages in lieu of notice and
retrenchment compensation. Thus it was held that if amount payable u/s. 25F(a) and (b) of
Industrial Disputes Act falls short the order cannot be sustained and in this case the
non-compliance of Sec. 25F(a) and (b) renders the termination non-est.
Girish Kumar Jain v. Union of India & Ors., 1994 (84) FJR 447 : 1994 (69) FLR 31 (Raj.HC)

iii) Value of house accommodation must be included (Raj.HC)

5A.347
In this case, notice pay and retrenchment compensation was paid while effecting
retrenchment of the workman but while calculating the retrenchment compensation value of house
accommodation was not included. It was held that there is non-compliance of Sec. 25F(b) of
Industrial Disputes Act and thus retrenchment is not valid.
Mahendra Kumar Sharma v. Union of India & Ors., 1994 (84) FJR 496 : 1994 (69) FLR 220 (Raj.HC)
Note: also refer to the following case
Girish Kumar Jain v. Union of India & Ors., 1994 (84) FJR 447 : 1994 (69) FLR 31 (Raj.HC)

Sec. 25F

Conditions precedent to retrenchment

2415

iv) Income earned from gainful employment to be excluded (S.C.2J)

F 5A.348 Labour Court is directed to compute the amount payable to the respondent. It is open
to the appellant to establish if respondent was employed elsewhere. The amount paid under the
direction of the High Court and Supreme Court be deducted.
Chief Engineer, Rajasthan State Electricity Board, Jaipur v. Additional Labour Court, Rajasthan & Anr.,
1993 III LLJ 576 : 1990 (61) FLR 647 : 1990 II LLN 992 : 1990 II CLR 689 : 1990 LLR 692 : 1991 SCC
(L&S) 730 : 1991 Suppl. (1) SCC 37 (S.C.2J)
The appeal is, therefore, decided by directing the Labour Court to compute the amount liable to be paid
to respondent, as Junior Engineer from the date of termination to date of superannuation minus the
amount received by him in course of employment and Rs. 200 per month paid under direction of High
Court. (Page: 576, Para: 3)

h) Who can claim

1. Temporary workman has also right to receive retrenchment compensation
(Mad.DB)
5A.349
A temporary workman deemed to be a workman u/s. 2(s) is entitled to receive
retrenchment compensation in addition to notice u/s. 25F, which makes no distinction between
permanent and temporary workman. Order of Single Judge is upheld.
The Chief Engineer (Irrigation), Chepauk, Madras-5 & Anr. v. N. Natesan., 1973 II LLJ 446 : 1974 (28)
FLR 48 : 1974 (28) FLR 69 : 1973 II LLN 501(Mad.DB)
That even.well established. (Page: 447, Para: 1)
The only.compensation. (Page: 447, Para: 2)
.The Act.is correct. (Page: 447, Para: 2)

2. Members of Co-operative Motor Transport Society not entitled to claim

since they are not workmen (Mad.DB)
5A.350
The claim for retrenchment compensation made by the member employees of the
Co-operative Motor Transport Society Ltd. was held not maintainable because (1) The member
employees were shareholders, interested in running the transport services and thus, were both
members and owners of the society and hence, not workmen indicating the absence of master and
servant relationship as a consequence of which no Industrial Dispute could exist (2) The
respondent employees can agitate their grievance through their workmen directors on the Board
as per the by laws of the society (3) The by laws do not provide for payment of any retrenchment
compensation (4) and the Societies Act provided for machinery for settlement of disputes and
hence the respondent employees were directed to get their claims adjudicated under Co-operative
Societies Act.
South Arcot Co-operative Motor Transport Society, Ltd. v. Syed Batcha & Ors., 1964 I LLJ 280
(Mad.DB)
In 1957 the Society.change. (Page: 281, Para: 2)
.the Presiding Officer.Act. (Page: 281, Para: 3)
.Bearing these principles.grievance. (Page: 283, Para: 3)
Thus the.society. (Page: 284, Para: 4)
It is also.1956 Days. (Page: 284, Para: 5)

2416

Chapter VA Lay-Off and Retrenchment

Sec. 25F

If immediately.this Act. (Page: 284, Para: 5)

The discharged.Societies Act. (Page: 285, Para: 3)

i) When deemed paid/when substantially complied

1. When drafts of compensation amount forwarded in advance to divisional
authority for workmen to receive is sufficient compliance (S.C.3J)
F 5A.351 Forwarding of individual drafts favouring tube well operators for the amounts of
retrenchment compensation to sub divisional / divisional officers well in advance of termination of
their services so that they are timely available to be received by employees is held to be sufficient
compliance of Sec. 25F(b).
Gurmail Singh & Anr., etc.etc. v. State of Punjab & Anr., 1991 II LLJ 76 : 1993 (82) FJR 332 : 1991 (62)
FLR 458 : 1991 I LLN 587 : 1993 LIC 428 : 1991 I CLR 637 : 1991 SCC (L&S) 147 : 1993 AIR (SC)
1388 : 1991 (1) SCC 189 (S.C.3J)
.High Court has satisfied itself by looking into the original records, that drafts in respect of
individual employees were dispatched in time so as to reach divisional/sub-divisional officers by 31st of
August, 1983.. It is true that the amounts were not actually paid or tendered to the workers by the
Corporation directly but the Corporation had evolved a method of disbursement of compensation in the
interest of the workers convenience. Instead of making the appellants, spread out all over the State, to
come to the head office to collect the compensation and to avoid the inconvenience and difficulty of the
Corporation making available the compensation at the doorstep of each employee, the Corporation made
arrangements whereby the tubewell operators could go to the nearest divisional/sub-divisional office and
collect the amount of compensation due to them.in the circumstances of this case, we agree with
the High Court that when individual drafts for the amounts of compensation due to the various tubewell
operators were forwarded to the divisional/sub-divisional Officer, sufficiently in time to be available to
be taken by them by 31st August, 1983, there was sufficient compliance with the provisions of Clause (b)
of Section 25-F. (Page: 83/84, Para: 9)

2. When sent by bank drafts through registered post though the workman
avoids receipt of the same (Raj.HC)
5A.352
The workman by avoiding to take the requisite amount through bank drafts, which
was sent by registered post, cannot contend that there was no tender of notice pay and
retrenchment compensation u/s. 25F(b).
Dinesh Kumar v. Union of India & Ors., 1993 (66) FLR (sum) 43 : 1993 LIC 678 (Raj.HC)

3. When demand draft and retrenchment notice were sent on the same day
though served three days after retrenchment (P&H.HC)
5A.353
The workman was a daily wager and his services were terminated and the
retrenchment compensation along with termination notice could be served only after 3 days of
termination. The Labour Court held the delay as non-compliance of Sec. 25F. The High Court in its
decision held that as the employer had tendered the amount by obtaining D.D. on the same date as
the notice, there is sufficient compliance of Sec. 25F and also, since, the workman is a daily wager,
his disengagement cannot be treated as being under the Industrial Disputes Act 1947. Also, the fact
that he had made a back door entry into the services it further disentitles him as it is in
contravention of Arts. 14 and 16 of the Constitution.
Hoshiarpur Central Co-operative Bank Ltd. Hoshiapur v. Presiding Officer, Labour Court, Jalandhar &
Ors., 2005 I LLJ 800 : 2005 (104) FLR 574 : 2005 I LLN 940 (P&H.HC)
Note: Refer to the following case
Anand Pandurang Mhaskar v. Eastern Engineering Works., 2003 (96) FLR 673 (Bom.HC)

Sec. 25F

Conditions precedent to retrenchment

2417

4. If compensation is paid at the time of retrenchment instead at the time of

notice (S.C.2J)
F 5A.354 Compensation need not be paid at the time of notice provided it is substantial
compliance with Sec. 25F if compensation is paid at the time of retrenchment therefore where the
employer after giving notice, made available compensation amount in the form of bankers
cheques at the divisional office it was held to be proper compliance of the section.
Pramod Jha & Anr. v. State of Bihar & Anr., 2003 II LLJ 159 : 2003 (97) FLR 110 : 2003 III LLN 34 :
2003 LIC 1449 : 2003 LLR 419 : 2003 SCC (L&S) 545 : 2003 AIR (SC) 1872 : 2003 (4) SCC 619
(S.C.2J)
In the case before us the workmen have been given one months notice in writing. The reasons for
retrenchment have been indicated. An opportunity of hearing against the proposed termination was also
afforded though not required by Section 25F. Retrenchment was to take effect on expiry of the month
from the date of the notice. Compensation as required by Section 25F was available in the form of
bankers cheques for payment to the workers simultaneously with the time of retrenchment and they were
given an intimation in advance in that regard. The workers had already approached the High Court and
secured an interim order protecting their employment and status quo being maintained. They were
obviously not interested in receiving the retrenchment compensation which if done may have had the
effect of frustrating the interim order. In these facts and circumstances, the retrenchment of any of the
appellants cannot be found fault with on any of the ground raised by the appellants by reference to
Clauses (a) and (b) of Section 25-F. (Page: 163, Para: 15)

5. When 3 months salary as compensation was paid to employees by

compromise pursuant to compromise formula by Supreme Court (S.C.2J)
F 5A.355 Subsequent to liquidation of society, workmen were retrenched by order dated 9th
Oct., 1991 and during that time no compensation as required u/s. 25F(b) was paid. During
pendency of writ petition filed by employees, pursuant to certain interlocutory orders, the last
installment of compensation was paid on April 30, 1996. In an SLP the question before Apex Court
was whether the cut off date for payment of retrenchment compensation on liquidation should be
9th Oct., 1991 or April 30, 1996 but since society agreed to pay 3 months salary to each employee
which was acceptable to them the appeal was disposed without going into merits of the matter.
K.H.R. Sai Sharma & Ors. v. Government of A.P. & Ors., 2001 I LLJ 1682 : 2002 LIC 119 : 2004 SSC
(L&S) 271 : 2003 (10) SCC 260 (S.C.2J)
.The Society had gone into liquidation under Section 64 of the Act and a Liquidator was
appointed. Under such circumstances, the Society retrenched the services of the appellants by order dated
October 9, (sic) 1991 (Page: 1683, Para: 2)
.at the time when the services of the appellants were retrenched, no compensation as required
under Section 25F(b) of the Industrial Disputes Act was given to the appellants. In these circumstances,
the appellants filed a writ petition under Article 226 of the Constitution, before the High Court of Andhra
Pradesh. It appears that, during the pendency of the writ petition, certain interlocutory orders were
passed, and in pursuance thereof, the last instalment of compensation was paid to the appellants on April
30, 1996. (Page: 1683, Para: 3)
The High Court while disposing of the writ petition, held that the appellants are entitled to payment of
compensation in accordance with Section 25-F(b) of the Industrial Disputes Act. It is against the said
judgement the appellants have filed the S.L.Ps. (Page: 1683, Para: 4)
Notice was issued in the SLPs., confined to the question whether the cut-off date for payment of
retrenchment compensation on closure should be October 9, 1991 or April 30,1996.
(Page: 1683, Para: 5)
When the matter was taken up today, learned counsel for respondent No.3 stated that respondent No.3 is
agreeable to pay 3 months salary to each of the appellants within a period of 3 months from today, which
is acceptable to the appellants. (Page: 1683, Para: 7)

2418

Chapter VA Lay-Off and Retrenchment

Sec. 25F

6. Deemed paid from the date of tender by cheque (Mad.DB)

5A.356
Payment of retrenchment compensation by cheque is effective from the date of tender
of the cheque amounts to compliance of Sec. 25F which is equivalent to cash and in due compliance
of Sec. 25F(b).
Management of Industrial Chemicals Ltd. v. P.O. Labour Court, Madras & Ors., 1977 II LLJ 137 : 1977
(34) FLR 403 : 1977 I LLN 607 (Mad.DB)
We may.the payee. (Page: 149, Para: 42)
We therefore.Act. (Page: 149, Para: 42)

7. Deemed paid from the date of tender by cheque and non-realisation of it on

the same day will not affect retrenchment (Raj.HC)
5A.357
The order of termination and cheque of retrenchment compensation which were
tendered to the workman simultaneously during his retrenchment were considered by the High
Court as a valid tender and just because the cheque could not be in cashed on the very same day
that wont make it invalid. But the order of termination can become invalid if the cheque bounces
and relief can be sought u/s. 138 of Negotiable Instruments Act. Therefore, payment by cheque is in
sufficient compliance of Sec. 25F.
Automobiles Co-op. Workshop Ltd. v. Jethmal Agarwal & Anr., 1993 II LLJ 62 : 1993 (66) FLR 711 :
1993 (67) FLR 5 : 1993 LLR 173 : 1993 I CLR 264 (Raj.HC)

8. Deemed paid even if cheque is undated (Raj.HC)

5A.358
When a cheque received by the workman while retrenching him, to cover his dues, is
undated, it would not render retrenchment invalid.
Vikas Bunkar /son of Manshiram Balai v. Rajasthan State Handloom Development Corporation Ltd.,
Jaipur, & through its Managing Director, Chomu House, Jaipur., 1996 (74) FLR 2105 : 1996 I LLN 986
: 1996 LIC 808 : 1996 II CLR 182 (Raj.HC)

9. Deemed paid if sent by cheque on the date of retrenchment through

registered post with acknowledgement due (Cal.HC)
5A.359
Payment made by cheque and sent by Registered Post with acknowledgement, due on
the date of retrenchment is sufficient compliance for the provision of Sec. 25F of the Act.
Parrys (Cal) Employees Union & Anr. v. Third Industrial Tribunal, West Bengal & Ors., 2001 II LLJ 39
: 2001 (89) FLR 192 : 2001 LLR 462 : 2001 II LLN 743 : 2001 I CLR 777 (Cal.HC)

10. When sent by money order though workman refused to receive notice and
compensation personally (Del.HC)
5A.360
Workman refused to receive personally notice of retrenchment and offer of
compensation so the employer sent notice by registered post and compensation by money order. It
is held to be sufficient compliance with requirement of payment before retrenchment.
The Management of Indian Compressors New Delhi v. D.D. Gupta, & Ors., 1977 LIC 694 (Del.HC)

Sec. 25F

Conditions precedent to retrenchment

2419

11. When sent prior to termination though received after termination by the
employee (Bom.HC)
5A.361
Notice pay and retrenchment compensation was sent on 8.11.1983 and was received
on 23.11.1983. Services were terminated with effect from 10.11.1983. It was held that Sec. 25F is
sufficiently complied and termination would be with effect from 23.11.1983.
G.D. Shinde v. Associated Cement Co. Ltd, & Ors., 1995 I LLJ 1245 : 1995 (70) FLR 541 : 1995 I LLN
235 : 1995 I CLR 157 : 1995 LLR 234 (Bom.HC)

12. When sent by Registered Post (Bom.HC)

5A.362
When the notice pay and retrenchment compensation is sent by Registered Post, there
is due compliance of Sec. 25F of Industrial Dispute Act.
G.D. Shinde v. Associated Cement Co. Ltd, & Ors., 1995 I LLJ 1245 : 1995 (70) FLR 541 : 1995 I LLN
235 : 1995 I CLR 157 : 1995 LLR 234 (Bom.HC)

13. When employee asked by letter to collect his dues from office after striking
his name from muster roll (AP.HC)
5A.363
When the employer offers the workman to collect retrenchment compensation and
one months notice pay, it cannot be taken to mean that the employer has not complied with Sec.
25F, keeping such an amount ready in the office is sufficient compliance of Sec. 25F of the Act. In
the instant case, workman raised the dispute alleging that retrenchment compensation and notice
pay was not paid with the notice of retrenchment. Labour Court rejected the plea and held that the
offer was made by the employer. High Court also upheld the award of the Labour Court.
Narayan Poojari v. The Labour Court, Ilnd Floor, Chandra Vihar & Anr., 2002 LLR 1213 : 2002 LIC
2762 (AP.HC)
5A.364
Where the workman assailed the termination on the ground that the employer has
asked the workman to collect the notice pay and compensation from the office instead of sending it
by money order, the Court setting aside the Labour Court order, held that Sec. 25F does not state
that compensation is only to be made through Money order and if that be the case then payment by
cheque and- Bank draft is to be ruled out as he has to approach the Bank. Hence asking the
employee to collect the dues from office is sufficient compliances Sec. 25F.
Ramesh Hydromachs, Udayambag, Belgaum v. Labour Court, Hubli & Anr., 1986 I LLJ 334 : 1985 (66)
FJR 468 : 1985 (51) FLR 88 : 1985 I LLN 940 : 1985 LIC 1806 : 1985 II CLR 48 (Karn.HC)
Note: also refer to the following cases
Ramesh v. Executive Engineer, Jayakwadi Project & Ors., 2001 III LLJ 889 : 2001 LIC 1255 : 2000 (86)
FLR 885 : 2000 IV LLN 986 : 2000 III CLR 92 : 2000 II LLR 1156 (Bom.HC)
Engineering & Ancilliary Manufacturers v. Salim Khan., 2004 (102) FLR 194 : 2003 IV LLN 261 : 2004
II CLR 309 : 2004 LLR 685 (Bom.HC)
Hari Singh v. Industrial Tribunal-cum-Labour Court, Rohtak & Anr., 1993 II LLN 245 : 1993 LLR 385
(P&H.HC)
Ramesh Hydromachs, Udayambag, Belgaum v. Labour Court, Hubli & Anr.,1986 I LLJ 334 : 1985 (66)
FJR 468 : 1985 (51) FLR 88 : 1985 I LLN 940 : 1985 LIC 1806 : 1985 II CLR 48 (Karn.HC)
Dabhoi Nagarpalika v. Omkarbhai Somabhai Patel & Ors., 2000 III LLJ 461 (Guj.HC)

2420

Chapter VA Lay-Off and Retrenchment

Sec. 25F

14. When employee is offered retrenchment compensation but declined to

accept it (Bom.HC)
5A.365
Casual employee who completed 240 days of continuous services was retrenched and
was offered his legal dues and retrenchment compensation, but he declined to accept. The High
Court held that there was due compliance with Sec. 25F of the fact, therefore, retrenchment of
casual employee was bonafide. Rs. 50,000 as compensation was directed to be paid to the employee.
Sakharam Govind Kadam v. David Brown Greaves Ltd., Pune & Anr., 2001 III LLJ 546 : 2000 I LLN 479
: 2000 LIC 186 : 2000 I CLR 180 : 2000 I LLR 258 (Bom.HC)
Note: also refer to the following case
Uttar Pradesh State Electricity Board, Lucknow, & Ors. v. P.O. Industrial Tribunal 1, Allahabad & Ors.,
1996 (74) FLR 1843 : 1996 II LLN 537 : 1996 II CLR 858 (All.HC)

15. Deemed paid even if the word gratuity was mistakenly written in place of
retrenchment compensation in the receipt (Raj.HC)
5A.366
A writ petition was preferred against the order of Labour Court holding the
retrenchment to be illegal and directing reinstatement with back wages. It was contended by the
workman that since the retrenchment compensation was not paid at the time of retrenchment, the
Labour Courts order should be upheld. The High Court rejected the plea on the ground that in the
receipt, the word gratuity was written instead of retrenchment compensation was only by
mistake and hence, it cannot be held that retrenchment compensation was not paid to the
workman.
Manager, M/S. Jai Drinks Pvt. Ltd. v. P.O. Labour Court No. 1, Jaipur & Ors., 2002 (95) FLR 931 : 2002
IV LLN 606 : 2002 LIC 2062 : 2002 III CLR 314 (Raj.HC)

16. Deemed paid when the same is paid in the name of gratuity under the
scheme of the company (S.C.3J)
F 5A.367 Where the company has already provided a scheme of compensation by name
gratuity to the retrenched employees, it is held that merely because of introduction of Sec. 25F
under Chapter V-A, the employees are not supposed to get the compensation once again and what
Sec. 25J has prescribed is a mere advantageous benefit either under the Act or by the companys
own gratuitous gesture and not both.
M/s. The Brahmachari Research Institute, Calcutta v. Their workmen, 1959 II LLJ 840 : 1959-60 (17)
FJR 282 : 1960 AIR (SC) 257 (S.C.3J)
.We cannot agree with the Appellate Tribunal that the payment of gratuity in the event of
retrenchment has nothing to do with the compensation payable to a workman under s. 25F of the Act. The
Appellate Tribunal seems to have been carried away by the word gratuity used in the Award and it
seems to think that gratuity on retrenchment is something different from compensation on retrenchment.
We are of opinion that this is not correct. Whether it is called gratuity or compensation, it is in
substance a payment to the workman on account of retrenchment; and if a scheme like the present
specifically provides payment for retrenchment as defined in s. 2(oo), we see no justification for
compelling that payment twice over, once under s. 25F and again under the scheme in force in the
concern. (Page: 843/844, Para: 4)
.it must be held that gratuity provided therein on retrenchment is nothing more nor less than
retrenchment compensation provided under s. 25F of the Act, and the workmen are only entitled to one or
the other, whichever is more advantageous to them in view of s. 25J. (Page: 844, Para: 1)

Sec. 25F

Conditions precedent to retrenchment

2421

17. When money and ex-gratia paid in lieu of notice and retrenchment
compensation (Cal.DB)
5A.368
Even though the employer paid money in lieu of notice and ex-gratia to the employees
not purporting them to be workman, the mandatory conditions of notice and retrenchment
compensation under Clause (a) and (b) were held to be complied with and hence their termination
was valid.
Guest Keen Willams Ltd. v. The Fifth Industrial Tribunal, West Bengal & Ors., 1996 III LLJ 825 : 1996 I
LLN 106 : 1995 LIC 1687 : 1995 II CLR 485 : 1996 LLR 64 (Cal.DB)
.Now the question.service. (Page: 833, Para: 23)
.It therefore.employees. (Page: 833, Para: 24)
.As we have.award. (Page: 834, Para: 27)

18. Though work man collects dues on 8.8.1972 i.e. Monday instead of 7.7.1972
i.e. Sunday (All.DB)
5A.369
Collection of dues by workmen on 8th August 1972 instead of 7th August 1972 being
Sunday is substantial compliance with the Sec. 6N(b) of U.P. Act and would not result in
invalidating the termination order dt. 6th August 1972 and, hence, the Labour Court order of
reinstating retrenched employees was set aside.
Swadesh Press v. State of Uttar Pradesh & Ors., 1980 I LLN 330 : 1980 LIC 878 (All.DB)
The petitioners gave.6 August 1972.The workmen were.on 8 August.The
Labour Court.retrenchment became effective.On this finding.full back
wages. (Page: 331, Para: 1)
.In the present.very following day.the delay of.invalidating the order.
(Page: 333, Para: 7)
.the award of.accordance with law. (Page: 333, Para: 9)

j) When not deemed paid/when not substantially complied with

1. When letter of termination offers employee his dues but does not specify
that it is compensation u/s. 25F it does not amount to compliance (S.C.2J)
F 5A.370 The letter of termination offering the employee to collect whatever was due to him but
it did not specify that the payment contemplates compensation in accordance with Sec. 25F, the
Supreme Court upheld the decision of the lower Courts that it would not amount to compliance of
Sec. 25F but awarded Rs. 50,000 considering the period employee was away from service.
Sain Steel Products v. Naipal Singh & Ors., 2001 I LLJ 1345 : 2001 (89) FLR 356 : 2001 II LLN 859 :
2001 LIC 2372 : 2001 II CLR 32 : 2001 LLR 566 : 2003 SCC (L&S) 554 : 2001 AIR (SC) 2401 : 2003 (4)
SCC 628 (S.C.2J)
..The Labour Court held that the termination of the services of the respondent did not comply
with the provisions of Section 25-F of the Act and therefore illegal and directed his reinstatement with
wages at Rs. 137/- per month which was the last drawn wage or the minimum wages permissible under
the Minimum Wages Act whichever is higher till the date of his reinstatement. This order was challenged
in a writ petition before the High Court. The High Court dismissed the same. Hence this appeal by special
leave. (Page: 1345, Para: 1)

2422

Chapter VA Lay-Off and Retrenchment

Sec. 25F

Secondly, he contended that the termination of services of the respondent was in terms of Section 25-F
of the Act as the order of termination discloses that it is open to the respondent to collect the dues before
leaving and in this context he relied upon two decisions of this Court in Straw Board Manufacturing Co.
Ltd. Saharanpur v. Govind AIR 1962 SC 1500 : 1962 I LLJ 420 and Management of Delhi Transport
undertaking v. Industrial Tribunal, Delhi and Anr., AIR 1965 SC 1503 : 1965-I-LLJ-458, to contend that
even an offer of payment is as good as payment itself in terms of Section 25-F of the Act. However, a
reading of the letter dated September 8, 1995 on which reliance is placed, it is clear that all that is stated is
to ask the respondent to collect whatever is due to him but it does not spell out whether it included the
amount as contemplated under Sec. 25-F or not. In these circumstances, we cannot take this sentence to
be making an offer in terms of Sec 25-F of the Act to comply with the terms therof. Hence the view taken
by the Labour Court as affirmed by the High Court stands to good reason and it does not call for any
interference at our hands. (Page: 1346, Para: 3)
Considering the fact that the respondent has not been in employment of the appellant since 1975 for well
over quarter of a century we do not think it appropriate to put him back in service of the appellant. It
would be proper that some reasonable compensation be paid to him in lieu of back wages and
reinstatement. We think, in the circumstances of the case, appropriate relief to be granted is a sum of
Rs.50,000 which shall be paid to the respondent period of one month from today to be drawn by the
respondent. (Page: 1346, Para: 4)
Note: also refer to the following case
Kailash Parshad Sharma v. Labour Court & Anr., 1998 III LLJ (Sum) 4 : 1996 (88) FJR 461 : 1996 (73)
FLR 1181 : 1996 II LLN 741 (P&H.HC)
R.D. Pillay v. Indian Dyestuff Industries Ltd., 1993 III LLJ (Sum) 671 : 1992 (65) FLR 977 : 1992 I CLR
1005 : 1992 LLR 636 (Bom.HC)

2. When sent by crossed cheque through post (Del.HC)

5A.371
Services of peon were terminated by intimating through Registered acknowledge due
Labour Court, though justified the action of management, awarded him reinstatement with full
back wages on its finding that Sec. 25F has not been complied with as no retrenchment notice was
given nor paid retrenchment compensation since sending a crossed cheque through post did not
amount to payment of compensation, hence the order of retrenchment is non-est which is upheld by
High Court.
Kanti Weekly v. D.D. Gupta & Ors., 1983 I LLN 771 (Del.HC)
.The workman.Kanti weekly.On 28
Thereafter.industrial dispute. (Page: 772, Para: 2)

Feb.April

1973.

.It is true.Concerned. (Page: 774, Para: 8)

.On the question.Continuity of service. (Page: 774, Para: 9)
.If it is.non est.I cannot find.was illegal. (Page: 776, Para: 16)

3. When sent by demand draft after terminating workman (Raj.HC)

5A.372
Retrenchment compensation was not paid to workman at the time of termination but
subsequently sent to him by demand draft. Labour Court ordered reinstatement holding that the
termination violated Sec. 25F and the same was upheld by High Court.
Assistant Engineer & Anr. v. Judge, Labour Court & Ors., 2006 (108) FLR 1035 : 2006 (109) FLR 274 :
2006 III LLN 384 : 2006 LIC 34 : 2006 I CLR 346 (Raj.HC)
Note: also refer to the following case
Rajasthan State Road Transport Corporation, Jaipur v. Industrial Tribunal, Jaipur, 1986 (68) FJR 374 :
1986 II LLN 996 (Raj.HC)

Sec. 25F

Conditions precedent to retrenchment

2423

4. Deemed not paid by showing mere readiness to pay unless there is an offer
or tender or actual payment (Raj.HC)
5A.373
For payment of compensation on retrenchment, there must be either an offer or
tender or actual payment. Mere readiness to pay was not sufficient.
Moinuddin & Ors. v. Union of India & Ors., 1981 LIC 697 (Raj.HC)
Note: also refer to the following case
Rajasthan Canal Project, Vijayanagar Circle, through State of Rajasthan v. Rajasthan Canal Rastriya
Mazdoor Union, Suratnagar & Anr., 1976 II LLJ 25 : 1976 II LLN 73 (Raj.HC)

5. If workman is merely asked to collect amount from office (Mad.HC)

5A.374
Simultaneous tender of amount along with termination order is necessary. Mere
statement that workman was asked to collect amount from office cannot be construed as sufficient
compliance of Sec. 25F of the Act
Management, Kodumudi Growers Co-op. Bank Ltd. v. P.O. Labour Court, Coimbatore & Anr., 1999 I
LLJ 497 : 2000 (86) FLR (Sum) 6 : 1999 I LLN 233 : 1999 LIC 771 (Mad.HC)

6. Mere notice to collect payment on a particular date cannot be equivalent to

payment if workman for good reason fails to turn up to collect (P&H.HC)
5A.375
Mere sending notices calling upon the workmen to receive payment before the due
date and then equating such an offer to actual payment, might lead to harsh results, because if the
employee could not come on the day fixed to receive the payment for some good reason, an
obstinate employer may refuse to make the payment on the next day on the plea that the notice
itself was equivalent to payment and his obligation to make the payment had ceased in previous
day.
Pepsu Transport Co. Pvt. Ltd v. State of Punjab & Ors., 1968 LIC 351 (P&H.HC)

7. When paid by cheque though on the date of retrenchment but after

banking hours (Mad.HC)
5A.376
Retrenchment compensation paid by cheque on the date of retrenchment but after
banking hours is held to be non-compliance of Sec. 25F.
R. Sankaran v. The P.O. Additional Labour Court, Madras & Anr., 1977 (50) FJR 28 : 1977 I LLN 94 :
1977 LIC 1338 (Mad.HC)

8. When compensation was paid on the basis of wages drawn prior to earlier
retrenchment (MP.HC)
5A.377
Service of the workman was terminated but he was reinstated under the order of
Court. Later he was again retrenched after paying retrenchment compensation, which was
challenged. Labour Court rejected the claim of workman but on appeal Industrial Court allowed
workmans claim and ordered reinstatement and held that Sec. 25F was not complied with since
compensation was paid on the basis of wage, which the workman was drawing prior to his earlier
termination. High Court upheld the order of Industrial Court.
Shaw Wallace Gelatines Ltd. Jabalpur v. Om Prakash Singh & Anr., 2001 (90) FLR 945 : 2001 IV LLN
503 : 2002 I CLR 250 (MP.HC)

2424

Chapter VA Lay-Off and Retrenchment

Sec. 25F

9. When gratuity is paid since object of both are different (S.C.3J)

Indian Hume Pipe Co. Ltd. v. Its workmen & Anr., 1959 II LLJ 830 : 1959-60 (17) FJR 273 : 1960 AIR
(SC) 251 (S.C.3J)
Note: Please see related ratio/s under the above citation in this section

10. When compensation offered not at the time of termination but subsequent
to it (Del.HC)
Kanti Weekly v. D.D. Gupta & Ors., 1983 I LLN 771 (Del.HC)
Note: Please see related ratio/s under the above citation in this section

11. If lay-off compensation is deducted from retrenchment compensation

(Bom.HC)
Vacuum Plant Kamgar Sanghtana v. Vacuum Plant & Instruments Fanufacturing Co. P. Ltd. & Anr.,
1999 II CLR 530 (Bom.HC)
Note: Please see related ratio/s under the above citation in this section

12. When notice to collect it was sent first and money order was sent later
(P&H.DB)
Mani Ram v. The P.O. Labour Court, Ambala, 1997 II LLJ 519 : 1997 (75) FLR 132 : 1996 (89) FJR 673 :
1996 LLR 615 : 1997 IV LLN 361 : 1997 II CLR 868 (P&H.DB)
Note: Please see related ratio/s under the above citation in this section

13. When there is mere recital in notice of termination that efforts will be made
to pay retrenchment compensation (Bom.DB)
The P.W.D. Mazdoor Union & Anr. v. The Executive Engineer, P.W.D. & Anr., 1997 (77) FLR 76 : 1997
LLR 1027 (Bom.DB)
Note: Please see related ratio/s under the above citation in this section

14. When amount due from employee is adjusted against compensation

payable u/s. 25F(a) and 25F(b) (Ori.DB)
M/s. Utkal Asbestos Ltd. v. Workman, T.S. Rao & Anr., 1993 III LLJ 726 : 1991 (62) FLR 972 : 1991 II
LLN 752 : 1991 II CLR 941 (Ori.DB)
Note: Please see related ratio/s under the above citation in this section

15. When it was not possible for workmen to be present to receive

retrenchment compensation on the same day on which the letter so
requiring, was posted (Cal.HC)
National Iron & Steel Company, Ltd v. Third Industrial Tribunal, West Bengal, & Ors., 1964 I LLJ 525 :
1964 (8) FLR 24 (Cal.HC)
Note: Please see related ratio/s under the above citation in this section

Sec. 25F

Conditions precedent to retrenchment

2425

16. When retrenchment compensation falls short due to non-inclusion of HRA

and travelling allowance when paid as part of wages (Raj.HC)
Girish Kumar Jain v. Union of India & Ors., 1994 (84) FJR 447 : 1994 (69) FLR 31 (Raj.HC)
Note: Please see related ratio/s under the above citation in this section

17. When the offer is made at the close of the day or bit earlier since the offer
cannot be said to be genuine (AP.HC)
5A.378
It is a settled principle of law that an offer may be as good as payment, but it must be
genuine and bonafide. But if the offer is made at the close of the day or even a bit earlier it can never
be said that the offer was genuine and bonafide more so if the office from which the amount is to be
collected is at a place away from the place of work.
Superintending Engineer, R & B Dept., Warangal & Anr. v. D. Sambaiah & Anr., 2002 LIC 2124
(AP.HC)

k) Retrenchment compensation vis--vis extra/additional compensation

whether admissible
1. Compensation awarded by Tribunal at its discretion before introduction
of Chapter V-A, held valid (S.C.CB)
F 5A.379 The purpose of enacting Chapter V-A was for standardizing compensation payment
but the Tribunal was awarding compensation for retrenchment in its discretion even before the
enactment after considering relevant factors therefore in the instant case retrenchment was
effected before enactment of the chapter and the Industrial Tribunals award of one week wages
for every four months of unemployment was not held to be in error and therefore did not require
interference.
Cachar Chah Sramik Union, Silchar, Assam v. The Management of Tea Estate of Cachar Assam & Anr.,
1966 AIR (SC) 987 : 1966 I LLJ 420 : 1965-66 (28) FJR 320 : 1966 (12) FLR 153 (S.C.CB)
.It was said that by enacting Ch. VA the legislature was merely recognising the practice of
payment of compensation by Labour Tribunal before the date of the amendment and the legislature
decided, by the amendment, to standardise the payment of compensation by prescribing a statutory rule in
that behalf.There is substance in the argument put forward on behalf of the appellant and the
Tribunal has also applied this principle in granting compensation to the retrenched workmen even though
the case was not attracted by S. 25F of the Industrial Disputes Act. But the Tribunal has taken the view
that one weeks wages for every four months of unemployment was adequate compensation. The
contention of the appellant is that the compensation should have been awarded on the scale laid down in
S. 25F of the Industrial Disputes Act. We are unable to accept this argument as correct.Industrial
Tribunal had been awarding compensation even before the enactment of S. 25F but there was no
uniformity or certainty in the matter and in determining the amount of compensation the Tribunals
considered a variety of relevant factors. It is manifest that in determining the amount of compensation the
Tribunals exercised complete discretion and took into account whatever factors they considered relevant.
In the present case, the Tribunal has estimated the amount of compensation as one weeks wages for
every four months of unemployment and it is not shown on behalf of the appellant that in making this
estimate the Tribunal has committed any error of law or applied any wrong principle.
(Page: 990, Para: 6)
Note: When termination was on 2.4.1973, whereas compensation was paid on 1.4.1973
Note: This position is prior to introduction of Chapter VA

2426

Chapter VA Lay-Off and Retrenchment

Sec. 25F

2. Tribunal cannot grant retrenchment compensation and compensation for

premature termination of service when it decides to grant it in lieu of
reinstatement (S.C.3J)
F 5A.380 Tribunal granted retrenchment compensation as well as compensation for unjustified
and premature termination of service of workman, it was held that if the Tribunal decides to give
compensation in lieu of reinstatement, it can grant only compensation for premature termination
of service but not retrenchment compensation.
Anglo-American Direct Tea Trading Co. Ltd. v. Workmen of Nahortoli Tea Estate, 1961 II LLJ 625 :
1961-62 (20) FJR 523 : 1962 (4) FLR 65 (S.C.3J)
We have already set out the final order of the Appellate Tribunal by which it allowed two kinds of
compensationretrenchment compensation as also compensation for unjustified and premature
termination of employment. It is urged on behalf of the appellant that the Appellate Tribunal was wrong
in allowing double compensation in this manner. It is not disputed that where a workman is entitled to
reinstatement but for some reason the tribunal does not consider it proper to give that relief, compensation
is awarded to such workman in lieu of that relief. There is, however, no scope for allowing retrenchment
compensation in a case of this kind, for there is no question of any retrenchment as such where the
tribunal decides not to pass an order of reinstatement but to give compensation instead. Strictly speaking,
therefore, the Appellate Tribunal was wrong in giving retrenchment compensation as well as
compensation for unjustified and premature termination of employment. What it could and should have
given was compensation only for unjustified and premature termination of employment. In effect,
however, the order of the Appellate Tribunal works out to giving one months average pay for each year
of completed service for unjustified and premature termination of employment in this case.
(Page: 628, Para: 3)

3. When retrenchment is proper Tribunal is not justified in awarding 50% of

wages as compensation in addition to statutory compensation (S.C.3J)
F 5A.381 Where retrenchment is held proper and compensation paid was also within the
provisions of Sec. 25F it is held that Tribunal was not justified in awarding 50% wages for the
period they remained unemployed as compensation in addition to statutory compensation and as
in the instant case retrenchment was not unjustified or illegal, workmen were not held entitled to
any relief other than statutory compensation.
M/s. Om Oil and Oil Seeds exchange, Ltd., Delhi v. Their Workmen, 1966 II LLJ 324 : 1965-66 (29) FJR
69 : 1966 (13) FLR 7 : 1966 AIR (SC) 1657 (S.C.3J)
The second part of the order directing that clerks from Nos. 4 to 14 and peons from Nos. 18 to23 in the
seniority list, shall be entitled, in addition to the retrenchment compensation already paid to them 50 per
cent of the wages as compensation for the period they remained unemployed is wholly indefensible.
These employees had been properly retrenched: that was conceded before the Labour Court. It was also
conceded that for carrying on the business of the appellant after imposition of the ban by the Central
Government, not more than seven employees were required. If the management was entitled to retrench
thirty workmen and did so after paying wages for the period of notice and retrenchment compensation,
we fail to appreciate the grounds on which an order for payment of 50 per cent of the wages in addition to
retrenchment compensation may be made. Retrenchment compensation is paid as solatium for
termination of service resulting in unemployment, and if that compensation be paid there can be no
ground for awarding compensation in addition to statutory retrenchment compensation.Where
retrenchment has been properly made and that order has not been set aside, we are not aware of any
principle which may justify an order directing payment of compensation to employees properly
retrenched in addition to the retrenchment compensation statutory payable. (Page: 329/330, Para: 2)

Sec. 25F

Conditions precedent to retrenchment

2427

4. Ex-gratia payable over and above compensation to legal heir of deceased

employee (S.C.3J)
F 5A.382 Where the employer is ready to pay ex-gratia payment over and above the
retrenchment compensation to the legal representative of the workman who died during the
pendency of appeal, the same was upheld by the Apex Court.
The Pioneer Ltd. v. S. Tajdar Husain (Dead) & Anr., 1974 (29) FLR 343 : 1974 LIC 1235 : 1974 AIR
(SC) 1809 : 1974 (3) SCC 232 (S.C.3J)
On behalf of the appellant, it has been represented before us by Mr. B. P. Maheshwari, learned counsel,
that his clients are prepared to pay to the legal representatives of the deceased respondent No.1 the
retrenchment compensation amount due to the deceased workman under S.25F of the Industrial Disputes
Act as also an additional ex-gratia amount of Rs.1000/-. We consider this offer to be quite reasonable,
because even if we do not accept ultimately the contentions of the appellant, the position would be that the
proceedings will have to go on afresh before the Labour Court as per the orders of the High Court, in
which case, the parties will be put to considerable expenses. Over and above that the appellants may also
raise an objection before the Labour Court regarding its jurisdiction to consider the matter afresh after the
death of the workman concerned. (Page: 344, Para: 7)
If we accept the contention of the appellant, the result will be that the order of the High Court remanding
the proceedings to the Labour Court will have to be set aside, in which case, the award upholding the
validity of the retrenchment will stand. In such a case the legal representatives of the deceased workman
will not be entitled to get anything more than what was due to the workman under S.25F of the Industrial
Disputes Act. On the other hand, as mentioned earlier, the appellant has offered to pay an additional
ex-gratia amount of Rs.1000/- over and above the amount due by way of retrenchment compensation.
That is why we are of the opinion that it is unnecessary to proceed further with the matter and that the
offer made by the appellant is quite fair to all parties. (Page: 345, Para: 8)

5. Additional compensation of six years wages paid when retrenchment is due

to closure on account of environmental protection (S.C.2J)
F 5A.383 The workmen employed in the shrimp culture industries, which are directed to be
closed in the interests of environmental protection are entitled to retrenchment compensation u/s.
25F and six years wages as additional compensation since they were in continuous service.
S. Jagannath, Petitioner v. Union of India & Anr., 1997 AIR (SC) 811 : 1997 (2) SCC 87 (S.C.2J)
The workmen employed in the shrimp culture industries which are to be closed in terms of this order,
shall be deemed to have been retrenched with effect from April 30, 1997 provided they have been in
continuous service (As defined in S.25B of the Industrial Disputes Act, 1947) for not less than one year in
the industry concerned before the said date. They shall be paid compensation in terms of S.25F(b) of the
Industrial Disputes Act, 1947. These workmen shall also be paid, in addition, six years wages as
additional compensation. The compensation shall be paid to the workmen before May 31, 1997. The
gratuity amount payable to the workmen shall be paid in addition. (Page: 815, Para: 16)

l) Recovery of compensation
1. Can be recovered u/s. 33C(2) (Pat.DB)
5A.384
Individual workman can claim retrenchment compensation u/s. 33C(2) although he
can claim the same by raising an industrial dispute u/s. 10 and hence grant of the same by Labour
Court under the section was upheld.
Management Navashakti Publishing Company, Ltd. v. State of Bihar & Ors., 1964 II LLJ 198 : 1964 (9)
FLR 351 (Pat.DB)
.petitioner has moved.of that Act. (Page: 198, Para: 1)

2428

Chapter VA Lay-Off and Retrenchment

Sec. 25F

On behalf of the.in this argument. (Page: 199, Para: 2)

In an opinion, the.aspect of the case. (Page: 199, Para: 3)
..we held that.and is dismissed.. (Page: 200, Para: 2)
5A.385
Since the Labour Court under sub-Sec. 33C(2) cannot determine a dispute with
regard to the claims for recovery of retrenchment compensation when the right of workmen are
disputed but can only determine the amount due from the employer hence it had no jurisdiction to
direct the employer to pay compensation.
Sri Gopalakrishna Weaving Mills v. Labour Court, Hubli, & Ors., 1967 I LLJ 657 : 1966-67 (30) FJR 24
(Mys.DB)
The Labour Court.of the Act. (Page: 658, Para: 2)
In this case.land revenue. (Page: 658, Para: 4)
The point.jurisdiction. (Page: 658, Para: 6)
5A.386
The amount of retrenchment compensation payable to the workman u/s. 25F can be
awarded by the Labour Court in proceedings u/s. 33C(2).
Central India Electric Supply Co. Ltd. Bilaspur v. P.O. District Labour Court, Gorakhpur Ward,
Jabalpur, & Ors., 1969 I LLJ 840 : 1969 (18) FLR 22 : 1969 LIC 1204 (MP.DB)
Indeed the matter.under S. 33C(2). (Page: 843/844, Para: 4)

2. Can be recovered under Payment of Wages Act (Bom.DB)

5A.387
The amount claimed by the employees of the mill u/s. 25F is a sum payable to
employees on the termination of their services, which comes within the second part of the definition
of wages under the Payment of Wages Act. Thus the authority under the Payment of Wages Act has
jurisdiction to decide the claim and it has erred in declining to do so. Its order is therefore set aside
and it is directed to adjudicate the claim.
District Labour Officer, Baroda & Ors. v. Authority Under Payment of Wages Act & Anr., AND A.D.
Divekar v. Dinesh Mills Ltd. & Ors., 1955 II LLJ 501 : 1955-56 (9) FJR 139 (Bom.DB)
.Now the definition of wages.the definition of wages. (Page: 505, Para: 3)
.we have no doubt.therefore wages. (Page: 506, Para: 2)
In this case.entitled to it. (Page: 507, Para: 2)
In the present case.passed by him. (Page: 516, Para: 3)
There is nothing.fulfillment of the contract. (Page: 513, Para: 2)
5A.388
The authority under the Payment of Wages Act could adjudicate the workmans
claim for retrenchment compensation and also decide incidental questions regarding employment,
termination of service and determination of the amount of compensation. Hence the order of the
authority rejecting the workmans petition is quashed and it is directed to decide the workmans
claim in accordance with law.
Ramcharan Tiwari v. District Judge, Jabalpur, & Ors., 1962 I LLJ 359 (MP.DB)
Any gratuity payable on the termination.and decide it in accordance with law.
(Page: 360/361, Para: 6

Sec. 25F

Conditions precedent to retrenchment

2429

m) The condition of serving notice on Appropriate Government / notified

authority as per Clause (c)
1. Object of Clause (c)
i) Is to inform State Government to make it aware of the existence of
conciliation proceedings or reference (Cal.DB)
5A.389
Notice u/s. 25F(c) is intended for information to State Government in case where
Government is not aware of conciliation proceedings or reference and not in case where
retrenchment is followed subsequent to conciliation and award of Tribunal.
Chandra Kumar Dutta v. Secretary, Messrs. Frank Ross & Co. Ltd, & Ors., 1971 LIC 790 (Cal.DB)
Left to myself.retrenchment. (Page: 793, Para: 15)

2. Attributes of the clause

i) Clause (c) being only informative is not mandatory nor condition precedent
(S.C.3J)
F 5A.390 The object of Clause (c) is mere service of notice on the Government to keep it
informed of the condition of employment in different industries but not intended to protect the
interests of the workmen and therefore cannot be treated as condition precedent to retrenchment
unlike Clauses (a) and (b) which provide for monetary compensation to redress partially the
hardships caused by retrenchment and therefore where the notice is issued after effecting
retrenchment is found not invalid and hence the contention of the workmen that it is mandatory
was set aside.
Bombay Union of Journalists & Ors. v. State of Bombay & Anr., 1964 I LLJ 351 : 1964-65 (26) FJR 32 :
1964 (8) FLR 236 : 1964 AIR (SC) 1617 (S.C.3J)
.Clause (a) of S. 25F, therefore, affords a safeguard in the interests of the retrenched employee; it
requires the employer either to give him one months notice or to pay him wages in lieu thereof before he
is retrenched. Similarly, clause (b) provides that the workman has to be paid at the times of retrenchment,
compensation which shall be equivalent to 15 days average pay for every completed year of service or
any part thereof in excess of six months. It would be noticed that this payment has to be made at the time
of retrenchment, and this requirement again provides a safeguard in the interests of the
workman.These provisions have to be satisfied before a workman can be retrenched. The
hardship resulting from retrenchment has been partially redressed by these two clauses, and so, there is
every justification for making them conditions precedent. The same cannot be said about the requirement
as to clause (c). Clause (c) is not intended to protect the interests of the workman as such. It is only
intended to give intimation to the Appropriate Government about the retrenchment, and that only helps
the Government keep itself informed about the conditions of employment in the different industries
within its region. There does not appear to be present any compelling consideration which would justify
the making of the provisions prescribed by clause (c) a condition precedent as in the case of clauses (a)
and (b). Therefore, having regard to the object which is intended to be achieved by clauses (a) and (b) as
distinguished from the object which clause (c) has in mind, it would not be unreasonable to hold that
clause (c), unlike clauses (a) and (b), is not a condition precedent. (Page: 357/358, Para: 3)

2430

Chapter VA Lay-Off and Retrenchment

Sec. 25F

ii) Notice u/s. 25F(c) is only directory and not mandatory, hence
non-compliance is not fatal (S.C.3J)
F 5A.391 The requirement of sending notice u/s. 25F(c) to Labour Department by registered
post is held to be only directory and not mandatory and a notice sent through peon book duly
acknowledge of held to be sufficient compliance with Sec. 25F(c) and the statute.
Gurmail Singh & Anr., etc.etc. v. State of Punjab & Anr., 1991 II LLJ 76 : 1993 (82) FJR 332 : 1991 (62)
FLR 458 : 1991 I LLN 587 : 1993 LIC 428 : 1991 I CLR 637 : 1991 SCC (L&S) 147 : 1993 AIR (SC)
1388 : 1991 (1) SCC 189 (S.C.3J)
.High Court was satisfied that the requisite notice in the prescribed form P was sent to the
Secretary to Government, Labour Department and the Employment Exchange concerned by personal
delivery duly acknowledged in the peon book of the Department. Pointing out that the requirements of
Clause (c) of Section 25-F were only directory and not mandatory, the High Court was of the opinion that
the notices were not vitiated due to non-compliance with Clause (c) of Sec. 25F. (Page: 80, Para: 2)
The contention base on Clause (c) of Section 25.F is equally baseless..the suggestion is that they
should have been sent by registered post. As rightly pointed but by the High Court, such a requirement
can be treated only as directory and not mandatory and it would be erroneous to hold that, unless sent by
registered post, the notices cannot be treated as complying with the statute.. (Page: 84, Para: 10)
5A.392
Non-compliance with Sec. 25F(c) is only an irregularity and does not make
retrenchment illegal as it is only a mere condition but not condition precedent to retrenchment.
Bombay Union of Journalists & Ors. v. State of Bombay & Anr., 1961 II LLJ 727 (Bom.DB)
5A.393
As the workmen were retrenched by giving one months salary in lieu of notice, notice
should have been given to the Government under Rule 79 within 3 days of payment. But as this
point regarding non-compliance of Rule 79 was not raised before the Labour Court, it could not be
taken up in writ proceedings. The workmen had accepted the payment made to them and were not
prejudiced in any way. Hence the provisions regarding notice to the Government were not really
mandatory.
Workmen of Shillong Hydro-Electric Ltd. v. State of Assam & Ors., 1965 II LLJ 619 (Ass.DB)
If however it is.rule 79. (Page: 622, Para: 1)
The Point not.before us. (Page: 622, Para: 2/3)
But so long as.really mandatory. (Page: 622, Para: 3)
5A.394
Considering retrenchment notice of casual workers of Railways, High Court held that
even though grounds for retrenchment were not specifically mentioned it cannot be said that the
same resulted in contravention of Clause (a) of Sec. 25F, also compliance with Rule 76 requiring
notice to be served on Appropriate Government and prescribed authorities is not condition
precedent for valid order of retrenchment and hence petition filed by the workers was dismissed.
Dhirendra Kumar Vidyarthi & Ors. etc. v. Union of India & Ors., 1982 LIC 1680 (Pat.DB)
.In the notice.work/work load.it would have.of the Act. (Page: 1682,
Para: 6)
It was then.of the Act.any non compliance.order of retrenchment.
(Page: 1683, Para: 8)
This writ application.it is dismissed. (Page: 1684, Para: 11)

Sec. 25F

Conditions precedent to retrenchment

2431

5A.395
Non-compliance of notice to Government is not fatal, because notice u/s. 25F(c) of
Industrial Disputes Act only directory in nature and not mandatory.
Jagan Singh v. Canara Bank & Anr., 1994 II LLJ 1184 : 1994 I CLR 899 : 1994 LLR 495 : 1994 (68) FLR
648 (All.HC)
Note: also refer to the following cases
Manohar Lal v. Central Warehosing Corporation & Anr., 1995 (87) FJR 494 : 1996 (72) FLR (Sum) 29
(P&H.HC)

iii) Requirement of notice is treated as a condition subsequent, hence failure

will not lead to any infirmity in retrenchment order (S.C.3J)
F 5A.396 Since the section requires notice to be given in a prescribed manner and the procedure
for the same is set out in the rules framed by the Government under the Act and since Rule 80 so
framed requires the employer to serve notice of retrenchment in terms of Sec. 25F(c) within 7 days
of retrenchment, it treats the notice as a condition subsequent but not precedent to retrenchment
and hence it was held that failure to serve notice on Appropriate Government prior to
retrenchment did not lead to any infirmity in the order of retrenchment.
Bombay Union of Journalists & Ors. v. State of Bombay & Anr., 1964 I LLJ 351 : 1964-65 (26) FJR 32 :
1964 (8) FLR 236 : 1964 AIR (SC) 1617 (S.C.3J)
Mr. Bishan Narain has then urged that.Section 25-F (c) provides that no workman to which the
said provision applies shall be retrenched by the employer until notice in the prescribed manner is served
on the Appropriate Government.There is no substance in this argument. It appears that the Rules
framed by respondent No. 1 under the Act indicate that respondent No. 1 has construed the provision of S.
25-F (c) as being directory and not as constituting a condition precedent for the validity of retrenchment
under S. 25-F, Rule 80 of the said Rules clearly shows that where the employer has retrenched the
employee by offering to pay him the requisite amount of remuneration in lieu of notice prescribed by S.
25-F (a), the employer is required to serve the notice of the said retrenchment within seven days of the
date of retrenchment, and that means that in such a case, the notice has not to be served on the
Government before retrenchment is effected. In other words, R. 80, it is conceded, treats the notice
prescribed by S. 25-F (c) as condition subsequent and not a condition precedent. In view of the rule
framed by itself respondent No.1 must not have thought it necessary to make any reference to the
argument urged by the appellants that respondent No. 2s failure to serve a notice on respondent No. 1
before retrenchment was effected introduced an infirmity in the order of retrenchment.
(Page: 355, Para: 2)
.Besides, the requirement introduced by the use of the work until is complied with even on the
view we are inclined to take about the nature of the condition prescribed by clause (c), because after the
retrenchment is effected, the employer has to comply with the condition of giving notice about the said
retrenchment to the Appropriate Government, and that is where the provision in clause (c) that the notice
has to be served in the prescribed manner assumes significance. Rules have been framed by the Central
Government and the State Government in respect of this notice and, stated broadly, it does appear that
these Rules do not require a notice to be served in every case before retrenchment is effected. In regard to
retrenchment effected on paying the workman his wages in lieu of notice, the Rules seem to provide that
the notice in that behalf should be served within the specified period prescribed by them; that is to say,
under the Rules, notice in such a case has to be served not before the retrenchment, but after the
retrenchment within the specified period.but on the view we are inclined to take, the Rules framed
by the Government appear to be consistent with the policy underlying the provision prescribed by S.
25F(c). We are, therefore, satisfied that S.25F(c) cannot be said to constitute a condition precedent which
has to be fulfilled before retrenchment can be validly effected. (Page: 357, Para: 2)

2432

Chapter VA Lay-Off and Retrenchment

Sec. 25F

iv) Notice to Government required u/s. 25F(c) is not an empty formality and
non-compliance results in vitiating termination (Ker.HC)
5A.397
The Labour Court ordered reinstatement of workman as his termination was illegal
in an ex-parte award and application for setting aside the ex-parte award was rejected on the
ground of insufficient cause being shown. The High Court held that conditions precedent to
retrenchment given u/s. 25-F are mandatory. The issue of notice to the Government as required
under the Act cannot be said to be an empty formality and thus non-compliance with the provisions
entitles workman to reinstated.
Ollur Regional Imitation Diamond Manufacturers Industrial Co-op. Society Ltd. v. Labour Court &
Anr., 1993 II LLJ 174 : 1993 (82) FJR 426 : 1993 (66) FLR 1056 : 1993 II CLR 312 : 1993 LLR 553
(Ker.HC)
Note: Refer to the decisions of Apex Court given above holding contrary view

v) Non-issuance of notice by the employer to State Government being not an

invasion of workmans right can not be raised in writ (Cal.DB)
5A.398
In order to maintain writ petition, petitioner has to prove invasion of his rights,
non-issuance of notice u/s. 25F(c) by the employer to State Government being not an invasion of
workmans right it cannot be raised in writ.
Chandra Kumar Dutta v. Secretary, Messrs. Frank Ross & Co. Ltd, & Ors., 1971 LIC 790 (Cal.DB)
Secondly.appellant. (Page: 792, Para: 6)

VI. When termination is not violative of Sec. 25F

Note: for additional ratios under this head, please also refer to cases under head on retrenchment
compensation when deemed paid

a) When a daily wage worker who failed to establish that he worked for 240 days
and employer refused to employ him can be terminated (S.C.2J)
F 5A.399 Daily rated workman who failed to establish that he had worked for 240 days and on
the contrary evidence proved that he did not report for duty and it was not the employer who
refused to give work to him and thus there was no act on the part of the employer, therefore the
Labour Court erroneously held that he was illegally retrenched and Apex Court held there was no
violation of Sec. 25F and not entitled to any relief.
State of Haryana v. Om Prakash & Anr., 1999 SCC (L&S) 262 (S.C.2J)
.The authority below has come to the conclusion that he had worked for a period from 10-8-1985
to 30-6-1986 which would be less than one year. Therefore, the authority was wrong in concluding that
he had worked for 240 days during 12 months immediately preceding the date of cessation of work.
Besides no information was laid before the authority as to how many days during that period he had
worked for, but in any case, he had not worked for 12 calendar months. There is also no evidence that he
had worked for 240 days to satisfy Section 25-B of the Act. Therefore, the authority was wrong in coming
to the conclusion that there was a violation of Section 25-F of the Act besides, as stated earlier, he himself
voluntarily ceased to report for duty and there was no act on the part of the employer nor is there anything
on record to suggest that the employer had refused work to him. Retrenchment within the meaning of
Section 2(oo) means termination by the employer of the service of the workman for any reason
whatsoever. Therefore it contemplates an act on the part of the employer which puts an end to service to
fall within the definition of the expression retrenchment in Section 2(oo) of the Act. There was nothing
of the sort in the instant case. It was the workman who ceased to report for duty and even after he ceased to
report for duty, it is not his case that at any point of time he reported for duty and he was refused work. He
straightaway proceeded to invoke the provisions of the Act and, therefore, this is a case in which the

Sec. 25F

When termination is not violative of Sec. 25F

2433

employer has done nothing whatsoever to put an end to his employment and hence the case does not fall
within the meaning of Section 2 (oo) of the Act. Therefore, the case does not attract Section 2(oo), nor
does it satisfy the requirements of Section 25 F. (Page: 264, Para: 3)
5A.400
Daily wager was employed on leave vacancy from 30.1.1984 to 30.11.1984 and his
services were terminated w.e.f. 1.12.1984. Subsequently he was appointed on 1.7.1985 to 31.3.1986
and he was terminated on 1.4.1986 thereby he worked for 226 days including holidays. The
Tribunal clubbing two periods of services held that he is entitled for reinstatement with full back
wages for non-compliance of Sec. 25F of Industrial Disputes Act. High Court over ruling held that
he being a daily wager and specifically employed on leave vacancy his first period can not be
counted and hence his termination for not having worked for 240 days for subsequent period is
legal and proper. Besides it held that as the reference was for the dispute of termination from
1.4.1986, the Tribunal while clubbing the previous services has exceeded its jurisdiction as it
cannot proceed to adjudicate dispute not referred to it.
Management of Divisional Engineer, Telecommunications, Mahaboobnagar District v. Venkataiah &
Anr., 2006 LIC 3395 : 2007 (112) FLR 24 : 2007 II LLN 298 : 2007 LLR 334 (Sum) (AP.HC)
Note: also refer to the following cases of daily wagers/temporary employees/employees appointed on
adhoc basis whose termination either for unsatisfactory work or for unauthorized absence or for service
of short period was held not violative of Sec. 25F
The Management, of M/s The Hindu Ins.Building v. The P.O. Industrial Tribunal No.II, Delhi & Anr.,
2002 II CLR 227 : 2002 LLR 151 (Del.HC)
Ad hoc employee can be terminated without complying Sec. 25F.
Teja Singh v. Punjab Water Supply & Sewerage Board & Ors., 1994 II LLJ 1111 (P&H.HC)
Termination of daily wager in violation of Sec. 25F was held proper.
Sunil Kumar Shukla v. Central Government Industrial Tribunal-Cum-Labour Court Pandu Nagar,
Kanpur & Ors., 2006 (108) FLR 390 (All.HC)
Adhoc employees termination by paying wages in lieu of notice is proper since no malafide on part
of employer.
Narmada Building Materials Pvt. Ltd. v. Devassy & Anr., 1999 I LLJ 142 : 1993 III LLJ (Sum) 463 : 1991
(79) FJR 591 (Ker.HC)
Daily wager who hardly worked for considerable period can be terminated for unauthorized
absence without following Sec. 25F.
Kanda Swami & Anr. v. P.O. Industrial Tribunal No. III & Anr., 2001 III LLJ 396 : 2000 III LLN 960 :
2000 I LLR 327 (Del.HC)
Employee is a daily wage workman and not completed for 240 days.
Jaipur Development Authority v. Ram Sahai & Anr., 2007 I LLJ 429 : 2006 (111) FLR 1178 : 2007 I LLN
78 : 2007 LIC 274 : 2007 I CLR 221 : 2007 LLR 92 : 2007 (1) SCC (L&S) 518 (S.C.2J)
Ajay Kumar Sharma v. Presiding Officer, Labour Court No. VI, Tis Hazari & Anr., 2006 LLR 1228
(Del.HC)
Daily wage worker not entitled to benefits of the provisions under the Act.
D. Mohan, v. Presiding Officer, Central Government Indl. Tribunal-cum-Labour Court, Chennai, 2006
III LLJ 912 : 2007 I LLN 314 (Mad.HC)
Sec. 25F not contravened when an employee who worked for 93 days
Raj Vimal v. State of Rajasthan & Ors., 2003 III LLJ 86 : 2003 (97) FLR 1199 (Raj.DB)
Sec. 25-F not violated by termination of workman since he did not complete 240 days.
Udai Ram Sharma v. Rajasthan State Road Transport Corporation, 2006 (108) FLR 726 (Raj.DB)
Termination without enquiry was held proper since appointment was on ad-hoc basis on a
temporary project.
Chief Project Officer & Ors. v. State of U.P. & Ors., 2000 III LLJ 960 : 2000 LIC 3143 (All.HC)

2434

Chapter VA Lay-Off and Retrenchment

Sec. 25F

Termination is proper, when employee is unsuitable for job routine.

Shri Ram Institute For Industrial Research, Delhi v. L.T. Governor, Delhi & Ors., 1985 (50) FLR 111
(Del.HC)
Termination proper, when period of employment of temporary employees has expired.
Crompton Engineering Co. (Madras) Pvt. Ltd. v. Additional Labour Court, Madras & Ors., 1975 I LLJ
207 : 1974 II LLN 262 : 1975 LIC 1006 (Mad.HC)

b) When Services of workman terminated for absence with notice pay as

permissible under Sastry Award (All.HC)
5A.401
Services of cook working in the canteen run by the bank was terminated on remaining
absent without notice for 6 days. Labour Court awarded reinstatement with back wages on the
ground that termination is illegal as 14 days notice under Para 522.4 of the Sastry Award was not
given. High Court held that Para 522.4 of the Sastry Award States that if employee leaves service
without notice will be entitled for a weeks pay including allowance and violation of not giving of
notice of 14 days does not render termination illegal and he is only entitled to 14 days wages
including allowances hence, quashed the award of Labour Court.
Management of State Bank of India v. P.O. Central GovernmentIndus. Tribunal & Anr., 2000 LIC 1892
(All.HC)
Note: also refer to the following case/s
Termination for unauthorized unjustified absence, does not attract Sec. 25F.
Babasaheb Devgonda Patil v. The Managing Director, Panchgonda Sahakari Sakhar Karkhana Ltd.,
1988 LIC 1282 (Bom.HC)

c) When workman was retired for disablement due to electric shock and received
adequate compensation and pensionary benefits (MP.HC)
5A.402
The workman was retired form service, since on account of electric shock he was
seriously injured and was not able to discharge his normal duties. On reference, Labour Court
granted reinstatement but Industrial Court reversed the order. Being aggrieved, workman moved
High Court, which upheld Industrial Courts order because workman received compensation as
per Workmens Compensation Act, gratuity and other pensionary benefits and he was terminated
only for his disablement. Hence, Sec. 25F is not attracted.
Ramesh Gonekar v. Member Judge, State Industrial Court & Ors., 2005 IV LLN 277 : 2005 LIC 2127 :
2005 LLR 855 (MP.HC)

d) When appointment order itself was forged and fabricated and void ab-initio
(Raj.DB)
5A.403
Where the appointment order itself was found forged and fabricated, compliance of
Sec. 25F cannot be insisted upon because one of the requisite conditions of compliance of this
provision is the genuine appointment with the employer. The award of Labour Court reinstating
with 25% back wages, held, suffers from the error apparent on the face of record in that it has
failed to correctly apply the law while making adjudication of industrial law.
Rajasthan State Granite & Mars Mazdoor Sangh v. Rajasthan Mines & Minerals Ltd. & Ors., 2007 (112)
FLR 1236 : 2007 LIC 905 : 2007 I CLR 1049 : 2007 LLR 558 (Raj.DB)

e) When terminated on the expiry of the term as per contract of employment

(Guj.HC)
5A.404
The Female Health Workers appointed for 11 months and continued after
reappointment for period of 11 months challenged the termination order and also seek
regularization in service. High Court observed that workers appointment were not made on

Sec. 25F

When termination is not violative of Sec. 25F

2435

regular basis by following statutory recruitment, it was interim arrangement made by State
authority, therefore the appointment came to an end automatically after completion of the period.
Court cannot extend contract of employment which was for 11 months. Workers have no legal
right, statutory right or constitutional right to challenge any of the conditions mentioned in the
appointment order. And they are also not entitled to regularization in service because their
appointments are void ab initio and de hors the statutory rules. No relief can be granted.
Arunaben Atmaram Dudhrejiya & 16 Ors. v. Union of India & 4 Ors., 2007 I CLR 513 (Guj.HC)

f) When workman voluntarily abandoned the service (S.C.2J)

F 5A.405 The name of a Railway casual labourer was deleted from the Muster Roll on
continued absence for a period of five weeks. After a period of one year five months he raised an
industrial dispute u/s. 25F. The Labour Court held that it is a case of voluntary abandonment of
service and rejected the reference. On a writ petition, the Single Judge of High Court set aside the
award of Labour Court and ordered reinstatement with full back-wages. The employer contested
the decision in Supreme Court. The Supreme Court, on appeal, set aside the decision of High Court
and held that it was a case of abandonment of service. The finding of the tribunal is not perverse or
unreasonable. The employee has not discharged his burden of proving that he was on duty
continuously for a period of 240 days. There is significant delay in challenging the action.
Chief Engineer (Construction) v. Keshava Rao (Dead) by Legal Representatives, 2005 SCC (L&S) 872 :
2005 (105) FLR 378 : 2005 II LLN 81 : 2005 II CLR 112 : 2005 LLR 446 (S.C.2J)
We are of the view that this Appeal should be allowed. The Labour Court recorded two crucial findings
of fact namely, that the Respondent was engaged as a causal labourer in connection with project work,
and secondly, that he had abandoned his service and the allegation that he was prevented from joining his
duties on 1.11.1977 was not true. These were findings of fact recorded by the Tribunal on the basis of
evidence on record. The muster roll, no doubt, supported the case of the Appellant that after 1.11.1977 he
did not report for duty. We cannot lose sight of the fact that thereafter till 4.4.1979 the respondent did
nothing to assert his right of reinstatement. The delay of a year and 5 months in issuing a notice appears to
us to be significant. Apart from this no evidence was led by the Respondent-Workman that he had made
any effort to seek reinstatement or complained against the action of the Management to anyone. There is
no material whatsoever to suggest that he had made a grievance about it before any authority or before the
Workers Union. (Page: 875, Para: 15)
We have further found that the learned Judge, whose finding was affirmed by the Division Bench, fell
into an error in thinking that the reply given by the Appellant to the notice of the Respondent justified the
order of termination. As we have noticed earlier, the learned Judge mis-read the reply given by the
appellant-Railways in which it was clearly asserted that the Respondent had abandoned his service and
therefore, in terms of the Rules his name was deleted from the muster roll. There is nothing in the reply to
the notice which is even suggestive of the fact that the appellant accepted the fact that the services of the
Respondent were terminated, or that there was justification for such termination. The finding of the
Tribunal therefore, did not suffer from the vice of perversity or unreasonableness. In fact the High Court
was in error in interfering with the findings of fact recorded by the Tribunal.
(Page: 875/876, Para: 16)
5A.406
Assistant Mechanic employed did not join service after expiry of due leave. But when
he was given fresh employment he worked only for 12 days and thereafter he never turned up.
When dispute was raised after five years, Labour Court directed his reinstatement with full back
wages. Aggrieved the employer moved High Court. It was observed that the conclusion of the
Labour Court was one which no reasonable man could reach on the evidence. Material evidence
that workman started working from 1982 but he produced the identity card of 1984, had been
ignored by the Tribunal. Moreover the workman raised the dispute after five years, and this fact
fitted with the case that the workman abandoned the work. The workman failed to prove the facts
for attracting Sec. 25F of the Act. Impugned order set aside.
Gammon India Limited, Hinoo, Ranchi v. Presiding Officer, Labour Court, Ranchi & Anr., 2006 III LLJ
875 (Jhar.HC)

2436

Chapter VA Lay-Off and Retrenchment

Sec. 25F

Note: also refer to the following case/s

Nagar Parishad Bilaspur v. Bone Ram & Anr., 2005 II LLJ 123 : 2005 II CLR 484 (HP.HC)
Bharat Sanchar Nigam Ltd. v. Balasabeb Maruti Poojari & Anr., 2006 (111) FLR 204 : 2007 I LLN 193 :
2006 III CLR 82 : 2007 I LLJ 88 (Bom.DB)

g) When employer deposits the short payment of compensation at the earliest,

when such mistake was bonafide (Bom.HC)
5A.407
The employee challenged his retrenchment from service by the management. In the
said proceedings as soon as the employee highlighted the fact of short payment of compensation,
the Management immediately deposited the same in the Court and the deficiency was cured at the
earliest. Though the short payment was bonafide mistake, Labour Court, however held
retrenchment to be illegal and awarded 3.3 years salary as compensation. Aggrieved, employer
filed the writ petition challenging the award. High Court relied upon the ratio laid down in the case
of ++++++++ (1981 (1) LLN 636) and held that retrenchment cannot be faulted on the ground of
non-compliance of Sec. 25F because if there is a bonafide mistake either of fact or law pertaining to
mandatory requirement of the Statute, then, an employer who rectifies the mistake at the earliest
available opportunity and deposits in Court the amount of short fall, would be deemed to have
substantially complied with the provisions of statute and hence set aside the impugned award of the
Labour Court.
Managing Director, The Bombay Film Laboratory Ltd. v. L.G. Vasule & Anr., 1998 I LLJ 208 : 1997 (76)
FLR 402 : 1997 II LLN 774 : 1997 I CLR 930 : 1997 LLR 643 (Bom.HC)

h) Retrenchment not vitiated for small and insignificant shortfall in payment of

retrenchment compensation (Mad.HC)
5A.408
A workman was retrenched on 1.5.1985 and when he went to collect salary for the
month of April he was offered retrenchment compensation of Rs. 2700 which he refused to receive
and demanded more. Termination was challenged on the ground that retrenchment compensation
was not paid hence it amounted to violation of Sec. 25F(b) of the Act. Labour Court dismissed the
petition as it held that provisions of Sec. 25F were complied with. High Court held that small and
insignificant shortfall in the payment of retrenchment compensation will not render the
retrenchment void ab initio. Therefore, it refused to remand the matter back as more than 19 years
had lapsed from the date of termination but modified the award by directing compensation of
Rs. 75,000 in full and final settlement.
Rajamani v. State Express Transport Corpn. Ltd., Chennai, 2004 LIC 2013 (Mad.HC)

i) Termination of apprentice held valid since 240 days service was not rendered
by him (Mad.HC)
5A.409
The workman was appointed as apprentice. On termination he moved Labour Court
contending that he was a workman under Industrial Dispute Act, 1947, therefore entitled to take
benefit of Sec. 25F. Labour Court upheld the order of termination since workman did not render
240 days of service and held that apprentice being a workman as per Sec. 2(s), thus in order to take
the benefit of Sec. 25F he was required to render continuous service as per Act. High Court upheld
the order of Labour Court.
R. Rajendra v. Principal Labour Court, Madras, & Anr., 1992 II LLN 91 : 1992 LIC 1421 : 1992 LLR
703 (Mad.HC)
Note: please refer to the following cases also where the termination was held valid since the employees
did not complete 240 days
Dilbagh Singh v. Union of India., 1997 (91) FJR 409 : 1998 (78) FLR 43 : 1997 LIC 1555 (Del.HC)
Life Insurance Corporation of India v. Santosh Kumar Sharma & Anr., 2004 (103) FLR 963 : 2004 LIC
3396 (MP.HC)

Sec. 25F

When termination is not violative of Sec. 25F

2437

Government Servants Co-op. Soc. Ltd., Wadakkamcherry, Thrissur District v. Industrial Tribunal,
Alappuzha & Anr., 2003 I LLJ 236 : 2003 LLR 169 (Ker.HC)
Daji Dada Pawar & Ors. v. Ornate Multi Model Carriers (P) Ltd. AND Umapati Chauhan of Mumbai v.
Ornate Multi-model Carriers (P). Ltd., 2003 (103) FJR 810 : 2003 (99) FLR 989 : 2004 I LLN 187 : 2003
III CLR 307 (Bom.HC)
Madhya Pradesh State Road Transport Corporation through Divisional Manager, Gwalior & Anr. v.
Indra Bahadur Singh & Ors., 2002 II CLR 1001 : 2002 LLR 723 (MP.HC)
Municipal Counsil, Erandol, Jalgaon v. Ramesh Mukund Lokhande, 2005 (105) FLR 565 : 2005 LLR
621 (Bom.HC)
Motila Nehru Farmers Training Institute (Cordet) v. Presiding Officer, Labour Court, Allahabad & Ors.,
2005 (105) FLR 386 : 2005 LLR 565 (All.HC)
Hemalata Sahoo v. Presiding Officer, Labour Court, Bhubaneswar, & Anr., 2005 IV LLN 693 (Ori.HC)
Punjab State Electricity Board v. P.O. Labour Court, Bhatinda & Anr., 1997 LLR 54 (P&H.HC)
Karnal Central Co-Operative Societies Bank Ltd. v. State Of Haryana & Ors., 1995 (86) FJR 223
(P&H.HC)
Management, Vikas Vidyalaya, Newri, Ranchi v. Presiding Officer, Labour Court, Ranchi & Anr., 2007
(112) FLR 79 : 2007 III LLN 745 : 2007 LLR 208 (Jhar.HC)

j) When Apprentice terminated has no right to post (S.C.2J)

F 5A.410 The employee was appointed as an apprentice in terms of a scheme sponsored by the
State Government. The Employee was terminated after the scheme came to an end. On reference
the Labour Court held that the services of workman were terminated as per rules and the
workman was never engaged on a permanent post and that he was a trainee and, therefore, did not
fall within the ambit of the definition of workman. On writ petition the High Court held that the
employer adopted unfair labour practice. On appeal the Supreme Court held that in terms of the
provisions of the Apprentice Act, 1961, a trainee or apprentice had no right to be absorbed in
services, of that the provisions of the apprentices Act override the provision of the Industrial
Disputes Act, 1947 therefor proper and the termination was legal and set aside the orders of the
High Court.
Dhampur Sugar Mills Ltd. v. Bhola Singh, 2005 I LLJ 1084 : 2005 LLR 320 : 2005 LIC 1611 : 2005 I
CLR 799 : 2005 (2) SCC 470 : 2006 AIR (SC) 1790 : 2005 SCC (L&S) 292 (S.C.2J)
In terms of the provisions of the Apprentices Act, 1961, a trainee or an apprentice has no right to be
absorbed in services. It is trite that if the provisions of the Apprentices Act applies, the provisions of the
Labour Laws would have no application. (Page: 1087, Para: 14)
The High Court, thus, in our opinion committed a manifest error in coming to the conclusion that the
Appellant is guilty of commission of unfair labour practice only on the premise that the services of 11
similarly situated had been regularized without taking into consideration the materials placed on records
as also the finding of fact arrived at by the Labour Court that the services of such persons had been
regularized in the year 1986. The High Court further failed to take notice of the fact that according to the
Appellant, the Respondent herein did not qualify for his absorption at that time and, thus, his services
continued as apprentice with several other trainees and it was only when the scheme came to an end, the
services of all the trainees had been terminated. (Page: 1088, Para: 16)
When a workman is appointed in terms of a scheme on daily wages, he does not derive any legal right to
be regularized in his service. It is now well known that completion of 240 days of continuous service in a
year may not by itself be a ground for directing regularization particularly in a case when the workman
had not been appointed in accordance with the extant rules. (Page: 1088, Para: 20)

k) When services terminated on reaching the age of superannuation (J&K.HC)

5A.411
On reaching the age of superannuation, the services of an Assistant Store Keeper were
terminated by the factory, which was managed by the State Government. He filed a writ petition in
High Court for quashing the order of the State Government contending that since he was not given
retrenchment compensation, which was a condition precedent before retrenchment u/s. 25F of
Industrial Dispute Act, therefore the order of termination was illegal. The High Court upheld the
order of termination by State Government and observed that the termination of the services of a

2438

Chapter VA Lay-Off and Retrenchment

Sec. 25F

workman in order to amount to retrenchment as defined in the Industrial Dispute Act, must be
due to discharge of surplus labour or staff in a continuing or running industry. Any other mode of
termination will not amount to retrenchment merely because he had reached the age of
superannuation and was given notice by employer to that effect; it will not amount to
retrenchment and will not entitle the workman to any retrenchment compensation.
SH. Parsidh Singh v. State of Jammu & Kashmir & Ors., 1965-66 (28) FJR 89 (J&K.HC)

l) Even though workman who is terminated completed 240 days but not in the
preceding year (Bom.HC)
5A.412
Services of the workman were terminated on 1.7.1994. Tribunal held that workman
had completed 240 days from 7.8.1988 to 14.5.1989 and therefore he was entitled to the benefit of
Sec. 25F. Management challenged the award. Held that completion of 240 days has to be in a year
preceding termination of services which in this case was 1.7.1994 and not in earlier years to avail
benefit of Sec. 25F. In this case relevant period of 1year is 1.7.1993 to 30.6.1994 in as much as his
service were terminated on 1.7.1994. Award of Tribunal was set aside.
Union of India (THROUGH Divisional Railway Manager) v. Jairaj N. Shetty., 2004 I LLN 658
(Bom.HC)
Note: For contrary view, see Mohan Lal v. The Management of M/s. Bharat Electronics, Ltd.,1981 II LLJ
70 : 1981 (58) FJR 467 : 1981 (42) FLR 389 : 1981 II LLN 23 : 1981 LIC 806 : 1981 SCC (L&S) 478 :
1981 AIR (SC) 1253 : 1981 (3) SCC 225 (S.C.2J)

m) When appointment is not consistent with standing orders and service was less
than 240 days (Cal.DB)
5A.413
When the services of an employee who had joined duty on 5.11.1981 was terminated
on 30.3.1982, all forums up to Single Judge held that the termination was illegal in violation of
Sec. 25F of the Act, but the Division Bench upheld the termination on the ground that he had not
been issued any appointment letter and he had worked for less than 240 days in a year, his
appointment was inconsistent with Standing Orders and that his termination was termination
simpliciter.
Calcutta Jute Mfg. Co. Ltd. & Anr. v. First Industrial Tribunal & Ors., 2006 III CLR 739 : 2006 (111)
FLR 1158 : 2007 I LLN 526 (Cal.DB)
The issue before.writ petition /appellant. (Page: 741, Para: 2)
It appears from the.of his services. (Page: 747, Para: 21)

n) When employee terminated is not employed in industry and has not completed
240 days of service (Karn.HC)
5A.414
High Court held that, the termination of the employee was not in contravention of Sec.
25F as he could not discharge his burden that he was a workman employed in the bank is no proof
that he had completed 240 days of continuous service.
Karur Vysya Bank Employees Union Bangalore v. P.O. Central Government Industrial
Tribunal-cum-Labour Court, Bangalore, & Anr., 1988 (73) FJR 93 : 1989 (59) FLR 157 : 1988 II LLN
794 : 1988 LIC 1746 (Karn.HC)
Note: Also refer to the following case
Delhi Agricultural Marketing Board v. Satya Pal Singh Dabas & Anr., 2003 (99) FLR 719 : 2003 IV LLN
313 : 2003 LLR 1035 (Del.HC)

Sec. 25F

When termination is not violative of Sec. 25F

2439

Karur Vysya Bank Employees Union Bangalore v. P.O. Central Government Industrial
Tribunal-cum-Labour Court, Bangalore, & Anr., 1988 (73) FJR 93 : 1989 (59) FLR 157 : 1988 II LLN
794 : 1988 LIC 1746 (Karn.HC)

o) When the employer is a Government company and workman was not

sponsored by Employment Exchange as per recruitment rules and there is no
evidence of 240 days of his service (Bom.HC)
5A.415
Claim of the employee of the Government company that his services were illegally
terminated was favoured by the Industrial Tribunal and the award of reinstatement with back
wages was passed. The High Court set aside the award as the relationship of employer-employee
was not proved and the employer being a Government company the employee should have been
employed by regular recruitment by sponsorship through an Employment Exchange. Further, the
findings of the Industrial Tribunal that the employee had worked for 240 days preceding his
termination was not based on any evidence and hence, it is perverse.
Bharat Earth Movers Ltd. v. Mansukh M. Makwana & Anr., 2001 III LLJ 846 : 2001 (89) FLR 141 : 2000
III CLR 914 (Bom.HC)
Note: also refer to the following case
Management of Vellore Co-operative Sugar Mills Ltd., (rep. By Special Officer), Vellore v. Presiding
Officer, Labour Court, Vellore & Anr., 2005 II LLJ 632 : 2005 I LLN 280 (Mad.HC)

p) If employee is purely temporary and termination is for want of Government

grants and due to closure of few divisions (Guj.HC)
5A.416
An employee was appointed as Tracer on purely temporary basis for a fixed term to
complete the work within the prescribed time. His services were terminated as the Government
grants were stopped and few divisions were closed. On reference the Labour Court directed
reinstatement with 50% back wages. On writ petition the High Court held that the termination was
proper and justified and there was no misuse or colourable exercise of powers by the employer and
the employee was appointed for a fixed term attracting Sec. 2(oo)(bb) and held that Sec. 25F is not
applicable and hence set aside that award.
Executive Engineer, Roads & Building Department, Rajkot v. Rameshkumar K. Bhatt, 2000 III LLJ 478 :
2000 II LLN 632 : 2000 LIC 818 (Guj.HC)

q) When probationer whose services were terminated was paid Rs. 5000 as
retrenchment compensation and one month wages (Guj.HC)
5A.417
Court found that termination of services of a probationer was due to his
unsatisfactory work, but taking into consideration the various aspects found that interests of
justice would be served if Rs. 5000 is awarded by way of retrenchment compensation. The
probationer also admitted that 1 months wages were sent to him by money order after the
termination of services. Hence, no case is made out for interference.
Narayan Maganlal Oza v. A.V. Jasani T.B. Hospital Rajkot, 2002 (93) FLR 728 (Guj.HC)
Note: also refer to the following cases
Termination of service On ground of unsatisfactory work was held to be legal and valid.
Mrs. Maria Thomas Gonsalvies v. Concept Pharmaceuticall Pvt. Ltd. & Anr., 2001 (90) FLR 412 : 2001
LLR 755 (Bom.HC)
Termination of temporary employee on the basis unsatisfactory service, held valid.
Madhya Pradesh State Road Transport Corporation through Divisional Manager, Gwalior & Anr. v.
Indra Bahadur Singh & Ors., 2002 II CLR 1001 : 2002 LLR 723 (MP.HC)

2440

Chapter VA Lay-Off and Retrenchment

Sec. 25F

r) When probationer terminated could not establish that he is a workman (Guj.HC)

5A.418
The employees appointed on probation by Indian Oil Corporation for a period of 6
months. We are appointed On termination they moved High Court contending that they were in
service for more than 6 months as such they should be deemed to have been confirmed in service
and could not be terminated without following Sec. 25F. High Court held that the termination was
valid because there was no rule, which provides such automatic confirmation nor any order of
confirmation was passed as per rules and it was held that Sec. 25F would not apply to the employees
because there was no material to show that the employees were workmen within the meaning of
Industrial Disputes Act.
Sunilkumar S.P. Sinha v. Indian Oil Corporation Ltd., Delhi & Anr., 1983 LIC 1139 (Guj.HC)
The petitioner.passed by it. (Page: 1141, Para: 1)
First contention.from 6-10-1978.
.In this case.to be terminated. (Page: 1142, Para: 3)
While passing.the said Act.As pointed out.their services.
(Page: 1147, Para: 14)

s) When workmans services were terminated as per settlement for non-selection

(Guj.HC)
5A.419
A settlement was entered between management and the union representing Gujarat
region which provided that workmen may on closure of Agricultural zone (West) due to losses be
relocated in Maharashtra wherever possible. As per the said settlement concerned workman was
called for an interview in Bombay but was not selected and terminated as per settlement. On
workmans challenge, the he held that when the workman acted in pursuance of the settlement in
respect of process of relocation by attending the interview, he was estopped from disputing
settlement and hence the award of Labour Court in favour of the workman holding that there were
only minutes but not settlement and there was no closure since the office at Baroda was functioning
ignoring the fact that it was attended only by one employee was quashed.
Shaw Wallace & Company, Ltd. v. N.R. Trivedi,1999 I LLN 319 : 1998 LIC 3309 (Guj.HC)

t) When there is no proof of employer-employee relationship (Raj.DB)

5A.420
In a dispute of alleged termination of service w.e.f. 15.10.1996 without compensation
raised by a salesman the Labour Court held that although he was alleged to be appointed w.e.f.
1973 no case for continuous service was made out and hence not entitled to any benefit. Though the
Single Judge denied relief holding a salesman is not a workman as per Apex Court decision but
Division Bench held that his termination is not retrenchment since the finding of fact recorded by
the Labour Court clinches that appellant was not in service of the respondent establishment for the
above duration.
Lekhakar Jha v. Manager, M/s. Aushadh Prathishthan, Udaipur & Anr., 2006 (109) FLR 522 (Raj.DB)
5A.421
The employee a Chowkidar was not allowed to join duty, although working for nearly
two years continuously. There was oral termination of his services. Upon reference of the
Industrial Dispute to Labour Court it held that neither he could be reinstated nor his case fitted
with the parameters governing the provisions of Sec. 25F of the Industrial Disputes Act, 1947 for
compensation on the ground that first, there was no post of a Chowkidar to be filled and second, the
wages of the employee were made out of the proceeds received from the trainees coming for
training where the employee functioned as a watchman. Therefore, there was no master and
servant relationship. Hence there was no proof of the termination of the employee by the employer
for want of master and servant relationship. The High Court upheld the findings of Labour Court
and refused to interfere with the award.
Ganesh Lal v. Judge, Labour Court & Ors., 2005 (106) FLR 528 : 2005 IV LLN 758 : 2005 LLR 926
(Raj.HC)

Sec. 25F

When termination is not violative of Sec. 25F

2441

u) When termination effected falls under the purview of Clause (bb) of Sec. 2(oo)
or on account of expiry of fixed tenure (S.C.2J)
F 5A.422 A person was appointed as a trainer to train weavers for a fixed period after expiry of
which, his services were discontinued. Labour Court passed an award of reinstatement which was
confirmed by Single Judge as well as by the Division Bench but the Apex Court held that since the
appointment was contractual, his appointment stood automatically terminated after the expiry of
the stipulated period and hence not violative of Sec. 2(oo) nor Sec. 25F.
M.D. Karnataka Handloom Development Corporation Ltd. v. Mahadeva Laxman Raval, 2007 I LLJ 696
: 2007 (112) FLR 490 : 2007 I CLR 25 : 2007 LLR 317 (Sum) (S.C.2J)
A careful perusal of the terms and conditions of appointment would go to show that the respondent is not
a worker but employed on contract basis on a time bound specific scheme assigned as weaving trainer.
However, the learned Judges of the Division Bench committed a factual error in holding that the above
letter of appointment does not show that employment was not a contract which stipulated that it comes to
an end with the expiry of project or scheme nor is it the case of the Corporation that the respondent was
made aware of any such stipulation even at the commencement of the employment. The High Court has
failed to notice that the respondent was engaged on contract basis and had been assigned to train weavers
who were lagging in weaving skills in the weaving potential development area working on time specific
short term scheme sponsored by the Corporation. We are, therefore, of the opinion that the respondent is
not a worker for the purposes of Section 25F of the I.D. Act but employed on contract basis only. The
High Court also has not properly appreciated the judgment relied on S.M. Nilajkar and Ors. v. Telecom
District Manager, Karnataka MANU/SC/0261/2003. As the respondent was engaged as trainer for a
specific period under the scheme and was paid a stipend of Rs. 1,000 p.m. from the date of his
appointment and, therefore, Section 2(oo) of the Act is not attracted soon after the expiry of the specific
period the respondents service was discontinued and so it is not a retrenchment as defined under Section
2(oo) of the I.D. Act. On the other hand, the case of the Corporation before the learned Single Judge and
also before the Division Bench was that the respondent was not a workman in the employment of the
appellant and that he was a weaver in the area as another weaver in the area and was getting certain
concessions from the Corporation. (Page: 700, Para: 10)
.The termination of his contract, in our view, does not amount to retrenchment and, therefore, it
does not attract compliance of Section 25F of the I.D. Act at all. (Page: 700/701, Para: 11)
Note: Also refer to the following cases
S.M. Nilajkar and Ors. v. Telecom District Manager, Karnataka, 2003 II LLJ 359 : 2003 (97) FLR 608 :
2003 II LLN 1134 : 2003 LIC 2273 : 2003 II CLR 233 : 2003 LLR 470 : 2003 SCC (L&S) 380 : 2003 AIR
(SC) 3553 : 2003 (4) SCC 27 (S.C.2J)
Kishore Chandra Samal v. Divisional Manager, Orissa State Cashew Development Corporation Ltd.,
Dhenkanal, 2006 I LLJ 685 : 2006 (108) FLR 143 : 2006 I LLN 74 : 2006 I CLR 29 : 2006 LLR 65 : 2006
SCC (L&S) 241 (S.C.2J)
Anil Bapurao Kanase v. Krishna Sahakari Sakhar Karkhana Ltd. & Anr., 1998 I LLJ 343 : 1997 (91) FJR
317 : 1997 (76) FLR 847 : 1997 III LLN 67 : 1997 II CLR 383 : 1997 LLR 701 : 1997 SCC (L&S) 1637 :
1997 AIR (SC) 2698 : 1997 (10) SCC 599 (S.C.3J)
5A.423
The workmen terminated from service were not temporary railway servants under
the Railway Establishment Code Rules, as they were employed as casual labourers in work
charged projects and on completion of the work, their services are liable to be terminated in
compliance with Sec. 25F as was done in this case, hence termination is valid.
Ravindra Kumar Srivastava v. Union of India & Ors., 1982 II LLN 427 : 1982 (45) FLR 214 : 1982 LIC
1739 (All.DB)
The services.employees. (Page: 431, Para: 10)
From the.servant. (Page: 431/432, Para: 10)
The petitioners.surplus. (Page: 432, Para: 14)

2442

Chapter VA Lay-Off and Retrenchment

Sec. 25F

5A.424
The workman was appointed temporarily on ad hoc basis and his services were
terminated after extending twice for brief spells. The Labour Court found that the case of the
workman falls u/s. 2(oo)(bb) but held that the employer violated Sec. 25F and thus directed his
reinstatement with 25% back wages. The High Court held that when the case falls under the
aforesaid Clause (bb), the employer was not required to follow the requirements of Sec. 25F.
Consequently, the award was set aside as being erroneous in law.
Netaji Subhash Institute of Technology v. Dilkhush Bairwa & Anr., 2006 (110) FLR 719 : 2006 LLR 847
(Del.HC)
Note: also refer to the following cases in the above context
Ravindrakumar B. Patel & Anr. v. National Dairy Development Board, 1997 LIC 207 (Guj.HC)
Deputy Executive Engineer, Gujarat Maritime Board v. Hasmukh M. Jasani, 2000 III LLJ 1307 : 2000
(85) FLR 886 : 2000 I CLR 827 (Guj.HC)
Medical Officer, District Health Centre & Anr. v. Savjibhai Trikambhai Kansagra, 2003 (96) FLR 268 :
2002 III CLR 838 : 2002 LIC 2659 (Guj.HC)

v) When notice served on the workman indicating that pay and other dues would
be paid to him on the same day but he failed to collect the same (Bom.HC)
5A.425
Employee was retrenched from his service and a notice was served to him. It indicated
that pay and other dues would be paid to him on the same day. Although the payment was ready
with the cashier he failed to collect the same. Therefore, his contention that his termination was in
violation of Sec. 25F was not valid.
Oriental Metal Pressing Works Pvt. Ltd. v. M.M. Kendrekar, 1981 (42) FLR 185 : 1981 I LLN 548
(Bom.HC)
Note: also refer to the following cases similarly decided
Retrenchment valid u/s. 25-F, employer offering the notice pay and retrenchment compensation to
the employee but the employee denying the same.
Frick India Private Ltd. v. Vijay Bahadur Singh & Anr., 2000 II LLJ 120 (P&H.HC)
Retrenchment valid, in compliance with Sec. 25F, notice and payment was given to the employee.
A. Selvam & Ors. v. Management C. Abdul Rahman & Co. & Anr., 2002 II LLJ 188 : 2002 (93) FLR 898 :
2002 II LLN 739 : 2002 LLR 372 : 2002 LIC 185 (Mad.HC)

w) When termination is valid even in the absence of notice u/s. 25F when there is
no work and one month salary paid (Mad.HC)
5A.426
Three employees working as stacking section operators and paid wages as per the law
filed a petition u/s. 2(k) of the Act. They were terminated since there was no further work and were
paid one month salary and compensation through a registered letter. Conciliation proceedings
failed. They filed a petition u/s. 2A and the same was rejected by the Labour Court. Thereafter they
filed a writ petition. The contention of the workmen was that they were not served notices but High
Court dismissed the petition holding that the letter sent to the workmen along with compensation
can be construed as notice only and further that when retrenchment was bonafide, the absence of
notice u/s. 25F will not invalidate it.
A. Selvam & Ors. v. Management C. Abdul Rahman & Co. & Anr., 2002 II LLJ 188 : 2002 (93) FLR 898 :
2002 II LLN 739 : 2002 LLR 372 : 2002 LIC 185 (Mad.HC)
Note: Refer to Workmen of Coimbatore Pioneer B Mills Ltd. v. The Presiding Officer, Labour Court,
Coimbatore and other, 1980 I LLJ 503 : 1982 (61) FJR 180 : 1980 (40) FLR 371 1981 I LLN 561 : 1981
LIC (Sum) 12 : 1980 AIR (SC) 1871 : 1980 (1) SCC 698 (S.C.2J)

Sec. 25F

When termination is not violative of Sec. 25F

2443

x) When services were terminated under the provisions of a statute which

prohibits continuance of temporary employees beyond six months (Karn.HC)
5A.427
Employee appointed on temporary basis u/s. 51B of Karnataka State universities Act
which prohibits continuance of a temporary employee beyond six months. Hence his services were
terminated. Therefore it was held that it was not retrenchment. Hence Sec. 25F was not attracted.
Mangalore University Non-Teaching Employees Assocition, Mangalore v. Mangalore University &
Anr., 1989 (58) FLR 173 : 1988 II LLN 771 (Karn.HC)

y) Though notice under Clause 25F(c) is not given since it is only a condition not
condition precedent (Bom.DB)
5A.428
Non-compliance with Sec. 25F(c) is only an irregularity and does not make
retrenchment illegal as it is only a mere condition but not condition precedent to retrenchment.
Bombay Union of Journalists & Ors. v. State of Bombay & Anr., 1961 II LLJ 727 (Bom.DB)
From.at all. (Page: 732, Para: 2)
Note: also refer to the following case
M/s. Utkal Asbestos Ltd. v. Workman, T.S. Rao & Anr., 1993 III LLJ 726 : 1991 (62) FLR 972 : 1991 II
LLN 752 : 1991 II CLR 941 (Ori.DB)

z) When workmen failed to prove that they have worked for 240 days service
(S.C.2J)
F 5A.429 The workman was terminated without following Sec. 25F. Labour Court ordered his
reinstatement accepting workmans contention that he rendered 240 days service. High Court
upheld the order of Labour Court. On appeal, Supreme Court set aside Labour Courts order
since apart from oral evidence, no evidence was produced by workman to show that he had
rendered 240 days service in preceding year before his termination.
Surendranagar District Panchayat v. Dahyabhai Amarsinh, 2006 I LLJ 424 : 2006 (108) FLR 193 : 2005
IV LLN 1007 : 2005 LIC 4308 : 2005 III CLR 892 : 2005 LLR 1222 : 2005 (8) SCC 750 : 2006 SCC
(L&S) 38 : 2006 AIR (SC) 110 (S.C.2J)
In the light of the aforesaid, it was necessary for the workman to produce the relevant material to prove
that he has actually worked with the employer for not less than 240 days during the period twelve
calendar months preceding Page 1559 the date of termination. What we find is that apart from the oral
evidence the workman has not produced any evidence to prove the fact that he has worked for 240 days.
No proof of receipt of salary or wages or any record or order in that regard was produced; no co-worker
was examined; muster roll produced by the employer has not been contradicted. It is improbable that
workman who claimed to have worked with the appellant for such a long period would not possess any
documentary evidence to prove nature of his engagement and the period of work he had undertaken with
his employer. Therefore, we are of the opinion that the workman has failed to discharge his burden that he
was in employment for 240 days during the preceding 12 months of the date of termination of his
service. (Page: 430, Para: 19)
Note: also refer to the following case
Not violative of Sec. 25F when no evidence that workman has worked for 240 days
Bhaskar Chandra Sahoo v. Chairman, Cuttack Gramya Bank, Cuttack & Anr., 2003 II LLJ 957 : 2003
LIC 1030 (Ori.DB)

2444

Chapter VA Lay-Off and Retrenchment

Sec. 25F

za) When workman accepted compensation & ex-gratia etc. (Pat.DB)

5A.430
A workman who received retrenchment compensation and also accepted exgratia
payment under settlement after filing the writ, is deemed to have acquiesced with the older of his
termination.
Borhan Kumar v. Assistant Personnel Officer, Indian Oil Corporation, Refineries Division Barauni Unit
& Ors., 1971 I LLJ 50 : 1971 LIC 675 (Pat.DB)
.the facts.retrenchment.So I do not.mandamus.
(Page: 58/59, Para: 2)

zb) Though retrenchment compensation is short of small amount of Rs. 552.87

when workman accepted it, and did not raise any objection in his pleadings
(Cal.DB)
5A.431
Termination of service of a workman on grounds of being surplus cannot be set aside
on the ground of short payment of compensation by small amount of Rs. 552.87 when he accepted
the same and did not raise any such objection in his pleadings and the payment was made in bona
fide and hence the order of reinstatement with back wages by the tribunal on the above ground was
set aside and employer was directed to pay the shortfall.
Purna Theatre v. State of West Bengal & Ors., 2000 II CLR 977 : 2000 (86) FLR 819 : 2000 I LLR 197 :
2000 I LLJ 519 (Cal.DB)
.the workman.retrenchment. (Page: 977/978, Para: 2)
.tribunal.Disputes Act. (Page: 978, Para: 3)
The.workman. (Page: 978, Para: 4)
.the workman.522.87. (Page: 979, Para: 9)
.So the fact.upheld.we deen.workman.nugatory.
(Page: 980, Para: 11)

zc) When workers did not opt for alternative employment and accepted
compensation u/s. 25F (Cal.HC)
5A.432
The employer provided an option to its senior security guards to join CISF in view of
the enactment of C.I.S.F. Act, 1968 which provided that C.I.S.F would protect industrial
establishments of the country. But, the security guards did not exercise the said option and as a
result the employers terminated them as per Sec. 25F and sent notice to State Government u/s.
25F(c). However, the Government referred the dispute of termination to Labour Court which held
that the termination was illegal and ordered absorption of the workmen. Being aggrieved,
employer moved High Court, which set aside Labour Court order on the ground that the workmen
failed to exercise the option of alternative employment and they were terminated in due compliance
with Sec. 25F and hence it is legal and valid.
Steel Authoritsy of India Ltd. v. The Ninth Industrial Tribunal & Ors., 1997 (76) FLR 4 : 1997 LIC 1247 :
1997 I CLR 737 (Cal.HC)

Sec. 25F

When termination is not violative of Sec. 25F

2445

zd) When money and ex-gratia paid in lieu of notice and retrenchment
compensation (Cal.DB)
5A.433
Even though the employer paid money in lieu of notice and ex-gratia to the employees
not purporting them to be workman, the mandatory conditions of notice and retrenchment
compensation under Clause (a) and (b) were held to be complied with and hence their termination
was held valid.
Guest Keen Willams Ltd. v. The Fifth Industrial Tribunal, West Bengal & Ors., 1996 III LLJ 825 : 1996 I
LLN 106 : 1995 LIC 1687 : 1995 II CLR 485 : 1996 LLR 64 (Cal.DB)
.Now the question.service. (Page: 833, Para: 23)
.It therefore.employees. (Page: 833, Para: 24)
.As we have.award. (Page: 834, Para: 27)

ze) When services of trainee who was not in regular employment were terminated
(Bom.DB)
5A.434
Termination of services of a trainee who was not in regular employment of the bank
was held not to be retrenchment under the section.
Anthony Olinto Silva v. S.V. Nevaji & Ors., 1989 (59) FLR 309 : 1989 I LLN 869 : 1990 LLR 191
(Bom.DB)
The petitioner was.a trainee officer.The bank held.bad in law.
(Page: 311, Para: 3)

zf) When workman declined to receive notice pay and retrenchment

compensation (Del.DB)
5A.435
Court accepted the contention of the management that postal receipt showing
dispatch of notice pay and retrenchment compensation which in fact workman had declined to
receive was sufficient compliance with Sec. 25F and hence writ petition by workman was dismissed.
Shri Beli Ram v. Management of M/s. Associated Instrument Manufacturers India Pvt. Ltd. & Ors., 1980
(41) FLR 416 : 1981 I LLN 109 (Del.DB)
With regard to.December 30, 1977. (Page: 417, Para: 2)

zg) When employer issued notice and paid compensation and interim relief on
terminating a probationer for unsuitability and thus complied with Sec. 25F
(Karn.DB)
5A.436
Where the employer complied with legal requirements of notice and compensation
while terminating the services of a probationer and also paid the interim relief of more than
Rs. 50,000 and the workman was not found suitable for employment, it was held unjust to penalise
employer with more damages and hence the award of reinstatement with 50% back wages was
quashed.
M/s. Karnataka Handloom Development Corporation Ltd. v. D.L. Nanjundaswamy & Anr., 2002 (95)
FLR 626 : 2003 LLR (Sum) 105 (Karn.DB)
.the above memo.clauses 2 & 3. (Page: 628, Para: 4)
Any how in the.undertaking. (Page: 632, Para: 14)
So far as back.petitioner. (Page: 632, Para: 15)

2446

Chapter VA Lay-Off and Retrenchment

Sec. 25F

zh) When Clauses (a) and (c) of Sec. 25F complied with one months salary in lieu
of notice paid despite error in the date of notice (Ass.DB)
5A.437
The workmen were paid one months salary in lieu of notice as per Sec. 25F(a) and
since the Statutory provisions were complied with, the defect in the date of notice erroneously
stating it as 1st Oct. 1960 instead of 1st Nov. 1960 would not vitiate the notice. Nor does this error in
the date of retrenchment, invalidate the notice to the Government in Form P.
Workmen of Shillong Hydro-Electric Ltd. v. State of Assam & Ors., 1965 II LLJ 619 (Ass.DB)
In the present caseof Service. (Page: 621, Para: 2/3)
The next point is.a valid notice. (Page: 621, Para: 4)

zi) When the letter offering him to collect his compensation and notice pay is
definite & genuine (Del.DB)
5A.438
The offer made by the Employer whose services were terminated through a letter
offering him to collect his compensation and notice pay was held to be definite, genuine and
sufficient compliance of the section and hence the contention of the workman that Sec. 25F was
violated since the offer was vague, was set aside.
Suresh Kumar v. Band Box Pvt. Ltd., 1982 I LLJ 362 : 1981 (42) FLR 276 : 1981 I LLN 657 (Del.DB)
The Learned Single Judge.follow.
This is to writ.due. (Page: 363, Para: 5)
The learned Single Judge.dismissing him. (Page: 364, Para: 8)

zj) When employee terminated completed 240 days of service due to interim order
of Writ Court (HP.DB)
5A.439
Termination of employees completing more than 240 days of service only due to
interim order of writ Court but not in regular course of engagement is not violative of Sec. 25F.
Amit Bhardwaj v. H.P.S.E.B. & Ors., 2001 I LLJ 241 : 2001 LLR 244 : 2000 LIC 2990 (HP.DB)
Felling.Sec. 25 F Act. (Page: 244, Para: 8)

zk) When notice of termination served on the workmen on 15.4.1982 and dues
were not accepted (All.DB)
5A.440
The notice of termination served on the workmen on 15.4.1982 was not accepted by
them on the date it was served, and they had continued to work on the 15th and 16th but Court held
that they cannot contend that it was illegal as they had not accepted the notice and dues offered to
them and so could not be permitted to argue otherwise and hence termination of service from date
of notice was not illegal.
Ravindra Kumar Srivastava v. Union of India & Ors., 1982 II LLN 427 : 1982 (45) FLR 214 : 1982 LIC
1739 (All.DB)
The petitioner.above. (Page: 434, Para: 20)

Sec. 25F

When termination is not violative of Sec. 25F

2447

zl) When workman offered compensation and one month wages though arrears of
wages not paid as demanded since it has no relationship with compliance of
Sec. 25F (Cal.DB)
5A.441
Employer by its letter requested the workman who was sought to be retrenched, to
collect the retrenchment compensation along with wages in lieu of notice which was denied by the
workman, on the ground that he was not paid arrears of wages of 3 months, it was held that
payment of arrears of wage have no connection with compliance of Sec. 25F(a) and 25F(b) hence
compliance was held to be justified.
Chandra Kumar Dutta v. Secretary, Messrs. Frank Ross & Co. Ltd, & Ors., 1971 LIC 790 (Cal.DB)
It is evident.of the Act. (Page: 791, Para: 5)

zm) When employer terminated is a daily wager not entitled to regular post and
there is delay of 8-9 years in raising dispute (Bom.DB)
5A.442
The daily wager worked continuously for 240 days but did not report for work
allegedly due to oral termination of his services. After 6 years, he raised a dispute and after
conciliation proceedings failed, the Labour Court, upon reference held that it is not a case of
voluntary abandonment of service and yet rejected the reference, he being a casual daily wager.
The Single Judge set aside the award and reinstated him with continuity of service relying on his
service of 240 days applying Sec. 25F of the Act. The Division Bench set aside the order of Single
Judge and held that it was a case of voluntary abandonment of service as the worker failed to
ventilate his grievance for 8-9 years apart from being a daily wager, not holding a post, the
employer is not obliged to issue any notice or to comply with Sec. 25F of the Act.
Bharat Sanchar Nigam Ltd. v. Balasabeb Maruti Poojari & Anr., 2006 (111) FLR 204 : 2007 I LLN 193 :
2006 III CLR 82 : 2007 I LLJ 88 (Bom.DB)

zn) When notice of retrenchment is accompanied by a sheet containing detailed

calculations for payment of retrenchment compensation (Mys.DB)
Workmen of Davangere Cotton Mills Ltd. v. Industrial Tribunal, Bangalore & Anr., 1973 I LLJ 306 :
1973 (43) FJR 107 : 1974 (28) FLR 162 : 1974 II LLN 154 : 1973 LIC 1356 (Mys.DB)
Note: Please see related ratio/s under the above citation in this section

zo) When service rendered by a daily wager in two spells cannot be clubbed to
arrive at 240 days (AP.HC)
5A.443
Daily wager was employed on leave vacancy from 30.1.1984 to 30.11.1984 and his
services were terminated w.e.f. 1.12.1984. Subsequently he was appointed on 1.7.1985 to 31.3.1986
and he was terminated on 1.4.1986 thereby he worked for 226 days including holidays. The
Tribunal clubbing two periods of services held that he is entitled for reinstatement with full back
wages for non-compliance of Sec. 25F of Industrial Disputes Act. High Court held that he being a
daily wager and specifically employed on leave vacancy his first period cannot be counted and
hence his termination for not having worked for 240 days for subsequent period is legal and
proper. Besides it held that as the reference was for the dispute of termination from 1.4.1986, the
tribunal while clubbing the previous services has exceeded its jurisdiction as it cannot proceed to
adjudicate dispute not referred to it.
Management of Divisional Engineer, Telecommunications, Mahaboobnagar District v. Venkataiah &
Anr., 2006 LIC 3395 : 2007 (112) FLR 24 : 2007 II LLN 298 : 2007 LLR 334 (Sum) (AP.HC)
Facts to the extent.to the Industrial Tribunal for adjudication. (Page: 3397, Para: 2)
The Tribunal held that.such reinstatement. (Page: 3397/3398, Para: 5)

2448

Chapter VA Lay-Off and Retrenchment

Sec. 25F

Since the 1st respondents.Industrial Dispute Act. (Page: 3405, Para: 23)
In view of breaks.ab initio void. (Page: 3407, Para: 31)
Thus mere completion.to be set aside. (Page: 3410, Para: 45)

zp) When services of probationer employee terminated for unsuitability as per

letter of appointment (S.C.2J)
F 5A.444 Services of the employee who was kept on probation was terminated in accordance
with letter of appointment as he was not found suitable dull unsatisfactory work it as held that his
termination will not invoke Sec. 25F hence Supreme Court set aside the order of Labour Court and
High Court.
Rajajinagar Coop. Bank Ltd. v. K. Gururaj & Anr., 2001 II LLJ 412 : 2002 SCC (L&S) 1022 : 2001 (10)
SCC 681 (S.C.2J)
. Before the Labour Court the appellant contended that Section 25-F would not be attracted
inasmuch as the services of the respondent had been put an end to during the period of probation, but the
same was considered. That is how the award was made in favour of the respondent. Unfortunately, the
learned single Judge while dealing with the writ petition held that contention had not been raised before
the Labour Court though at earlier stage of the order he noticed that the appellant had raised such a
probation was due to expire on December 31, 1988. Thus, the facts are clear in this case that termination
was within the period of probation. (Page: 413, Para: 3)
.. When the services of the respondent were required to be continued, regularized or confirmed
after the period of probation his service record is examined and since the same is not satisfactory his
services were discharged. Thus the respondent was not found suitable to be continued in service of the
appellant. Hence we do not think the order of termination is bad. Therefore, we hold that the order of
termination of the respondent was in terms of stipulation contained in his appointment order and we set
aside the award made by the Labour Court as affirmed by the High Court.
(Page: 413/414, Para: 4)

zq) When pleadings of employer that workman is a daily wager is not controverted
by workman (P&H.DB)
5A.445
Since an inference is deducible if a pleading by one party is not specifically
controverted by the other party, the workman appointed on daily wages was held to have been
appointed for a specific period as per the pleadings of the employer which was not controverted by
the workman and hence the order of the Labour Court holding the termination illegal, having been
oblivious of the above fact was set aside and matter remanded to it for fresh consideration.
Haryana Board of School Education v. Industrial Tribunal, Hissar, 1994 I LLJ 1123 (P&H.DB)
After.Disputes Act. (Page: 1123, Para: 2)
The Management.February 191985. (Page: 1123, Para: 3)
The services of the workman.nature. (Page: 1123, Para: 4)
The workman.sustained. (Page: 1124, Para: 5)

zr) When discharged due to medical unfitness since it does not amount to
retrenchment (S.C.3J)
The Workmen of Bangalore Wollen, Cotton & Silk Mills Co. Ltd. v. Bangalore Woollen, Cotton & Silk
Mills Co. Ltd., 1962 I LLJ 213 : 196162 (21) FJR 538 : 1962 (4) FLR 298 : 1962 AIR (SC) 1363 (S.C.3J)
Note: Please see related ratio/s under the above citation in this section

Sec. 25F

Sec. 25F when violated or when required to be complied

2449

zs) When workman appointed for 88 days on temporary basis was terminated
since banks policy forbids appointment for 90 days (S.C.2J)
F 5A.446 The workman was appointed for 88 days on temporary basis as regard to Banks
policy of appointment to maximum for 90 days. On termination of his services and on reference
Labour Court awarded reinstatement with full back wages on writ petition, High Court modified
award for reinstatement only. On appeal Supreme Court held that temporary service of
workman for 88 days only does not attract reinstatement, full back wages nor Sec. 25H is
applicable.
Regional Manager, SBI v. Mahatma Mishra, 2007 I CLR 594 : 2007 I LLJ 424 : 2007 (112) FLR 338 :
2007 I LLN 32 : 2007 LIC 270 : 2007 LLR 98 (S.C.2J)
.Section 11A of the Industrial Disputes Act confers a discretionary power in the Industrial
Tribunal or the Labour Court, as the case may be. Although in a given case, the Industrial Tribunal or the
Labour Court may grant appropriate relief, its discretion should be exercised judiciously. An employee
after termination of his services cannot get a benefit to which he was not entitled to if he remained in
service. (Page: 598, Para: 11)
.Even in a case where service of an employee is terminated in violation of Section 25F of the
Industrial Disputes Act, he would not be entitled to grant of a permanent status. Regularisation does not
mean permanence. (Page: 598, Para: 11)

VII. Sec. 25F when violated or when required to be complied

Note: please refer to head on service of notice and retrenchment compensation for more ratios on
violation of Sec. 25F.

a) When Termination is effected without compliance of any of the Clauses (a) (b)
& (c) are not complied since they are all independent (S.C.3J)
F 5A.447 The Supreme Court in this case has held that failure to comply with the provisions of
Sec. 25F especially Sec. 25F(b) renders the orders of termination invalid and inoperative.
State of Bombay & Ors. v. Hospital Mazdoor Sabha & Ors. 1960 I LLJ 251 : 1959-60 (17) FJR 423 : 1960
AIR (SC) 610 (S.C.3J)
On a plain reading of S. 25F (b) it is clear that the requirement prescribed by it is a condition precedent
for the retrenchment of the workman. The section provides that no workman shall be retrenched until the
condition in question has been satisfied. It is difficult to accede to the argument that when the section
imposes in mandatory terms a condition precedent, non-compliance with the said condition would not
render the impugned retrenchment invalid. The argument which appealed to Tendolkar, J., however, was
that the consequence of non-compliance with the requirement of S. 25F (b) was not to render the
impugned retrenchment invalid, because he thought that by S. 25-I a specific provision has been made for
the recovery of the amount prescribed by S. 25F (b). Section 25-I provides for the recovery of monies due
from employers under Ch. V, and according to Tendolkar J. this provision covers the amount due to the
workman by way of compensation under S. 25F (b). In our opinion, this view is untenable. Having regard
to the fact that the words used in S. 25F (b) are mandatory and their effect is plain and unambiguous it
seems to us that the Court of Appeal was right in holding that S. 25-I covered cases of recovery of monies
other than those specified in S. 25F (b), and it is obvious that there are several other cases in which monies
become due from the employers to the employees under Ch. V; it is for the recovery of these monies that
S. 25-I had been enacted. Therefore, we see no substance in the argument that the Court of Appeal has
misconstrued S. 25F (b). That being so, failure to comply with the said provision renders the impugned
orders invalid and inoperative. (Page: 255, Para: 2)

2450

Chapter VA Lay-Off and Retrenchment

Sec. 25F

5A.448
When amounts due to the retrenched employees u/s. 25F(a) and 25F(b) have not been
fully paid, retrenchment is void and reinstatement with full back wages is ordered.
Hanuman Singh v. Municipal Council, Jaipur., 1989 II LLJ 138 : 1989 (58) FLR 392 : 1989 II LLN 1010
(Raj.DB)
There cannot.before us. (Page: 139, Para: 2)
5A.449
Termination of employee without paying retrenchment compensation was held to be
invalid and therefore he was awarded reinstatement without back wages in facts of case and
probability of gainful employment for the period in question.
Braja Kishore Pradhan v. Tribal Development, 1992 LIC 1831 : 1993 LLR 15 (Ori.DB)
.even if the.the petitioner. (Page: 1831, Para: 3)
.yet we would think.petitioner. (Page: 1832, Para: 6)
5A.450
Workman employed in a bank for a fixed term was terminated and it was held that,
since sub-Sec. (a), (b), (c) of the section is independent, violation of any of the clause will make the
termination illegal hence retrenchment of workmen having completed 240 days though in
compliance of Clause (a) but not by Clause (b) and hence was held to be illegal.
State Bank of India v. Union of India & Ors., 1996 III LLJ 1191 : 1995 LIC 1668 : 1995 LLR 890
(Pat.DB)
It has been.be illegal. (Page: 1670, Para: 20)
5A.451
The contention of the management that the provisions of Sec. 25F have been
substantially complied with by paying one months salary in lieu of notice was held to be not
proper. The High Court held that all the provisions of Sec. 25F need to be complied with as a whole
and non-compliance would make termination of service liable to be considered as retrenchment
u/s. 2(oo). Thus, the management did not have the right to terminate the services under College
rules and regulation.
Raj Kumar College Karmachari Union v. Raj Kumar College, Raipur & Anr., 1987 (55) FLR 93 : 1987 II
LLN 573 (MP.HC)
Note: The following cases may also be referred in the above context
M/s. Jodhpur Sahkari Upbhokta Wholesale Bhandar Ltd. v. State of Rajasthan, 2006 (111) FLR 892
(Raj.HC)
Non-compliance of Sec. 25F, workman neither regularized nor was compensation given,
termination illegal.
Pratap Singh v. Panchayat Samiti, Shahpura, 1995 II LLJ 206 (Raj.HC)
Retrenchment invalid, when retrenchment compensation is not paid.
District Red Cross Society, Silas v. Krishna Kumari & Ors., 2003 (98) FLR 919 : 2004 LIC 172 : 2003
LLR (Sum) 1021 (P&H.HC)
Termination without notice, without compensation was held bad.
State of Rajasthan v. Labour Court & Anr.,1994 (85) FJR 384 : 1995 (70) FLR 463 (Raj.HC)
Termination illegal, only notice pay but no retrenchment compensation u/s. 25F given.
Ashok Kumar Gupta & Ors. v. State of Jharkhand & Ors., 2003 (98) FLR 852 : 2003 LIC (Sum) 210
(Jhar.HC)
Retrenchment without paying compensation, is bad.
Prabh Dayal v. Pepsu Road Transport Corpn., 1997 (91) FJR 570 : 1998 (78) FLR 150 :1998 I LLN 309 :
1998 LLR (Sum) 4 (P&H.HC)

Sec. 25F

Sec. 25F when violated or when required to be complied

2451

Retrenchment compensation if not paid and employee completed 240 days, retrenchment bad.
Jagannath Prasad Yadav v. Deoria Kasiya Sakhari Bank, 1988 (57) FLR 298 (All.HC)
Termination held bad retrenchment compensation not paid.
Cuttak Municipal Council v. Presiding Officer Labour Court, 1988 (57) FLR 157 (Ori.HC)
Termination-was set aside since Sec. 25F was not followed.
Roy Brother v. Presiding Officer, Labour Court - VIII & Ors., 2005 (105) FLR 1196 (Del.HC)

b) If one month notice or one month salary in lieu of notice is not given (S.C.2J)
F 5A.452 Where neither one months notice nor in lieu of notice, one months salary was given,
it was clearly a non-compliance with Sec. 25F and therefore order of termination was illegal since
the workman by producing muster roll had established the 240 days service and the employer
failed to lead any evidence to rebut the same and reinstatement with back wages was directed.
Executive Engineer, Punjab v. Pargat Singh, 2006 SCC (L&S) 95 (S.C.2J)
By the impugned order the High Court has upheld the award made by the Labour Court directing the
reinstatement of the respondent workman with back wages. The Labour Court came to the conclusion
that the appellant while issuing the notice of retrenchment as contemplated under Section 25F of the
Industrial Disputes Act neither gave one months notice nor in lieu of the notice gave one months salary
which has been upheld by the High Court. Learned counsel for the appellant is not able to satisfy us how
the impugned orders of the Labour Court Court as well as the High Court are contrary to the law.
(Page: 95, Para: 2)
5A.453
Termination of services without any notice pay or retrenchment compensation is in
violation of the provisions of Sec. 25F of the Act when an employee had worked from 5.3.1985 to
26.6.1987, more than 240 days in a year and upheld the award of Labour Court.
Municipal Corporation of Delhi v. Ram Kumar & Anr., 2006 (111) FLR 1077 (Del.DB)
The facts leading.to the Labour Court. (Page: 1078, Para: 1)
On the basis of.50% back wages. (Page: 1081, Para: 7)
Even on merits, we.not more than 30.9.2006. (Page: 1083/1084, Para: 19)
Note: also refer to the following cases
Bombay Leprosy Project v. Vishnu B. Chavan & Anr., 2002 (94) FLR 789 : 2002 LLR 994 (Bom.HC)
Sita Ram Pareek v. Judge, Labour Court & Anr., 2006 (110) FLR 877 : 2006 LLR 1092 : 2007 I LLJ 264
(Raj.HC)
Sarjug Prasad v. State of Bihar, 1985 (51) FLR 620 : 1984 II LLN 630 : 1984 LIC 1264 (Pat.DB)
Kanti Weekly v. D.D. Gupta & Ors., 1983 I LLN 771 (Del.HC)
Non-compliance of Sec. 25F, if notice of retrenchment not served.
Ramjee Jaisingh & Co. v. R.K. Meshram & Anr., 1995 (70) FLR 122 : 1994 II CLR 780 (Bom.HC)
Notice if not given, workman terminated, held illegal.
Executive Engineer, PWD & Anr. v. Labour Court Jaipur & Anr., 1995 II CLR 393 (Raj.HC)
Retrenchment-invalid, when notice/notice pay was not given.
Divisional Railway Manager, Southern Railway Palghat v. General Secretary, Dakshina Railway
Casual Labour Union, Ernakulam & Ors., 1996 LIC 718 (Ker.HC)
Notice by registered post, if one month not lapsed on date of termination it is illegal.
Bhanwar Lal v. Municipal Board, Nagpur, & Ors, 1988 (57) FLR (Sum) 19 : 1988 LIC 1265 (Raj.HC)

2452

Chapter VA Lay-Off and Retrenchment

Sec. 25F

Dismissal of workman with one year service without show cause notice nor notice or pay in lieu
thereof held bad.
Coal India Ltd. v. P.O. (Labour Court-3) & Ors., 2001 II LLJ 45 : 2001 (89) FLR 929 : 2001 II LLN 314 :
2001 LIC 2243 : 2001 II CLR 502 : 2001 LLR 460 (Del.HC)
Retrenchment of an employee in contravention of Sub-Sec. (a) or (b) was null and void and was
liable to be quashed.
Om Prakash v. Registrar Co-OPerative Societies, 1980 (40) FLR 38 (Raj.HC)

c) When notice was served fifteen minutes before closing of work (Bom.HC)
5A.454
Where notice of termination is served on employee 15 minutes before the closing of the
working day and asking the workman to collect his dues immediately, it is not a genuine offer and
held that Sec. 25F is not complied with.
Bengal Chemicals & Pharmaceuticals Ltd. v. General Secretary, Dyes & Chemical Workers Union, &
Ors., 1988 (57) FLR (Sum) 13 : 1988 II LLN 40 : 1988 I CLR 439 (Bom.HC)

d) When termination is from back date since it amounts to termination without

notice (S.C.2J)
F 5A.455 Termination of workman from back date being indicative of no issuance of notice
before termination, is violative of Sec. 25F and held retrenchment is void ab-initio.
L. Robert DSouza v. The Executive Engineer, Southern Railway & Anr., 1982 I LLJ 330 : 1982 (60) FJR
144 : 1982 (44) FLR 250 : 1982 I LLN 257 : 1982 LIC 811 : 1982 SCC (L&S) 124 : 1982 AIR (SC) 854
(S.C.2J)
.The basic fallacy in the submission is that notice of change contemplated by Section 9-A and
notice for a valid retrenchment under S. 25-F are two different aspects of notice, one having no
correlation with the other. It is, therefore, futile to urge that even if termination of the service of the
petitioner constitutes retrenchment it would nevertheless be valid because file notice contemplated by S.
25-F would be dispensed with in view of the provision contained in S. 9-A, proviso (b). That apart, it is an
indisputable position that none of the other pre-conditions to a valid retrenchment have been complied
with in this case because the very letter of termination of service shows that services were deemed to have
been terminated from a back dale which clearly indicates no notice being given, no compensation being
paid and no notice being given to the prescribed authority. Therefore, termination of service, being
retrenchment, for failure to comply with See. 25-F, would be void ab initio. (Page: 336/337, Para: 7)

e) When services of employees terminated by notice under Service Rules or terms

of appointment order but not by notice u/s. 25F (Ori.DB)
5A.456
Notice given under Rule 421 of Orissa Municipal Rules 1953 for termination of
services of sweepers on abolition of Post under Rule 420 would not affect a case of retrenchment.
Hence retrenchment made in non-compliance of Sec. 25F was held to be inoperative and invalid.
Smt. Pandab Kalyani & Ors. v. Notified Area Council, Bhubaneswar, & Ors., 1974 II LLN 329 (Ori.DB)
Rule 420. Retrenchment. (Page: 331, Para: 4)
Admittedly.Retrenchment. (Page: 332, Para: 4)
.Since.to law. (Page: 332, Para: 5)
5A.457
Services of an employee were terminated as per Clause 10 of the appointment order
without complying with Sec. 25F. Labour Court held that the employee was a workman u/s. 2(s)
and termination was not justified for non-compliance with Sec. 25F. It granted reinstatement with
back wages payable after deducting pension received by him. High Court held that finding of the
Labour Court that termination was not justified cannot be interfered with as it is a fact. Even
though clause in appointment order provides services of workman can be terminated by giving one

Sec. 25F

Sec. 25F when violated or when required to be complied

2453

months notice or payment in lieu of notice, management cannot take advantage of it in view of
Sec. 25F. He is entitled to back wages for the period he was unemployed without deducting pension,
amount of such back wages has to be decided by Labour Court afresh.
Beco Engineering Co. Ltd v. State of Punjab & Ors.,

1981 (59) FJR 121 : 1981 II LLN 569 (P&H.HC)

Note: also refer to the following case

S.H. Kelkar & co. Ltd. v. Khashaba K. Jadhav & Anr., 1997 (77) FLR 619 : 1997 IV LLN 638 : 1997 II
CLR 649 (Bom.HC)

f) Termination of service for any reason in violation of Sec. 25F prior to March 2,
1982 is void ab initio (P&H.DB)
5A.458
Before introduction of Clause (bb) in 1984 termination of service for any reason was
covered by retrenchment, therefore non-compliance with Sec. 25F in case of termination prior to
August 18, 1984 would render it void ab initio.
Administrator, Municipal Committee v. P.O. Labour Court Patiala & Ors., 1999 II LLJ 14 : 1998 III
LLN 526 (P&H.DB)
.Definition of retrenchment.contact of employment. (Page: 18, Para: 12)
.We hold that.of section 25F. (Page: 21, Para: 18)
.In the present.of that clause. (Page: 21, Para: 19)
Note: This position is prior to introduction of Clause (bb) of Sec. 2(oo)

g) If lay-off compensation is deducted from retrenchment compensation

(Bom.HC)
5A.459
Company laid off 65 employees as it was in financial difficulty, financial position did
not improve hence these and few more were retrenched. It was held that company was not entitled
to deduct lay-off compensation from retrenchment compensation and by effecting such deduction
there was breach of mandatory provision of Sec. 25F of the Act and therefore retrenchment was
held illegal.
Vacuum Plant Kamgar Sanghtana v. Vacuum Plant & Instruments Fanufacturing Co. P. Ltd. & Anr.,
1999 II CLR 530 (Bom.HC)

h) When the termination is in non-compliance of Sec. 25F though it is oral

(Pat.DB)
5A.460
Oral termination falls within the purview of retrenchment u/s. 2(oo). It does not
amount to dismissal/discharge u/s. 11A due to the absence of a written order and hence the
employer is not allowed to adduce evidence in support of dismissal. Since the requirements of Sec.
25F were not complied with, termination is illegal and Tribunal has rightly directed reinstatement
with back wages.
State Bank of India v. Union of India & Ors., 1989 II LLJ 294 : 1989 (75) FJR 63 : 1989 II LLN 640 : 1989
LIC 623 (Pat.DB)
Note: Please see related ratio/s under the above citation in this section
Note: also refer to the following case
Shiv Dan Singh v. State of Rajasthan & Ors., 1999 I LLR 1103 : 1999 (83) FLR 112 (Raj.HC)

2454

Chapter VA Lay-Off and Retrenchment

Sec. 25F

Termination of workmen on the oral orders of the president in non-compliance of Sec. 25F
amounts to illegal retrenchment.
Chief Officer, Municipal Council Akot & Anr. v. Smt. Shantabai Kisan & Ors., 1976 (33) FLR 96 : 1976
LIC 660 (Bom.DB)
When services were verbally terminated without complying with section.
T.A. Benny v. Rajasthan Co-op., Dairy Federation Ltd., 1994 III LLJ (Sum) 336 : 1991 (63) FLR 52 :
1991 II LLN 218 : 1991 I CLR 460 (Raj.HC)

i) When appointment letter mentions only the words contract basis without
mentioning the period and nature of work (P&H.DB)
5A.461
Where the employer merely mentions in the appointment letter the word contract
basis without stipulating the period of contract and nature of work whether fixed or temporary,
his termination, it is held violates the provisions of Sec. 25F of the Act which led the Labour Court
to set aside the termination ordering his reinstatement with 50% back wages which was upheld by
the Division Bench of the High Court.
Municipal Counsil, Quadin through its Executive Officer v. Presiding Officer, Labour Court, Gurdaspur
& Anr., 2007 (113) FLR 179 : 2007 I CLR 650 (P&H.DB)

j) When an overaged employee is terminated without compliance of Sec. 25F

(Ori.DB)
5A.462
Because of non-compliance of Sec. 25F termination of the employee was held to be
illegal retrenchment and hence he was reinstated with full back wages, whereas company
contended that the workman could not be reinstated because of being overage. The companys
contention was rejected on the grounds that earlier also the employee being over age was continued
in service and also had employed several overage employees without Government approval and
hence was directed to employ him with back wages.
The Management of Bhubaneswar Municipality v. Mojes Gaon & Anr., 1986 II LLJ 349 : 1986 (52) FLR
188 (Ori.DB)
The Labour.terminated. (Page: 350, Para: 6)
It transpires.appointment. (Page: 350, Para: 7)
Opposite party.assailed. (Page: 351, Para: 9)
Note: also refer to the following case
Rajeshwar Nath v. Union of India & Ors., 1981 LIC 696 (Raj.HC)

k) When the workman who had worked for 240 days is terminated (S.C.3J)
Note: A long list of additional cases is given at the end of the heading on violation of this section given
below in which termination of workmen whether daily wagers/casual labour/temporary
employees/probationers who completed 240 days was held illegal for non compliance of Sec. 25F
F 5A.463 Employer moved Supreme Court against the order of Division Bench which upheld
the order of Labour Court and ordered reinstatement of the workman in view of the
non-compliance of Sec. 25F. Supreme Court affirmed the order of Division Bench since the
workman by producing muster roll had established the 240 days service and the employer failed to
lead any evidence to rebut the same.
Executive Engineer & Anr. v. Lekh Raj & Anr., 2006 SCC (L&S) 650 (S.C.3J)

Sec. 25F

Sec. 25F when violated or when required to be complied

2455

We have heard the learned counsel for the appellant in this appeal and perused the award as well as the
judgment of the High Court. From the award we notice that so far as the workman is concerned he has
produced muster rolls for the relevant period which indicated that the workman did work continuously
from 1.2.1994 to 31.8.1995 and the appellant management did not produce any material from its side to
rebut the same on such factual background we find no reason to interfere with the impugned order. Hence
this appeal fails and the same is dismissed. (Page: 650, Para: 2)
5A.464
Neither notice nor compensation was paid to terminated employee who had rendered
245 days of service therefore Court upheld decision of Industrial Tribunal-cum-Labour Court that
his termination was null and void and he was entitled to be reinstated with back wages.
Municipal Board, Marwar Mundwa v. Industrial Tribunal & Ors., 1989 (58) FLR 469 (Raj.DB)
.The total number.with back wages. (Page: 471, Para: 1)
5A.465
Discontinuance of an employee completing 240 days service in violation of Sec. 25F is
unlawful and hence order was unsustainable.
Managing Director Rajasthan Small Industries Corporation & Anr. v. Faily Ram, 1997 I LLJ 817 : 1996
(74) FLR 2459 : 1996 II LLN 1261 : 1996 500 : 1996 LLR 645 (Raj.DB)
Since the respondent.in the matter. (Page: 818, Para: 6)
5A.466
Termination without notice of services of a workman re-employed after his
resignation is bad as he completed 240 days since then.
F.R.P. Moulding Company Pvt. Ltd. v. State of Wet Bengal & Ors., 2001 III LLN 158 : 2001 LLR 1089
(Cal.DB)
In such circumstances.resignation. (Page: 160, Para: 16)
In view of the above.April 4, 1987.(Page: 160, Para: 17)
5A.467
Termination of person who worked for more than 240 days in preceding 12 months in
violation of Sec. 25F is invalid.
Divisional Engineer, Telecom, Coaxial Cable Project, Rajahmundry v. Mamidi Venkata Ramana & Anr.,
2003 II LLJ 907 : 2003 (97) FLR 1132 : 2003 III LLN 764 : 2003 LLR 803 (AP.DB)
.The learned single.respondent is invalid. (Page: 911, Para: 11)
5A.468
The workman was terminated without complying Sec. 25F. On reference, Tribunal
held that workman completed 240 days service and ordered reinstatement. Single Judge set aside
Tribunals order since workman was not in continuous service preceding the date of termination.
On appeal, Division Bench set aside Single Judges order since workman was in continuous service
as he had worked for 240 days in earlier year or years though not in the year immediately
preceding termination and held that Sec. 25F was applicable in the case.
Jairaj N. Shetty v. Union of India, 2006 I LLJ 206 : 2005 IV LLN 537 : 2005 III CLR 106 : 2005 LLR
1095 (Bom.DB)
Note: also refer to the following case
If employee terminated after 240 days of service.
Ram Niwas & Anr. v. P.O. Labour Court, Faridabad & Ors., 2001 II LLJ 1164 : 2001 (91) FLR 1037 :
2001 II LLN 1169 : 2001 LLR 846 (Sum) 3 (P&H.DB)

2456

Chapter VA Lay-Off and Retrenchment

Sec. 25F

1. In respect of apprentice
i) If apprentice who was continued beyond the initial period of appointment
and worked for 240 days as staff reporter terminated (Guj.HC)
5A.469
Workman was appointed as an apprentice and he continued in employment for about
8 months after training was over. Held that as he remained in service after completion of training
and during that service he completed 240 days of continuous service and Sec. 25F of the Act was not
followed when he was terminated, he is entitled to reinstatement with back wages.
Textile Traders co-operative Bank, Ltd. v. Jagdishbhai Natwarlal Patel, 2001 I LLJ 235 : 2000 III LLN
766 : 2000 II CLR 503 : 2002 (93) FLR 9 (Guj.HC)
Note: also refer to the following case
Surat Mahila Nagrik Sahakari Bank, Ltd., Surat v. Mamtaben Mahendrabhai Joshi., 2000 III LLJ 1082 :
2000 II CLR 603 : 2001 III LLN 444 : 2001 LIC 222 (Guj.HC)
M. Raghuram v. Labour Court, Hyderabad & Ors., 1994 (69) FLR 329 : 1994 I CLR 1089 (AP.HC)
H.B. Vinobha & 39 Ors. v. Hindustan Photo Films, & Ors., 1999 III LLJ (Sum) 60 : 1998 (93) FJR 326 :
1998 (78) FLR 857 : 1998 I LLN 744 : 1998 LLR 391 (Mad.HC)
Management, Vikas Vidyalaya, Newri, Ranchi v. Presiding Officer, Labour Court, Ranchi & Anr., 2007
(112) FLR 79 : 2007 III LLN 745 : 2007 LLR 208 (Jhar.HC)

2. In respect of temporary workman

i) If temporary workmen with 240 days service for not passing test for
absorption is terminated (S.C.3J)
F 5A.470 Labour Court held that termination of temporary workmen who had completed 240
days because of failure to pass the test for permanent absorption is invalid but did not reinstate
them with back wages because in its view it will create dissatisfaction with those workmen who had
passed the test but Supreme Court set aside the order and held that there is no shade of evidence to
suggest that reinstatement will cause widespread dissatisfaction among permanent employees and
therefore reinstated them with full back wages and further held that for seniority purpose the
period from retrenchment to reinstatement will not be considered.
Surendra Kumar Verma etc. v. The Central Government Industrial Tribunal-cum-Labour Court, New
Delhi & Anr., 1981 AIR (SC) 422 : 1981 I LLJ 386 : 1980 (57) FJR 67 : 1980 II LLN 456 : 1980 LIC 1292
: 1981 SCC (L&S) 16 : 1980 (4) SCC 443 (S.C.3J)
In the cases before us we are unable to see any special impediment in the way of awarding the relief. The
Labour Court appears to have thought that the award of the relief of reinstatement with full back wages
would put these workmen on a par with those who had qualified for permanent absorption by passing the
prescribed test and that would create dissatisfaction amongst the latter. First, they can never be on par
since reinstatement would not qualify them for permanent absorption. They would continue to be
temporary, liable to be retrenched. Second, there is not a shred of evidence to suggest that their
reinstatement would be a cause for dissatisfaction to anyone. There is no hint in the record that any undue
burden would be placed on the employer if the same relief is granted as was done in Santosh Gupta v.
State Bank of Patiala, (AIR 1980 SC 1219). (Page: 425, Para: 7)
F 5A.471 In the instant case Labour Court overlooked the fact that the workman had worked
for 240 days and also post was not abolished, the interference by the High Court that the
termination was in violation of Sec. 25F and also the post was not abolished, was justified by the
Supreme Court.
Nagar Panchayat, M.P. v. Diwan Chand Teneja & Anr., 2001 (90) FLR 1121 : 2001 I LLJ 1410 : 2001
LLR 822 : 2002 SCC (L&S) 719 : 2001 (10) SCC 49 (S.C.2J)

Sec. 25F

Sec. 25F when violated or when required to be complied

2457

.his services were put to an end by an oral order on the ground that the Helper / Nakedar post
stood abolished. Aggrieved by that action the respondent raised a dispute under section 10(1) of the
Industrial Disputes Act, 1947 which was referred to the Labour Court. The Labour Court, however, did
not interfere with the action of the appellant having taken the view that the Helper / Nakedar post stood
abolished.It was made clear that the respondent was working as a Helper / Nakedar and his
services were orally terminated. When the fact that the respondent had worked for more than 240 days in
a year could not be disputed and it was not clearly established that it was on account of closure of Nakedar
system, the High Court took the view that the finding recorded by the Labour Court was perverse and,
therefore, interfered with the order and held that the respondent was entitled not only to retrenchment
compensation but also shall get Rs. 30, 000 (Rupees thirty thousand) or in the alternative he shall be
employed in some other vacancy. (Page: 1121, Para: 1)
.we think the order made by the High Court is just and proper and we decline to interfere with the
same. (Page: 1121, Para: 2)
Note: also refer to the following cases
Shashikant Govind Malgaonkar v. State of Maharashtra & Ors., 2003 (98) FLR 20 : 2004 LIC 273 : 2003
II LLN 1023 : 2003 II CLR 342 (Bom.HC)
Executive Engineer (Construction Division), Co-operative Department v. P.O. & Anr., 2002 (100) FJR
120 (Mad.HC)
A. Ilango & Ors. v. Union of India & Ors., 1996 LIC 2362 (Mad.HC)

3. In respect of casual workman/daily wager

i) When a casual worker with more than 240 days of service in preceding 12
months terminated (Cal.DB)
5A.472
Verbal termination of the services of the casual labourer constitutes retrenchment
u/s. 2(oo) of Industrial Disputes Act. Workman had worked for more than 240 days and his
termination was in violation of Sec. 25F, hence reinstatement is ordered.
Tapan Kumar Jana v. Calcutta Telephones & Ors., 1981 II LLJ 382 : 1981 LIC (Sum) 68 (Cal.DB)
As soon.of the Act. (Page: 391, Para: 2)
It is.appellant. (Page: 391, Para: 25)
5A.473
The termination of services of the casual workmen who have been in continuous
service for more than a year constitutes retrenchment and it is bad in law, as the statutory
requirements of Sec. 25F have not been complied with and hence orders of termination are set
aside.
Prem Narain & Ors. v. Assistant Personnel Officer & Ors., 1985 (50) FLR 143 : 1985 I CLR 163 : 1984
(48) FLR 400 (All.DB)
In the present.illegal. (Page: 144/145, Para: 4)
5A.474
As university is an industry its casual labourers who undisputedly completed 240
days of continuous service were workmen therefore non compliance with Sec. 25F would render
their termination illegal hence Court issued mandamus directing that concerned employees should
not be terminated and if already terminated they should be reinstated with all benefits.
Narendra Deo Krishi Evam Proudyogik Vishwavidyala Mazdoor Union v. Kulpati Narendra Deo Krishi
Evam Proudyogik Vishwavidyalaya & Ors., 1989 (59) FLR 701 : 1990 I LLN 28 : 1990 LLR 81 (All.DB)
It is settled.definition of workman.Admittedly no.than one year.it is
clear.of their employment. (Page: 703, Para: 3)

2458

Chapter VA Lay-Off and Retrenchment

Sec. 25F

The argument of.has no force. (Page: 704, Para: 4)

.A writ in.with all benefits. (Page: 704, Para: 5)

4. In respect of probationer
i) When probationer with continuous service of one year or more terminated
(Karn.DB)
5A.475
Probationer who had put in continuous service of one year or more, his Termination
without complying with requirements of Sec. 25F was held to be illegal and void.
Hutchiah v. Karnataka State Road Transport Corporation & Ors., 1983 I LLJ 30 : 1982 (61) FJR 207 :
1983 I LLN 205 (Karn.DB)
Once it is.in law. (Page: 37, Para: 2)
5A.476
Termination of probationer for unsatisfactory work which did not carry any stigma
as per regulations amounts to retrenchment and hence non compliance of Sec. 25F renders it void
and illegal and the Division Bench awarded compensation in lieu of reinstatement holding that
reinstatement is not the inevitable consequence of illegal retrenchment following the decision of the
Constitution Bench in the case of Punjab Land Development Reclamation Corporation 1990 (77)
FJR 17.
Delhi Transport Corporation v. P.O. & Anr., 2000 II LLN 231 : 2001 (98) FJR 424 : 2001 (90) FLR 418 :
2000 I CLR 557 : 2000 I LLR 136 : 2002 I LLJ 457 (Del.DB)
The workman.assigned. (Page: 232, Para: 2)
.as regards.not. (Page: 236, Para24)
The decision.back wages. (Page: 236, Para: 27)
5A.477
Employee who was appointed on probation of 6 months, was continued after expiry of
6 months and had also completed 240 days hence termination in violation of the section was held to
be illegal and reinstatement with back wages were granted.
Wazir Singh. v. Managing Director of Tarn Taran Co-operative Sugar Mills Ltd., Amritsar & Anr., 2001
LIC 1227 (P&H.DB)
.Moreover, according to the cross-examination of MW1 read with the appointment letter Ex.
M1, the petitioner had worked from November, 1989 upto October, 1990 and his services were
terminated on 22-10-1990. In this position, both because the petitioner had worked for more than 240
days and because even after the expiry of the service period of six months, the petitioner was allowed to
continue, the petitioners appointment cannot be said to be for a particular period. Therefore, we do not
agree with the Labour Court which upheld termination. (Page: 1228, Para: 3)
The Labour Court has held that the petitioner has not completed 240 days of service in a calender year
and his appointment was for a fixed period and was not extended further and that provision of section
2(oo) (bb) of the Industrial Disputes Act (hereinafter referred to as the Act) will be applicable.
(Page: 1228, Para: 3)
Note: also refer to the following case
Termination for unsatisfactory work in violation of Sec. 25F illegal.
Branch Manager, Commercial Clearing Agnecies (P.) Ltd. v. Manibhai D. Bhojani, 2004 (105) FJR 604 :
2004 (102) FLR (Sum) 50 : 2004 (105) FJR 609 (Guj.HC)

Sec. 25F

Sec. 25F when violated or when required to be complied

2459

ii) When Probationers even appointed invalidly but terminated in

non-compliance of Sec. 25F since their termination does not fall under any
of the exceptions (MP.DB)
5A.478
An invalid appointment does not fall in exception clause of Sec. 2(oo), therefore it was
held that even in case of termination of probationers though appointed invalidly, compliance with
provisions of Sec. 25F is necessary and hence the orders of their termination were quashed.
Rajesh Kumar & Ors. v. State of M.P. & Ors., 1994 II LLJ 320 : 1993 II LLJ 249 : 1993 I LLN 1009 :
1993 I CLR 846 (MP.DB)
.Though the petitioners.25F was mandatory. (Page: 321, Para: 7)
.An invalid appointment.25F is necessary. (Page: 322, Para: 11)
Note: Similar view was held incase of termination of trainee in the following case
R. Radhakrishnan v. Presiding Officer, Labour Court, Cuddalore (2) Management of Thanthai Periyar
Transport Corporation (Now known as Tamil Nadu State Transport Corporation, Villupuram),
Villupuram, 2004 III LLJ 631 : 2004 (103) FLR 671 : 2004 II LLN 1054 : 2004 LLR 756 (Mad.HC)

l) When contractors employees under previous direct payment system

discontinued due to reintroducing of contract system to deny the status of
workman (S.C.3J)
F 5A.479 When the corporation introduced direct payment system to the workmen of the
contractor they became the employees of the corporation and subsequently its unilateral act of
discontinuing it and reintroducing contract system o deny the status of workman will amount to
termination of these employees in violation of Sec. 25F as well as non compliance of Sec. 9A inviting
a penalty u/s. 31(2) of Industrial Dispute Act and held that all the workmen so affected shall be
entitled to all the rights liabilities obligations and duties as prescribed for the workmen by the
corporation and displacement of their contract of service with corporation was held illegal, invalid,
ab initio void and they continue to be workmen of Food Corporation of India and Supreme Court
quashed and set aside Tribunals award and directed it to pass a formal award on the lines of the
decision set out by the Supreme Court now in case before it.
The Workmen of the Food Corporation of India v. M/s. Food Corporation of India, 1985 II LLJ 4 : 1985
(66) FJR 453 : 1985 (50) FLR 442 : 1985 II LLN 20 : 1985 LIC 876 : 1985 SCC (L&S) 420 : 1985 AIR
(SC) 670 : 1985 (2) SCC 136 (S.C.3J)
.. Therefore, the abolition of the contract system and the introduction of direct payment system
hereinbefore discussed brought about a basic qualitative change in the relationship between the
Corporation and the workmen engaged for handling foodgrains in that on the disappearance of the
intermediary contractor, a direct relationship of master and servant came into existence between the
contractor and the workmen.. (Page: 10, Para: 15)
.whether once on the introduction of the direct payment system, the workmen acquired the status
of the workmen of the Corporation, was it open to the Corporation of unilaterally discontinue the system
without the consent of the workmen and reinduct contractor so as to again introduce a smoke-screen
which may on paper effectively deny the status of being the workmen of the Corporation, acquired by
these workmen. And on discontinuance of the system of direct payment, without ordering retrenchment
of their services by the Corporation, they obtained a fresh employment under the
Contractor.When workmen working under an employer are told that they have ceased to be the
workmen of that employer, and have become workmen of another employer namely, the contractor in this
case, in legal parlance such an act of the first employer constitutes discharge, termination of service or
retrenchment by whatsoever name called and a fresh employment by another employer namely, the
contractor.the action of introducing so as to displace the contract of service between the
Corporation and the workmen would be illegal and invalid and ab initio void and such action would not

2460

Chapter VA Lay-Off and Retrenchment

Sec. 25F

alter, charge or have any effect on the status of the afore-mentioned 464 workmen who had become the
workmen of the Corporation. (Page: 11, Para: 17)
the award of the Tribunal rejecting the reference and denying the benefit must be quashed and set
aside and an award be made that the aforementioned 464 workmen who had become the workmen of the
Corporation continued to be the workmen employed by the Corporation and shall be entitled to all the
rights, liabilities, obligations and duties as prescribed for the workmen by the Corporation. A formal
award to that effect shall be made by the Tribunal. (Page: 13, Para: 22)

m) When contract workers employed without license by principal employer were

terminated since they are deemed to be terminated by principal employer
(P&H.DB)
5A.480
Termination of services of workers employed through contractor was held to be
effected by principal employer only, since neither the employer had certificate of registration as
required u/s. 7 of Contract Labour Act nor the workers were employed through licensed
contractor and hence it was set aside on ground of violation of Sec. 25F.
Food Corpn. of India v. P.O. Central Government Industrial Tribunal, Chanmdigarh & Anr., 1993 III
LLJ 347 : 1987 (70) FJR 395 : 1988 I LLN 472 : 1988 I CLR 144 (P&H.DB)
The Tribunal.illegal. (Page: 348, Para: 3)
In the.Tribunal. (Page: 351, Para: 13)
For the.observed. (Page: 351, Para: 15)

n) When the name of daily rated worker on passing of matriculation exam is

struck-off in the absence of any such condition of service (S.C.2J)
F 5A.481 Considering that the daily rated Tikka Mazdoor of bank was not told at the time of
accepting job that his name would be struck off the rolls if he clears matriculation examination and
also considering that there was no such term in the memorandum governing terms and conditions
of service of Tikka Mazdoor, Apex Court setting aside Tribunals order held that striking his name
off the rolls in accordance with a confidential circular issued by bank to the effect that matriculates
would not be retained in the service and hence termination in violation of mandatory provisions of
Sec. 25F would amount to invalid retrenchment and Court directed reinstatement with back wages
and costs.
H.D. Singh v. Reserve Bank of India & Anr., 1986 I LLJ 127 : 1985 (67) FJR 379 : 1985 (51) FLR 494 :
1985 II LLN 1037 : 1985 LIC 1733 : 1985 II CLR 246 : 1985 SCC (L&S) 975 : 1986 AIR (SC) 132 : 1985
(4) SCC 201 (S.C.2J)
The appellant was a Tikka Mazdoor with the first respondent, the Reserve Bank of India.At the
time he was selected for employment, he was not a matriculate. He passed the matriculation examination
in 1975. At the time he was selected he was not told that his name would be struck off the list of Tikka
Mazdoors if he passed the matriculation examination. On 23-7-1976, he received a letter from the bank
asking him to state within a week (latest by 29-7-1976) as to what his educational qualification was. He
was also informed that his name would be struck off since he had concealed his educational qualification
and that his services would be terminated without any notice and compensation from the bank. It appears
that Tikka Mazdoors are placed in List II maintained by the bank. A confidential circular seems to have
been issued by the bank on 27-6-1976 to the effect that matriculates would not be retained in this list. The
appellant sent a reply stating that he was not a matriculate in 1974 when he was selected and that he
passed the examination only in 1975. (Page: 128, Para: 1)
The appellant was not given any work after July 1976.. (Page: 128, Para: 2)
.it would be appropriate to extract in full the Memorandum issued by the Reserve Bank of India,
Kanpur, which lays down the terms and conditions of service of a Tikka Mazdoor.
(Page: 129, Para: 6)

Sec. 25F

Sec. 25F when violated or when required to be complied

2461

.It is useful to note that this Memorandum does not contain any terms that a Tikka Mazdoor will
be struck off the rolls once he passed the matriculation examination. (Page: 130, Para: 7)
. Striking off the name of a workman from the rolls by the employer amounts to termination of
service and such termination is retrenchment within the meaning of Section 2(oo) of the Act if
effected.in violation of the mandatory provision contained in S. 25-F, and is invalid.
(Page: 131, Para: 10)
.We set aside the order of the Industrial Tribunal and hold that the striking off the name of the
appellant from List II amounted to retrenchment under S. 2(oo) of the Act and was in violation of S. 25-F.
We direct the first respondent-bank to enlist the appellant as a regular employee, as Tikka Mazdoor, to
reinstate him and pay him his backwages up-to-date. The appeal is allowed with costs.
(Page: 132, Para: 16)

o) When terminated without enquiry for continued absence unauthorisedly by

invoking Standing Orders (MP.DB)
5A.482
Termination of workman for over staying the leave period made as per standing order
being not covered by excepted category specified u/s. 2(oo) it would amount to retrenchment and
since it was made without complying with Sec. 25F was held to be void.
Hemraj v. State Industriall Court, Indore & Ors., 1994 III LLJ 327 : 1989 (58) FLR 768 : 1989 II CLR
145 (MP.DB)
Note: also refer to the following case/s
Sec. 25F violated when workman for over staying the leave period terminated as per standing
order in non-compliance of section.
Atlas Cycle Industries Ltd. v. Labour Court, Rohtak & Anr., 1995 (87) FJR 571 : 1996 (72) FLR 372 :
1995 II LLN 417 (P&H.HC)
Termination for unauthorized absence without complying Sec. 25F was held bad.
Gursewak Singh v. Labour Court, Bathinda, 1997 I LLN 468 (P&H.HC)
Termination for unauthorized absence without complying Sec. 25F was held bad.
Udam Raj v. Judge, Labour Court & Anr., 1998 I LLN 683 (Raj.HC)

p) When terminated on grounds of abandoning service (Jhar.DB)

5A.483
Termination of service due to abandonment of work would be retrenchment and Sec.
25F applies and it was also held that a dispute raised even after 12 years regarding termination in
violation of Sec. 25F would not become stale.
Employers in Management, Kusunda Area of M/s. BCCL v. P.O. Central Government & Ors., 2003 (97)
FLR 262 : 2003 LLR (Sum) 618 (Jhar.DB)
.In this case.had become stale.The petitioner himself.proceeding against
them. (Page: 263, Para: 3)
.As per own.it dormently survived. (Page: 264, Para: 4)
5A.484
Services of employee terminated without enquiry for having absented herself without
applying for leave for more than 20 consecutive working days and therefore, should be deemed to
have voluntarily abandoned her employment as per Clause 5(vi) of Standing order, and the said
order is upheld by Labour Court, which was challenged on the ground that she had been deprived
of her right to livelihood guaranteed u/Art. 21 of the Constitution. High Court held that the
employee has discharged her burden by proving that she worked for 240 days to seek the benefit of
Sec. 25F and the action of the management amounts to violation of Art. 14 and observed that the

2462

Chapter VA Lay-Off and Retrenchment

Sec. 25F

rules of natural justice should be complied with at a pre-decisional stage when the workman is
entitled to submit his explanation but not at a post decisional level and directed his reinstatement
with continuity of service.
Smt. Muththabarabnam v. P.O. Labour Court, Coimbatore, Management of Colacumble Tea
Manufacturers Pvt. Ltd. Colacumby, Nilgiris., 2001 IV LLN 894 : 2002 LLR 202 (Mad.HC)
The arbitrary.Constitution of India. (Page: 895, Para: 2.1)
.The Labour Court.employee. (Page: 896, Para: 5.1)
.The fact that.respondent management. (Page: 900, Para: 9.4)
.I am satisfied.of the Act. (Page: 900, Para: 9.6)
.It therefore, logically.of India. (Page: 902, Para: 11.9)
In this view of the.respondent management.in violation of the.with back wages.
(Page: 903, Para: 12)
5A.485
The services of a workman was terminated without notice or enquiry or compensation
although he had worked continuously for three years. He raised an industrial dispute of which
reference was made to the Tribunal. The Tribunal rejected the contention of the employer that he
had abandoned the duties, as he had issued no notice asking the employee to come and join the
duties. As the workman had rendered continuous services for a period of three years and in the
absence of any other defence the Tribunal also rejected the contention of the employer that the
termination of the services was outside the purview of Sec. 25F of Industrial Disputes Act, 1947 and
ordered his reinstatement with back-wages and continuity of service. The High Court upheld the
decision of the Tribunal.
Chief Engineer, I.T.D.A. (TW Department), Hyderabad, & Ors. v. Presiding Officer, Industrial
Tribunal-cum-Labour Court, Visakhapatnam, & Anr. 2005 IV LLN 118 : 2005 LLR 1034 (AP.HC)
5A.486
The services of workman were terminated on which Labour Court granted
reinstatement with 25% back wages which was challenged on the ground of delay and
abandonment of service by workman. High Court held that the plea of delay though not raised
before Labour Court is not fatal, unless the dispute ceased to exist due to delay. Labour Court has
to consider delay factor while granting relief. If the workman abandoned the service the principle
of natural justice has to be followed, employer has to serve notice and conduct departmental
enquiry against workman. And even in case of daily wagers, compliance of Sec. 25F may be
required.
Kheda District Panchayat v. Jashubhai Devabhai Gohel, 2007 I CLR 404 (Guj.HC)
Looking to the.rejected. (Page: 405, Para: 5)
As regards.such a situation. (Page: 405/406, Para: 6)
Next contention.award in question. (Page: 406, Para: 7)
Right of daily wager.and illegal. (Page: 407, Para: 9)

q) When employee refuses to work on a lower post in night shift but attends office
during normal hours and employer treats him to have abandoned the service
(P&H.HC)
5A.487
An employee who was appointed as Accounts clerk was transferred to a sister concern
and was asked to work in the night shift as cane clerk which was a lower post in pay scale and
status. The employee refused to work in the night shift but attended the office during normal hours
and signed the attendance register at that time but was not given any work. High Court held that as

Sec. 25F

Sec. 25F when violated or when required to be complied

2463

per contract of service he cannot be made to work at a lower post and thus, award of the Tribunal
passed against him is erroneous. The management did not start proceedings for terminating his
services for absence nor took any action u/s. 25F but assumed that the employee abandoned the
services which is illegal, void and without jurisdiction. Thus, he is entitled to continue in service
with all benefits.
Jai Bhagwan Jain v. M.C. Bharadwaj, P.O. Industrial Tribunal & Anr., 1986 II LLN 634 (P&H.HC)

r) When name was removed for absence as per service rules due to arrest since
conditions u/s. 25F mandatory (All.HC)
5A.488
The workman was on leave but due to his arrest by police he was not able to join duty.
The employer deleted his name from muster roll as per rule. Labour Court upheld the order of
termination, On workmens appeal, High Court set aside the order of Labour Court on the ground
that Sec. 25F was not complied with before termination and it was held that rule could not override
the express provisions of statutory section.
Afsar Mian v. Labour Court, Bareilly & Ors., 1994 III LLJ (Sum) 589 : 1991 (63) FLR 721 : 1992 I LLN
69 : 1992 I CLR 173 : 1992 LLR 221 (All.HC)
Note: Similar view held in the following case
Sohanlal v. Union of India & Ors., 2000 I LLJ 201 : 1999 LIC 1553 (J&K.HC)

s) When termination is for misconduct without enquiry or where despite enquiry

the charges were not proved (Pat.DB)
5A.489
Discharge simpliciter as per the provisions of Sastry Award, of the workmen for his
complicity in fraudulent withdrawal of money from the Bank since the charges against him having
not been proved in the domestic enquiry, was held not to be pursuant to a disciplinary action and
hence it was held not vitiated for not hearing him about the order of discharge but it was held
amounting to only retrenchment and since no compensation was paid even as per the provisions of
Sastry Award which is more or less on the same lines as u/s. 25F, the discharge was held not valid.
Sarjoo Prasad v. Regional Manager, State Bank of India, 1979 (55) FJR 223 : 1979 (38) FLR 433 : 1979
LIC 990 (Pat.DB)
The petitioner.detection.The
petition. (Page: 224/225, Para: 2)
There is no dispute.521(10)
action. (Page: 226, Para: 5)

petitioner.above.ultimately.writ

(c).Paragraph

521(10)

(c).disciplinary

From the last sentence.Sastry Award. (Page: 227, Para: 5)

5A.490
For unauthorized absence from duty, the service of the workman was terminated
without holding departmental enquiry. Labour Court awarded reinstatement without back wages
for the interim period on the ground that the order of termination itself states that the termination
is for misconduct of unauthorized absence and no enquiry was conducted for the same, and thus
violated the principle of natural justice, which was upheld by the High Court.
Gujarat Electricity Board v. Narayanbhai Kalubhai Bhamre, 2003 I LLN 223 : 2003 LLR 38 : 2002 III
CLR 702 (Guj.HC)
Note: also refer to the following cases in the above context
Termination if Sec. 25F not followed and enquiry not held.
President, State Transport Co-op. Credit & Thrift Society Ltd. v. Sanjaykumar Mahendrakumar Mehta,
2001 (89) FLR 759 (Guj.HC)

2464

Chapter VA Lay-Off and Retrenchment

Sec. 25F

Termination is bad when no enquiry was held.

Puthiya Veetil Raghavan v. M.K. Bhaskaran & Ors., 1993 III LLJ (Sum) 700 : 1988 I LLN 106 : 1987 II
CLR 439 (Bom.HC)
Retrenchment includes termination for misconduct affected without enquiry, without following
Sec. 25F.
Employers in Relation to M/s. Anand Cinema of M/s. Maheshwari & Bernard, Jabalpur v. Mohan Tiwari
& Anr., 1984 (49) FLR 357 : 1986 LIC 336 (MP.HC)
Termination in breach of Sec. 25F, though for misconduct without enquiry.
M.P. State Road Transport Corpn. Member Judge v. State Industrial Court & Anr., 1998 (78) FLR 565
(MP.HC)
Charges against the employee were not proved and therefore termination of his services was illegal
u/s. 25F of Industrial Disputes Act.
Madan Lal Arora v. Management/Director, All India Institute of Medical Sciences & Ors., 2000 I LLJ
158 : 1999 IV LLN 272 (Del.HC)
Misconduct if not established, termination would be illegal.
C.O. Johny v. Larsen & Tubro Consumers Co-Op. Society Ltd. & Anr., 1987 (54) FLR 156 (Bom.HC)
Discharge of workman without enquiry, without paying compensation held bad.
Modern India Construction Company Ltd. v. Labour Court, Bilaspur & Ors.,1993 I LLN 1008 : 1993
(66) FLR 505 (MP.HC)

t) When temporary workmen terminated after completion of probation period

(S.C.2J)
F 5A.491 Temporary workman who was terminated from his service after completion of his
probation period does not fall within the exception given u/s. 2(oo) of the Act therefore termination
of the workman amounts to retrenchment and attracts Sec. 25F hence the order of Labour Court
holding that termination was valid, was set aside.
Mohan Lal v. Bharat Electronics Limited, 1981 II LLJ 70 : 1981 (58) FJR 467 : 1981 (42) FLR 389 : 1981
II LLN 23 : 1981 LIC 806 : 1981 SCC (L&S) 478 : 1981 AIR (SC) 1253 : 1981 (3) SCC 225 (S.C.2J)
The appellant Mohan Lal was employed with the respondent M/s. Bharat Electronics Limited as
Salesman at its Delhi Sales Depot on a salary of Rs. 520/- Per month from 8th December, 1973. His
service was abruptly terminated by letter dated 12th October, 1974 with effect from 19th October,
1974. (Page: 71, Para: 1)
.termination in this case, according to the Labour Court, would not constitute retrenchment
within the meaning of Section 2(oo) read with Section 25-F of the Industrial Disputes Act. Accordingly it
was held that the termination was neither illegal nor improper nor unjustified.
(Page: 71, Para: 3)
.the appointment was temporary in the first instance and there was an inner indication that it was
likely to be made permanent.. (Page: 72, Para: 5)
.The case does not fall under any of the excepted categories. There is thus termination of service
for a reason other than the excepted category. It would indisputably be retrenchment within the meaning
of the word as defined in the Act. (Page: 73, Para: 7)
Reverting to the facts of this case, termination of service of the appellant does not fall within any of the
excepted, or to be precise, excluded categories. Undoubtedly therefore the termination would constitute
retrenchment and by a catena of decisions it is well settled that where prerequisite for valid retrenchment
as laid down in Section 25F has not been complied with, retrenchment bringing about termination of
service is ab initio void. In State of Bombay v. The Hospital Mazdoor Sabha, (1960) 2 SCR 866 at p. 872 :
(AIR 1960 SC 610 at p. 613) this Court held that failure to comply with the requirement of Section 25-F
which prescribes a condition precedent for a valid retrenchment renders the order of retrenchment invalid

Sec. 25F

Sec. 25F when violated or when required to be complied

2465

and inoperative. In other words, it does not bring about a cessation of service of the workman and the
workman continues to be in service. This was not even seriously controverted before us.
(Page: 75, Para: 9)
Note: also refer to the following case
Probationer continued to be in service even after his period was over, later he was terminated
held bad.
Sharad Hari Deshpande v. India Security Press & Ors., 1988 I LLJ 297 : 1987 II LLN 656 : 1987 II CLR
297 (Bom.DB)

u) When termination effected during probationary period without paying

compensation (P&H.HC)
5A.492
Termination during probationary period without paying compensation amounts to
retrenchment and probationer liable to be reinstated in service.
Ambala Central Co-op. Bank Ltd. v. Labour Court, Ambala & Anr., 1990 (77) FJR 368 (P&H.HC)

v) Temporarily appointed daily wage workman terminated on account of

surplusage (S.C.3J)
F 5A.493 Where the workmen appointed on temporary basis on daily wages were terminated
for want of enough work, it is held that it amounted to retrenchment, upon they being rendered
surplus and therefore it attracts the provisions of Sec. 2(oo) and where the termination was made
without complying with the provisions of Sec. 25F of the Act, such termination becomes illegal and
therefore their reinstatement made by the Labour Court was held valid.
Management of M/s. Willcox Buck well India Ltd. v. Jagannath & Anr., 1973 (44) FJR 523 : 1974 (29)
FLR 173 : 1974 I LLN 96 : 1974 LIC 706 : 1974 AIR (SC) 1166 (S.C.3J)
.It is quite clear from the admission made in the written statement filed before the Industrial
Tribunal and the evidence of Shri J. K. Nayar, that these workmen were served with notices of
termination of service, because there was not enough work for them, which apparently meant that they
had become surplus so far as their services were concerned.If the reason, which the management
itself gave, was that the termination of the services was on account of surplus labour, there is no escape
from the conclusion that the concerned workmen were retrenched and that could not have been done
without giving them the benefits provided by the relevant provisions of the Act. As that was not done, the
Labour Court was fully justified in ordering their reinstatement. (Page: 525/526, Para: 3)

w) When notice to collect retrenchment compensation was sent first and money
order later since Sec. 25F(b) deemed not complied (P&H.DB)
5A.494
Mere notice given to workmen to collect the retrenchment compensation and
subsequently sending the money order on expiry of notice does not exonerate the liability of
employer.
Mani Ram v. The P.O. Labour Court, Ambala, 1997 II LLJ 519 : 1997 (75) FLR 132 : 1996 (89) FJR 673 :
1996 LLR 615 : 1997 IV LLN 361 : 1997 II CLR 868 (P&H.DB)
.The section.the Act. (Page: 521, Para: 4)

2466

Chapter VA Lay-Off and Retrenchment

Sec. 25F

x) When there is mere recital in notice of termination that efforts will be made to pay
retrenchment compensation since Sec. 25F(b) deemed not complied (Bom.DB)
5A.495
Mere recital in notice of termination that efforts will be made to pay retrenchment
compensation would render termination null and void and of no effect.
The P.W.D. Mazdoor Union & Anr. v. The Executive Engineer, P.W.D. & Anr., 1997 (77) FLR 76 : 1997
LLR 1027 (Bom.DB)
.As far as.full back wages. (Page: 78, Para: 5)

y) When retrenchment compensation of 15 days wage paid for service of 2 years

since Sec. 25F(b) deemed not complied (Raj.DB)
5A.496
Payment of Retrenchment Compensation of 15 days wage only for service of 2 years
being inadequate retrenchment was held to be illegal.
Madan Singh Rawat v. Ajmer Central Co-operative Bank & Ors., 2000 I LLJ 984 : 2000 (84) FLR 619
(Raj.DB)
The appellant.of the Act. (Page: 985, Para: 6)

z) When Amount due from employee is adjusted against compensation payable

u/s. 25F(a) & 25F(b) since Sec. 25F(b) deemed not complied (Ori.DB)
5A.497
Amount due from employee cannot be adjusted against compensation payable
u/s. 25F(a) and 25F(b) since it is imperative and mandatory condition to avoid hardship of
employee after Termination hence award of tribunal holding the termination illegal for in non
compliance of Sec. 25F(a) and 25F(b) was upheld by the Court.
M/s. Utkal Asbestos Ltd. v. Workman, T.S. Rao & Anr., 1993 III LLJ 726 : 1991 (62) FLR 972 : 1991 II
LLN 752 : 1991 II CLR 941 (Ori.DB)
In view of.his retirement. (Page: 728, Para: 7)
.The aforesaid.of the Act. (Page: 729, Para: 8)

za) When service terminated without retrenchment compensation though terms of

employment render service terminable without notice (Karn.HC)
5A.498
Termination of service not preceded by payment of prescribed amount of
retrenchment compensation as in Sec. 25F(b) is held invalid even if terms of service provide that
service of workman is terminable at any time without notice.
S.R. Papanna v. The Union of India & Anr., 1981 LIC 1129 (Karn.HC)

zb) When it was not possible for workmen to be present to receive retrenchment
compensation on the same day on which the letter so requiring, was posted
since Sec. 25F(b) deemed not complied (Cal.HC)
5A.499
Notice was served on the retrenched workmen to receive payment following their
retrenchment. The notice of retrenchment was posted and the retrenched workmen were called for
the payment either on the same day or any subsequent date. As there was very little chance for the
workmen to receive the retrenchment letter on the day when it was posted and present themselves
for payment, the offer was held to be bad and retrenchment order was incompetent.
National Iron & Steel Company, Ltd v. Third Industrial Tribunal, West Bengal, & Ors., 1964 I LLJ 525 :
1964 (8) FLR 24 (Cal.HC)

Sec. 25F

Sec. 25F when violated or when required to be complied

2467

zc) When bank drafts carrying retrenchment compensation were remitted at 6 P.M.
on the date of retrenchment as well as on the next day since Sec. 25F(b) deemed
not complied (Raj.HC)
5A.500
Tribunal directed reinstatement of workmen with back wages as the Works Manger
who passed the retrenchment order was not the appointing authority and therefore, was not
competent to pass such order and provisions of Sec. 25F were not complied with. Thus, the
retrenchment was illegal. High Court held that the Corporation started the process of remitting
dues by mailing the bank drafts at 6 p.m. on the date of retrenchment for only 20 workmen and for
the rest of the 96 workmen on the next day. Thus, it cannot be said that Sec. 25F had been complied
with before or at the time of retrenchment.
Rajasthan State Road Transport Corporation, Jaipur v. Industrial Tribunal, Jaipur, 1986 (68) FJR 374 :
1986 II LLN 996 (Raj.HC)

zd) When retrenchment compensation falls short at the time of retrenchment due
to non-inclusion of HRA and travelling allowance when paid as part of wages
(Raj.HC)
Girish Kumar Jain v. Union of India & Ors., 1994 (84) FJR 447 : 1994 (69) FLR 31 (Raj.HC)
Note: Please see related ratio/s under the above citation in this section
Note: also refer to the following cases in the above context
Retrenchment compensation when falls short at the time of retrenchment, retrenchment is
invalid.
Purna Theatre v. State of West Bengal & Ors., 1998 III LLJ (Sum) 493 : 1998 (79) FLR 85 : 1997 LIC
997 : 1998 I CLR 912 (Cal.HC)
Compensation paid was not adequate, therefore termination was set aside.
State Bank of India v. Union of India & Ors., 1998 III LLN 499 (Pat.HC)
Termination was held bad due to not non-compliance of Sec. 25F.
Uttar Pradesh State Road Transport Corporation v. State of Uttar Pradesh & Ors., 1987 I LLN 90
(All.HC)
Retrenchment Compensation falls short, termination was set aside.
Ramesh Gonekar v. Member Judge, State Industrial Court & Ors., 2006 (110) FLR 394 : 2006 LLR 901 :
2006 (3) Mah.LJ 534 : 2006 (5) BCR 275 (Bom.HC)

ze) When employee who completes 240 days or more even with artificial breaks
after 89 days or with intermittent breaks, terminated with malafide intention
to deprive workman of benefits u/s. 25F (S.C.2J)
F 5A.501 Where the employer a Government in this case appoints casual labourers on 89 days
basis but terminates the after but reappoints after a day or two and this cycle lasts as many as 4
spells where after the services of said casual labourers were terminated, the High Court held that
the employer has violated Sec. 25F and Sec. 25G of the Act and therefore the said casual labourers
are ordered to be reinstated on 31.3.2001 from 11.1.1995 with full back wages. Supreme Court
confirmed the High Court order except for the fact that the back wages are reduced to 50% only
and held that the employers conduct shows that despite having sufficient work, termination and
reemployment after each spell of 89 days is aimed at to deprive the workmen the benefit of Sec. 25F
and thus ordered their re-employment as aforesaid with in a period of one month.
Union of India & Ors. v. Ramchander & Anr., 2007 (1) SCC (L&S) 439 (S.C.2J)

2468

Chapter VA Lay-Off and Retrenchment

Sec. 25F

The respondents were appointed against casual labourers but nevertheless they continued in service for
four spells and that too their re-appointments were made immediately within a few days of termination on
completion of 89 days. It shows that sufficient work was available with the employer and had there been
no termination on completion of 89 days, they would have completed 240 days of continuous
employment. In that view of the matter the appellants had violated Sec. 25G of the Industrial Disputes
Act. We do not find any error or illegality in the decision rendered by the Division Bench. We direct the
appellants to re-employ the respondents as daily-wagers. However, the direction of the High Court for
payment of entire salaries and allowances for the period they were out of service was not justified under
the circumstances. The termination of the respondents was from 11.1.1995 and now a fairly long period
has passed and in the meantime, the respondents must have been engaged in employment in any other
work. Therefore, we direct the appellants to re-employments to re-employ the respondents with 50%
back wages from the date of termination till their re-employment. The Appellants shall re-employ the
respondents within a period of one month. (Page: 440/441, Para: 4)
5A.502
Termination of services of an employee appointed initially for fixed period of 89 days
but continued for 3 years with intermittent breaks without any notice, despite continuity of work
was held by Court as not covered by Sec. 2(oo)(bb) and violative of Sec. 25F and amounts to unfair
labour practice and hence matter was remanded.
Bhikku Ram Son of Sh. Lalji v. The P.O. Industrial Tribunal-cum-Labour Court, Rohtak, 1996 III LLJ
1126 : 1995 LIC 2448 : 1996 LLR 259 (P&H.DB)
Petitioner was appointed.was finally discontinued. (Page: 1127, Para: 2)
.Only a bona.of the Act. (Page: 1143, Para: 35)
.Admittedly, the petitioner.by the employer.it must be.of Sec.
25-F. (Page: 1143, Para: 36)
5A.503
Termination of casual workers completing 240 days of service in one calendar year
with artificial breaks of a day or two without complying with Sec. 25F and 25G is illegal.
Ram Chandra v. Union of India & Ors., 2001 II LLJ 431 : 2001 (90) FLR 55 : 2001 LLR 1034 : 2002 LLR
(Sum) 104 : 2002 LIC 1077 (Raj.DB)
.facts make it.Industrial Disputes Act. (Page: 433, Para: 8)
.it is declared.of the services. (Page: 433, Para: 16)
5A.504
Termination of service after 89 days and re-employment after one day break and then
termination of service on completion of 232 days denotes malafide intention of the employer to
deprive workman of benefits u/s. 25F.
Estate Officer, Haryana Urban Development Authority, karnal & Anr. v. P.O. Industrial
Tribunal-cum-Labour Court, Panipat & Anr., 2001 II LLJ 120 : 2001 (91) FLR 341 : 2001 III LLN 1139 :
2001 III CLR 77 (P&H.DB)
.after reading the.be set aside.the Labour Court.malafide one.
(Page: 121, Para: 4)
Note: also refer to the following case/s in the above context
Nar Singh v. The P.O. Industrial Tribunal Labour Court & Anr., 1997 LLR 352 (P&H.HC)
Termination of workman, who was repeatedly appointed for small periods, was held bad.
Mahindra & Mahindra Ltd. v. Digambar G. Pawaskar & Ors., 1997 I CLR 872 : 1997 LLR 589
(Bom.HC)

Sec. 25F

Sec. 25F when violated or when required to be complied

2469

Termination of daily wager who was in service from 1987 till 19.12.1991 with breaks held bad.
Management 0-322 Kovilpatti Co-operative Marketing Society, Kovilpatti v. P.O. Labour Court,
Tirunelveli & Anr., 2001 I LLJ 1516 : 2001 I LLN 542 : 2001 LLR 363 (Mad.HC)
Retrenchment invalid, when employees services are terminated on the ground of breaks.
Union of India v. P.O. C.G.I.T. & Anr., 2002 III CLR 251 : 2002 LIC 2051 (MP.HC)
Termination was held bad as workman was repeatedly appointed for 89 days to avoid compliance
of Sec. 25F.
Ferozepur Central Co-operative Bank Ltd. v. Labour Court, Bhatinda, & Anr., 1985 (67) FJR 367 : 1986
I LLN 204 (P&H.HC)
Termination of a daily wager who completed 240 days, with breaks held bad due to violation of
Sec. 25F.
Rajasthan State Road Transport Corporation v. Babu Lal Sharma & Anr., 1995 II LLJ 222 : 1994 (85)
FJR 510 : 1995 (70) FLR 241 : 1995 II LLN 491 (Raj.HC)
When workman who is appointed in fixed spells but completing 240 days service in 12 months is
terminated.
Tata Consulting Engineers v. Ms. Valsala K. Nair & Ors., 1998 I LLN 525 : 1998 LLR 66 : 1997 II CLR
1099 (Bom.HC)

zf) When terminated without counting the services rendered by an employee in

the previous organisation from which he was transferred (Raj.DB)
5A.505
The services rendered by an employee under Urban Improvement Trust from which
he was transferred to Development Authority have to be taken to compute 240 days and since no
reasons were given for excluding the said service and the employee completed more than 240 days
of service, the High Court has set aside the termination on grounds of non-compliance of Sec. 25F.
J.D.A. v. Judge, Labour Court No.1, Jaipur & Anr., 2001 II LLJ 787 (Raj.DB)
.the services of.of service benefits.his services rendered.Industrial
Disputes Act. (Page: 788, Para: 2)

zg) When workman under contractual service in a project terminated before

completion of it in non-compliance of Sec. 25F (AP.DB)
5A.506
Workman who was employed under contract of service for project, was terminated
before completion of project it was held to be retrenchment and since it was made in non
compliance of Sec. 25F, workmen was deemed to be in continuous service with all consequential
benefits.
Shantimoy Mandal v. Concilliation Officer & Joint commissioner of Labour, Government of A.P. & Ors.,
1997 II LLJ 539 : 1997 (75) FLR 603 : 1997 I LLN 829 : 1996 LIC 2213 : 1997 I CLR 82 (AP.DB)
When we.Industrial. (Page: 540, Para: 5)
The only.benefits. (Page: 541, Para: 6)

2470

Chapter VA Lay-Off and Retrenchment

Sec. 25F

zh) When surplus railway employee terminated though as per Indian Railway
Establishment Code but in violation of Sec. 25F (Ker.DB)
5A.507
Termination of services of surplus staff made in accordance with Rule 149(1) of the
Railway Establishment Code is retrenchment and compliance of Sec. 25F of the Act was necessary
but as the same was not complied with, reinstatement was awarded.
L. Krishnan & Ors. v. Divisional Personnel Officer, Southern Railway & Anr., 1972 II LLJ 568 : 1973
(43) FJR 129 : 1973 (26) FLR 268 : 1973 I LLN 172 : 1972 LIC 1588 (Ker.DB)
We have.S. 25F. (Page: 575, Para: 13)
It is.unacceptable. (Page: 575, Para: 13)
Nevertheless.respondents case. (Page: 571, Para: 6)
We have.for decision. (Page: 573, Para: 10)
Note: also refer to the following case/s in the above context
Somu Kumar Chatterjee & Ors. v. The District Signal Telecommunicatioin Engineer Construction, N.F.
Railway Katihar (Purnea) & Ors. cases, 1972 II LLJ 462 (Pat.DB)
Union of India & Ors. v. Piru Kisku & Ors., 1977 I LLN 549 : 1977 LIC 1236 (Cal.DB)
Mahabir v. D.K. Mittal, Dy. Chief Mechanical Engineer, N.E. Rly, & Ors., 1979 II LLJ 363 : 1979 (55)
FJR 216 : 1979 II LLN 341 : 1980 LIC 119 (Pat.DB)
Malkhan Singh v. Union of India & Ors., 1981 II LLJ 174 : 1981 (42) FLR 401 : 1981 II LLN 670 : 1981
LIC 1633 (Del.DB)
Shri Rammoo & etc. v. Union of India & Ors., 1988 LIC 1509 (Cat.DB)

zi) When employee with 8 years of service terminated without compliance of

Sec. 25F (P&H.DB)
5A.508
Employee employed for 8 years cannot be held to be employed for a short duration
and therefore compliance of Sec. 25F was imperative.
All India Institute of Medical Sciences, New Delhi & Anr. v. Attar Singh & Ors., 2000 I LLJ 1323 : 2000
(96) FJR 581 : 2000 (85) FLR 911 : 2000 I LLN 728 : 2000 LIC 853 (P&H.DB)
.In the case.Act. (Page: 1325, Para: 8)

zj) When employee with longer tenure of service terminated when the work is of
perennial nature or after a long tenure of service (Guj.HC)
5A.509
The workman was engaged as a daily wager, he worked for 4 years. Thereafter, he was
terminated. Labour Court awarded reinstatement since he was periodically engaged on the same
post and his nature of work was same, which revealed that the work was perennial in nature and he
was terminated in violation to Sec. 25F. High Court upheld the same.
Executive Engineer, District Panchayat, Bharuch v. Shankarbhai Jivabhai Patel, 2006 (111) FLR 164 :
2007 I LLN 922 :2006 LIC 2180 : 2006 II CLR 1027 : 2006 LLR 872 (Guj.HC)
Note: also refer to the following cases where termination was held bad after longer service periods
Sec. 25F violated Termination is bad-two years service.
The Zilla Parihsad, Nagpur & Anr. v. Moreshwar, s/o Vithobaji Mendhekar & Anr., 2004 LIC 2505 :
2004 LLR 957 (Bom.HC)

Sec. 25F

Sec. 25F when violated or when required to be complied

2471

Termination of workman in violation of Sec. 25F appointed for 3 years allowed to continue beyond
that period is illegal.
State of U.P. v. P.O. Industrial Tribunal (V), Meerut & Anr., 2003 (98) FLR 473 (All.HC)
Termination illegal, workman completing 2 years of continuous services, in non-compliance of
Sec. 25F.
Jagtar Singh v. State of Punjab & Ors., 2003 II LLJ 763 : 2003 (98) FLR 73 : 2003 II LLN 691 : 2003 II
CLR 305 (P&H.HC)
Termination illegal, workman working for long period in non-compliance of Sec. 25F.
Deputy Secretary, Trible Area Development Department & Ors. v. Labour Court, Udaipur & Anr., 2003
(98) FLR 41 (Raj.HC)
Termination of an employee continued for 2 years, violating Sec. 25F, held illegal.
Kukadi Irrigation Project v. Waman & Anr., 1994 (68) FLR 639 : 1994 I CLR 252 : 1994 LLR 381 : 1994
LLR 788 : 1994 II LLN 111 (Bom.HC)
Termination of probationer in violation to Sec. 25F, was held bad since he rendered 22 years
service and ought to be regularized.
Gidderbha Co-operative Marketing-Cum-Processing Society v. Labour Court & Ors.,1996 I LLJ 644 :
1995 (87) FJR 41:1995 (71) FLR 370:1995 II LLN 418:1995 LLR 510 (P&H.HC)
Termination of employees with several years of service without complying Sec. 25F, invalid.
Rajasthan State Road Transport Corporation & Anr. v. Narendra Joshi & Anr., 1998 LIC 3401 (Raj.HC)
Termination of workman engaged for continuous work for number of years illegal.
State Bank of Indore v. Rashtriya Mazdoor Sena & Anr., 2003 LIC 2789 : 2003 LLR 1031 (Bom.HC)

zk) When correspondent in a newspaper was terminated to avoid financial burden

and not for misconduct in non-compliance of Sec. 25F (MP.DB)
5A.510
Correspondent in a newspaper was terminated, to avoid the financial burden and not
for misconduct hence it was held to be retrenchment and since provisions of Sec. 25F was not
complied week by issuing 3 months notice and retrenchment compensation was not paid, same was
set aside and reinstatement was granted.
Nav Bharat & Madhya Pradesh Chronicle Group of Newspapers v. Krishna Sharan Shrivastava & Anr.,
1989 II LLN 226 (MP.DB)
We, rather.retrenchment. (Page: 229, Para: 9)
Accordingly.Tribunal. (Page: 230, Para: 10)
.we also.disputed. (Page: 230, Para: 12)
To sum up.our hands. (Page: 231, Para: 16)
Note: also refer to the following case in the above context
Termination due to financial difficulties by employer without following Sec. 25F bad.
Commissioner, Edapadi Municipality, Edapadi, Salem v. Presiding Officer, Labour Court, Salem, A.
Kadhirvel, 2004 II LLN 353 (Mad.HC)

2472

Chapter VA Lay-Off and Retrenchment

Sec. 25F

zl) When employees in irrigation department of public works of State

Government were terminated in non-compliance of section (Guj.DB)
5A.511
Employees in irrigation department of public works of State Government were
terminated without complying with provisions of Sec. 25F hence their termination were set aside.
The P.W.D. Employees Union & Ors. v. State of Gujarat & Ors., 1988 I LLJ 524 : 1988 (57) FLR (Sum)
31 : 1987 LIC 89 (Guj.DB)
In that.set out above. (Page: 533, Para: 19)

zm) When senior was terminated retaining his junior in violation of the principle
of last come-first go u/s. 25G (S.C.2J)
F 5A.512 Workman was working as a Beldar, his services were terminated and dispute was
raised by him. On reference, Labour Court found that there was a breach of Sec. 25G and 25H of
the Act and granted reinstatement with 50% back wages which was affirmed by High Court as well
as Supreme Court except back wages as the finding of the fact that persons juniors to the workman
were still working was not contravened by the management.
State of Haryana v. Dilbagh Singh, 2006 (111) FLR 919 : 2007 I LLJ 8 : 2007 I LLN 120 : 2007 I CLR
550 : 2007 LLR 72 : 2007 (1) SCC (L&S) 211 (S.C.2J)
The respondent was serving as a Beldar in PWD (B&R) and his services were terminated on 25.12.1999.
A dispute under the Industrial Disputes Act, 1947 (hereinafter to be referred to as the Act) was raised
and the matter was referred to Labour Court and the Labour Court after hearing both the parties found that
there is a breach of Sections 25G and 25H of the Act. It was held that person junior to the respondent is
still working whereas the services of the respondent had been terminated. Therefore, the Labour Court
allowed the claim of the respondent and granted reinstatement with continuity of service with 50% back
wages from the date of demand notice i.e. from 1.2.2000. Aggrieved against that order a writ petition was
filed before the High Court and the High Court affirmed the order of the Labour Court. Hence, the present
appeal. (Page: 919, Para: 2)
We have heard learned Counsel for the parties. Learned counsel for the appellant has failed to
substantiate that no person junior to the respondent had been retained in the Department. It is a clear
finding of the Tribunal that a person like Krishan s/o Dharam Singh who is junior to the respondent is still
working with the Management whereas the services of the respondent had been terminated. It is also
alleged that another person named Mahabir who is also junior to the respondent is still working with the
Management. Therefore, the Tribunal has found violation of Sections 25G & 25H of the Act. This finding
of fact has not been controverted by the management and there is no reason to take a different view from
the view taken by the Tribunal which was affirmed by the High Court. Hence, we find no merit in this
appeal and the same is accordingly dismissed. The respondent shall be reinstated but looking into the
peculiar facts and circumstances of this case, he will not be entitled to any back wages. The appellant shall
issue order of appointment of the respondent within one month from the date of receipt of this order.
There will be no order as to costs. (Page: 919/920 Para: 3)

zn) When employee who completes 240 days terminated for not accepting certain
conditions of service (Raj.HC)
5A.513
The workman was appointed for one month and continued to work regularly.
Applications were received for regular appointment and the workman applied for the same. He
was selected and put on probation and continued to work for more than 240 days. He was removed
without complying with the provisions of Sec. 25F because he refused to accept certain conditions
of service. The Labour Court ordered his reinstatement with full benefits. The High Court upheld
the order and dismissed the writ filed by the employer.
Managing Director, Sri Ganganagar Sahakari Spinning Mills Ltd. v. Labour Court, Bikaner & Ors.,
1997 IV LLN 820 : 1998 I LLJ 523 (Raj.HC)

Sec. 25F

Sec. 25F when violated or when required to be complied

2473

zo) When driver terminated while employer maintains three vehicles and employs
a casual driver (Bom.HC)
5A.514
An employee working as driver was terminated on the ground that company was
taking measures of economy and driver was rendered surplus to its requirement. Employer was
still maintaining 3 vehicles and was also employing casual driver on occasion as such the reason for
effecting retrenchment does not seem to be genuine. Labour Court ordered reinstatement with
60% back wages. Even High Court upheld the same.
Bombay Leprosy Project v. Vishnu B. Chavan & Anr., 2002 (94) FLR 789 : 2002 LLR 994 (Bom.HC)

zp) If terminated for disobedience of transfer orders without enquiry since it

amounts to punishment (P&H.HC)
5A.515
Employee did not comply with the transfer orders on transfer of undertaking, hence
he was terminated. It was held that termination was illegal as Sec. 25F was not complied with and
also it amounts to punishment for non-compliance with transfer orders and hence disciplinary
action against the employee for defying transfer orders was to be taken.
Bahadur Singh & Ors. v. State of Haryana & Ors., 1988 I LLN 982 (P&H.HC)

zq) When termination is ostensibly due to closer of one unit since functional
integrality exists between the unit closed and other unit (Del.DB)
5A.516
Dismissing appeal of the management and upholding Labour Courts finding of fact as
affirmed by Single Judge that establishment consisting of letter press and offset press was one
integrated whole because of unity of ownership, control, production, inter changeability of
workmen and location of machines, closure of letter press would not mean closure of undertaking
and hence termination of services of workmen of letter press was invalid retrenchment due to non
compliance with Sec. 25F and hence concerned workers were entitled to reinstatement with full
back wages and continuity of service.
Raj Hans Press v. Labour Court, Delhi & Ors., 1980 I LLN 155 (Del.DB)
.Labour Court found.dismissed the petition. (Page: 157, Para: 3)
The Labour Court.of the undertaking. (Page: 157, Para: 7)
.The Labour Court.placed before it. (Page: 158, Para: 11)
.we find.the same. (Page: 158, Para: 14)

zr) When workmen terminated for pressing their charter of demands since
actuated by victimisation (Karn.HC)
5A.517
The union of workmen challenged the validity of retrenchment as it were actuated by
victimization and unfair labour practice and company had failed to adduce evidence to prove
otherwise, Tribunal on the basis of charter of demands, and other evidence, came to the conclusion
that retrenchments are not proved to be on proper reasons and the same was upheld by High
Court.
Mysore Structurals, Ltd., Bangalore v. Workmen of Mysore Structurals, Ltd., & Anr., 1983 I LLN 441
(Karn.HC)
.In the instant.in this regard.The charter of demands.unfair labour
practice. (Page: 457, Para: 29)
The finding recorded.on record. (Page: 459, Para: 29)

2474

Chapter VA Lay-Off and Retrenchment

Sec. 25F

zs) When some workmen were terminated in view of proposed closure and others
are retained (Mad.HC)
5A.518
Where a few workmen were retained whereas remaining were terminated from
services in view of proposed closure without complying with provisions of Sec. 25F. The High Court
held that termination of the services of the remaining workmen was illegal because there was
non-compliance of Sec. 25F.
McKenzies, Ltd. Madras v. Labour Court, Madras & Anr., 1960 I LLJ 334 : 1960-61 (18) FJR 7
(Mad.HC)

zt) When terminated without compliance of the section and employer-employee

relationship exists (Bom.HC)
5A.519
The workman was reinstated by Labour Court on the ground that Sec. 25F was not
complied with. Challenging the award the employer moved High Court, which upheld the order of
on the ground that before Labour Court workman proved that the relation of employee-employee
existed and held that under writ jurisdiction Court could not interfere with award where it was
correct.
Fashion Exim India Pvt. Ltd. v. Chintamani Ambolkar & Anr., 2005 (105) FLR 988 : 2005 LLR 624
(Bom.HC)
Note: also refer to the following case
Termination-was held bad since no evidence was produced by employer to prove that the
workman.

zu) When workmen terminated for not possessing requisite qualification after
serving more than two years (P&H.DB)
5A.520
Services of nurses cannot be terminated on the ground of not possessing registration
certificate after keeping them on job for a long period of 2 to 12 years and after undergoing
training course and hence termination in violation of the section is illegal.
R.B. Sewak Ram Maternity Hospital v. P.O. Labour Court Jalandhar & Ors., 1999 II LLJ 81 (P&H.DB)
5A.521
The termination of workman in violation of Sec. 25F on the ground of lack of
qualification held bad and the same was held as a case of retrenchment.
Rao Saheb Shripatrao Patil v. Balasaheb Desai Sahakari & Ors.,1995 (71) FLR 384 : 1995 LLR 980
(Bom.HC)

zv) When terminated on the ground of loss of confidence for remaining absent
continuously (MP.HC)
5A.522
The contention of the management was that it lost confidence on the workmen because
of their act of remaining absent continuously for days together and hence, their services were
terminated. The High Court relied on the case of L. Robert DSouza v. The Executive Engineer,
Southern Railway and another, AIR 1982 (SC) 854 and held that even if the management lost
confidence, it has to comply with the provisions of Sec. 25F of the Act.
Raj Kumar College Karmachari Union v. Raj Kumar College, Raipur & Anr., 1987 (55) FLR 93 : 1987 II
LLN 573 (MP.HC)

Sec. 25F

Sec. 25F when violated or when required to be complied

2475

zw) When terminated in the absence of proof of appointment for fixed term
(Del.HC)
5A.523
The workman was reinstated by Labour Court as he has completed 240 days service
and Sec. 25F was not followed. Employer challenged the award contending that workman was
employed for a specific period on compassionate ground. High Court upheld Labour Courts order
since there was no averment that the workman was employed for a specific project or scheme for
temporary duration or that the employment came to an end on the expiry of the specified scheme or
project.
Municipal Corporation of Delhi v. Ram Pal & Anr., 2005 LLR 392 (Del.HC)
5A.524
It is held that in the appointment letter though the word contract basis is used but it
does not stipulate the period of contract and nature of work whether fixed or temporary. So this
case falls within the term termination of services for any reason whatsoever, thus it is
retrenchment within the meaning of Sec. 2(oo) of the Act. The Labour Court has categorically and
rightly held that the services were terminated in violation of provisions of Sec. 25F of the Act.
Municipal Counsil, Quadin through its Executive Officer v. Presiding Officer, Labour Court, Gurdaspur
& Anr., 2007 (113) FLR 179 : 2007 I CLR 650 (P&H.DB)
Note: also refer to he following cases in the above context
Termination held illegal, if no record of period of employment available.
Municipal Committee, Gobindgarh v. Labour Court, Patiala., 1994 (85) FJR 161 : 1994 (69) FLR 1002 :
1994 LLR 206 (P&H.HC)
Termination-was held bad since there was no evidence that workman was appointed for a specific
project.
Rajkot District Panchayat & Anr. v. Vajasoor Ala Rathod, 2005 (106) FLR 930 : 2005 LLR 952
(Guj.HC)

zx) When terminated on non-renewal of contract of employment (S.C.3J)

F 5A.525 When the contract of employment for the three employees who were appointed for a
fixed period of three years were not renewed, it is held that their termination Constitutes
retrenchment as mandated u/s. 2(oo) of the Act and would be consistent with the scope and purpose
of Sec. 25F of Industrial Disputes Act and not contrary to the scheme of Act in keeping with the case
SBI v. Sundara Money and therefore the award reinstating three employees was upheld.
M/s. Hindustan Steel Ltd. v. Labour Court, Orissa & Ors., 1977 I LLJ 1 : 1976 (49) FJR 397 : 1976 (33)
FLR 257 : 1976 II LLN 479 : 1976 LIC 1766 : 1976 SCC (L&S) 583 : 1977 AIR (SC) 31 : 1976 (4) SCC
222 (S.C.3J)
Analysing this definition in State Bank of India v. N. Sundara Money, (supra) this Court held :
Termination. . for any reason whatsoever are the key words. Whatever the reason, every termination
spells retrenchment. So the sole question is has the employees service been terminated ?.... A termination
takes place where a term expires either by the active step of the master or the running out of the stipulated
term.... Termination embraces not merely the act of termination by the employer, but the fact of
termination howsoever produced.
...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.
This decision, as conceded by the Solicitor General, goes against the contention of the appellant and is
conclusive on the main question that arises for consideration in this appeal. It may also be noted that
Section 25F(a) which lays down that no workman who has been in continuous service for not less than

2476

Chapter VA Lay-Off and Retrenchment

Sec. 25F

one year under an employer shall be retrenched by that employer unless he has been given one months
notice or wages in lieu of such notice, has a proviso which says that no such notice shall be necessary if
the retrenchment is under an agreement which specifies a date for the termination of service. Clearly, the
proviso would have been quite unnecessary it retrenchment as denned in Section 2(oo) was intended not
to include termination of service by efflux of time in terms of an agreement between the parties. This is
one more reason why it must be held that the Labour Court was right in taking the view that the
respondents were retrenched contrary to the provisions of Section 25F. (Page: 3, Para: 2)
Note: This is prior to introduction of Clause (bb) to Sec. 2(oo)

zy) Termination not proper if employer fails to disclose grounds and nor is it
examined by the Labour Court (S.C.2J)
F 5A.526 Since there was no material available to show on what grounds workmans services
were terminated by employer and also Labour Court did not examine any of the contentions of the
employee including that the workman had completed 240 days of service at the time of his
termination while dismissing the dispute raised by employee that his termination was in violation
of Sec. 25F, and hence Labour Courts award as affirmed by High Court was set aside, Supreme
Court directed his appointment a fresh in similar employment which he had earlier.
Talwinder Singh v. P.O., Labour Court & Anr., 2004 II LLJ 1050 : 2004 IV LLN 50 : 2003 (10) SCC 283
(S.C.2J)
The grievance of the appellant in this case is that though he had put in 240 days of service, his services
were terminated without observing the due procedure as provided under Section 25F of the Industrial
Disputes Act. He raised a dispute before the Labour Court. Various contentions were raised on behalf of
the parties. The Labour Court did not examine any one of those contentions in the manner in which it
should have been done. However, it dismissed the claim made by the appellant. When the matter was
carried further by way of a writ petition, the High Court also dismissed the same by a cryptic
order. (Page: 1050, Para: 1)
There is no material to show on what ground his services have been terminated. In the circumstances the
award made by the Labour Court, as affirmed by the High Court needs to be set aside. We direct
Respondent 2 to appoint the appellant afresh. (Page: 1051, Para: 4)

zz) When Extra Departmental Branch Post Master was terminated after enquiry
without an opportunity of hearing (CAT)
5A.527
Extra Departmental Branch Post Master was terminated after enquiry without an
opportunity of hearing nor was given one month notice nor wages in lieu thereof in compliance of
provision of Sec. 25F. It was held that such termination was bad in law.
Asoke Kumar Sinha v. Union of India & Ors., 1989 LIC 670 (CAT)
.when the applicant.cannot be sustained. (Page: 672, Pasra: 5)
.we hold that.bad in law. (Page: 673, Para: 6)
.The termination of.from this date. (Page: 673, Para: 7)
Note: In the following cases, termination of employees including daily wagers, casual employees or
probationers or ad hoc held illegal if he completed 240 days and Sec. 25F violated
Casual worker rendered 240 days of continuous service entitled to regularization
Management of Tungabhadra Steel Products Ltd. v. A.B. Patil & Anr., 2000 (96) FJR 278 : 2000 (84)
FLR 565 : 2000 (84) FLR (Sum) 7 (Karn.HC)
M.P. State Tourism Development Corporation v. Smt. Sita Bai Kushwaha, 2002 (94) FLR 425 : 2002 IV
LLN 714 : 2002 LLR 566 (MP.HC)
Parshuram Yallapa Kotekar v. Telecom District Engineer, Ratnagiri & Ors., 2002 (93) FLR 1181 : 2002
II CLR 78 : 2002 LLR 825 (Bom.HC)

Sec. 25F

Sec. 25F when violated or when required to be complied

2477

Daily Wager If completed 240 days of service in a year cannot be terminated in violation of Sec.
25F.
Kutch District Panchayat Executive Engineer v. Kishor D. Varu., 1999 I LLJ 973 : 1998 LLR 886
(Guj.HC)
Termination on completing 240 days in a calendar year is in contravention of Sec. 25F.
State of Rajasthan v. Ram Kumar & Anr., 1998 LIC 874 : 1998 LLR 583 (Raj.HC)
Termination Without complying Sec. 25F, invalid as employee completed 240 days of continuous
service.
Executive Engineer, Garhi & Anr. v. Kalia & Anr.,1998 LIC 1078 : 1998 LLR 586 (Raj.HC)
M.P. Text Book Corporation, Bhopal v. S. K. parasar & Anr. And S.K. Parasar v. Managing Director,
M.P. Text Book Corp. & Anr., 2005 LLR 324 (MP.HC)
Nirmal Kumar Sharma v. Municipal Board, Kherthal & Anr., 2003 (96) FLR 877 : 2002 LIC 3329 : 2003
LLR 154 (Raj.HC)
Termination workman completing 240 days, held illegal.
State of Haryana v. Naresh Kumar & Anr., 2001 III LLN 1144 (P&H.HC)
Maheshkumar Jivram Chauhan & Anr. v. Prantij Municipal Borough & Ors., 1996 II LLN 1130 : 1996 II
CLR 189 (Guj.HC)
Causal emolyee, if completed 240 days of service Sec. 25F must mandatorily be followed.
Nagappa Hanumanthappa Lamani v. Management of Sericulture Department, 2002 (101) FJR 581 :
2002 (94) FLR 1183 : 2002 III LLN 1026 : 2002 III CLR 219 : 2002 III CLR 322 : 2002 LLR 1145
(Karn.HC)
Termination of casual labour working for more than 240 days, reinstatement with back wages
follows.
Madhya Pradesh State Tourism Development Corporation v. Smt. Sita Bai Kushwaha, 2002 (94) FLR
425 : 2002 IV LLN 714 : 2002 LLR 566 (MP.HC)
Labour Court Justified in granting reinstatement with back-wages in absence of any rebuttal
evidence
Commissioner, Municipal Corporation, Hyderabad v. Labour Court, Hyderabad & Anr., 2002 (94) FLR
300 : 2002 LLR 957 (AP.HC)
M.P. Rajya Van Vikas Nigam Limited, Balaghat v. Shri Q.M. Qureshi English Coaching Class & Ors.,
2003 (96) FLR 90 : 2003 I LLN 740 : 2003 LIC 1951 (MP.HC)
Sec. 25F must be followed, if casual employee has completed 240 days of service.
S. Ratnakar v. Karnatak State Road Transport Corporation, 1996 (74) FLR 1903 (S.C.3J)
Reinstatement of daily wager who worked for 240 days, non-compliance Sec. 25F, continuity with
full back-wages, held valid.
Gujarat State Land & Development Corpn. Ltd. v. Sompura Dharmendra Hathi c/o. H.D. Rathod, 2002
III CLR 694 (Guj.HC)
Sunil Bhalchandra Jani v. Gujarat Electricity Board, 2002 II LLJ 607 : 2002 (101) FJR 442 : 2002 (93)
FLR 1050 : 2002 LLR (Sum) 955 (Guj.HC)
Termination u/s. 25F valid, does not amount to retrenchment, workman worked for less than 240
days.
Girdhar Gopal Saini v. Industrial Tribunal & Ors., 2002 (94) FLR 905 : 2002 II LLN 692 : 2002 II CLR
1043 : 2002 LLR 685 : 2002 LIC 59 (Sum) : 2003 (99) FLR 25 (Sum) (Raj.HC)
Sec. 25F violated, daily wage employee worked for 240 days, no notice and compensation was
given.
State of Rajasthan v. Kanhaiya Lal & Ors., 2002 (94) FLR 283 : 2002 II CLR 1040 : 2002 LIC 1915
(Raj.HC)

2478

Chapter VA Lay-Off and Retrenchment

Sec. 25F

480 days, strict rules of evidence are not applicable to the proceedings before Labour Court and
only rules of natural justice are to be followed.
G. Thilagam & Ors. v. The P.O. Labour Court, Salem & Anr., 2002 (93) FLR 518 : 2002 I CLR 876 :
2002 LLR 552 (Mad.HC)
Retrenchment valid, not completed 240 days, workman was an absentee who did not come to join
the job, also employer had not terminated his services.
Modh. Islam v. P.O. Labour Court, Agra & Ors., 2002 (95) FLR 533 (All.HC)
Retrenchment violated, on completion of 240 days provisions of Sec. 25F must be followed.
Municipal Council, Shahpura v. State Labour Court & Anr., 2002 (94) FLR 200 : 2002 IV LLN 708 :
2002 LLR 565 (MP.HC)
Non-compliance of Sec. 25F, employee had worked for more than 240 days he is entitled to a show
cause notice and compliance of the provisions of Sec. 25F of the Act, reinstatement with continuity
of services must be allowed.
R. Poori @ Bhoopathi v. P.O. Labour Court, Vellore & Anr., 2002 (95) FLR 624 : 2002 III LLN 1099
(Mad.HC)
Retrenchment invalid, worker seeking full wages succeeded in proving that he had completed
continuous service of more than 240 days in a year, mere delay in reaching Court, cannot deny
relief to workman u/s. 25F.
State of Punjab & Ors. v. Iqbal Singh & Anr., 2002 I CLR 678 (P&H.HC)
Termination illegal, amounts to retrenchment, workman worked for more than 240 days in a
calendar, on account of non-compliance of Sec. 25F.
M.P. Rajya Van Vikas Nigam Limited, Balaghat v. Shri Q.M. Qureshi English Coaching Class & Ors.,
2003 (96) FLR 90 : 2003 I LLN 740 : 2003 LIC 1951 (MP.HC)
Termination valid, workman failing to prove that he has worked for 240 days of continuous
service in a calendar year, not entitled to any benefits u/s. 25F.
Regional Manager, Bank of Baroda v. P.O. Central Government Industrial Tribunal & Anr., 2003 III
LLJ 198 : 2004 (106) FJR 509 : 2003 (98) FLR 385 (Raj.HC)
Termination illegal, amounts to retrenchment, chowkidar working in service of State
Government for 240 continuous days, on account of non-compliance of Sec. 25F.
State of Madhya Pradesh through Executive Engineer v. Jitendra S/o. Rajendra Rathor., 2003 LLR 556
(MP.HC)
Termination illegal, amounts to retrenchment, non-compliance of Sec. 25F, worked for 240 days
but job was abandoned, yet compliance of Sec. 25F is a must.
Nirmal Kumar Jain v. P.O. Central Government Industrial Tribunal-cum-Labour Court, Kanpur & Anr.,
2003 (96) FLR 301 : 2003 LIC 403 : 2003 I CLR 547 : 2003 LLR 236 (All.HC)
Termination illegal, amounts to retrenchment, on account of non-compliance of Sec. 25F.
Gujarat State Construction Corporation v. Andravadan Ambalal Soni., 2003 LLR 916 (Guj.HC)
Termination illegal, amounts to retrenchment, workman worked for more than 240 days in the
preceding year, on account of non-compliance of Sec. 25F.
Municipal Copo of Delhi v. Jai Veer & Anr., 2003 II CLR 886 (Del.HC)
Termination valid, does not amount to retrenchment, workman completed 240 days but not in
the preceding year, hence not entitled to the benefits of Sec. 25F.
Shashikant Govind Malgaonkar v. State of Maharashtra & Ors., 2003 (98) FLR 20 : 2004 LIC 273 : 2003
II LLN 1023 : 2003 II CLR 342 (Bom.HC)
Gujarat Water Supply & Sewg. Board v. Dineshbhai M. Solanki, 2005 LIC 2353 (Guj.HC)

Sec. 25F

Sec. 25F when violated or when required to be complied

2479

Retrenchment u/s. 25F invalid, as the employee had completed 240 days of continuous services.
P.M. More v. P.O. Central Government Industrial Tribunal No.1 & Anr., 2001 III LLJ 689 : 2000 (87)
FLR 228 : 2000 III CLR 113 (Bom.HC)
Smt. Hemalata Sahoo v. Presiding Officer, Labour Court, Bhubaneshwar & Anr., 2005 (106) FLR 732 :
2005 LLR 993 (Ori.HC)
Termination illegal, amounts to retrenchment, workman working for more than 240 days, on
account of non-compliance of Sec. 25F.
Sachiv, Krishi Upaj Samiti, Anjad (Barwani) v. Kalyan Singh S/o. Maan Singh Thakur & Anr., 2003 III
LLJ 338 : 2003 (97) FLR 566 : 2003 III LLN 391 : 2003 LLR 489 (MP.HC)
Reinstatement and back wages continuous service of 240 days in a calander year, employers
contention of employment being temporary not supported by evidence.
State of Madhya Pradesh & Ors. v. Vinod Singh Rathur & Ors., 2003 I LLN 135 : 2002 LLR 1093
(MP.HC)
Reinstatement and back wages continuous service of 240 days in a calander year, employers
contention of employment being temporary not supported by evidence.
MCD v. Lekh Ram & Anr., 2004 I LLJ 533 : 2003 IV LLN 1017 : 2004 LLR 62 : 2003 (99) FLR 1209
(Del.HC)
Termination illegal, amounts to retrenchment, on account of non-compliance of Sec. 25F, when
workman has completed 240 days of continuous service in a calendar year.
Management of Calcutta, telephone v. P.O & Ors., 2003 III CLR 665 (Cal.HC)
Termination illegal, amounts to retrenchment, if workman working for more than 240 days in a
calendar year, claim of employers that the wokman was appointed against Jawahar Yojana
Scheme not supported by evidence.
State of Rajasthan v. Ram Chandra & Anr., 2003 (96) FLR 603 : 2003 I LLN 619 : 2003 LIC 8 (Raj.HC)
Termination illegal, workman working for 240 continuous days in a calendar year, on account of
non-compliance of Sec. 25F.
State of Madhya Pradesh through Conservator of Forest & Ors. v. Ram Prakash Tiwari & Anr., 2003
(96) FLR 9 : 2003 LLR 9 (MP.HC)
Termination illegal, amounts to retrenchment, proof of 240 days of continuous service adduced
by employee, on account of non-compliance of Sec. 25F.
Executive Engineer, Gujarat Water Supply & Severage Board, Junagadh v. Makwana Dhirajlal
Dahyalal, 2003 LIC 665 (Guj.HC)
Termination illegal, amounts to retrenchment, workman working for 240 continuous days in a
calendar year, on account of non-compliance of Sec. 25F.
State and Others v. Bhopal Singh., 2003 (96) FLR 1144 : 2003 III LLN 492 : 2003 LLR 5494 : 2003 LLR
468 (Raj.HC)
Termination illegal, amounts to retrenchment, after completion of continuous service of 240
days.
High Court in writ petition no jurisdiction to re-appreciate evidence.
Navsari District Panchayat & Anr. v. Sumanbhai Morarbhai Patel & Anr., 2003 I LLN 1071 : 2003 LIC
1088 (Guj.HC)
Termination void ab initio as workman had completed 240 days and Sec. 25F not followed.
Executive Engineer, Power Plant v. Presiding Officer, Labour Court, & Ors., 2004 (102) FLR 1122
(Ori.HC)
Shri Pal S/o Chander Bhan v. P.O. Industrial-cum-Labour Court & Anr., 2002 (95) FLR 401 : 2002 II
LLN 667 : 2002 LLR 371 : 2002 LIC 227 (P&H.HC)
John Fernanez & Anr. v. Executive Engineer, P.H. Dvn, Alleppey & Anr., 1979 (38) FLR 287 : 1979 LIC
255 (Ker.HC)
Government Nehru Degree College Sabalgarh Dist. Morena v. Ashok Kumar Verma & Ors., 1995 I LLJ
287 : 1995 (86) FJR 723 : 1995 I CLR 539 : 1994 LLR 857 (MP.HC)

2480

Chapter VA Lay-Off and Retrenchment

Sec. 25F

Termination illegal, if 240 days completed on re-employment and Sec. 25F not complied.
Alexandar Yesudas Maikel v. Perfect Oil Seals & Irp & Ors., 1996 I LLJ 533 : 1995 (70) FLR 1086 : 1995
I LLN 1165 : 1995 I CLR 942 : 1995 LLR 777 (Bom.HC)
Krishi Upaj Mandi Samiti Katghora v. Muzahid Hussain & Anr., 1998 III LLJ (Sum) 333 : 1995 (71)
FLR 405 : 1995 LLR 1018 (MP.HC)
Part-time Employee Worked for 240 days, terminated without complying Sec. 25F, illegal.
State of Rajasthan v. Ram Kumar & Anr.,1998 LIC 874 : 1998 LLR 583 (Raj.HC)
Managing Director, Sri Ganganagar Sahakari Spinning Mills Ltd. v. Labour Court, Bikaner & Ors.,
1997 IV LLN 820 : 1998 I LLJ 523 (Raj.HC)
Executive Engineer, Garhi & Anr. v. Kalia & Anr.,1998 LIC 1078 : 1998 LLR 586 (Raj.HC)
State of U.P. v. P.O. Labour Court & Anr., 2003 (96) FLR 317 (Uttar.HC)
Shri Pal Singh v. National Thermal Power Corporation Ltd. C.W.P., 2002 (95) FLR (Sum) 20 : 2002 LIC
1923 : 2002 II CLR 512 : 2002 LLR 529 : 2002 (95) FLR 9 (Del.HC)
Sawai Madhopur & Tonk Dugdhutpadak Sahkari Sangh Ltd.& Ors. v. Om Prakash Sharma & Ors., 2002
(92) FLR 811 : 2002 (94) FLR 151 : 2002 LLR 382 (Raj.HC)
Executive Engineer, Narmada Yojna & Anr. v. Legal Heirs of Bhagwanbhai Khodabhai Algotar & Anr.,
2001 (88) FLR 818 (Guj.HC)
Rameshbhai Nagarbhai Parmar & Anr. v. Halvad Nagarpalika & Ors., 2001 (91) FLR 785 (Guj.HC)
Madan Singh Shekhawat v. Sikar Central Co-operative Bank Ltd., 2001 (91) FLR 1042 (Raj.HC)
Mahindra & Mahindra Ltd. v. Digambar G. Pawaskar & Ors., 1997 I CLR 872 : 1997 LLR 589
(Bom.HC)
Umesh Saxena v. P.O. Labour Court, Agra, The Administrator, Nagar Palika, Fatehpur Sikri, Agra,
Officer-in-charge, Nagar Palika, Fatehpur Sikri, Agra, Water Works Engineer, Nagar palika, Fatehpur
Sikri, Agra, Executive Officer., 1993 (66) FLR 566 : 1993 I LLN 809 : 1993 LLR 118 (All.HC)
Umesh Saxena v. P.O. Labour Court, Agra, The Administrator, Nagar Palika, Fatehpur Sikri, Agra,
Officer-in-charge, Nagar Palika, Fatehpur Sikri, Agra, Water Works Engineer, Nagar palika, Fatehpur
Sikri, Agra, Executive Officer., 1993 (66) FLR 566 : 1993 I LLN 809 : 1993 LLR 118 (All.HC)
Kanhaiya Lal v. State of Rajasthan & Ors., 1994 (68) FLR (Sum) 33 : 1994 II LLJ 474 : 1993 I CLR 929
(Raj.HC)
Viney Kumar Majoo v. State of Rajasthan & Ors., 1968 II LLJ 398 : 1970 (37) FJR 22 : 1968 LIC 1180
(Raj.HC)
Jaipur Development Authority v. Suresh Chand, 1999 (83) FLR 224 (Raj.HC)
Goutam Chatterjee v. State of West Bangal & Ors., 2001 II LLJ 282 : 2001 (89) FLR 181 : 2001 III LLN
1021 : 2001 I CLR 781 : 2001 LLR 431 (Cal.HC)
Ram Swaroop Sharma v. Labour Court, Jaipur IInd & Anr., 2000 (85) FLR 102 (Raj.HC)
M.P. Electricity Board, Vidisha v. Hariram & Anr., 2000 (87) FLR 750 (MP.HC)
Gujarat Water Resources Development Corporation Ltd.& Anr. v. Vithalbhai Gambhilrbhai Bariya,
Vadodara, 2001 (89) FLR (Sum) 15 (Guj.HC)
Zonal Manager, Central Bank of India v. Union of India & Ors., 2003 II LLJ 234 : 2003 (96) FLR 842 :
2003 II LLN 108 : 2003 II CLR 437 : 2003 LLR 189 (Pat.HC)
State Bank of India v. Union of India & Ors., 2002 III LLJ 223 : 2002 (94) FLR 633 : 2002 III CLR 427
(Pat.HC)
Sanjay Kumar Jain v. Nagar Palika, Aron through the Chief Municipal Officer, 1998 II LLJ 555 : 1998 I
LLN 629 : 1998 LIC 1198 : 1998 LLR 218 (MP.HC)
Medical Officer, District Health Centre & Anr. v. Savjibhai Trikambhai Kansagra, 2003 (96) FLR 268 :
s2002 III CLR 838 : 2002 LIC 2659 (Guj.HC)
Predyumn Nath Pandey v. Life Insurance Corporation of India & Ors., 1979 LIC 831 (All.HC)
Workman of Municipal Corpn. of Delhi & Anr. v. Management of Municipal Corpn. of Delhi & Anr.,
1987 I LLJ 85:1987 II LLN 118 (Del.HC)
Shri Ram Deen v. State & Ors.,1993 LLR 474 (Raj.HC)
Khadim Ali v. State of Rajasthan., 1993 (67) FLR 345 (Raj.HC)
Norton Engineering Works v. P.O. Labour Court, Amritsar., 1998 (92) FJR 133 : 1997 III LLN 666 :
1997 LIC 2254 (P&H.HC)
The State of Punjab through Exective Engineer Central Works Division, Pathankot v. Bodh Raj S/o
Sunder Das & Anr., 1995 LLR 518 (P&H.HC)
Vinod Kumar v. Market Committee Bhiwanigarh & Ors., 1996 (88) FJR 431 : 1996 (73) FLR 1187
(P&H.HC)

Sec. 25F

Sec. 25F when violated or when required to be complied

2481

Chief Engineer, Irrigation Department, Haryana, & Anr. v. Industrial Tribunal-cum-Labour Court &
Anr., 1994 II LLN 663 (P&H.HC)
Shri Kishore B. Dave v. Dean, J.J. Group of Hospitals & Ors., 1994 III LLJ (Sum) 1001 : 1986 (52) FLR
380 : 1986 I CLR 172 (Bom.HC)
The termination of workman in contravention to Sec. 25F was set aside by Labour Court and the
same was upheld by High Court on the ground that workman completed 240 days service.
Block Development Officer & Anr. v. Chhagan Lal & Anr., 2005 LLR 717 (Raj.HC)
Standard Charted Bank, Ltd. v. Sudhakaar D. Khanvilkar & Anr., 2004 II LLN 927 (Bom.HC)
Termination of probationer in violation of Sec. 25F was held bad, since he rendered 240 days
service.
Ranchhodji C. Chauhan v. District Panchayat, through D.D.O. Palanpur & Anr., 2001 III LLJ 829
(Guj.HC)
R. Vijayakumari WITH R. Sivakumar & Ors. v. P.O. & Anr., 2001 III LLJ 833 : 2000 III LLJ 644 : 2001
(98) FJR 27 : 1999 IV LLN 383 : 1999 LIC 3450 (Mad.HC)
Executive Engineer M.P. Housing Board, Indore & Ors. v. Ramesh, 2006 (108) FLR 401 : 2006 LIC
1814 (MP.HC)
Administrative Officer, Municipal School Board & Ors. v. Mohan E. Jagtap, 2006 (110) FLR 265 : 2006
(2) BCR 873 (Bom.HC)
State of Gujarat v. Kiritbhai Somabhai Bariya c/o. Indian Employees Union, 2006 II LLJ 1079 : 2006
(109) FLR 770 : 2006 I CLR 1096 (Guj.HC)
Food Corporation of India v. P.O. & Anr., 2001 III LLJ 959 (Gau.HC)
Mansukhbhai Jivabhai & Ors. v. Bhavnagar Mahanagarpalika, 1997 (76) FLR 508 : 1997 II LLN 942 :
1997 I CLR 948 : 1997 LLR 582 (Guj.HC)
Rajwant Singh Rewat v. The District Foood & Supplies Controller, Ferozepur & Ors., 1996 I LLJ 637
(P&H.HC)
Commissioner, Tirvallur Municipality, Tiruvallur v. P.O. First Additional Labour Court, Chennai, &
Ors., 2002 II LLN 311 (Mad.HC)
C.K. Kumaran v. Idukki Jilla Motor Mazdoor Sangh (BMS) & Anr., 1995 I LLJ 323 : 1994 (85) FJR 340 :
1995 (70) FLR 113 : 1994 LLR 528 (Ker.HC)
Madhya Pradesh State Tourism Development Corporation v. Smt. Sita Bai Kushwaha, 2002 (94) FLR
425 : 2002 IV LLN 714 : 2002 LLR 566 (MP.HC)
Indian Overseas Bank v. Industrial Tribunal, Alapuzha & Anr., 2002 III LLJ 984 : 2003 (102) FJR 903 :
2002 LIC (Sum) 56 (Ker.HC)
Zilla Parishad, Dhule & Ors. v. Rajendra Hiraman Khairnar,. 1995 II LLJ 565 : 1995 (70) FLR 64 : 1994
II CLR 995 : 1995 LLR 183 (Bom.HC)
Ghansham v. Chief Conservator of Forests & Ors., 2000 I LLJ 459 : 1999 LIC 2193 (J&K.HC)
Senior Divisional Mechanical Engineer, Northern Railway, Lucknow v. P.O. Central Government
Labour Tribunal, & Ors., 1992 LIC 1586 (All.HC)
Rajendraprasad Shanklal Purohit v. Executive Engineer, Gramya Marg Vikas Yojna Vibhag, 2002 III
CLR 439 : 2002 LIC 3214 (Guj.HC)
R. Ravichandramoorthy & Ors. v. P.O. Labour Court, Salem & Ors., & Management of Institute of Road
Transport & Tenchology (represented by its Principal), Erode, 2003 I LLJ 729 : 2003 (96) FLR 459 :
2002 IV LLN 465 (Mad.HC)
Bharat Pump & Compressors Ltd. v. State of U.P. & Ors., 2004 (103) FLR 411 (All.HC)
State of Rajasthan v. Smt. Ratni, 2004 (106) FJR 613 : 2005 I LLN 384 (Raj.HC)
Termination is invalid, when employee has completed 240 days of service.
Workmen of Municipal Corp. of Delhi & Anr. v. Mgnt. Of Municipal Corp. of Delhi & Anr., 1986 (53)
FLR 223 (Del.HC)
Retrenchment includes termination of services of a pump assistant on ad hoc basis who has
completed 240 days of service.
Umesh Saxena v. P.O. Labour Court, Agra, The Administrator, Nagar Palika, Fatehpur Sikri, Agra,
Officer-in-charge, Nagar Palika, Fatehpur Sikri, Agra, Water Works Engineer, Nagar palika, Fatehpur
Sikri, Agra, Executive Officer., 1993 (66) FLR 566 : 1993 I LLN 809 : 1993 LLR 118 (All.HC)

2482

Chapter VA Lay-Off and Retrenchment

Sec. 25F

Termination is invalid, when employee has completed 240 days of services.

Kanhaiya Lal v. State of Rajasthan & Ors., 1994 (68) FLR (Sum) 33 : 1994 II LLJ 474 : 1993 I CLR 929
(Raj.HC)
Prakash Budhaji Jadhav v. Bajaj Electricals Ltd., 2007 II LLN 807 : 2007 I CLR 555 : 2007 LLR 418
(Bom.HC)
Termination without complying with Sec. 25F was held bad as workman completed 240 days
service.
Kanpur Electricity Supply Co. Ltd. v. The P.O., Labour Court, IV Kanpur & Anr., 2006 (108) FLR 814 :
2006 III LLN 207 : 2006 LLR 764 (All.HC)
Benefit of Sec. 25F is available to workman who rendered 240 days service, how he was paid and
recruited is not relevant.
Executive Engineer & Ors. v. Bhimrao Shioram Khobragade, 2004 III LLN 814 (Bom.HC)
Probationer if rendered 240 days service, cannot be terminated in violation to Sec. 25F.
Mohindergarh Central Co-op. Bank, Ltd., Mohindergarh v. State of Haryana & Ors., 2004 II LLN 501
(P&H.HC)
Termination of two employees who had completed 240 days of service in 12 calendar
month-Contravention of Sec. 25F.
Workmen, Nirsa Area of M/s. ECF Ltd. v. Employers, Management of M/s. Eastern Coal Field Ltd. &
Anr., 2003 (96) FLR 665 (Jhar.HC)
Sec. 25F contravened when workman terminated for non-compliance of Sec. 25F though
appointed on non-sanctioned post.
Chief Municiipal Officer, Municipal Council, Govindgarh, Rewa v. Presiding Officer, Labour Court,
Rewa f& Ors., 1998 III LLJ 655 : 1995 I LLN 1112 : 1994 II CLR 708 (MP.DB)
If terminated when the total service becomes 240 days after adding Sundays and holidays in a year.
Jaipur Development Authority & Anr. v. Mahesh Kumar & Anr., 2006 (110) FLR 1207 : 2006 III CLR
448 : 2007 I LLJ 142 (Raj.DB)
When workman in an irrigation project terminated though his name is born on two muster rolls if
he completes 240 days under both the muster rolls.
Executive Engineer, Irrigation Division, Gondia & Ors. v. Maroti S/o. Janba Dupare, 2004 (106) FJR
849 2004 (101) FLR 1133 : 2004 II LLN 928 : 2004 II CLR 677 (Bom.HC)
Termination illegal when probationer worked more than 12 months confirmed as per Model
Standing Order.
R.P. Garg v. Indian Oil Corporation Ltd., 2007 (112) FLR 369 (All.HC)

VIII. Effect of violation of Sec. 25F

a) Employer-employee relationship exists when retrenchment is bad due to
non-compliance of Sec. 25F (Raj.DB)
5A.528
The retrenchment of the workman being invalid due to noncompliance of Sec. 25F,
employer-employee relationship was still in existance and the Labour Court has erred in refusing
reinstatement. Hence the order of the Single Judge amending the award to this effect is proper.
Udaipur Mineral Development Syndicate Pvt. Ltd., Bhilwars v. M.P. Dave & Anr., 1975 II LLJ 499 :
1975 II LLN 210 : 1975 LIC 1556 (Raj.DB)
We have.retrenchment.. (Page: 502, Para: 4)
.and it therefore.its award. (Page: 502,503, Para: 4)

Sec. 25F

Remedies for violation of the section

2483

b) Termination becomes void (Bom.DB)

5A.529
Termination of services of workman being in violation of Sec. 25F is held to be ab
initio void.
Elpro International Ltd. v. K.B. Joshi & Ors., 1987 II LLJ 210 : 1987 (54) FLR 428 : 1987 I LLN 695 :
1987 LIC 1468 : 1987 I CLR 266 (Bom.DB)
Therefore.fail. (Page: 214, Para: 6)
The amount.fail. (Page: 214/215, Para: 7)
So far.powers. (Page: 215, Para: 8)
5A.530
The Appellate Authority has u/s. 41 of the Andhra Pradesh Shops and Establishments
Act has the jurisdiction to determine whether retrenchment of employees was in accordance with
Sec. 25F and 25G of the Industrial Disputes Act and hence retrenchment is set aside and employer
is directed to comply with these provisions.
N.V. Purnachandra Rao & Ors. v. Krishna District Cooperative Marketing Society Ltd., Vijayawada &
Ors., 1987 II LLJ 237 : 1987 I LLN 517 (AP.DB)
In fact.Act. (Page: 238, Para: 5)
5A.531
Non-compliance of Sec. 25F renders the termination void and reinstatement with
back wages is ordered.
Satyendra Singh Rathore v. Rajasthan Rajya Pathya Pustak Mandal, Jaipur, 1989 II LLJ 289 : 1989 (58)
FLR 507 : 1989 II LLN 272 : 1989 I CLR 806 (Raj.DB)
Admittedly in the.inoperative. (Page: 293, Para: 9)
5A.532
Sec. 25F of the Act has to be complied with if the workman has put in 240 days of
service in the year prior to the date of termination of service. Hence, in the instant case, termination
of service of such workmen was illegal, since compliance of Sec. 25F of the Act is a condition
precedent to the termination of service.
Delhi Cantonment Baord v. Central Government Industrial Tribunal & Ors., 2006 LIC 1140 : 2006 LLR
835 : 2006 III LLJ 752 (Del.DB)

IX. Remedies for violation of the section

a) Workman can elect his remedy either by challenging retrenchment or
claiming retrenchment compensation by accepting retrenchment (Del.HC)
5A.533
When an order of retrenchment is passed without paying retrenchment compensation
as provided in Sec. 25F, it is optional for the concerned workman either to challenge the order of
retrenchment as invalid and inoperative and claim reinstatement and consequential reliefs or to
accept the fact of retrenchment and claim retrenchment compensation computed in accordance
with the provision in Clause (b) of Sec. 25F.
Shri Adaishwar Lal v. The Labour Court, Delhi & Ors., 1970 LIC 936 (Del.HC)

2484

Chapter VA Lay-Off and Retrenchment

Sec. 25F

b) Legal heirs can enforce the claim for retrenchment compensation and the right
survives even though the workman dies (LAT)
5A.534
The right of workman to receive compensation is a statutory right conferred u/s. 25F.
This right became rested in the workmen on fulfilment of the conditions laid down u/s. 25F. The
said right having been descended upon the heirs-at-law of the said workmen, they are entitled to
enforce the claim to recover the amount from the company and this right cannot be easily
dismissed on the ground that the workmen entitled to it have died. Therefore held that the dues due
to them should be paid to their heirs-at-law.
K.P. Dass and Co Ltd v. Howrah Zila Kharkhana mazdoor Congress, 1956 I LLJ 679 (LAT)

c) Proper forum is under Industrial Disputes Act but not under writ jurisdiction
(All.DB)
5A.535
Where workman alleged that he was illegally retrenched due to contravention of
Sec. 25F and the case of the employer was that the termination was automatic due to efflux of time,
exercising discretion, High Court refused to entertain writ petition filed by worker on the ground
that effective remedy under Industrial Disputes Act was available where Industrial Court could
consider whether termination in question was camouflage, malafide etc. which cannot be possibly
decided u/Art. 226.
Rakesh Kumar v. Uptron India Ltd. & Ors., 1989 (59) FLR 244 (All.DB)
Since the petitioner.into that controversy. (Page: 247, Para: 4)
Whether a writ.speedy and appropriate. (Page: 247, Para: 5)
5A.536
If termination is in violation of principle of natural justice and in non-compliance of
provisions of Sec. 25F, proceedings under Industrial Dispute Act for remedy are maintainable
Nathaniel Masih v. Uttar Pradesh Scheduled Caste Finance & Development Corpn. Ltd. & Ors., 1991 II
LLJ 347 : 1989 (59) FLR 620 : 1989 LIC 2276 : 1990 I LLN 334 : 1990 I CLR 159 (All.DB)
So far as.petition. (Page: 348, Para: 5)
5A.537
Court.

In case of termination of services in violation of Sec. 25F the proper forum is Labour

Wajeeh Ullah v. District Assistant Registrar Coop Societies, Banda & Ors., 1992 (64) FLR 20 (All.DB)
Regarding.Labour Court. (Page: 24, Para: 7)
5A.538
Remedy for temporary workmen appointed on contract basis apprehending their
termination without compliance with Sec. 25F is not a writ application but to raise an industrial
disputes specially when no cause of action has yet arisen.
Chairman, Midnapore Municipality v. Prabir Kumar Nag & Ors., 2001 II LLJ 1153 : 2001 LIC 1946
(Cal.DB)
The writ petitioners.of the programme. (Page: 1156, Para: 11)
Although Mr. Dutta.a writ petition. (Page: 1158, Para: 24)
A disputed question.has yet arisen. (Page: 1158, Para: 25)

Sec. 25F

Remedies for violation of the section

2485

d) Workman on his reappointment for one month which does not include his
previous service can challenge his previous termination in violation of Sec. 25F
(Raj.DB)
5A.539
Services of Workman were terminated in contravention of Sec. 25F and Tribunal
directed reinstatement with full back wages Court held that since his subsequent reappointment
for one month does not continue his earlier service with out breaks it does not validate termination
and hence which still working under subsequent appointment order it will not estop workman
from challenging his earlier termination.
Rajasthan Rajya Pathya Pustak Mandal, Jaipur v. Industrial Tribunal & Ors., 1990 (60) FLR 250
(Raj.DB)
.the learned Judge.full back wages.The employer has.by the
Tribunal. (Page: 251, Para: 2)
.The clinching.made on 571980. (Page: 251, Para: 3)

e) Employer deemed acquiesced into findings of award when he never challenged

award which thus becomes final (All.DB)
5A.540
As employer in any manner never challenged award of Labour Court which had held
termination of workman without compliance with Sec. 25F was illegal retrenchment, he will be
deemed to have acquiesced to it including findings recorded therein, thus award becomes final.
R.B. Singh Son of Shri V.B. Singh v. The State of U.P. Through the Secretary, Labour Department,
Lucknow & Ors., 1997 (76) FLR 657 : 1998 LLR 573 : 1998 LLR 1001 (All.DB)
The respondent No.justified and legal. (Page: 658, Para: 3)
Suffice it to.respondent No.3. (Page: 658, Para: 6)

f) Scope of powers of the Tribuna/Labour Court under Industrial Disputes Act

1. Labour Court is not barred by Haryana State Co-op. Societies Act to grant
relief (P&H.DB)
5A.541
Jurisdiction of Labour Court to decide whether Termination is in violation of Sec. 25F
or not being not excluded by provisions of Sec. 102 of Haryana State Co-op. Societies Act order
passed by Labour Court for reinstatement with 25% back wages was held sustainable.
Bhuna Co-operative Sugar Mill, Bhuna v. Presiding Offier, Industrial Tribunal-cum-Labour Court,
Hissar, & Anr., 1999 IV LLN 589 (P&H.DB)
Thus, in view.to do so. (Page: 591, Para: 10)

2. Delay cannot be ground for Labour Court to decline relief to workman

(P&H.DB)
5A.542
On being terminated, the workman moved Labour Court for reinstatement as Sec.
25F was not complied with. Labour Court refused to grant any relief in view of delay of 4 years.
High Court held that where the Labour Court found that the workman completed 293 days
service, it was not proper for Labour Court to deny relief because delay of 4 years did not cause
any prejudice to employer and it could not be said that the claim was stale one.
Anil Kumar v. State of Haryana & Anr., 2005 III LLJ 1098 : 2005 (106) FLR 838 : 2005 IV LLN 290 :
2005 LLR 979 (P&H.DB)

2486

Chapter VA Lay-Off and Retrenchment

Sec. 25F

5A.543
Where a workman has completed 240 days of continuous service in a year, it was held
by the High Court that delay in approaching the Court or making a reference cannot be a ground
to decline the relief to the workman. Therefore, the award passed by the Labour Court granting
lump sum amount of Rs. 15,000 as back wages was modified on the ground that Delay and laches
had to be examined on the facts and circumstances of each case and therefore full back wages with
reinstatement was granted.
State of Punjab & Ors. v. Iqbal Singh & Anr., 2002 I CLR 678 (P&H.HC)

3. Labour Court cannot question managements right to retrench but to

examine whether the same is justified (All.HC)
5A.544
Right of the management to effect retrenchment cannot normally be questioned when
a dispute arises before an Industrial Court in regard to validity of any retrenchment but the
adjudicator has to consider whether the retrenchment was justified for proper reasons. Sec. 25F(b)
should be complied with if the workman is to be retrenched.
Smt. Reeta Pandey v. Industrial Tribunal (III), Kanpur & Ors., 2005 (104) FLR 584 (All.HC)

4. Industrial Tribunal but not Administrative Tribunal can adjudicate on

termination in violation of Sec. 25F (HP.DB)
5A.545
In case of termination of service in violation to Sec. 25F Industrial Tribunal alone but
not Administrative Tribunal has jurisdiction to adjudicate the dispute.
Durga Ram v. State of H.P. & Ors., 2006 LIC 314 : 2006 I CLR 653 (HP.DB)

5. Tribunal cannot interfere with termination if union fails to submit

evidence despite ample opportunities (Raj.HC)
5A.546
The award of Labour Court upholding the retrenchment of 27 workmen working in
composing sections is challenged by the union that opportunity was denied to submit evidence
hence, award passed is contrary to law, High Court on being satisfied by the order sheets of Labour
Court produced by management which states that ample opportunity was afforded to union to
submit the evidence, held the award of Labour Court holding the termination valid requires no
interference.
Rajasthan Samachar Patra Karmachari Sangh v. Judge Industrial Tribunal, 2004 (105) FJR 980
(Raj.HC)
.The management of.of the workmen. (Page: 980, Para: 2)
The award dated.provisions of law. (Page: 981, Para: 5)
Mr. Kala appeary.ample opportunity. (Page: 981, Para: 6)
Since the union.terminated is valid. (Page: 981, Para: 7)
In view of the.dated 5-1-1996. (Page: 981, Para: 10)

6. Labour Court to give positive finding on justification of termination failing

which award stands vitiated (Ori.DB)
5A.547
Where dispute raised by workman was that his termination of service was
retrenchment, award of Labour Court justifying termination order, with no positive finding
regarding nature of termination was held as vitiated in law.
Adikanda Biswal v. State of Orissa & Ors., 1974 (29) FLR 244 (Ori.DB)

Sec. 25F

Remedies for violation of the section

2487

..........The admission of..........vitiated, in law.......... (Page: 246, Para: 4)

Note: also refer to the following case
U.P. State Road Transport Corporation through General Manager v. State of U.P. & Ors., 1986 (52)
FLR 116 : 1986 I LLN 719 (All.HC)

7. Labour Court not justified in granting reinstatement, when workman

claimed re-employment (Bom.HC)
5A.548
Workman was employed on daily wages as an unskilled labourer. He did not report on
duty and afterwards he applied for re-employment, which was denied. On raising industrial
dispute against the removal, Labour Court granted reinstatement to the workman. High Court set
aside Labour Courts award holding that it would result in miscarriage of justice because
workman had only applied for re-employment and not for reinstatement in service and it was
proved that there was no dispute of wrongful termination. Workman kept silent for 5 years to put
up action without suitable reason, so his claim cannot be accepted.
State of Maharashtra v. Dyaneshwar Rakmaji Aher & Anr., 1998 I LLJ 716 : 1998 (78) FLR 953 : 1998 II
LLN 694 : 1998 I CLR 522 : 1998 LLR 494 (Bom.HC)

8. Labour Court must find out whether employee is a workman and he has
completed 240 days of service to decide the question of retrenchment
compensation (Karn.HC)
5A.549
In a case, where in while terminating the services of a workman retrenchment
compensation was not paid, the task before the Labour Court was to find out whether the employee
was a workman u/s. 2(s) of the Industrial Disputes Act, 1947 and whether he has put in continuous
services of 240 days before the day of termination and if these two conditions were fulfilled then he
is entitled to have compliance u/s. 25F of the Act.
Nagappa Hanumanthappa Lamani v. Management of Sericulture Department, 2002 (101) FJR 581 :
2002 (94) FLR 1183 : 2002 III LLN 1026 : 2002 III CLR 219 : 2002 III CLR 322 : 2002 LLR 1145
(Karn.HC)

9. Tribunal to give declaration that workman terminated has continued in

service when termination becomes void and non-est (Guj.HC)
5A.550
On violation of Sec. 25F, the act of termination of service becomes void and non-est
and therefore a declaration is to be given that the workman concerned has continued in service.
Bharat Heavy Electricals Ltd. Boroda v. R.V. Krishnarao, 1989 (59) FLR (Sum) 30 : 1989 II LLN 381 :
1989 LIC 1914 : 1989 II CLR 112 : 1990 I LLJ 87 : 1990 (76) FJR 190 : 1990 LLR 252 (Guj.HC)

10. The decision of High Court though was a summary dismissal operates as
res judicata against the same cause of action for the same relief before
Labour Court (P&H.DB)
5A.551
Once the termination order of probationer was held as legal on merits by the High
Court in a writ petition, though it was summary dismissal, principle of resjudicata u/s. 11 of Civil
Procedure Code applies and approaching Labour Court on same cause of action and for same
relief is debarred and hence the order of reinstatement by the Labour Court with 60% back wages
was quashed.
The Punjab State Co-operative Bank Ltd. v. P.O. Labour Court & Ors., 1993 II LLJ 260 (P&H.DB)
.If the High.the Labour Court. (Page: 262, Para: 7)
Since the order.cannot be sustained. (Page: 262, Para: 9)

2488

Chapter VA Lay-Off and Retrenchment

Sec. 25F

g) Remedy under civil jurisdiction

1. Civil Court is not proper forum for recovery of retrenchment
compensation and remedy lies u/s. 33C(2) of Industrial Disputes Act
(All.HC)
5A.552
Employee who was retrenched was not paid retrenchment compensation as per Sec.
25F of the Industrial Disputes Act. Hence remedy available to him was by making an application
u/s. 33C for recovery of money. Civil Court cannot interfere.
Kanpur Industrial Development Co-operative Estate Ltd. v. Vinod Kumar Srivastava, 1980 (40) FLR 325
(All.HC)
Note: also refer to the following case
Union of India v. Phirangi, 1981 (59) FJR 281 : 1981 II LLN 500 : 1981 LIC (Sum) 152 (All.HC)
Civil Court cannot prevent an establishment from retrenching, if provided under the Act.
Nippani Electricity Co. Pvt. Ltd. & Anr. v. Bhimarao Laxman Patil & Ors., 1969 I LLJ 268 : 1968 (34)
FJR 385 : 1968 (17) FLR 281 : 1968 LIC 1571 (Mys.HC)

h) Remedy under Central Administative Tribunal

1. CAT cannot interfere with the relief granted by the Tribunal since not
vested with power of superintendence over the latter (S.C.3J)
F 5A.553 Award of reinstatement with full back wages passed by the Industrial Tribunal can
only be set aside by a forum with proper hierarchy which has the power of superintendence over
the Industrial Court and therefore the CAT was not held to have jurisdiction to set aside the award
passed by the Industrial Court.
Ajay D.PanalKar v. Management of Pune Telecom Department, 1998 II LLJ 170 : 1999 LIC 221 : 1998
SCC (L&S) 224 : 1999 AIR (SC) 538 : 1997 (11) SCC 469 (S.C.3J)
The principal question is whether the CAT could entertain the application particularly after the
Industrial Tribunal had ruled that the respondent was a workman within the meaning of the Industrial
Disputes Act and was entitled to retrenchment compensation under Section25-F and since the same was
not paid he was entitled to reinstatement with full back wages. That decision could be upset only by the
Court within that hierarchy and could not have been brushed aside by invoking the jurisdiction of the
Central Administrative Tribunal and having the said Tribunal decide that the Department was not an
industry may be based on a judgment of this Court. The Central Administrative Tribunal also skirted the
issue whether it had jurisdiction in the circumstances of the case. The learned counsel appearing for the
respondent-Department was not able to satisfy us as to how the Central Administrative Tribunal could
assume jurisdiction so long as the decision of the Industrial Tribunal and the Award made by that body
stood unaltered. (Page: 171, Para: 5)
5A.554
The petitioner who seeks relief against termination in violation of Sec. 25F shall
approach the forum under the Act but not the Writ Court on the ground that the termination also
amounts to violation of Art. 21 of the constitution.
General Manager, Magma Area Eastern Coalfields Ltd. v. Gopal Chandra Mondal & Ors., 2000 III LLN
641 : 1999 (82) FLR 530 : 2000 I LLR 353 (Cal.DB)
..In our view.constitutions. (Page: 643, Para: 5)

Sec. 25F

Remedies for violation of the section

2489

i) Remedy under writ jurisdiction for violation of Sec. 25F

1. When can be
i) High Court can directly entertain writ over matters falling under Chapter
V-A since it does not contain disputes referable to Labour Court or
Tribunal u/s. 10 (All.HC)
5A.555
Where the workman challenged the notice of retrenchment in writ petition and
management resisted the writ contending that the High Court has no jurisdiction to adjudicate the
validity of the notice of retrenchment because the Industrial Disputes Act is a complete code and all
disputes under it can only be decided by Courts or Tribunals constituted under it. However,
rejecting its contention High Court held that theTribunals or Courts have exclusive jurisdiction
only when any dispute exists or apprehended and referred to them u/s. 10. However Chapter V-A
does not deal with disputes referable to them and in the instant case, Sec. 25F is in question that
falls in Chapter V-A therefore, High Court has jurisdiction and quashed the notice of
retrenchment.
Kalicharan v. The Workshop Electrical Engineer & Ors., 1973 LIC 172 (All.HC)
Note: also refer o the following case/s
Hardayal & Ors. v. Union of India & Ors., 1976 (32) FLR 428 : 1976 LIC 1426 (All.HC)

ii) High Court can entertain dispute of termination if Sec. 25F is violated since
it amounts to violation of natural justice (Mad.HC)
5A.556
Non-compliance of Sec. 25F would make the order of termination void ab-initio and
the workman could move directly to High Court under Art. 226 instead of approaching forums
constituted under Industrial Disputes Act because violation of the said provision amount to
violation of natural justice.
P.R. Ramachandran & Ors. v. Tamil Nadu Water Supply & Drainage Board & Ors., 1996 I LLJ
823:1996 (89) FJR 678:1996 (73) FLR 1548:1996 I LLN 845:1996 LLR 855 (Mad.HC)

iii) High Court not barred by availability of alternate remedy to grant relief
for retrenchment u/Art. 226 (Cal.DB)
5A.557
A temporary railway servant who had worked for more than one year was retrenched
without paying retrenchment compensation hence order was held to be not sustainable and Writ
Court rejected the ground of alternate remedy, it is not a bar to exercise jurisdiction u/Art. 226 and
allowed the petition.
Union of India & Ors. v. Jaydev Mandal & Ors., 1977 (34) FLR 359 (Cal.DB)
It has.availed of. (Page: 362, Para: 4)
Under.be sustained. (Page: 362, Para: 1)
5A.558
Termination of casual railway employee was held as illegal retrenchment due to
non-compliance of Sec. 25F and it was also held that availability of remedy u/s. 10 will not bar the
petition.
Asst. Personnel Officer, S. Rly Olvakkot v. K.T. Anthony, 1978 II LLJ 254 : 1978 LIC 394 : 1977 (35) FLR
439 (Ker.DB)
Termination in this.illegal, is correct. (Page: 257, Para: 3)
.Reference of industrial.42nd Amendment Act. (Page: 257, Para: 4)

2490

Chapter VA Lay-Off and Retrenchment

Sec. 25F

iv) When contravention of Sec. 25F is an admitted fact but not a dispute for
adjudication (Ori.DB)
5A.559
Where dispute is not related to adjudication of question of fact but is based on
admitted position as to contravention of Sec. 25F, then High Court can exercise jurisdiction
u/Art. 226.
Rajendra Prasad Jena & Anr. v. Orissa State Electricity Board & Ors., 1993 III LLJ 724 : 1989 LIC
(Sum) 111 : 1989 I CLR 598 (Ori.DB)
.The orders.retrenchments. (Page: 725, Para: 3)
In that case.no substance. (Page: 726, Para: 4)

v) When services of casual workers were terminated on completion of work

without any written order (Cal.HC)
5A.560
When services of casual workers were terminated on completion of work and there
was no written order of termination, writ petition by employee was held to be maintainable.
Tapan Kumar Jana v. General manager, Calcutta Telephones & Ors., 1980 II LLN 334 : 1980 LIC 508
(Cal.HC)

vi) High Court can modify the relief granted u/s. 25F if industry is closed or is
in severe financial condition (Bom.HC)
5A.561
High Court can modify the relief granted u/s. 25F when the Industry might have
closed down or is in severe financial difficulty or the workman may have secured better
employment then the Court may deny reinstatement with back wages.
Vacuum Plant Kamgar Sanghtana v. Vacuum Plant & Instruments Fanufacturing Co. P. Ltd. & Anr.,
1999 II CLR 530 (Bom.HC)

2. When cannot be
i) High Court cannot interfere where no jurisdictional error/procedural
irregularity is committed (Guj.HC)
5A.562
In the instant case, as Sec. 25B of Industrial Disputes Act had been satisfied but Sec.
25F of the Act was not complied with Labour Court granted reinstatement without back wages to
the workman who had worked for more than 240 days. This award was challenged in the High
Court by filing writ petition. High Court was of the opinion that where there was no jurisdictional
error and no procedural irregularity committed, High Court could not interfere with the award.
Therefore High Court held the award valid and workman was directed to be reinstated with
continuity of service without back wages till the date of the award but with full back wages from
date of award till actual reinstatement.
Gujarat Housing Board, Rajkot v. Meenakshiben Bhanushankar Bhatt, 2002 LLR 793 : 2002 LIC 1546
(Guj.HC)

ii) High Court cannot decide questions of fact like whether or not the
workman completed 240 days of service (All.HC)
5A.563
Employee raised an industrial dispute when his services came to be terminated.
According to him he worked from 24.10.1985 to 31.7.1986 and therefore, termination of his
services without complying with Sec. 25F is illegal. Industrial Tribunal accepted his contention.
Employer-Corporation filed a writ petition submitting that the employee had not completed 240
days of service. High Court held that the Industrial Tribunal has found as a fact that the employee

Sec. 25F

Remedies for violation of the section

2491

had worked for 240 days and more and that the finding of fact cannot be questioned in the writ
petition, that there is violation of Sec. 25F and as such the findings of the Industrial Tribunal is
upheld.
Senior Branch Manager, Life Insurance Corporation of India, Kanpur v. Central Government Industrial
Tribunal-cum-Labour Court, Kanpur & Anr., 1997 I LLN 155 : 1997 I CLR 427 (All.HC)
5A.564
Services of a daily wager, who was in continuous service was terminated without
complying with the provision of Sec. 25F, Labour Court held that the termination was illegal. This
finding of fact based on evidence on record cannot be interfered with by the High Court.
State of M.P. v. Km. Pratibha Badlani & Ors., 2002 (95) FLR 1161 (MP.HC)
Note: also refer to the following cases in he above context
R. Sankaran v. The P.O. Additional Labour Court, Madras & Anr., 1977 (50) FJR 28 : 1977 I LLN 94 :
1977 LIC 1338 (Mad.HC)
Reserve Bank of India v. S. Mani & Ors., 1999 II CLR 1021 (Karn.HC)

iii) When alternate remedy is available under Industrial Disputes Act (All.DB)
5A.565
The workman has been retrenched in violation of Sec. 25F and remedy is available to
him in the provisions of the Industrial Disputes Act and hence writ jurisdiction of the High Court
cannot be invoked until such remedy has been exhausted.
Divisional Engineer, Head Quarters, N.R. Lucknow v. Durgesh Kumar, 1976 (33) FLR 365 : 1977 I LLN
52 (All.DB)
In our opinion.the Court. (Page: 369, Para: 8)
For the.the Constitution. (Page: 375, Para: 19)
5A.566
Order of termination was challenged by way of a writ petition on the ground that Sec.
25F was not complied with and demanding retrenchment compensation. High Court denied
exercising its discretion, as remedy was available under Industrial Disputes Act.
Mukul Kumar Shukla v. Hindustan Times Ltd., 2002 (95) FLR 944 : 2002 III CLR 677 : 2003 LLR 91
(Del.HC)
Note: also refer to the following case/s in the above context
Moinuddin & Ors. v. Union of India & Ors., 1981 LIC 697 (Raj.HC)
Nazir Singh v. State of Rajasthan & Ors., 1994 II LLJ 1059 (Raj.HC)
Shanker Lal Mali, Petitioner v. State of Rajasthan and others, Respondents, 1980 LIC 964 (Raj.HC)

iv) Writ not maintainable in case of non-compliance of Sec. 25F unless there is
proof of legal injury or infringement of legal right of the employee (Pat.HC)
5A.567
Daily wage employees were retrenched from service in accordance with Sec. 25F.
They preferred to file writ petition after their case was not accepted favourably by the Labour
Court. The High Court held that when the employees failed to demonstrate any legal injury to
them or any infringement of legal right in them to warrant interference with the impugned order,
the employees cannot prefer an action in exercise of writ jurisdiction.
Ram Chandra Shah & Ors. v. State of Bihar & Ors., 2001 III LLJ 296 : 2000 (86) FLR 72 : 2000 III LLN
402 : 2000 II LLR 1003 (Pat.HC)

2492

Chapter VA Lay-Off and Retrenchment

Sec. 25F

v) When writ involves pure question of facts like whether employee worked
for 240 days (S.C.2J)
F 5A.568 Where the Industrial Tribunal had come to a finding that the workman had worked
for 240 days; which was also subsequently upheld by the High Court, the Supreme Court dismissed
the special leave petition holding that since it was a pure question of fact, Supreme Court cant
entertain it.
Processing Manager, Exp. Oriental Handloom v. Madan Gopal, 2006 SCC (L&S) 643 (S.C.2J)
The Tribunal by its award after considering the evidence adduced by the parties, has given specific
finding that the respondent workman has worked for 240 days continuously from 1.5.1986 till
17.12.1987. This finding of fact has been accepted by the learned Single Judge as well as by the Division
Bench in the writ petition and the LPA respectively. This being a pure question of fact, we find no merit in
this appeal and the same is dismissed. (Page: 643, Para: 2)
F 5A.569 An employee was terminated from service without following provisions of Sec. 25F.
On writ petition in the High Court, the employee succeeded. On further appeal the Supreme Court
held that there was a dispute whether the employee had worked for more than 240 days in one year
or not which is a question of fact and should not have been entertained by the HighCourt in the writ
petition directly but the proper remedy was to refer it to the Labour Court. It set aside as the
judgment and made a direction to Government to makes a reference to Labour Court.
Chairman, Oil & Natural Gas Corporation Ltd. v. Shyamal Chandra Bhowmik, 2006 I LLJ 419 : 2006 I
LLN 91 : 2006 LIC 130 : 2006 I CLR 18 : 2006 LLR 70 : 2006 AIR (SC) 392 : 2006 SCC (L&S) 113 :
2006 (1) SCC 337 (S.C.2J)
.High Courts should n6t entertain writ petitions directly when claim of service of more than 240
days in a year is raised. Whether a person has worked for more than 240 days or not is a disputed question
of fact which is not to be examined by the High Court. Proper remedy for the person making such a claim
is to raise an industrial dispute under the Act so that the evidence can be analysed and conclusion can be
arrived at. As in the instant case the legal position has not been analysed in the proper perspective, it
would be appropriate if the matter is decided by the forum provided under the Act. (Page: 423, Para: 13)

vi) When fresh issues were raised before High Court but not before Industrial
Tribunal (Guj.HC)
5A.570
Union on behalf of daily wagers made reference. Tribunal granted benefits of
permanency to those who had completed 240 days and also directed employer to make seniority
list. Tribunal rejected all other demands. Employer filed a writ petition on the ground that
Industrial Tribunal did not frame any issue. High Court set aside the petition stating that said issue
couldnt be raised at this stage.
Dy. Conservator of Forest v. Shramjivi General Workers Union 2001 (89) FLR 213 : 2001 II LLN 1054 :
2001 LIC (Sum) 46 (Guj.HC)

vii) Cannot be for contesting ex-parte award when employer failed to contest
the reference before Tribunal (Del.HC)
5A.571
The Industrial Tribunal held that the workman was in continuous services for more
than 240 days and was illegally terminated since he was not given any show cause notice nor any
enquiry was held as required by Sec. 25F of the Act 1947 and the order of reinstatement of the
workman was passed ex-parte accordingly. The High Court dismissed the writ petition filed by the
employer and held that the petitioner was an industry and the respondent was a workman and if
the employer had not contested the reference before the Industrial Tribunal it was at its own peril.
The High Court, therefore, found no scope of interfering with the decision of the Tribunal.
Management of CCW v. Partap Sing, 2005 II LLJ 146 : 2005 (105) FLR 227 : 2005 LLR 230 (Del.HC)

Sec. 25F

Remedies for violation of the section

2493

viii) When order dismissing the writ against Labour Courts order of
reinstatement operates as resjudicata in the subsequent writ appeal filed by
management against writ for back wages by workman (S.C.3J)
F 5A.572 Labour Court came to the conclusion that termination of service was not in
compliance with Sec. 25F hence granted reinstatement but did not grant other benefits like
back-wages etc. On the writ being filed by both the employee and employer, the employees writ
came to be allowed with all benefits but the employers writ was dismissed. On management filing
appeal it came to be rejected ex-parte at the admission stage itself. The management also filed writ
appeal against the order in the writ by the employee. The Division Bench in their order, unaware of
the dismissal of the writ by management in earlier appeal, reversed the decision of the Labour
Court and also the Single Judge of High Court. Against this order the employee preferred appeal to
Supreme Court, which concluded that it is not necessary to consider the grounds upon which the
High Court held that the employee was not entitled to the benefits u/s. 25F as the issue was already
decided earlier in the dismissed writ petition of the management and that acted as res judicata.
Hence the Supreme Court set aside the impugned order of the Division Bench of High Court and up
held has order of single judge.
Lal Singh Ram Singh Rajput v. Assistant Executive Engineer, 2005 II LLJ 256 : 2005 (105) FLR 376 :
2005 II LLN 991 : 2005 II CLR 116 : 2005 SCC (L&S) 868 (S.C.3J)
The appellant-management filed another writ appeal against the order of the learned Single Judge in the
writ petition filed by the workman seeking enhanced relief. This was done by way of a writ appeal No.
8318 of 1999, very much after its earlier writ appeal had been dismissed. Obviously in the second writ
appeal the management did not disclose the fact that its earlier writ appeal challenging the award had
already been dismissed. This writ appeal which could have been only against the order of the Single
Judge granting continuity of service came to be entertained by another Division Bench of the High Court,
notice of which was issued to the workman who had no knowledge of the earlier writ appeal being
dismissed. In that background, obviously the second Division Bench hearing the second writ appeal of
the management was unaware of the judgment of another Division Bench made in writ appeal No. 4374
of 1998.
In the absence of any such information the Division Bench in the second writ appeal noted that the
challenge in the said writ appeal was against the direction of the learned Single Judge granting
reinstatement of the appellant-workman as also against the benefit of continuity of service and other
consequential benefits granted. This, as stated above, is factually incorrect because the question of any
challenge by the management against the reinstatement order made by the labour court as affirmed by the
learned Single Judge and by the Division Bench by dismissal of appeal, could not have been the subject
matter of a second appeal before the High Court. (Page: 257, Para: 4)
Proceeding on that erroneous basis the Division Bench of the High Court considering the grounds raised
by the appellant afresh and contrary to the view taken by the Division Bench in the earlier writ appeal
reversed the findings of the Labour Court and came to the conclusion that the evidence produced by the
appellant-workman in regard to his continuous work for 240 days in the management establishment was
unacceptable. On the said basis it set aside the award of the Labour Court as well as the order of the
learned Single Judge with a direction that the wages, if any, already paid to the workman should not be
recovered. (Page: 257, Para: 6)
It is against this order of the Division Bench of the High Court the appellant is before us in this appeal.
We do not think it is necessary for us to consider the grounds on which the High Court in the impugned
order came to the conclusion that the appellant is not entitled to the benefit of Section 25(F) of the Act
because the challenge, if any, on this ground by the respondent to the order of reinstatement made by the
Labour Court is hit by the principle of res judicata. As noticed hereinabove that issue stood concluded by
the judgment of the Division Bench made in writ appeal 8794 of 1998 holding that there was no
compliance of Section 25(F) of the Act by the respondent-management when the appellants services
were terminated, and there being no further challenge to the said order, that order being inter parties, the
management was precluded from questioning the said reinstatement in the second writ appeal. It is
because of the fault committed by the management in not bringing to the notice of the second Division
Bench the factum of its earlier appeal being dismissed that misled the High Court in the Second writ
appeal into going to the question of validity of the order of termination, which question as stated above

2494

Chapter VA Lay-Off and Retrenchment

Sec. 25F

already stood concluded in favour of the workman. Hence, the question whether the workman had
established that he had put in 240 days of continuous work immediately prior to his dismissal, was not a
question available for the second Division Bench to be considered afresh. On that ground alone impugned
order of the High Court is liable to be set aside. (Page: 257, Para: 7)

ix) High Court cannot dismiss a writ on grounds of delay without ascertaining
facts for delay like agitating in wrong forum ignorantly (S.C.2J)
F 5A.573 Some casual labourer had remained absent for a period of six months. On rejoining
they were not given any benefit for past services and they were treated as having joined afresh. The
Labour Court held that this meant that there was in fact, termination since Sec. 25F was not
complied with and awarded reinstatement and back wages. The employer by an error filed an
original application before the Central Administrative tribunal, and when it came to light that it
was wrong forum ordered that the matter be taken up before the right forum. On writ petition the
High Court dismissed the case stating that it was filed belatedly. The Supreme Court held that the
High Court was in error in not taking not of the factual position as was clearly mentioned in the
writ petition and set aside the order of High Court and remitted the same to it for decision on merit.
SubDivisional Officer, Telegraph, Bijnor v. Presiding Officer, Central Government Industrial
TribunalCumLabour Court, Kanpur, 2006 I LLJ 1085 : 2006 (108) FLR 1153 : 2006 SCC (L&S) 420
(S.C.2J)
.By order dated 17.12.1997 CAT disposed of the matter holding that the proceedings before it
were not maintainable. It was, however, inter alia observed as follows:
Nothing in this order shall however, preclude the applicant from seeking redressal of his grievances from
an appropriate forum. (Page: 1086, Para: 5)
The writ application was filed in February, 1998 and has been dismissed as afore-noted by order dated
30.4.1998. (Page: 1086, Para: 6)
A perusal of the factual scenario as noted above clearly indicates that the writ petition was not belated as
was observed by the High Court. It is unfortunate that the High Court did not take note of the relevant
factors and the intervening circumstances and by a cryptic order dismissed the writ application holding
that it was highly belated. Had the High Court applied its mind to the factual background facts it could not
have come to the conclusions as arrived at. It is true, if there is abnormal delay in filing a writ petition and
there is no plausible explanation for the same, the Court can decline to entertain it on the ground of laches.
But the fact situation is entirely different here. In paragraphs 47 to 50 of the writ petition filed before the
High Court, all relevant details were indicated. Unfortunately, the High Court has not taken note of that.
(Page: 1086, Para: 6)

x) Single Judge cannot analyse the issue whether qualification was

misrepresented to obtain employment but only to examine applicability of
the section (Raj.DB)
5A.574
The services of a Peon were terminated on the ground that he obtained employment
by misrepresentation i.e. he was possessing higher qualification than the maximum qualification
prescribed for the post. In reference, Labour Court held his termination was illegal because he had
completed 240 days of service and Sec. 25F was not complied with the Single Judge held that
advertisement issued by employer was unconstitutional. Feeling aggrieved, employer moved
Division Bench which set aside the order of Single Judge holding that Single Judge instead of
considering the applicability of Sec. 25F which was the main issue involved proceeded to analyse
the nature of misrepresentation and hence remitted the matter to Single Judge to decide the matter
on point of main issue.
General Manager, Bank of Baroda & Ors. v. Presiding Officer, Central Government Industrial Tribunal
& Anr., 2006 II LLJ 399 : 2006 I CLR 606 (Raj.DB)

Sec. 25F

Remedies for violation of the section

2495

3. High Court to pass speaking order while upholding order of reinstatement

(S.C.2J)
F 5A.575 The employee contested his termination being illegal contending continuous service of
not less than 240 days in the year. In conciliation proceedings employer proved 197 days service
only leading to rejection of his contention. The employee on raising a dispute, reference was made
to Labour Court, which made a presumption of continuous service of 240 days and held
termination is in violation of Sec. 25F of the Act and therefore reinstated him with 25%
back-wages. Employer unsuccessfully contested in High Court up to Division Bench which upheld
the award purportedly on merits but gave no speaking order. On appeal the Supreme Court set
aside the order of High Court and remitted the matter to Division Bench of High Court for hearing
on merit and passing speaking orders after hearing the parties.
Assistant Engineer, Rajasthan v. Ram Charan, 2006 II LLJ 1035 : 2006 (109) FLR 1207 : 2006 III LLN
845 : 2006 (5) SCC 272 : 2006 SCC (L&S) 1089 (S.C.2J)
The learned Judges of the Division Bench dismissed the appeal on the ground of laches in approaching
the High Court by 321 days. However, the High Court also dismissed the appeal on the ground that there
was no merit therein. A perusal of the order passed by the Division Bench of the High Court, goes to show
that there is absolutely no discussion about the merit of the rival contentions made by the parties. The
Division Bench, in our view, is not justified in dismissing the appeal on merit without having discussed
the merits of the rival claims. The order passed by the Division Bench, in our view, is not sustainable as it
is not a speaking order. The High Court also dismissed the appeal by holding that the Labour Court was
right in directing the reinstatement of the respondent in service with 25% back-wages, without even
adverting to the grounds raised in the appeal challenging the said direction. Likewise, the Division Bench
is also not correct in affirming the presumption made by the Labour Court regarding 240 days of service
rendered by the respondent, without adverting to the material placed before it by the parties.
(Page: 1037, Para: 12)
.Since the order of the Division Bench is not a speaking one, we set aside the same and remit the
matter to the Division Bench of the High Court for fresh disposal and passing a speaking order after
hearing the respective parties. We, therefore, restore the D.B. Special Civil Appeal No. 85, 2004 to the
file of the High Court and request the Division Bench to dispose of the same afresh on merit and in
accordance with law, without being influenced by any of the observations made by us in this judgment.
(Page: 1038, Para: 13)

i) Remedy of Letters patent appeal

a) Not a proper remedy to decide questions of appointment on vacancy
and violation of rules and benefits u/s. 25F (MP.DB)
5A.576
The dispute involved questions of facts regarding appointment on vacancy and
violation of rules and denial of benefits u/s. 25F and as the same could not be decided in a Letters
Patent Appeal therefore parties were directed to approach the proper forum.
Dhaneshwar Sharma v. Nagar Panchayat, Jaura & Ors., 2000 II LLJ 1425 (MP.DB)
Havingof fact. (Page: 1426, Para: 6)

j) Prosecution
1. Can be initiated for violation of Sec. 25F (Ori.HC)
5A.577
Employer if does not comply with the provisions of Sec. 25F(b) of the Act can be
prosecuted even before the retrenchment compensation due to the concerned workman is
computed under the provisions of Sec. 33C of the Act.
Mahadev Prasad Gupata & Anr. v. State, 1964 II LLJ 546 (Ori.HC)

2496

Chapter VA Lay-Off and Retrenchment

Sec. 25F

k) Appropriate Government-whether competent to determine workmans claim

1. Cannot determine the question of retrenchment compensation claimed by
discharged workman (Mad.HC)
5A.578
In a Claim by a discharged workman for retrenchment compensation u/s. 25F of the
Act, the Appropriate Government has got no power to determine such disputed question and direct
recovery of the compensation u/s. 25-I also right to recover retrenchment compensation under the
provisions of Sec. 25F of the Act as it is a civil right within the meaning of Sec. 9 of Civil Procedure
Court.
C.B.R. Ratnam & Co. v. D. Ekambaram & Anr., 1957 II LLJ 266 : 1957-58 (12) FJR 117 (Mad.HC)
Note: The pertains prior to the insertion of Section 33C to F 19.12.1964.

X. Pleadings by either party-what can be and appropriate forum where can be

made
a) Pleading as to non-payment or inadequacy of compensation to be made to
challenge retrenchment (P&H.DB)
5A.579
Where a workman has refused to accept the Money Order sent by employer as
retrenchment compensation, he cannot challenge the same on the ground that amount sent was not
full and proper amount of retrenchment compensation unless it is based on pleading and evidence.
Gian Chand & Anr. v. Rawalpindi Victory Transport Co. Ltd., 1970 II LLJ 564 : 1970 (37) FJR 451 :
1970 (21) FLR 278 (P&H.DB)
What has been.unexceptional. (Page: 566, Para: 3)

b) Plea of non-compliance of section to be raised before the lower Courts but not
before Higher Courts (S.C.2J)
F 5A.580 Since the plea of non compliance of section by retrenched workmen was not raised
before High Court nor was it taken even in SLP rather it was sought to be taken only at the time of
hearing before Apex Court it was held as not maintainable on grounds of no requisite pleadings
being raised or documents brought on record and also considering that the controversy was only
confined to 55 workers, submission based on Sec. 25N of the Act for non-compliance was held as
irrelevant.
Pramod Jha and Ors. v. State of Bihar and Ors., 2003 II LLJ 159 : 2003 (97) FLR 110 : 2003 III LLN 34 :
2003 LIC 1449 : 2003 LLR 419 : 2003 SCC (L&S) 545 : 2003 AIR (SC) 1872 : 2003 (4) SCC 619
(S.C.2J)
Faced with this situation, a last effort was made by the learned senior counsel for the appellants urging
for relief being allowed on the ground of non-compliance with the provision of Section 25-N of the Act.
Section 25-N is placed in Chapter V-B of the Act which according to Section 25-K has an application
only to industrial establishment in which not less than 100 workmen were employed on an average
working day for the preceding 12 months. The plea was not raised before the High Court. It is not even
taken in the special leave petitions. It was sought to be taken only at the time of hearing. The plea need not
detain us any longer. The infirmity in retrenchment by reference to Section 25-N cannot be ventured to be
found out without laying factual foundation attracting applicability of the provision. It is basically a
question of fact. In the absence of requisite pleadings having been raised and documents having been
brought on record, we are not persuaded to entertain the plea. On the contrary, Mr. B.B. Singh, the
learned counsel for the State has pointed out that the controversy in this case is confined only to 55
workers and therefore the submission based on Section 25-N of the Act is totally irrelevant and devoid of
any merit. (Page: 163, Para: 16)

Sec. 25F Pleadings by either party-what can be and appropriate forum where can be made

2497

c) Plea disputing the status of employer as an industry to be taken before Labour

Court but not before High Court for first time (P&H.HC)
5A.581
The employer moved High Court against the order of Labour Court, which held that
the Forest Department was an industry and ordered reinstatement of a workman on the ground
that the employer did not comply Sec. 25F. High Court dismissed the petition and upheld the
Labour Courts order since the employer did not raise the said contention before Labour Court
and held that under writ jurisdiction the High Court could not go into the mixed question of law
and fact.
Principal Chief Conservator of Forests v. Smt. Paramjit Kaur, 1996 I LLJ 643 : 1996 I LLN 963 (P&H.HC)

d) Plea of probationer that he was workman and completed 240 days raised for
first time in writ appeal is untenable (AP.DB)
5A.582
Since plea of probationer that he was workman and had completed 240 days and
hence his termination is hit by Sec. 25F was raised for first time in writ appeal and hence it was held
as untenable.
E. Ramesh Kumar v. The Administrative Officer, 1996 LIC 2154 (AP.DB)
The further ground.in the appeal. (Page: 2157, Para: 11)

e) Workman to specifically plead that he put in 240 days or more in preceding 12

months to claim relief (Bom.HC)
5A.583
High Court held that in the present case, Sec. 25F is not attracted as the employee has
neither specifically pleaded nor proved that he had put in uninterrupted service of 240 days or
more in 12 months preceding the alleged termination of his services.
S.H. Kelkar & co. Ltd. v. Khashaba K. Jadhav & Anr., 1997 (77) FLR 619 : 1997 IV LLN 638 : 1997 II
CLR 649 (Bom.HC)

f) Pleading that employment is tenure based cannot be taken by the employer for
the first time in the appeal before Apex Court (S.C.2J)
F 5A.584 Where a workman was appointed as computer helper, his services were later came to
be terminated upon challenge the Labour Court held that Sec. 25F was violated as no notice or
compensation was paid to him and he was reinstated as a computer programmer with full back
wages and continuity of service. The appeal of the employer before High Court against the decision
was dismissed. Employer moved Supreme Court contending that the workman was appointed
contractual basis for a specific term from July 1st, 1998 to 31.8.1999 and his termination was for
non-renewal of contract. Rejecting the plea, the Supreme Court held that such a contention was
never raised by the employer before Labour Court or High Court and therefore he can not raise
the same before Supreme Court for the first time. The employee also did not plead and prove that
the workman was suitably informed about the contractual nature of service at the time of
appointment and this also can not be raised for the first time. The Supreme Court however
modified the award reinstateting him as computer helper as clerical grade and not as programmer
and upheld the award in all other respects.
Sonepat Co-Op. Sugar Mills Ltd. v. Rakesh Kumar, 2006 I LLJ 688 : 2006 (108) FLR 592 : 2006 I LLN
850 : 2006 I CLR 277 : 2006 LLR 161 : 2006 SCC (L&S) 1496 (S.C.2J)
.The appellant never contended before the Labour Court or the High Court that the appointment
was contractual for a specific term from 1.7.1998 to 31.8.1999 and that the termination was on account of
now renewal of such contract. Nor was it pleaded or proved that Respondent was informed at the time of
appointment that appointment was contractual up to 31.8.1999. The appellant can not raise such a
contention for the first time before us. The pleadings and evidence clearly show that the termination is
retrenchment. The first contention is, therefore, rejected. (Page: 689/690, Para: 6)

2498

Chapter VA Lay-Off and Retrenchment

Sec. 25F

From the evidence led before the Labour Court, the finding recorded by the Labour Court that the
respondent was employed on daily wage basis and had worked for more than 240 days during the period
of 12 months before the date of termination, did not call for interference. The appellant had examined one
Randhir Singh, Time Keeper as MW-2 who had produced the Attendance Register for the period
1.7.1998 to 31.8.1999 and specifically admitted that as per the Attendance Register, the respondent had
worked continuously between the said period and further admitted that the respondent had worked for
more than 240 days in a period of one year prior to respondents termination. In view of it there was a
clear violation of Section 25F and we find no error in the direction for reinstatement.
(Page: 690, Para: 7)
.The Respondent did not produce any document to show that he was appointed as a
Programmer. In the demand notice under Section 2A, he merely stated that he was engaged to work in
the computer department and grayed that he may be reinstated into service. The Labour Court was not
justified in directing that the respondent should be reinstated as a Computer Programmer, as he was
appointed as a Helper in the Computer Department. The reinstatement can, therefore, be only as a helper
and not as Computer Programmer. As the records clearly show that he was appointed in a non-manual
clerical post in the computer department his reinstatement shall be as Helper involving clerical work (not
necessarily in the computer section), but not as a manual labourer. (Page: 690, Para: 9)

g) Plea that employee was irregular to be taken to justify termination before

Labour Court (Raj.HC)
5A.585
Labour Court awarded reinstatement of the workman with back wages and
continuity of service as employer failed to comply with Sec. 25F and employer failed to adduce any
evidence before Labour Court to justify termination. Though employer contended that the
appointment of the workman was irregular but High Court held that such plea was never raised
before Labour Court, therefore it could not be raised before High Court under Art. 226 or 227 of
the Constitution of India.
State of Rajasthan v. Smt. K. Lassi & Anr., 1997 I LLN 1009 : 1997 LLR 368 (Raj.HC)

h) Plea that department is closed is to be taken before Labour Court but not High
Court (Mad.HC)
5A.586
If a plea of closure of department is not taken before Labour Court then the same
cannot be taken in High Court. Termination of casual workmen amounts to retrenchment. In this
case, termination was unjustified as Sec. 25F was not complied. Thus, the award of reinstatement is
upheld.
The Pilot Pen Co. (India) Pvt. Ltd. v. The P.O. Additional Labour Court, Madras & Anr., 1971 I LLJ 241 :
1971 (22) FLR 337 (Mad.HC)
5A.587
The services of workman were terminated for alleged misconduct. Labour Court held
termination as invalid in the absence of enquiry and granted reinstatement without backwages.
Writ was filed by the employer against reinstatement of the workman as he had not completed 240
days as per Sec. 25B and hence provisions of Sec. 25F were not violated and questioned the
jurisdiction of Labour Court. High Court held that since the above matters were not brought
before competent authority and Labour Court, there is no need to interfere with the said order.
Rahoorianwali Co-operative Agriculture Service Society Ltd. v. Presiding Officer, Labour Court, 2004
(107) FJR 996 (P&H.HC)

Sec. 25F Pleadings by either party-what can be and appropriate forum where can be made

2499

i) Plea of non-payment of retrenchment compensation can not be raised by

employee who obtained stay on the service of notice of retrenchment (Pat.HC)
5A.588
Workman obtaining stay immediately on service of notice of retrenchment cannot
subsequently complain that retrenchment compensation was not paid to them.
Gangadhar Prasad & Anr. v. State of Bihar & Anr., 1986 (53) FLR 209 (Pat.HC)

j) Plea of non-payment of compensation at the time of retrenchment not

sustainable once the fact of receiving is admitted by the workman (Raj.HC)
5A.589
The workman was appointed as a chowkidar on daily wages. On termination, he
moved Labour Court contending the termination was illegal as no retrenchment compensation was
paid to him simultaneous with termination. Labour Court rejected the application since from
records it was found that the workman admitted the fact that he received compensation at the time
of termination. The workman moved High Court against the said rejection and contended that he
was terminated in August and compensation was paid in October, as such employer did not pay
compensation at the time of retrenchment. High Court upheld the order of Labour Court as the
workman had admitted that at the time of termination he received compensation and dismissed
workmans petition.
Sukha Ram v. Executive Engineer, I.G.N.P. & Anr., 2000 III LLJ 1473 : 2000 I LLR 196 (Raj.HC)
The necessary.order of termination. (Page: 1474, Para: 2)
It is contended.paid compensation. (Page: 1474, Para: 3)
In view of.rejected. (Page: 1474, Para: 4)

k) Plea that calculation of compensation was as per previous wages instead of

wage board award to be raised initially before Tribunal (S.C.2J)
F 5A.590 As the employees did not raise the plea before tribunal that retrenchment
compensation was computed not as per the wage board award but as per wages existing before the
award the employees cannot raise this ground for challenging validity of termination but Supreme
Court held that the employees were entitled to difference in payments from date of implementation
of award till termination.
Workmen of Sudder Workshop of Jorehaut Tea Co. Ltd. v. The Management of Jorehaut Tea Co. Ltd.,
Respondent and vice versa, 1980 II LLJ 124 : 1980 (56) FJR 513 : 1980 (40) FLR 474 : 1980 II LLN 151 :
1980 LIC 742 : 1980 SCC (L&S) 427 : 1980 AIR (SC) 1454 : 1980 (3) SCC 406 (S.C.2J)
.when probed further as to how S. 25F had been violated, Shri Mridul argued that the amount
paid by way of retrenchment compensation envisaged in S. 25F fell short of what was legally due and
hence there was non-compliance. Under more searching interrogation, Shri Mridul stated that the
compensation had been computed on the basis of wages previously paid and in derogation of the Wage
Board Award which had been implemented by the Management with effect from 1-4-1966. The
retrenchment was on November 5, 1966 i. e. months after April 1, 1966. Therefore, the revised pay-scales
as per the Wage Board Award should have been adopted in calculating the retrenchment compensation.
This spinal flaw rendered the tender of compensation insufficient and, therefore, the retrenchment itself
was invalid.The fact is that before the Tribunal the contention pressed before us was neither
pleaded nor proved. There is no hint of it in the Award. In the High Court this new plea based on the facts
was not permitted. Had there been some foundation laid at least in the written statement of the workmen,
we might have been inclined to explore the tenability of the plea, especially because there is no dispute
about the Wage Board Award and the fact that it had been given effect to from 1-4-1966 and the further
fact that in the retrenchment notice the wages were not calculated according to the Wage Boards Award.
It must be remembered, however, that the Wage Boards Award was subsequent to the retrenchment
although retrospectively applied and the workmen had accepted the retrenchment compensation on the

2500

Chapter VA Lay-Off and Retrenchment

Sec. 25F

wages prevalent at the time of the retrenchment. In the absence of any basis for this new plea we are
unable to reopen an ancient matter of 1966 and, agreeing with the High Court, dismiss the appeal. But the
16 workmen being eligible admittedly for the Wage Board scale, will be paid the difference for the period
between 1-4-1966 to 5-11-1966. (Page: 125, Para: 3)

l) Plea of non-compliance of Sec. 25F can be raised by workman in writ appeal

though not raised in writ petition since it involves question of law (Raj.DB)
5A.591
Single Judge dismissed petition of employee against order of termination on ground
that services of employee were terminated after complying with Sec. 25F and on appeal the
Division Bench rejected the argument of the employer that in an appeal against order of Single
Judge the plea regarding non compliance of Sec. 25F cannot be raised by the employee, as it was not
raised in the writ petition and observed that since writ appeal is a continuation of the proceedings
in writ petition and the question being a question of law plea was entertainable and held that as
dispute was regarding non-compliance of Sec. 25F workman can approach the necessary forum for
relief.
Rajendra Kumar Sharma v. State of Rajasthan & Ors., 2000 II LLJ 1466 : 2000 LIC 2503 (Raj.DB)
At this.petition. (Page: 1468, Para: 7)
We have.appeal. (Page: 1468, Para: 8)
We are.the act. (Page: 1468, Para: 11)

m) Plea of non-service of notice and non-payment of retrenchment compensation

cannot be raised by workman who avoids to take drafts (Raj.HC)
5A.592
The workman by avoiding to take the requisite amount through bank drafts, which
was sent by registered post, cannot contend that there was no tender of notice pay and
retrenchment compensation u/s. 25F(b).
Dinesh Kumar v. Union of India & Ors., 1993 (66) FLR (sum) 43 : 1993 LIC 678 (Raj.HC)

n) Plea of infirmity in notice to be specific and precise and not in the form of a
general plea (S.C.3J)
F 5A.593 In order to challenge the infirmity in retrenchment notice, it is necessary that grounds
given are not general but specific and precise so as to enable the appellant to meet it.
Management of Hindustan Steel Ltd. v. Their Workmen & Ors., 1973 (43) FJR 192 : 1973 (26) FLR 136 :
1973 I LLN 208 : 1973 LIC 461 : 1973 SCC (L&S) 195 : 1973 AIR (SC) 878 : 1973 (3) SCC 564 (S.C.3J)
It is also clear that the respondent had not specifically raised any plea of defect in the notice given to Shri
Naidu. The Tribunal, however, allowed the objection of the notice Ex. 7 being conditional to be argued on
the view that the notice was infirm on the face of it and that the objection was covered by the general plea
in the written statement filed on behalf of Shri Naidu, to the effect that the grounds given in the
retrenchment notice were all false and cooked up. On this view the notice was held to be conditional and,
therefore, invalid and Shri Naidu was held entitled to be reinstated. (Page: 199/200, Para: 3)
In our view, Shri Setalvad was fully justified in submitting that the management had been taken by
surprise and that the Tribunal was in error in holding the general ground in the written statement to cover
the specific plea of infirmity of the notice because of its being conditional. The plea of the statutory defect
in the notice should, in our opinion, have been reasonably specific and precise so as to enable the
appellant to meet it. The general plea could not serve the object of putting the appellant on guard about the
precise case to be met at the trial and tell the management the precise nature of the plea with respect to the
defect in the notice, to enable them to meet it. In our view, if Clause (b) of Section 25-F is excluded from
consideration and the plea relating to infirmity of the notice is ruled out, as we hold on these two points in

Sec. 25F Pleadings by either party-what can be and appropriate forum where can be made

2501

agreement with Shri Setalvad, then, the impugned order is clearly insupportable. We are, therefore,
constrained to allow the appeal, set aside the impugned award and hold that the retrenchment of Shri
Naidu was proper and justified. (Page: 200, Para: 1)

o) Pleadings by management as to abandonment of services and retrenchment

being inconsistent not acceptable (Del.HC)
5A.594
Two women Employees were unlawfully terminated because the management was
annoyed that they had complained to the Labour inspector for non-maintenance of their service
records. It was held by the Labour Court that the two pleas of the management one of,
abandonment of services and the other of notice pay and retrenchment compensation, cannot
stand together especially when no evidence as to any final settlement of dues is adduced. Further
there was no inquiry held in respect of abandonment. On writ petition by the employer the High
Court held the above are findings of facts and do not warrant any interference under Art. 226 of
constitution of India.
Shakuntala Export House (P) Ltd. v. P.O., Labour Court X & Anr., 2005 II LLJ 389 : 2005 III LLN 576
(Del.HC)

p) Management cannot adduce evidence as to payment of retrenchment

compensation if no averment made to that effect in its reply (Bom.DB)
5A.595
Where union specifically pleaded non-compliance of Sec. 25F(b) in statement of claim
and Management in its reply failed to make an averment that requisite amount was offered, it was
held that management cannot subsequently adduce evidence in this behalf before Tribunal.
Calama Industries Pvt. Ltd. v. Industrial Tribunal, Maharashtra, B.B. Tambe., & Ors., 1981 (42) FLR 50
: 1981 II LLN 255 (Bom.DB)
As held by.before the Tribunal. (Page: 52, Para: 6)

q) Plea of invalidity of retrenchment cannot be taken by employer to deny his

liability to pay it (Mys.DB)
5A.596
The employer who has purported to retrench the workman without complying with
the provisions of Sec. 25F, cannot go back on the order of retrenchment on the plea that it is invalid
and so deny his liability to pay retrenchment compensation. The mere fact that conditions
precedent to retrenchment were not fulfilled will not take away the workmans right to
retrenchment compensation and he was entitled to claim the amount u/s. 33C(2). The Labour
Court has rightly precluded the employer from questioning the validity of the retrenchment in
contravention of Sec. 25F and granted retrenchment compensation to the workman.
D. Mahadev v. K. Muniswami, 1966 I LLJ 838 : 1965-66 (29) FJR 404 : 1966 (12) FLR 55 (Mys.DB)
The Labour Court.under law. (Page: 839, Para: 3)
When these is an.under section 25F. (Page: 841, Para: 3)
In the instant case.invalid retrenchment. (Page: 841/842, Para: 6)
The only question.retrenchment compensation. (Page: 842, Para: 4)
In view of section 25F.cannot be defeated. (Page: 842/843, Para: 8)
For the reasons.is dismissed. (Page: 843, Para: 4)

2502

Chapter VA Lay-Off and Retrenchment

Sec. 25F

XI. Reliefs available for violation of the sections

a) Who can claim
1. Only aggrieved employees (MP.DB)
5A.597
Relief u/s. 25F can be claimed only by employees who were employed for 240 days and
reinstatement can be granted only on existence of vacancies.
Prakash Dravid & Ors. v. State of Madhya Pradesh & Ors., 2000 II LLJ 1511 : 2000 (86) FLR 472 : 2001
IV LLN 494 (MP.DB)
The.1947. (Page: 1511, Para: 2)
In these.reinstatement. (Page: 1512, Para: 3)
In view.with law. (Page: 1512, Para: 6)

2. Employees who worked for 240 days during the period of 12 calendar
months preceding termination (Del.HC)
5A.598
Labour Court granted reinstatement with back wages and continuity of service and
the award of the Labour Court was challenged. Held that as per Sec. 25B if the workman had
worked for 240 days during a period of 12 calendar months preceding termination to which the
calculation is made, he would be deemed to be in continuous service and where the workman had
worked for 288 days, he was entitled to benefit of Sec. 25F.
Municipal Copo of Delhi v. Jai Veer & Anr., 2003 II CLR 886 (Del.HC)

3. Legal heirs in case of death of the workman (Del.HC)

5A.599
Having found the retrenchment of the workman illegal for non-compliance of Sec.
25F of the Act, it would be illegal to tell the workman that he is not entitled to reinstatement
because management has abolished the post. Thus, there is no fault in the order of Labour Court
ordering reinstatement. But in the instant case, since the workman has died, the heirs of deceased
would be entitled to arrears of salary, from the date of retrenchment till death of workman.
Kanti Weekly v. D.D. Gupta & Ors., 1983 I LLN 771 (Del.HC)
.Having fought.was illegal. (Page: 776, Para: 16)
.He passed away.is not possible. (Page: 776, Para: 17)

b) Who cannot claim

1. Workmen working in different units under different employers if failed to
complete 240 days in any of the units (Raj.DB)
5A.600
Workmen working in different units who did not complete 240 days service in any one
unit could not seek benefit under Sec. 25F because they worked in different units under different
employers
Sarvajanik Nirman Mazdoor Sangh, Bhilwara & Ors. v. Judge, Labour Court, Udaipur & Ors., 2005 III
LLJ 149 : 2005 IV LLN 784 (Raj.DB)

Sec. 25F

Reliefs available for violation of the sections

2503

c) Relief of Reinstatement
1. The expression deemed to be in service in the award means
reinstatement (Ker.HC)
5A.601
The Industrial Court ordered that the employees would be allowed to be in service as
the retrenchment was found to be in violation of Sec. 25F. The employee applied u/s. 17B for
payment of their wages. The High Court held that the order of the Industrial Court though not
explicit, meant that the employees should be reinstated. Since the Tribunal had found that the
workmen were retrenched in violation of Sec. 25F it directed that the workmen would be deemed
to be in service. Hence, the High Court allowed the application u/s. 17B by the workmen and
ordered payment of wages during the pendency of the writ petition.
Transporting & General Worker Union & Ors. v. M/s. La yard Food Ltd., 2006 I LLJ 1152 : 2006 (109)
FLR 686 : 2005 LIC 4030 (Ker.HC)

2. Conditional Reinstatement by employer is invalid and he cannot contend

the same against grant of 50% back wages (Bom.HC)
5A.602
Where the employer offered conditional reinstatement to the employee with out
continuity of service and backwages, the Labour Court upon challenge reinstated him with 50%
back wages. The employer challenged the grant of back wages as not tenable since he had offered
him reinstatement voluntatraily. The High Court held that conditional offer is invalid amd the
employee deserves full back wages had he challenged the grant of 50% back wages since he has not
challenged it no interfear was made in the award.
Palmon Fashions & Ors. v. M.M. Verghese & Ors., 1993 III LLJ (Sum) 683 : 1987 II CLR 411 (Bom.HC)

3. When can be
i) When workman proved having worked 240 days with the help of muster
roll (S.C.2J)
F 5A.603 Reinstatement with full backwages was upheld by Supreme Court as there was non
compliance of the section while terminating the employee who had completed 240 days of service.
Deep Chandra v. State of U.P. & Anr., 2001 I LLJ 742 : 2001 (88) FLR 508 : 2001 III LLN 820 : 2001
LLR 312 : 2002 SCC (L&S) 1010 : 2001 (10) SCC 606 (S.C.2J)
.The High Court lost sight of the point in issue that is, when an employee had put in service for
more than 240 days in each year for several years whether his services can be put to an end to without
following the procedure prescribed under section 25-F of the Industrial Disputes Act. If there has been
violation thereof in his original service on the same terms and conditions in which he was working earlier.
If this is the position in law, we fail to understand as to how the High Court could have interfered with the
award made by the Labour Court. We set aside the order made by the Labour Court. The appeal is allowed
accordingly. (Page: 743, Para: 2)

ii) When a workman even a casual one worked for 5 years (AP.DB)
5A.604
Casual workman, employed under contract of service, worked continuously for 5
years Sec. 25F was held to be attracted and hence termination in violation thereof was set aside and
reinstatement was granted.
Smt. T. Yadamma v. National Remote Sensing Agency & Anr., 1998 I LLJ 109 : 1998 I LLN 127 : 1998
LLR (Sum) 576 (AP.DB)
The judgement.the award. (Page: 112, Para: 10)

2504

Chapter VA Lay-Off and Retrenchment

Sec. 25F

Note: also refer to the following case

Reinstatatement is to be when employment continued for months, wages/salary though as Badlee
worker paid on monthly basis.
Management of Orissa Road Transport Co. Ltd. Berhampur (Ganjam) v. Workmen of Orissa Road
Transport Co. Ltd. Berhampur & Anr., 1972 I LLJ 95 : 1972 LIC 81 (Ori.DB)

iii) When workman after 240 days of continuous service terminated in

non-compliance of Sec. 25F (S.C.3J)
F 5A.605 Labour Court, on its finding that workman had completed 240 days of service,
directed reinstatement with back wages and the employer has not produced material that could
have rebutted the claim of workman even though same was available with him. On this
background Supreme Court held that High Court is justified in confirming the award of Labour
Court.
State of Punjab & Ors. v. Babita Kumari, 2006 SCC (L&S) 396 (S.C.3J)
This appeal is directed against the judgment and order dated 23-5-2002 in CWP No. 8120 of 2002 of the
Punjab and Haryana High Court challenging the award made by the Presiding Officer, Labour Court,
Gurdaspur whereby the Labour Court directed the reinstatement of the respondent with full back wages
on the ground that the respondent had completed 240 days of continuous service in the given year. This
finding of the Labour Court is based on material that was placed before it and also on the basis of the fact
that the material which could have rebutted the claim of the respondent was not produced by the appellant
even though the same was available with it. That being the case, in our opinion, the High Court was
justified in dismissing the challenge to the award and confirming the same. We find no error to interfere in
this appeal. (Page: 397, Para: 2/3)
5A.606
Where 240 days continuous service has been rendered termination of workmens
services as per standing orders and not for misconduct in non-compliance of Sec. 25F is null and
void and their reinstatement with back wages was directed.
Tata Engineering & Locomotive Co. Ltd, Jamshedpur v. State of Bihar, 1983 (47) FLR 246 : 1984 I LLN
395 : 1984 LIC 206 (Pat.DB)
.All these petitioners.eyes of law. (Page: 249, Para: 12)
.The petitioner Nos.services were terminated. (Page: 250, Para: 15)
5A.607
Termination of services of an employee sponsored by employment exchange and
without assigning any reason and in violation of the secton is illegal and hence reinstatement
ordered.
Management, N.L.C. Employees Co-operative Thrift & Credit Society Ltd. & Anr. v. P.O. Labour Court
& Anr., 2000 (87) FLR 248 : 2000 III LLN 991 : 2000 LIC 1758 : 2000 III CLR 60 : 2001 LLR 18
(Mad.DB)
5A.608
Termination of service of an employee who though did not work for one year but had
completed 240 days of service in a period of 12 months amounts to retrenchment and in view of
non-compliance of Sec. 25F, Labour Court awarded reinstatement.
General Manager, Haryana Roadways v. Rudhan Singh & Anr., 2002 III LLJ 119 : 2002 (94) FLR 192 :
2002 (100) FJR 865 (P&H.DB)
The respondent.1947. (Page: 120, Para: 2)
the argument.25-B of the act. (Page: 120, Para: 3)
After considering.only. (Page: 120, Para: 5)

Sec. 25F

Reliefs available for violation of the sections

2505

In view.accepted. (Page: 121, Para: 13)

In the instant case.Labour Court. (Page: 251, Para: 8)
5A.609
Non-fulfillment of provisions of Sec. 25F and 25H would render termination of
workmens services illegal and hence Court held that the workmen would be entitled to
reinstatement.
M. Nagabhushanam & Ors. v. Twin Cities Steel Re-rolling Mills Pvt. Ltd. & Ors., 2003 II LLJ 692 : 2003
(97) FLR 963 : 2003 LLR 687 (AP.DB)
The learned single.was not bonafide. (Page: 695, Para: 23)
.We are of.the industrial establishment. (Page: 697, Para: 34)
5A.610
The workman was terminated for unauthorised absence without complying Sec. 25F.
Labour Court ordered re-appointment of workman for non-compliance. Workman moved High
Court for back wages and other benefits but Single Judge declined to grant any relief since
workman accepted order of re-appointment. Division Bench held that once termination was held to
be illegal for non-compliance with Sec. 25F, the consequential relief would have been reinstatement
with all consequential benefits but the Division Bench denied back wages for the period workman
remained out of service. Therefore, modified the award accordingly.
Nand Kishore Singh v. Presiding Officer, Labour Court, Bokaro & Anr., 2005 LIC 3094 (Jhar.DB)
Note: In the following cases reinstatement was awarded for termination in violation of Sec. 25F
Reinstatement-cannot be denied, if production section where workman was employed stopped
functioning.
Virnarpinder Singh & Ors. v. State of Punjab & Ors., 1997 II LLN 291 (P&H.HC)
If 240 days completed without compliance with Sec. 25F,workman entitled to reinstatement with
back-wages.
State of Madhya Pradesh v. The P.O. Labour Court, Bhopal & Ors., 2002 (95) FLR 582 (MP.HC)
Medical Officer, District Health Centre & Anr. v. Savjibhai Trikambhai Kansagra, 2003 (96) FLR 268 :
2002 III CLR 838 : 2002 LIC 2659 (Guj.HC)
Termination when illegal, reinstatement of employee is a must.
Smt. Tola v. State of Rajashthan & Ors., 2005 (104) FLR 1054 : 2005 LIC 1395 (Raj.HC)
Raj Kumar College Karmachari Union v. Raj Kumar College, Raipur & Anr.,1987 (55) FLR 93 : 1987 II
LLN 573 (MP.HC)
Management of Oasis School, Hyderabad v. Labour Court, Himayatnagar, Hyderabad & Ors., 1992 I LLJ
210 : 1991 (78) FJR 314 : 1991 LIC 428 : 1990 II LLN 954 : 1990 II CLR 506 (AP.HC)
ANZ Grindlays Bank v. General Secretary, Grindlays Bank Employees Union & Ors., 2001 I LLJ 1238 :
2001 (89) FLR 375 : 2001 II LLN 692 : 2001 LIC 3563 : 2001 I CLR 570 : 2001 LLR 428 (Bom.HC)
State of Rajasthan & Ors. v. Jaisa Ram & Anr., 1999 III LLN 1166 : 1999 II CLR 502 : 1999 II LLR 1145
(Raj.HC)
B.M. Gupta v. State of West Bengal & Ors., 1979 I LLJ 168 : 1979 (54) FJR 127 : 1979 II LLN 63 :
1979 LIC 499 (Cal.HC)
Tata Consulting Engineers v. Ms. Valsala K. Nair & Ors., 1998 I LLN 525 : 1998 LLR 66 : 1997 II CLR
1099 (Bom.HC)
U.P. State Road Transport Corporation v. State of U.P. & Ors, 1986 (53) FLR 678 (All.HC)
Mining Engineer, Mines & Geology Department, Government of Rajasthan v. State of Rajasthan & Ors.
2005 (105) FLR 338 : 2005 LLR 578 (Raj.HC)
Dharamveer Singh v. State of Rajasthan, 2001 II LLJ 1168 : 2001 (89) FLR 994 (Raj.DB)

2506

Chapter VA Lay-Off and Retrenchment

Sec. 25F

iv) When retrenchment not bonafide as effected to enable employer

subsequently to raise salaries of other employees (Mad.DB)
5A.611
Subsequent to retrenchment, salary of a few employees were raised therefore
retrenchment was not held to be bonafide and also as Sec. 25F was not complied with, employee is
liable to be reinstated and therefore Labour Courts order awarding compensation in lieu of
reinstatement was not held to be proper.
Management of Seeranaickenpalayam Weavers Co-op. Production & Sales Soc. Ltd., Coimbatore v. N.
Selvaraj & Anr., 2003 I LLJ 666 (Mad.DB)
The.not justified. (Page: 668, Para: 8)
.There is ample.by the learned judge. (Page: 669, Para: 9)

v) When there is violation of the section though the appointment is dehors the
Act (Raj.DB)
5A.612
Once it was shown that workman had actually worked for 240 days during period of
12 calendar months, both conditions u/s. 25B i.e. service for 240 days and employment for 12
months were fulfilled and also the employer failed to prove the special circumstances as claimed by
him in which principle of last come first go u/s. 25G was not required to be adhered and it was held
that even if appointment was dehors the Act, termination must conform to the law and hence
termination in violation of Sec. 25F was rightly set aside by Labour Court and Single judge and
reinstatement with 40% backwages was upheld.
State of Rajasthan & Ors. v. Mahendra Joshi & Anr., 2003 I LLJ 256 : 2002 (95) FLR 595 : 2003 III LLN
484 (Raj.DB)
.the termination was.Industrial Disputes Act 1947. (Page: 257, Para: 4)
The Tribunal found.dispute about that. (Page: 257, Para: 6)
.the workman was.50% backwages. (Page: 257, Para: 10)
The special circumstances.any ground whatever. (Page: 259, Para: 26)
Learned.1947. (Page: 259, Para: 27)
If the.retrenchment. (Page: 260, Para: 29)

vi) When termination of employees is due to closure of mechanical work shop

since it is not a separate undertaking being adjunct to manufacturing
activity (Guj.DB)
5A.613
Mechanical workshop adjunct to main manufacturing activity is not a separate
undertaking hence termination of services of all workshop employees will not fall u/s. 25 FFF and
hence in absence of any compliance with mandatory provisions of Sec. 25F terminated employees
were entitled to reinstatement with full back wages as they were not gainfully employed.
Umakant C. Acharya & Ors. v. Saurashtra Cement & Chemical Industries Ltd., 1993 (66) FLR 1080 :
1993 I LLN 379 (Guj.DB)
In the instant.of the Act. (Page: 1086, Para: 2)

Sec. 25F

Reliefs available for violation of the sections

2507

vii) Reinstatement is the relief for non-compliance of Sec. 25F though services
were terminated under standing orders (Bom.DB)
5A.614
Irrespective of contention of management that dismissal was under Standing Orders
which did not require any opportunity to be given to concerned workman to show cause against his
termination Court held that since observance of requirements of Sec. 25F is a condition precedent
to retrenchment therefore before any action under aforesaid Standing Orders could be taken Sec.
25F had to be complied with and since there was non compliance of the same Court directed
reinstatement of the workman upholding decision of the Tribunal.
Devidayal Nanackchand Sharma v. State Industrial Court, Nagpur & Ors., 1961 I LLJ 167 (Bom.DB)
On behalf of.dismissed from service. (Page: 168, Para: 3)
.section 25F of.conditions are satisfied. (Page: 168, Para: 7)
.the heading of section 25-F.of standing order 23. (Page: 169, Para: 2)
.we allow the.reinstate the petitioner. (Page: 170, Para: 3)

viii) Reinstatement proper if employee completed 240 days in a year though in

spells of 89 days (P&H.DB)
5A.615
The services of a Bulldozer operator was terminated although he worked from
1.11.1990 to 15.7.1996. The appointment was on 89 days basis but extended from time to time and
requirement of Sec. 25F was not complied with. On raising a dispute by the workman the matter
was adjudicated in his favour. The High Court upon a writ petition upheld the finding of Labour
Court and held that the attendance register tendered by the management was incomplete and
hence no inference could be drawn therefrom that the employee was not working for 240 days in a
year. Regarding the contention that the undertaking was not an industry, it was held that despite
having framed an issue, management had led no evidence to substantiate that plea before the
Labour Court.
Chief Soil Conservator for Punjab, Chandigarh & Ors. v. Gurmail Singh & Anr., 2006 (110) FLR 571 :
2006 II CLR 963 : 2006 LLR 997 : 2006 III LLJ 644 (P&H.DB)
5A.616
The workman was initially appointed for 89 days on daily wages. In a year the
employer used to terminate and reappoint the workman in four spells. When he was discontinued
he moved Administrative Tribunal seeking reinstatement in view of Sec. 25F. Tribunal refused to
grant any relief. Being aggrieved, he moved Division Bench which granted reinstatement of
workman with 50% back wages since 240 days service was rendered by workman.
Babulal Bishnoi v. Union of India & Ors., 2005 III LLJ 389 : 2005 IV LLN 760 (Raj.DB)
Note: also refer to the following cases
The Director, Helath & Family Welfare, Chandigarh & Anr. v. Balwinder Kaur & Anr., 1996 LLR 493
(P&H.HC)

2508

Chapter VA Lay-Off and Retrenchment

Sec. 25F

ix) Reinstatement proper when workman terminated for unsatisfactory work

in violation of Sec. 25F (Guj.HC)
5A.617
Services of a probationer were terminated on the grounds of unsuitability and
unsatisfactory work without complying with the mandatory provisions of Sec. 25F, Labour Court
held the allegation not proved hence, workman must be deemed to be in service and further
observed since workman was appointed for a specific post and not in any specific place and merely
because the branch in which the workman was working was closed, it would not adversely affect
the legal right of workman to get reinstatement and the same is upheld by High Court.
Branch Manager, Commercial Clearing Agnecies (P.) Ltd. v. Manibhai D. Bhojani, 2004 (105) FJR 604 :
2004 (102) FLR (Sum) 50 (Guj.HC)
In the present petition.from 1-3-1988. (Page: 608, Para: 2)
.According to the.in 1986.service of the.February 1988.
(Page: 609, Para: 3)
.Appointment of the.not disputed. (Page: 611, Para: 6)
.Therefore the aspect.any error. (Page: 615, Para: 9)
.Therefore looking.to the petition.In fact the reality.specific post.
(Page: 617, Para: 13)
.Therefore on both these.is bad.Therefore according.legally entitled.
(Page: 619, Para: 15)
.The Tribunal has not.such
dismissed. (Page: 620, Para: 18)

award.This

Court

cannot.is

x) Reinstatement cannot be denied on the ground of closure when the same

not pleaded by the employer (Bom.HC)
5A.618
The workman was terminated on the ground of non-availability of work. On
reference, Labour Court held that the termination was illegal since Sec. 25F, Sec. 25G was not
followed but instead of reinstatement granted compensation on the ground that company had
closed its entire business. On appeal, High Court ordered reinstatement of workman since in the
written statement of employer the fact of closure was not pleaded nor the Labour Court discussed
any evidence to indicate whether the entire activity of the establishment was closed or not.
Damodar Totaram Khairnar v. India Book House & Ors., 1993 II LLN 905 : 1993 LLR 803 (Bom.HC)

xi) Reinstatement cannot be denied on the ground of strained relationship

between management and retrenched workman (Mad.HC)
5A.619
In case of wrongful retrenchment, strained relationship between management and
retrenched workman could not be a ground for denying reinstatement to retrenched employee.
R. Sankaran v. The P.O. Additional Labour Court, Madras & Anr., 1977 (50) FJR 28 : 1977 I LLN 94 :
1977 LIC 1338 (Mad.HC)

Sec. 25F

Reliefs available for violation of the sections

2509

xii) Reinstatement proper when one workman not taken back while other
delinquent workmen were taken back after strike (Del.HC)
5A.620
The services of a workman who was appointed as lab technician were terminated as he
participated in the strike. Labour Court quashed the termination as bad since neither chargesheet
was given to the workman nor the conditions of Sec. 25F were complied with and it ordered
reinstatement with full back wages. High Court upheld the said order on the ground that the
workman was not taken back while other delinquent workmen were taken back resulting in
discrimination.
Delhi Jal Board v. Presiding officer and Anr., 2004 II LLJ 569 (Del.HC)
.The respondent.proceeding in CWP No. 2768/986. (Page: 570, Para: 1)

xiii) Reinstatement proper when probationer terminated in violation of Sec.

25F as he rendered service of 22 years (P&H.HC)
5A.621
The workman was engaged as a truck driver. He was terminated on the ground that
the employer sold the only truck he had with him. On a reference, Labour Court held that the
termination was illegal as the retrenchment compensation which was paid to the workman was less
and directed employer to pay Rs. 50,000 as retrenchment compensation. Being aggrieved, the
employer moved High Court and contended that the workman was appointed as probationer and
was never confirmed as per service rules. High Court upheld the order of Labour Court since no
employee could be continued for more than 2 years on probation as per service rules, where as the
workmen had put 22 year service when he was terminated.
Gidderbha Co-operative Marketing-Cum-Processing Society v. Labour Court & Ors.,1996 I LLJ 644 :
1995 (87) FJR 41:1995 (71) FLR 370:1995 II LLN 418:1995 LLR 510 (P&H.HC)

xiv) Reinstatement cannot be denied on the ground of delay even if it is

unexplained (Pat.HC)
5A.622
Even though there has been an unexplained delay in raising dispute, the workman
would be entitled to reinstatement whenever there is a violation of Sec. 25F.
Padam Chandra Jain v. The Chairman Industrial II, Central Dhanbad & Ors., 1991 (63) FLR 49 : 1991 I
LLN 876 : 1991 LIC 633 (Pat.HC)

xv) Reinstatement cannot be denied when Labour Court gave a clear finding
that termination was illegal (Del.HC)
5A.623
A writ petition was preferred by the workman against the award, wherein, his claim of
wrongful termination was rejected. The question before the Labour Court was whether employees
services were terminated illegally or whether he had abandoned his services. The High Court held
that when the Labour Court had given a clear finding that the services of the workman was illegally
terminated then the Labour Court should have passed an award of reinstatement with 50% back
wages.
Anil Kumar v. The P.O. Labour Court No. 2 & Anr., 2000 (84) FLR 522 : 2000 LLR 142 (Del.HC)

2510

Chapter VA Lay-Off and Retrenchment

Sec. 25F

xvi) Reinstatement proper when workman was terminated in violation of Sec.

25F as a measure of pruning (Cal.HC)
5A.624
The award of reinstatement with all benefits was not implemented by the employer
and despite it the employee agreed to forgo a part of his legal / legitimate claim which was awarded
by Industrial Tribunal if he was reinstated before a certain date. Whereas High Court directed the
employer to give the employee all reliefs as granted by Industrial Tribunal that is to reinstate, set
aside the dismissal and payment of arrears within a month from the date of receipt of the award.
Phanindra Chandra Roy v. Calcutta State Transport Corporation & Ors.,1991 I LLN 138 : 1991 LIC
929 : 1991 LLR 252 (Cal.HC)

xvii) Reinstatement cannot be denied when termination does not fall within the
purview of exceptions u/s. 2(oo) (All.HC)
5A.625
Where the Labour Court awarded compensation in lieu of reinstatement upon a
finding that the termination of the daily wage workman was void-ab-initio, the High Court in
appeal, held that when the termination does not fall within the exclusive part of the Sec. 2(oo), the
normal relief of reinstatement should be given and quashed the award of Labour Court.
Ahmed Ullah Siddique v. P.O. Labour Court, Lucknow & Ors.,1990 I LLJ 109 : 1989 (59) FLR 265 :
1989 II LLN 564 (All.HC)

xviii) When a workmans services are terminated even after completion of 240
days by oral orders while that of similarly placed employees were
continued (Raj.DB)
5A.626
Ordinarily the order of compensation by Labour Court instead of reinstatement with
back wages is not interfered with but since in instant case a duly appointed employee having
worked for more than 240 days in calendar year was terminated by oral order whereas other
employees appointed along with him were continued, Labour Courts award of only compensation
instead of reinstatement with back wages merely on grounds of delay of 4 years was substituted by
reinstatement without back wages.
Dharamveer Singh v. State of Rajasthan, 2001 II LLJ 1168 : 2001 (89) FLR 994 (Raj.DB)
Ordinarily, when the.of Rs. 20,000. (Page: 1169, Para: 7)
.He is granted.early as possible. (Page: 1170, Para: 12)

4. When reinstatement cannot be

Note: For more cases where reinstatement is denied, readers are requested to refer sub-head with title
Compensation in lieu of reinstatement given below as well as subject index on reinstatement

i) Reinstatement cannot be of casual workman in the absence of proof of

retrenchment or appointment letter or completion of 240 days (Guj.HC)
5A.627
A casual driver who was asked to perform his duty when need of a driver arose, and
was asked to give his services till regular driver is recruited and who was not appointed as per rules
was terminated from services. Labour Court awarded reinstatement without any benefit for the
intervening period despite the finding that workman failed to prove that after his termination
someone else is appointed in his place, and it is also not proved that respondent workman was
retrenched by the department. High Court set aside the Labour Courts order on the ground that
when it has found that there was no retrenchment, and workman was not given any appointment
order and no proof was produced regarding service of 240 days, Labour Court had no jurisdiction
to pass an order of reinstatement and quashed set aside the order.
Executive Engineer v. Ashokbhai J. Desai, 2004 (105) FJR 1050 (Guj.HC)

Sec. 25F

Reliefs available for violation of the sections

2511

.He was appointed.by the Department. (Page: 1052, Para: 3)

After considering.intervening period. (Page: 1052, Para: 5)
.when the Labour Court.regular driver. (Page: 1052, Para: 7)
In the above view.set aside. (Page: 1053, Para: 8)
.However.No costs. (Page: 1056, Para: 14)

ii) Reinstatement unjustified when no work is available (S.C.2J)

F 5A.628 The Labour Court directed the management to pay the compensation of Rs. 15,000 in
lieu of reinstatement to a workmen after taking into consideration the facts and circumstances of
the case. High Court in a writ by aggrieved workman, directed the management to reinstate him. In
an appeal by management, the Supreme Court upheld Labour Courts award holding that it was
justified on the ground of non-availability of work however, it enhanced the compensation amount
from Rs. 15,000 to Rs. 25,000.
State of Rajasthan v. Naresh Subey, 2006 SCC (L&S) 676 (S.C.2J)
The Industrial Tribunal before whom the dispute was raised by the respondent workman, after
considering the material on record, came to the conclusion that the appellant had completed 240 days in a
calendar year immediately prior to his removal from service. But taking into consideration the facts and
circumstances of the case, came to the conclusion that it was appropriate that he be compensated rather
than directing reinstatement. Accordingly by the award dated 13-3-2000 directed the appellant State to
pay the compensation of Rs. 15,000 in lieu of his reinstatement. In a writ petition filed by the aggrieved
workman, the High Court by the impugned order relying on the judgment of the said High Court in the
case of Bhawanisingh v. State if Rajasthan which pertains to the validity of the Rajasthan (Regularisation
of Employment to Public Services and Rationalization of Staff) Act, 1999 held that the respondent
workman was entitled to reinstatement without even considering the alternative prayer of the respondent
workman himself regarding compensation in lieu of reinstatement. (Page: 676/677, Para: 2)
We have heard learned counsel for the parties and perused the records. The Labour Court refused
reinstatement on the ground of non-availability of work. Therefore, we are in agreement with the Labour
Court that reinstatement is not the proper remedy. (Page: 977, Para: 3)

iii) Reinstatement cannot be in case of closure of business or severe financial

constraints or in case of better employment of workman elsewhere (S.C.3J)
F 5A.629 Removal of an order terminating the services of workmen must ordinarily lead to the
reinstatement with back wages but in exceptional circumstances like closure of the industry or
severe financial problem in the industry or if workmen has secured better or other employment,
Court has discretion to deny the above said relief.
Surendra Kumar Verma etc. v. The Central Government Industrial Tribunal-cum-Labour Court, New
Delhi & Anr., 1981 I LLJ 386 : 1980 (57) FJR 67 : 1980 II LLN 456 : 1980 LIC 1292 : 1981 SCC (L&S)
16 : 1981 AIR (SC) 422 : 1980 (4) SCC 443 (S.C.3J)
.Plain common sense dictates that the removal of an order terminating the services of workmen
must ordinarily lead to the reinstatement of the services of the workmen. It is as if the order has never
been, and so it must ordinarily lead to back wages too. But there may be exceptional circumstances which
make it impossible or wholly inequitable vis--vis the employer and workmen to direct reinstatement
with full back wages. For instance, the industries might have closed down or might be in severe financial
doldrums; the workmen concerned might have secured better or other employment elsewhere and so on.
In such situations, there is a vestige of discretion left in the Court to make appropriate consequential
orders. (Page: 389, Para: 6)

2512

Chapter VA Lay-Off and Retrenchment

Sec. 25F

5A.630
The services of Machine operater terminated as per Standing Order on not joining
duty on completion of 5 months after sanctioned leave on which workman raised industrial
dispute. Labour Court held that the termination of the services of the workman amounted to
retrenchment u/s. 2(oo) of the Act and since the retrenchment had been effected without complying
with the provisions of Sec. 25F the termination from service was illegal and directed to reinstate
him with 50% back wages. On being challenged, Single Judge denied back wages but as the
establishment was closed it was held that relief of reinstatement is not warranted in this case and
offer of employer of voluntary retirement benefits should be awarded which is just and proper.
Infomedia India Ltd. v. Suhas Shripad Gadre & Anr., 2007 II LLJ 467 : 2007 (113) FLR 669 : 2007 III
LLN 188 : 2007 I CLR 846 : 2007 LLR 779 : 2007 (1) BCR 188 : 2007 (1) Mah.LJ 193 (Bom.HC)
Note: also refer to the following case
Ravindra Gopal Shinde v. National Textile Corporation (South Maharashtra) Limited & Ors., 2006 III
CLR 813 (Bom.HC)

iv) Reinstatement cannot be when workman did not complete 240 days
(S.C.2J)
F 5A.631 The Labour Court reinstated the workman as Sec. 25F was not complied with. High
Court also dismissed the writ petition filed against the order. On appeal Supreme Court set aside
the award of Labour Court because records revealed that the workman did not complete 240 days
continuous service.
Huda v. Jagmal Singh, 2006 III LLJ 152 : 2006 (110) FLR 767 : 2006 LLR 947 : 2006 (5) SCC 764 : 2006
SCC (L&S) 1193 (S.C.2J)
We are unable to appreciate the approach made by the Labour Court in calculating the statutory period
of 240 days in a year. In our opinion, both the Labour Court and the High Court have failed to appreciate
the fact that the respondent has failed to complete the statutory period of 240 days in a year to entitle him
for claiming any benefits whatsoever. As already noticed, evidence has been led to the said fact before the
Labour Court but still the issue of attendance of the respondent has been decided in his favour. This apart,
the respondent was appointed only as a daily wage earner and not as a permanent employee of the
appellant and hence the respondent cannot claim any right to the post in question and that no right has
accrued to him to claim any benefits from the appellant. This fact has been overlooked by the Labour
Court and also by the High Court. The fact remains that the respondent has not worked for the statutory
period of 240 days which has been clearly established by the appellant. It is settled law that the workman
has to prove that he had worked for 240 days. In the instant case, the workman has not established that he
has served the appellant for the statutory period of 240 days. (Page: 153, Para: 6)
F 5A.632 Workman was reinstated by Labour Court as Sec. 25F was not complied with Single
Judge and Division Bench refused to interfere with the award. Supreme Court set aside the Labour
Courts order since records revealed that workmen completed only 227 days service in a period of 4
years and held the Single Judge and Division Bench committed error of law on the face of the
record in ordering reinstatement.
Rajasthan Tourism Development Corporation Ltd. & Anr. v. Intejam Ali Zafri, 2006 III LLJ 155 : 2006
(110) FLR 773 : 2006 III LLN 829 : 2006 LLR 942 : 2006 (6) SCC 275 : 2006 SCC (L&S) 1314 (S.C.2J)
The respondent has not worked for 240 days in one calendar year which is the condition precedent for
attracting provisions of Section 25F of the Industrial Disputes Act, 1947. This apart, the workman was a
causal house assistant who never worked for 240 days continuously in one calendar year. As per the
provisions of Section 25(B) of the Industrial Disputes Act, there should be working of 240 days in one
calendar year. Hence, the provisions of Section 25F of the Industrial Disputes Act are not attracted in the
instant case for the reason that the respondent worked only for 227 days in about 4 years period from the
date of his initial appointment i.e. 28.12.1987 to the date of termination i.e. 07.02.1992. In our opinion,
the learned Single Judge as also the learned Judges of the Division Bench of the High Court have
committed a mistake of law in ordering reinstatement with back wages etc. This apart, the order passed by
the Division Bench is also non-speaking. (Page: 153, Para: 3)

Sec. 25F

Reliefs available for violation of the sections

2513

5A.633
On dismissal, the workman moved Labour Court claiming reinstatement as he
rendered continuous service of 240 days in a year. Labour Court held that he was not entitled to
any relief, because, he did not render service for 240 days, service in the proceeding 12 monhs, and
award was upheld by the High Court.
Suraj Pal Singh v. The Presiding Officer & Anr., 2006 II LLJ 335 : 2006 (108) FLR 865 : 2006 I CLR 217
: 2006 LIC 601 (Del.DB)
Note: Also refer to he following cases in the above context
Reinstatement cannot be granted as it is not established employee worked for more than 240
days.
Management of Connemara Hotel, Spencer International Hotels Ltd. v. P.O. III Additional Labour Court
& Anr.,1998 II LLJ 643 (Mad.HC)
Reinstatement Cannot be granted, if workman has not completed 240 days of service in a year.
Crystal Electrical v. State of Punjab & Ors.,1998 II LLJ 417 (P&H.HC)
Termination As workman absents himself 240 days not completed, not entitled to relief u/s. 25F.
Modh. Islam v. P.O. Labour Court, Agra & Ors., 2002 (95) FLR 533 (All.HC)

v) When termination though violative of Sec. 25F is for loss of confidence that
is justified (Bom.DB)
5A.634
Where the employer loses confidence in his employee he has completed 240 days of
continuous service like the Bus conductor in the present case it is held that there is no fault in
denying reinstatement instead granting compensation only is held not invalid.
Divisional controller, Maharashtra State Road Transport Corporation Nagpur v. Shrihari Padmakar
Dharmadhikari, 1990 II LLN 462 (Bom.DB)
Shri Dharmadhikari.Regulations. (Page: 463, Para: 1)
The Labour Court.31 March 1979. (Page: 463, Para: 3)
.In the instant case.Disputes Act. (Page: 465, Para: 6)
In this context.similar. (Page: 465/466, Para: 8)
In the circumstances.order. (Page: 466, Para: 9)

vi) When workman is found to be indulging in smuggling activities (Bom.DB)

5A.635
Where workman is found to be indulging in smuggling activities, then that is justified
ground for not awarding reinstatement with back wages even if his retrenchment on loss of
confidence is made in violation of Sec. 25F.
Air Corporation Employees Union & Ors. v. Air India & Ors., 1995 III LLJ 356 : 1987 II LLN 711 : 1987
II CLR 279 (Bom.DB)
The second respondent.25F of the Act. (Page: 358, Para: 5)
.the benefits received.Award. (Page: 358, Para: 5)
.It is no doubt.follow. (Page: 358, Para: 6)
.In an opinion.writ petition. (Page: 359, Para: 6)

2514

Chapter VA Lay-Off and Retrenchment

Sec. 25F

vii) When workmans capacity to work is impaired (Bom.DB)

5A.636
Non-compliance of the provision in nonpayment of the retrenchment compensation
shall not result into reinstatement where Labour Court has found impairment in his capacity to
work.
Shankar Krishna Nikam v. M/s. Bhide & Sons Pvt. Ltd. Engineering & Founders & Anr., 1982 (45) FLR
280 : 1982 II LLN 716 (Bom.DB)
Coming to.this judgement. (Page: 282, Para: 8)

viii) When employee is superannuated during pendency of proceedings

(Ori.DB)
5A.637
Termination due to absence without leave under standing order was held to be
retrenchment and the termination was invalid for non compliance of Sec. 25F but as the employee
was superannuated, during pendency of proceedings, he was awarded full back wages in terms of
revised pay and other benefits but not reinstatement.
Brajabandhu Panigrahi v. The Management Utkal Ayurvedic Co-operative Pharmacy, Ltd & Anr., 1984
(49) FLR 326 (Ori.DB)
It is not.of service. (Page: 330, Para: 10)
The next.other benefits. (Page: 331, Para: 12)

ix) Reinstatement cannot be granted when workman worked for short period
and attained the age of superannuation on date of retrenchment (Raj.HC)
5A.638
A driver was retrenched without following provisions of Sec. 25F and Labour Court
held that retrenchment was illegal but awarded compensation instead of reinstatement taking into
consideration the fact that he had worked for a very short period and had attained the age of 55
years on the date of retrenchment. Also, he had crossed the age of superannuation and was not
appointed by due process of selection. High Court modified the award by increasing compensation
taking into consideration the fact that 8 years had passed and workman has crossed age of
superannuation long back.
Mubareek Khan v. State of Rajasthan & Ors., 2004 (106) FJR 682 : 2004 (100) FLR 784 : 2005 I LLN
400 (Raj.HC)
The facts and.this writ petition. (Page: 684, Para: 2)
The Labour Court.and back wages. (Page: 684, Para: 5)
.The order of.No costs. (Page: 686, Para: 12)
Note: also refer to the following cases in the above context
Compensation-was granted instead of reinstatement as workman reached age of superannuation.
Union of India & Ors. v. Lal Chand & Anr., 2006 (108) FLR 1206 (Raj.HC)
R. Nawroji & Co. v. Francis E. Lobo & Anr., 2007 (112) FLR 605 : 2007 II LLN 354 : 2007 LIC 290 :
2007 LLR 305 : 2007 (1) Mah.LJ 63 : 2007 (2) BCR 206 (Bom.HC)

Sec. 25F

Reliefs available for violation of the sections

2515

x) Reinstatement not justified when tribunal did not decide the question of
voluntarily leaving the job when raised by the employer (Raj.DB)
5A.639
Workman raised dispute over termination of his service after 12 years. Tribunal
granted him reinstatement for non-compliance of of Sec. 25F. On writ petition filed by
Management, Single Judge set aside the award, against which a special appeal was filed. Division
Bench held that when the Management had the plea that workman had left the job on his own and
that his services were not terminated, the question of delay definitely becomes relevant and Labour
Court should have gone into this question and therefore, upheld the judgement of Single Judge.
Madan Singh v. State of Rajasthan & Ors., 2006 III CLR 482 (Raj.DB)

xi) Reinstatement not proper for casual workmen when not entitled to regular
post and not completed 240 days (Bom.DB)
5A.640
The workmen appointed as casual workmen on their simple discharge from service
for their joining union without retrenchment compensation raised a dispute that they were
permanent workmen and Labour Courts order holding termination proper was affirmed by both
Single Judge and Division Bench on the ground that from muster roll it was clear that workmen
had not completed 240 days service and they were terminated before their joining the union and
the workmen though employed in place of regular workmen could not be deemed to be permanent
workmen merely because of their engagement in regular post.
Maharashtra General Kamgar Union v. Raptakos Bratt & Co. Ltd. & Anr., 2006 II LLJ 683 : 2006 (108)
FLR 1182 : 2006 I CLR 312 (Bom.DB)
Note: also refer to he following cases
Compensation granted instead of reinstatement if workmen were casual workers.
Reichold Chemicals India Ltd v. Workemen, Reichold Chemicals India Ltd., Second Additional Labour
Court, Madras, 1997 II LLJ 1008 : 1997 (76) FLR 877 : 1997 II LLN 268 : 1997 LLR 675 (Mad.HC)
Compensation in lieu of reinstatement granted.
Management of Connemara Hotel, Spencer International Hotels Ltd. v. P.O. III Additional Labour Court
& Anr., 1998 II LLJ 643 (Mad.HC)

xii) Reinstatement cannot be of daily wagers though terminated in violation of

Sec. 25F since the posts they worked on were not sanctioned (Mad.HC)
5A.641
Termination of the services of the employees who worked as ad-hoc employees for 2
years were challenged by them for non-compliance of Sec. 25F of the Act. Labour Court held the
termination to be illegal but awarded compensation in lieu of reinstatement. When challenged the
High Court held that many of the posts in which these persons were working do not find a place in
the sanctioned strength of the employers institute and in such a case it would not be in the interest
of the institute to take back the employees on permanent basis. Thus the Labour Courts award
was held as proper but the award of compensation was increased.
R. Ravichandramoorthy & Ors. v. P.O. Labour Court, Salem & Ors., & Management of Institute of Road
Transport & Tenchology (represented by its Principal), Erode, 2003 I LLJ 729 : 2003 (96) FLR 459 :
2002 IV LLN 465 (Mad.HC)
Note: also refer to the following case
State of Gujarat v. Kalidas kuberbhai Machhi, Bharuch, 2002 (93) FLR 928 (Guj.HC)

2516

Chapter VA Lay-Off and Retrenchment

Sec. 25F

xiii) Reinstatement cannot be if there was unexplained delay of 13 years on the

part of workman (Mad.HC)
5A.642
The employee of bank was dismissed in violation to Sec. 25F. On employees
application, High Court refused to grant any relief to employees because there was 13 years
un-explained delay on the part of workman.
N. Krishnamurthy v. The Management of State Bank of India, 1995 (71) FLR 272 : 1996 I LLN 136
(Mad.HC)

xiv) If termination is by way of acceptance of voluntary resignation (Bom.HC)

5A.643
When service of workman is terminated by accepting voluntary resignation, he is not
entitled to reinstatement. Thus, award of Labour Court granting reinstatement was quashed.
M/s. Maharastra State Road Transport Corporation v. C.R.Shingote., 2001 (88) FLR 375 : 2000 LIC
2474 : 2000 IV LLN 167 : 2001 LLR 341 (Bom.HC)

xv) When workman abandons service of his own volition (Raj.HC)

5A.644
The dispute is with regards to removal of the workmen by the employer from the
service. The Tribunal held that he had completed 240 days of service and as such ordered
reinstatement with full back-wages and continuity in service. High Court quashed the order of the
Labour Court stating that he was not been terminated but he himself has abandoned the service as
such he was not entitled to reinstatement with full back-wages.
Director, Directorate of Millets Development v. Vijay Kumar & Anr., 2002 (93) FLR 875 (Raj.HC)
5A.645
On termination workman by invoking provisions of Sec. 25F of the Industrial Dispute
Act moved Labour Court which awarded him reinstatement with full back wages as he had
completed one year of continuous service by rejecting the contention of the employer that the
workman himself abandoned the employment. High Court set aside the award of reinstatement on
the ground that offer made by the employer in writing to join duty was refused by the workman
and hence he lost plea of reinstatement from the date of such offer.
Sonal Garments v. Trimbak Shankar Karve, 2003 I LLN 91 : 2004 LIC 214 (Bom.HC)
Accordingly to the respondent.constitution of India. (Page: 91, Para: 2)
However as the offer.back wages at all. (Page: 92, Para: 4)
The award is.set aside. (Page: 92, Para: 5)

xvi) Reinstatement cannot be awarded on the ground of workman completing

240 days without discussing the evidence on record (P&H.HC)
5A.646
An employee was working as casual worker for more than 2 year was terminated
from his services. The employer contended that during the period of 21/2 year he never completed
240 days in the period of 12 calendar month and as such he cannot be protected under the
Industrial Disputes Act. However Labour Court awarded reinstatement on the ground that he had
completed 240 days in the period of 2 year of services which was arrived at without discussing the
evidence on record as such High Court held, award was perverse and liable to be set aside.
Palwal Co-operative Sugar Mills, Ltd. v. P.O. Labour Court, Faridabad, & Anr., 2002 II LLN 665 : 2002
LIC 685 (P&H.HC)

Sec. 25F

Reliefs available for violation of the sections

2517

xvii) Reinstatement not proper when employment is for fixed period (Raj.HC)
5A.647
awarded.

When the appointment of an employee was for a fixed period reinstatementcannot be

State of Rajasthan & Ors. v. Richpal Singh & Anr., 2003 IV LLN 946 (Raj.HC)

xviii) When retrenchment is valid on facts though Sec. 25F violated as

retrenchment compensation was not paid (S.C.2J)
F 5A.648 Where the employer upon retrenchment of workmen failed to pay the retrenchment
compensation notice pay simultaneously as provided u/s. 25F of the Act, the Labour Court held the
retrenchment invalid and yet refused to grant reinstatement as on facts the retrenchment was
found valid and bonafide and instead awarded one month additional payment in lieu of
reinstatement over and above what the employer granted as provided in Sec. 25F. The High Court
on appeal hiked the compensation in lieu of retrenchment by another months wages thus in place of
Rs. 375 to each workman, it increased it to Rs. 750 per month to each workman. The Supreme
Court while up holding the decisions not to reinstate raised the compensation further in lieu there
of by another Rs. 750 to each of the 40 workmen.
Workmen of Coimbatore Pioneer B Mills Ltd. v. The Presiding Officer, Labour Court, Coimbatore
and other, 1980 I LLJ 503 : 1982 (61) FJR 180 : 1980 (40) FLR 371 : 1981 I LLN 561 : 1981 LIC (Sum)
12 : 1980 AIR (SC) 1871 : 1980 (1) SCC 698 (S.C.2J)
.The retrenchment was announced on October 19, 1970, but simultaneously with the
announcement of the retrenchment, compensation was not tendered. But the notice further stated that the
workers concerned have been. Will be paid compensation as required by and in accordance with clause
(b) of Section 25-F of the Industrial Disputes Act, 1947 (hereinafter referred to as the Act). The
retrenchment compensation was in fact paid on October 20, 1970. Out of the said 87 workers, 47 accepted
the compensation and went away. The remaining 40 workers raised an industrial dispute which was
referred to the Labour Court for adjudication. The Labour Court held by its judgment dated November
18, 1971 that the retrenchment was bona fide and that the reason given for such retrenchment were also
legal and valid. But it further held that there was non-compliance with the provisions of clause (b) of
Section 25-F inasmuch as the retrenchment compensation and notice pay was not aid before or
simultaneously with the notice of retrenchment on October 19, 1970, and, therefore, the retrenchment
was not valid. In the result while refusing reinstatement, the Labour Court awarded to each of the 39
workers (excepting No. 39) a months wages in lieu of reinstatement apart from the amounts specified in
Ex. M6 and lay off compensation for 30 days agreed to before the labour officer. (Page: 504, Para: 1)
On appeal, the High Court upheld the Labour Courts refusal to grant reinstatement of the workers, but
modified the Labour Courts award by substituting two months pay for a months pay payable to the
workers in lieu of reinstatement apart from other amounts awarded by the Labour Court. In other words,
the High Court awarded Rs. 375 to each of the said workers over and above the amounts directed to be
paid by the Labour Court. (Page; 504, Para: 2)
The special leave to appeal under Article 136 was granted by this Court confined to the question of
back wages payable and compensation in lieu of reinstatement and other directions regarding absorption
of the workmen when there is scope for re-absorption. Thus the validity of the retrenchment as such is no
longer open to question in this appeal. After hearing learned counsel on both sides we think it fair and
reasonable to raise the compensation payable to each of the 40 workers, in lieu of reinstatement, by
another sum of Rs. 750. (Page: 504, Para: 3)

2518

Chapter VA Lay-Off and Retrenchment

Sec. 25F

d) Relief of back wages

Note: For more ratios on quantum of back wages, please refer to relevant heads u/s. 17B & Sec. 11A and
subject index on back wages

1. General principles to determine quantum of back wages

i) There is no starightjacket formula to grant back wages and Labour Court
has discretion to decide the qunatum on facts and circumstances (S.C.3J)
F 5A.649 The Supreme Court held that a host of factors govern for grant of back wages upon
reinstatement like the manner and method of selection and appointment ie whether after proper
advertisement of the vacancy or inviting applications from employment exchange, nature of
appointment viz. adhoc short term, daily wage, temporary or permanent in character and special
qualification and possible requirement for the job if any and these are to be weighed and balanced
for a decision in this regard. One of the important factors for consideration is the length of service
rendered. Full and partial back wages depend further on his age and qualification and possibility
of his getting another employment and where the total length of service rendered is very small or
negligible, grant of back wages from date of award to date of reinstatement does not arise being
inappropriate. Same is the case of nature of employment i.e a short, intermitent daily wage is not
comparable with regular permanent character for back wages.
General Manager, Haryana Roadways v. Rudhan Singh, 2005 III LLJ 4 : 2005 LLR 849 : 2005 (5) SCC
591 : 2005 SCC (L&S) 716 (S.C.3J)
There is no rule of thumb that in every case where the Industrial Tribunal gives a finding that the
termination of services was in violation of Section 25-F 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. (Page: 8, Para: 8)
F 5A.650 When Sec. 25F is not complied with full backwages is to be granted subject to the
Courts discretion therefore where the Labour Court in its discretion after considering facts and
circumstances of the case awarded 60% backwages, High Court was in error in setting aside the
same without any reasons.
Post Graduate Institute of Medical Education & Research, chandigarh v. Raj Kumar & Ors., 2001 I LLJ
546 : 2001 (98) FJR 180 : 2001 (88) FLR 688 : 2001 I LLN 804 : 2001 LIC 476 : 2001 I CLR 1055 : 2001
LLR 255 : 2001 AIR (SC) 479 : 2001 (2) SCC 54 (S.C.2J)
.Labour Court, Chandigarh came to a finding that the services of Raj Kumar were illegally
terminated by the appellant and as such declared his entitlement for reinstatement in service with benefit
of continuity of service but awarding only 60% of the back wages. (Page: 547, Para: 6)

Sec. 25F

Reliefs available for violation of the sections

2519

The High Court in the matters under appeal did interfere with the order of the Labour Court in a petition
under Article 226 principally on the ground that the Labour Court was in error in the matter of grant of
restricted back wages to the extent of 60% and the High Court has modified the order of the Tribunal and
directed entitlement in its entirety. (Page: 547, Para: 2)
The issue as raised in the matter of back wages has been dealt with by the Labour Court in the manner as
above having read to the facts and circumstances of the matter in the issue upon exercise of its discretion
and obviously in a manner which cannot but be judicious in nature. In the event however the High Courts
interference is sought for there exists an obligation on the part of the High Court to record in the
judgment, the reasoning before however denouncing a judgment of an inferior Tribunal, in the absence of
which, the judgment in our view cannot stand the scrutiny of otherwise being reasonable. There ought to
be available in the judgment itself a finding about the perversity or the erroneous approach of the Labour
Court and it is only upon recording therewith the High Court has the authority to interfere. Unfortunately,
the High Court did not feel it expedient to record any reason far less any appreciable reason before
denouncing the judgment. (Page: 549, Para: 14)

ii) No law in absolute terms can be laid down to grant full back wages but it is
not automatic since industry cannot be compelled to pay for the period
during which the employee contributed nothing (S.C.2J)
F 5A.651 A law in absolute terms cannot be laid down as to in which cases and under what
circumstances full back wages can be granted or denied. For granting any back wages workmen
has to raise a plea in his written statement. That he had been sitting idle or not obtained any other
employment, in the interregnum. Further there has been a fundamental change in the dicta of
recent judgments of Supreme Court in this respect where full back wages upon reinstatement is no
more the rule. But now with the passage of time, it has come to be realized that industry is being
compelled to pay the workman for a period during which he apparently contributed little or
nothing at all, but was spent unproductively. The Court therefore urged that it is necessary to
develop a pragmatic approach to problems dogging industrial relations. No just solution can be
offered but a golden mean may be arrived at.
Allahabad Jal Sansthan v. Daya Shankar Rai & Anr., 2005 II LLJ 847 : 2005 LIC 2030 : 2005 SCC
(L&S) 631 : 2005 AIR (SC) 2371 : 2005 (5) SCC 124 (S.C.2J)
In the very nature of things there cannot be a straitjacket formula for awarding relief of back wages. All
relevant considerations will enter the verdict. More or less, it would be a motion addressed to the
discretion of the Tribunal. Full back wages would be the normal rule and the party objecting to it must
establish the circumstances necessitating departure. At that stage the Tribunal will exercise its discretion
keeping in view all the relevant circumstances. But the discretion must be exercised in a judicial and
judicious manner. The reason for exercising discretion must be cogent and convincing and must appear
on the face of the record. When it is said that something is to be done within the discretion of the authority,
that something is to be done according to the rules of reason and justice, according to law and not humour.
It is not to be arbitrary, vague and fanciful but legal and regular. (Page: 2032, Para: 11)

iii) Quantum of back wages to be determined on the basis of nature of work,

employment and appointment (Raj.HC)
5A.652
Labour Court directing reinstatement to a workman on account of non-compliance of
Sec. 25F of the Act was confirmed by the High Court, but the High Court found no justification for
awarding back wages from the date of termination to the concerned workman who worked from
Feb. 1985 to Jan. 1986, looking at the nature of work, employment and appointment. The High
Court allowed wages from the date of the award only.
Municipal Corporation, Kota v. Sushila Smt. & Anr., 2000 I LLJ 330 (Raj.HC)

2520

Chapter VA Lay-Off and Retrenchment

Sec. 25F

iv) Quantum of back wages to be determined having regard to financial

implications on public functionary (All.HC)
5A.653
The workman was appointed on daily wage basis in a Social Forestry Scheme and
when the scheme came to an end he was assigned with another work which was abandoned by him.
He did not approach the employer for providing employment and later alleged that he was illegally
retrenched without complying with Sec. 6N of U.P. Industrial Disputes Act. Labour Court
awarded reinstatement with back wages on the ground that there was lot of carelessness on part of
the State while conducting the dispute. High Court modified the award with 50% back wages
considering the large-scale financial implication on the public functionary.
State of U.P. v. Ram Lal & Anr., 2004 (103) FLR 204 (All.HC)
Now coming to the.to an end.daily wage appointment.the post.
(Page: 208, Para: 9)
Here in the present.by this Court. (Page: 209, Para: 10)
At last it has been.as a rule.In the facts.is maintained.
(Page: 209, Para: 11)

v) Quantum of back wages to be determined on the basis of apportionability

of burden due to delay not attributable to either party (S.C.2J)
F 5A.654 Dismissal was set aside for non compliance of 25F, back wages was denied due to delay
in instituting the dispute and it was held that as delay occurred due to employee firstly approaching
CAT and the same was pending for five years the delay was neither due to employees nor
employers fault and therefore apportioning the burden of back wages on both parties, awarded
50% back wages.
Anil Kumar Puri v. Presiding Officer, Labour Court, Chandigarh & Anr., 2000 II LLJ 1406 : 2000 IV
LLN 605 : 2000 SCC (L&S) 874 : 2000 (9) SCC 129 (S.C.2J)
.when his termination dated 20.10.1989 was set aside by the Labour Court on account of the
finding that there was breach of Section 25-F of the Industrial Disputes Act, 1947, on the part of
respondent-Management, he was wrongly denied back wages on the ground that he had raised the
industrial dispute after a period of more than five years. His case is that in the meantime he had promptly
approached the Central Administrative Tribunal and the matter was admitted and remained pending for
five years before the Central Administrative Tribunal. The Central Administrative Tribunal ultimately
took the view that it had on jurisdiction to entertain the dispute. Therefore, it cannot be said that there was
deliberate delay on the part of the appellant-workman in raising an industrial dispute.But on the
peculiar facts of this appeal, especially when the respondent-Management was not responsible for the
delay before the Central Administrative Tribunal, we hold that the period for which the back burden to be
claimed, should require the burden to be equally borne by both the sides. We, therefore, direct by partly
allowing this appeal that the appellant will be entitled to 50% back wages from the date of termination till
he was actually reinstated. (Page: 1406, Para: 3)

vi) Labour Court to record the basis of evidence for granting back wages and
mere absence of plea of employer raising objection to back wages does not
entitle workman to back wages (Del.HC)
5A.655
Back wages upon reinstatement is not automatic. Merely because the employer did
not plead any thing before the Labour Court so as to debar the workman for his claim for full back
wages, it cannot entitle the workman for full back wages. Although earlier view of Supreme Court
was that it was for the employer to raise the plea of alternative employment but now having regard
to Sec. 106 of Evidence Act or provisions analogous thereto such a plea should be raised by the
workman. Whenever back wages are awarded, the Labour Court is bound to record the basis

Sec. 25F

Reliefs available for violation of the sections

2521

under which the quantum of back wages was awarded. The matter was remanded back to Labour
Court to decide this issue only by providing opportunities to the parties to adduce evidence so as to
arrive at the quantum of back wages on the basis of evidence and not on the basis of reinstatement.
Mata Sundari College v. Padam Kant Saxena & Ors., 2007 LLR 370 (Del.HC)

vii) Reinstatement entitles employee to wages of the post from which he was
terminated but not of fresh post to be considered (S.C.3J)
F 5A.656 Termination of employee who was working as town-in-charge was held to be invalid
as prequisites for valid retrenchment were not complied with and meanwhile he was appointed
afresh as Sub-station Asst. and for computation of back wages the salary and allowances
applicable to the post of Town in Charge is to be considered and not what was payable for the post
of sub station assistant in which he was employed afresh and accordingly directed to make
payment of back wages upon re-posting him as town-in-charge.
Hari Mohan Rastogi v. Labour Court & Anr., 1984 I LLJ 32 : 1984 (48) FLR 294 : 1984 I LLN 89 : 1983
LIC 1906 : 1985 SCC (L&S) 152 : 1984 AIR (SC) 502 : 1984 Suppl. SCC 428 (S.C.3J)
.the appellant continues to be in service as Town-in charge, he will be entitled to arrears of salary
and other benefits which can be computed in terms of money. One peculiar feature of this case is that the
appellant was re-employed afresh as Sub-station Assistant on December 4, 1968 and was confirmed in
that post. While rendering his service as Sub-Station Assistant he was in receipt of monthly salary.
Therefore, while working out the monetary benefit with regard to the arrears of back-wages and other
monetary benefits, credit will have to be given for what the appellant has received as and by way of salary
and all other allowances. (Page: 33, Para: 3)
We, therefore, direct that the appellant shall be re-posted as Town-in-charge forthwith and not later than
a fortnight from today. We direct the Labour Court to compute the back-wages payable by respondent to
the appellant pursuant to this decision and this computation may be both of monetary benefits and
non-monetary benefits to which the appellant is entitled after giving credit for the amount of Rs. 13,000/which would be paid to the appellant within one month from today (Page: 33, Para: 6)

viii) Back wages to be at the rate commensurate to the status of a daily rated
workman but not at the scale of the post i.e. driver (Gau.HC)
5A.657
Where the services of a permanent daily rated workman was terminated without
holding domestic enquiry and violating the provisions of Sec. 25F, the industrial tribunal held the
termination illegal for violation of the principles of natural justice and for non-compliance of the
provisions of the Act and hence directed his reinstatement with back wages. But the back wages, it
ordered, to be as per scale of a driver. The High Court while upholding the finding and award of
industrial tribunal however held that by directing the employer to pay back wages as per scale of a
driver, the Tribunal exceeded the term of reference and instead ordered to pay the back wages as
admissible to permanent daily rated garden workers.
Manager, Issabheel Tea Estate v. State of Assam & Ors., 2007 I LLJ 838 : 2007 LLR 660 (Gau.HC)

ix) The factor of gainful employment of the workman to be considered while

examining the admissibility of back wages or deciding quantum of back
wages (S.C.3J)
F 5A.658 In a claim for back wages for the period of their enforced unemployment though there
was no evidence that workmen were not employed else where, the Supreme Court upheld the
finding of Tribunal that usually workmen of sugar factories are engaged in agricultural operations
for the portion of off season and therefore justified the limiting of back-wages to 50% only.
Jaswant Sugar Mills Ltd., Meerut v. Shri Badri Prasad & Anr., 1961 I LLJ 649 : 1961-62 (20) FJR 34 :
1991 (3) FLR 83 : 1967 AIR (SC) 513 (S.C.3J)

2522

Chapter VA Lay-Off and Retrenchment

Sec. 25F

As regards the claim for back wages the position was that there was no evidence on either side that for
the period during which they were not employed by the company they found employment elsewhere. The
Appellate Tribunal rightly pointed out, however, that usually workmen in sugar factories are employed in
agricultural operations for portions of off-season. Having regard to this it ordered the payment of 50 per
cent of their wages for the period of their enforced unemployment by the company till their reinstatement.
We do not see any justification to interfere with this order. (Page: 651, Para: 3)
F 5A.659 When an employee, a clerk in the Bank remained absent for a long period of 4 years,
his services were terminated but the High Court reinstated him with full back wages. The Supreme
Court held that while granting full back wages, the High Court, has not considered the question of
his gainful employment and therefore remitted the matter for fresh consideration of High Court
while still upholding the decision of reinstatement.
General Manager, Vijaya Bank & Anr. v. Pramod Kumar Gupta, 2006 (111) FLR 325 : 2006 III LLJ 971
: 2006 IV LLN 780 : 2006 (7) SCC 379 : 2006 SCC (L&S) 1659 (S.C.2J)
The appellant before us is the General Manager of Vijaya Bank. The respondent was employed in the
Bank as a clerk. According to the Bank, he abstained from duty without any leave application on
12-9-1991. On 13-5-1992, the Bank issued notice directing him to report for duty in 30 days time. On
11-6-1992, the respondent reported back to duty. Within ten days i.e. on 21-6-1992, the respondent again
abstained from duty without any prior intimation. On 8-9-1992, the Bank issued second notice to the
respondent. A copy of the said notice was also pasted on the notice board. The said notice dated 8-9-1992
was received by the respondent on 14-9-1992. According to the respondent, when he reported for duty on
12-10-1992, he was not permitted by the Bank since he had not joined duty on 8-10-1992 i.e. within 30
days from 8-9-1992. The respondent after four years raised a dispute on 1-4-1996. He protested against
the termination. Thereafter, the matter was referred to the Industrial Tribunal. The Tribunal in para 12 of
its order has held as under.In these circumstances, the case of the management appears to be
correct that the workman concerned was gainfully employed in other trade or business and had no
intention to join duties of the Bank, and the decision of the Bank that he had relinquished and abandoned
the service of the Bank appears to be fully justified. (Page: 325, Para: 1)
The High Court directed the appellant Bank to reinstate the respondent on the post held by him with
continuity in service and that the respondent shall also be entitled to other consequential benefits to which
he is entitled to in accordance with law. The High Court, in our opinion, without considering the relevant
issue has ordered full back wages with all other consequential benefits which, in our opinion, is not
correct.He has also now shown any acceptable material that he was not gainfully employed and,
under these circumstances, ordering full back wages to the respondent by the High Court without
considering the merits of the claim by the Bank is not correct and that the approach made by the High
Court in ordering full back wages cannot, at all, be countenanced in the facts and circumstances of this
case. (Page: 327, Para: 5)
We, therefore, remit the matter to the High Court to consider the question of payment of back wages for
the period in question. We request the High Court to consider the matter afresh on the question of back
wages only. The appellant Bank is also free to hold any departmental enquiry against the respondent
workman for his absence from duty during the relevant period. Since the matter is remitted to the High
Court on the question of back wages only, the respondent will not be entitled for payment of any back
wages during the period in question. (Page: 328, Para: 9)
5A.660
When the termination of service of a workman who completed 240 days of work is
void ab-initio, he is deemed to be in continuous service from the date of termination without back
wages since it requires enquiry as to his gainful employment by appropriate forum.
Pawan Kumar Srivastava v. Municipal Corporation, 1999 II LLJ 21 : 1999 III LLN 266 (MP.DB)
In view.standing orders. (Page: 25, Para: 10)
As the appellant.appellant. (Page: 25, Para: 11)

Sec. 25F

Reliefs available for violation of the sections

2523

As the order.service. (Page: 27, Para: 22)

As a result.wages. (Page: 27, Para: 22)
Note: also refer to the following case
Back wages a plea from the side of workman that he was not gainfully employed is important.
Onkar Nath Singh v. Presiding Officer, Labour Court, Agra & Anr., 2007 (112) FLR 1203 (All.HC)
Back wages - was reduced from 70% to 50%, as normally a driver cannot remain out of
work.routine.
State of Gujarat & Ors. v. Navinchandra L. Mandavia & Anr., 2001 III LLJ 14 (Guj.HC)

x) The factor of delay to be considered in determinig the quantum of back

wages (Guj.HC)
5A.661

Delay of seven years, back wages of only 20% granted.

Deputy Executive Engineer Panchayat Sub-Division 2 v. Jitendrakumar Ranchhodbhai Bhatt, 2002 (95)
FLR 445 : 2002 II LLN 600 : 2002 I CLR 816 : 2002 LLR 429 : 2002 LIC 1598 (Guj.HC)

xi) The principle of no work-no pay to be considered to decide the quantum

of back wages (Ori.HC)
5A.662
Services of a watchman were terminated by striking off his name from the muster roll
as he did not turn up for work. The dispute was referred for adjudication to Labour Court which
held that since he had served continuously for a period exceeding 240 days in a calendar year, his
services could not be terminated without following the principles of natural Justice and the
provisions of the Industrial Dispute Act and set aside his termination and directed reinstatement
with back-wages. Aggrieved, management moved High Court. High Court held that he was not
entitled to back-wages as he was paid wages throughout the period he worked and thereafter he did
not turn up for work.
Executive Engineer Camps & Buildings Division, Samal v. Presiding Officer, Labour Court,
Bhubaneshwar & Anr., 2007 I LLJ 413 : 2006 (111) FLR 135 : 2007 II LLN 766 (Ori.HC)

2. Quantum of back wages when can be in full/when can be reduced

i) Back wages in full payable if gainful employment of workman not proved
(S.C.2J)
F 5A.663 When termination was found to be violative of Sec. 25F and unless there is clear
evidence of gainful employment, workman cannot be denied back wages to any extent hence
Supreme Court upheld High Courts decision to grant full back wages instead of 40% as directed
by Labour Court.
Post Graduate Institute of Medical Education and Research, Chandigarh v. Vinod Krishan Sharma &
Anr., 2000 III LLJ 1678 (S.C.2J)
.. It has to be kept in view that when termination is found to be violative of Section 25-F of the
Act, it would be void as condition precedent would be found to be lacking for passing such order. The
result would be that the workman concerned would be deemed to be in service throughout as has rightly
been held by the Labour Court in his favour. Once that conclusion is reached, unless there is a clear
evidence of gainful employment in the meantime, the respondent could not have been denied back wages
to any extent. (Page: 1680, Para: 4)

2524

Chapter VA Lay-Off and Retrenchment

Sec. 25F

5A.664
Provisions of Sec. 25F are mandatory and their non-compliance by employer would
result in reinstatement with continuity of service and back wages.
Ajit Singh v. P.O. Labour Court, Rohtak Camp Court, Sonepat & Anr., 2002 II LLJ 218 : 2002 (100) FJR
876 : 2002 (94) FLR 446 : 2002 I CLR 681 : 2002 LLR 459 (P&H.DB)
The provisions of.to be mandatory.The Courts have.of section 25F.
(Page: 222, Para: 12)
.we hold that.face of the record. (Page: 224, Para: 10)
.The order of.Court is restored. (Page: 224, Para: 22)

ii) Burden of proof as to gainful employment

a) Is on the employer to have the issue of gainful employment framed by
the Tribunal to determine admissibility of back wages (S.C.3J)
F 5A.665 Where the issue of backwages upon reinstatement was decided in favour of the
workman, it is contended that the tribunal did not make an issue of gainful employment of the
workman it is held that it was equally the duty of the management to have got that issue framed by
the Tribunal and adduce the necessary evidence, otherwise it can be construed that the employer
has deliberately omitted to take that issue at a later stage to the disadvantage of the workman. The
workman can only be asked to furnish such information at the earliest stage and where the
management has not resorted to that course, it cannot take such a course later on and the workman
was not expected to prove the negative.
Shambhu Nath Goyal v. Bank of Baroda & Anr., 1983 II LLJ 415 : 1983 (47) FLR 438 : 1983 LIC 1697 :
1984 (64) FJR 37 : 1984 I LLN 8 : 1984 SCC (L&S) 1 : 1984 AIR (SC) 289 : 1983 (4) SCC 491 (S.C.3J)
The blame for not framing an issue on the question whether or not the workman was gainfully employed
in the intervening period cannot be laid on the Tribunal alone. It was equally the duty of the management
to have got that issue framed by the Tribunal and adduce the necessary evidence unless the object was to
rake up that question at some later stage to the disadvantage of the workman as in fact it has been done.
The management appears to have come forward with the grievance for the first time only in the High
Court. There is no material on record to show that the workman was gainfully employed anywhere. The
management has not furnished any particulars in this regard even before this Court after such a long lapse
of time. The workman could have been asked to furnish the necessary information at the earliest stage.
The management has not resorted to that course. The workman was not expected to prove the negative.
(Page: 422/423, Para: 13)
Note: For latest view to the contrary refer the case of Kendriya Vidyalaya Sanghatana v. S.C. Sharma,
2005 II LLJ 153 : 2005 (2) SCC 363 : 2005 AIR (SC) 768 (S.C.2J)
5A.666
The services of chowkidar was terminated. Labour Court ordered reinstatement on
the ground of non-compliance with provisions of Sec. 25F but refused back wages on the ground
that neither in the statement of claim nor in the affidavit, it was mentioned that he was not
employed elsewhere after termination of his services. High Court held that the award of the
Labour Court refusing back wages on this ground was not justified as it is for the employer to show
that petitioner was gainfully employed during this period. Hence held that the petitioner was
entitled to back wages.
Roopa v. Rajasthan Tourism Development Corp. Ltd. & Ors., 1986 (53) FLR 126 (Raj.HC)
The petitioner.adjudication to Labour Court.
The Labour Court.to any back wages. (Page: 126, Para: 1)

Sec. 25F

Reliefs available for violation of the sections

2525

In view.petitioner. (Page: 128, Para: 5)

In the result.reinstatement. (Page: 128, Para: 6)
Note: This dicta is no more the rule as could be seen in the case of Kendriya Vidyalaya Sanghatana v.
S.C. Sharma, 2005 II LLJ 153 : 2005 (2) SCC 363 : 2005 AIR (SC) 768 (S.C.2J)

b) On the employee to prove that he is not gainfully employed (S.C.2J)

F 5A.667 When the question of determining the entitlement of a person to back wages, the
employee has to show that he was not gainfully employed. The initial burden is on him. After and if
he places materials in that regard, the employer can bring on record materials to rebut his claim.
Where the workman failed to so plead or place materials in support for awarding back wages,
awarding the same is held not appropriate.
Kendriya Vidyalaya Sanghatana v. S.C. Sharma, 2005 II LLJ 153 : 2005 (2) SCC 363 : 2005 AIR (SC)
768 (S.C.2J)

iii) Plea of gainful employment to be raised before Tribunal by employer but

not before Writ Court (Chh.HC)
5A.668
Workman was removed from service as no longer required. On reference, Labour
Court held that removal was in utter violation of Sec. 25G of Industrial Disputes Act and directed
reinstatement with full back-wages. Corporation challenged the said award contending that
Labour Court granted full back-wages without considering that workman was gainfully employed
during the period between removal and reinstatement. High Court held that the plea was not
raised before Labour Court. Hence there is no merit in the petition hence liable to be dismissed.
Municipal Corporation, Bilaspur v. Mohammed Farookh & Anr., 2006 (111) FLR 658 : 2007 LLR 85
(Chh.HC)
Municipal Corporation, Bilaspur was.for adjudication. (Page: 658, Para: 1)
The findings of the Labour Court.first respondent workman. (Page: 659, Para: 3)
Note: Further citations on back wages granted for no gainful employment
Amrik Singh & Ors. v. The Dt. Food & Supplies Controller & Ors., 1993 II LLJ 22 (P&H.HC)
Chairman, Krishi Utpadan Mandi Samiti & Anr. v. Labour Court, Allahabad & Ors., 1993 III LLJ (Sum)
764 : 1992 (64) FLR 412 : 1992 LIC 1934 : 1992 I CLR 972 : 1992 LLR 266 (All.HC)
Sachiv, Krishi Upaj Mandi Samiti, Anjad (Barwani) v. Aditya S/o. Baijnath Shukla, 2003 III LLJ 555 :
2003 (98) FLR 379 : 2003 II LLN 156 : 2003 LLR 417 (MP.HC)
Subhash Mekurenkar v. M.D.M.P. Rajya Krishi Kripnon Board, 2005 (105) FLR 955 : 2005 LIC 3057 :
2005 LLR 424 (MP.HC)

iv) Full back wages payable when the Labour Court fails to furnish reasons for
reducing them to 50% (P&H. DB)
5A.669
Termination of workman was held to be unjustified but Labour Court awarded
compensation u/s. 25F and denied reinstatement but single judge set aside the same and granted
reinstatement with full back wages and it was upheld by divisional bench as once termination was
held unjustified necessary corollary is that workman is entitled to reinstatement with full back
wages.
Patiala Central Co-operative Bank Ltd. v. Mehar Chand & Anr., 1998 I LLJ 1142 : 1998 (79) FLR (Sum)
30 : 1998 III LLN 513 (P&H.DB)
.the learned.single judge. (Page: 1143, Para: 3)

2526

Chapter VA Lay-Off and Retrenchment

Sec. 25F

5A.670
It was held in Hari Palace Ambalo v. Labour Court that full back wages will be the
normal rule and any party contending departure must establish necessary circumstances or
reasons. In this case Labour Court found order of termination in breach of Sec. 25F, and ordered
half back wages without assigning reasons. In absence of reasons, normal rule must be followed.
Baldev Singh v. Labour Court, Chandigarh & Anr., 1991 II LLJ 534 (P&H.HC)
5A.671
Labour Court can not deny back wages without offering cogent reasons and no
material was shown to prove that the employee was gainfully employed and the Labour Courts
direction to adjust his leave against his absence not tenable since the termination is illegal and
hence High Court directed payment of back wages.
Surjit Singh v. State of Punjab & Ors., 1998 (92) FJR 277 (P&H.HC)
Note: For contrary decision refer case of U.P. State Brassware Corpn. Ltd. & Anr. v. Udai Narain
Pandey, 2006 I LLJ 496 : 2006 (108) FLR 201 : 2006 I LLN 125 : 2006 I CLR 39 : 2006 LLR 214 : 2006
(1) SCC 479 : 2006 AIR (SC) 586 : 2006 SCC (L&S) 250 (S.C.2J)

v) Back wages in full payable when the workman even after termination made
a representation to the employer to allow him to work (Bom.DB)
5A.672
When the services of an employee, a monthly rated casual Labourer, was terminated
for absence from duty, he was reinstated without back-wages by the Tribunal, and the High Court
allowed the back-wages on the plea that the workman after termination did represent requesting to
permit him to perform his duties which was not allowed by the employer and therefore, he
deserved to be paid full back-wages.
Chhotelal Badriprasad Yadav, Akola v. Union of India through General Manager, Central Railway,
Mumbai & Ors., 2006 III CLR 946 (Bom.DB)
The instant writ petition.of back wages. (Page: 946, Para: 2)
In the present case.wages to the petitioner. (Page: 947, Para: 9)
For the reasons stated.are hereby confirmed. (Page: 947, Para: 11)

vi) Back wages cannot be denied on the plea that it would affect public
exchequer for payment of back wages (Guj.HC)
5A.673
Services of daily wagers were orally terminated. Labour Court by way of a common
order reinstated them with back wages on the ground that mandatory provision of Sec. 25F was not
complied with and there was nothing to establish that during that time they were gainfully
employed. By rejecting the plea of employer that they being a public body and award of back wages
would affect the public exchequer, High Court held that employer being a public body should act
and behave like a model employer and found no irregularity in the award of Labour Court hence
upheld the same.
Chief Officer Keshad Municipality v. Chandrakant Harilal Rokholiya, 2004 (100) FLR 174 : 2003 III
LLN 1050 (Guj.HC)
.The Labour Court.Common order. (Page: 175, Para: 1)
The law in this.consequential benefit. (Page: 177, Para: 8)
.the workmen have been.is removed.plea that the.therefore rejected.
(Page: 180, Para: 10)
.Ordinarily therefore.normal rule. (Page: 182, Para: 12)
.Accordingly to may.to be dismissed. (Page: 185, Para: 14)

Sec. 25F

Reliefs available for violation of the sections

2527

Note: also refer to the following cases on full back wages

Back wages cannot be denied by the employer on grounds of sickness of the company or incapacity
to pay.
Metal Equipment, Jeedimetla, Hyderabad v. P. Venkateswar Rao & Ors., 2002 III CLR 420 (AP.HC)
Uttam Singh v. Labour Court, Patiala, & Anr., 1986 I LLN 911 (P&H.HC)
State of Madhya Pradesh v. The P.O. Labour Court, Bhopal & Ors., 2002 (95) FLR 582 (MP.HC)
The Chief Editor, Aurangabad Times & Sham Nama Evening Urdu Daily v. Jamil Ahmed Mohd. Mustafa
Ansari & Ors., 2002 (95) FLR 371 (Bom.HC)
Nirmal Kumar Sharma v. Municipal Board, Kherthal & Anr., 2003 (96) FLR 877 : 2002 LIC 3329 : 2003
LLR 154 (Raj.HC)
Ramani Mohan Industries Pvt. Ltd. v. Second Industrial Tribunal & Ors., 1981 I LLJ 363 : 1981 I LLN
553 : 1981 LIC 59 (Cal.HC)
Back-wages Employee entitled on illegal termination.
Pancham Singh v. State of Haryana & Anr., 2002 (92) FLR 762 : 2002 I CLR 132 (P&H.HC)
Delhi Jal Board v. Presiding officer and Anr., 2004 II LLJ 569 (Del.HC)

vii) Back wages as a lumpsum granted when workman is a daily wager

(Guj.HC)
5A.674
The services of daily workman were terminated. On challenge, Labour Court held
termination illegal as it was without complying with Sec. 25F of Industrial Dispute Act and granted
reinstatement with 40% back-wages. The Nagar Palika challenged the same on the ground that
workman was not appointed as per recruitment rules and had not completed continuous service of
240 days. Rejecting the contention High Court upheld the order of Labour Court modifying 40%
back-wages in to lump sum nominal amount payable for back-wages.
Shihor Nagar Palika through Chief Officer v. Natvarlal Maganlal Trivedi, 2006 III CLR 503 (Guj.HC)
In this group petition.40% back wages of interim period. (Page: 504, Para: 3)
In light of the observations made.being an interim period. (Page: 510 Para: 13)

viii) 25% granted inspite of gainful employment when the same is not
substantially better (Bom.HC)
5A.675
When the services of an employee was terminated, despite working 240 days in the
previous year Sec. 25F was not complied with. The High Court there upon upholding his
reinstatement with continuity of service by Industrial Tribunal held that 25% of back-wages
instead of full will meet the ends of justice having regard to has gainful employment which may not
be substantially better one.
Goodlass Nerolac Paints Ltd. v. Anand Shivram Samant & Anr., 2006 III CLR 875 : 2007 LIC 301
(Bom.HC)
The claim of the First.unfair labour practice. (Page: 876, Para: 2)
By its order dated.and 4th July 1989. (Page: 876, Para: 3)
The Industrial Court held that.continuity of service. (Page: 876/877, Para: 5)
In the present case.to the aforesaid extent. (Page: 882, Para: 20)

2528

Chapter VA Lay-Off and Retrenchment

Sec. 25F

ix) 25% garnted since employer cannot be saddled with burden of full back
wages for no work rendered (S.C.2J)
F 5A.676 Where the services of workmen appointed in U.P. state brassware corporation from
23.7.1984 to 8.1.1987 was subsequently got appointed in non ferrous rolling mills from 8.1.1987 to
12/13.2.1987 and was terminated on expiry of tenure giving rise to industrial dispute in which they
got reinstated with full back wages by Labour Court and the petition in challenge before High
Court was also dismissed. The Supreme Court held that merely because the termination is illegal
the employer is not entitled to full back wages. The recent dicta of Supreme Court judgments has
laid down not to saddle the employer with burden of full back wages where the employee rendered
no work. Hence 25% back wages only granted as fair and proper and judgment of Labour Court
and High Court set aside.
U.P. State Brassware Corpn. Ltd. & Anr. v. Udai Narain Pandey, 2006 (108) FLR 201 : 2006 I LLJ 496 :
2006 I LLN 125 : 2006 I CLR 39 : 2006 LLR 214 : 2006 (1) SCC 479 : 2006 AIR (SC) 586 : 2006 SCC
(L&S) 250 (S.C.2J)
A person is not entitled to get something only because it would be lawful to do so. If that principle is
applied, the functions of an industrial Court shall lose much of its significance. (Page: 220, Para: 45)
The changes brought about by the subsequent decisions of this Court probably having regard to the
changes in the policy decisions of the Government in the wake of prevailing market economy,
globalization, privatization and outsourcing is evident. (Page: 220, Para: 46)
The only question is whether the Respondent would be entitled to back-wages from the date of his
termination of service till the aforementioned date. The decision to close down the establishment by the
State of Uttar Pradesh like other public sector organizations had been taken as far back on 17-11-1990
wherefor a GO had been issued. It had further been averred, which has been noticed hereinbefore, that the
said GO has substantially been implemented. In this view of the matter, we are of the opinion that interest
of justice would be subserved if the back wages payable to the Respondent for the period 1-4-1987 to
26-3-1993 is confined to 25% of the total back-wages payable during the said period.
(Page: 223, Para: 64)
The judgments and orders of the Labour Court and the High Court are set aside and it is directed that the
Respondent herein shall be entitled to 25% back wages of the total back-wages payable during the
aforesaid period and compensation payable in terms of Section 6-N of the U.P. Industrial Disputes Act.
If, however, any sum has been paid by the Appellant herein, the same shall be adjusted from the amount
payable in terms of this judgment. (Page: 223, Para: 65)

x) Back wages to the tune of only 30% payable when project workman
terminated six years before the project came to an end (Guj.HC)
5A.677
Where the workman was terminated when the project was still going on and he has
put up 240 days of continuous work his termination being ab initio void, reinstatement to him
cannot be denied merely because the project being coming to an end during the pendency of the
dispute. The Court held that the fact that the workman was already reinstated pursuant to award
of Labour Court in other Government Department. The Government now connot raise contention
that since the project in which the workman was working has been closed and he can not be
reinstated and that since no written appointment order not he was informed while engaging orally
that his tenure of appointment is limited to project he can not be considered as project employee
and Court reinstated him into 30% back wages in the instant case relying as the case of S.M.
Nilajkar, 2003 (97) FLR 608 (SC).
Rajendra Prasad Shankar Lal Purohit v. Executive Engineer, 2004 (103) FLR 1069 (Guj.HC)

Sec. 25F

Reliefs available for violation of the sections

2529

.On 14th March 1989.question was closed. (Page: 1070, Para: 3)

.The paragraph 12.office/project. (Page: 1072, Para: 7)
.Therefore considering.June
purposed. (Page: 1073, Para: 10)

1996.considering

the

legal.for

all

.Therefore according.project alone.the re was no.of reinstatement.

(Page: 1074, Para: 10)
In the result.as directed earlier. (Page: 1074, Para: 11)

xi) Only 50% back wages admissible from the date of filing claim statement till
passing of award in view of delay in raising the dispute (Bom.HC)
5A.678
Workman was employed during 1983-1987 for doing the work of maintenance and
repair of the road. His services were orally terminated and he raised a dispute in the year 1993.
Labour Court came to the finding that termination was in breach of Sec. 25F and 25G of the Act
and granted reinstatement but for delay in filing the application, it denied of back wages. High
Court in the interest of justice granted 50% back wages from the date of filing statement of claim
till pronouncement of award by Labour Court.
State of Maharashtra through Executive Engineer v. Sayyedlal Gani Sayyed AND Sayed Lal v.
Sarvajanik Bankdhkam Vibhag, 2002 LLR 1155 (Bom.HC)
.Writ Petition No. 4759.back wages. (Page: 1156, Para: 2)
The employee was.issuing within under.He chise to.Labour Court.the
Labour Court.to the employer. (Page: 1156, Para: 3)
.Hence in the.statement of claim.in my considered.December
1999. (Page: 1158, Para: 5)
Writ Petition 4759.allowed (Page: 1158, Para: 6)
Note: also refer to the following cases where back wages were reduced or denied on account of delay
Back wages refused as the dispute was raised after 15 years and workman was also occupying the
companys quarter for 15 days.
Shri Khanderao A. Mohite v. New Standard Engg. Co. & Anr., 2000 (86) FLR 18 : 2000 LIC 1331
(Bom.HC)
Back wages claim of the workman allowed, 2 years wages deducted due to delay.
Devendra Pandurang Pandore v. The Chief Executive Officer, Chiplun Municipal Council & Anr., 2005
(104) FLR 536 : 2004 III CLR 666 (Bom.HC)
Employee filing the complaint belatedly, reinstatement with only 50% backwages was granted.
Bhika Ram v. Labour Court, Jodhpur & Anr., 2000 (87) FLR 339 (Raj.HC)
Backwages 50% denied by High Court considering facts and circumstances of case and passage
of time.
N.D.M.C. v. Vijay Pal Singh & Ors., 2004 II LLJ 607 : 2004 V LLN (Sum) 240 (Del.HC)

xii) 50% back wages granted on no work no pay basis though employee was
wrongfully denied work by the employer (All.HC)
5A.679
An employee was working as sheet writing clerk in a seasonal work during the
crushing season 1971-1972, but he was denied work in the crushing season of 1972-1973, unlike
other employees. On reference, the Labour Court considering the pleading of the parties, came to
the findings that the work for which the employee was appointed was not temporary or contingent

2530

Chapter VA Lay-Off and Retrenchment

Sec. 25F

and provisions of Sec. 25F regarding retrenchment were not complied with. The High Court
dismissed the writ petition filed by the employer stating that it would not interfere with the findings
of the Labour Court but decided to award half the emoluments on the principle of no work no pay
from the date of termination to the date of reinstatement in the coming season and just modified the
award of Labour Court reducing it to the extent of 50%.
M/s. U.P. State Sugar Corporation Ltd. v. The Labour Court, U.P. & Anr., 2005 LIC 951 (All.HC)
5A.680
The order passed to give full last drawn wages to the workman till final award was
challenged before High Court. High Court held that as workman not rendering service to the
management and even after reinstatement the workman may not be entitled to full back-wages, as
per recent pronouncement of Supreme Court, it would be proper to allow 50% of the last drawn
wages as interim relief.
Chefair Hotel Corporation of India Ltd. v. Om Prakash, 2006 LLR 1066 (Del.HC)
In the present case.wages as interim relief. (Page: 1068, Para: 4)

xiii) Backwages of 50% granted since employer is public instituition and the
employee was not employed after termination (Mad.HC)
5A.681
An Assistant Secretary was terminated as he was not recruited through Employment
Exchange. As he had worked for more than 240 days, he was entitled for show cause notice, Sec.
25F of the Act also should have been complied with. The management shall be liable to pay 50% of
the back wages as it was a public institution and also the secretary had not been working after the
date of termination of service. Therefore, he was reinstated with 50% of back wages.
R. Poori @ Bhoopathi v. P.O. Labour Court, Vellore & Anr., 2002 (95) FLR 624 : 2002 III LLN 1099
(Mad.HC)

xiv) Only 50% backwages granted as the employer being the State cannot be
saddled with full back wages (Guj.HC)
5A.682
Award of Labour Court holding the workmans termination of services valid and
refusing to grant relief holding Sec. 25F is not applicable, was challenged. The High Court found
that Sec. 25F is clearly applicable as workman had put in continuous service of one year, therefore,
order of termination is violative of Sec. 25F and High Court held workman entitled to relief of
reinstatement with back wages up to 50%, as full back wages cannot be granted as the employer
being the State should not be saddled with liability of full back wages.
Rajendraprasad Shanklal Purohit v. Executive Engineer, Gramya Marg Vikas Yojna Vibhag, 2002 III
CLR 439 : 2002 LIC 3214 (Guj.HC)

xv) 60% granted to probationer who was terminated for misconduct without
enquiry and terminated without enquiry (Guj.HC)
5A.683
Workman was retained after completion of the probationary period, thus Sec. 2(oo)
(bb) is not applicable. He was terminated because of misconduct without enquiry and hence
Labour Court was right in setting aside the termination. As regards back wages it was held that
order of full back wages is modified to 60% back wages from date of reference to date of award and
full back wages from then onward till reinstatement.
Deputy Executive Engineer v. Jayantibhai Chhimabhai, 2001 (89) FLR 446 : 2001 II LLN 1077
(Guj.HC)
Note: Other citations where quantum of back wages were reduced are given below

Sec. 25F

Reliefs available for violation of the sections

2531

Back wages 50% granted.

Dhani Ram & Ors. v. Presiding Officer, Labour Court-II, Faridabad & Ors., 2007 I LLJ 350 : 2006 III
CLR 934 : 2007 LLR 138 (P&H.DB)
Termination without complying with Sec. 25F, illegal 25% granted.
Chief Medical & Health Officer, Dausa v. Judge, Labour Court, Jaipur & Anr., 2006 (108) FLR 331 :
2006 I CLR 344 (Raj.HC)
Back wages 40% granted when terminated in violation of Sec. 25F and 25G.
State of Rajasthan & Anr. v. Chandra Kant & Anr. 2003 (97) FLR 445 (Raj.HC)
Back wagest 40% Casual workers employed on a permanent nature of job having put in long
period of service are covered.
Employer in relation of Management of Central Planning & Design Institute Ltd. v. Union of India &
Ors., 2004 LIC 1602 (Jhar.HC)

xvi) Full back wages from the date of termination to the date of reference not
admissible since not appropriate to burden the exchequer meant for public
benefit and 60% back wages permissible for the period of pendency of
reference since employee is not at fault (Guj.HC)
5A.684
Termination of services of a temporary clerk without complying with Sec. 25F is
illegal and he was entitled to reinstatement, but the High Court found no justification for granting
full back wages, from the date of termination to the date of reference since the employer is a public
body and it is not appropriate to burden Exchequer meant for public benefit with full back wages
and granted 60% back wages from the date of reference to the date of award and disallowed any
backwages from date of termination to date of reference but full backwages from date of award
and till date of reinstatement as the employer is not at fault for pendency of adjudication for 13
years. Labour Courts order grants full backwages was modified accordingly.
Deputy Executive Engineer v. Jiviben V. Pandya, 2000 III LLJ 1066 : 2000 (86) FLR 841 : 2000 II CLR
881 : 2000 LLR 940 (Guj.HC)

3. Back wages when can be denied

i) Back wages not payable in case of a daily wager who completed only 264
days in his short employment under a year (S.C.3J)
F 5A.685 Where are employee worked only 264 days in his short employment from 16.3.1988 to
28.2.1989 still Sec. 25F will be violated if he is terminated without its compliance. A plea of
employment only for a fixed period cannot be taken before Supreme Court unless taken before
Courts below and a claim for a for backwages is not tenable when the employee only works for very
short period as in the present case and disallowed payment any backwages and set aside the 50%
back wages granted by Labour Court in this regard.
General Manager, Haryana Roadways v. Rudhan Singh, 2005 III LLJ 4 : 2005 LLR 849 : 2005 (5) SCC
591 : 2005 SCC (L&S) 716 (S.C.3J)
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 25-F 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

2532

Chapter VA Lay-Off and Retrenchment

Sec. 25F

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. (Page: 8, Para: 8)
In the case in hand the respondent had worked for a very short period with the appellant, which was less
than one year. Even during this period there were breaks in service and he had been given short term
appointments on daily wage basis in different capacities. The respondent is not a technically trained
person, but was working on a class IV post. According to the finding of the Industrial
Tribunal-cum-Labour Court plenty of work of the same nature, which the respondent was doing, was
available in the District of Rohtak. In such circumstances we are of the opinion that the respondent is not
entitled to payment of any back wages. (Page: 9, Para: 11)

ii) Back wages not payable since the employee remained absent without
bonafide reasons though reinstated for non-compliance of Sec. 25F
(Bom.HC)
5A.686
An employee was granted 3 months leave on an undertaking being given that if she
failed to resume work on the said date, the services would be terminated. A request was made for
extension of leave which was not granted and the employee failed to communicate whether she
could resume duty. After repeated communications being sent by the employer, her services were
terminated as no reply was received. After 4 months she returned and claimed that the termination
was illegal and she was not given opportunity of being heard, also the undertaking was detained
under duress. The Labour Court held that she remained absent without bonafide reasons and
therefore is entitled to only reinstatement without wages as provision of Sec. 25F were not complied
with by the employer. The High Court held that employee is not entitled to be reinstated and
provisions of Sec. 25F are not attracted. As the employee has already been reinstated, the Court
would not disturb the status quo and the petitions are disposed off.
Blow Plast Ltd. v. Nafisa Shabbir Hussain Mashraqui & Ors.,1998 I LLJ 463 : 1997 (77) FLR 926 : 1997
IV LLN 430 : 1997 II CLR 926 (Bom.HC)

iii) Back wages denied for unauthorized absence on the principle of no

work-no pay (Ori.HC)
5A.687
Services of the workman were terminated without enquiry for remaining absent.
Labour Court ordered for reinstatement with back-wages. Employer reinstated the workman but
denied to pay back-wages. On challenging this, High Court held that the workman was not entitled
to back-wages automatically on the non-compliance of Sec. 25F of Industrial Dispute Act as it
depends upon several factors and since in the present case there was deliberate abstention from
work the principle of No work No Pay would be applicable.
Executive Engineer, Camps & Buildings Division, Samal v. Presiding Officer, Labour Court,
Bhubaneshwar & Anr., 2006 (111) FLR 135 : 2007 I LLJ 413 : 2007 II LLN 766 (Ori.HC)
The award dated.for adjudication. (Page: 136, Para: 2)
On the basis of.in this Writ application. (Page: 137, Para: 4)
Law is well settled that.should be applicable. (Page: 137/138 Para: 6)
In the result.to his reinstatement. (Page: 138, Para: 7)
Note: also refer to the following case where back wages denied for absence
S.A. Quader v. Superintending Engineer, (Operation), A.P.S.E.B., Hyderabad & Anr., 2002 (95) FLR
782 (AP.HC)
Ravindrakumar B. Patel & Anr. v. National Dairy Development Board, 1997 LIC 207 (Guj.HC)

Sec. 25F

Reliefs available for violation of the sections

2533

iv) Back wages not payable when employee is not joining duty on
reinstatement but working elsewhere (Mad.HC)
5A.688
When the termination order passed by the employer is set aside, it is the duty of the
employee concerned to join the service within a reasonable time or to give a notice that he should be
re-instated, if an employee does not report for duty within reasonable time the Court cannot allow
the claim for back wages especially when that employee is found working elsewhere soon after the
order of re-instatement was passed.
Peer Mohamed & Co. v. Mohamed Hussain & Anr., 1968 LIC 1143 (Mad.HC)

v) Back wages not payable merely on acquittal of criminal charges when they
are fairly serious and employee did not work during pendency of criminal
proceedings (Del.HC)
5A.689
A workman was discharged from service in October 1975 in view of his alleged
involvement in smuggling under the Customs Act. He sought reference of dispute but the same was
rejected by the Delhi Administration. Subsequently, criminal proceedings initiated against the
workman under Customs Act were quashed. He sought reference of dispute for a second time and
the same was allowed. The Labour Court granted reinstatement and back wages to the workman
even though he was superannuated well before the award. The High Court on writ petition held
that the workman cannot be reinstated because he was already superannuated and secondly he was
also denied the backwages on the ground that the allegations were of fairly serious in nature and he
could not have worked with the company during the pendency of the criminal proceedings. Labour
Courts award was set aside accordingly.
Air France v. Government of NCT of Delhi & Ors., 2005 I LLJ 1142 : 2005 II LLN 557 : 2005 I CLR 307
(Del.HC)
The grievance.awarded to him. (Page: 1143, Para: 1)
So far as.for this period. (Page: 1144, Para: 14/17)

vi) Back wages denied for long delay in raising dispute and employee earning
Rs. 800 p.m. (Bom.HC)
5A.690
Labour Court holding termination of services of an employee to be illegal, failed to
grant normal relief of reinstatement and back wages. Hence this writ petition. The High Court
observed that the management has not made out a case for not granting relief of reinstatement with
continuity of service. So the relief was granted to the employee, but back wages were disallowed on
two grounds. (1) long delay in raising the dispute and (2) employee is in employment on salary of
Rs. 800 p.m. from 1988 onwards at Parel.
Parshuram Yallapa Kotekar v. Telecom District Engineer, Ratnagiri & Ors., 2002 (93) FLR 1181 : 2002
II CLR 78 : 2002 LLR 825 (Bom.HC)

e) Relief of re-employment can be

1. When new recruitment was made by employer subsequent to termination
of the workman (S.C.3J)
F 5A.691 Direction by industrial tribunal to give re-employment to retrenched workman was
held justified as subsequent to retrenchment new employment was made and thereby employer
violated provisions of Sec. 25H which was although not in force but added later on and yet it is held
that the principle was recognised by Tribunal in industrial adjudication.
Cawnpore Tannery Ltd., Kanpur v. S. Guha & Anr., 1961 II LLJ 110 : 1961 (3) FLR 237 : 1967 AIR (SC)
667 (S.C.3J)

2534

Chapter VA Lay-Off and Retrenchment

Sec. 25F

.This position is now made perfectly clear by the present definition of workmen which
includes a person who had been dismissed, discharged or retrenched. Besides, the definition of the term
industrial dispute is wide enough to justify the Union of which Mr. Guha as well as the propriety of the
appellants conduct in not giving him an opportunity to be re-employed when an occasion for the
employment when an occasion for the employment of an additional clerk arose. That is the view taken by
the Labour Appellate Tribunal and we are not satisfied that the said conclusion is erroneous in law so as to
justify our interference. (Page: 112, Para: 2)
.In our opinion, this argument is misconceived. Even before 25-H was added to the Act industrial
adjudication generally recognised the principle that if an employer retrenched the services of an
employee on the ground that the employee in question had become surplus, it was necessary that
whenever the employer had occasion to employ another hand the retrenched workman should be given an
opportunity to join service. This principle was regarded as of general application in industrial
adjudication on the ground that it was based on considerations of fairplay and justice, vide Shri
Vishuddananda Saraswathi Hospital v. Their Employees, 1949-1 Lab LJ 111: (IT-West Bengal) ; Kilburn
and Co. and MacNeill and Co. v. Their Employees, 1950-2 Lab LJ 125 (IT-West Bengal) and Sri
Annapurna Mil1s v. Certain Workmen, (1953) 1 Lab LJ 43 (L..A.T.I. All). It is true that in the case of
Annapurna Mills the discharge of the workmen was the result of the fact that the employer had closed his
business and it was held that with improvement in circumstances if the employer re-opened his business it
was necessary that he should take back in his employment his old employees. It would be noticed that the
principle which was applied to the case of an employer who re-opened his business which had been
closed by him is substantially the same principle which requires the employer to give an opportunity to
his retrenched workman when he has occasion to engage another servant. That is why the Labour
appellate Tribunal has observed that the principle now statutorily recognised by Section 25-H was, before
the Act was amended, recognised by industrial adjudicators in dealing with such question. Therefore, we
do not think that Mr. Sen is justified in contending that the order passed in the present proceedings against
the appellant is contrary to industrial law. (Page: 112, Para: 1)

f) Relief of re-appointment whether can be

1. Cannot be when provisional employees were retrenched and replaced by
Public Service Commission recruits (Ker.DB)
5A.692
When provisional employees are retrenched and in their place candidates selected by
the Public Service Commission are appointed, it is necessary that the provisions of Sec. 25F be
complied with as regards such retrenchment. Employees are not liable for reappointment as
against Public Service Commission recruits, however in compliance with Sec. 25F retrenchment
compensation is directed to be paid to them.
The Corporation of Cochin & Ors. v. V.S. Jalaja & Ors., 1985 LIC 1121 : 1984 I LLJ 526 : 1984 I LLN
685 (Ker.DB)
We are clear.above O.P., (Page: 1123, Para: 8)
An employer.the industry. (Page: 1124, Para: 12)
With these.alternative relief. (Page: 1124/1125, Para: 13)

g) Relief of continuity of service

1. Continuity of service means
i) The intervening period to count for seniority and back wages on pay
revised during the intervening period (Raj.HC)
5A.693
Where the Labour Court by an award reinstated, the Government employee with
continuity of service and back wages, the State Government considered the same among other
things stating that the workman is entitled for back wages on the scale of pay he was entitled at the
time of termination implying there by that he was not entitled to the revised wages whereas the

Sec. 25F

Reliefs available for violation of the sections

2535

High Court held that since the continuity of service has been granted which is not only for seniority
but also for the entitlement for intervening period and therefore the workman is entitled for
fixation of pay at least at the minimum of revised pay scales or fixation due from 1.9.1976 and
1.9.1981 during the intervening period of the award. This therefore can be computed u/s. 33C(2) of
the Act.
State of Rajastan & Ors. v. Harish Chandra Sharma & Ors., 2007 (112) FLR 968 (Raj.HC)
Note: also refer the following case
M/s. U.P. State Sugar Corporation Ltd. v. Presiding Officer, Labour Court, U.P. Gorakhpur & Ors.,
2005 LIC 2222 (All.HC)

ii) If reinstated pending final result of writ petition, increments falling due
during the period of employment to be paid along with wages (P&H.HC)
5A.694
Workman who was terminated and reinstated by management was entitled to
increments along with wages for the a period during which he would have been entitled to had he
not been out of employment.
Punjab State Electricity Board v. P.O. Labour Court, Bhatinda, 1995 I LLJ 666 : 1995 I LLN 194
(P&H.HC)

2. When can be
i) When retrenchment and suspension are declared void employee entitled to
be in continuous service (P&H.HC)
5A.695
Non-compliance whether with Clause (a) of Sec. 25F or with Clause (b) thereof will
equally render a retrenchment invalid, void and inoperative. A void order has in law to be treated
as having never been passed. The conclusion therefore, is that the workmen, whose suspension and
retrenchment orders are found by a competent Court or Tribunal to be illegal workman entitled to
be treated to be continuing in service.
Workmen of M/s. Kundan Iron & Steel Industries, Chheharta v. The P.O. Labour Court, Jullundur &
Anr., 1972 (25) FLR 50 : 1971 LIC 1213 (P&H.HC)

ii) When workman without giving notice or wages in lieu of it is terminated

(Ori.DB)
5A.696
Termination of workman without giving notice or wages in lieu of notice being made
in violation of Sec. 25F was set aside and directed to be continued in employment.
Rabindra Kumar Prusty & Ors. v. Government of Orissa & Ors., 1986 I LLN 189 : 1985 LIC 1770
(Ori.DB)
In view.accordingly. (Page: 195, Para: 14)

iii) When termination in violation of Sec. 25F is deemed to be non-est or void

ab-initio (S.C.2J)
F 5A.697 If the service of an employee is terminated in contraventions of Sec. 25F of the Act
then the order of termination is void ab-initio and employee is entitled to continuity of service with
back wages.
Narotam Chopra v. P.O. Labour Court, 1994 III LLJ 252 : 1988 (57) FLR 218 : 1988 II CLR 220 : 1989
SCC (L&S) 565 : 1989 Suppl. (2) SCC 97 (S.C.2J)

2536

Chapter VA Lay-Off and Retrenchment

Sec. 25F

It is now well settled that if the services of an employee are terminated in violation of Section 25(F) of
the Industrial Disputes Act, 1947, the order of termination is rendered ab initio void and the employee
would be entitled to continuity of service along with his backwages, see Gammon India Ltd. v. Niranjan
Dass MANU/SC/0237/1983. We accordingly allow the appeal and set aside the order of the High Court
and modify the Award of the Labour Court and we further direct that the appellant is entitled to
reinstatement with full backwages and other allowances. (Page: 252/253, Para: 3)
5A.698
When termination is violative of Sec. 25F, it is deemed to be non-est and hence the
workman was deemed to be in service on the appointed day i.e. 15.10.1980 and consequently
entitled to continue in service in the Government company after nationalisation.
National Bicycle Corporation of India Ltd. v. Gopal B. Keluskar & Ors., 2002 (95) FLR 751 (Bom.DB)
Note: also refer the following cases where continuity of service was awarded by the Courts
Amalgamated Machines Corporation v. P.O. Industial Tribunal & Ors., 2001 II LLJ 309 : 2002 (92) FLR
211 : 2001 III LLN 1036 : 2001 LLR 1037 (Del.HC)
Rajendra Bhagat & Ors. v. Labour Court, Ranchi, & Anr, 2004 IV LLN 1073 (Jhar.HC)

h) Relief of Compensation in lieu of reinstatement is proper

1. When can be
i) When termination is as a result of closure of unit (S.C.2J)
F 5A.699 The services of Chowkidar appointed as a daily wager without any appointment letter
and worked from August 1984 to July, 1992 was terminated on closure of production unit. On
raising a dispute Labour Court reinstated him with full back-wages for violation of the section
which was affirmed by High Court. But the Supreme Court held that since he was appointed as a
daily wager he does not hold any post in Government for protection under Art. 311 of the
constitution nor was he entitled to reinstatement since the unit was closed despite violation of Sec.
25F of the Act and interest of justice would be met if monetary compensation of Rs. 10,000 is
granted to him instead of full back wages.
State of M.P. & Ors. v. Arjunlal Rajak, 2006 II LLJ 104 : 2006 (109) FLR 156 : 2006 II LLN 842 : 2006
LIC 1319 : 2006 LLR 381 : 2006 (2) SCC 711 : 2006 SCC (L&S) 429 (S.C.2J)
It is beyond any doubt or dispute that a daily wager does not hold a post. The Forest Department is a
wing of the State. Its employees hold a status. For acquiring that status and for obtaining the
constitutional protection in terms of Article 311 of the Constitution of India, all appointments must be
made in conformity with the Constitutional Scheme as laid down under Articles 14 and 16 of the
Constitution of India as well as the rules made in terms of the proviso to Article 309 of the Constitution of
India or in terms of a Legislative Act. Concededly, while appointing the respondent, the constitutional
provision or the statutory provisions had not been followed. The rights and liabilities of the parties are,
therefore, governed by the terms of the contract and/or the provisions of the statute applicable in relation
thereto. The respondent was not given any offer of appointment in writing. He admittedly worked in
different departments of the State. His last posting was in the production division of Forest Department in
the District of Guna which as noticed above stood abolished. It is, however, true that while terminating
the services of the respondent the appellants had not complied with the mandatory requirements of
Section 25F of the Industrial Disputes Act and, thus, ordinarily, the workman could have been directed to
be reinstated with or without back wages, but it is also well. (Page: 105/106, Para: 5)
Keeping in view the fact that the services of the respondent were terminated on the ground that the
production unit in which he was working itself had been closed, we are of the opinion that interest of
justice would be sub-served if a monetary compensation of Rs. 10,000/- is granted to him. It, however,
goes without saying that he would be entitled to the wages for the period he had actually worked pursuant
to or in furtherance of the order of the Labour Court and as also of the High Court upon his reinstatement.
The award of the Labour Court as also the judgment of the High Court are set aside.
(Page: 107, Para: 10)

Sec. 25F

Reliefs available for violation of the sections

2537

5A.700
The employer calculated retrenchment compensation with divider of 30 instead of 26.
Therefore, Tribunal directed reinstatement of the workman for short payment. Single Judge
dismissed the application filed by employer. Division Bench held that the award by Tribunal was
justified but in view of the closure of establishment granted compensation instead of reinstatement.
DBH International Ltd. v. Their Workmen, rep. By Transport and Dock Workers Union and Anr., 2005
III LLJ 434 : 2005 (106) FLR 735 : 2005 III LLN 414 : 2005 II CLR 679 (Bom.DB)
Note: also refer to the following case in the above context
Shivshankar S. Pathak & etc. v. State of Gujarat & Ors., 1997 LIC 3280 (Guj.HC)

ii) When employee worked only for one year and not appointed as per
recruitment rules (S.C.2J)
F 5A.701 The workman was terminated in violation to Sec. 25F. On raising industrial Dispute in
1986 Labour Court granted reinstatement with full back-wages from the year 1986. High Court
refused to interfere with the award. On employers appeal, Supreme Court set aside the award of
Labour Court and granted compensation instead of reinstatement because the workman was
employed only for a period of one year, there was nothing on record to show that he was employed
in accordance with recruitment rules not any material to show that the post was regular, further
dispute was raised with a delay of twelve years.
U.P. State Road Transport Corporation v. Man Singh, 2006 (111) FLR 323 : 2006 (7) SCC 752 : 2006 III
LLJ 1058 (S.C.2J)
The respondent admittedly raised a dispute in 1986, i.e. after a period of about 12 years. It may be true
that in an appropriate case, as has been done by the Labour Court, delay in raising the dispute would have
resulted in rejection of his claim for back-wages for the period during which the workman remains absent
as has been held by this Court in Gurmal Singh v. Principal. Government College of Education and Ors.
2000 (9) SCC 496. But the discretionary relief, in our opinion, must be granted upon taking into
consideration all attending circumstances. The appellant is a statutory Corporation. Keeping in view the
fact that the respondent was appointed on a temporary basis, it was unlikely that he remained unemployed
for such a long time. In any event, it would be wholly unjust at this distance of time i.e. after a period of
more than 30 years, to direct reinstatement of the respondent in service. Unfortunately, the Labour Court
or the High Court did not consider these aspects of the matter. (Page: 754, Para: 7)
Keeping in view the peculiar facts and circumstances of this case, we are of the opinion that in stead and
place of the direction for reinstatement of the respondent together with back-wages from 1986, interest of
justice would be subserved if the appellant is directed to pay a sum of Rs. 50,000/- to him.
(Page: 754, Para: 8)

iii) When the employee is not interested in continuing the job (S.C.3J)
F 5A.702 The employee working as a typist was discharged from service without payment of
compensation in terms of Sec. 25F despite her working continuously for a period of 240 days
during the relevant year. The Tribunal held her discharge as illegal and ordered her reinstatement
with 50% back-wages. The Single Judge also confirmed her reinstatement but ordered no
back-wages. The appeal before Division Bench against this order is dismissed. The Supreme Court
held that considering the fact that the employee is not interested in continuing the job even after
her reinstatement, she be paid compensation of Rs. 25000 and that it is not mandatory to order
reinstatement in all cases of non-compliance of the conditions prescribed in Sec. 25F of Industrial
Disputes Act.
Employers, Management of Central P & D Inst., Ltd. v. Union of India & Anr., 2005 (104) FLR 373 :
2005 I LLN 653 : 2005 LIC 2251 : 2005 I CLR 494 : 2005 LLR 132 : 2005 AIR (SC) 633 (S.C.3J)
But it is to be noticed that it is not always mandatory for the Courts to order reinstatement in cases where
there has been violation of Section 25F of the Act (Chapter 5 A of the Standing Orders) which can be
substituted for good reasons by awarding compensation. In the normal course we would not have

2538

Chapter VA Lay-Off and Retrenchment

Sec. 25F

interfered with the order of reinstatement directed by the Industrial Court. In this case we think the
concerned work-person is not interested in going back to her duty on terms and conditions as were
applicable to her on the date of her discharge which according to the record was as a daily wager. From
the material on record and the submission of the learned counsel for the appellant it is clear that the
employee has not joined duty as directed by the Industrial Tribunal probably because she is otherwise
settled in some other job. (Page: 2252, Para: 7)
Be that as it may, non-compliance of the requirement of Chapter 5A of the Standing Orders by the
appellant cannot be condoned. Therefore in substitution of the order of reinstatement directed by the
Industrial tribunal as confirmed by the High Court below we order that the appellant pay a sum of
Rs.25,000 as compensation to the said employee Miss Aleyamma Samuel. (Page: 2252, Para: 8)

iv) When post itself is abolished (Ori.DB)

5A.703
Where termination of services is due to abolition of post on account of financial loss,
compensation of Rs. 15000 was held adequate relief in lieu of reinstatement.
Bharat Kumar Sekhar v. P.O. Labour Court, Bhubaneswar, & Ors., 1993 III LLJ 659 : 1988 II LLN 767 :
1988 LIC 1261 (Ori.DB)
From.compensation. (Page: 661, Para: 5)

v) When retrenchment is bonafide though in violation of Sec. 25F (Mad.DB)

5A.704
Retrenchment was bonafide but made without compliance of Sec. 25F, Labour Court
awarded compensation in lieu of reinstatement on the facts of the case and it was held to be
justified.
Management of Coimbatore Pioneer B. Mills v. P.O. Labour Court, Coimbatore & Ors., 1979 I LLJ 41 :
1979 (54) FJR 236 : 1979 (39) FLR 236 : 1979 I LLN 81 (Mad.DB)
.We have.of the Labour Court. (Page: 45, Para: 10)
5A.705
When retrenchment is bona fide and justified, compensation in lieu of reinstatement
was held proper and can be so awarded by the Labour Court inspite of violation of the section and
hence the award of reinstatement was set aside with the direction to pass orders fixing suitable
compensation.
Mount Mettur Pharmaceuticals Ltd. v. Second Additional Labour Court, Madras & Anr., 1985 II LLJ
505 : 1985 (67) FJR 60 : 1985 I LLN 801 (Mad.DB)
.It is not.workmen. (Page: 508, Para: 7)
Note: also refer to the following cases
Shashikant Bhagwant Kulkarni v. Indian Red Cross Society, Solapur & Anr., 2000 (84) FLR 114 : 2000 I
LLN 172 : 1999 II CLR 993 : 2000 I LLR 20 (Bom.HC)

vi) When employee does not have prescribed qualification to carry out or
discharge duties of the post (Bom.DB)
5A.706
Reinstatement is not a mandatory relief in case of breach of Sec. 25F and 25G hence
compensation awarded by Labour Court in lieu of reinstatement on finding that employee does not
have prescribed qualification to carry out or discharge duties of the post was held to be justified.
Vishwas Bhimrao Dhumal v. Kopargaon Nagarpalika & Ors., 1993 III LLJ 772 : 1988 (57) FLR 107 :
1988 II LLN 385 : 1988 I CLR 569 (Bom.DB)

Sec. 25F

Reliefs available for violation of the sections

2539

The labour.qualification. (Page: 774, Para: 6)

The learned.faulted with. (Page: 774, Para: 6)

vii) When workman offered to take employment afresh through selection

process and he worked only for 230 days (P&H.DB)
5A.707
Labour Court held that termination was unjustified as it was not as per Sec. 25F but
instead of granting reinstatement, awarded compensation and the same was upheld since
workman were given an opportunity to take employment afresh by participating in selection
process also they had worked for 230 days, quantum of compensation was modified.
Mohinder Singh & Ors. v. Ropar Central Co-op. Bank, Ltd., Ropar, 1997 IV LLN 364 (P&H.DB)
.The Labour.each case. (Page: 367, Para: 9)
Since.of justice. (Page: 367, Para: 9)

viii) When termination is set aside on technical reason of miscalculation of

compensation and since 14 years lapsed (S.C.3J)
F 5A.708 In a case of dismissal held wrongful, it is held that award of retrenchment
compensation u/s. 25F for such unjustified and premature termination of employment must be
held inadequate instead of that proper compensation for unjustified and premature termination of
employment should have been given and this compensation ought to have been something more
than what he would have got as retrenchment compensation in a proper case. Accordingly while
setting aside the retrenchment compensation of 15 days for each completed year of service granted
to him by the Appellate Tribunal, the Supreme Court increased the compensation for unjustified
and premature termination of service by another 15 days per year making it one month
compensation for a year of service.
Anglo-American Direct Tea Trading Co. Ltd. v. Workmen of Nahortoli Tea Estate, 1961 II LLJ 625 :
1961-62 (20) FJR 523 : 1962 (4) FLR 65 (S.C.3J)
It is not disputed that where a workman is entitled to reinstatement but for some reason the tribunal does
not consider it proper to give that relief, compensation is awarded to such workman in lieu of that relief.
There is, however, no scope for allowing retrenchment compensation in a case of this kind, for there is no
question of any retrenchment as such where the tribunal decides not to pass an order of reinstatement but
to give compensation instead. Strictly speaking, therefore, the Appellate Tribunal was wrong in giving
retrenchment compensation as well as compensation for unjustified and premature termination of
employment. What it could and should have given was compensation only for unjustified and premature
termination of employment. In effect, however, the order of the Appellate Tribunal works our to giving
one months average pay for each year of completed service for unjustified and premature termination of
employment in this case. We feel that though the Appellate Tribunal was wrong in splitting up the
compensation in two parts as it did, there would have been no reason or interfering with its order if it had
given compensation for unjustified and premature termination of employment at the rate of one months
average pay per completed year of service. Now, in a case of proper retrenchment law allows
compensation at the rate of fifteen days average pay for each completed year of service; it stands to reason
that where a workman loses his job on account of unjustified and premature termination of employment,
he should get something more than what he would have got as compensation if it was a proper case of
retrenchment. In such a case we do not think that the award of one months average pay for each
completed year of service would be an excessive compensation for unjustified and premature termination
of employment. Therefore, though the order of the Appellate Tribunal may not be quite correct in form
and though some of the words used in the last part of the decision seem to suggest that the Appellate
Tribunal was punishing that the appellant which it should not and could not do, the order as whole giving
one months average pay for each completed year of service as compensation does not seem to us
unreasonable or unjust. In the circumstances we see no reason to interfere. (Page: 628/629, Para: 3)

2540

Chapter VA Lay-Off and Retrenchment

Sec. 25F

5A.709
The workman worked for 2 years as casual workman followed by 1 year on regular
pay-scale. Employer terminated him as per Sec. 25F taking into account 1 year service of workman
on regular pay-scale. On reference, Labour Court held that the dismissal was bad as two year
service of workman as casual was not taken into consideration while calculating compensation.
Therefore, ordered reinstatement of the workman. Single Judge upheld Labour Courts order. On
appeal, Division Bench modified the order of Labour Court and awarded compensation instead of
reinstatement because termination was set aside on a technical ground and 14 years passed after
termination.
State of Rajasthan & Ors. v. Ramesh Kumar & Anr., 2005 IV LLN 770 (Raj.DB)
Note: also refer o the following case
Nehru Yuva Kendra Sangathan v. Union of India & Ors., 2001 I LLJ 191 : 2000 (86) FLR 450 : 2000 LIC
2306 : 2000 II LLR 776 (Del.HC)
Dharamveer Singh v. State of Rajasthan & Ors., 2000 (85) FLR 137 (Raj.HC)

ix) When there is lapse of longer period after retrenchment more so when
work man was appointed on temporary basis/daily wage basis/adhoc basis
and also they can be gainfully employed (S.C.2J)
F 5A.710 Workman was appointed in 1974 on temporary basis. On committing misconduct he
was terminated in 1975. On which Industrial Dispute was raised in 1986. Labour Court found that
employer had not complied with mandatory provision of Sec. 25F and set aside the order of
termination and granted back-wages from 1986. On appeal High Court refused to interfere as
Labour Court has indisputable jurisdiction to grant award but while exercising the power it should
have taken into consideration relevant factors. Keeping in view that reinstatement was granted
after a period of 30 years and back-wages from 1986, High Court held that interests of justice
would be subserved if it is directed to pay him a sum of Rs. 50,000 as it is unlikely that he remained
unemployed for such long period.
U.P. State Road Transport Corporation v. Man Singh, 2006 (111) FLR 323 : 2006 III LLJ 1058 : 2006 III
CLR 698 : 2006 LLR 1151 : 2006 SCC (L&S) 1776 : 2006 (7) SCC 752 (S.C.2J)
The appellant before us is a Corporation constituted under the Road Transport Corporation Act. The
respondent was appointed w.e.f. 20.4.1974 on temporary basis. His services were terminated on
23.07.1975. He is said to have been paid one months salary in lieu of notice. Some allegations had also
been made that he committed misconduct. (Page: 324, Para: 1)
On a finding that in retrenching the respondent the appellant failed to comply with the mandatory
requirements of Section 25F of the Industrial Disputes Act, 1947, the Labour Court although set aside the
order of termination of the services of the respondent but granted back-wages only from 1986. The High
Court in the writ petition filed by the appellant refused to interfere therewith. (Page: 324, Para: 3)
The respondent admittedly raised a dispute in 1986, i.e. after a period of about 12 years. It may be true
that in an appropriate case, as has been done by the Labour Court, delay in raising the dispute would have
resulted in rejection of his claim for back-wages for the period during which the workman remains absent
as has been held by this Court in Gurmal Singh v. Principal. Government College of Education and Ors.
2000 (9) SCC 496. But the discretionary relief, in our opinion, must be granted upon taking into
consideration all attending circumstances. The appellant is a statutory Corporation. Keeping in view the
fact that the respondent was appointed on a temporary basis, it was unlikely that he remained unemployed
for such a long time. In any event, it would be wholly unjust at this distance of time i.e. after a period of
more than 30 years, to direct reinstatement of the respondent in service. Unfortunately, the Labour Court
or the High Court did not consider these aspects of the matter. (Page: 325, Para: 5)
Keeping in view the peculiar facts and circumstances of this case, we are of the opinion that in stead and
place of the direction for reinstatement of the respondent together with back-wages from 1986, interest of
justice would be subserved if the appellant is directed to pay a sum of Rs. 50,000/- to him.
(Page: 325, Para: 6)

Sec. 25F

Reliefs available for violation of the sections

2541

5A.711
The termination of a guard, on daily wages was contested in High Court for
non-compliance of Sec. 25F of the Act as he had continuously worked from 1.2.1990 to 17.5.1994.
The Single Judge allowed the petition. The employer contested the same in Division Bench. The
Division Bench by modification ordered a lump sum payment of Rs. 50,000 in lien of reinstatement
since nine years elapsed and employee will not be benefited, as he will only to be reinstated on daily
wages basis also he may be gainfully employed by now and his reinstatement may create
complications also and hence one time settlement was ordered.
State of Rajasthan & Ors. v. Rashid Mohammed, 2006 (108) FLR 727 (Raj.DB)
5A.712
Considering that the employee had barely worked in the establishment as accounts
clerk for a period of 240 days when his services were terminated in view of his work and conduct as
an ad hoc employee and that his services were not regularised and thirteen years had passed since
his termination Bench held that Single Judge was right in directing payment of compensation
instead of reinstatement with backwages.
Murari Lal Sharma v. Nehru Yuva Kendra Sangathan, 2002 (93) FLR 919 : 2002 II CLR 480 : 2002 LLR
464 (Del.DB)
5A.713
A workman had been terminated without complying with Sec. 25F of the Act, such
termination was held to be illegal and void. Taking into consideration the plea taken by the
Corporation before the Tribunal that only a skeleton consultant office was functioning at Ranchi
and more than 12 years had been passed after the retrenchment, instead of reinstatement, the
workman was allowed 50% of the arrears of wages as lump sum payment.
Sudipta Rai @ S. Roy v. P.O. Labour Court, Ranchi & Ors., 2002 (95) FLR 648 : 2003 LIC (sum) 27
(Jhar.HC)
Note: also refer to the following cases which were similarly decided
When workman terminated is a daily wager and the post was manned by a duly recruited person.
Municipal Board v. Labour Court & Ors., 2004 LIC 1885 (Raj.HC)
Rajinder Singh C/o. Amritsar Transport Workers Employees Union (Regd.) v. State of Punjab & Ors.,
2000 I LLJ 299 : 2000 (96) FJR 23 : 2000 (84) FLR 556 : 1999 II LLN 494 (P&H.HC)
J.N. Bhardwaj v. Hindustan Insecticides Ltd., 1995 LLR 998 (Del.HC)
Lorrik Yadav v. Labour Court & Ors., 2003 (97) FLR 888 : 2003 LLR 722 (Raj.HC)
Lumpsum compensation granted to workman instead of reinstatement and 20% back-wages as
the employee had delayed coming to the Court and there was now a delay of 29 years after his
termination.
State of Rajasthan & Anr. v. Amar Singh & Anr., 2007 LIC 798 : 2007 I CLR 1052 : 2007 LLR 252
(Raj.HC)
Termination occurred 20 year back without complying with Sec. 25F is a fit case for lump sum
compensation instead of reinstatement.
Food Corporation of India v. Union of India & Anr., 2007 (113) FLR 337 : 2007 LLR 591 (Jhar.HC)
Compensation in lieu of reinstatement adequate for violation if dispute is 16 years old.
Pramod Kumar & Anr. v. Presiding Officer & Anr., 2006 I LLJ 158 : 2006 I LLN 254 : 2006 LIC 76 :
2006 LLR 302 (Del.DB)
Workman was terminated 21 years ago, and he was engaged in an independent work, granted
lumpsum compensation of Rs. 1 lac.
M/s. Advance Engineering Corporation v. Presiding Officer, Labour Court No. II & Anr., 2007 (112)
FLR 524 : 2007 LIC 807 : 2007 LLR 198 (Del.HC)
District Red Cross Society v. Surjit Kaur & Anr., 2003 III LLN 1160 (P&H.HC)
The Management of the Chief Engineer Transmission Project Grid Corporation of Orissa Ltd. v. State of
Orissa & Ors., 2005 LIC 3441 (Ori.HC)

2542

Chapter VA Lay-Off and Retrenchment

Sec. 25F

Compensation in lieu of reinstatement is proper when the workman did not serve for 14 years
when the dispute was pending.
Babu Ram Sagar v. The Presiding Officer, Labour Court & Anr., 2006 LLR 1122 (Del.HC)
Compensation in lieu of reinstatement with back-wages may be appropriate, as relief was granted
after a lapse of 25 years.
The Employer, in Relation to the Management of Central Bank of India, Kanpur v. P.O. Central
Government Industrial Tribunal-cum-Labour Court, Kanpur & Ors., 2003 (97) FLR 895 (All.HC)
Compensation can be granted in lieu of reinstatement since workman is a daily wager and
worked for four years.
Devi Prasad v. The Sub-Divisional Officer (Land Conversion) & Ors., 2004 (101) FLR 121 : 2004 III
LLN 419 (Raj.HC)
Lala Ram v. State of Rajasthan & Anr., 2002 I CLR 421 : 2001 LLR 802 (Raj.HC)
Nagar Palika, Lalsot v. Babu Lal & Ors., 2002 II CLR 1045 (Raj.HC)
Sushil Kumar Mathur v. State of Rajasthan & Ors., 2001 III LLJ 286 : 2001 I LLN 429 : 2000 LIC 2756 :
2001 I CLR 214 (Raj.HC)
University of Delhi v. R.K. Sharma & Ors., 2003 LLR 893 : 2003 (99) FLR 303 (Del.HC)
B.N. Elias & Co. Pvt. Ltd. v. Fifth Industrial Tribunal, West Bengal & Ors., 1965 II LLJ 324 : 1961 II LLJ
14 : 1965-66 (28) FJR 257 (Cal.HC)
Note: also refer to the following case on the above lines in case of casual workers
R. Baskar & Ors. v. M/s. Auto Care Centre, Chennai & Ors., (2) P.O. First Additional Labour Court,
Madras, 2003 I LLJ 700 : 2003 (96) FLR 75 : 2002 IV LLN 518 (Mad.HC)
Compensation in lieu of reinstatement, held proper, casual worker if terminated
L&T. McNeil Ltd., Madras v. P.O. Principal Labour Court, Madras & Anr., 2001 II LLJ 1655 : 2001 III
LLN 807 (Mad.HC)
R. Baskar & Ors. v. M/s. Auto Care Centre, Chennai & Ors., (2) P.O. First Additional Labour Court,
Madras, 2003 I LLJ 700 : 2003 (96) FLR 75 : 2002 IV LLN 518 (Mad.HC)
Reinstatement after a prolonged period of termination is not a suitable relief than lump sum
compensation
Vikash Adhikari & Anr. v. Judge, Labour Court, Bikaner & Anr., 2007 (113) FLR 37 (Raj.HC)

x) When workmen terminated were casual employees and did not work for
240 days (S.C.3J)
F 5A.714 The Supreme Court granted 75% back-wages with benefit of Sec. 25F to 100
permanent workmen who were held illegally terminated but not reinstated in as much as they are
employed elsewhere but ordered 50% back-wages to remaining 239 permanent workmen similarly
terminated but were not employed with orders for their reinstatement. The difference in
back-wages was explained as flowing from the fact of reinstatement or its absence. Similarly casual
employees 74 in number with service more than nine months were reinstated but 57 with less than
240 days of service were not in accordance with the Industrial law but awarded flat rate of
compensation.
Gujarat Steel Tubes Ltd., etc. v. Gujarat Steel Tubes Mazdoor Sabha & Anr., 1980 I LLJ 137 : 1980 (56)
FJR 137 : 1980 (40) FLR 152 : 1980 I LLN 230 : 1980 LIC 1004 : 1980 SCC (L&S) 197 : 1980 AIR (SC)
1896 : 1980 (2) SCC 593 (S.C.3J)
While reinstatement is refused for these 100 workmen, when shall they be deemed to have ceased to be
in service for drawal of terminal benefits? Their discharge orders having been quashed, they remain in
service until today. We concluded the arguments on Aug. 3, 1979 and on the eve of the closure of
counsels submissions certain inconclusive settlement proposals were discussed. We, therefore, consider
August 3, 1979 as a pivotal point the calendar with reference to which the final relief may be moulded.
We direct that the 100 workmen for whom reinstatement is being refused will be treated as in service until
August 3, 1979 on which date they will be deemed to have been retrenched. We direct this step with a
view to pragmatise the situation in working out the equities. These 100 will draw all terminal benefits

Sec. 25F

Reliefs available for violation of the sections

2543

plus 75 per cent of the back wages. This scaling down of back pay is consistent with the assumption that
somewhere in the past they had secured alternative employment. The long years and the large sum
payable also persuade us to make this minor cut. Of course, in addition, they will be entitled to
retrenchment benefits under S. 25F of the Act (Page: 175/176, Para: 153)
The remaining 139 will be awarded 50 per cent of the back wages since we are restoring them. The High
Court has adopted this measure and so we do not depart from it. The case of the hundred stands on a
slightly different footing, because some compensation in lieu of refusal of reinstatement is due to them
and that also has entered our reckoning while fixing 75 per cent for them. The computation of the wages
will be such as they would have drawn had they continued in service and on that the cut directed will be
applied. (Page: 176, Para: 154)
We have disposed of the case of the permanent workmen except to clarify that in their case continuity of
service will be maintained and accrual of benefits on that footing reckoned. The next category relates to
casual employees, 131 in number of whom 57 have less than nine months service. the policy of the Act
draws a distinction between those with service of 240 days and more and others with less. The casuals
with less than nine months service are 57 in number and we do not think that this fugitive service should
qualify for reinstatement especially when we find a number intermediate recruits, with longer though
untenable service, have to be baled out.
We decline reinstatement of these 57 hands. The other 74 must be reinstated although notionally but
wrongly they are shown as casual. In the life sense, all mortals are casuals but in the legal sense, those
with a record of 240 days on the rolls, are a class who have rights under industrial law. We direct the 74
long-term casuals aforesaid to be reinstated but not the 57 short-term ones. To this extent, we vary the
High Courts order. (Page: 176, Para: 155)

xi) When employee was a daily wager and the company is engaged in
manufacture of missiles which is a sensitive one requiring verification of
antecedents (AP.HC)
5A.715
The workman was appointed as helper on daily wages. His termination was held bad
by Tribunal since Sec. 25F was not complied with and compensation in lieu of reinstatement
granted to him. Claiming reinstatement workman moved High Court which upheld the order of
Labour Court as the employer engaged in manufacture of missiles which was very much sensitive
and reinstatement would require verification of workmans antecedents.
Md. Hyder & Ors. etc. v. Industrial Tribunal-II, Hyderabad & Anr., 2006 LIC 26 : 2006 I CLR 663
(AP.HC)

xii) When worlkman reached superannuation (P&H.DB)

5A.716
The workman was terminated without complying with Sec. 25F but instead of
reinstatement compensation was granted as he had reached the age of superannuation. Writ
petition against the award was rejected, hence workman approached Division Bench, which
upheld order of compensation and enhanced the amount of compensation from Rs. 4,000 to
Rs. 20,000.
Mohinder Singh Sohan Pal v. Presiding Officer, Labour Court, U.T. Chandigarh & Anr., 2006 I LLJ 556
: 2006 IV LLN 975 : 2005 III CLR 1036 : 2006 LLR 159 (P&H.DB)
Note: also refer to the following case
K.H. Pandhi v. Presiding Officer, Additional Labour Court & Anr., 2004 II LLJ 877 : 2004 (106) FJR 943
: 2004 (101) FLR 518 : 2004 II LLN 657 : 2004 LIC 1401 : 2004 LLR 409 (Del.HC)
5A.717
Technician was appointed on ad hoc basis; his services were terminated as per terms
and condition of letter of appointment. Labour Court found that termination was in contravention
of provisions of Sec. 25F of the Act and granted compensation of Rs. 4000 in lieu of reinstatement.
Single Judge held that as the workman had been appointed for a specific period and assuming that
there had been a violation of the provisions of Sec. 25F, compensation alone was the proper relief

2544

Chapter VA Lay-Off and Retrenchment

Sec. 25F

under the circumstances. Division Bench upheld the order; stated workman would have been
gainfully employed after his services had been terminated. As he has attained the age of
superannuation, the question of reinstatement does not arise. However, increased the amount of
compensation from Rs. 4000 to Rs. 20,000 holding the same clearly inadequate.
Mohinder Singh Sohan Pal v. Presiding Officer, Labour Court, U.T. Chandigarh & Anr., 2006 IV LLN
975 : 2006 I LLJ 556 : 2005 III CLR 1036 : 2006 LLR 159 (P&H.DB)
The workman-appellant.learned Single Judge. (Page: 975, Para: 1)
We too are of the opinion.from Rs. 4000 to 20,000. (Page: 975, Para: 3)

xiii) When workman is a temporary supervisor and termination is illegal for

mere technical violation of the section by non-payment of retrenchment
compensation (Bom.HC)
5A.718
A temporary civil supervisor was terminated without compliance with Sec. 25F of
Industrial Disputes Act and no retrenchment compensation was paid. The High Court held that the
termination was technically illegal hence the compensation of Rs. 1,50,000 was granted which
could be paid in three instalment.
Sharad Dinkar Dongare v. R.V. Ingale, Member, Industrial Court, Solapur & Ors., 2001 III LLJ 937 :
2001 (88) FLR 235 : 2000 IV LLN 994 : 2001 I CLR 143 (Bom.HC)

xiv) When reinstatement is not insisted by workman in his petition (Raj.DB)

5A.719
When the services of the employee was terminated without compliance of Sec. 25F
though working continuously for a period of six years, the matter came to be referred to Labour
Court. The Labour Court did not grant reinstatement and back-wages but ordered payment of Rs.
11,500 as compensation. The Division Bench enhanced the compensation to Rs. 75,000 holding the
termination illegal being in contravention of Sec. 25F of the Act as reinstatement was not insisted.
Vikram Singh v. District Education Officer, (Primary Education), Banswara & Ors., 2006 (108) FLR
725 (Raj.DB)
Note: also refer to the following case similarly decided
R.Shivanna v. M.P. Nagaraja Powerloom Factory & Anr., 1987 (71) FJR 160 : 1988 I LLN 219
(Karn.HC)

xv) When the job performed by employees in fast food centers is such that they
can easily find other jobs (S.C.2J)
F 5A.720 Employee employed in fast food centers and tourist complexes of corporation which
were closed and were handed over to the bus stands of transport dept in compliance of policy
decision of State Government as they were running into loss, Court considered the fact that
retrenched employees were daily wagers not recruited through the employment exchange etc. nor
regularized in service and their work of cooking, cleaning are of such a nature that they can be
easily employed anywhere hence reinstatement after a lapse of some years is unjustified and
ordered the payment of a sum of Rs. 70,000 to each of the workman in lieu of reinstatement
Haryana Tourism Corporation Ltd. v. Fakir chand & Ors., 2004 I LLN 14 : 2004 I LLJ 195 : 2003 (99)
FLR 821 : 2003 LIC 3678 : 2004 SCC (L&S) 36 : 2003 AIR (SC) 4465 : 2003 (8) SCC 248 (S.C.2J)
The respondents herein were engaged to work on dialywage basis. All of them continued as
dailywage employees and their services were terminated as early as 1991. (Page: 15, Para: 4)

Sec. 25F

Reliefs available for violation of the sections

2545

It is submitted on behalf of the appellant Corporation that some of the fast food centres and tourist
complexes of the appellant Corporation are still being run by incurring losses and that there are a large
number of workers already available for running them. It was submitted that if these respondents are
directed to be reinstated, it would only lead to excess manpower, disproportionate to the actual
requirement. It is, however, to be noted that these respondents had obtained an award for reinstatement as
the appellant Corporation did not raise appropriate contention before the Labour Court. However, it is
clear that in other cases the Labour Court accepted the plea raised by the appellant Corporation. These
respondents, as stated earlier, were mostly working as cook, cleaner, sweeper and gardener etc. and by the
nature of their work, they must have been doing similar work elsewhere if not regularly, at least
intermittently after their services were terminated. (Page: 15, Para: 5)
Having regard to the above facts, we do not think that the direction to reinstate them would be a just and
equitable solution at this distance of time. (Page: 15, Para: 6)
In the above circumstances and taking into account the amount of daily wages that were being paid by
them, we feel that the appellant Corporation can be directed to pay a sum of Rs. 70,000 to each of these
respondents by way of compensation in lieu of reinstatement. (Page: 15, Para: 7)

xvi) Mere compensation for truck driver proper when the truck driven by him
was sold (P&H.DB)
5A.721
Society employed truck driver and terminated his services without compliance of Sec.
25F but the truck which he was driving was sold, the society had no obligation to offer alternate
employment but compensation with interest was payable.
Ranjit Singh v. Presiding Officer, Labour Court & Anr., 2006 III LLJ 72 : 2006 (110) FLR 412 : 2006 II
LLN 817 (P&H.DB)

xvii) Compensation is proper when establishment was sold out (Karn.HC)

5A.722
The employer retrenched the workmen without complying with Sec. 25F and during
the pendency of the dispute regarding the retrenchment, sold the establishment to another. Labour
Court while adjudicating the dispute came to a finding that the termination was illegal and
directed the employer as well as the purchaser to re-employ the workman with 50% back wages.
Being aggrieved, employer and the purchaser moved High Court. High Court modified the award
of Labour Court and held that Labour Court was erred in granting re-employment since the sale
was not a sham transaction and the sale was a bonafide completed transaction and upheld the
award to the extent it was related to compensations and back wages.
ACC Ltd., HMP Cement Ltd. v. Smt. Shivamma & Ors., 1997 (91) FJR 552 : 1998 (78) FLR 680 : 1998 I
CLR 291 (Karn.HC)

xviii) When workman is part-timer and irregular in attendance (Raj.HC)

5A.723
The workman was employed as a part-time Chowkidar in a hostel. He was
discharged for poor attendance. Labour Court held that termination was illegal but awarded
compensation only and refused reinstatement as the workman was a part-timer and irregular also.
Before High Court the workman contended that there was no special circumstances for awarding
compensation alone and he was entitled to reinstatement with full back-wages. High Court upheld
the award of Labour Court, as the workman was irregular in job.
Babu Lal v. Labour Court, Jodhpur & Ors., 2004 II LLN 872 : 2004 (105) FJR 837 : 2004 LLR (Sum)
287 (Raj.HC)
The factual.of the Hostel.
.The Labour Court.Rs. 11,000. (Page: 873, Para: 2)
The petitioner.of reinstatement. (Page: 874, Para: 3)
Though the management.of reinstatement. (Page: 877, Para: 12)

2546

Chapter VA Lay-Off and Retrenchment

Sec. 25F

xix) Proper for just reasons like establishment is a defence establishment

(AP.HC)
5A.724
The Labour Court found that the casual workman employed by employer was
terminated in violation to Sec. 25F but instead of reinstatement, it granted compensation. On
workmans appeal, High Court upheld the Labour Courts since Labour Court denied
reinstatement on the ground that establishment was a defence establishment and it was also held
that Labour Court can grant reinstatement or compensation in lieu of reinstatement for just and
fair reason.
Md. Hyder & Ors. etc. v. Industrial Tribunal-II, Hyderabad & Anr., 2006 LIC 26 : 2006 I CLR 663
(AP.HC)

xx) Proper when establishment is running into losses (P&H.HC)

5A.725
Service of the employee who was transferred from Haryana State Federation of
Consumer Co-operative Wholesale Stores, Ltd. (CONFED) to Kohla Co-operative Agricultural
Credit Society Ltd. was terminated without complying Sec. 25F on ground that he had not
completed 240 days. Labour Court held that appointment of employee cannot be treated as a fresh
or de novo appointment. It held termination to be illegal, being in violation of Sec. 25F, awarded
compensation in lieu of reinstatement as the society was running in loss. Even High Court upheld
the decision.
Kitab Singh & Ors. v. P.O. Labour Court, Rohtak, & Ors., 2003 (99) FLR 1151 : 2003 IV LLN 383 :
2003 III CLR 636 (P&H.HC)

xxi) When workman is engaged elsewhere after termination (P&H.HC)

5A.726
The services of the workmen were terminated on the ground of closure of unit, but
workmen moved Labour Court contending that the termination really was a case of retrenchment.
Labour Court held that the termination was illegal as the unit was being run in another name but
denied reinstatement as workmen got engaged elsewhere on termination of services and allowed
retrenchment compensation.
Nagesh Hosiery Mills v. State of Punjab & Ors., 1997 (91) FJR 618 : 1998 (79) FLR 184 : 1998 I LLN
307 : 1998 LLR (Sum) 288 (P&H.HC)

xxii) Mere compensation proper when appointment itself is not as per relevant
rules (Raj.HC)
5A.727
Workmen who were appointed as part time employees in the class IV group raised
claim for regularization and reinstatement. Labour Court held termination is illegal since
provisions of Sec. 25F is not followed and awarded compensation of Rs. 15,000 to the workman.
High Court held that workmen were appointed as part time employees without following
provisions of relevant rules, it amounted to flagrant violation of rules and procedures.
Appointment on daily wages does not give right of regularization. Thus, Labour Court has not
committed any illegality in denying regularization to workman.
District Education Officer (EE), Banswara v. Bapu Lal & Anr., 2004 (101) FLR 1232 : 2005 IV LLN 787
(Raj.HC)
The facts and.hence the writ petition. (Page: 1232, Para: 2)
There is no.liable to be dismissed. (Page: 1234, Para: 6)
In State of Rajastan.part time employee. (Page: 1235, Para: 11)
In these instant.them compensation. (Page: 1235, Para: 12)

Sec. 25F

Reliefs available for violation of the sections

2547

xxiii) Proper when only consultant office was functioning at skeletal level
(Jhar.HC)
5A.728
In this case the employer pleaded after 12 years that only its skeletal consultant office
was functioning at Ranchi. The High Court held that the termination of services of the employee in
violation of Sec. 25F to be illegal and allowed 50% of arrears of wages in lieu of reinstatement,
which should be construed to be one time lump sum payment made in his favour in the interests of
justice. Therefore, the petition was dismissed.
Sudipta Rai @ S. Roy v. P.O. Labour Court, Ranchi & Ors., 2002 (95) FLR 648 : 2003 LIC (sum) 27
(Jhar.HC)

xxiv) Proper when workers are not interested to be reinstated to the post last
held (Mad.HC)
5A.729
When the Labour Court ordered reinstatement of workers who were in continuous
service for several years but the workers not interested to be reinstated to the post last held
therefore Labour Court ordered compensation instead of reinstatement, High Court affirmed the
orders of Labour Court and enhanced the amount of compensation in modification of the award.
R. Baskar & Ors. v. M/s. Auto Care Centre, Chennai & Ors., (2) P.O. First Additional Labour Court,
Madras, 2003 I LLJ 700 : 2003 (96) FLR 75 : 2002 IV LLN 518 (Mad.HC)

xxv) Mere compensation proper in case of termination of project employee

though illegal (S.C.2J)
F 5A.730 When the High Court interfering with the award of Labour Court gave a relief of
reinstatement with 50% back-wages, to a project employee, the Supreme Court modified the order
and instead directed to pay a sum of Rs. 50,000 as compensation and held that the High Court
should not have interfered with the award of Labour Court.
State of Rahasthan & Anr. v. Ghyanchand, 2006 SCC (L&S) 1779 : 2007 I LLJ 228 : 2007 (112) FLR
1066 : 2007 I CLR 1077 : 2007 LLR 557 (Sum) (S.C.2J)
Having heard the learned counsel for the parties, we are of the opinion that the High Court should not
have interfered with the quantum of damages awarded by the Labour Court in exercise of its jurisdiction
under Section 11-A of the Industrial Disputes Act. The Labour Court had directed payment of
compensation keeping in view the fact that the respondent was a project employee and was not in service
since June, 1990. We do not find any justification for the High Court to arrive at a conclusion that
reinstatement with 50% back wages will meet the ends of justice. (Page: 1779, Para: 2)

xxvi) When employer cannot provide continuous work (Bom.DB)

5A.731
Where the Labour Court held the termination of commercial Artist unjustified and
ordered his reinstatement without back wages, the Single Judge allowing the petition substituted
the reinstatement by compensation to the extent of Rs. 50, 000. The Division Bench upholding the
same observed that the workman was appointed in 1976 for 5 years and from 1981 the employer
could not provide continuous work to him and there was hardly any possibility of continuous work
and hence the award of compensation in lieu of reinstatement was held just proper reasonable as it
is a settled position in like circumstances.
Jayant Dhirajlal Kachalia v. Dowells Electro Works & Anr., 2007 (113) FLR 158 : 2007 I CLR 807 :
2007 LLR 416 (Bom.DB)

2548

Chapter VA Lay-Off and Retrenchment

Sec. 25F

xxvii) When terminated for unsatisfactory work (Bom.HC)

5A.732
Employee who had worked for 240 continuous days terminated for unsatisfactory
work in contravention of Sec. 25F, Labour Court awarded Rs. 10000 in lieu of reinstatement.
Samarth Samaj v. Manohar Shankar Sahastrabudhe & Ors., 2001 III LLJ 692 : 2000 IV LLN 177 : 2000
LIC 2315 (Bom.HC)

xxviii) When employer loses confidence in the concerned employee when

employer loses a customer by the conduct of workman (AP.HC)
5A.733
When an employer was exposed to the risk of losing a valuable customer due to the
conduct of employee, it was held to be sufficient for the employer to say he has lost confidence in the
concerned employee. It was held that payment of compensation with out reinstatement was valid.
National Insurance Co. Ltd., Hyderabad v. M. Viswanath & Anr., 1979 I LLJ 16 : 1978 (52) FJR 441 :
1977 I LLN 228 : 1977 LIC 242 (AP.HC)
Note: also refer to the following case
When the employee is a casual workman and lost confidence.
Zonal Manager, UCO Bank v. Ram Prakash Prajapati, 2007 II LLJ 664 : 2007 (114) FLR 314 : 2007 LIC
1229 : 2007 II CLR 65 : 2007 LLR 1007 (Raj.DB)

xxix) Mere compensation proper though Sec. 25F was violated if worker
abandons service by not joining at the place of transfer (Mad.HC)
5A.734
Workman working on daily rate basis covered by Sec. 2(s) of the Act was transferred
to another place where he did not join for 8-9 months without giving any justification for not
joining. It was held that worker abandoned services on his own but he was awarded compensation
as Sec. 25F of the Act was not complied with but other benefits were not given.
P. Kalivarthan v. P.O. Second Additional District Judge, Pondicherry, & Anr., 2002 I LLJ 443 : 2002 I
LLN 397 : 2001 LIC 3475 (Mad.HC)

xxx) When employer lost his confidence and termination though violative of
Sec. 25F was as per service rules (S.C.2J)
F 5A.735 The workman was terminated in violation of Sec. 25F but Labour Court held that
workman was terminated as per service rule, hence awarded compensation of one years wages in
lieu of reinstatement. Apex Court held that there is error apparent in award but instead of
reinstatement granted back wages for 12 years i.e. the period during which the workman remained
unemployed and also compensation of Rs. 50,000 since employer lost his confidence on the
workman and reinstatement under an unwilling employer is not desirable.
Sant Raj & Anr. v. O.P. Singla & Anr., 1985 AIR (SC) 617 : 1985 II LLJ 19 : 1985 (67) FJR 89 : 1985 (50)
FLR 452 : 1985 II LLN 42 : 1985 LIC 810 : 1985 I CLR 306 : 1985 (2) SCC 349 (S.C.2J)
The Labour Court while declining to grant the relief of reinstatement which should have ordinarily
followed, consequent upon its finding that the termination of service was bad and illegal, in exercise of its
discretion awarded one years wages as compensation in lieu of reinstatement on the ground that the
termination of service of each of the appellant was bona fide and not a colourable exercise of power in
accordance with service rules. There is thus an error apparent on the face of the record of the case
inasmuch as if the termination of service was according to service rules and was bona fide it could not be
simultaneously held to be illegal and invalid. Therefore the discretion was exercised on irrelevant and
extraneous considerations or considerations not germane to the determination.
(Page: 618, Para: 5)

Sec. 25F

Reliefs available for violation of the sections

2549

Dr. Chitley, learned counsel who appeared for the respondents attempted to take us through the evidence
with a view to persuading us that the employer even if it acted contrary to law, should not be burdened
with reinstatement because it had lost confidence in the appellants. The employer is a foreign
air-transport company. The workmen were loaders posted at Delhi Airport. In this far-fetched
hierarchical relationship, loss of confidence if it is to be considered a relevant factor would have hardly
impressed us. However, as the workmen are out of job from August 30, 1973 i.e. roughly for a period of
12 years, it is in their own interest, that instead of reinstatement in service under an unwilling if not a
hostile employer, adequate compensation would meet the ends of justice. Therefore, in the special facts
and circumstances of this case, though disagreeing with the reasons given by the Labour Court for
declining to grant the normal relief of reinstatement, we uphold the same but the meagre compensation
awarded by the Labour Court namely one years wages requires to be adequately and properly modified.
(Page: 618, Para: 6)
Dr. Chitley gave us, information about the last wages drawn by each of the workmen. That does not take
care of over-time allowance or bonus or other benefits that they enjoy roughly, the monthly pay packet of
each workman appears to be around Rs. 1,000. Each one of them was a loader which means doing manual
job. Each one of them is entitled to backwages in full for a period of 12 years. Each one was therefore
entitled to get Rs. 1,50,000 towards backwages. Adding to it the compensation in lieu of reinstatement in
the amount of Rs. 50,000, we are of the opinion that a total compensation in the amount of Rs. 2,00,000/to each appellant would meet the ends of justice. (Page: 618, Para: 7)

xxxi) When reinstatement is not possible due to peculiar circumstances like

cancellation of work permit which is necessary to enter port area (S.C.3J)
F 5A.736 The Industrial Court came to the conclusion that the termination of the employee was
unjustified and yet awarded compensation of paltry Rs. 15000, therefore Supreme Court held that
when termination was found to be illegal, reinstatement with full back wages ought to have been
awarded but considering the special facts and subsequent developments in which Bombay Port
Trust had refused to grant the said employee permission to enter the port premises, an adequate
compensation of Rs. 2 lacs in lieu of reinstatement was held appropriate.
Naval Kishore (Workman) v. Messrs Darbshaw B. Cursetjee & Sons, 1984 II LLJ 473 : 1984 (49) FLR
355 : 1985 I LLN 4 : 1984 LIC 1558 : 1984 AIR (SC) 1892 : 1984 Suppl. SCC 384 (S.C.3J)
.The Industrial dispute referred to the tribunal was whether the action of the respondent
Management directing the termination of the services of the appellant with effect from March 1, 1980 is
justified. If it was not so justified, what relief the appellant would be entitled for? (Page: 474, Para: 1)
.Now the Tribunal after recording finding that the termination of the service of the appellant was
not justified, proceeded to examine as to what relief should be given and reached a ludicrous conclusion
that a compensation in the amount of Rs. 15,000/- (Rupees fifteen thousand only) would be adequate and
would meet the ends of justice. Ordinarily on the finding that termination of service was not justified,
reinstatement with full back wages should have been awarded. (Page: 474, Para: 2)
Having heard both sides we are of the opinion that in the special facts of this case and the subsequent
developments we agree with the Tribunal that the compensation would be an adequate relief. Having
regard to all the circumstances, we direct that the respondents shall pay Rs. 2,00,000/- (Rupees two lacs)
as and by way of compensation to the appellant. (Page: 474, Para: 4)

xxxii) When employee suffered from paralysis (Gau.DB)

5A.737
After holding that termination of employee was illegal retrenchment, Court
considered that since employee was in Firefighting Branch and had suffered from paralysis of right
leg and awarded compensation of Rs. 7,000 instead of reinstatement.
Marmeswar Das v. Labour Court & Ors., 1984 II LLN 156 : 1984 LIC 837 (Gau.DB)
.we are satisfied.regarded as illegal. (Page: 160, Para: 14)
.As the petitioner.on this count. (Page: 160, Para: 15)

2550

Chapter VA Lay-Off and Retrenchment

Sec. 25F

xxxiii) When employee dies during pendency of proceedings (S.C.2J)

F 5A.738 Death of workmen during pendency of proceedings. Physical reinstatement becoming
impossible. Moulding of appropriate relief in lieu of reinstatement, he must be paid wages till his
death.
Delhi Cloth and General Mills Ltd. v. Shambhu Nath Mukherjee, 1985 I LLJ 36 : 1985 I LLN 1 : 1984
LIC 1743 : 1985 LIC 897 : 1985 (SC) AIR 141 : 1984 Suppl. SCC 534 (S.C.2J)
.once the finding of the Labour Court is accepted that there was no valid rule of service
prescribing retirement by superannuation at the age of 58 years, the employer was bound to physcially
reinstate the respondent workman in service and he would have been entitled to serve till the date of his
death. (Page: 38, Para: 9)
.Accordingly, he must be paid his wages till the date of his death. We accept this
submission. (Page: 38, Para: 10)

2. Compensation in lieu of reinstatement when not proper

i) Ten times the retrenchment compensation not proper when retrenchment
compensation was duly sent and termination is lawful (Bom.DB)
5A.739
In absence of any illegality in terminating services and in view of the fact that
retrenchment compensation was duly sent, grant of amount by Single Judge which was 10 times the
amount of compensation was held unsustainable.
Sub-Divisional Engineer, Dham Unnati Dhraran (Pipri), Wardha v. Sudhakar Bapurao Bhagat, 2003 II
LLJ 786 : 2003 (97) FLR 1130 : 2003 III LLN 137 (Bom.DB)
.Once it has.the respondent workman. (Page: 787, Para: 8)

ii) When granted without any cogent reasons by diluting its own findings
(Mad.HC)
5A.740
The workman was retrenched without complying with Sec. 25F. Labour Court held
that the termination was illegal but instead of reinstatement it granted compensation. On
workmans appeal High Court set aside the order of Labour Court and granted reinstatement with
all other consequential benefits because Labour Court tried to dilute its own finding given earlier
and tried to justify the award of compensation in an unreasonable manner.
N. Selvaraj v. Management of Seeranaickenpalayam Weavers Co-op. Production & Sales Soc. Ltd.,
Coimbatore, 1997 I LLJ 830 : 1997 LLR 500 (Mad.HC)

iii) When work man did not complete 240 days (Del.HC)
5A.741
Workmen who did not complete 240 days service could not claim any benefit under
Industrial Dispute Act, 1947.
Raj Rani v. G.T.B.Hospital & Anr., 2005 (105) FLR 187 : 2005 LLR 250 (Del.HC)

iv) Regularization cannot be

a) In the absence of any posts (Ori.DB)
5A.742
When temporary workers were retrenched following the procedure under the section,
no direction for their regularisation can be given in the absence of any posts.
Dhananjaya Sahoo & Anr. etc. v. Managing Directors, Orissa Construction Corpn Ltd., & Anr., 1997
LIC 2213 (Ori.DB)

Sec. 25F

Reliefs available for violation of the sections

2551

Situated thus.service. (Page: 2215, Para: 15)

Coming to the case in hand.detenorating.it has to keep.cost law.It is not
possible.their services. (Page: 2216, Para: 16)
In view of.cost.However.said Act. (Page: 2216, Para: 17)

b) Cannot be of a casual employee in a local body if Government

instructions prohibit it (Cal.DB)
5A.743
Zila Parishad being State under Art. 12 is bound to comply with State Government
circular which stipulates that all recruitments to local bodies should be made either through Public
Service Commission or through Employment Exchange, therefore a casual employee who has
completed 240 days of service is not entitled for absorption but to only benefits of Sec. 25 F.
Birmhum Zila Parishad & Ors. v. Nitya Hari Chaterjee & Ors., 1997 III LLJ 1293 : 1997 (75) FLR 482 :
1996 II LLN 906 (Cal.DB)
As a State.employment. (Page: 1294, Para: 1)

c) Cannot be when workman agitated for the relief after a delay of 12

years (Mad.HC)
5A.744
In view of the case of Shri N. Sundara Money (AIR 1976 SC 1111) the State Bank
called back its 18 temporary employees who were terminated by the bank and absorbed them on
permanent post. On the ground of this absorption, the temporary watchman of the bank who was
terminated on 1972 applied High Court in the year 1984 for his absorption and contended that he
was discriminated by the employer. High Court rejecting the said contention refused to grant any
relief since the workman did not have any reasonable explanation for a long delay of 12 years.
R. Sundaram v. The Management of State Bank of India, Respondent, 1995 LIC 2533 (Mad.HC)

i) Relief of bonus
1. Can be granted to the retrenched workmen for the period prior to their
retrenchment (Cal.DB)
5A.745
Subsequent to retrenchment of certain workers and dismissal of one workman,
company issued a notification declaring additional profit bonus for financial year prior to such
retrenchment and dispute regarding claim for bonus by retrenched employees was taken up by
other workmen of establishment through their union, Court dismissed challenge to the validity of
reference by the management and held that definition of Industrial Dispute is very wide and as
workmen raising dispute in instant case have community of interest with retrenched workmen in
general interest of labour because they put forward a claim that under circumstances similar to the
present case they are entitled to claim bonus and also since the claim for bonus was not barred by
Sec. 25F or 25H as the relief claimed was not relief under the Act but relief under declaration made
by company and upheld the validity of reference made for the claim of bonus by retrenched
workmen.
East Asiastic & Allied Co. (India) Pvt. Ltd. v. Fourth Industrial Tribunal West Bengal & Ors., 1961 I LLJ
720 : 1961-62 (20) FLR 309 (Cal.DB)
.By a notice dated.21 November 1956.upon the appellant.fourth
Industrial Tribunal. (Page: 722, Para: 1)
.By an award published.of the Tribunal. (Page: 722, Para: 2)
.The question of consideration.therefore very wide. (Page: 723, Para: 4)

2552

Chapter VA Lay-Off and Retrenchment

Sec. 25FF

In the case before.the appellant company. (Page: 724, Para: 4)

.I have comeis an Industrial Dispute. (Page: 724, Para: 5)
Sri Chowdhury also argued.of the appeal fails. (Page: 724, Para: 7)

j) Relief of fringe benefits and gratuity

1. Workman deemed to be in employment and entitled to all the benefits till
employer tenders the due amount of gratuity (All.HC)
5A.746
Where the termination of services of an employee were held illegal the Labour Court
held that the workman was entitled for gratuity/arrears of gratuity, wages and all fringe benefits as
if he was still in employment till the employer tenders the due amount of gratuity to him. High
Court upheld the decision.
M/s. Gangeshwar Ltd., Deoband v. P.O. Labour Court, Dehradun & Anr., 2003 (98) FLR 1004 (All.HC)

XII. Settled law on the issues under this section

a) Retrenchment compensation to be calculated on the basis of 30 days instead of
26 days (S.C.2J)
Issue Retrenchment compensation to be calculated on the basis of 30 days instead of 26 days
Case law Guru Jambeshwar University, Hisar v. Dharam Pal, 2007 I LLJ 1006 : 2007 (112) FLR 880
: 2007 I LLN 740 : 2007 LIC 956 : 2007 I CLR 931 : 2007 LLR 297 : 2007 (1) SCC (L&S) 792 : 2007
AIR (SC) 1040 : 2007 (2) SCC 265 : 2007 (3) Mah.LJ 63 : 2007 SCCL.COM 59 (S.C.2J)
Note: As observed from decisions of some High Courts, there is no unanimity as to the number of days
to be considered to arrive at one day wage for the purpose of computing retrenchment compensation.
However the Apex Court in the recent case of Guru Jambheshwar University v. Dharam Pal
Regisrar2007 SCCL.COM 59( see supra) has settled the issue by holding that the number of working
days to be considered is 30 days but not 26 days.

H. Compensation to workmen in case of transfer of undertaking - Sec. 25FF

I. Scope object and applicability of section
a) Transfer does not end workmens contract of service (S.C.2J)
F 5A.747 Neither Sec. 25FF nor transfer by itself has the effect of putting an end to contract of
employment of workmen the section in fact envisages the continuation of employment and only
provides for compensation to workmen if such transfer results in termination of the contract of
employment hence in instant case where corporation took over textile undertakings, corporations
contention that provisions of Sec. 25FF put on end to contract of employment on transfer was held
to be a wrong presumption of law.
N.T.C. Ltd. v. Rashtriya Mill Mazdoor Sangh and Ors., AND National Textile Corporation ltd. v.
Rashtriya Mill Mazdoor Sangh and Anr. AND National Textile Corpn. Ltd. v. Vijay Kumar Agarwal and
Ors. AND N.T.C. (South Maharashtra) Ltd. v. Vithal S. Mohite, 1993 I LLJ 954 : 1993 (82) FJR 462 :
1993 SCC (L&S) 178 : 1993 (1) SCC 217 (S.C.2J)
The learned Attorney General contended that the provisions of Section 25FF in effect terminated the
contract of employment of the workmen on account of the transfer of management of the textile mills to
the appellants, and all that the workmen were entitled to was the notice and compensation from the textile

Sec. 25FF

Scope object and applicability of section

2553

mills in accordance with the provisions of Section 25F of the I.D. Act as if the workmen were
retrenched. The workmen could not remain in service in continuance of the contract of employment after
the transfer, and in any case not with the appellants. Hence, there was no obligation on the appellants to
continue the services of the workmen after the takeover of the management.
(Page: 957, Para: 11)
.contention which is based on the provisions of Section 25FF of the I.D. Act, we are afraid that
the same proceeds on a wrong presumption of the law. As is clear from the provisions of the said section
which are reproduced above, the section by itself does not put an end to the contract of employment on the
transfer of the ownership or management of the undertaking to the new employer. There is nothing in the
said provisions to indicate such a consequence on the transfer of the undertaking. The section only
provides for compensation to the workmen if such transfer aliunde results in the termination of the
contract of employment. Whether the transfer results in the termination of the contract of employment or
not, will depend upon either the terms of the agreement of transfer or on the provisions of the law which
effects the transfer. The section in terms states that if the terms of the agreement or the provisions of the
law have the effect of terminating the contract of employment, every workman in employment in the
transferor undertaking would be entitled to notice and compensation in accordance with the provisions of
Section 25F as if the workmen had been retrenched.The three conditions under which the
workman becomes ineligible to the notice and retrenchment compensation under Section 25F, further
make it abundantly clear that by itself neither Section 25FF nor the transfer of the undertaking as such,
puts an end to the contract of employment. In fact, the section envisages the continuation of employment,
and makes provision for the compensation, only if the transfer results in the termination of the contract of
employment. These provisions show that where the employment continues in spite of the transfer of the
undertaking, the workmen would not be entitled to notice and retrenchment compensation under Section
25F from the transferoremployer. It is only if there is a transfer of the undertaking and the said three
conditions are not satisfied that a workman would be entitled to such notice and retrenchment
compensation from the transferoremployer. (Page: 959, Para: 15)
It is, therefore, more than clear that neither Section 25FF nor the transfer by itself has the effect of
putting an end to the contract of employment of the workmen. (Page: 959, Para: 16)

b) Inter-departmental transfers are not within the ambit of the section (S.C.3J)
F 5A.748 Transfer of all the workmen of a retail business department to another dept. by a firm
having many combined parts of business at same place, common muster roll for all employees who
were governed by the same service condition and who were liable to be transferred from one
department to another and were treated as one unit for purposes of bonus and were not employed
for any particular branch or line of business, cannot be considered to be a transfer of separate
undertaking or establishment for purposes of Sec. 25FF. The Supreme Court therefore upheld the
contention of Tribunal that transfer does not attract Sec. 25FFand the proviso to it. In other words
to attract Sec. 25FF the entire business requires to be transferred i.e. ownership or management of
the undertaking.
The Management of R.S. Madho Ram and Sons (Agencies) Private Ltd. & Ors. v. The Workmen as
represented by Madho Ram and Sons Employees Union, 1964 I LLJ 366 : 1964 (8) FLR 117 : 196364
(25) FJR 294 : 1964 AIR (SC) 645 (S.C.3J)
.The fact that one undertaking runs these businesses would not necessarily exclude the
application of Section 25FF solely on the ground that all the businesses or industries run by the said
undertaking have not been transferred. (Page: 369, Para: 2)
But where the undertaking runs several allied businesses in the same place or places, different
considerations would come into play. In the present case, the muster roll showing the list of employees
was common in regard to all the departments of business run by the transferor firm. It is not disputed that
the terms and conditions of service were the same for all the employees and what is most significant is the
fact that the employees could be transferred from one department run by the transferor firm to another
department. Though the transferor conducted several branches of business which are more or less allied,
the services of the employees were not confined to any one business, but were liable to be transferred
from one branch to another. In the payment of bonus all the employees were treated as constituting one
unit and there was thus both the unity of employment and the identity of the terms and conditions of

2554

Chapter VA Lay-Off and Retrenchment

Sec. 25FF

service. In fact, it is purely a matter of accident that the 57 workmen with whose transfer we are
concerned in the present appeal happened to be engaged in retail business which was the subject-matter
of the transfer between the firm and the company These 57 employees had not been appointed solely for
the purpose of the retail business but were in charge of the retail business as a mere matter of accident.
Under these circumstances, it appears to us to be very difficult to accept Mr. Setalvads argument that
because the retail business has an identity of its own it should be treated as an independent and distinct
business run by the firm and as such, the transfer should be deemed to have constituted the company into a
successor-in-interest of the transferor firm for the purpose of S. 25FF. (Page: 369/370, Para: 3)
.we are satisfied that the appellant cannot claim to be a successor-in-interest of the firm so as to
attract the provisions of S. 25FF of the Act. The transfer which has been effected by the firm in favour of
the appellant does not, in our opinion, amount to the transfer of the ownership or management of an
undertaking and so, the Tribunal was right in holding that S. 25FF and the proviso to it did not apply to the
present case. (Page: 370, Para: 1)

c) Sec. 25FF does not compel employees to accept transfer but only ensures
compensation to them (Bom.HC)
5A.749
Employees of transferor undertaking are not compelled u/s. 25FF of the Act to accept
transfer of their services to transferee undertaking, it only ensures payment of retrenchment
compensation in case of transfer of undertaking.
Rallis Group Employees Union v. Rallis India Limited & Ors., 2002 I LLJ 173 : 2001 (91) FLR : 2002 I
LLN 721 : 2001 III CLR 230 : 2002 LLR 52 (Bom.HC)

d) Transfer of undertaking cannot be assumed but to be proved on evidence

(S.C.2J)
F 5A.750 When a verbal assurance by chairman of the company that there would be no shifting
of venue of 2 publications for specified period cannot be inferred from circumstances of case in
absence of any oral and documentary evidence, and hence workers would not be entitled to any
relief because of the transfer of 2 publication.
The Andhra Prabha Ltd., & Anr. v. The Secretary, Madras Union of Journalists & Ors., 1968 I LLJ 15 :
1967-68 (33) FJR 318 : 1967 (15) FLR 435 : 1967 AIR (SC) 1869 (S.C.2J)
.The central question with regard to the first issue was, whether Ramnath Goenka had given a
verbal assurance in November 1958 that there would be no shifting of the venue of the publication of any
of the papers from Madras to Vijayawada for 2 years. The Tribunal scrutinized the evidence both oral
and documentary in great detail and observed that it was not satisfied that Ramnath Goenka had given any
verbal assurance imputed to him. The Tribunal further held that an assurance of the nature could not be
inferred from the circumstances of the case with the result that the first part of the first issue was answered
in the affirmative with the necessary consequence that the workers could not be held entitled to any relief
because of the transfer of these two publications. (Page: 20/21, Para: 3)
No attempt was made before us to show that the Tribunals conclusion about the absence of the verbal
assurance or the inference to be drawn in respect thereof from the circumstances was wrong.
(Page: 21, Para: 3)

e) Sec. 25FF does not stipulate notice or payment of compensation as condition

precedent to transfer nor any time limit for their payment (S.C.2J)
Payment of Wages Inspector, Ujjain v. Surajmal Mehta, Director, Barnagar Electric Supply & Industrial
Co. Ltd. & Anr., 1969 I LLJ 762 : 1969 (35) FJR 232 : 1969 (18) FLR 284 : 1969 LIC 867 : 1969 AIR (SC)
590 (S.C.2J)
Note: Please see related ratio/s under the above citation in this section

Sec. 25FF

Scope object and applicability of section

2555

f) Section is applicable prospectively (AP.DB)

5A.751
Undertaking was taken over by State Government and all the employees were
retained but without continuity of service. Negativing the claim of employees for retrenchment
compensation against undertaking it was held as workers were not discharged as surplus Labour
there was no retrenchment u/s. 25FF and also since Sec. 25FF came into force w.e.f. 4 September
1956 after the claim of workmen arose on 1 May 1956 the said section would be inapplicable.
Ex-Employees Union, Guntur Power & Light, Ltd. v. Guntur Power & Light, Ltd., 1961 I LLJ 30 :
1960-61 (19) FJR 492 (AP.DB)
.Electricity Supply undertakings.company in question. (Page: 30, Para: 2)
Indisputably all the.by the Government. (Page: 32, Para: 1)
At the outset.to the present case. (Page: 32, Para: 3)
The Next Point.the same employer. (Page: 32, Para: 4)
.if follows that.appeal is sustained. (Page: 33, Para: 1)

g) Applicable to all undertakings covered both under Chapter VA and VB

(Mad.HC)
5A.752
Sec. 25FF is expressly made applicable to all undertakings whether they fall within
Chapter V-A or V-B. That is the only section dealing with compensation to workmen in case of
transfer of undertaking in the entire Act. When the legislation has taken care to make that section
applicable to the undertaking governed by the Chapter V-B also, it is futile to contend that Sec. 25N
would apply to termination of employment on transfer of undertaking also even though the section
does not refer to it and on the other hand it refers only to retrenchment.
Workmen of Deccan Sugars v. Nava Bharat Ferro Alloys Ltd. & Ors., 1993 I LLJ 1211 : 1993 II LLN 173
: 1993 II CLR 31 : 1993 LLR 697 (Mad. HC)

h) Section not applicable to take over of undertakings if it is not for acquiring

ownership (Pat.DB)
5A.753
The provisions of this section are not applicable to State Financial Corporation which
took over the Jute Mill for the purpose of recovering the loan but not for acquiring ownership and
running it since no employeremployee relationship can be inferred in the case of the former.
Bihar State Financial Corporation v. Jute Mill Mazdoor Sabha & Ors., 1995 LIC 801 : 1999 III LLJ 1505
(Pat.DB)
It appears.undertaking. (Page: 803, Para: 5)
From the provisions.this case. (Page: 804, Para: 17)

i) Sec. 25FF has no application in case where transfer of an industrial concern is

fictitious or benamidar (S.C.CB)
F 5A.754 In case where transfer of an industrial concern is fictitious or benamidar, Sec. 25FF
has no application at all as there is no change of ownership thus resulting in continuity of service
under same terms and hence question of compensation does not arise.
Anakapalle Cooperative Agricultural & Industrial Society Ltd. v. Their Workmen & Ors., 1963 AIR
(SC) 1489 : 1962 II LLJ 621 : 1963-64 (24) FJR 101 : 1963 (6) FLR 1(S.C.CB)

2556

Chapter VA Lay-Off and Retrenchment

Sec. 25FF

.It is common ground that if a transfer is fictitious or benami, S. 25-FF has no application at all.
In such a case, there has been no change of ownership or management and despite an apparent transfer,
the transferor employer continues to be the real employer and there has to be continuity of service under
the same terms and conditions of service as before and there can be no question of compensation.
(Page: 1495, Para: 18)

II. Transfer of Undertaking vis-a-vis splitting of existing firm into two

firms-Whether to be considered to be two different employers
a) It cannot be two different employers if company is split dividing functions and
liabilities between them when workmen are not aware of such split or
contracted separately with them and there is no change in their service
conditions (S.C.3J)
F 5A.755 When a company itself merely split into two between themselves and divides functions
and shares liability to pay and workmen of company were not aware of this interrelationship nor
agreed by any contract to work for the new firm but continue to do the same work and receive same
pay without any change in their employment, the doctrine of common employment would not arise
in this circumstance as the change in the constitution was created by the two employers themselves
and there is no role of employees in these divisions and therefore it was held that the reference of
dispute to implement the recommendations of wage board for interim relief was held valid.
M/s. Mahesh Transport Co. v. The Transport and Dock Workers Union, 1974 LIC 595 : 1974 (28) FLR
280 : 1974 II LLN 131 : 1974 SCC (L&S) 310 : 1974 AIR (SC) 868 : 1974 (4) SCC 355 (S.C.3J)
On 1-8-1965, however, i.e. after the Wage Boards recommendations were accepted by the Government
of India, there came into existence the partnership firm of the appellants.The workers were
working as the employees of M /s. Krishna Commercial Co. and did not know the internal relationship
between these two firms. They continued to work, as they were accustomed to do, for M /s. Krishna
Commercial Co. After the creation of the new firm of the appellants, however, there was a division of
functions between M /s. Krishna Commercial Co., on the one hand, and the appellants, on the
other. (Page: 596/597, Para: 5)
.The workers were not interested as to whether the one firm or the other bore the total
responsibility for paying for the work which they were doing. In fact, they had thought that they were the
employees of only M /s. Krishna Commercial Co. But the latter shared its liability to pay the workers with
a new firm of the appellants after 1-8-1965; and if the two firms agree that they have so shared the liability
both would be regarded as the employers of the workmen. The workers continued to do the same work
and receive the same payment without any change in their employment. The change was merely in the
constitution of the employers. In fact the workers had not even agreed by a separate contract to work for
the appellants. Therefore, there is no substance in the contention that on the finding of the Tribunal it
should be held that this was a case of common employment. If what the two firms had done created a
situation of common employment that was not of the seeking of the workers. The doctrine of common
employment may, perhaps, apply where the workers contract separately to serve two employers, without
the latters mutual agreement. That is not the case here. As to whether the doctrine of common
employment is unknown to Industrial law it is not necessary for us to decide in this case.
(Page: 597/598, Para: 7)

III.Transfer of undertakingEntering into partnership-whether same

a) Entering into a partnership business requires no consent of employees and
legally no transfer takes place (Mad.HC)
5A.756
In order to enter into a partnership business, the consent of employees to such transfer
was held not required in as much as legally there takes place no transfer but consent is required
when the firm withdraws from the so called transfer.
Workmen of Mettur Beardsell Ltd. v. Management of Mettur Beardsell Ltd, & Ors., 1992 I LLJ 1 : 1992 I
LLN 279 (Mad.HC)

Sec. 25FF

Transfer is valid

2557

b) Sec. 25FF not applicable to a change of constitution of partnership firm or

conversion of partnership firm into a proprietorship firm (Mad.HC)
5A.757
Sec. 25FF will have no operation where there is a change of constitution of a
partnership firm or the partnership firm was dissolved to convert the same into a proprietorship
firm.
A.R. Sundararajan v. A.P. Chellappan & Anr., 1966 I LLJ 564 (Mad.HC)

IV. Transfer of undertaking

a) Includes
1. Sale of a bus together with the permit since it involves transfer of
ownership (Mad.HC)
5A.758
The transfer of one bus together with the permit would amount to transfer of its
ownership or of the undertaking even though the seller might still be the owner of the other buses
and might still be continuing the business of a bus owner by plying other buses for profit because on
the sale of bus along with the permit, the management of the bus and the ownership of bus would
change hands.
Khadar Hussain Sahib B.M. v. Mohamed Sheriff & Anr., 1962 I LLJ 361 : 1962 (5) FLR 249 (Mad.HC)

b) Excludes
1. Joint venture between two companies for better functioning and technical
cooperation (All.HC)
5A.759
The establishment entered into an agreement with other establishment according to
which a joint sector was created for float glass project. The other establishment was to provide the
technical know-how and technical services to joint company. The employees were retrenched as
per Sec. 25FF of the Act and the same was challenged. High Court observed that from the admitted
facts, it was clear that employer has not ceased to operate the business but entered into an
agreement for better functioning of the organization and to avail technical know-how and
expertise in the trade. Thus, the retrenchment in question was illegal and was not consequent upon
transfer. Quashing order of retrenchment it was ordered that the employer is under legal
obligation to regularize and pay the same salary as they have worked for more than 240 days.
Umesh Chandra Pandey & Ors. v. State of U.P. & Ors., 1991 LIC 1449 : 1991 LLR 638 (All.HC)

V. Transfer is valid
a) When business of transferor and transferee is the same (Bom.DB)
5A.760
In a valid transfer, the identity of business of transferor and transferee company must
not change. In other words the business carried on by transferor must if so facto be carried on by
the transferee.
N.J. Chavan v. P.D. Sawarkar, 1958 I LLJ 36 (Bom.DB)

b) Though workmens consent is absent (S.C.2J)

F 5A.761 The workmen were transferred due to transfer of the undertaking and there was no
change in their conditions of service. They moved Tribunal contending that by transfer the
management practiced fraud upon them. Tribunal held that there was no dispute. But the Single
Judge as well as Division Bench held that the transfers were illegal as no consent of employees was
taken by employer before such transfer. On appeal, Supreme Court set aside the High Courts

2558

Chapter VA Lay-Off and Retrenchment

Sec. 25FF

order as there was nothing in the wording of Sec. 25FF to suggest that consent was a condition
precedent for transfer, nor the workmen had able to establish any element of fraud as they
contended.
Management, Mettur Beardsell Ltd. v. Workmen of Mettur Beardsell Ltd. & Anr., 2006 II LLJ 899 : 2006
(109) FLR 1057 : 2006 III LLN 687 : 2006 LIC 2230 : 2006 LLR 868 : 2006 AIR (SC) 2056 (S.C.2J)
.There is nothing in the wording of Section 25FF even remotely to suggest that consent is a
pre-requisite for transfer. The underlying purpose of Section 25FF is to establish a continuity of service
and to secure benefits otherwise not available to a workman if a break in service to another employer was
accepted. Therefore, the letter of consent of the individual employee cannot be a ground to invalidate the
action.(Page: 902, Para: 10)
5A.762
Denying the contention of workmen it was held that absence of the consent of
workmen does not invalidate transfer of ownership or management of an undertaking.
Spencer Group Aerated Water Factory Employees Union & Anr. v. The P.O. Industrial Tribunal & Ors.,
1997 I LLJ 362 : 1996 (89) FJR 728 : 1997 LLR 189 (Mad.DB)
.we have no hesitation in holding that after the advent of Section 25FF of the I.D. Act there is no
scope for invalidating the transfer of the ownership or management of an undertaking, whether by
agreement for by operation of law, on the ground that consent of the workmen had not been
obtained.Therefore, on the first point framed by us we hold against the workmen that no consent
is necessary for validating the transfer of ownership or management of an undertaking, within the
meaning of Section 25FF of the I.D. Act. (Page: 373, Para: 24)
5A.763
Employee was working as a bus conductor in the transport wing of the Tirumala
Tirupati Devasthanam (TTD), Tirupati. The said transport undertaking was taken over by the
Andhra Pradesh state Road Transport Corporation in pursuance of the agreement dated August 8,
1975. The employee was removed from service after a domestic enquiry for the misconduct of
violating the rule of Issue and Start. Aggrieved, he moved the High Court contending that he was
not the employee of the APSRTC and therefore, not bound by the terms of the agreement between
the APSRTC and TTD because the employees of the erstwhile transport wing are not the parties to
the bipartite agreement dated August 8, 1975. However, the High Court rejected the contention
and upheld the removal on the ground that in case of transfer of undertakings, the workmen
therein can be taken over by the transferee undertaking. In such a case, Sec. 25FF of the Industrial
Disputes Act is attracted. It is not necessary to obtain the consent of the workmen in order to
transfer such undertaking. The rights of the employees of such undertakings are envisaged u/s.
25FF.
G.V.M. Reddy, Conductor, Tirupathi I Depot v. Depot Manager, A.P. State Road Transport Corporatin,
Tirupathi, 1993 I LLJ 549 : 1994 II LLJ 861 : 1993 (66) FLR 782 : 1993 I CLR 948 : 1993 LLR 252
(AP.HC)

c) When workmen had tacitly consented to it (Mad.DB)

5A.764
In view of the facts that the Transferor as well as transferee sent individual notices to
workmen that conditions of proviso to the section were complied with and service conditions were
to remain unchanged and workmen never questioned transfer on the ground that their consent was
not obtained and sought relief against Transferee against stoppage of work, the workman had
tacitly consented to transfer and hence cannot contend that their consent was not obtained.
Spencer Group Aerated Water Factory Employees Union & Anr. v. The P.O. Industrial Tribunal & Ors.,
1997 I LLJ 362 : 1996 (89) FJR 728 : 1997 LLR 189 (Mad.DB)
.We have noticed the fact that both the second respondent Company as well as the Purchaser
had given notice to the workers individually making it clear that all the three conditions of the proviso to
Section 25FF of the I.D. Act were being complied with and the workmen were assured that the same
conditions of service will prevail and even the settlement dated September 18, 1989 would be adhered
to.The relief sought for in W.P. 15742 of 1993 by the appellantworkmen against the

Sec. 25FF

Transfer is not valid

2559

Purchaser3rd respondent, to reopen the factory or in the alternative to pay the workmen wages due to
them, was a clear indicator of the fact that the appellantworkmen by their positive conduct did consent to
the transfer of the undertaking by the second respondent to the third respondent. In this view of the matter,
we hold that by their conduct the workmen had tacitly accepted the change in the management.
(Page: 373/374, Para: 25)

d) When factory sold is functioning as a separate undertaking (Mad.DB)

5A.765
It was held on facts that entire aerated water factory was sold as a going concern and
was functioning as a separate undertaking, remand by Single Judge for establishing whether the
transfer was of undertaking was unnecessary.
Spencer Group Aerated Water Factory Employees Union & Anr. v. The P.O. Industrial Tribunal & Ors.,
1997 I LLJ 362 : 1996 (89) FJR 728 : 1997 LLR 189 (Mad.DB)
.factual aspects make it clear beyond any reasonable doubt that the entire Aerated Water Factory
Unit with all the employees, Plant and Machinery, was sold as a going concern to the third
respondent. (Page: 374, Para: 27)
We do not.undertaking or not (Page: 376, Para: 29)

VI. Transfer is not valid

a) If there is no express consent of the workmen (Bom.DB)
5A.766
In case of transfer of undertaking, services of employees cannot be transferred
unilaterally, and as the transfer of service was made without consent was held to be no transfer at
all and employee deemed to be continued as an employee of transferee company.
Hasuram G. Gharat & Ors. v. General Manager, Bombay Metropolitan Transport Corpn. Ltd., 1987
(54) FLR 343 (Bom.DB)
We have.of CIDCO. (Page: 345, Para: 8)
Having.of service. (Page: 346, Para: 8)
5A.767
Petitioner transferred its Aerated Water Factory along with its workmen to the new
employer without obtaining the consent of workmen working therein. The workmen worked for
several months after transfer but were continuously protesting and hence they cannot be said to
have given any implied consent. It was held that their transfer without their consent was not
justified.
Spencer Consumer Products & Service, Ltd. (represented by its Attorney S.N. Bannerjee), Madras v.
Industrial Tribunal, Madras, Spencer Group Aerated Water Factory Employees Union (represented by
its General Secretary), Madras, Vishwadarshan Distributors., 1996 II LLJ 852 : 1996 LIC 18 : 1995 I
LLN 473 (Mad.HC)
Note: Refer to the case of Management, Mettur Beardsell Ltd. v. Workmen of Mettur Beardsell Ltd. &
Anr., 2006 II LLJ 899 : 2006 (109) FLR 1057 : 2006 III LLN 687 : 2006 LIC 2230 : 2006 LLR 868 : 2006
AIR (SC) 2056 (S.C.2J)

2560

Chapter VA Lay-Off and Retrenchment

Sec. 25FF

b) When the transfer is inter-departmental and departments are interdependent

(S.C.3J)
F 5A.768 The tribunal held that the transfer of the Hoop mill to Calcutta could be a ground for
retrenching employees at the most in that department alone and retrenchment of employees of
other department is not justified but it was observed by Supreme Court that the Tribunal has
overlooked the view that departments are functionally interdependent on one another and closure
or transfer of one materially affects the functioning of other and results in surplusage of workmen
in other departments also and thus one cannot confine retrenchment of staff merely to the closed or
transferred department alone and to this extent the Tribunals view is narrow and cannot sustain.
J.K. Iron and Steel Co., Ltd., Kanpur v. The Iron and Steel Mazdoor Union, Kanpur, 1956 I LLJ 227 :
1955-56 (9) FJR 419 : 1956 AIR (SC) 231 (S.C.3J)
The Tribunal also upheld the finding that the Hoop Mill was in the course of transfer to Calcutta
consequent on the orders of Government, but they held that there was nothing on the record to show
which of the 105 persons (it should be 102) whose cases they were considering were specifically
engaged in the Hoop Mills and had become surplus by reason of the transfer to Calcutta.
(Page: 229, Para: 4)
This is one of the findings attacked before us by the Company on the ground that the Tribunal has failed
to realise that the Companys operations must be considered as a whole and that because of the
interdependence of its various departments a closure of one section, coupled with a shortage of materials
in another, is bound to affect its all round working and, therefore, the question of retrenchment cannot be
looked at from the narrow point of view of only one department but must be viewed in its all round
setting. We will deal with this later. (Page: 229, Para: 5)
Next, when the Appellate Tribunal turned its attention to the transfer of the Hoop Mill to Calcutta, it
agreed that that would have been a good ground for retrenching those who were specifically engaged in
the Hoop Mill but not the others. But this takes an impossibly narrow view and ignores the over-all
working of a business concern and the repercussions that a transfer of this kind would have on other parts
of the business. It totally ignores the pleadings of the parties and like the adjudicators, bases its
conclusion on some airy view of what it considers would be a good thing for the workmen. That is not a
decision given in accordance with the Act and is as much open to objection on that score as the award of
the Adjudicator. (Page: 238, Para: 41)
.we are of opinion that the Adjudicator and the Labour Appellate Tribunal had adopted the
attitude of benevolent despots and have based their conclusions on irrelevant considerations and have
ignored the real question that arose for decision and the issues that arose out of the pleadings of the
parties. (Page: 234, Para: 2)
The award and the decision of the Labour Appellate Tribunal are set aside and the case is remitted to the
Labour Appellate Tribunal for a re-hearing of the appeals filed before it and for a fresh decision in the
light of the foregoing observations. (Page: 234, Para: 5)

c) If resorted to as a colourable exercise of power to discharge workmen

(Ker.DB)
5A.769
Action u/s. 25FF resulting in the discharge or termination of the workman if found to
be colorable exercise of power and act of victimization, will attract Sec. 33(2)(b) and application
u/s. 33A is maintainable, hence relief of reinstatement with back wages granted by Tribunal was
held to be justified.
Thomas Paul v. Industrial Tribunal Kozhikode, & Ors., 1977 (35) FLR 345 : 1978 LIC 267 (Ker.DB)
We see.emphasised. (Page: 350, Para: 6)
By implication.be attracted. (Page: 352, Para: 10)

Sec. 25FF

Transfer is not valid

2561

d) If transfer is fictitious or benami or despite transfer, the management

continues to be in the same set of persons organised differently (S.C.3J)
F 5A.770 Where the transfer is fictitious or benami with no change of ownership or
management and despite an apparent transfer, the transferor employer continues to be the real
employer, it was held that Sec. 25FF has no application at all, the transfer in the eyes of law being
non-est. Similarly where there is a transfer both in form and law, of a succession in interest but the
management continues to be in the hands of the same set of persons organized differently, the
transferee and transferor being virtually the same, the transfer cannot be valid in the eyes of law,
the overriding principle being that no one should be able to frustrate the intent and purpose of law
by drawing corporate veil across the eyes of the Court. The third category of case as an exception to
Sec. 25FF arises in the context where the transferor and transferee is State or State instrumentality
which is expected to act fairly and not arbitrarily as in the instant case. If the object of transfer is to
insulate from the losses, then the Government should have decided to cut off itself once the tube
wells were transferred from all liabilities but that the Government did not do so but continued to
bear the losses and while so doing abridged the rights of the employees by choosing to retrench 498
tube well operators and arranging simultaneously to absorb them as fresh recruits in the new
corporation. The arbitrariness smacks in the face by excluding their past services and deprivation
of all resultant benefits and therefore in such cases the Court is held to be bound to direct the state
to do what it failed to do by judicial review by verifying the terms of conditions of transfer as an
exception to the application of Sec. 25FF.
Gurmail Singh & Anr., etc.etc. v. State of Punjab & Anr., 1993 (82) FJR 332 : 1991 II LLJ 76 : 1991 (62)
FLR 458 : 1991 I LLN 587 : 1993 LIC 428 : 1991 I CLR 637 : 1991 SCC (L&S) 147 : 1993 AIR (SC)
1388 : 1991 (1) SCC 189 (S.C.3J)
.The Supreme Court itself has visualised such a case and made it clear that if a transfer is
fictitious or benami, Section 25FF has no application at all. Of course, in such a case, there has been no
change of ownership or management and despite an apparent transfer, the transferor employer continues
to be the real employer and there has to be continuity of service under the same terms and conditions of
service as before and there can be no question of compensation. A second type of cases which comes to
mind is one in which there is in form, and perhaps also in law, a succession but the management continues
to be in the hands of the same set of persons organised differently such as in Bombay Garage Ltd. v.
Industrial Tribunal (1953) 1 Lab LJ 14 (Bom), and Artisan Press v. L.A.T. (1954) 2 Lab LJ 424 (Mad). In
such cases, the transferee and transferor are virtually the same and the overriding principle should be that
no one should be able to frustrate the intent and purpose of the law by drawing a corporate veil across the
eyes of the Court, (see, Palmer, Company Law, 23rd Edn., pages 200-201, paras 8 and 10 and the decision
in Kapur v. Sheilds (1976) 1 WLR 131, cited therein). These exceptions to the above rules, we think,
would still be operative. But it is not necessary here to decide whether this principle will help us to
identify the corporation with the State Government in the present case for the present purposes,
particularly as there is a catena of cases which do not approve of such identification (see Accountant and
Secretarial Services P. Ltd. v. Union of India MANU/SC/0005/1988 and the cases cited therein.).
Leaving this out of account then, we may turn to a third category of cases, which we think would also fall
as an exception to the principle behind Section 25FF. This is where, as here, the transferor and or
transferee is a State or a State instrumentality, which is required to act fairly and not arbitrarily (see the
recent pronouncement in Mahabir Auto Stores v. Indian Oil Corporation MANU/SC/0191/1990, and the
Court has a say as to whether the terms and conditions on which it proposes to hand over or take over an
industrial undertaking embody the requisite of fairness inaction and could be upheld. We think that,
certainly, in such circumstances it will be open to this Court to review the arrangement between the. State
Government and the Corporation and issue appropriate directions. Indeed, such directions could be
issued even if the elements of the transfer in the present case fall short of a complete succession to the
business or undertaking of the State by the Corporation, as the principle sought to be applied is a
constitutional principle flowing from the contours of Article 14 of the Constitution which the State and
Corporation are obliged to adhere to. We are making this observation because it was attempted to be
argued on behalf of the State and the Corporation that only certain assets of the State industry, viz. the
tubewells, were taken over by the latter and nothing more. We do not quite agree with this contention but,
in view of the approach we propose to adopt, this aspect is not very material and need not be further
discussed. (Page: 350/351, Para: 5)

2562

Chapter VA Lay-Off and Retrenchment

Sec. 25FF

VII. Successor-in-interest
a) No single conclusive factor but to be determined by various factors like
whether whole business was purchased or is it a going concern etc. (S.C.CB)
F 5A.771 The question as to whether a purchaser of industrial concern is successor-in-interest
of vendor should be decided considering several relevant facts such as whether whole business was
purchased, was the business purchased a going concern at time of sale transaction, is the business
purchased is the same or similar, nature, reasons and length of any break in continuity of business,
whether good will is purchased, if purchase is only of some parts and purchaser starts new business
similar to old after purchasing some other new parts and such decision cannot be reached by
treating any one fact as of overriding or conclusive significance, neither presence nor absence of
any of them is decisive.
Anakapalle Cooperative Agricultural & Industrial Society Ltd. v. Their Workmen & Ors., 1963 AIR
(SC) 1489 : 1962 II LLJ 621 : 1963-64 (24) FJR 101 : 1963 (6) FLR 1 (S.C.CB)
The question as to whether a purchaser of an industrial concern can be held to be a successor-in-interest
of the vendor will have to be decided on a consideration of several relevant facts. Did the purchaser
purchase the whole of the business? Was the business purchased a going concern at the time of the sale
transaction? Is the business purchased carried on at the same place as before? Is the business carried on
without a substantial break in time? Is the business purchased carried in at the same or similar to the
business in the hands of the vendor? If there has been a break in the continuity of the business, what is the
nature of the break and what were the reasons responsible for it? What is the length of the break? Has
goodwill been purchased? Is the purchase only of some parts and the purchaser having purchased the said
parts purchased some other new parts and started a business of his own which is not the same as the old
business but is similar to it? These and all other relevant factors have to be borne in mind in deciding the
question as to whether the purchaser can be said to be a successor-in-interest of the vendor for the purpose
of industrial adjudication. It is hardly necessary to emphasise in this connection that though all the facts to
which we have referred by way of illustration are relevant, it would be unreasonable to exaggerate the
importance of any one of these facts or to adopt the inflexible dale that the presence or absence of any one
of in them is decisive of the matter one way or the other. (Page: 1492/1493, Para: 9)

b) Who can be Successor-in-interest

1. A purchaser can be when he carries on same business without appreciable
break at same place and its very object of sale transaction was to carry on
business of vendor company (S.C.CB)
F 5A.772 Since purchaser carried on same business without appreciable break at the same
place and its very object of entering into sale transaction was to carry on business of vendor
company which manufactured sugar, hence the purchaser i.e. local cane growers society was held
to be a successor-in-interest of vendor for purposes of demand of re-employment of workmen of
vendor company.
Anakapalle Cooperative Agricultural & Industrial Society Ltd. v. Their Workmen & Ors., 1963 AIR
(SC) 1489 : 1962 II LLJ 621 : 1963-64 (24) FJR 101 : 1963 (6) FLR 1 (S.C.CB)
.the appellant has carried on the business of the Co., without an appreciable break; the business
thus carried on is the same as that of the Co., the place of business is the same, and the very object of
entering into the sale transaction was to enable the local cane growers to carry on the business of the
Company. Therefore, we are inclined to take the view that having regard to all the relevant facts in this
case, the tribunal was right in law in coming to the conclusion that the appellant is a successor-in-interest
of the Company. (Page: 1493, Para: 10)

Sec. 25FF

Successor-in-interest

2563

2. A new company can be when the same business was carried on by new
company and identity of business is not destroyed by interruption
(Ker.DB)
5A.773
Where the same factories were being worked with same goodwill in discharge of the
obligation to employ workmen who had been thrown out of employment and with loan aid given to
old company, it can be inferred that same business was carried on by new company and identity of
business is not destroyed by interruption or time gap between incoming and outgoing management
and it is immaterial that new management begins to carry on same business on fresh lease, hence
new company will be successor in interest.
Musaliar Industries Pvt. Ltd. v. State of Kerala & Ors., 1960 II LLJ 341 (Ker.DB)
.interruption of or gaps.become its successor.in the case.a fresh lease.
(Page: 347, Para: 10)

c) Who cannot be a successor-in-interest

1. A transferee company cannot be in respect of an employee whose services
were terminated at the time of transfer if it has liberty not to absorb all
(Cal.DB)
5A.774
Government Corporation took over a shipping company running into financial loss
under a scheme sanctioned by the High Court. Clause 7 of the scheme granted the Corporation the
liberty to absorb only those who were found suitable but not all employees. On a writ petition filed
by the Corporation challenging the order of the tribunal holding the reference of the dispute about
the termination of an employee as valid inspite of corporations objection that the claimant was not
its employee nor was it the successor of the company, it was held that the claim by such employee
against the transferee company is not maintainable since it is not a successor of the company so far
as the employees who were not taken in employment and hence the Tribunal has no jurisdiction to
decide the said question.
Central Inland Water Transporat Corporation Ltd. v. Seventh Indsutrial Tribunal, West Bengal & Ors.,
1983 I LLJ 157 : 1983 I LLN 366 : 1983 LIC 31 (Cal.DB)
It wouldthe same. (Page: 163, Para: 17)

2. A transferee company is not when it took over only assets but not liabilities
and sale was free from encumbrances (Bom.DB)
5A.775
The license of the electricity supply undertaking was revoked during the pendency of
adjudication proceedings in regard to disputes with the workmen and substantial portion of assets
was taken over by the State Electricity Board at prices determined under the State Electricity Act
but the liabilities of the company including staff liabilities were not taken over and the undertaking
was sold free from encumbrances. In these circumstances, it cannot be said that the Board was a
successor-in-interest of the company. The employees were paid retrenchment compensation u/s.
25FF and 25F on the termination of their services and were not entitled to claim reinstatement
from the transferee board as transfer was not fictitious. Thus the Board is not a necessary party to
the dispute and the order of the Tribunal impleading it as a party is set aside.
Maharashtra State Electricity Board v. Industrial Tribunal & Ors.,1965 II LLJ 458 (Bom.DB)
.the substance of the.of the undertaking. (Page: 466/467, Para: 1)
The Board was not liable.electricity Act, 1910. (Page: 467, Para: 1)
.Once the licence.as a whole. (Page: 468, Para: 1)

2564

Chapter VA Lay-Off and Retrenchment

Sec. 25FF

On an evaluation.cannot be sustained. (Page: 469, Para: 1)

.in our view.the workmen. (Page: 469, Para: 2)
But when the transfer.to be set aside. (Page: 471, Para: 3/4)

3. Purchaser of equity redemption of assets cannot be as it does not amount to

transfer or it being transferee (S.C.3J)
F 5A.776 The tea estate terminated the services of all the workmen on 21st August 1961 and
thereafter Court receiver was appointed on 5th October 1961 whereas reference of dispute was
made on 27th July 1962 and sale deed was executed on 11th August 1962 whereby equity
redemption in part of he assets was purchased by the 1st respondent and liquidator was still
functioning hence it was held that the first respondent cannot be considered to be a
successor-in-interest of the Tea Company, nor can he be considered to claim through the Receiver
or Liquidator and their claim will have to be adjudicated in accordance with Sec. 25F of the Act if it
is a retrenchment and u/s. 25FF if the claim is based on the ground of transfer of business and in
either case, it is for the Labour Court to properly adjudicate upon the case and the First
respondent is not answerable to the claims of workmen under any of the sections.
Workmen of Brahmputra Tea Estates v. Incoming Management of Brahmputra Tea Estates & Anr.,1969
II LLJ 685 : 1967-68 (33) FJR 348 : 1967 (15) FLR 390 : 1968 LIC 521 : 1968 AIR (SC) 514 (S.C.3J)
We are in agreement with the contentions of the learned Solicitor General that the view of the Labour
Court, that the first respondent is not liable to answer any of the claims of the workmen concerned, is
perfectly justified. From the various facts, given above, it will clearly be seen that the order terminating
the services of the workmen was made on August 21, 1961, Job the Superintendent of the Tea Gardens,
under instructions from the Receiver, appointed by the Jorhat Court, in the mortgage suit. On October 5,
1961, the High Court had appointed a Receiver, for the Tea Gardens, as separate from the Tea Company,
in the suit Transfer Company Suit No. 7 of l962. The order, referring the dispute to the Labour Court was
made, by the Government, on July 27, 1962. The 1st respondent, admittedly, was not in the picture on
these various dates. It cannot also be stated, having due regard to the various recitals, contained in the sale
deed, dated August 11, (sic) 1962, and considered, in the light of the principles, laid down by this Court,
in Anakapalle Co-operative Agricultural and Industrial Society Ltd. V. Workmen, (1963) Supp 1 SCR
730 = (AIR 1963 SC 1489), that the first respondent is the successor-in-interest of the Tea Company.
What was purchased, by the first respondent, was only the equity of redemption in a part of the assets of
the Tea Company, in respect of which the Official Liquidator was still functioning. Therefore, the learned
Solicitor General is perfectly justified in his contention that the first respondent cannot be considered to
be a successor-in-interest of the Tea Company, nor can he be considered to claim through the Receiver or
Liquidator. Even on the basis that the first respondent is considered to be a person, to whom the
ownership of the undertaking has been transferred, it will be seen that the claims of the workmen will
have to be considered, as against the Tea Company, in accordance with Section 25FF of the Act, when its
proviso cannot be invoked. (Page: 691, B.L: 9)

4. Purchaser cannot be where the business is not taken over but only land and
buildings were purchased to start a new business (Karn.HC)
5A.777
A purchaser can be called as successor in interest only if the prior business is taken
over as a going concern with all its assets and liabilities. Where the business is not so taken over and
only the land and buildings are purchased for starting together a new business and leaves plants
and machinery to the vendors disposal, the purchaser can not be held to be successor in interest.
PSI Data Systems Ltd. v. Additional Industrial Tribunal, Bangalore & Anr., 1993 I LLJ 73 : 1992 (80)
FJR 281 : 1992 (64) FLR 1162 : 1992 I LLN 817 : 1992 LIC 1127 : 1992 II CLR 252 : 1992 LLR 929
(Karn.HC)

Sec. 25FF

Obligations of Transferor

2565

VIII. Obligations of Transferor

a) Transferor is liable to pay compensation u/s. 25FF (S.C.CB)
F 5A.778 In all cases to which Sec. 25FF applies the only claim workmen can make is for
compensation against their employer (transferor) and not against transferee and the words as if
u/s. 25FF provide that though termination of services on transfer may not be retrenchment
u/s. 2(oo) workmen are entitled to compensation as if termination was retrenchment.
Anakapalle Cooperative Agricultural & Industrial Society Ltd. v. Their Workmen & Ors., 1963 AIR
(SC) 1489 : 1962 II LLJ 621 : 1963-64 (24) FJR 101 : 1963 (6) FLR 1 (S.C.CB)
.The Legislature, however, wanted to provide that though such termination may not be
retrenchment technically so-called, as decided by this Court, nevertheless the employees in question
whose services are terminated by the transfer of the undertaking should be entitled to compensation, and
so, S. 25-FF provides that on such termination compensation would be paid to them as if the said
termination was retrenchment. The words as if bring out the legal distinction between retrenchment
defined by S. 2(oo) as it was interpreted by this Court and termination of services consequent upon
transfer with which it deals. In other words, the section provides that though termination of services on
transfer may not be retrenchment, the workmen concerned are entitled to compensation as if the said
termination was retrenchment. This provision has been made for the purpose of calculating the amount of
compensation payable to such workmen; rather than provide for the measure of compensation over again,
S. 25-FF makes a reference to S. 25-F for that limited purpose, and therefore, in all cases to which
S. 25-FF applies, the only claim which the employees of the transferred concern can legitimately make is
a claim for compensation against their employers. No claim can be made against the transferee of the said
concern. (Page: 1495, Para: 16)
F 5A.779 As per the section employees are entitled to compensation in case of interruption in
their services and the same can be sought only against the transferor and not the transferee
therefore the former employees of the company who were not absorbed by the corporation were
entitled to claim compensation from the transferor company.
Central Inland Water Transport Corporation Ltd. v. The Workmen & Anr., 1974 (29) FLR 56 : 1974 (46)
FJR 1 : 1974 II LLN 78 : 1974 LIC 1018 : 1974 SCC (L&S) 421 : 1974 AIR (SC) 1604 : 1974 (4) SCC
696 (S.C.2J)
.The old Company closed its business on May 3, 1967. The Corporation, in due course,
appointed a large number of the Companys employees by fresh letters of appointments, but it could not
absorb all of them. The reference was made on behalf of the employees mentioned in Lists I and II. They
were in all 512. Out of these, it appears, 24 were re-employed by the Corporation later on. The rest of
them virtually claimed reemployment or at least some benefits on the basis of their alleged right to be
re-employed. In actual fact, however, the Corporation did not employ these workmen after the
Companys undertaking was transferred to it. The scheme of transfer did not compel the Corporation to
employ the workmen. Nor is there any term in the transfer agreement or the scheme which passed over to
the Corporation any responsibility in respect of the workmen.Therefore, prima facie, the claim of
the workman would be for compensation u/s. 25FF, directed, not against the Corporation, but against the
Company of which they were formerly the employees. As a matter of fact the scheme itself shows that the
employees of the Company who were not taken over by the Corporation were to be paid by the Company
all money due to them under the law. The scheme further shows that the Company was to be put in
possession of funds by the Government of India for satisfying liabilities to the workers.
(Page: 64, Para: 1)
5A.780
Employees cannot claim re-employment or compensation from transferee
undertaking. Compensation can be claimed from the transferor undertaking u/s. 25FF.
Choudhary Sao & Ors. v. Union of India & Ors., 1983 II LLN 487 : 1983 LIC 1224 (Pat.DB)
If we go.undertaking. (Page: 490, Para: 9)

2566

Chapter VA Lay-Off and Retrenchment

Sec. 25FF

b) Transferor liable to pay retrenchment compensation in the absence of any

agreement between him and the transferee on the liability to pay the same
(Raj.HC)
5A.781
Municipal Board running and managing a powerhouse was transferred to the
Rajasthan State Electricity Board. On the said transfer the question arose as to who would be liable
to pay retrenchment compensation to the employee. Court held that as there was no agreement
between the previous and present employer regarding liability of retrenchment benefits, it is the
former employer who is liable to pay retrenchment compensation. Employee for claiming the said
benefit can make a application u/s. 33C(2) after the lapse of 1 year.
Municipal Board v. State of Rajasthan, 1980 (40) FLR 149 (Raj.HC)

c) Sec. 25FF does not stipulate notice or payment of compensation as condition

precedent to transfer nor any time limit for their payment (S.C.2J)
F 5A.782 Since Sec. 25FF and 25FFF do not contain any condition precedent unlike Sec. 25F
and therefore transfer and closure can validly be effected without notice or payment of a months
wages in lieu thereof or payment of compensation, therefore Sec. 25FF can be said not to have
provided any time within which such compensation is to be paid. The Court held that it is well
established that the words in accordance with the provision 25F in Sec. 25FF and 25FFF are used
only as a measure of compensation and are not used for laying down any time limit within which
the employer must pay the compensation. The compensation payable u/s. 25FF and 25FFF read
with 25F would be wages within the meaning of Sec. 2(vi)(d) of the Payment of Wages Act.
However, where the employer disputes the claim of the workman by invoking the proviso to 25FF
and where complicated question of fact and law arises, and employer contends that the
compensation is defeated by virtue of proviso of that section, it is held that the Labour Court
u/s. 33C(2) can exercise jurisdiction instead of the very limited jurisdiction cast u/s. 15(1) of
Payment of Wages Act on the authority.
Payment of Wages Inspector, Ujjain v. Surajmal Mehta, Director, Barnagar Electric Supply & Industrial
Co. Ltd. & Anr., 1969 I LLJ 762 : 1969 (35) FJR 232 : 1969 (18) FLR 284 : 1969 LIC 867 : 1969 AIR (SC)
590 (S.C.2J)
.Since Sections 25FF and 25FFF do not contain any conditions precedent, as in the case of
retrenchment under Section 25F, and transfer and closure can validly take place without notice or
payment of a months wages in lieu thereof or payment of compensation, Section 25FF can be said not to
have provided any time within which such compensation is to be paid. It is well established that the words
in accordance with the provisions of Section 25F in Sections 25FF and 25FFF are used only as a
measure of compensation and are not used for laying down any time within which the employer must pay
the compensation. It would, therefore, appear that compensation payable under Sections 25FF and 25FFF
read with Section 25F would be wages within the meaning of Section 2(vi)(d) of the Act.
(Page: 766, Para: 2)
the claim made in the instant case is not a simple case of deductions having been unauthorisedly
made or payment having been delayed beyond the wage-periods and the time of payment fixed under
Sections 4 and 5 of the Act. In the second place, in view of the defence taken by Respondent 1, the
Authority would inevitably have to enter into questions arising under the proviso to Section 25FF, viz.,
whether there was any interruption in the employment of the workmen, whether the conditions of service
under the Board were any the less favourable than those under the company and whether the Board, as the
new employer, had become liable to pay compensation to the workmen if there was retrenchment in the
future. Such an inquiry would necessarily be a prolonged inquiry involving questions, of fact and of law.
Besides, the failure to pay compensation on the ground of such a plea cannot be said to be either a
deduction which is unauthorised under the Act, nor can it fall under the class of delayed wages as
envisaged by Sections 4 and 5 of the Act. It may be that there may conceiveably be cases of claims of
compensation which are either admitted or which cannot be disputed which by reason of its falling under
the definition of wages the Authority may have jurisdiction to try and determine. But we do not think that
a claim for compensation u/s. 25FF which is denied by the employer on the ground that it was defeated by
the proviso to that section, of which all the conditions were fulfilled, is one such claim which can fall
within the ambit of Section 15(2). When the definition of wages was expanded to include cases of sums

Sec. 25FF

Rights of Transferee

2567

payable under a contract, instrument or a law it could not have been intended that such a claim for
compensation which is denied on grounds which inevitably would have to be inquired into and which
might entail prolonged inquiry into questions of fact as well as law was one which should be summarily
determined by the Authority under Section 15. Nor could the Authority have been intended to try as
matters incidental to such a claim questions arising under the proviso to Section 25FF. In our view it
would be the Labour Court in such cases which would be the proper forum which can determine such
questions under Section 330(2) of the Industrial Disputes Act which also possesses power to appoint a
commissioner to take evidence where question of facts require detailed evidence.
(Page: 769, Para: 1)

IX. Rights of Transferee

a) Transferee not liable to absorb retrenched workmen (Guj.DB)
5A.783

Refusal by transferee company to absorb retrenched employees is legal.

Bhavnagar Municipal Corpn. v. Kumar G. Mehta & Anr., 2001 I LLJ 823 : 2001 (88) FLR 830 : 2000
LIC 3017 : 2001 I CLR 49 (Guj.DB)
.In the instant.the matter (Page: 826, Para: 10)
.In the instant.decisive. (Page: 827, Para: 11)
In view of.allowed. (Page: 827, Para: 12)
Note: The following cases may be referred in the above context
Workmen of Dahingeapar Tea Estate v. Dahingeapar Tea Estate, 1958 II LLJ 498 : 1958-59 (15) FJR 77
: 1958 AIR (SC) 1026 (S.C.CB)

b) Transferee not liable to reinstate employees of transferor when no such relief is

prayed (AP.DB)
5A.784
In the absence of any pleading or prayer for relief against transferee, nor any action of
transferee being challenged before authority under Shops Act, direction of the authority to the
transferee to reinstate employees terminated by transferor was illegal and without jurisdiction and
a writ petition is maintainable against the order, availability of alternative remedy not being
absolute bar.
Hindustan Coca-coal Beverages Pvt. Ltd. v. Assistant Commissioner of Labour & Ors., 2002 (100) FJR
222 (AP.DB)
The question which survives for consideration is as to whether alternative remedy is available to the
appellant? The answer to the said question must be rendered in the negative. Having regard to the fact that
an appeal in terms of subsection (2) section 48 of the Act lies against the employer, the employer itself is
an aggrieved person. No doubt under subsection (3) of section 48 of the Act, a second appeal lies against
any decision of the authority under subsection (2). But, the appellant herein is aggrieved by the
jurisdictional error committed by the first respondent herein in so far as it directed the appellant to
reinstate the workmen with full backwages. Such a finding of fact has been arrived at, as noticed
hereinbefore, without any pleading or even no relief has been prayed for against the appellant and despite
the same such a relief has been granted. It is not a case where the relief could be directed to be moulded as
no action of the appellant herein was under challenge before the first respondent. The first respondent,
therefore, must be held to have acted wholly illegally and without jurisdiction and in such a case, in view
of the decisions of the Apex Court, it would not be proper to direct the parties to avail of the alternative
remedy. (Page: 238/239, Para: 6)
.since the order of the authority was clearly without jurisdiction, in our opinion, it would not be
proper not to entertain the writ petitions in exercise of the discretionary jurisdiction of this Court.
(Page: 242, Para: 3)

2568

Chapter VA Lay-Off and Retrenchment

Sec. 25FF

c) In the absence of any express or implied undertaking, transferee entitled to

treat the discharged employees on their absorption as fresh hands (S.C.3J)
F 5A.785 When the business of a company for all practical purposes were taken over by a new
company and the services of employees were terminated but the new company agreed to employ
the workmen with no express or implied undertaking regarding their continuity of service and
after so joining the company they have become fresh members of Provident Fund and in this
background the decision of Appellate Tribunal to hold the employees as fresh hands without
continuity of service is held valid.
Ispahani, Ltd. Calcutta v. Ispahani employees Union, 1959 II LLJ 4 : 1959-60 (16) FJR 366 : 1959 AIR
(SC) 1147 (S.C.3J)
Turning now to the appeal of the workmen on the question of benefits, we are of opinion that the
decision of the Appellate Tribunal on this question also is correct. It is true that the company practically
took over the business of Messrs. M. M. Ispahani Ltd. But, as pointed out by the Appellate Tribunal,
when Messrs. M. M. Ispahani Ltd. transferred their head-office from Calcutta to Chittagong, the question
arose of retrenching those employees who were not willing to go to Chittagong in view of the expected
partition of India. In these circumstances, the company, when it came into existence in September 1947,
agreed to employ those employees of Messrs. M. M. Ispahani Ltd., whose services were likely to be
terminated. These employees apparently agreed to the termination of their services with Messrs. M. M.
Ispahani Ltd., and therefore obtained settlement of their claims for provident fund, and also received all
arrears of salary from them. They were thereafter appointed, after withdrawal of their provident fund, by
the company. There was no express or implied undertaking given by the company regarding continuity of
service and the employees joined the provident fund of the company afresh. In the circumstances the
decision of the Appellate Tribunal on this question is correct, and the appeal of the workmen must also
fail. (Page: 8, Para: 4)
Note: the following case may also be referred in the above context
Employers in relation to the Management of Nirsa Area of M/s. Eastern Coalfields Ltd. v. P.O. C.G.I.T.
No. 1, Dhanbad & Anr. AND Workmen Represented by their Secretary, Rajendra Rahi v. Employers in
relation to the Management of Nirsa Area, 2003 (98) FLR 861 : 2003 LLR (Sum) 1023 (Jhar.HC)

d) Transferee entitled to cross-examine witnesses when impleaded as a party to

the proceedings before the Tribunal (Del.HC)
5A.786
A bank was taken over under an agreement by the new employer without any liability
in respect of employees whose services had been terminated by the bank. On dispute being referred
regarding termination of service and application was moved u/s. 18(3) before the Tribunal with
prayer to implead the new employer as a party in the proceedings, which was done. When the new
employer made an application for cross examination of workman and his witnesses, it was rejected
and order was passed in favour of the workman for reinstatement with full back-wages. On a writ
being filed, it was held that principles of natural justice require that any person who is impleaded
as a party in the proceeding should be given an opportunity to cross-examine witnesses. The earlier
order rejecting application for cross-examination is erroneous and is vitiated. Also the order of
reinstatement of workman with full back-wages is quashed. Thus, the writ is allowed and the issue
be decided afresh after giving opportunity to the new employer.
United Bank of India v. P.O. Central Government Industrial Tribunal-cum-Labour Court & Ors. 1987
(55) FLR 31 (Del.HC)

Sec. 25FF

Obligations of transferee

2569

e) Transferee when not undertaken to retain workmen of the transferor is not

liable to pay the same wages drawn prior to transfer to workmen in case of
re-employment (P&H.HC)
5A.787
Undertaking was transferred and the transferee did not undertake the obligation to
retain workmen thus employment of workmen with the transferor came to an end. Transferee
despite being successor-in-interest was not liable to pay same wages to workman in case of
re-employment.
Workmen of the Punjab State Electricity Board v. Haryana State Electricity Board, Chandigarh & Ors.,
1981 LIC 1586 (P&H.HC)

X. Obligations of transferee
a) Undertaking given by transferor company to employees of its subsidiaries are
binding on transferee (Bom.DB)
5A.788
Undertaking given by the transferor company to employees of its subsidiaries will be
binding on transferee company.
Hindustan Lever Employees Union v. Hindustan Lever Ltd. & Ors., 1996 (88) FJR 129 : 1996 I LLN 529
(Bom.DB)
It is pertinenton HLL. (Page: 144, Para: 2)

b) If all the conditions in the proviso to Sec. 25FF complied, transferor stands
absolved of obligations, transferee liable to employees about their conditions of
service (Mad.DB)
5A.789
In instant case of legal transfer as transferor and transferee both had established that
conditions mentioned in proviso to Sec. 25FF were complied, transferor was absolved of any
obligation towards workmen and hence workmen now being transferees employees can claim
regarding conditions of service only from transferee.
Spencer Group Aerated Water Factory Employees Union & Anr. v. The P.O. Industrial Tribunal & Ors.,
1997 I LLJ 362 : 1996 (89) FJR 728 : 1997 LLR 189 (Mad.DB)
.We have noticed.would be adhered to. (Page: 373/374, Para: 25)
..we hold thatthird respondent-Purchaser. (Page: 377, Para: 31)

c) Employee illegally terminated liable to be reinstated by the transferee since he

was deemed to continue in service on the date transferee corporation came into
existence (S.C.2J)
F 5A.790 Road Transport authority set up in the place of Rajya transport authority was
empowered to exercise all powers and functions performed by the earlier transport including the
administrative management of undertaking, the employment of staff, regulating their service
conditions disciplinary action etc. hence being a successor in interest is liable to reinstate the
workmen of Rajya transport authority who was deemed to be on the rolls due to their illegal
termination on the day when corporation took over the employees.
Bihar State Road Transport Corpn. v. State of Bihar & Ors., 1970 II LLJ 138 : 1971 (40) FJR 571 : 1970
(21) FLR 11 : 1970 LIC 1040 : 1970 AIR (SC) 1217 : 1970 (1) SCC 490 (S.C.2J)
.Under clause 2 of that notification the appellant corporation was empowered to exercise all the
powers and perform, all the functions which were till then exercised and performed by the Rajya
Transport Authority. It is manifest that the powers and functions of the Rajya Transport Authority were to

2570

Chapter VA Lay-Off and Retrenchment

Sec. 25FF

carry on and conduct the transport undertaking. For that purpose its principal function would be the
administration and management of that undertaking which would necessitate the employment of an
adequate staff of employees. Employment of such a staff and regulating their conditions of service,
including disciplinary action, would clearly be one of the powers or functions of the Rajya Transport
Authority, which power or function was also to be exercised and performed by the appellant corporation
under the said notification. Furthermore, in para 5 of the writ petition filed by the appellant corporation in
the High Court, the corporation in clear terms averred that it had taken over as from May 1, 1959 such of
the employees of the Rajya Transport Authority into its service who were on the rolls of the said
Authority on the date it came into existence. As rightly observed by the High Court, on a proper
construction of the said averment, if the termination of the services of respondent 3 was invalid, it never
became operative and respondent 3, therefore, would be deemed to be continuing in the service of the
Rajya Transport Authority on May 1, 1959, and therefore, on its rolls. In that view, the appellant
corporation must be deemed to have taken over the services of respondent 3. The argument, however, was
that the true meaning of the said averment was that only those of the employees of the Rajya Transport
Authority who were actually on its rolls were taken over and not those who were deemed to be on its rolls.
It is difficult to understand the distinction sought to be made between those whose names were actually on
the rolls and those whose names, though not physically on the rolls, were deemed in law to be on the rolls.
If respondent 3 continued in law to be in the service, it makes little difference whether his name actually
figured in the rolls or not. The expression on the rolls must mean those who were on May 1, 1959 in the
service of the Rajya Transport Authority. By reason of the order discharging him from service being
illegal, respondent 3 was and must be regarded to be in the service of the said Authority, and therefore, he
would be one of those whose services were taken over by the appellant corporation.
(Page: 142, Para: 9)
Apart, therefore, from the question of the appellant corporation being the successor-in-title of the said
Authority, respondent 3, in the absence of any valid termination of his services, continued and still
continues to be in the service of the appellant corporation since May 1, 1959, and therefore, the
corporation was bound to pay his wages including all the emoluments to which he was entitled as from
May 1, 1959. For the period from February to April the Rajya Transport Authority was liable to pay his
wages and other emoluments, if any, to which he was entitled. The corporation, as successor-in-title of
the said Authority, became liable to pay the said wages for the said period and not from February to
September 1959 as directed by the Labour Court. (Page: 142, Para: 10)

d) If made a party to the dispute, transferee liable to reinstate the workmen if

retrenchment is illegal (Guj.HC)
5A.791
Where the transferee of an undertaking has joined as a party in a dispute between
transferor- employer and his employees about termination it was held that the transferee would be
liable to reinstate the workman if the retrenchment was illegal
Udaipur Phosphates & Fertilizers, Ltd. v. Gujarat Mazdoor Kranti Union & Anr., 1998 I LLN 277 : 1998
LIC 448 (Guj.HC)

e) Transferee taking over transferor corporation liable to pay the benefits to

which employees were entitled (Mad.HC)
5A.792
Claims to certain benefits like wages dearness allowance, house rent allowance and
other benefits made by employees of Electricity Corporation which was taken over by the State
Electricity Board was referred to the Labour Court u/s. 33(C). Benefits were available from a date
anterior to the transfer. It was held that only Board was liable as on the date of transfer, the
erstwhile employees of the Corporation had become employees of the Board and the Board can
have only one category of employees and since on the date of vesting the control in the Board, the
employee-employer relationship had snapped so far as the Corporation is concerned and hence it is
only the Board that is liable.
Vellore Electricity Corporation Ltd. v. Labour Court, Madras & Ors., 1978 I LLJ 229 : 1978 I LLN 153
(Mad.HC)

Sec. 25FF

Obligations of transferee

2571

f) Transferee company liable to give notice pay and compensation to workman

whose dismissal it effected was set aside even after retransfer to original owner
if bound by an agreement (Bom.HC)
5A.793
A company entered into a lease agreement with the transferee company and the
management along with the employees were transferred to it for 2 years. By a subsequent
agreement lease was extended by 30 years. An employee was dismissed by the transferee company
and during the pendency of reference before the Labour Court, the lease agreement was revoked.
The lease was surrendered and the transferee company was reverted to the transferor company. It
was agreed that the transferee company would bear the liabilities in respect of the employees. The
dismissal order was set aside by the Labour Court as it was illegal and reinstatement was granted
without back-wages. High Court upheld the Industrial Courts order that the transferee company
would have been liable to reinstate the employee until the date of surrender of the lease deed. Hence
u/s. 25FF of the Act it was the transferee company who had to give notice pay and compensation
and also back-wages from the date of termination till the date of surrender of the deed.
Suresh Baburao Bhandare v. Administrator, Saswad Mali Sahakari Karkhana Ltd., Malinagar & Anr.,
1995 III LLJ (Sum) 270 : 1992 (65) FLR 702 : 1992 I CLR 309 : 1993 I LLN 562 (Bom.HC)

g) Clause in memorandum of agreement or the sale deed giving discretion to the

purchaser to employ or not to employ or give fresh employment to workmen is
prejudicial to the workmen and cannot be considered as bonafide (S.C.CB)
F 5A.794 During the pendency of a dispute under conciliation, a transfer of undertaking
inserting a clause in memorandum of agreement or the sale deed giving discretion to the purchaser
to employ or not to employ members of the staff or give them fresh employment was held to be a
clause which operated to the prejudice of the workmen and cannot be considered as bonafide.
Workmen of Dahingeapar Tea Estate v. Dahingeapar Tea Estate, 1958 II LLJ 498 : 1958-59 (15) FJR 77
: 1958 AIR (SC) 1026 (S.C.CB)
.This line of reasoning overlooked two essential circumstances; one was that the notice of
discharge was given by the outgoing management during the dispute and pendency of conciliation
proceedings and was hit by S. 33 of the Act, and the other was that in spite of the notice all the members of
the staff were allowed to continue in service till 4-1-1954. The third circumstances was that the Industrial
Tribunal found that the conditions which the incoming management sought to impose were intended to
discriminate between workmen and most likely to create industrial unrest. The clause in the
memorandum of agreement or the sale deed which gave the respondent a discretion to employ or not
employ members of the staff or to give them fresh employment was indeed found by the Appellate
Tribunal to be a bona fide clause as between the vendor and purchaser; but the question before the
Industrial tribunal was as to how it would operate against the workmen in the context of the industrial
dispute referred to it for adjudication. In the circumstances of the present case the Industrial Tribunal
found that it operated to their prejudice, and we are not satisfied that the Appellate Tribunal has given
cogent reasons for going behind that finding. (Page: 505, Col: II)
On the majority decision of this Court in the Workmen of Dimakuchi Tea Estate v. Management of
Dimakuchi Tea Estate, 1958-1 Lab LJ 500: (AIR 1958 SC 353) (A) the present dispute is undoubtedly an
industrial dispute within the meaning of the Act. That decision lays down that where the workmen raise a
dispute as against their employer, the person or persons regarding whose employment or
non-employment the dispute is raised need not be, strictly speaking workmen within the meaning of the
Act but must be persons in whose employment or non-employment the workmen as a class have a direct
or substantial interest. In the case before us as between the vendor and the discharged workmen, the latter
came within the definition of workmen as they were discharged during the pendency of conciliation
proceedings. This fact did not, however, make them workmen of the purchaser. Even then they were
persons in whose employment or non-employment the actual workmen of the Dahingeapar Tea Estate
were directly interested. Therefore, the ratio of the Western India, Automobile Association v. Industrial
Tribunal, Bombay, 1949 FCR 321: (AIR 1949 FC 111) (B), as also of the later decision in workmen of the
Dimakuchi Tea Estate (supra) applied, and the dispute was clearly an industrial dispute within the
meaning of the Act. (Page: 503, Col: II)

2572

Chapter VA Lay-Off and Retrenchment

Sec. 25FF

XI. Effect of transfer of undertaking

a) Workman entitled to receive retrenchment compensation as per legal fiction
envisaged under the section (S.C.2J)
F 5A.795 Workman entitled to receive retrenchment compensation in view of the legal fiction
envisaged that those rights would accrue to thimas if he had been retrenched.
South Arcot Electricity Distributing Co. Ltd. v. N.K. Mohammed Khan & Ors., 1970 II LLJ 44 : 1971 (40)
FJR 1 : 1970 (21) FLR 174 (S.C.2J)
The principal clause of this section clearly confers a right on every workman, who has been employed
continuously for not less than one year in any undertaking, to receive retrenchment compensation in
accordance with the provisions of Section 25-F of the Act as if the workman had been retrenched
whenever the ownership or management of the undertaking is transferred, whether by agreement or by
operation of law. Consequently, in the present case, the employees, who presented the applications under
Section 33-C(2) of the Act, clearly became entitled to receive retrenchment compensation in accordance
with Section 25-F of the Act when, under the Madras Act, this undertaking stood transferred to the State
Government from the company. This would be the legal right vesting in the workman if the proviso does
not apply to their cases, and it accrues irrespective of the fact that the workmen had not actually been
retrenched. The right under this principal clause is conferred on the basis of the legal fiction that the
workmen are to be deemed to have been retrenched unless their services are continued in accordance with
the conditions laid down in the proviso. The only question that falls for determination in respect of the
first point raised by Mr. Gupte thus is whether the right which accused to the workmen under the principal
clause was defeated because of the compliance of the conditions laid down in the proviso.
(Page: 47/48, Para: 3)

b) Benefits of Sec. 25FF cannot be claimed if transfer of undertaking is not proved

(Mad.DB)
5A.796
Where a section of establishment is transferred but there is no transfer of ownership
then in absence of any proof of transfer of undertaking, benefit of Sec. 25FF cannot be claimed.
Management of Best & Crompton Engineering Ltd., Ambattur, Madras v. P.O. I Additional Labour
Court, Madras & Ors., 2003 II LLJ 502 : 2003 (97) FLR 927 : 2003 II LLN 887 : 2003 LLR 727
(Mad.DB)
In this case.Section 25FF. (Page: 506, Para: 14)
As the necessary.be employed therein. (Page: 506, Para: 15)
.we do not.Industrial Disputes Act. (Page: 507, Para: 17)

c) Tribunal has jurisdiction to give effect to obligations arising out of transfer

(Ker.DB)
5A.797
If new employer is burdened with obligations of old employer, Tribunal would be
within its jurisdiction to give effect to such an obligation by directing new employer to do
something. It could direct the old employer to do because such an order of Tribunal would be
bound not on contractual relation between new employer and employees but on obligations of new
employer due to succession in business.
Musaliar Industries Pvt. Ltd. v. State of Kerala & Ors., 1960 II LLJ 341 (Ker.DB)
.grounds taken forare thatas there was.reinstatement is wrong.
(Page: 344, Para: 3)
If the new.succession in business. (Page: 348, Para: 12)

Sec. 25FF

Effect of transfer of undertaking

2573

d) Relationship between transferor and workmen gets terminated by reason of

deemed retrenchment and discretion to continue employees lies with
transferee as per agreement (Bom.DB)
5A.798
There was transfer of business via surrender of lease from co-operative factory
(lessee) to a company (original lessor) and there was clear mention in deed of surrender and also in
a subsequent agreement under Bombay Industrial Relation Act between company and union
providing for absorption of erstwhile employees of co-operative factory, they would be taken only
as fresh appointees and all liabilities of prior employment would be borne by co-operative factory
itself and hence considering Sec. 25FF employees were held not entitled to continuity of service in
fact or in law.
The Malshiras Taluka Rashtriya Sakhar Kamgar Sangh v. The Saswad Mali Sugar Factory Ltd. & Ors.,
1995 III LLJ 397 : 1989 II LLN 843 (Bom.DB)
.an agreement was.factory itself. (Page: 400, Para: 7)
.In the deed.in continuous service. (Page: 404, Para: 18)
5A.799
Once there is a transfer of undertaking resulting in the change of employer, the
relationship between the transferor and the workmen gets terminated by reason of the deemed
retrenchment and compensation provided by the section, and the liability to continue their
employment will be at the discretion of the Transferee Company and governed by the terms of
transfer and since the transferee Bharat Coca-Cola bottling Company agreed to re-employ only 73
permanent workmen but not casual workers thereby indicating non- existence of any relationship
between the transferee Company and the casual workmen and hence the necessary party to be
impleaded in the reference made u/s. 10B should have been the transferor Company namely the
Vijayawada Bottling Company Ltd. and not the transferee Company and the reference having not
impleaded the necessary party, was held not competent.
Bharat Coca-Cola Bottling South East Pvt. Ltd., Vijayawada v. Government of A.P. & Ors., 2002 I LLJ
753 (AP.DB)
.The petitioner.workers. (Page: 754, Para: 2)
The learned Single Judge.directed. (Page: 754, Para: 3)
In the light.reached.The transferor.arise. (Page: 754, Para: 4)
Despite the facts that the said judgement.Court. (Page: 755, Para: 5)
.On the same day.thus.
Whereas the.their Management. (Page: 755, Para: 6)
The petitioner.thereof. (Page: 755, Para: 7)
As indicated.transferor. (Page: 756, Para: 13)
Havingsuch transfer. (Page: 756, Para: 14)
The change.being. (Page: 756, Para: 15)
If under No.maintainable. (Page: 757, Para: 17)
It is therefore.extent. (Page: 759, Para: 25)

2574

Chapter VA Lay-Off and Retrenchment

Sec. 25FF

Note: The following case may also be referred in the above context
Workmen of Dahingeapar Tea Estate v. Dahingeapar Tea Estate, 1958 II LLJ 498 : 1958-59 (15) FJR 77
: 1958 AIR (SC) 1026 (S.C.CB)
The Management of Puspa Talkies, Tiruppur v. Workers in Puspa Talkies & Anr., 1961 (3) FLR 485
(Mad.HC)

1. Tribunal not to focus on automatic end of service since it is an abstract

question of law but on diverse issues arising out of contractual relations
between parties since it answers the said question (S.C.CB)
F 5A.800 The mere abstract question of law u/s. 25FF as to the automatic end of service of
workmen upon transfer of management on a sale, according to Supreme Court, need not be a
function for adjudication by the Tribunal. The Tribunal should instead of dealing with abstract
question of law should go to the root of the matter concerning diverse circumstances relating to and
arising out of contractual relations between the parties since it answers the said question.
Workmen of Dahingeapar Tea Estate v. Dahingeapar Tea Estate, 1958 II LLJ 498 : 1958-59 (15) FJR 77
: 1958 AIR (SC) 1026 (S.C.CB)
.In our opinion, the Industrial Tribunal could not deal with those questions as mere abstract
questions of law; and we doubt if they could answer them as such. Much of the controversy in this case,
and perhaps a good part of the difference of opinion between the Industrial Tribunal and the Labour
Appellate Tribunal and also between the two members of the latter body inter se have arisen by reason of
the different standpoints from which question No. 1 has been approached. We do not think that it was
necessary, and we go further and say that we doubt if it was the function of the Industrial Tribunal, to
decide the abstract question of law whether on a transfer of management consequent on a sale, the
services of workmen - be they members of the staff or labourers - are automatically put an end to. The
answer to such an abstract question must depend on diverse circumstances relating to and arising out of
the contractual relation between the parties. (Page: 504, Col: II)

e) Employee opting to serve transferee is bound by transferees service

conditions (S.C.3J)
F 5A.801 Subsequent to the take over of the Kanpur Electric Supply Corporation by the
Government the electricity board was formed and the employees were taken in by the board which
framed regulation regarding their allowance, conditions of service, retirement age and the same
was notified u/s. 13B of the Industrial employment (Standing Order) Act 1946 as per regulations
framed u/s. 79(c) of Electricity (Supply) Act, 1948 and that once the employees being informed that
their service conditions will be governed by the regulation so opted to serve the board, it is held to
be binding on them and therefore the retirement on attaining the age of 58 years is legal even
though as per the Government assurance the employees were assured of service till they were
physically fit.
U.P. State Electricity Board & Anr. v. The Labour Court (I) U.P. Kanpur & Anr., 1984 AIR (SC) 1450 :
1984 I LLJ 28 : 1983 (63) FJR 253 : 1983 (47) FLR 435 : 1983 II LLN 723 : 1983 LIC 1520 : 1984 (1)
SCC 147 (S.C.3J)
The Labour Court found that the second respondent joined service as a cooly under the Kanpur
Electricity Supply Corporation Limited on 11-5-1945 and he became the State Governments employee
on 16-9-1947 when that establishment was taken over by Kanpur Electricity Supply Administration and
the employees of that Administration became the employees of the State Electricity Board when it took
over that Undertaking after that Board was constituted on 1-4-1959. It was not disputed that by the
Regulations framed under S. 79 (c) of the Electricity (Supply) Act, 1948, age of retirement was fixed at 58
or 60 years and that those Regulations were notified on 28-5-1972 under S. 13B of the Industrial
Employment (Standing orders) Act, 1946. (Page: 1451, Para: 4)
.The only point argued before this Court.was as to the binding nature of the Regulations
framed by the Electricity Board under S. 79 (c) of the Electricity (Supply) Act, 1948 fixing age of
retirement as 58 years in regard to workmen like the second respondent who were originally employees of

Sec. 25FF

Effect of transfer of undertaking

2575

the Kanpur Electricity Supply Corporation Limited.The Member Secretary of the U.P. State
Electricity Board had informed the Government employee, whose services had been lent to the Board on
deputation that their salary, allowances and other conditions of service shall be governed by Regulations
made by the Board under S. 79 (c) of the Electricity (Supply) Act, 1948 from time to time. It is not
disputed that the second respondent had thereafter exercised his option to serve in the U. P. State
Electricity Board. The second respondent is, therefore, bound by the Regulation by which the age of
retirement has been fixed in regard to employees like him at 58 years. (Page: 1452, Para: 5)
.In view of the admitted fact that the regulations framed by the Board under S. 79 (c) of the
Electricity (Supply) Act, 1948 have been notified by the Government under S. 13B of the Industrial
Employment (Standing Orders) Act, 1946 we hold that the second respondent is bound by those
regulations in which the age of retirement has been admittedly fixed at 58 years and that the has no reason
to complain against his retirement on that basis with effect from 31-3-1979. The appeal is accordingly
allowed and the order of the appellant retiring the second respondent with effect from 31-3-1979 is
upheld. (Page: 1452, Para: 6)

f) In the absence of uninterrupted service, employees terminated by transferor

cannot claim reinstatement or compensation from transferee (AP.DB)
5A.802
Considering the agreement of transfer of undertaking wherein the transferee
accepted employees of transferor except those facing disciplinary action and suspension, it was
held that in absence of uninterrupted service or any employer-employee relation with transferee,
employees terminated by transferor cannot claim reinstatement or compensation from transferee
and their appeal u/s. 48(1) of Shops Act is not maintainable.
Hindustan Coca-coal Beverages Pvt. Ltd. v. Assistant Commissioner of Labour & Ors., 2002 (100) FJR
222 (AP.DB)
.Although the appellant herein had no liability to takeover the services of the employees of
respondents Nos. 3 and 4, they agreed to takeover on its rolls only such of those employees who had no
adverse remarks against them or employees against whom no disciplinary proceedings had been initiated
or pending as on the date of takeover of the firms. The concerned employee, who has been arrayed as
respondent No. 2 in each of the respective writ petitions herein, was one of such employees against whom
disciplinary proceedings had been initiated or pending at the relevant time. In the enquiry, all the
employees were found guilty of the charges or misappropriation. Consequently, they were dismissed
from service by orders dated August 25, 1999. (Page: 225, Para: 4)
.The appeal provided for under section 48 must be in relation to termination of service of an
employee. Termination of service of an employee can be effected by an employer which clearly implies
that there must exist relationship of employer and employee, the parties to the lis. But, where such
relationship does not exist, nor where a relief has been sought for against a third party, the authority in
terms of the provisions of the said Act, would not have any jurisdiction whatsoever in the
matter.The appellant before us being not the employer of the concerned employees, could not
have and in fact did not terminate the services of the employees. The appeal against it ex facie, therefore,
was not maintainable. (Page: 230/231, Para: 6)
.Condition No.(c), appended to the proviso to section 49 of the Act.
(Page: 231, Para: 2)
Clause (c) aforementioned, therefore, postulates a liability on the part of a new employer to make
himself legally liable to pay the employees service compensation on the basis that his employment has
been continued and has not been interrupted by reason of transfer. An exception to the same can be
brought about only either by reason of operation of a statute or agreement. It is not and could not be the
case of the employees that the transfer had been taken place by reason of any statute.
(Page: 231, Para: 5)

2576

Chapter VA Lay-Off and Retrenchment

Sec. 25FF

g) Workmen of transferor company have no claim barring right to compensation

u/s. 25FF when services terminated prior to transfer (Mad.DB)
5A.803
Before the transfer of unit, service of workman were terminated in compliance of Sec.
25FF and it was held that 25FF workmen of transferor company have no claim barring right to
compensation u/s. 25FF and 25F.
Management of William Goodacre & Sons Ltd. (2) Tac Floor Company, owned by Alleppey Co. Ltd.,
Ammandivilal v. K. Neelakandan & Ors., 1998 I LLJ 1038 : 2000 (96) FJR 310 : 1997 III LLN 327
(Mad.DB)
In conclusion.Disputes Act. (Page: 1040, Para: 5)
In our opinion.the award. (Page: 1043, Para: 17)
The Labour.other relief. (Page: 1042, Para: 12)

h) The employee becomes entitled for retrenchment compensation and need wait
for the formal orders of termination (All.HC)
5A.804
As soon as an undertaking is transferred u/s. 25FF, the employee of transferor
company becomes entitled for retrenchment compensation and it is not necessary that they need
wait for the formal orders of termination.
U.P. Electric Supply Co. Ltd. v. H.V. Bowen & Anr., 1968 LIC 326 (All.HC)

i) Compensation at the rate provided in Sec. 25F is payable when conditions of

Proviso not satisfied as service conditions of transferee are less favourable
(S.C.2J)
F 5A.805 Subsequent to transfer of undertaking of company to the State Government the
condition of employment being less favourable to the workmen, they were held entitled by the
Labour Court, High Court and Apex Court to retrenchment compensation as per legal fiction
envisaged u/s. 25F because of the right accruing to them u/s. 25FF of the Act.
South Arcot Electricity Distributing Co. Ltd. v. N.K. Mohammed Khan & Ors., 1970 II LLJ 44 : 1971 (40)
FJR 1 : 1970 (21) FLR 174 (S.C.2J)
.Consequently in the present case, the employees, who presented the applications under section
33-C(2) of the Act, clearly became entitled to receive retrenchment compensation in accordance with
section 25-F of the Act.The only question that falls for determination in respect of the first point
raised by Mr. Gupte thus is whether under the principle clause was defeated because if the compliance of
the condition laid down in the proviso lay down three condition in clauses (a), (b) and (e) each of which
has to be satisfied before it can be held that the right conferred by the principle clause does not accrue to
the Workmen. In the present case, there is no doubt that the services of the workmen had not been
interrupted by the transfer, so that condition (a) was clearly satisfied. It has however, been found by the
High Court that condition (b) and (c) of the proviso had not been satisfied. In our opinion.because
it is very clear that condition (b) of the proviso is certainly not satisfied. Under clause (b) the requirement
is that the terms and condition of service applicable to the Workmen after the transfer must not in any way
be less favourable than those applicable to him immediately before the transfer. On examination of the
Madras Act and the rules, it is manifest that the terms and condition of service of the Workmen have not
remained as favourable under the State Government or the Electricity Board as they were the Workmen
were employed by the company. (Page: 47/48, Para: I)
.It does not appear that, if the Government were to terminate the service of the same Workmen
under section 15(1) of the Madras Act, the Workmen would be entitled to the same compensation which
he would have received from the Company if he had been retrenched in accordance with the provision of
section 25-F of the Act. Thus, clause (1) of section 15 of the Madras Act, itself introduce a condition of
service which was less favorable to the Workmen than the condition applicable when they were

Sec. 25FF

Effect of transfer of undertaking

2577

employed by the Company. Similarly, clause (2) of section 15 of the Madras Act.no such liability
of changes conditions of service of the Workmen while they were employed under the company.
(Page: 48, Col.: II)
.Rule 17 of the rule further shows that immediately on the vesting of the undertaking in the State
Government, the service of the Workmen retained by the Government become provisional and the
subsequent permanent employment of those Workmen in the undertaking is dependent on the condition
laid down in that rule. This liability imposed on the Workmen is clearly disadvantageous to those
Workmen who were in the permanent employ of the Company . The same rule also show that the
employees would not be entitled to bonus or other concessions not allowed to be servants of the
Governments, even if the Workmen were entitled to the bonus and the concessions from the Company.
The Workmen also became liable to transfer to any other place or post in the Government Electricity
Department depending on exigencies of service. These are instances of a number of condition of service
which become less favorable to the Workmen on their becoming employees of the State Government
when the undertaking vested in the Government by transfer form the Company In these circumstances,
the requirements of the proviso to section 25-FF of the Act are obviously not satisfied and that proviso
cannot be invoked by the Company for the purpose of defeating the claim made by the Workmen under
the principle clause of that section. Under that principle clause the Workmen become entitled to receive
retrenchment compensation in accordance with the provisions of section 25-F of the Act on the basis of
the legal fiction envisaged that those rights would accrue to them as if the Workmen had been retrenched.
The Labour Court and the High Court were, therefore, right in holding that the Workmen were entitled to
claim retrenchment compensation in accordance with the provisions of section 25-F of the Act because of
the right accruing to them under section25-FF of the Act. (Page: 49, Para: 1)

j) Compensation under the section is payable by the transferor only when

employees are reemployed afresh by transferee (S.C.2J)
F 5A.806 West Bengal Government by notification revoked the license of Asansol Electricity
Supply Co. and directed to sell the company to the West Bengal State Electricity Board and in
terms of transfer of the undertaking to the board, the services of the workmen were interrupted
and board had given them employment as fresh employees and purchase money paid by the
erstwhile employer was sufficient to pay the compensation u/s. 25FF to the workmen and hence
board was not liable to pay and the action of the board was justified.
Bhola Nath Mukherjee & Ors. v. Government of West Bengal and Ors. And West Bengal State Electricity
Board & Ors. v. Bhola Nath Mukherjee & Ors., 1997 II LLJ 59 : 1997 (75) FLR 95 : 1997 I LLN 523 :
1997 SCC (L&S) 734 : 1997 (1) SCC 562 (S.C.2J)
Asansol Electricity Supply Co Ltd. was a licensee under the Indian Electricity Act, 1910 and was
engaged in the business of generation and distribution of the electricity. On April 5, 1979 west Bengal
Government in exercise of its powers under Section 4(1) of the Indian Electricity Act, 1910 revoked the
license of the company and directed the company to sell the undertaking to the West Bengal State
Electricity Board on April 16,1979. Pursuant to the order the deputy chief engineer took over the said
undertaking on behalf of the board on April 16, 1979. The employees of the company were allowed to
continue in the service of the board. (Page: 60, Para: 1)
.The service of the workmen has been interrupted. Fresh employment has been offered by the
transferee. The workmen, who had previously been permanently employed were offered temporary
employment by the Board. The workmen accepted the offer. There is no legal obligation cast upon the
Board under the terms of the transfer or otherwise to pay any retrenchment compensation to the
workmen. Therefore, the employees have no right u/s. 25FF to claim any compensation from the Board.
Nor do they have any right to claim to be in continuous employment on same terms and conditions, even
after the purchase of the undertaking by the Board. The High Court in appeal was right in holding that the
employees were entitled to retrenchment compensation under the provisions of Section 25FF. But the
High Court was in error in holding that the Board even after payment of the purchase price to the
transferor-Company was liable to pay retrenchment compensation to the employees. The assertion of the
Board that the purchase money was more than adequate to pay retrenchment compensation to the
employees has not been denied. (Page: 63, Para: 12)

2578

Chapter VA Lay-Off and Retrenchment

Sec. 25FF

k) Compensation payable is as per Sec. 25F and not u/s. 25FF or 25FFF when the
illegally terminated employee was either transferred to the Electricity Board
as employee of the transferor or the company never closed down but continued
on transfer (S.C.CB)
F 5A.807 When the illegally terminated employee, upon transfer of an undertaking, was neither
listed as one of their employees among the employees of the company for purposes of transfer nor
the transferee company has taken over the said dismissed employee, the compensation payable to
him invariably fall u/s. 25F of the Act and not either u/s. 25FF or 25FFF for that matter because the
company never closed down but continued with transferee company and therefore it is held that
the transferor company is liable to pay compensation that also u/s. 25F only.
Workmen of Uttar Pradesh State Electricity Board & Anr. v. Upper Ganges Valley Electricity Supply Co.
& Ors., 1966 I LLJ 730 : 1966 (12) FLR 231 (S.C.CB)
.The tribunal treats the matter as falling within the proviso to S. 25FFF (1). Sharma, on the other
hand, claims under S. 25 F (1).Both the sub-section and the proviso apply to the undertakings
which close down. If Sharma had continued in service with the company and the undertaking had closed
down, the proviso last quoted would undoubtedly have applied to his case. But the undertaking never
closed down. It continued in the hands of the board. All that happened was that the company having
unlawfully terminated the service of Sharma did not transfer him to the board as one of the employees in
the undertaking and the board also did not accept him on its service rolls. The result was that Sharma
stood retrenched on 5 May 1959 when the undertaking changed hands. He was so retrenched by the
action of the company and his case, therefore, falls squarely within the rule indicated in S. 25F
(b). (Page: 734, Para: 2)

l) Compensation u/s. 25FF is payable to workmen since it is not closure but

transfer as the company is taken by MPEB (MP.DB)
5A.808
The power company has been taken over by the M. P. Electricity Board on expiry of
its license and services of workmen were terminated on payment of compensation u/s. 25FFF. On
application by workmen u/s. 33C(2) claiming compensation u/s. 25F, the Labour Court held that
the case was not of closure but of transfer of undertaking by operation of law u/s. 25FF and granted
full compensation claimed which was upheld by the Court which opined that Labour Court could
award retrenchment compensation u/s. 33C(2) which was payable u/s. 25F.
Central India Electric Supply Co. Ltd. Bilaspur v. P.O. District Labour Court, Gorakhpur Ward,
Jabalpur, & Ors., 1969 I LLJ 840 : 1969 (18) FLR 22 : 1969 LIC 1204 (MP.DB)
The company was ..under S. 25F (Page: 844, Para: 2)
Lastly it is.under S. 25F. (Page: 844, Para: 2)
.We have.Labour Court. (Page: 843, Para: 1)

m) No compensation is payable for benefit of earned leave not availed before the
transfer (S.C.2J)
F 5A.809 In absence of any provision in a statute governing the right to compensation for
earned leave not availed of by workmen before closure or transfer of undertaking, such
compensation was not held to be payable after the company closed its business.
U.P. Electric Supply Co. Ltd. (In Voluntary liquidation) v. R. K. Shukla & Anr., 1969 II LLJ 728 : 1969
(36) FJR : 1969 (19) FLR 268 :1970 LIC 276 : 1970 AIR (SC) 237 : 1996 (2) SCC 400 (S.C.2J)
Finally it was contended-and that contention relates only to the cases of 56 workmen in the Lucknow
undertaking-that the workmen who had not availed themselves of earned leave were entitled to
compensation equal to thirty days wages. But we do not think that any such compensation is statutorily
payable. So long as the Company was carrying on its business, it was obliged to give facility for enjoying

Sec. 25FF

Effect of transfer of undertaking

2579

earned leave to its workmen. But after the Company closed its business, it could not obviously give any
earned leave to those workmen, nor could the workmen claim any compensation for not availing
themselves of the leave. In the absence of any provision in the statute governing the right to compensation
for earned leave not availed of by the workmen before closure or transfer of an undertaking, we do not
think that any such compensation is payable. (Page: 738, Para: 2)
Note: Provision regarding leave is amended under Factories Act

n) Claim of seniority over transferees employees is not maintainable (S.C.3J)

F 5A.810 Where in the matter of transfer of an undertaking functioning under the state to a
corporation fully owned by the same State Government and it is held that the state is expected to
act fairly and not arbitrarily and it is held that in all such cases the Court has a right of judicial
review notwithstanding the fact that the case is not falling under complete succession and that this
requirement of judicial review flows from the contours of Art. 14 of the constitution which the state
and the corporation are obliged to adhere to and the Court in the instant case, held that it being
Government is not expected to function like a private party by depriving the tube well employees
upon absorption into the new corporation their continuity of service which would have led to their
better salary, length of service and retirement benefits in the corporation. Therefore in the instant
case, the Court ordered continuity of service and all benefits arising their with the to the employees
of the transfer tube well work under the Government to the corporation except seniority to the
employees affected by the transfer. Since it is a case of transfer the Court held that they are entitled
either for compensation u/s. 25FF or continuity of service with attendant benefits but not both.
Gurmail Singh & Anr., etc. v. State of Punjab & Anr., 1991 II LLJ 76 : 1993 (82) FJR 332 : 1991 (62) FLR
458 : 1991 I LLN 587 : 1993 LIC 428 : 1991 I CLR 637 : 1991 SCC (L&S) 147 : 1993 AIR (SC) 1388 :
1991 (1) SCC 189 (S.C.3J)
.where, as here, the transferor and/or transferee is a State or a State Instrumentality, which is
required to act fairly and not arbitrarily (see the recent pronouncement in Mahabir Auto Stores v. Indian
Oil Corporation, 1990-3 S.C.C. 752) and the Court has a say as to whether the terms and conditions on
which it proposes to hand over or take over an industrial undertaking embody the requisite of fairness in
action and could be upheld. We think that, certainly, in such circumstances it will be open to this Court to
review the arrangement between the State Government and the Corporation and issue appropriate
directions. Indeed, such directions could be issued even if the elements of the transfer in the present case
fall short of a complete succession to the business or undertaking of State by the Corporation, as the
principle sought to be applied is a constitutional principle flowing from the contours or Article 14 of the
Constitution which the State and Corporation are obliged to adhere to. (Page: 88/89, Para: 16)
.. we are unable to see why the Government stopped short of giving the appellants the benefit of
their past services with the Government when thus absorbed by the Corporation. Such a step would have
preserved to the appellants their rightful dues and retirement benefits (Page: 89/90, Para: 17)
the appellants should be entitled to count their past service with the Government for the
purpose of computation of their salary, length of service and retirement benefits with the Corporation.
This, however, should not result in the appellants claiming any seniority over the staff which the
Corporation has otherwise engaged right from its commencement in 1970.
(Page: 90, Para: 18)
.. in a case where one or both of the parties is a State instrumentality, having obligations under
the Constitution, the Court has a right of judicial review over all aspects of transfer of the undertaking. It
is open to a Court, in such a situation, to give appropriate directions to ensure that no injustice results from
the change-over. In the present case, the parties to the transfer are a State on the one hand and a fully
owned State Corporation on the other. That is why we have examined the terms and conditions of the
transfer and give appropriate directions to meet the needs of the situation.. (Page: 91, Para: 21)

2580

Chapter VA Lay-Off and Retrenchment

Sec. 25FF

o) Reinstatement of employee not maintainable if there is agreement not to

transfer the employees concerned (S.C.CB)
F 5A.811 Despite being acquitted by High Court in criminal charge the dismissed employee was
denied reinstatement, subsequently the undertaking was transferred to Electricity Board and all
employees except certain specified categories were transferred to Board but the dismissed
employee was not mentioned in employees transfer list. Since the employee was not in the list
prepared by the Company and accepted by the board, he could not be said to have been
automatically transferred and hence Tribunals decision that the Company in liquidation and not
the board was liable for employees claim for retrenchment compensation u/s. 25F of the Act.
Workmen of Uttar Pradesh State Electricity Board& Anr. v. Upper Ganges Valley Electricity Supply Co.
& Ors., 1966 I LLJ 730 : 1966 (12) FLR 231 (S.C.CB)
.The board took over the staff of the company subject to certain conditions. These conditions are
contained in Ex. E 3/1 which is described as schedule of procedure for handing over the companys
undertaking. Paragraph 4 of this schedue reads:
All staff, except those specified by the company or who wish to resign or who in the opinion of the
electricity board are not suitable, will be transferred to the electricity board and will continue to be paid
the same scales of salary including dear-food allowance, etc., as hitherto and the same shall not be less
favorable than those on which they are at present employed. As Sharma had not been reinstated despite
his acquittal, the company did not show him in the list of the staff taken over from the company by the
board. (Page: 732/733, Para: 1)
.It was decided by the Tribunal that the responsibility, if any, must fall upon the Company in
liquidation because Sharma was not an employee of the managing agents and had never been accepted by
the board.the language of the paragraph is not very happy. The words all staff are cut down by
the exception and really mean that such of the staff as do not fall within the exception were transferred
form the Company to the board, Sharma was not in the list prepared by the Company and accepted by the
board and, therefore, he could not be said to have been automatically transferred because he would be hit
either by the first exception or by the second or both. The Tribunal has taken the same view of the matter
and in our opinion rightly. (Page: 733, Para: 2)

p) Re-employment u/s. 25H can be sought when employees were retrenched prior
to the transfer and not paid compensation u/s. 25FF but u/s. 25F (S.C.2J)
F 5A.812 Rejecting the contention of the employer that as soon as the transfer had been
effected, all workmen are entitled for compensation u/s. 25FF and since employee who had been
paid the compensation, re-employment u/s. 25H is not allowed, Supreme Court held that they were
retrenched long before the colliery was taken over by the management and they were not paid
u/s. 25FF but u/s. 25F and hence upheld the orders Tribunal directing re-employment when any
re-employment is done.
Workmen (represented by Akhil Bhartiya Koyla Kamgar Union) v. Employers in relation to Management
of Industry colliery of Bharat Coking Coal, Ltd. & Ors., 2001 I LLJ 1400 : 2001 (98) FJR 652 : 2001 (89)
FLR 552 : 2001 II CLR 1 : 2001 II LLN 819 : 2001 LIC 1397 : 2001 SCC (L&S) 641 : 2001 AIR (SC)
1994 : 2001 SCC (4) 55 (S.C.2J)
Shri Sinha submitted that as soon as transfer had been effected under section 25-FF of the Act all the
employees became entitled to claim compensation will not be entitled to claim re-employment under
section 25-H of the Act as the same would result in double benefit in the form of payment of
compensation and immediate re-employment and, therefore, fair entitled to such conferment of double
benefit. It is no doubt true that this argument sounds good, but there has been no retrenchment as
contemplated under Section 25-FF of the Act in the present case. The workmen in question have been
retrenched long before the colliery was taken over by the respondents and, therefore, the principle stated
in Anakapalle Co-operative Agricultural and Industrial Society Ltd., (surpa) in this regard cannot be
applied at all. The workmen had been paid compensation only under section 25-F and not under section
25-FF of the Act on transfer of the colliery to the present management. That case has not been pleaded or
established. Hence, we do not think that the line upon which the High Court has proceeded is correct. The
order made by the High Court deserves to be set aside and the Award made by the Tribunal will have to be
restored. (Page: 1403, Para: 9)

Sec. 25FF

Effect of transfer of undertaking

2581

q) Permanent employees are entitled to be absorbed subsequent to the transfer in

the same status when so directed (S.C.2J)
F 5A.813 Subsequent to the transfer of the cotton agency from the Marketing Federation to a
new organization State Co-op. Cotton Growers Marketing Federation the permanent employees
were to be absorbed by the new organization in the same status and therefore the organizations
refusal to absorb such employees not as permanent employees but as seasonal employees without
reasons was held to be without substance.
Maharashtra State Co-operative Cotton Growers Marketing Federation Ltd. v. (1) Shripati Pandurang
Khade & Anr., (2) Vijay Madhavrao Patil & Anr., (3) Dattatraya Beruji Hake & Anr., 1989 AIR (SC) 485
: 1989 I LLJ 57 : 1987 (74) FJR 115 : 1988 (57) FLR 779 : 1989 I LLN 563 : 1989 LIC 1040 : 1989 SCC
(L&S) 318 : 1989 Suppl. (1) SCC 326 (S.C.2J)
On the basis of the directions in paragraph 2 extracted above, it is submitted on behalf of the appellant
that the appellant is at liberty not to absorb or accept the respondents in the appellants concern. This
contention, in our opinion, is without any substance whatsoever. There is a specific direction that the
appellant shall finally absorb the staff of the Marketing Federation after scrutiny as on January 1, 1985.
The appellant cannot refuse to absorb or accept a permanent employee of the Marketing Federation
without any reason whatsoever. So far as the respondents are concerned, we do not find any reason why
the appellant should not accept them as its permanent employees. The High Court has rightly directed the
appellant and the Marketing Federation to process the cases of the respondents on the basis that they have
put in more than 240 days of service and grant them all the benefits under the circular letter dated January
18, 1985. (Page: 488, Para: 12)

r) Workman entitled to retrenchment compensation as per Sec. 25FF though

reinstated for invalid retrenchment (AP.DB)
5A.814
Workman though reinstated for invalid retrenchment after the transfer of
management yet the workman is entitled to retrenchment compensation as per Sec. 25FF.
Hyderabad Construction Company, Ltd., Acetic Acid Plant, Azamabad (represented by General
Manager) & Ors. v. Labour Court, Hyderabad & Ors., 1980 I LLN 65 (AP.DB)
.the order of.of her reinstatement. (Page: 69, Para: 11)
We, however, notice.of the Act. (Page: 69, Para: 12)
.the section provides.termination was retrenchment. (Page: 70, Para: 13)
.Smt. Kanaka Durga.of the Act. (Page: 70, Para: 14)
Though Smt. Kanaka.to the company. (Page: 70, Para: 15)

s) Double benefit of compensation and re-employment u/s. 25H not envisaged by

the section in case of genuine transfer (S.C.CB)
F 5A.815 Sec. 25H is not applicable to cases of genuine transfer of establishment neither can the
general principles underlying provisions of Sec. 25H be invoked when dealing with claim of
re-employment of transferors workmen against transferees concern because double benefit in
form of compensation u/s. 25FF and immediate re-employment is not based on considerations of
fair play and justice.
Anakapalle Cooperative Agricultural & Industrial Society Ltd. v. Their Workmen & Ors., 1962 II LLJ
621 : 1963-64 (24) FJR 101 : 1963 (6) FLR 1 : 1963 AIR (SC) 1489 (S.C.CB)
Note: Please see related ratio/s under the above citation u/s. 25H

2582

Chapter VA Lay-Off and Retrenchment

Sec. 25FF

t) Reinstatement can be claimed when no notice or compensation paid as their

services are deemed to have been not interrupted by transfer (S.C.2J)
F 5A.816 Where the workmen were illegally denied employment despite the fact that they
produced themselves for employment both before the company and the Board which had taken
over company, Court held that workers who had completed one year of service were not given any
compensation or notice as per Sec. 25F in compliance of Sec. 25FF before such transfer, their
services should be deemed to have not been interrupted by such transfer and they are entitled for
reinstatement by Board being a successor in interest of the company.
Karnataka Power Transmission Corporation Ltd. & Anr. v. The Amalgamated Elec. Co. Ltd and Ors.,
2001 (88) FLR 729 : 2001 I LLJ 556 : 2001 III LLN 705 : 2001 LIC 406/2140 : 2001 I CLR 708 : 2001
LLR 413 (Sum) 9 : 2001 SCC (L&S) 278 : 2001 SCC (1) 586 : 2001 AIR (SC) 291 (S.C.2J)
It is true that these workmen were not working in the Amalgamated Company at the time when the
management of the Company was taken over on 18-12-1974 as they were illegally denied employment.
Nevertheless, the Company was legally bound to reinstate these workers as early as from 25-3-1971. The
award of the Tribunal shows that they were illegally denied employment with effect from 25-3-1971.
When the Karnataka Electricity Board took-over the management of the Amalgamated Electricity
Company, these workers made themselves available for work, but they were not allowed to join duty by
the Karnataka Electricity Board. The entire assets and liabilities of the Amalgamated Electricity
Company were taken over by the Karnataka Electricity Board. Even as per Section 25FF of the Industrial
Disputes Act, 1947, where the ownership or management of an undertaking is transferred, whether by
agreement or by operation of law, from the employer in relation to that undertaking to a new employer,
every workman who has been in continuous service for not less than one year in that undertaking
immediately before such transfer shall be entitled to notice and compensation in accordance with the
provisions of Section 25-F thereof. These workers were not paid any such compensation as per Section
25-F. Their services should be deemed to have been not interrupted by such transfer. Had the
Amalgamated Electricity Company Ltd. been functioning in Belgaum, the said Company would have
been legally bound to engage these workers as their workmen by virtue of the award passed by the
Tribunal. The Karnataka Electricity Board being the successor-in-interest is bound to reinstate these
workers as per the award passed by the Tribunal. (Page: 731, Para: 6)

u) Transferee becomes real owner if in de facto possession of tea estate and

termination by him is retrenchment u/s. 25 F and not u/s. 25FF (S.C.2J)
F 5A.817 By virtue of agreement dated 28.12.1959 both the parties agreed to sell the tea estate
and transferee was put in de facto possession on 17.2.1959 subject to certain conditions of transfer
and during this period transferee was taking all the decisions in consultation with transferor hence
it was held that the transferee was the real owner and employer and retrenchment of eight
employees by transferee has been held as retrenchment as per Sec. 25F and not termination as per
Sec. 25FF.
Workmen of Subong Tea Estate (Indian Tea Employees Union) v. Subong Tea Estate & Anr., 1964 I LLJ
333 : 1964-65 (26) FJR 18 : 1964 (8) FLR 91 : 1967 AIR (SC) 420 (S.C.2J)
The industrial dispute which has given rise to this appeal arose between the appellants, the workmen of
Snbong Tea Estate, and the management of Subong Tea Estate represented by respondents 1 and 2.
Respondent No. 1, M/s. Macneill and Barry Ltd., who managed the Subong Tea Estate, has transferred
the said estate to respondent No. 2, M/s. Gungaram Tarachand otherwise known as Hindustan Tea
Company. (Page: 334, Para: 1)
.It was agreed between the parties that when the agreement was completed, it would take effect
from January 1, 1959. This agreement was subject to the approval of the Reserve Bank of India. The said
approval was accorded on July 15, 1959, and the conveyance was actually executed on December 28,
1959. Pending the execution of the conveyance, on February 17, 1959, the Vendee was put in possession
of the tea garden. These facts are not in dispute. (Page: 335, Para: 1)

Sec. 25FF

Effect of transfer of undertaking

2583

On August 31, 1959, Mr. Hammond, the Manager of the Vendor Company served notices on the 8
employees in question intimating to them that their services would be terminated with effect from
October 1. 1959.In pursuance of these notices, the eight employees were paid retrenchment
compensation due to them on August 31, 1959. On September 1, 1959. the Union representing the said
employees protested against the retrenchment in question. (Page: 335, Para: 2)
Shri Sastri for the vender.His case is that the transfer which is evidenced by the conveyance
executed between the parties on December 28, 1959 clearly shows that it was subject to two C0nditions; it
had to receive the sanction of the Reserve Bank and the Vendee held made it clear that the staff whom the
Vendee regarded as surplus had to be retrenched by the Vendor before the Vendee could take over the
undertaking as an owner. Since these two conditions can be treated as conditions precedent to the transfer
there can be no question of the transfer of the undertaking having taken place before the date of
retrenchment. (Page: 339, Para: 3)
.It is common ground that on July 15, 1959, the approval of the Reserve Bank was obtained, and
so, there can he no doubt whatever that as from July 15, 1959, the essential condition precedent having
been satisfied, the Vendee became the owner of the property. We have already noticed that the main
stipulation in the conveyance was that whenever the conveyance may be actually registered, it was agreed
to take effect from January 1, 1959. Even taking into account the fact that the approval of the Reserve
Prank was a condition precedent, there can be no escape from the conclusion that after the approval was
obtained, the operative clause in the conveyance came into play and the Vendee who had already
obtained possession of the estate became the owner of the property and his possession became the
possession of the owner. Therefore, whatever may be the character of the Vendees possession from
February 17, to July 15, 1959, as from the latter date it would be impossible to accept the Vendees case
that it continued manage the property as the Agent of the Vendor. That is one important point which
cannot be ignored. (Page: 340, Para: 3)
.We are therefore, satisfied that at least from July 15, 1959, the tea estate was in the possession
and management of the Vendee as an owner and that the conduct of the parties clearly shows that the
Vendee was the employer and the workmen working in the garden including the 8 retrenched workmen
were the Vendees employees. If that be so, whether or not the transfer of management took place on
February 17, 1959, there can be little doubt that after July 15, 1959 the Vendee accepted the employees as
its workmen and became answerable to them in that character. The impugned retrenchment cannot,
therefore, be taken to attract the operation of S. 25FF at all. It is not retrenchment consequent upon
transfer; it is retrenchment effected after the transfer was made. (Page: 341, Para: 1)
.It is conceded that if the retrenchment is held to be effected by the Vendee, it has not complied
with S. 25F or S. 25G of the Act, and there can be little doubt that failure to comply with S. 25F would
make the retrenchment invalid, and so would the failure to comply with S. 25G, because no reasons have
been recorded by the Vendee for departing from the rule prescribed by S. 25G.
(Page: 341, Para: 3)

v) Transfer of undertaking when affected during the pendency of a dispute about

termination, workers entitled to wages till the date of transfer and
compensation from seller (transferor) u/s. 25FF (Karn.HC)
5A.818
The services of the workmen were terminated without complying with the provisions
of Sec. 25F. As a result a dispute was raised and during the pendency of the proceedings, the
industrial establishment was transferred. The purchasers were also impleaded to the proceedings.
The Labour Court held that the order of termination be set aside and both the seller and the
purchaser are liable to reinstate workers with 50% back-wages and two workers who have
attained the age of superannuation are entitled to retirement benefits. This order was challenged
by the seller and purchaser and the High Court held that the workers are entitled to wages till the
date of transfer and to compensation from the seller u/s. 25FF as if they were retrenched including
those who have reached the age of superannuation.
A.C.C. Ltd. v. Smt. Shivamma & Ors., AND HMP Cements, Ltd., v. Smt. Shivamma & Ors.,1998 (78) FLR
38 : 1998 LLR (Sum) 284 : 1998 I LLN 299 (Karn.HC)

2584

Chapter VA Lay-Off and Retrenchment

Sec. 25FF

XII. Remedy for violation of the section

a) Right to retrenchment compensation is exercisable not against the transferee
company but accrues against the owner at the time of actual transfer (S.C.2J)
F 5A.819 In a transfer of business, if the right to retrenchment compensation is exercisable it is
not against the transferee company but accrues against the owner at the time of actual transfer.
South Arcot Electricity Distributing Co. Ltd. v. N.K. Mohammed Khan & Ors., 1970 II LLJ 44 : 1971 (40)
FJR 1 : 1970 (21) FLR 174 (S.C.2J)

In this connection, an additional point urged by Mr. Gupte was that the principal clause of Section
25-FF of the Act does not lay down which of the two employers mentioned therein is liable to pay the
retrenchment compensation and, consequently, where there is a dispute between the two employers,
an application for computation of the benefit under Section 25-FF of the Act cannot be competently
entertained and decided by a Labour Court. It appears to us that the language of that principal clause
makes it perfectly clear that, if the right to retrenchment compensation accrues under it, it must be a
right to receive that compensation from the previous employer who was the owner up to the date of
transfer. It is implicit in the language of that clause. The clause lays down that every workman
mentioned therein shall be entitled to notice and compensation in accordance with the provisions of
Section 25-F as if the workman had been retrenched. Obviously, in such a case, the date of the deemed
retrenchment would be the date when the ownership or management of the undertaking stands
transferred to the new employer. In the present case, that date would be the 1st of June, 1957, when the
undertaking of the company was taken over by the Government of Madras under the Madras Act. If
the workmens services are to be deemed to be retrenched on that very date, it is clear that, for
purposes of determining who has retrenched the workmen and who is liable to pay the retrenchment
compensation, the workmen could not become the employees of the new employer. The employment
under the new employer could only commence from the time when the ownership or the management
of the undertaking vested in the State Government; but, simultaneously with this vesting, the
workmen had to be deemed to be retrenched from service. That retrenchment could, therefore, be
deemed to have been made only by the previous employer. Further, it would be that previous employer
who would be competent to give the notice in accordance with the provisions of Section 25-F of the
Act. The notice of retrenchment, which has to be deemed to have become effective on the date of
vesting of the undertaking in the State Government, could not possibly be given by the State
Government. In these circumstances, the conclusion is irresistible that the claim under Section 25-FF
of the Act to compensation accrues to the workmen against the previous employer under whom he was
employed until the date of transfer. (Page: 49, Para: 2)

b) Remedy lies u/s. 33C (2) for recovery of compensation (S.C.2J)

F 5A.820 Denial by employer to pay compensation u/s. 25FF on ground that proviso to section
was applicable, will not fall within the ambit of Sec. 15(2) of Payment of Wages Act since such
denial cannot be termed as unauthorized deduction nor delayed payment and hence High Courts
decision that authority u/s. 15(2) of Payment of Wages Act had no jurisdiction to try applications
was upheld hence only Labour Court would be proper forum u/s. 33C(2) Industrial Dispute Act to
entertain such claims.
Payment of Wages Inspector, Ujjain v. Surajmal Mehta, Director, Barnagar Electric Supply & Industrial
Co. Ltd. & Anr., 1969 I LLJ 762 : 1969 (35) FJR 232 : 1969 (18) FLR 284 : 1969 LIC 867 : 1969 AIR (SC)
590 (S.C.2J)
.the claim made in the instant case is not a simple case of deductions having been unauthorisedly
made or payment having been delayed beyond the wage periods and the time of payment fixed under
Sections 4 and 5 of the Act. In the second place, in view of the defence taken by Respondent 1, the
Authority would inevitably have to enter into questions arising under the proviso to Section 25FF, viz.,
whether there was any interruption in the employment of the workmen, whether the conditions of service
under the Board were any the less favourable than those under the company and whether the Board, as the
new employer, had become liable to pay compensation to the workmen if there was retrenchment in the
future. Such an inquiry would necessarily be a prolonged inquiry involving questions of fact and of law.

Sec. 25FFA

Scope and Object

2585

Besides, the failure to pay compensation on the ground of such a plea cannot be said to be either a
deduction which is unauthorised under the Act, nor can it fall under the class of delayed wages as
envisaged by Ss. 4 and 5 of the Act. (Page: 769, Para: 1)
.we agree with the High Court that the Authority had no jurisdiction under Section 15 (2) of the
Act to try these applications. (Page: 769, Para: 2)
.In our view it would be the Labour Court in such cases which would be the proper forum which
can determine such questions under Section 33C(2) of the Industrial Disputes Act.
(Page: 768/769, Para: 3)

I. Sixty days notice to be given of intention to close down any undertaking

Sec. 25FFA
I. Scope and Object
a) The object of 60 days notice is to prevent sudden closure and to enable the
Government to take any measure including reference (Cal.DB)
5A.821
The object of 60 days notice is to prevent sudden closure and to enable the
Government to take any measure including reference and hence in the absence of any limitation of
time in the Act for Government action, the reference of the question about the validity of closure
made by the Government even after the expiry of 60 days was held valid.
Wolford Transport Ltd. v. State of West Bengal & Ors., 1979 LIC 70 (Cal.DB)
There is.reference. (Page: 71, Para: 4)
.The object.reference. (Page: 72, Para: 4)
Note: also refer to the Commercial Ahmedabad Mills Co. Ltd. v. State of Gujrat, 1988 (56) FLR18
(Guj.HC)
5A.822
Purpose of giving notice to Government is to prevent sudden closure so that
Government may take appropriate measure for intended closure, failure to give such notice though
punishable u/s. 30A will not make closure non est or illegal and hence finding of Tribunal that
closure was illegal was set aside.
The Management of M/s. Town Bidi Factory, Cuttack v. P.O. Labour Court & Anr., 1990 II LLN 587 :
1990 II LLJ 55 : 1990 LLR 461 : 1990 II CLR 358 (Ori.DB)
The next finding.or non est.. (Page: 590, Para: 10)

b) Provisions of Sec. 25FFA and 25-O since imposed in public interest, are not
unconstitutional (Bom.DB)
5A.823
While Sec. 25FFA merely requires 60 days notice for closure, 25O requires
Appropriate Governments permission for closure and such restriction being imposed in the
interests of general public, is not violative of Art. 19(1) (g) or 14.
Bamwari Lolya S/o.Radhakisan Lolya v. The State of Maharashtra & Ors., 1994 III LLJ 306 : 1989 (58)
FLR 902 : 1989 I LLN 345 : 1989 I CLR 147 (Bom.DB)
There is no.public. (Page: 308, Para: 3)
We are.involved. (Page: 309, Para: 4)

2586

Chapter VA Lay-Off and Retrenchment

Sec. 25FFA

c) Expiry of 60 days will not render reference made thereafter as to validity of

closure invalid since no limitation for the same stipulated in the Act (Cal.DB)
5A.824
The object of 60 days notice is to prevent sudden closure and to enable the
Government to take any measure including reference and hence in the absence of any limitation of
time in the Act for Government action, the reference of the question about the validity of closure
made by the Government even after the expiry of 60 days was held valid.
Wolford Transport Ltd. v. State of West Bengal & Ors., 1979 LIC 70 (Cal.DB)
Note: Please see related ratio/s under the above citation in this section

II. Applicability
a) Applicable only to establishments employing less than 100 employees
(Jhar.DB)
5A.825
Since a provision for reference with regard to justifiability is made u/s. 25-O which
only applies to establishments employing 100 or more workmen and since the establishment in the
instant case employed less than 100 workmen, only Sec. 25FFA is attracted which requires the
employer to serve only 60 days notice but not to seek any permission from the Government for
closure, the reference by the Government about the justifiability of the closure was held bad and
hence the order of the Single Judge directing the Tribunal to adjudicate on the reference was
quashed.
Management of BASF India Ltd. v. State of Bihar & Ors., 2002 I LLJ 389 : 2002 (93) FLR 1019 : 2001 III
CLR 1034 (Jhar.DB)
.Section 25-K.attracted.The only.closure.the appellant.
Circumstances.workman doubtedly.25-O Act.It means.Tribunal of
therefore.Act. (Page: 394, Para: 8)
Viewed from.and patently. (Page: 397, Para: 13)
Note: also refer to the case of Bamwari Lolya v. State of Maharastra & others 1989 (58) FLR 902 Bom
HC 1989 I LLN 345

b) Section not applicable to cases falling u/s. 25-O (Cal.DB)

5A.826
Application if made u/s. 25-O, then provisions of chapter V-B will be applicable and
not 25FFA, hence prior permission of 90 days and not 60 days is required to make closure effective.
MAMC Sramajibi Union & Anr. &Union of India & Ors. WITH MAMC Employees Union & Ors v.
Union of India & Ors., 2002 (94) FLR 570 : 2002 II LLJ 735 : 2002 II CLR 364 (Cal.DB)
.The submission of the learned counsel with reference to section 25-FFA is totally meaningless
because the management has moved the Appropriate Government under S. 25-O of the Act and therefore
the provisions under Chapter VB shall apply and in Chapter VB no reference of section 25 FFA appears
nor it has any applicability whatsoever. Once an application has been moved under S. 25-O under
Chapter VB then all the procedure laid down in Chapter VB will be applicable. S. 25-O which appears in
Chapter VB clearly lays down the complete procedure for closing down the undertaking and for that the
Appropriate Government is the Central Government. Therefore, the reference of S. 25-FFA has no
application as far as S. 25-O is concerned. It clearly lays down whenever an employer who intends to
close down an undertaking of an industrial establishment to which this Chapter applies shall, in the
prescribed manner, apply, for prior permission at least ninety days before the date on which the intended
closure is to become effective before the Appropriate Government. Whereas the period prescribed under
section 25-FFA is sixty days for application before the Appropriate Government. Therefore, S. 25-FFA
has no application in the present case. In the present case we are governed by Chapter VB which is a

Sec. 25FFA

Notice of closure

2587

complete code in itself where special definition has been given of the Appropriate Government.
Therefore, in the present case Chapter VB is applicable and S. 25-FFA has no application whatsoever. As
such the argument is totally misconceived. The cases cited by the learned counsel with reference to
S. 25-FFA has no relevance as far as this submission is concerned. (Page: 584, Para: 19)

III. Notice of closure

a) Closure will not result in termination of services unless notice of closure was
given and compensation paid (Guj.DB)
5A.827
Dependents of the deceased workmen, of the mills which had closed down had applied
to the Regional Provident Fund Commissioner for settlement of the dues of the deceased workmen
under the Employees Deposit Linked Insurance Scheme which was refused by him on the ground
that the services of the deceased workmen were terminated due to closure but Court held that
closure of the business, will not result in termination of service of employees unless notice of closure
has been given as per Sec. 25FFA and compensation u/s. 25FFF has been paid, which was not done
in this case and hence the deceased workmen were members of the Fund on the date of their death
and direction to pay the insurance benefits with interest is given.
D.S. Vasavada, Textile Labour Association, Ahmedabad v. Regional Provident Fund Commissioner,
Gujarat State, Ahmedabad, 1985 I LLJ 263 : 1985 (51) FLR 308 : 1985 I LLN 629 (Guj.DB)
Any person.of service. (Page: 265, Para: 6)
.the consequences by way.matter beyond controversy. (Page; 266, Para: 7)
As we have.retrenchment. (Page: 266, Para: 10)
For the.benefit claimed. (Page: 266, Para: 11)
The petition succeeds.to suffer costs. (Page: 266, Para: 12)
Note: Please see related ratio/s under the above citation in this section The Apex Court in M/s. Hathising
Manufacturing Co., Ltd., Ahmedabad & Ors., (2) D. P. R. Cassad (3) Shri Digvijayshinji Spinning and
Weaving Mills Ltd. Jamnagar & Anr. v. (1) Union of India & Anr, (2) Regional Labour Commr. (Central)
Bombay & Anr, (3) Union of India & Ors, (4) P. Ranchoddas, Intervener. 1960 II LLJ 1 : 196061 (18)
FJR 181 : 1960 (1) FLR 402 : 1960 AIR (SC) 923 (S.C.CB)

b) Notice u/s. 25FFA mandatory failing which closure becomes invalid (Bom.HC)
5A.828
The language of Sec. 25FFA is clearly mandatory. There is a clear violation in the
instant case by the employer of the requirements contemplated by Sec. 25FFA and the employer
has rendered itself liable for the penalty contemplated by Sec. 30A.
Maharashtra General Kamgar Union v. Glass Containers Pvt. Ltd. & Anr., 1983 I LLJ 326 : 1983 I LLN
157 (Bom.HC)

c) Though notice was issued closure will not be justified when it results in the
unemployment to sizeable number of workmen and affects producers of
Sugarcane (S.C.3J)
F 5A.829 Although closure notice u/s. 25FFA of a sugar factory was held justified and valid by
the tribunal and yet it was refused by the Tribunal on grounds that closure would adversely affect
not only a large number of workmen but also producers of sugarcane thereby bringing
unemployment to a sizeable population in the locality and holding that with 925 workers and staff,

2588

Chapter VA Lay-Off and Retrenchment

Sec. 25FFA

the unit can be viable and factory can run Supreme Court directed the company to create a fund
for the rehabilitation of workmen, rendered surplus and jobless and gave other directions to
strengthen the company and for the progressive welfare of the workmen and the staff.
E. I. D. Parry (India) Ltd. & Anr. v. State of T.N. & Anr., 1985 AIR (SC) 753 : 1985 (51) FLR 231 : 1985
II LLN 58 : 1985 LIC 887 : 1985 Suppl. SCC 31 (S.C.3J)
In course of hearing we were impressed by the fact that the factory was almost a century and a half old
and appeared to be the most ancient as also the premier industry of the area. In view of the fact that the
factory required a sizeable quantity of sugarcane for its business, people in the locality had been growing
sugarcane and the Tribunal had found that a lot of sugarcane was standing in the fields. Closure of the
factory was not only going to affect adversely the workmen but also the producers of sugarcane and was.
therefore, likely to bring about unemployment to a sizeable population in the locality. Though the
Tribunal came to hold that the closure notice was valid and justified, it also recorded a finding pursuant to
the direction of this Court dated August 10, 1983, that with a viable unit of 925 workers, including staff,
the factory could run. We found that if the factory was not closing down and was to operate, apart from
providing a ready market for the sugarcane growers, provision for employment of at least 925 people
would be made. (Page: 754, Para: 5)
.we record our appreciation of the co-operation shown by counsel for all the parties in the matter
of keeping the Factory going. (Page: 756, Para: 8)

IV. Effect of violation of Section

a) Closure becomes invalid when requirements of Sec. 25FFA are not fulfilled
(Bom.HC)
5A.830
A closure effected in fact, without compliance with the requirements of Sec. 25FFA
must be held to be devoid of legal effect, invalid and illegal.
Maharashtra General Kamgar Union v. Glass Containers Pvt. Ltd. & Anr., 1983 I LLJ 326 : 1983 I LLN
157 (Bom.HC)

b) Closure will not result in termination of service of employees unless notice of

closure has been given (Guj.DB)
Note: Please see related ratio/s under the above citation in this section

c) Does not render closure illegal but workman is entitled to 60 days wages
(Bom.HC)
5A.831
Employer effected closure without giving notice of 60 days of the intended closure to
the Government. The workmen claimed reinstatement alleging that the closure was not valid. It
was held that due to non-compliance of intended notice to be served u/s. 25FFA of Industrial
Disputes Act it cannot be held that closure is illegal, but it only entitles the workmen to 60 days
wages and not reinstatement.
Poonvasi & Ors. v. Crown Silk Weaving Industries & Ors., 1994 (69) FLR 341 : 1994 I LLN 126 : 1994 I
CLR 1047 : 1994 LLR 888 (Bom.HC)
Note: Authors comments on the notice u/s. 25FFA
Sec. 25FFA calls up on an employer who intends to close down his undertaking to serve a notice of sixty
days before the intended closure in the prescribed format on the Appropriate Government. The section is
applicable to undertakings employing not less than fifty workmen in the preceding twelve months. Since
the provisions relating to closer u/s. 25-O are applicable to industrial establishments as defined in Sec.
25-L, it has largely been the view of the employers, professionals and even practitioners of labour laws
that the service of notice of closure u/s. 25FFA is imperative only in case of factories employing between
fifty and less than hundred workmen. However it is to be noted that the section used the expression

Sec. 25FFA

Remedy for violation of Sec. 25FFA

2589

undertaking but not industrial establishment. An undertaking is defined u/s. 2(ka) of the Industrial
Disputes Act as one in which any industry is carried on. Then the expression industry u/s. 2(j) is wide
enough to include any business trade undertaking manufacture or calling of employers.
Thus while Chapter VB is applicable only to factories (or industrial establishments u/s. 25-L) employing
not less than one hundred workmen, Sec. 25FFA is applicable to every undertaking whether or not it is a
factory and employs not less than fifty workmen. The only instance where an undertaking falls outside
the purview of Sec.25FFA is where such an undertaking is a factory (or industrial establishment u/s.
25-L) and employs not less than 100 workmen in which case it is governed by Sec.25-O or where it
employs less than fifty workmen. Thus in authors opinion, the scope Sec. 25FFA is wider than Sec. 25-O
as the former covers undertakings other than factories.
It is therefore prudent for every business employing not less than fifty workmen to serve a sixty day
notice as per Sec. 25FFA on the Government failing which the employer is likely to run the risk of closure
being declared illegal as was held in the case of Maharashtra General Kamgar Union v. Glass
Containers Pvt. Ltd. & Anr.,1983 I LLJ 326 : 1983 I LLN 157 (Bom.HC) or the termination of workmen
consequent up on closer being declared void as in the case of D.S. Vasavada, Textile Labour Association,
Ahmedabad v. Regional Provident Fund Commissioner, Gujarat State, Ahmedabad, 1985 I LLJ 263 :
1985 (51) FLR 308 : 1985 I LLN 629 (Guj.DB) notwithstanding the decision of the Bombay High Court
in Poonvasi & Ors. v. Crown Silk Weaving Industries & Ors., 1994 (69) FLR 341 : 1994 I LLN 126 : 1994
I CLR 1047 : 1994 LLR 888 (Bom.HC) that payment of sixty fays wages in lieu of notice saves the
closure from becoming illegal.

V. Remedy for violation of Sec. 25FFA

a) Writ of Mandamus will lie even against a private company (Guj.DB)
5A.832
The term person u/Art. 226 has same meaning as laid down in Sec. 3(42) of General
Clauses Act as provided under Art. 367 hence a writ of mandamus would lie against a private
company since mass termination of entire working force by a notice without complying with
provisions u/s. 25FFA and 25FFF amounts to injury of public nature, therefore such notice was
held as null and void, was quashed and reinstatement with full back wages and continuity in service
was directed.
Miscellancous Mazdoor Sabha v. State of Gujarat & Ors., 1995 III LLJ 677 : 1992 (65) FLR (Sum) 37 :
1992 II LLN 694 : 1992 II CLR 754 : 1993 LLR 763 (Guj.DB)
.question is whether.Nos. 3 and 6. (Page: 679, Para: 7)
.Even though.on the other. (Page: 690, Para: 24-A)
It therefore.and 25 FFF. (Page: 691, Para: 25)

b) Workman not entitled to any other relief u/s. 25-N once Sec. 25FFA complied
since termination due to closure excludes retrenchment (S.C.2J)
F 5A.833 Company decided to close down due to continuous loss suffered by it and State
Government granted exemption from complying with the provision of Sec. 25FFA of the Act.
Company issued order for closure and services of employee were terminated giving one months
wage in lieu of notice. Union raised industrial dispute on which Tribunal held that Sec. 25N is
attracted and workmen are entitled for another two months wages. Aggrieved, petition filed in
High Court by both the parties. High Court setting aside order held that Sec. 25N is not applicable
and workmen were only entitled for protection u/s. 25FFA and 25FFF which are complied with by
the company, hence workmen are not entitled to any relief. Supreme Court upholding the order
stated that retrenchment u/s. 2(oo) does not cover retrenchment due to closer or transfer of an
undertaking and since Sec. 25FFA and 25FFF were already complied with, workmen are not
entitled to any relief.
H.P. Mineral and Industrial Development Corporation Employees Union v. State of H.P. and Ors., 2001
III LLJ 1413 : 1996 SCC(L&S) 470 : 1996 (7) SCC 139 (S.C.2J)

2590

Chapter VA Lay-Off and Retrenchment

Sec. 25FFA

From the aforementioned observations, it is evident that the definition of retrenchment as defined in
Section 2(oo) of the Act has to be read in the context of Section 25-FF and 25-FFF of the Act and if thus
read retrenchment under Section 2(oo) does not cover the service as a result of closure or transfer of an
undertaking though such termination has been assimilated to retrenchment for certain purposes, namely,
the compensation payable to the workmen whose services are terminated as a result of such closure. In
that view of the matter Section 25-N which deals with retrenchment cannot apply to the present case
where termination of the services of the workmen was brought about as a result of the closure of the
undertaking. (Page: 1415/1416, Para: 6)
There is one more reason why Section 25-N cannot be made applicable to the workmen in the present
case. Section 25-N and 25-O were inserted in the Act by Act. No. 32 of 1976 whereby Chapter V-B was
introduced in the Act. Section 25-N imposed restriction in the matter of retrenchment of workmen
employed in large undertakings while Section 25-O deal with the procedure for closing down such
undertaking. Section 25-O was held to be unconstitutional by this Court in Excel Wear case (supra). The
striking down of Section 25-O would not ipso facto, result in enlargement of the ambit of Section 25-N so
as to cover termination of services of workmen as a result of closure which was otherwise outside the
ambit of Section 25-N. We are, therefore, unable to uphold the contention of Shri Sharma that Section
25-N was applicable in the present case and was obligatory for the Management of the
respondent-Company to give three months notice as required by Section 25-N. Since Section 25-O was
not available on account of the said provision having been struck down by this Court the only protection
that was available to the workmen whose services were terminated as a result of closure was that
contained in Sections 25-FFA and 25-FFF of the Act. It is not disputed that both these provisions have
been complied with in the present case. (Page: 1416, Para: 7)

c) Functional integrality of unit with the factory to be determined before deciding

applicability of Sec. 25FFA (Ori.DB)
5A.834
Industrial tribunal concluded that since more than 50 persons were employed in
Town Bidi Factory at the time of closure of bidi rolling unit, Sec. 25 FFA applied, violation of which
made closure void, but as it failed to decide whether rolling unit was an integral part of Town Bidi
factory, Division Bench set aside the order.
The Management of M/s. Town Bidi Factory, Cuttack v. P.O. Labour Court & Anr., 1990 II LLN 587 :
1990 II LLJ 55 : 1990 LLR 461 : 1990 II CLR 358 (Ori.DB)
Section 25 FFA of.cannot be sustained.(Page: 591, Para: 11)

d) Labour Court cannot draw inference as to closure without recording findings

on the factum of closure on the basis of evidence (Mad.HC)
5A.835
The management decided to close down the establishment as heavy loss occurred due
to stoppage of work and strike by workmen year by year. The workmen raised industrial dispute
that their services were illegally terminated. Labour Court ordered reinstatement on the ground
that there could be no closure when a charter of demands was pending without arriving at any
finding whether closure was valid or not or whether it was a case of retrenchment or illegal
termination, or whether management revived the operation within two years of closure and it
started operation under BIFR scheme. Though it referred to the closure notice as well as its
acknowledgments and also the closure compensation received by workmen without demure, the
inference by the Labour Court that it was illegal termination was factually not correct. Hence the
award is quashed and matter is remitted for fresh consideration.
Management, Wavin India Ltd. v. P.O. Principal Labour Court & Ors., 2002 (93) FLR 1095 : 2002 (100)
FJR 332 (Mad.HC)

Sec. 25FFF

Scope of the section

2591

e) Employer liable to pay interest on the closer compensation due to workmen

(Cal.DB)
5A.836
When out of 53 workmen, 49 have received their closer compensation and the four did
not receive it, the High Court directed that the sane may be paid in accordance with law in terms of
Sec. 25FFA within a periods of two months together with interest calculated at the simple rate of
6% per annum
Workmen Rep. By South Eastern Roadways Workmens Union & Anr. v. VIII Industrial Tribunal & Ors.,
2005 II LLJ 1020 : 2005 (105) FLR 395 (Cal.DB)

J. Compensation to workmen in case of closing down of undertaking

Sec. 25FFF
Note: also refer to Secs. 2(cc) & 25-O for additional ratios on closure

I. Object of the Section

a) To provide for involuntary unemployment, a sense of security in a worker and
to standardize his right in relation to industry (MP.DB)
5A.837
The object of the provisions contained in Sec. 25FFF or for that matter Sec. 25F and
25FF is (i) To provide for involuntary unemployment. (ii) To create a sense of security in a worker
to a reasonable extent that in case he sticks to his work he will not be thrown out in case his
employment is terminated in eventualities such as closure on grounds of expediency among others.
(iii) To raise the position and status of Labour and to standardize its right in relation to industry.
Rajkumar Singh v. Payment of Wages Authority, Ujjan & Anr., 1960 II LLJ 543 : 1960-61 (19) FJR 77
(MP.DB)
It is beyond doubt.general public. (Page: 549, Para: 17)
The object of the provision.to industry. (Page: 549, Para: 18)

II. Scope of the section

a) Retrospective application of amendment of the section is not unconstitutional
(S.C.CB)
F 5A.838 Imposition of civil liability is in respect of closure of undertakings on and after Nov.
28, 1956 (retrospective date of operation of section) and not in respect of closures effected before
aforementioned date, and hence is not discriminatory and does not violate Article 14 of the
constitution.
M/s. Hathising Manufacturing Co., Ltd., Ahmedabad & Ors., (2) D. P. R. Cassad (3) Shri Digvijayshinji
Spinning and Weaving Mills Ltd. Jamnagar & Anr. v. (1) Union of India & Anr, (2) Regional Labour
Commr. (Central) Bombay & Anr, (3) Union of India & Ors, (4) P. Ranchoddas, Intervener, 1960 II LLJ
1 : 196061 (18) FJR 181 : 1960 (1) FLR 402 : 1960 AIR (SC) 923 (S.C.CB)
Article 14 of the Constitution is not violated by making by law a distinction between employers who
closed their undertakings on or before November 27 1956, and those who close their undertakings after
that date.When Parliament enacts a law imposing a liability as flowing from certain transactions
prospectively, it evidently makes a distinction between those transactions which are covered by the Act
and those which are not covered by the Act, because they were completed before the date on which the
Act was enacted. This differentiation, however, does not amount to discrimination which is liable to be
struck down under Art. 14. The power of the legislature to impose civil liability in respect of transactions

2592

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

completed even before the date on which the Act is enacted does not appear to be
restricted.Article 14 strikes at discrimination in the application of the laws between persons
similarly circumstanced; it does not strike at a differentiation which may result by the enactment of a law
between transactions governed thereby and those which are not governed thereby. If the argument that
discrimination results when by statute a civil liability is imposed upon transactions which were otherwise
subject to such liability be accepted, every law which imposes civil liability will be liable to be struck
down under Art. 14 even if it comes into operation on the date on which it is passed, because immediately
on its coming into operation, discrimination will arise between transactions which will be covered by the
law after its coming into force and transactions before the law came into force which will not naturally be
hit by it. (Page: 11, Para: 4)

b) Retrospective application of the section by an amendment is not violative of

Art. 20(1) since non-payment of compensation does not amount to an offence
(S.C.CB)
F 5A.839 Though liability to pay compensation arises for all undertakings closed on or after
Nov. 28, 1956 (retrospective date of operation of section), by failing to discharge such liability
employer does not contravene Sec. 25FFF(1) as liability is not condition precedent to closure and
hence would not constitute an offence therefore will not attract Article 20 (1) of the constitution.
M/s. Hathising Manufacturing Co., Ltd., Ahmedabad & Ors., (2) D. P. R. Cassad (3) Shri Digvijayshinji
Spinning and Weaving Mills Ltd. Jamnagar & Anr. v. (1) Union of India & Anr, (2) Regional Labour
Commr. (Central) Bombay & Anr, (3) Union of India & Ors, (4) P. Ranchoddas, Intervener. 1960 II LLJ
1 : 196061 (18) FJR 181 : 1960 (1) FLR 402 : 1960 AIR (SC) 923 (S.C.CB)
.payment of compensation and wages in lieu of notice under the impugned section are not made
conditions precedent to effect termination of employment. The section only creates a right in the
employees : it does not enjoin the employers to do anything before closure. Section 31 (2) of the Act
which imposes penal liability for contravention of the provisions of the Act can therefore have no
application to failure to make payment of compensation and wages for the period of notice under S.
25FFF (1). The amending Act was, it is true, passed in June 1957, and liability to pay compensation arises
in respect of all undertakings closed on or after November 28, 1956. But, if liability to pay compensation
is not a condition precedent to closure, by failing to discharge the liability to pay compensation and wages
in lieu of notice, the employer does not contravene S. 25FFF (1). A statute may prohibit or command an
act and in either case, disobedience thereof will amount to contravention of the statute. If the statute fixes
criminal liability for contravention of the prohibition or the command which is made applicable to
transactions which have taken place before the date of its enactment the protection of Art. 20 (1) may be
attracted. But S. 25FFF (1) imposes neither a prohibition nor a command. But there being no
prohibition against closure of business without payment of compensation, S. 31 (2) does not apply. By S.
33 (c), liability to pay compensation may be enforced by coercive process, but that again does not amount
to infringement of Art. 20 (1) of the Constitution. Undoubtedly for failure to discharge liability to pay
compensation, a person may be imprisoned, under the statute providing for recovery of the amount e.g.,
the Bombay Land Revenue Code, but failure to discharge a civil liability is not, unless the statute
expressly so provides, an offence. The protection of Art. 20 (1) avails only against punishment for an act
which is treated as an offence, which when done was not an offence. (Page: 12, Para: 2)

c) No additional compensation like ex-gratia is payable when not payable under

law (S.C.2J)
F 5A.840 The workmen who were paid compensation and all other dues admissible under law
on account of genuine closure were held not entitled to any additional compensation in the form of
ex-gratia which is not payable under law and hence the award of the Labour Court, granting
additional compensation on the principle of social justice was set-aside.
Management of Gordon Woodrofe Agencies Pvt. Ltd. v. Presiding Officer, Principal Labour Court &
Ors., 2004 (106) FJR 903 : 2004 III LLN 1241 : 2004 LIC 3222 : 2004 III CLR 1 : 2004 LLR 881 : 2004
SCC (L&S) 1105 : 2004 AIR (SC) 4124 : 2004 (8) SCC 90 (S.C.2J)

Sec. 25FFF

Scope of the section

2593

The appellant before us was a trading agency being managed under the name and style of Gordon
Wardrobe Agencies P. Ltd. at the then Madras now known as Chennai. Said company came to be closed
w.e.f. 31.5.1984 because it had incurred heavy losses in its business. At that time the appellant had less
than 50 workmen. It is also the case of the appellant that the closure being genuine, it offered to all its
workmen, closure compensation as prescribed by law and other legal entitlements like provident fund,
gratuity etc. due to the workmen.However, the respondent workmen herein alone chose not to
receive the same, primarily contending that they were entitled to alternate employment in a sister
concern.The appellant in regard to this claim of the respondent workmen had contended that
Gordon Woodrofe Ltd. was a separate company and the question of providing alternate employment in
the said company.they were only entitled to the closure compensation and.
(Page: 904/905, Para: 1)
.Principal Labour Court, Madras, which by its order dated 18.3.1985 came to the definite
conclusion that the closure of the appellants establishment cannot be held to be invalid or unjustified. In
other words, the Labour Court held that the closure was genuine and justified in law.
(Page: 905, Para: 3)
Having come to the above conclusion, the Labour Court came to the conclusion that on the facts of this
case, there was substantial ground for awarding enhanced compensation to the respondent workmen on
compassionate grounds by applying the principle of social justice which according to the Labour Court is
linked with industrial adjudication. Therefore, it directed the appellant-management, apart from the
closure compensation and other legally payable amounts offered to the workmen, to pay to the
respondent-workmen ex gratia amounts in addition to closure compensation and other legal entitlements
to which they are entitled, at the rate of 15 days wages on the last drawn salary for the remaining years of
service till the date of superannuation by treating 6 months or more as one year of service. Over and above
this, the Labour Court directed a consolidated sum of Rs. 3,000 payable as solatium to each one of them.
(Page: 905, Para: 4)
In our opinion, the ratio laid down in the above case clearly applies to the facts of this case. In the instant
case also, the Labour Court came to the conclusion that the closure of the establishment was legally
justifiable and the management had as required under the law, offered apart from the compensation
payable for the closure, all other statutory dues which some of the employees collected without demur
and in the case of respondent-workmen even though the same were offered on time, they did not accept it,
therefore, the question of paying any additional ex gratia compensation which is not contemplated under
the statute, does not arise. This Court in the case of N.S. Giri (supra) held : An award under the Industrial
Disputes Act cannot be inconsistent with the law laid down by the Legislature or by the Supreme Court
and if it does so, it is illegal and cannot be enforced. Thus, it is clear from the pronouncements of this
Court that the Labour Court or for that matter the High Court had no authority in law to direct payment of
any additional sum by way of ex gratia payment otherwise than what is provided under the statute when
the act of the management in closing down the establishment is found to be valid and all legally payable
amounts have been paid or offered in time. In such a situation, contrary to the statute, the principle of
social justice cannot be invoked since the Legislature would have already taken note of the same while
fixing the compensation payable. (Page: 907, Para: 13)

d) Liability under the section is not violative of Art. 19(1)(g) (S.C.CB)

F 5A.841 A law which creates a civil liability in respect of a transaction which has taken place
before the date of its enactment such as in instant case Act 40 of 1957 makes employers who close
their under takings after 27th Nov. 1956 liable to pay compensation u/s. 25FFF(1), does not per se
impose unreasonable restriction on freedom guaranteed by Art. 19(1)(g).
M/s. Hathising Manufacturing Co., Ltd., Ahmedabad & Ors., (2) D. P. R. Cassad (3) Shri Digvijayshinji
Spinning and Weaving Mills Ltd. Jamnagar & Anr. v. (1) Union of India & Anr, (2) Regional Labour
Commr. (Central) Bombay & Anr, (3) Union of India & Ors, (4) P. Ranchoddas, Intervener. 1960 II LLJ
1 : 196061 (18) FJR 181 : 1960 (1) FLR 402 : 1960 AIR (SC) 923 (S.C.CB)

2594

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

.Whether an impugned provision imposing a fetter on the exercise of the fundamental right
guaranteed by Art. 19 (1) (g) amounts to a reasonable restriction imposed in the interest of the general
public must be adjudged not in the background of any theoretical standards or predeterminate patterns,
but in the light of the nature and incidents of the right, the interest of the general public sought to be
secured by imposing the restriction and the reasonableness of the quality and extent of the fetter upon the
right. (Page: 7, Para: 1)
By Act 40 of 1957, employers who close their undertakings after November 27, 1956, are made liable to
pay compensation under S. 25FFF (1) at the prescribed rates, and this liability evidently arises even in
respect of undertakings closed before the date of the enactment of the impugned section. A law which
creates a civil liability in respect of a transaction which has taken place before the date on which the Act
was enacted does not per se impose an unreasonable restriction. (Page: 7, Para: 2)

e) Compensation in addition to wages does not violate Art. 19(1)(g) (S.C.CB)

F 5A.842 Provision for payment of compensation in addition to wages in lieu of notice is not
unreasonable since the latter are normally inadequate compensation for loss of employment due to
closure of establishment and hence such provision does not violate Art. 19(1)(g).
M/s. Hathising Manufacturing Co., Ltd., Ahmedabad & Ors., (2) D. P. R. Cassad (3) Shri Digvijayshinji
Spinning and Weaving Mills Ltd. Jamnagar & Anr. v. (1) Union of India & Anr, (2) Regional Labour
Commr. (Central) Bombay & Anr, (3) Union of India & Ors, (4) P. Ranchoddas, Intervener. 1960 II LLJ
1 : 196061 (18) FJR 181 : 1960 (1) FLR 402 : 1960 AIR (SC) 923 (S.C.CB)
Wages in lieu of notice are normally inadequate compensation for loss of employment in an industrial
undertaking. Having regard to the prevailing conditions in the employment market, it would be difficult
for the workman thrown out of employment to secure employment similar to the one terminated within
one month, and therefore the Parliament has thought it proper to provide for payment of additional
compensation besides wages in lieu of notice. The provision for payment of such compensation in
addition to wages in lieu of notice cannot therefore be characterized as unreasonable. (Page: 8, Para: 3)

f) Standardisation of compensation is not in violation of Art. 19(1)(g) (S.C.CB)

F 5A.843 Standardization of compensation on termination of employment which dispenses with
recourse to judicial tribunal for assessing the quantum in the light of employers capacity to pay
and loss suffered by employer is a recognized method specially where large number of workmen
are involved in similar situation and hence it is not unreasonable and violative of Article 19 (1) (g).
M/s. Hathising Manufacturing Co., Ltd., Ahmedabad & Ors., (2) D. P. R. Cassad (3) Shri Digvijayshinji
Spinning and Weaving Mills Ltd. Jamnagar & Anr. v. (1) Union of India & Anr, (2) Regional Labour
Commr. (Central) Bombay & Anr, (3) Union of India & Ors, (4) P. Ranchoddas, Intervener. 1960 II LLJ
1 : 196061 (18) FJR 181 : 1960 (1) FLR 402 : 1960 AIR (SC) 923 (S.C.CB)
The plea of unreasonableness of the restriction imposed as flowing from the provision which
standardizes compensation and does not leave it to be ascertained by a judicial tribunal in the light of the
capacity of the employer and the loss suffered by the employees on termination of employment, cannot
also be sustained. Instead of leaving the question to be decided in each individual case in the context of a
variety of circumstances having a bearing on the amount of compensation to be awarded, the Parliament
has standardized the compensation by relating it to the length of service of the employee, and thereby a
definite standard for payment of compensation related to readily ascertainable data is prescribed.
Standardization of compensation which dispenses with recourse to a judicial tribunal for assessing the
quantum is a recognized method of awarding compensation especially where large numbers of workmen
are involved in a similar situation. Absence of a provision for a judicial verdict on the quantum of
compensation payable does not therefore make the law unreasonable. (Page: 8, Para: 4)

Sec. 25FFF

Applicability

2595

g) Restrictions u/s. 25FFF on the right of employer to close down his business are
not unreasonable nor violative of Constitution (MP.DB)
5A.844
Dismissing the petition filed by employer challenging constitutional validity of the
section, Court held that restrictions imposed on the fundamental right of employer to close down
business under the section are neither unreasonable so as to violate Art. 19(1)(g) nor classification
involved in provisions of the section is arbitrary so as to violate Art. 14 of constitution considering
that object of legislation is for benefit of workman and balances the right of labour and obligation
of industry.
Rajkumar Singh v. Payment of Wages Authority, Ujjan & Anr., 1960-61 (19) FJR 77 : 1960 II LLJ 543
(MP.DB)
The only question raised.as section 25-FFF. (Page: 78, Para: 2)
.the object of all.be as indicated above.the proportion of.need not
interfere. (Page: 86, Para: 1)
for these reasons.upon that right. (Page: 87, Para: 3)
The petition is.hereby dismissed. (Page: 87, Para: 4)

III. Applicability
a) Applicable to cases where there is closure of independent undertaking
(Del.HC)
5A.845
For a case to fall within the jurisdiction of Sec. 25FFF, the closure even though a
partial closure must be of such part of undertaking as is independent.
Raj Hans Press v. Labour Court, Delhi & Ors. & K.S. Sidhu & Ors., 1977 II LLJ 524 : 1977 (51) FJR 184
: 1978 (36) FLR 53 : 1977 II LLN 513 : 1977 LIC 1633 (Del.HC)

b) Applicable to termination of temporarily appointed workman appointed for

definite period (MP.DB)
5A.846
On facts it was held that workman was temporarily appointed for a definite period on
a project hence his termination on completion of project would not amount to retrenchment u/s.
2(oo) attracting Sec. 25F but would be deemed retrenchment u/s. 25FFF and hence employer was
directed to pay compensation as per said section and to consider his claim for absorption on
sympathetic grounds.
Pramod Kumar Tiwari v. Hindustan Fertilizers Corpn. Ltd., 1995 I LLJ 192 (MP.DB)
.The petitioner did.or industrial activity.it appears from.account of
nonpayment. (Page: 195, Para: 8)
.The petitioner had.sympathetically considered. (Page: 195, Para: 9)

2596

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

c) Reference as to applicability of proviso to Sec. 25FFF does not become

inaccurate merely because it refers to entitlement of compensation u/s. 25F
(Pat.DB)
5A.847
When the dispute pertains to the applicability of proviso to Sec. 25FFF, the
notification referring the dispute does not become wholly inaccurate, merely because it refers to
the entitlement of workmen to receive compensation u/s. 25FF but not u/s. 25FFF since the Sec.
25FFF itself refers to retrenchment compensation payable u/s. 25F and as also no prejudice was
shown to have been caused to the employer by such omission.
Bharat Collieries Ltd. Owners of Ekra Enineering Works, Bansjora v. P.O. Labour Court, Chota
Nagpur, Ranch & Ors., 1969 LIC 1424 (Pat.DB)
The Petitioner employer is.factory.the Management.August 1964.there
was.benefits.The Management.in terms. (Page: 1425, Para: 2)
notification No. III/Di-606.money
On the basis.Section 33 C (2) of the Act.Hence it held.Section 25 F of the
Act. (Page: 1425, Para: 3)
Mr. Tara Kishore Prasad.two application
(i) .
(ii) As there was No.of the Act.
(iii) .
(iv) .
(v)
It was then urged.irregularity. (Page: 1426, Para: 6)

d) Not applicable when notice indicating termination cites recession and not
closure as reason (S.C.3J)
F 5A.848 The Supreme Court held that the notice mentioned the cause of termination as due to
recession in volume of work, and no where in the notice, it is shown or even a word there of was
mentioned stating that the termination was occasioned due to the closure of one unit of business,
the Court held that such termination is deemed to fall u/s. 25F as if retrenchment of surplus Labour
and therefore held that Sec. 25FFF meant for closure is not attracted to the case in point.
M/s. Gammon India Ltd. v. Sri Niranjan Dass, 1984 I LLJ 233 : 1984 (64) FJR 60 : 1984 (48) FLR 310 :
1984 I LLN 90 : 1983 LIC 1865 : 1984 SCC (L&S) 144 : 1984 AIR (SC) 500 : 1984 (1) SCC 509 (S.C.3J)
.Respondent continued to serve in that capacity when on September 14, 1967, he was served
with a notice terminating his services. The notice reads as under:
Due to the reduction in the volume of business of the company as a result of the recession in (sic)
services will not be required by the company after the 14th October, 1967, and this may be treated as
statutory notice of one month of termination of your service. (Page: 234, Para: 1)
.The question, however, is whether the learned Single Judge, who interfered with the award of
the Tribunal was justified in coming to the conclusion that the case was one of closure covered by SEC.
25FFF or the Industrial Tribunal was right in holding that it is a case of retrenchment covered by S.25F of
Industrial Disputes Act.The notice as a whole recites that as a result of recession in the volume of
work of the company, services of the respondent would no more be required.There is not even a
whisper in the notice that as the Delhi office is being closed down, the services of the respondent would
not be required. (Page: 234, Para: 2)

Sec. 25FFF

Attributes of the section

2597

.The recitals and averments in the notice leave no room for doubt that the service of the
respondent was terminated for the reason that on account of recession and reduction in the volume of
work of the company, respondent has become surplus. Even apart from this, the termination of service for
the reasons mentioned in the notice is not covered by any of the clauses (a), (b) and (c) of S.2(oo) which
defines retrenchment and it is by now well-settled that where the termination of service does not fall
within any of the excluded categories, the termination would be ipso facto retrenchment. It was not even
attempted to be urged that the case of the respondent would fall in any of the excluded categories. It is
there indisputably a case of retrenchment (Page: 236, Para: 2)

e) Not applicable to an undertaking where there are only 14 workmen (All.HC)

5A.849
Company was closed without proper notice to all its 14 workmen who claimed wages
for the period they were kept out of employment. It was held that the amount claimed by workmen
amounted to wages and not compensation and hence authorities under Payment of Wages Act have
jurisdiction and also the number of workmen being only 14, provisions of Sec. 25FFF of the
Industrial Dispute Act did not apply.
Banjarwala Tea Estate v. Dist. Judge, Dehradun & Ors., 1981 I LLN 371 : 1981 LIC 370

(All.HC)

f) Not applicable if a specific project is discontinued which is not a separate and

distinct activity (Bom.HC)
5A.850
Sugar Factory implemented pilot project for which it employed 6 employees
specifically and after some time discontinued the project. It was held that the pilot project was not a
separate or distinct activity so as to attract Sec. 25FFF and hence the termination without
complying Sec. 25F, 25M and 25G of Industrial Disputes Act is illegal.
Shriram Sahakari Sakhar Karkhana Kamgar Union & Ors. v. S.V. Kotnis & Ors., 1995 II LLJ 541 : 1995
(71) FLR 236 : 1995 I CLR 680 (Bom.HC)

g) Applicable to an independent project which is completed since it amounts to

bonafide closure (Raj.HC)
5A.851
On termination of services the employee who was working for Installation and
Maintenance Unit (IMU) at Jodhpur, challenged the same on the ground that Sec. 25N was violated
as IMU Jodhpur is an unit of India Telephone Industries Ltd. (ITIL) which has more than 1000
workmen. High Court held that the ITILs main business is manufacturing and selling
telecommunication instruments and also undertaking independent project of temporary nature
for installing those instruments including civil works like construction of buildings etc. and
petitioner-employee was employed temporarily for that project and the work of the said project is
already completed and also there is no functional integrality with the said project and ITIL,
therefore, closure is bonafide and he is only entitled to notice and compensation u/s. 25FFF(2) and
Sec. 25N not applicable.
Dinesh Kumar v. Union of India & Ors., 1993 (66) FLR(sum) 43: 1993 LIC 678 (Raj.HC)

IV. Attributes of the section

a) Paying compensation and notice are not pre-conditions for the section since
Sec. 25F and 25FFF are not pari materia (S.C.CB)
F 5A.852 u/s. 25FF a prohibition is imposed on retrenchment until conditions prescribed by
section are fulfilled but u/s. 25FFF(1) termination of employment on closure without payment of
compensation and without service of notice or paying wages in lieu of notice is not prohibited, hence
payment of compensation and wages for notice period are not conditions precedent to closure.
M/s. Hathising Manufacturing Co., Ltd., Ahmedabad & Ors., (2) D. P. R. Cassad (3) Shri Digvijayshinji
Spinning and Weaving Mills Ltd. Jamnagar & Anr. v. (1) Union of India & Anr, (2) Regional Labour
Commr. (Central) Bombay & Anr, (3) Union of India & Ors, (4) P. Ranchoddas, Intervener, 1960 II LLJ
1 : 196061 (18) FJR 181 : 1960 (1) FLR 402 : 1960 AIR (SC) 923 (S.C.CB)

2598

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

There is between the text of S. 25F and SEC. 25FFF (1) a significant difference in phraseology. Whereas
by S. 25F the constitution validity whereof does not fall to be determined in these petitions certain
conditions precedent to retrenchment of workmen are prescribed, SEC. 25FFF (1) merely imposes
liability to give notice and to pay compensation on closure of an undertaking which results in termination
of employment of the workmen.By the plain intendment of SEC. 25FFF (1), the right to notice
and compensation for termination of employment flows from closure of the undertaking; the clause does
not seek to make closure effective upon payment of compensation and upon service of notice or payment
of wages in lieu of notice. An employer proposing to close his undertaking may serve notice of
termination of employment and if he fails to do so, he becomes liable to pay wages for the period of
notice. On closure of an undertaking, the workmen are undoubtedly entitled to notice and compensation
in accordance with S. 25F as if they had been retrenched, i.e. the workmen are entitled beside
compensation to a months notice or wages in lieu of such notice, but by the use of the words as if the
workman had been retrenched the legislature has not sought to place closure of an undertaking on the
same footing as retrenchment under S. 25F. By S. 25F, a prohibition against retrenchment until the
conditions prescribed by that section are fulfilled is imposed; by SEC. 25FFF(1), termination of
employment on closure of the undertaking without payment of compensation and without either serving
notice or paying wages in lieu of notice, is, not prohibited. Payment of compensation and payment of
wages for the period of notice are not therefore conditions precedent to closure. (Page: 6/7, Para: 3)
Note: also refer to the following case
Sunder Singh & Anr. v. Beas Construction Board. New Delhi & Ors.,1978 (52) FJR 484 : 1978 (37) FLR
187 : 1979 LIC 12 (Pat.FB)
5A.853
In matters of paying compensation, upon closure of an undertaking the settled
position of law as laid down by the Constitution Bench in the case of Hathi Singh Manufacturing
Co. Ltd. is that the requirement of paying compensation and issuing notice or wages in lieu there of
under sub-Sec. (1) of Sec. 25FFF as if the workmen had been retrenched cannot be placed on the
same footing as the requirement u/s. 25F. The observance of the requirement is not a condition
precedent to a valid action of closure of an establishment u/s. 25FFF. In the instant case, in the
matter of termination it was also intimated to the workmen that the compensation together with
one months salary in lieu of notice had been kept ready together with other legal dues and the legal
dues were collected subsequently. Hence it is held that no breach of Sec. 25FFA and 25FFF
occasioned merely because the dues were collected subsequently.
Lal Bavta Hotel Aur Bakery Mazdoor Union v. Ritz Private Ltd. & Anr., 2007 III LLJ 201 : 2007 (113)
FLR 568 : 2007 II LLN 810 : 2007 I CLR 907 : 2007 LLR 637 : 2007 (3) Mah.LJ 426 (Bom.DB)

b) Discharge due to closure is not due to surplusage (S.C.CB)

F 5A.854 Discharge of workmen consequent upon closure is not retrenchment, since
retrenchment in the ordinary sense connotes discharge of staff as surplusage only in a running
industry. Though there is discharge in retrenchment and closure, compensation awarded under
the law is not for discharge as such but for discharge on retrenchment and since retrenchment is
discharge of surplus it cannot include discharge on closure hence Court overruled the contention
that though there was no concluded agreement to pay workmen a share of profits on sale
transaction, Tribunal can award compensation for termination of their services, treating it as
retrenchment.
Pipraich Sugar Mills, Ltd. v. Pipraich Sugar Mills Mazdoor Union, 1957 I LLJ 235 : 1956-57 (11) FJR
262 : 1957 AIR (SC) 95 (S.C.CB)
It was next contended by Mr. Umrigar.But retrenchment connotes in its ordinary acceptation that
the business itself is being continued but that a portion of the staff or the labour force is discharged as
surplusage and the termination of services of all the workmen as a result of the closure of the business
cannot therefore be properly described as the retrenchment. It is however contended by Mr. Umrigar that
the definition of retrenchment in S. 2 (00) of the Industrial Disputes Act, 1947 (14 of 1947) is wide
enough to include discharge consequent on the closure of business, and that under S. 25-F, compensation
could be awarded.Our attention has been invited on behalf of the appellant to the decision in J. K.
Hosiery Factory v. Labour Appellate Tribunal (S) A I R 1956 All 498 (D), where it was held that
retrenchment as defined in S. 2 (00) does not comprehend discharge on the closure of business, but Mr.

Sec. 25FFF

Attributes of the section

2599

Umrigar contends that it is erroneous. We do not consider it necessary to decide this question as the
definition of retrenchment in S. 2 (00) of act, 14 of 1947 and S. 25-F therein were inserted by the
Industrial Disputes (Amendment) Act, 1953 (43 of l953) and we have held in Burn and Co. Ltd., Calcutta
v. Their Workman (C) (supra) that this Act has no retrospective operation. The rights of the parties to the
present appeal must, therefore, be decided in accordance with the law as it stood on 21-3-1951 when the
workmen were discharged. (Page: 241/242, Para: 2)
We are unable to agree with these observations. Though tree is discharge of workmen both when there is
retrenchment and closure of business, the compensation is to be awarded under the law, not for discharge
as such but for discharge on retrenchment, and if, as is conceded, retrenchment means in ordinary
parlance, discharge of the surplus, it cannot include discharge on closure of business. .
(Page: 242, Para: 2)
Note: This case arose prior to the amendment of Sec. 2(oo) by the amending Act XLIII of 1953

c) The legal fiction envisaged as to applicability of Sec. 25F is limited only to

notice or payment of wages in lieu of notice and does not render termination as
retrenchment (Pat.DB)
5A.855
The legal fiction envisaged u/s. 25FFF as to applicability of provisions of Sec. 25F is
limited only to issuance of notice or payment of wages in lieu of notice as specified u/s. 25F and it
does not render termination on closure of undertaking as retrenchment and hence second proviso
to Sec. 25C does not apply in case of Sec. 25FFF.
Management of Junkundar Colliery of M/s. D. Mandal & Co. v. Sahdeo Thakur & Ors., 1973 (27) FLR
460 : 1974 LIC 417 (Pat.DB)
There are.in this case. (Page: 464, Para: 8)

d) Closure may be of part of undertaking and not whole business (Raj.DB)

5A.856
Closure of undertaking implies closure of part of the business and not the whole
business, which must be real and genuine and not malafide and hence termination made on account
of closure being not a retrenchment, termination without payment of retrenchment compensation
was held to be justified.
Rajasthan Small Scale Industries Employees union v. State of Rajasthan & Ors., 1993 III LLJ 361 : 1990
(61) FLR 157 : 1990 II LLN 888 : 1990 LIC 1668 : 1990 II CLR 485 (Raj.DB)
The Retrenchment.undertaking. (Page: 364, Para: 10)
Sections 25-FFA.perfectly legal (Page: 364, Para: 14)
The position.no ground. (Page: 365, Para: 17)
.We are.workmen. (Page: 366, Para: 20)

e) Closure leads to severance of employer employee relationship and employee

cannot be treated as continued in service even if undertaking is restarted
(All.DB)
5A.857
Closure of an undertaking leads to severance of the relationship between employer
and employee and employee cannot be treated as continued in service after closure even if
undertaking is restarted, employee is entitled only to notice pay and compensation as per Sec.
25FFF, hence Labour Court has erred in awarding to the workmen, wages beyond the statutory
provision and its award is quashed.
M/s. The Kanpur Bottling Co. Pvt. Ltd. v. Labour Court (II) Kanpur & Ors., 1979 (38) FLR 398 : 1979
LIC (Sum) 117 (All.DB)

2600

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

.It thus appears.quashed. (Page: 400, L: 49 to Page: 401, L: 20)

f) Closure does not automatically terminate contract of service and hence

nominees can claim benefits under Employees Deposit Linked Insurance
Scheme (Guj.DB)
5A.858
Though manufacturing activities were stopped on August 12, 1977, notice of
termination had been issued to employees only on November 15, 1977 and considering these facts
and that concerned employee died on September 11, 1977 Court held that deceased was an
employee till his death as contract of service will not automatically terminate on stoppage of
manufacturing activities and hence rejection of the claim of nominee of deceased for benefit under
Employees Deposit linked Insurance Scheme was held unjustified.
Imambhai Gulamhusen Shaikh v. The Regional Provident Fund Commissioner, Ahmedabad, 1982 LIC
1036 (Guj.DB)
.Assurance benefit was.per Annexure E. (Page: 1036, Para: 1)
.Respondent no. 1.therefore be allowed. (Page: 1037, Para: 2)

V. Criteria determinative for closure

Note: also refer to Sec. 2(cc) and also Sec. 25-O for more ratios and subject index on closure/closer
compensation

a) Winding up the company and transferring machinery are not determinative of

closure (S.C.3J)
F 5A.859 Winding up of a company and transfer of the machinery are not the criteria to
determine the fact whether there has been a closure or not.
Kalinga Tubes, Ltd. v. Their Workmen, 1969 I LLJ 557 : 1968 (34) FJR 393 : 1968 (17) FLR 311 : 1969
LIC 90 : 1969 AIR (SC) 90 (S.C.3J)
.It is difficult to accede to the contention of Mr. Govind Das that the Company must be wound up
or that there should have been a transfer of the machinery or the factory before it could be said that the
undertaking had been closed down. (Page: 564, Para: 3)
It is significant that in the case of the Workers of the Pudukottahi Textile Mills, Civil Appeal No. (1005
of 1963 (SC) there had neither been winding up of the entire business nor had the machinery or the
factory been disposed of and actually the Mills had been reopened only after an interval of a few months
and yet it was held that there had been a closure. (Page: 565, Para: 1)

b) Closure should be real and bonafide (S.C.CB)

F 5A.860 To be a closure it should be real and bonafide and then only it travels outside the
purview of industrial dispute Act for any type of reference there to.
Pipraich Sugar Mills Ltd v. Pipraich Sugar Mills Mazdoor Union.,1957 I LLJ 235 : 1956-57 (11) FJR
262 : 1957 AIR (SC) 95 (S.C.CB)
Therefore, where the business has been closed and it is either admitted or found that the closure is real
and bona fide, any dispute arising with reference thereto would, as held in K. N. Padmanabha Ayyar v.
The State of Madras (supra), fall outside the purview of the Industrial Disputes Act. And that will a
fortiori be so, if a dispute arises - if one such can be conceived - after the closure of the business between
the quondam employer and employees. (Page: 239, Para: 3)

Sec. 25FFF

Notice of closure (Sec. 25FFF(1))

2601

VI. Notice of closure (Sec. 25FFF(1))

a) Excludes
1. Scheme of leasing (Mad.DB)
5A.861
The order for winding up of the company was expressly stayed by Appellate Court
considering a scheme for leasing and the lessee continued to run the mill with old employees
barring few and there was no evidence that they were recruited afresh and hence it was held that
there was no scope to conclude that workers were discharged u/s. 445(3) of Companies Act which
provides that winding order once made shall be deemed to be a notice of discharge to employees of
the company and hence workers were not entitled to closure compensation u/s. 25FFF.
Jayajothi & Co. Rajapalayam v. Official Liquidator & Anr., 1963 (7) FLR 389 : 1963 II LLJ 739
(Mad.DB)
The official liquidator who.is accordingly set aside. (Page: 395, Para: 5)

b) Effect of absence of notice on validity of termination

1. Absence of notice does not affect validity of termination (Raj.DB)
5A.862
Absence of notice in case of closure does not affect validity of termination of workmen
and claim of retrenchment compensation should be determined u/s. 25FFF and hence order
granting 50 percent of wages as compensation to workmen by the tribunal on the ground that
closure of mill was without a valid notice and workers should be deemed to be in service was invalid
in view of Sec. 25FFF.
Bijey Cotton Mill Ltd. & Ors. v. Rashtriya Mill Mazdoor Sangh, Bajeynagar & Ors., 1963 II LLJ 47
(Raj.DB)
.The Mill was.of the Act. (Page: 49, Para: 3)
.view taken by.lieu of notice. (Page: 50, Para: 3)
.It cannot be said.of the mill.the workmen
retrenched.The tribunal.Sec. 25FFF. (Page: 50, Para: 3)

could.they

are

We find that.the permanent workers. (Page: 50, Para: 4)

c) When notice is required

1. When Chapter V-A is applicable to the workman he is entitled to one
months notice & not 3 months notice on closure (P&H.DB)
5A.863
Closure of an entire unit was neither challenged nor shown to be wrong therefore it
was held that no exception can be taken to the order of retrenchment on the ground of non
compliance with Sec. 25F also challenge by the workman to his termination that as per his
appointment order he was entitled to three months notice was dismissed on the ground that since
chapter VA was applicable workman was entitled to only a months notice as was given to him and
hence order of Single Judge allowing the writ petition by workman was reversed.
Haryana Seeds Development Corpn. v. Pohap Singh & Anr., 1994 II LLJ 53 (P&H.DB)
.In the present.not complied with. (Page: 55, Para: 10)
As regards the.three months notice. (Page: 55, Para: 12)
.order of the.workman is dismissed. (Page: 55, Para: 13)

2602

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

2. Notice of closure required even in case of closure due to Force Majeure

(Ker.HC)
5A.864
Where closure was due to Force Majeure workman are still entitled to one months
notice or wages in lieu thereof as provided in cl. (a) of Sec. 25F.
Kerala Cashew Staff & Workers Union v. Industrial Tribunal, Alleppey., 1979 I LLJ 485 : 1979 I LLN
604 (Ker.HC)

VII. Compensation on closure

a) Attributes of closure compensation
1. Expression as if the workman had been retrenched means workmen are
entitled to compensation and notice pay and not re-employment (S.C.CB)
F 5A.865 The words as if the workman had been retrenched used in Sec. 25FFF does not
confer any right on the workmen in case of genuine closure to re-employment under Sec. 25H but
only grants the benefits of notice and compensation as per Sec. 25F.
The Punjab Land Devt. & Reclamation Corpn. Ltd., Chandigarh etc and several Ors. v. Presiding
Officer, Labour Court, Chandigarh etc. and several Ors., 1990 II LLJ 70 : 1990 (77) FJR 17 : 1990 (61)
FLR 73 : 1990 I LLN 1054 : 1990 LLR 410 : 1990 II CLR 1 : 1990 (3) SCC 682 : 1991 SCC (L&S) 71
(S.C.CB)
For the purpose of harmonious construction.Section 25-FF provides for compensation to
workmen in case of transfer of undertakings.Very briefly stated Section 25-FFF which has been
already discussed lays down that where an undertaking is closed down for any reason whatsoever, every
workman who has been in continuous service for not less than one year in that undertaking immediately
before such closure shall, subject to the provisions of subsection (2), be entitled to notice and
compensation in accordance with the provisions of Section 25-F, as if the workman had been
retrenched. (Emphasis supplied). Section 25-H provides for re-employment of retrenched
workmen.In our view, the principle of harmonious construction implies that in a case where there
is a genuine transfer of an undertaking or genuine closure of an undertaking as contemplated in the
aforesaid sections, it would be inconsistent to read into the provisions a right given to workman deemed
to be retrenched a right to claim re-employment as provided in Section 25-H. In such cases, as
specifically provided in the relevant sections the workmen concerned would only be entitled to notice and
compensation in accordance with Section 25-F. It is significant that in a case of transfer of an undertaking
or closure of an undertaking in accordance with the aforesaid provisions, the benefit specifically given to
the workmen is as if the workmen had been retrenched and this benefit is restricted to notice and
compensation in accordance with the provisions of Section 25-F. (Page: 93, Para: 76)

2. Compensation to accompany order of discharge of workman (P&H.DB)

5A.866
Discharge order of a workman u/s. 25FFF shall be accompanied by retrenchment
compensation and shall indicate amount of compensation payable.
Raghubir Singh & Anr. v. Beas Construction Board & Ors., 1978 (52) FJR 451 (P&H.DB)
We are not.the project. (Page: 454, Para: 2)
Note: Please see related ratio/s under the above citation in this section The Apex Court in M/s. Hathising
Manufacturing Co., Ltd., Ahmedabad & Ors., (2) D. P. R. Cassad (3) Shri Digvijayshinji Spinning and
Weaving Mills Ltd. Jamnagar & Anr. v. (1) Union of India & Anr, (2) Regional Labour Commr. (Central)
Bombay & Anr, (3) Union of India & Ors, (4) P. Ranchoddas, Intervener, 1960 II LLJ 1 : 196061 (18)
FJR 181 : 1960 (1) FLR 402 : 1960 AIR (SC) 923 (S.C.CB) held that notice and payment of closure
compensation are not preconditions to closure which view is reflected in the following ratio

Sec. 25FFF

Compensation on closure

2603

3. Payment is not a condition precedent to closure u/s. 25FFF and need not be
paid with discharge notice (Pat.FB)
5A.867
Payment of retrenchment compensation is not a condition precedent for invoking
Sec. 25FFF and it need not be paid along with discharge notice given by employer on completion of
work undertaken by them.
Sunder Singh & Anr. v. Beas Construction Board. New Delhi & Ors., 1978 (52) FJR 484 : 1978 (37) FLR
187 : 1979 LIC 12 (Pat.FB)
In my view.discharge notice. (Page: 489, Para: 2)
We are not.the project. (Page: 489, Para: 1)
5A.868
In case of retrenchment, payment of compensation is condition precedent whereas in
case of closure it is not a condition precedent but can be made after closure.
Rajasthan Small Scale Industries Employees union v. State of Rajasthan & Ors., 1993 III LLJ 361 : 1990
(61) FLR 157 : 1990 II LLN 888 : 1990 LIC 1668 : 1990 II CLR 485 (Raj.DB)
There is.the closure. (Page: 366, Para: 22)
5A.869
On issuance of notification regarding imposition of liquor prohibition, the
establishment sought to close its unit in accordance to Sec. 25-O and Government granted
permission on terms and condition that the workmen be given compensation and in the event of
restarting the unit the workers who were in employment will be given preference. Thereafter the
workmen were paid compensation. But workmen raised dispute and one of their grievances was
that they have not been paid compensation on closure date but paid subsequently which is in
violation of Sec. 25F of the Act. On failure of conciliation proceeding the failure report was sent to
Government, in the meantime the factory re-opened and it published notice in the newspaper
about re-opening of the factory but the workmen were not taken back by the management because
none of the workers came forward for re employment and it is held that individual in termination
by Regd. A.D. is not required. The claim of the workmen have been dismissed by the Labour Court
which was challenged in writ. High Court held that, from the language of the section it is clear that
the payment of compensation was not a condition precedent to closure as contained in Sec. 25F.
There was no stipulation that the payment of compensation would be a condition precedent to the
closure. Hence it was held that the did not violate any of the provision of Sec. 25FFF.
Ombir Singh & Ors. V. Haryana Breweries Ltd. & Anr., 2007 LLR 257 : 2007 (112) FLR 256 (P&H.DB)

4. Sec. 25F is a yardstick for standardizing compensation while u/s. 25FFF, it

is by way of equitable relief (S.C.CB)
F 5A.870 Though compensation was awarded in cases of closure it was by way of equitable relief
and enactment of Sec. 25F by legislature was for standardizing payment of compensation by using
a simple yardstick to retrenched employees in a continuing industry.
Hariprasad Shivshankar Shukla & Anr. v. A. D. Divelkar & Anr., AND Barsi Light Railway Co. Ltd. v. K.
N. Joglekar & Anr., 1957 I LLJ 243 : 1956-57 (11) FJR 317 :1957 AIR (SC) 121 (S.C.CB)
.But the fundamental question at issue is, does the definition clause cover cases of closure of
business, when the closure is real and bona fide ? The point to be emphasised in that connection is that
there is no provision (except perhaps s. 25FF inserted in 1956 by Act XLI of 1956 to which we shall
presently refer) which can be said to bring a closed or dead industry within the purview of the Act. The
provisions of the Act, almost in their entirety, deal with an existing or continuing industry. All the
provisions relating to lay off in ss. 25A to 25E are also inappropriate in a dead business.
(Page: 249, Para: 2)

2604

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

5. Compensation does not fall within the definition of wages u/Payment of

Wages Act & authority thereunder cannot adjudicate claims (MP.DB)
5A.871
The compensation payable to the workman u/s. 25FFF on account of closure is by
virtue of the fiction created by the statutory provision and not due to termination of services. Such
compensation does not fall within the definition of wages under the Payment of Wages Act and
hence the authority under the Payment of Wages Act has no jurisdiction to adjudicate the claims
u/s. 25FFF. The orders passed by the Payment of Wages authority as well as the decisions in the
appeals by the Additional District Judge affirming them, are quashed.
Fajale Hussain v. Authority under Payment of Wages Act, 1966 I LLJ 361 (MP.DB)
The compensation payable.disputes Act. (Page: 363, Para: 1)
.the orders passed by the.are also quashed. (Page: 363, Para: 2)

6. Compensation but not reinstatement is the relief to workmen in case of

genuine closure (S.C.3J)
F 5A.872 Where the depots/ branches being part of business are closed and the same is real and
genuine and also it is established that the business is not carried elsewhere tribunal has jurisdiction
to decide about the relief to be granted to the workmen in the form of compensation hence in the
instant case Tribunal was justified in denying to set aside retrenchment on closure and refuse to
give direction for reinstatement and what the workmen under the Act entitled was compensation
which the company had complied with.
Workmen of the Indian Leaf Tobacco Development Co. Ltb., Guntur v. The Management of Indian Leaf
Tobacco Development Co. Ltd., Guntur, 1970 I LLJ 343 : 1970 (37) FJR 231 : 1970 (20) FLR 269 : 1970
LIC 755 : 1970 AIR (SC) 860 (S.C.3J)
Of course, if a Company closes down a branch or a depot, the question can always arise as to the relief to
which the workmen of that branch or depot are entitled and if such a question arises and becomes the
subject-matter of an industrial dispute, an Industrial Tribunal will be fully competent to adjudicate on it. It
is unfortunate that, in this case, when dealing with the preliminary issue, the Tribunal expressed its
decision in the interim award in general words, holding that Issue No. 1 as a whole was beyond its
jurisdiction. If the reasoning in the interim award is taken into account, it is clear that the Tribunal on that
reasoning only came to the conclusion that it was not competent to direct reopening of the 8 depots which
had been closed, so that the Tribunal should have held that the first part of Issue No. 1 only was outside its
jurisdiction. (Page: 346, Para: 7)
.The Tribunal, thus, came to the finding that the closure of these depots was real and
genuine.If the same business had been continued, though under a different guise.on the
finding that there was a genuine closure of the business that used to be carried on at the depots, no
question could arise of the retrenchment being set aside by the Tribunal. The Tribunal could not ask the
Company to re-employ or reinstate the workmen, because there was no business for which the workmen
could be required. In these circumstances all that the workmen could claim was compensation for loss of
their service and in that respect, as we have indicated above, the workmen have received adequate
compensation. (Page: 347, Para: 10)

7. If closure is not due to fraud but for circumstances beyond control of

employer, compensation u/s. 25FFF and not u/s. 25F (Ker.HC)
5A.873
Where a company has been closed down under the orders of the Court and such
orders were not as a result of fraud or collusion, it must be held that the business of the company
was closed down under the circumstances beyond its control and the workmen of the company
would be entitled only to the benefits laid down u/s. 25FFF and not u/s. 25F.
K. Sathiarthy & Ors. v. New Era Manufacturing Co. Ltd., 1970 (38) FJR 144 (Ker.HC)

Sec. 25FFF

Compensation on closure

2605

8. Closure compensation as per Sec. 25F will not make termination as

retrenchment since procedure u/s. 25F adopted as a yardstick to compute
closure compensation (S.C.CB)
F 5A.874 Mere payment of compensation on closure as per Sec. 25F does not bring closure
within the purview of retrenchment since it is awarded as an equitable relief adopting the simple
yardstick of length of service to standardize the amount of compensation.
Hariprasad Shivshankar Shukla & Anr. v. A. D. Divelkar & Anr., AND Barsi Light Railway Co. Ltd. v. K.
N. Joglekar & Anr., 1957 I LLJ 243 : 1956-57 (11) FJR 317 :1957 AIR (SC) 121 (S.C.CB)
.Retrenchment means discharge of surplus workmen in an existing or continuing business; it had
acquired no special meaning so as to include discharge of workmen on bona fide closure of business,
though a number of Labour Appellate Tribunals awarded compensation to workmen on closure of
business as an equitable relief for a variety of reasons. It is reasonable to assume that in enacting S. 25-F,
the legislature standardized the payment of compensation to workmen retrenched in the normal or
ordinary sense in an existing or continuing industry; the legislature did away with the perplexing variety
of factors for determining the appropriate relief in such cases and adopted a simple yard stick of the length
of service of the retrenched workmen. If the intention of the legislature was to given statutory effect to
those decisions which awarded compensation on real and bona fid closure of business, the legislature
would have said so instead of being content by merely adding a definition clause, every requirement of
which is fulfilled by the ordinary, accepted meaning of the word retrenchment. (Page: 250, Para: 1)
Note: See also The Punjab Land Development & Reclamation Corporation Ltd., Chandigarh v.
Presiding Officer, Labour Court, Chandigarh & Ors., AND Divisional Controller, Maharashtra State
Road Transport Corporation, Amravati v. Chandrashekhar Maribhau Dehmukh & Anr., AND 1990 II
LLJ 70 : 1990 (77) FJR 17 : 1990 (61) FLR 73 : 1990 I LLN 1054 : 1990 LLR 410 : 1990 II CLR 1 : 1990
(3) SCC 682 : 1991 SCC (L&S) 71 (S.C.CB) which rubs the field today

9. Not being business expenditure cannot be deducted from profit of the

relevant year (Mad.DB)
5A.875
Closure compensation being payable only when business is closed, cannot be treated
as expenditure incurred by assessee company for the purpose of business hence not allowed to be
deducted from profit of the relevant years.
Venkates Color Works v. Commissioner of Income-Tax, Madras-II, 1977 (51) FJR 314 (Mad.DB)
Mr. K. Srinivasan.the business. (Page: 316, Para: 4)
5A.876
Retrenchment compensation payable on closure of undertaking being not an
expenditure incurred for carrying on business held to be not an admissible deduction u/s. 37(1) of
Income Tax Act. 1961.
P.N. Ganesan Pvt. Ltd., (In Liquidation) v. Commissioner Income-Tax, 1992 (65) FLR 460 (Mad.DB)
under.such closure. (Page: 461, Para: 3)
Applying.of the Act. (Page: 463, Para: 2)
The decision.the assesses. (Page: 465, Para: 1)
5A.877
Closure compensation not deductible u/ Income Tax Act as it is not to be treated as
revenue expenditure.
Coimbatore Premier Corpn.Pvt. Ltd. v. Commissioner of Income-Tax, 2000 (97) FJR 100 (Mad.DB)
If goes without saying.accordingly. (Page: 102, Para: 6)

2606

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

VIII. Computation of period of service for purpose of compensation

a) Definition of Continuous service u/s. 25B applicable in case of closure (Raj.DB)
5A.878
The definition of continuous service u/s. 25B applies also to Sec. 25FF and 25FFF as
these sections introduced by an amendment are to be read as a whole with Sec. 25F. Hence the part
of the award of the Tribunal granting compensation u/s. 25FFF to workmen who had completed
240 days services prior to the second closure, is maintained.
Shri Bijay Cotton Mills, Ltd. v. Rashtriya Mill Mazdoor Sangh, Bijaynagar & Ors., 1965 II LLJ 83 :
1965-66 (28) FJR 489 (Raj.DB)
It is obvious that.provisions of S.25. (Page: 91, Para: 3)
It is significant.and SEC. 25FFF. (Page: 91/92, Para: 3)
The Writ application.is maintained. (Page: 92, Para: 4)

b) Continuous service is to be determined before workman can be held entitled to

compensation (Mad.DB)
5A.879
Whether an employee has been in continuous service for one year from the date of
entry is to be determined before he can be held to be entitled for compensation u/s. 25FFF and
compliance with other conditions of continuous service and period of illegal strike cannot be
considered.
A. Parthasarathi & Anr. v. Management of Standard Motors Products of India Ltd. & Anr., 1979 LIC
(Sum) 136 (Mad.DB)
Note: Refer to the case of The Management of Standard Motors Products of India Ltd. v. Shri A.
Parthasarathy & Anr., 1986 I LLJ 34 : 1985 (67) FJR 417 : 1985 (51) FLR 459 : 1985 II LLN 830 : 1986
LIC 101 : 1986 AIR (SC) 462 : 1985 (4) SCC 78 (S.C.2J)

c) Length of service to be the basis for compensation to compensate the workman

who is to be content with jobs at lower level after termination (S.C.CB)
F 5A.880 As legislatures intention in relating the compensation payable on closure of
undertaking to length of service was to assist workmen who on termination of services would have
to compete for employment at lower level for which he may not be fit or to seek employment in a
similar job but at lower level, it cannot be held that doing so was unreasonable and violative of
Art. 19(1)(g).
M/s. Hathising Manufacturing Co., Ltd., Ahmedabad & Ors., (2) D. P. R. Cassad (3) Shri Digvijayshinji
Spinning and Weaving Mills Ltd. Jamnagar & Anr. v. (1) Union of India & Anr, (2) Regional Labour
Commr. (Central) Bombay & Anr, (3) Union of India & Ors, (4) P. Ranchoddas, Intervener. 1960 II LLJ
1 : 196061 (18) FJR 181 : 1960 (1) FLR 402 : 1960 AIR (SC) 923 (S.C.CB)
Compensation related to the length of service of the employee is also not unreasonable. An employee
remaining employed in an industry for an appreciable length of time acquires experience and some
degree of aptitude in the branch in which he is employed and his experience in that branch qualifies him to
promotion and to receive wages at a higher level. (Page: 8, Para: 2)
By his continued employment, he reaches seniority in the cadre of employment, with chances of
promotion, the benefit of which he loses by sudden termination of employment. The workman, on
termination of employment, may have to compete for employment at a lower level in branches to which
he may be by experience or aptitude, not fitted, or to seek employment in a job similar to the one
terminated at a lower level. If, in the light of these considerations, the legislature has related the
compensation payable on termination of employment to the period of service of the employee, the
provision cannot be regarded as unreasonable. (Page: 8, Para: 3)

Sec. 25FFF

Computation of period of service for purpose of compensation

2607

d) Period of illegal strike to be excluded in computing 240 days (S.C.2J)

F 5A.881 The workmen continued strike even after being prohibited by the Government and
hence it was closed. Since the workmen who have completed 240 days immediately before the
closure excluding the period of illegal strike were deemed to be in continuous service, they were
entitled to closure compensation irrespective of they being on illegal strike.
The Management of Standard Motors Products of India Ltd. v. Shri A. Parthasarathy & Anr., 1986 I LLJ
34 : 1985 (67) FJR 417 : 1985 (51) FLR 459 : 1985 II LLN 830 : 1986 LIC 101 : 1986 AIR (SC) 462 :
1985 (4) SCC 78 (S.C.2J)
.In the present case, even if the period of illegal strike is excluded, the number of days during
which the workman actually worked tinder the employer would be found to be more than 240 days. That
being so it has to be held that the workmen were in continuous service for a period of one year
immediately before the date of closure. (Page: 35, Para: 2)

e) Period of closure is to be included in length of service for calculation of closure

compensation (Guj.HC)
5A.882
During the winding up of an undertaking, workers should be given priority with
regards to payment of wages, retrenchment compensation and gratuity. Period of closure to be
included in length of service for calculating retrenchment compensation. Notice pay and bonus are
not covered for priority payment as the same is excluded in definition of wages under Industrial
Dispute Act. Relevant date for computation of dues would be the date of 1st appointment of
liquidator or the date of winding up order. Interest on the above dues not to be granted for period
after relevant date unless realization of assets produces surplus and interest for the prior period
due to be governed by the terms of contract.
Textile Labour Assoication v. Official Liquidator of Jubilee Mills Ltd., 2000 (96) FJR 159 (Guj.HC)

f) When an establishment was closed twice, the period of service rendered by an

employee prior to first closure cannot be considered for computing continuous
service for the purpose of compensation on second closure (Raj.DB)
5A.883
The textile mill was closed on 1.4.1953. In adjudication of the dispute the Tribunal
held the closure real and bonafide and rejected the demand for reinstatement as a permanent hand
upon reopening of the Mill in future and also, rejected the demand for compensation as Sec. 25FFF
had not come into force then. The mill was reopened on 15.5.1954 and old workmen were taken as
fresh hands. The Mill was closed again on 23.6.1957. Upon adjudication the Tribunal ignoring the
binding effect and finality reached of the first award directed to take into account the services even
that of the period prior to first closure for computing continuous service while paying
compensation u/s. 25FFF. The High Court in a writ quashed the award and held that the findings of
first award would operate as resjudicata as that award had held that the workmen would only be
taken as fresh hands upon reopening and as such the Industrial Tribunal should not have gone to
the question of compensation by counting the services prior to first closure also.
Shri Bijay Cotton Mills, Ltd. v. Rashtriya Mill Mazdoor Sangh, Bijaynagar & Ors., 1965 II LLJ 83 :
1965-66 (28) FJR 489 (Raj.DB)
We have knowing quoted.it is debarred from giving fresh decisions on the point covered by the
principles of resjudiata. (Page: 88, Para: 3)
The Second I.T.fresh decision. (Page: 89, Para: 5)

2608

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

IX. Burden of proof in respect of claim for closure compensation

a) Is on the workman
1. To prove 240 days of service in a year immediately preceding closure
(S.C.2J)
F 5A.884 In order to claim the benefit of notice and compensation on closure, the workman has
to only establish that he has worked for not less than 240 days immediately before closure but not
240 days in each year during the period preceeding closure.
Ramakrishna Ramnath v. The Presiding Officer, Labour Court, Nagpur & Anr., 1970 II LLJ 306 : 1972
(41) FJR 209 : 1970 (21) FLR 159 : 1973 LIC 87 : 1970 (3) SCC 67 (S.C.2J)
The contention that a workman has to establish that he had worked for 240 days in all the years for each
year the compensation was claimed is without force. It is significant to note that by the first issue before
the Labour Court the applicant was only called upon to prove that she had been in continuous service of
the appellant for not less than 240 days immediately before the closure. In our opinion the issue had been
properly framed. Section 25FFF lays down that in order that a workman may claim the benefit of the
provision he must establish that he has been in continuous service for not less than one year in that
undertaking immediately before the closure. As soon as this is done he becomes entitled to notice and
compensation in accordance with the provisions of S. 25F as if he had been retrenched subject to the
provisions of subs. (2). (Page: 314, Para: 19)

X. Closure compensation when payable

a) When date of discharge is after date of Sec. 25FFF becoming enforceable
(Punj.DB)
5A.885
The provisions of Sec. 25FFF being made retrospectively enforceable from 28th Nov.
1956, the workmen who were discharged on account of the closure of the mill from 10th Jan. 1957
were entitled to compensation as if they had been retrenched subject to the limitations of Sec.
25FFF. The dispute between employer and workmen regarding payment of compensation is an
industrial dispute and could be referred to a tribunal for adjudication.
Maharaja Weaving Mills, Amritsar v. The State of Punjab & Ors.,1962 I LLJ 565 : 1961 (3) FLR 23
(Punj.DB)
Note: For Text please refer Ratio No:., on Page:..

b) Payable as per first part of Sec. 25FFF but not as per proviso where
establishment is not closed for circumstances beyond the control of employer
(Mad.DB)
5A.886
The employer closed the company as the financing bank stopped giving money to him
and for accumulation of stocks. No notice of closure nor any compensation paid to workmen as per
Industrial Disputes Act. On workmens application Single Judge ordered the employer to pay
compensation to the workmen as per first part of Sec. 25FFF but not as per proviso. Being
aggrieved, employer appealed to Division Bench contending that second part of Sec. 25FFF would
apply. Division Bench upheld the order of Single Judge since the reasons of closure were not due to
unavoidable circumstances which was beyond the control of employer.
S. Anthony Raj & Anr. v. A Shanmugam & Ors., 1995 II LLJ 1208 : 1995 (70) FLR 508 (Mad.DB)
The learned.as prayed for. (Page: 1209, Para: 2)
The case on.of the employer. (Page: 1222, Para: 26)
In the circumstances.of the Act.when we.to receive. (Page: 1222, Para: 27)

Sec. 25FFF

Closure compensation when payable

2609

c) When services of an employee were terminated on dissolution of Khadi Board

(Ori.DB)
5A.887
When the Khadi Board which is an industry is dissolved, the employee whose services
have been terminated upon such closure can claim compensation u/s. 25FFF and he can seek
appropriate remedy under the Industrial Disputes Act.
Sisir Kumar Mohanty v. State of Orissa & Anr., 1970 (38) FJR 123 : 1970 (21) FLR 169 : 1970 LIC 856
(Ori.DB)
A statutory closure.compensation. (Page: 128, L: 12 to 16)
We therefore.further orders. (Page: 128, L: 38 to Page: 129, L: 2)
Note: also refer to the following cases-for text and ratio see infra
Ram Hari Dev v. Offical Liquidator, High Court, Calcutta, 1965 II LLJ 230 : 1965-66 (28) FJR 300
(Cal.DB)

d) When there is mere gherao but no threatening speech or physical injury as

proof of circumstances beyond control to carry business (S.C.3J)
F 5A.888 In absence of any incident involving physical violence during gherao or any period
preceding gherao and any speech threatening or inciting bodily injury and with the exception of
gherao, there was nothing to furnish justification that the working of the factory would involve
unusual exertion or expense nor was any officer of the company produced before the Tribunal to
give any other facts and circumstances from which it could be inferred that it appeared to the
management that it was not possible to carry on the business it cannot be held that the closure was
due to unavoidable circumstances beyond the control of the appellant. Thus compensation would
be payable as if the undertaking was closed down for any reason whatsoever within Sec. 25FFF(1)
of the Act and not under proviso to the section.
Kalinga Tubes, Ltd. v. Their Workmen, 1969 I LLJ 557 : 1968 (34) FJR 393 : 1968 (17) FLR 311 : 1969
LIC 90 : 1969 AIR (SC) 90 (S.C.3J)
The only question which now remains to be determined is whether the undertaking was closed for any
reason whatsover or it was on account of unavoidable circumstances beyond the control of the
employer.In the notice served by the Management in the present case it was claimed that the
undertaking had been closed down under the proviso to sub-section (1) and actually compensation has
been paid to the 613 workers in accordance with the porviso. (Page: 565, Para: 1)
The circumstances which had been proved in the Calcutta case were much stronger than the present case
in which there had certain been a gherao for the period mentioned previously but there, had been no
incidents involving physical violence nor a series of incidents of any kind for any length of period
preceding the gherao. No speech had been delivered by any of the representative of the workers
threatening or inciting bodily injury. With the exception of the gherao, therefore, there was nothing to
furnish justification for the Management for thinking that the working of the factory would involve
unusual exertion or expense. (Page: 565, Para: II)
Mr. Chaudhury quite properly and fairly accepts.. N. K. Mahapatra, the Manager
(Administration) who had issued the notice dated October 3, 1967 nor any Director or other principal
officer of the company was produced by the Management before the Tribunal to give any other facts and
circumstances from which it could be inferred that it appeared to the Management that it was not possible
to carry on the business by acting in a business-like way and without unusual exertion.
(Page: 565, Para: Last)
After considering the entire facts and circumstances of the present case we are not satisfied that the
closure of the undertaking was due to unavoidable circumstances beyond the control of the appellant.
Thus compensation would be payable as if the undertaking was closed own for any reason whatsoever
within Section 25FFF (1) of the Act. (Page: 567, Para: 2)

2610

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

e) If workman has worked for 240 days of service and after deducting illegal
strike period (S.C.2J)
F 5A.889 If a workman who was on illegal strike, worked for 240 days preceding the date of
closure even after deducting the period of illegal strike, he was held to be entitled to closure
compensation.
The Management of Standard Motors Products of India Ltd. v. Shri A. Parthasarathy & Anr., 1986 I LLJ
34 : 1985 (67) FJR 417 : 1985 (51) FLR 459 : 1985 II LLN 830 : 1986 LIC 101 : 1986 AIR (SC) 462 :
1985 (4) SCC 78 (S.C.2J)
.In the present case, even if the period of illegal strike is excluded, the number of days during
which the workman actually worked under the employer would be found to be more than 240 days. That
being so it has to be held that the workmen were in continuous service for a period of one year
immediately before the date of closure. (Page: 35, Para: 2)

f) Payable under Proviso to Sec. 25FFF even if closed for unavoidable

circumstances/reasons beyond employers control (S.C.2J)
F 5A.890 When worker refused to work and prevented others from working and factory is
closed for unavoidable reason and the compensation is paid as per the proviso to Sec. 25FFF,
workmen are not entitled to any other relief.
Workmen of M/s. Sur Iron & Steel Co. Pvt. Ltd. v. M/s. Sur Iron & Steel Co. Pvt. Ltd. & Anr., 1971 I LLJ
570 : 1969 (18) FLR 223 : 1970 (3) SCC 618 (S.C.2J)
.The Workmen instead of seeking redress by raising an Industrial Dispute, conciliation or
adjudication, took the step of refusing to work themselves & prevented other Workmen who were willing
to abide by the settlement & to join duty in order to enable the factory to carry on its work. Not only did
they thus start a strike, but they even used force against other Workmen to prevent them from working in
the factory. If, in these circumstances, the management felt that it was not possible to carry on the work &
to run the factory & decided to close it, the closure was quite clearly for reasons beyond their control
Consequently, the Tribunal was again right in holding that the case of closure of the factory by the
Company fell within the scope of the provision had already been paid to the Workmen, they were not
entitled to any relief. (Page: 575, Para: 7)

g) When society goes into liquidation (S.C.2J)

F 5A.891 Where a society registered under A.P. Coop. Societies Act went into liquidation and
workmen were retrenched, they in a writ petition before High Court held entitled for
compensation in accordance with Sec. 25F(b) of the Act and in S.L.P., the Supreme Court ordered
in terms agreed between the parties that 3 months salary to be paid within a period of 3 months.
K.H.R. Sai Sharma & Ors. v. Government of A.P. & Ors., 2001 I LLJ 1682 : 2002 LIC 119 : 2004
SSC(L&S) 271 : 2003 (10) SCC 260 (S.C.2J)
It is not disputed that the appellants herein were its employees. The Society had gone into liquidation
under Section 64 of the Act and a Liquidator was appointed. Under such circumstances, the Society
retrenched the services of the appellants by order dated October 9, (sic) 1991. (Page: 1683, Para: 2)
It is not disputed that at the time when the services of the appellants were retrenched, no compensation as
required under Section 25F(b) of the Industrial Disputes Act was given to the appellants..
(Page: 1683, Para: 3)
The High Court while disposing of the writ petition, held that the appellants are entitled to payment of
compensation in accordance with Section 25F(b) of the Industrial Disputes Act...
(Page; 1683, Para: 4)

Sec. 25FFF

Closure compensation when payable

2611

When the matter was taken up today, learned Counsel for respondent No. 3 stated that respondent No. 3
is agreeable to pay 3 months salary to each of the appellants within a period of 3 months from today,
which is acceptable to the appellants. (Page: 1683, Para: 7)
Note: the following cases may also be referred in this context. For ratios and text Please see related ratio/s
under the above citation in this section
Said & Son Pvt. Ltd. v. Fourth Industrial Tribunal & Ors., 1966 II LLJ 59 : 1965-66 (29) FJR 447 : 1966
(12) FLR 69 (Cal.DB)
John v. Coir Yarn Textiles, Ltd., Alleppey., 1960 I LLJ 304 (Ker.HC)
Trisul Biri Factory v. Their Workmen., 1960 II LLJ 140 (IT)
Daya Shankar Pandey v. State of West Bengal & Ors., 1964 I LLJ 137 : 1963 (7) FLR 18 (Cal.HC)
Bhattacharjee Rubber Works Pvt. Ltd v. Bhattacharjee Rubber Works Workers Union & Ors., 1960 II
LLJ 198 : 1960-61 (18) FJR 215 (Cal.HC)
Presidency Jute Mills Co. Ltd. v. Fifth Industrial Tribunal & Ors., 1994 II LLJ 564 : 1993 (66) FLR 815 :
1992 II LLN 658 : 1993 II CLR 99 (Cal.DB)
Ramchandra Keshav Gadhave & Ors. v. Belapur Sugar Mills Ltd. & Anr. AND Ramchandra Tukaram
Jadhav & Ors. v. Belapur Sugar Mills Ltd. & Anr., 1980 (40) FLR 298 : 1982 LIC 27 : 1981 I LLN 87
(Bom.DB)
Haji Ismail Said & Son Pvt. Ltd. v. Fourth Industrial Tribunal & Ors., 1966 II LLJ 59 : 1965-66 (29) FJR
447 : 1966 (12) FLR 69 (Cal.DB)

h) Payable even in the absence of provision for closure compensation in the State
Act by virtue of Sec. 25J (S.C.3J)
F 5A.892 Workmen whose services were terminated consequent upon the closure of a unit are
entitled to compensation u/s. 25FF F which section has supplied the lacuna for absence of similar
provision under U.P. Act and therefore there is no repugnancy between U.P. Act and Central Act
in view of Sec. 25J of Industrial Disputes Act and hence it was held that it was not correct for the
tribunal to hold that workmen were not entitled to compensation u/s. 25FFF and therefore the
matter was remanded back to the Tribunal for adjudication of applicability of sub-Sec. (1) of Sec.
25FFF or the proviso there to so as to determine the quantum of compensation including the onus
on employer to justify payment of lesser compensation under the proviso to Sec. 25FFF(1).
Workmen of the Straw Board Manufacturing Co., Ltd. v. M/s. Straw Board Manufacturing Co., Ltd.,
1974 I LLJ 499 : 1974 (28) FLR 357 : 1974 (45) FJR 266 : 1974 II LLN 102 : 1974 LIC 730 : 1974 SCC
(L&S) 406 : 1974 AIR (SC) 1132 (S.C.3J)
The next crucial question that will then arise for consideration is whether the concerned employees are
entitled to relief under Section 25-FFF of the Central Act since there is no similar provision in the U.P.
Act.Since the U.P. Act does not make any provision for compensation in the case of closure and
the Central Act has supplied the lacuna, there is no repugnancy between the U.P. Act and the Central Act
and the beneficent provisions of the latter Act can be availed of by labour even in their absence in the U.P.
Act. The Central Act applies to the whole of India, including U.P. Even if there may be the slightest doubt
in the matter, Section 25-J of the Central Act advisedly leaves no scope for controversy in the
matter. (Page: 510/511, Para: 32)
Section 6-N of the U.P. Act is identical with S. 25-F of the Central Act.Act by virtue of the
provisions of S. 25-FFF(1) of the Central Act. The Tribunal was, therefore, not correct in holding that S.
25-FFF did not apply to the employees concerned. Indeed the management has paid, as already noted,
compensation to their employees under S. 25-FFF (1) of the Act. (Page: 511, Para: 33)

2612

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

i) When termination is due to closure of department but not amounting to

retrenchment (S.C.2J)
F 5A.893 Because of closure of seeds sales counter of Haryana Seeds Development Corp. Ltd.
the termination of services of workmen has been held as not amounting to retrenchment but due to
closure u/s. 25FFF and they are entitled to closure compensation only.
The Managing Director, Haryana Seeds Development Corpn. Ltd. v. The Presiding Officer & Anr., etc.,
1997 II LLJ 823 : 1997 (91) FJR 539 : 1997 (77) FLR 21 : 1997 IV LLN 111 : 1997 LIC 2912 : 1997 II
CLR 395 : 1997 LLR 806 : 1997 AIR (SC) 3086 : 1997 (10) SCC 727 (S.C.2J)
The admitted position ............ by special leave. (Page: 824, Para: 3)
As a consequence ........... admitting the writ petition. (Page: 824, Para: 5)
Note: Please see related ratio/s under the above citation u/s. Sch 3 Item 10

j) If closure is due to financial difficulties which is not beyond employers control

(S.C.2J)
F 5A.894 Subsequent to scheme of arrangement to close down the company, it was taken over
by the corporation which absorbed some of the workers as fresh employees and in a claim by
workmen not absorbed by the corporation, the Labour Court and High Court held that they are
entitled to compensation u/s. 25FF whereas the Apex Court held that it was not a transfer but
closure due to financial difficulty which is not beyond the control of management and hence
workers are entitled to compensation u/s. 25FFF(1).
Inland Steam Navigation Workers Union & Anr. v. Union of India & Ors., 2001 I LLJ 730 : 2001 (99)
FJR 140 : 2001 (88) FLR 976 : 2001 II LLN 620 : 2001 I CLR 695 : 2001 SCC (L&S) 513 : 2001 SCC (3)
47 (S.C.2J)
.So far as the claim against the Corporation is concerned this Court made it clear that the workers
who were taken over by the Corporation were given fresh appointments from June 5, 1967 with different
conditions of service and there was break in the condition of service. Even assuming that on such
investigation, conclusion could be drawn that the Corporation is a successor that matter will not be settled
because, the transferee even as a successor would be liable neither to pay compensation not to re-employ
the workmen whose employment stood automatically terminated on the transfer. Where by operation of
law the employment of Workmen stands terminated, it may be difficult to sustain it on the basis of term in
a settlement prohibiting retrenchment, though statutorily binding on the transferee as a successor.
Therefore, the view taken by the Tribunal that the Corporation is not liable to pay either compensation or
to absorb the Workmen in question is unexceptionable. As rightly held by the High Court, the Workmen
in question are entitled to compensation in case of closing down of an undertaking. Here there has been
no transfer of the undertaking form the Company to the corporation as found by the Tribunal and upheld
by the High Court because by order made by the Company Court the scheme of arrangement was to close
down the Company and what was taken over by the Corporation was a separate arrangement.In
case where an undertaking is closed down by reason of financial difficulties as was the position in the
present case, it cannot be deemed to have been closed down on accounts of unavoidable circumstances
beyond the control of the employer. Therefore, if an application is made by the workmen or by the union
on their behalf before a Labour Court under section 33-C (2) of the I.D. Act it will be proper for the
Labour Court to examine the claims under section 25-FFF of the I.D. Act, of each of these workmen and
award compensation accordingly which shall be payable by the Union of India and to those proceedings
the erstwhile company and the Union of India shall be parties. (Page: 734/735, Para: 10)

Sec. 25FFF

Closure compensation when payable

2613

k) Payable even if single unit is closed since the word undertaking covers even
closure of a single unit (S.C.3J)
Management of Hindustan Steel Ltd. v. Their Workmen & Ors., 1973 (43) FJR 192 : 1973 (26) FLR 136 :
1973 I LLN 208 : 1973 LIC 461 : 1973 SCC (L&S) 195 : 1973 AIR (SC) 878 : 1973 (3) SCC 564 (S.C.3J)
Note: Please see related ratio/s under the above citation in this section

l) Payable when project work comes to an end (S.C.2J)

Management of Dandakaranya Project, Koreput v. Workmen through Rehabilitation Employees Union
& Ors., 1997 I LLJ 833 : 1997 (90) FJR 299 : 1997 (75) FLR 357 : 1997 II LLN 39 : 1997 LIC 858 : 1997
II CLR 42 : 1997 LLR 193 : 1997 SCC (L&S) 434 : 1997 AIR (SC) 852 : 1997 (2) SCC 296 (S.C.2J)
Note: Please see related ratio/s under the above citation in this section
F 5A.895 When workmen employed in a project meant for constructing a railway line were
terminated on the completion of the project, the only relief they are entitled to compensation as
provided u/s. 25FFF(2) but not regularisation.
Lal Mohammad & Ors. v. Indian Railway Construction Co. Ltd. & Ors., AND Ravindra Nath Mishra v.
Indian Railway Construction Co. Ltd. & Anr., 2007 I LLJ 773 : 2007 (112) FLR 847 : 2007 II LLN 31 :
2007 LIC 2783 : 2007 I CLR 688 : 2007 (1) SCC (L&S) 725 : 2007 AIR (SC) 2230 : 2007 (2) SCC 513
(S.C.2J)
Since this was a project for construction of some railway lines, therefore, the rigour of Sub-section (1)
for seeking a permission of Government is not required in the present case. Once the project is completed
the service of the incumbent comes to an end. But the legislature in its wisdom has provided relief for
such class of workmen. (Page: 786, Para: 17)
So far as the termination of the incumbents is concerned after completion of the project they have
no right to continue. They are only entitled to notice and compensation to be determined under Section
25-F. Shortfall of period of notice or compensation will not render termination bad on that count.
(Page: 787, Para: 19)

m) Closure compensation when deemed paid

1. When workmen offered though refused to accept it (S.C.3J)
F 5A.896 Where the compensation u/s. 25FFF was offered following closure of the
establishment to the workmen, but they refused to accept the same, it is held that in such
circumstance one cannot find any fault with the employer.
Government of India v. Workmen of State Trading Corpn. & Ors., 1998 II LLJ 40 : 1998 SCC (L&S) 329
: 1999 AIR (SC) 1532 : 1997 (11) SCC 641 (S.C.3J)
.Counsel for the workmen stated that some of them have not accepted the compensation. That is
a different matter altogether. If the compensation has been offered and not accepted, one cannot find fault
with the employer. (Page: 42, Para: 6)

n) Effect of payment of closure compensation

1. Employer-employee relationship comes to an end (Cal.HC)
Waxpol Industries Ltd. v. State of West Bengal Ors., 2006 (111) FLR 732 : 2006 III CLR 298 (Cal.HC)
Note: Please see related ratio/s under the above citation in this section

2614

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

o) Effect of non-payment of closure compensation

1. Closure does not become illegal by non-payment of compensation to four
out of 59 workmen (Cal.DB)
5A.897
Employer after giving statutory notice of 60 days and after paying the statutory
compensation closed the establishment. Both Labour Court and Single Judge affirmed the closure.
Being aggrieved, 4 workmen out of 59 workmen moved High Court contending that the closure was
bad since they had not received compensation. High Court upheld the closure and held that the
same would not render the closure illegal or invalid and directed employer to pay compensation to
the workman within 2 months.
Workmen (represented by South Eastern Roadways Workmens Union) & Anr. V. Eighth Industrial
Tribunal & Ors., 2006 II LLN 580 (Cal.DB)

XI. Closure compensation when not payable

a) When workmen were retrenched before Sec. 25FFF came into force (Pat.DB)
5A.898
As workmen were retrenched w.e.f 1st September 1955 and Sec. 25FFF came into
force with retrospective effect from 28th November 1958 concerned workmen are not entitled to
claim compensation and hence Government notification constituting Labour Court u/s. 33C(2) to
compute retrenchment compensation is ultra vires, illegal and void.
Madan Lal Budhia & Ors. v. State of Bihar & Ors.,1960 II LLJ 443 (Pat.DB)
.in may 1955.1 September 1955. (Page: 443, Para: 1)
.There after the petitioners.1 September 1955. (Page: 444, Para: 1)
.It appears that.the workmen concerned.. (Page: 444, Para: 1)
We accordingly.this application (Page: 446, Para: 3)

b) On termination or retrenchment but not when employee is continued de facto

in other section (S.C.2J)
F 5A.899 Compensation due to closure was payable to those employees who due to the closing
down of the section of the factory lost their employment and also to those who were retrenched due
to closure but given fresh employment in other unit, but no compensation is payable to those who
were de facto continued in other section and merely being on rolls on date of closure does not entitle
payment for compensation and hence the matter was remanded for investigation as the right for
compensation rests on those who really suffered the real blow of closure and not every employee
who otherwise not a victim there of.
M/s. Balwant Motors v. Workmen, 1982 SCC (L&S) 107 : 1982 (1) SCC 493 (S.C.2J)
.The question then is: who are the employees who lost their employment as a result of the
closure? The Deputy Labour Commissioner must identity them i.e. those who became victims of the
closure. The enquiry there is not as to how many were shown on the attendance rolls or registers of the
section on the date of closure; for some might have been given alternative jobs in some other section of
the factory. It might even be that while formally terminating their employment in the closed section they
might have been de facto continued in another section. The compensation is not meant for them as the
blow has not fallen on them. So, merely because they were on the roster of the lockedout unit on the
closure date they were not entitled to compensation.This aspect requires close scrutiny, not a
superficial paper verification. (Page: 107, Para: 2)

Sec. 25FFF

Closure compensation when not payable

2615

c) When closure is genuine and not malafide (Raj.DB)

5A.900
Closure of undertaking implies closure of part of the business and not necessarily the
whole business. The closure must be real and genuine and not malafide and hence termination
made on account of closure being not a retrenchment, termination without payment of
retrenchment compensation was held justified. The closure is not bad because the payment
mentioned in Sec. 25FFF has not been made before the closure.
Rajasthan Small Scale Industries Employees union v. State of Rajasthan & Ors., 1993 III LLJ 361 : 1990
(61) FLR 157 : 1990 II LLN 888 : 1990 LIC 1668 : 1990 II CLR 485 (Raj.DB)
The Retrenchment.undertaking. (Page: 364, Para: 10)
Sections 25-FFA.perfectly legal (Page: 364, Para: 14)
The position.no ground. (Page: 365, Para: 17)
.We are.workmen. (Page: 366, Para: 20)

d) When undertaking is leased out as a going concern and employer continued to

have ownership (Mad.DB)
Jayajothi & Co. Rajapalayam v. Official Liquidator & Anr., 1963 II LLJ 739 : 1963 (7) FLR 389
(Mad.DB)
Note: Please see related ratio/s under the above citation in this section

e) Though Letter Press Section was closed since it is not an independent part of
the establishment as workmen were interchangeable between Letter Press
section and Offset Press unit (Del.HC)
Raj Hans Press v. Labour Court, Delhi & Ors. & K.S. Sidhu & Ors., 1977 II LLJ 524 : 1977 (51) FJR 184
: 1978 (36) FLR 53 : 1977 II LLN 513 : 1977 LIC 1633 (Del.HC)
Note: Please see related ratio/s under the above citation in this section

f) When claimant is a badli workman (S.C.2J)

F 5A.901 Badli workmen have no right to claim or entitled to any compensation on account of
closure. Adoptiong the principle engrafted to Sec. 25C of Industrial Disputes Act which excludes a
Badli workman or a Casual workman from the benefit of compensation in case of lay off, the order
of Industrial Court directing compensation to them is set aside.
Prakash cotton mills (p) Ltd v.The Rashtriya mills mazdoor sanga., 1987 I LLJ 97 : 1986 (69) FJR 254 :
1986 (53) FLR 310 : 1986 II LLN 459 : 1986 LIC 1361 : 1986 SCC (L&S) 682 : 1986 AIR (SC) 1514 :
1986 (3) SCC 588 (S.C.2J)
The next question that remains to be considered is whether the Industrial Court is justified in directing
payment of compensation to some of the Badli workmen. It is not in dispute that Badli workmen get work
only in the absence, temporary or otherwise, of regular employees, and that they do not have any
guaranteed right of employment. Their names are not borne on the muster rolls of the establishment
concerned. Indeed, a Badli workman has no right to claim employment in place of any absentee
employee. In any particular case, if there be some jobs to be performed and the employee concerned is
absent, the Company may take in a Badli workman for the purpose. Badli workmen are really casual
employees without any right to be employed. It has been rightly submitted by the learned Counsel for the
appellant that the Badli employees could not be said to have been deprived of any work to which they had
no right and, consequently, they are not entitled to any compensation for the closure. Indeed, the
Industrial Court has itself observed that to allow the claim of Badli workmen would be tantamount to
penalising the appellant. In spite of the said observation, the Industrial Court directed payment of

2616

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

compensation to the Badli workmen in place of certain categories of regular employees. We fail to
understand how the Industrial Court can direct payment of compensation to the Badli workmen when,
admittedly, such Badli workmen, as noticed already, have no right to be employed. It may be that the
Company may not have to pay closure compensation to the three categories of employees, as mentioned
by the Industrial Court, but that does not mean that the Company has to pay compensation to the Badli
workmen in place of these categories of employees. In this connection, we may refer to Section 25C of the
Industrial Disputes Act, 1947 which excludes a Badli workman or a casual workman from the benefit of
compensation in the case of layoff. (Page: 101, Para; 14)
In the circumstances, although we uphold the order of the Industrial Court for payment of compensation
to the regular employees of the appellant at the rate fixed by it, we are unable to subscribe to the view that
the compensation which would have been payable to the three categories of employees, should be paid to
the Badli workmen. In other words, we hold that Badli workmen have no right to claim compensation on
account of closure. (Page: 101/102, Para: 15)

XII. Closure compensation whether refundable

a) Closer compensation not to be refunded, when fresh employment is not at the
instance of undertaking closing down (Guj.HC)
5A.902
An employee of Fisheries Corporation was retrenched and paid compensation.
Thereafter he got an appointment in Dairy Corporation. Fisheries Corporation opposed his
appointment on the ground that employee was not entitled to join duty in the Dairy Corporation till
he refunded the terminal benefits paid to him by the Fisheries Corporation on termination of his
services and that he may be allowed to join the Dairy Corporation only on production of clearance
certificate from the Fisheries Corporation. Thus, on this basis, even the Dairy Corporation did not
permit the employee to join the service and insisted upon production of clearance certificate from
the Fisheries Corporation. Aggrieved, he filed the writ petition. High Court held that since the
employee was getting appointment in Dairy Corporation as a fresh employee and not at the
instance of undertaking closed down i.e. Fisheries Corporation, he was not bound to refund the
amount given as compensation u/s. 25FFF.
M.G. Chudasma v. D.J. Biswas, Managing Director, Central Fisheries Corp. Ltd. & Ors., 1996 II LLJ
1114 : 1996 III LLN : 1996 LIC 2694 (Guj.HC)

XIII. Whether any other compensation can be set off against closer compensation
a) Employer can set off any compensation paid to workman against closure
compensation (Ker.HC)
5A.903
The employer issued one months notice for retrenchment as it was decided to close
down the business on account of accumulation of stock and financial difficulties. The Tribunal
passed an award directing the management to pay retrenchment compensation at the rate of 15
days average pay for every completed year of service together with one months notice pay. It was
challenged on the ground that the State Government did not have power to make reference
because, it was a dead industry. The High Court held that it cannot be said to be a dead industry
because employer-employee relationship existed and the management has been taking the position
that they were retrenching workmen by giving one months notice u/s. 25F. The employer was
liable to pay retrenchment compensation as per Sec. 25FFF even in case of closure of business.
Also, the employer has right to set off any compensation paid to a workman for having been laid off
during the preceding 12 months as against the retrenchment compensation payable as per Sec. 25C.
Ravikrishna Weaving Mills Pvt. Ltd. v. State of Kerala & two Ors., 1959 II LLJ 760 (Ker.HC)

Sec. 25FFF

Closure for unavoidable Circumstances beyond the control

2617

XIV. Closure on account of unavoidable circumstances beyond the control

Sec. 25FFF(1) Proviso
a) To claim benefit of proviso employer to act with mere diligence but need not
put extra effort or incur extraordinary expenses to prevent closure (Bom.DB)
5A.904
Negativing the contention of employee that non availability of sugar cane should be
treated as case of financial difficulty mentioned in explanation to the proviso, Court also observed
that in order to claim benefit of proviso employer is only required to act with ordinary diligence
and need not go out of his way or put extra effort or incur unusual extraordinary expenses to
prevent closure on account of unavoidable circumstances.
Ramchandra Keshav Gadhave & Ors. v. Belapur Sugar Mills Ltd. & Anr. AND Ramchandra Tukaram
Jadhav & Ors. v. Belapur Sugar Mills Ltd. & Anr., 1980 (40) FLR 298 : 1982 LIC 27 : 1981 I LLN 87
(Bom.DB)

b) The issue whether complete lawlessness in industry is a circumstance beyond

the control cannot be decided in writ (S.C.2J)
F 5A.905 U/s. 25FFA of the Act a notice of closure was given by undertaking on the ground of
complete lawlessness causing heavy loss, the question whether complete lawlessness in
undertaking would be unavoidable circumstances beyond control of employer can be decided
only in a properly raised industrial dispute and therefore dismissed the petition.
Shri Rameshwar Dass & Ors. v. State of Haryana & Ors., 1987 I LLJ 514 : 1987 (70) FJR 309 : 1987 (54)
FLR 445 : 1987 I LLN 425 : 1987 LIC 713 : 1987 I CLR 450 : 1988 SCC (L&S) 355 (S.C.2J)
.But in the present case, according to the management, in the course of the seven years, there has
been continuous industrial strife marked by the strikes and lockouts and marred invariably by acts of
violence. It was also said that whenever any dispute was referred to an Industrial Tribunal, the workmen
would refuse to cooperate and would not appear before the Industrial Tribunal. According to the
management, there was a continuous state of lawlessness prevailing in that undertaking over the last
several years resulting in the undertaking suffering heavy losses since 1977.If as alleged by the
management, there was complete lawlessness prevailing in the undertaking over a course of years, we are
unable to say that the circumstances were not unavoidable circumstances beyond the control of the
employer.. (Page: 515/516, Para: 3)

c) Tribunal to determine whether closure was due to unavoidable circumstances

beyond employers control (S.C.CB)
F 5A.906 It was held that coupled with other circumstances, closure of an undertaking due to
financial difficulties or accumulation of undisposed stocks which otherwise is excluded from
application of proviso of Sec. 25FFF(1), would attract the benefit of restricted liability of the
proviso and hence Tribunal was called upon to decide whether particular case is covered by
proviso, hence entitled to look into causes which led to financial losses or accumulation of stocks
and decide whether closure was on account of circumstances beyond the control of employer.
M/s. Hathising Manufacturing Co., Ltd., Ahmedabad & Ors., (2) D. P. R. Cassad (3) Shri Digvijayshinji
Spinning and Weaving Mills Ltd. Jamnagar & Anr. v. (1) Union of India & Anr, (2) Regional Labour
Commr. (Central) Bombay & Anr, (3) Union of India & Ors, (4) P. Ranchoddas, Intervener. 1960 II LLJ
1 : 196061 (18) FJR 181 : 1960 (1) FLR 402 : 1960 AIR (SC) 923 (S.C.CB)
.The proviso restricts the liability of employers who are compelled to close down their
undertakings on account of unavoidable circumstances beyond their control, but in the view of the
Parliament, in that category are not to be included employers compelled to close down their undertakings
merely because of financial difficulties or accumulation of undisposed of stocks. Closure of an
undertaking attributable merely to financial difficulties or accumulation of undisposed of stocks, is by the
explanation, excluded from the benefit of restricted liability; but coupled with other circumstances,

2618

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

financial difficulties or accumulation of undisposed of stocks may justify the view that the closure is due
to unavoidable circumstances beyond the control of the employer, and attract the application of the
proviso notwithstanding the explanation. (Page: 10, Para: 1)
By the explanation, certain persons may, because of persistent losses or accumulation of stocks find
themselves unable to carry on the business, and may still not be entitled to the benefit of the proviso, but
that will not be a ground for holding that the explanation is unreasonable. The tribunal called upon to
decide whether the case of an employer is covered by the proviso will certainly be entitled to look into the
causes which led to the financial losses or the accumulation of stocks and ascertain whether the closure
was merely on account of financial losses or accumulation of stocks or was on account of circumstances
beyond the control of the employer, and in assessing whether the circumstances were beyond the control
of the employer, the fact that the employer has suffered financial losses or there is accumulation of stocks
is not required by the legislature to be excluded from consideration. (Page: 11, Para: 1)
Note: Section is amended by Act 45 of 1971 w.e.f. 15-12-71

d) Benefit of proviso cannot be availed unless evidence of circumstances beyond

control placed before Labour Court (P&H.HC)
5A.907
Services of an employee were terminated on closure of the thermal plant. Labour
Court granted reinstatement with backwages as provisions of Sec. 25F and 25G had not been
complied with. High Court held that it was not placed before the Labour Court that the plant was
closed on account of unavoidable circumstances beyond the control of the State Electricity Board.
Thus, it cannot take advantage of proviso to Sec. 25FFF. It did not plead that the thermal plant was
a separate and independent entity and workman was employed only at the said plant. Also, it was
not pleaded that employees were not transferable to other units and place of work. Thus, the earlier
order is upheld.
Punjab State Electricity Board v. Labour Court, Patiala, & Anr., 1984 (64) FJR 416 : 1984 II LLN 176
(P&H.HC)

e) Burden of proof in respect of unavoidable circumstances beyond employers

control
1. Is on the employer (S.C.3J)
F 5A.908 Burden to bring their case of closure as due to unavoidable circumstance within the
proviso to Sec. 25FFF and to prove that circumstance were unavoidable and beyond the control of
the company is upon the company and as in the instant case management failed to produce any
evidence in proof of their contention and therefore the Supreme Court held that the employer shall
be liable to pay compensation under the principal part of the sub-Sec. (1) of Sec. 25FF of the Act in
as much as it was for the employer to make an all out effort like a prudent man of business in the
matter of tiding over difficulties for saving his business and in the absence of any such proof
sub-Sec. (1) of Sec. 25FFF would attract to the case.
Kalinga Tubes, Ltd. v. Their Workmen, 1969 I LLJ 557 : 1968 (34) FJR 393 : 1968 (17) FLR 311 : 1969
LIC 90 : 1969 AIR (SC) 90 (S.C.3J)
Sri chaudhuri quite properly and fairly accepts that the burden was on the company to bring the case
within the proviso and to prove that the circumstances were unavoidable and were also beyond the
control of the company for closing down the undertaking. Furthermore such a determination has to be
objective on such evidence as may be placed on the record. It is significant that neither N.K. Mahapatra,
the Manager (Administration), who had issued the notice dated 3rd October, 1967 nor any Director or
other principal Officer of the company was produced llbyb the Management before the Tribunal to give
any other facts and circumstances from which it could be inferred that it appeared to the Management that
it was not possible to carry on the business by acting in a business like way and without unusual exertion.
(Page: 566, Para: 2)

Sec. 25FFF

Closure for unavoidable Circumstances beyond the control

2619

After considering the entire facts and circumstances of the present case we are not satisfied that the
closure of the undertaking was due to unavoidable circumstances beyond the control of the appellant.
Thus compensation would be payable as if the undertaking was closed down for any reason whatsoever
within section 25-FFF (1) of the Act. (Page: 567, B.L.: 10)
5A.909
The burden of proving that the closure is due to unavoidable circumstances to attract
the proviso is on the employer and mere financial difficulties or accumulation of undisposed stocks
cannot be treated as unavoidable circumstances within the purview of the proviso and there shall
be other circumstances independent of the cause of financial difficulties and they shall be beyond
the control of the employer and hence the workers trouble and indiscipline, delayed deliveries and
defective workmanship which led to decline in orders, finally leading to accumulation of loss were
held only as contributory causes to the financial difficulties but not causes independent of it and
therefore the employer was held not entitled to invoke the proviso.
Bharat Collieries Ltd. Owners of Ekra Enineering Works, Bansjora v. P.O. Labour Court, Chota
Nagpur, Ranch & Ors., 1969 LIC 1424 (Pat.DB)
I now take up.explanation. (Page: 1427, Para: 10)
.The burden.stocks.If the employer.to be a bar. (Page: 1428, Para: 10)
The contention.workmen. (Page: 1428, Para: 11)
There are.jurisdiction. (Page: 1429, Para: 13)
Secondlyclosure. (Page: 1429, Para: 14)
In reply.workers.the workshop.resources.contents.explanation.
(Page: 1429, Para: 14)

f) Unavoidable circumstances beyond the control includes

1. Refusal of a workman to work and preventing others from working
(S.C.2J)
F 5A.910 When worker refused to work and prevented others from working and factory is
closed for unavoidable reason and the compensation is paid as per the proviso to Sec. 25FFF,
workmen are not entitled to any other relief.
Workmen of M/s. Sur Iron & Steel Co. Pvt. Ltd. v. M/s. Sur Iron & Steel Co. Pvt. Ltd. & Anr., 1971 I LLJ
570 : 1969 (18) FLR 223 : 1970 (3) SCC 618 (S.C.2J)
.The Workmen instead of seeking redress by raising an Industrial Dispute, conciliation or
adjudication, took the step of refusing to work themselves & prevented other Workmen who were willing
to abide by the settlement & to join duty in order to enable the factory to carry on its work. Not only did
they thus start a strike, but they even used force against other Workmen to prevent them from working in
the factory. If, in these circumstances, the management felt that it was not possible to carry on the work &
to run the factory & decided to close it, the closure was quite clearly for reasons beyond their control
Consequently, the Tribunal was again right in holding that the case of closure of the factory by the
Company fell within the scope of the provision had already been paid to the Workmen, they were not
entitled to any relief. (Page: 575, Para: 7)

2. Governments refusal to grant license to manufacture spirit and supply

raw material (Cal.DB)
5A.911
Standing Orders of distillery provided that services of workmen could be terminated
by giving a months notice or payment in lieu of notice and it was held that termination of workmen
under aforesaid Standing order for reasons beyond the control of the employer i.e. refusal of the
Government to grant license to manufacture spirit and to supply raw material i.e. molasses and

2620

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

when bonafide attempts made by employer to run business failed, would not amount to
retrenchment and even in case it was retrenchment proviso to sub-Sec. (1) of Sec. 25FFF would
have applied and hence award of retrenchment compensation by Tribunal was set aside.
Haji Ismail Said & Son Pvt. Ltd. v. Fourth Industrial Tribunal & Ors., 1966 II LLJ 59 : 1965-66 (29) FJR
447 : 1966 (12) FLR 69 (Cal.DB)
.The Tribunal appears.all the workers (Page: 62, Para: 3)
.the learned Judge.Industrial Disputes Act. (Page: 63, Para: 1)
In the instant.unfair Labour practice. (Page: 63, Para: 2)
.Here the notice.Industrial Dispute Act (Page: 67, Para: 5)
If we had come.Sub Sec. (1) there of. (Page: 69, Para: 6)
For these reasons.the Industrial Tribunal. (Page: 70, Para: 7)
Note: The following case may also be referred
Venkatarama Naidu v. Labour Court, Madurai & Anr., 1979 (54) FJR 364 : 1980 LIC 923 : 1979 I LLN
504 (Mad.DB)

3. Adverse trade conditions like restrictions imposed by importing countries

(Ker.HC)
5A.912
Company engaged in business of coir and on account of adverse trade conditions like
restrictions imposed by importing countries decided to wind up, The company was wound up
under order of High Court. The liquidator retrenched some workmen and later the remaining in 2
stages. The workmens claim for compensation for retrenchment was rejected by liquidator, hence
the Court held that workmen are entitled to retrenchment compensation u/s. 25FFF of the Act for
closure of business up to maximum limit mentioned in the proviso to the said section and held it to
be closure due to unavoidable circumstances.
John v. Coir Yarn Textiles, Ltd., Alleppey., 1960 I LLJ 304 (Ker.HC)

4. Compulsive vacation of rented premises by company running bidi factory

(IT)
5A.913
Company running a bidi factory in a rented premises was forced to close down as the
company was asked to vacate the premises and no alternative accommodation was available.
Closure of business was held justified on account of factor beyond control of employers, concerned
workmen held entitled to retrenchment compensation under the proviso of Sec. 25FFF of
Industrial Dispute Act.
Trisul Biri Factory v. Their Workmen., 1960 II LLJ 140 (IT)

5. Division of workers into two camps indulging in mutual assault, throwing

hand bombs and indulging in go-slow tactics (Cal.HC)
5A.914
Where workmen in a factory divided themselves into 2 camps, and were involved in
assault and go-slow tactics, throwing hand bombs, the management decided to close down despite
making profits. Industrial Tribunal adjudicating the dispute relating to closure, awarded full
retrenchment compensation. The High Court allowing companys petition to quash such award,
held that closure was beyond control of employer and was due to unavoidable circumstances within
the meaning of the proviso to Sec. 25FFF(1).
Bhattacharjee Rubber Works Pvt. Ltd v. Bhattacharjee Rubber Works Workers Union & Ors., 1960 II
LLJ 198 : 1960-61 (18) FJR 215 (Cal.HC)

Sec. 25FFF

Closure for unavoidable Circumstances beyond the control

2621

6. Want of accommodation for running factory (Cal.HC)

5A.915
Where the employer challenged the award of the Tribunal granting one months notice
pay in addition to closure compensation under the proviso to Sec. 25FFF(1), the High Court held
that the workman in such bonafide closure is entitled to notice for wages in lieu of notice in addition
to compensation in accordance with the provision of Sec. 25F(6) subject of cause to the terms of
proviso limiting the amount of compensation u/s. 25F(6) where the proviso is attracted and upheld
the award of the Tribunal.
Daya Shankar Pandey v. State of West Bengal & Ors., 1964 I LLJ 137 : 1963 (7) FLR 18 (Cal.HC)

7. Termination of agency as in the case of a petrol pump compelling

retrenchment of a salesman (Mad.HC)
5A.916
Where an employer retrenched the salesman employed in his petrol pump on account
of termination of agency by a petrol company and the Labour Court held that the closure was
proper because it was unavoidable circumstance beyond the control of the employer and awarded
three months wages to workman. The High Court in writ proceedings held that there was
absolutely no justification for extending, by way of analogy, the provisions of Clause (iii) of the
Explanation to Sec. 25FFF of the Act, which provides that the expiry of lease or license shall not be
taken to be an unavoidable circumstance beyond the control of employer, to a case of
termination of agency and therefore, the award of the Labour Court was correct.
Venkatarama Naidu v. Labour Court, Madurai & Anr., 1974 (46) FJR 188 : 1975 LIC 1226 : 1974 II LLN
342 (Mad.HC)

8. Closure of bank due to winding up order of Court (Ker.DB)

5A.917
Where the Bank was closed due to winding up order imposed on it by Court, the
closure was held to be due to unavoidable circumstances beyond the control of the directors and the
question that the winding up was brought about by misconduct or mismanagement was irrelevant.
General Secretary, Palai Central Bank Employees Union v. Official Liquidator, Palai Central Bank
Ltd., 1965 (10) FLR 98 : 1966 I LLJ 533 (Ker.DB)
He second objection.either. (Page: 99, Para: 2)
Note: also refer to the following case in the above context
K. Sathiarthy & Ors. v. New Era Manufacturing Co. Ltd., 1970 (38) FJR 144 (Ker.HC)
Inre :Shree Madhav Mills Ltd.,1967-68 (32) FJR 315 :1967 (15) FLR 430 : 1966 II LLJ 827 (Bom.HC)

9. Closure due to increase in production costs, total disappearance of orders

and business and refusal by workmen to do work besides financial
difficulties (Mys.DB)
5A.918
Only in cases where closure is attributable merely to financial difficulties or
accumulation of undisposed stocks, explanation to Sec. 25FFF(1) is attracted but where many
other reasons are also assigned for closure such as increase in production costs, total disappearance
of orders and business and refusal by workmen to do work, closure would be governed by proviso
to Sec. 25FFF(1) and not its explanation.
Industrial and General Engineering Company v. Their Workmen & Anr., 1964 II LLJ 438 : 1963-64 (25)
FJR 264 (Mys.DB)
It is true that that.undisposed by stocks. (Page: 445, Para: 3)
.even in cases in.to that subsection. (Page: 446, Para: 2)

2622

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

10. Obstructive activities of workmen compelling closure (Cal.DB)

5A.919
After considering that company had not intended closure initially but wanted
rationalisation but was compelled to effect closure on account of obstructive activities of workmen
preventing the company from implementing the scheme of rationalisation, closure was held to be
beyond the control of employer hence setting aside order of Labour Court and Single Judge it was
held that workman were entitled to compensation only under proviso to Sec. 25FFF(1).
Presidency Jute Mills Co. Ltd. v. Fifth Industrial Tribunal & Ors., 1994 II LLJ 564 : 1993 (66) FLR 815 :
1992 II LLN 658 : 1993 II CLR 99 (Cal.DB)
Having arrived at.of the section. (Page: 571, Para: 29)
We are, therefore.Section 25FFF(1). (Page: 572, Para: 34)

11. Closure of sugar factory due to non-availability of sugarcane (Bom.DB)

5A.920
Dismissing petition of worker and upholding order of Labour Court passed pursuant
to workers application u/s. 33C(2) Court held that closure of sugar factory on account of non
availability of sugar cane was clearly a circumstance beyond employers control and proper
compensation payable was under proviso to Sec. 25FFF(1) and negativing the contention of
employee that non availability of sugar cane should be treated as case of financial difficulty
mentioned in explanation to the proviso, Court also observed that in order to claim benefit of
proviso employer is only required to act with ordinary diligence and need not go out of his way or
put extra effort or incur unusual extraordinary expenses to prevent closure on account of
unavoidable circumstances.
Ramchandra Keshav Gadhave & Ors. v. Belapur Sugar Mills Ltd. & Anr. AND Ramchandra Tukaram
Jadhav & Ors. v. Belapur Sugar Mills Ltd. & Anr., 1980 (40) FLR 298 : 1982 LIC 27 : 1981 I LLN 87
(Bom.DB)
..........it is not..........Section 25FFF(1). (Page: 305, Para: 5)
..........there is no..........and are dismissed.......... (Page: 307, Para: 5)

12. Governments refusal to grant license to manufacture spirit and to supply

raw material i.e. molasses etc. (Cal.DB)
5A.921
Government refused to grant license to manufacture spirit and to supply raw material
i.e. molasses and when bonafide attempts made by employer to run business failed, the case will fall
under the proviso of sub-Sec. (1) of Sec. 25FFF and hence award of payment of retrenchment
compensation by Tribunal and Single Judge was set aside.
Haji Ismail Said & Son Pvt. Ltd. v. Fourth Industrial Tribunal & Ors., 1966 II LLJ 59 : 1965-66 (29) FJR
447 : 1966 (12) FLR 69 (Cal.DB)
.The tribunal appears.all the workmen. (Page: 62, Para: 3)
.the learned judge.Industrial Disputes Act. (Page: 63, Para: 1)
.The main defence.the Standing Orders. (Page: 63, Para: 2)
In the instant.unfair labour practice. (Page: 65, Para: 5)
.Here the notice.Industrial Disputes Act. (Page: 67, Para: 5)
If we had come.Sub sec. (1) thereof. (Page: 69, Para: 6)
For these reasons.the industrial tribunal. (Page: 70, Para: 7)

Sec. 25FFF

Closure for unavoidable Circumstances beyond the control

2623

13. Statutory prohibition on Trust to carry on any business coupled with

financial compulsion of substantial corpus of the Trust to clear liabilities
(Mad.HC)
5A.922
Workmen of the Trust filed a claim petition to compute the money value of their
benefit on closure. High Court held that in addition to the fact that if the printing business had to be
carried on, a substantial corpus of the Trust has to be sold to clear liabilities of several lakhs, there
was a prohibition u/s. 7(5) of the Official Trustees Act on the Official Trustees carrying on any
business and also the Trust did not provide for carrying on printing business. Secondly, closure of
the undertaking was not merely on the ground of financial difficulties but also due to unavoidable
circumstance beyond the control of the Trustee as such workmen were entitled only to the closure
compensation under the proviso to Sec. 25FFF(1).
Vavilla Press (by Official Trustee) v. Labour Court, Madras & Ors., 1979 (54) FJR 36 : 1979 (39) FLR
109 : 1979 I LLN 148 (Mad.HC)

14. Inability to produce standardized products with available machinery

compelling closure (Mad.DB)
Engineering Metal & General Workers Union v. M. Jeevanlal (1929) Ltd. & Ors., 1981 I LLJ 317 : 1980
(57) FJR 111 : 1981 I LLN 124 (Mad.DB)
Note: Please see related ratio/s under the above citation in this section
Note: the following case may also be referred
Jeewanlal (1929) Ltd. v. Industrial Tribunal, Madras & Ors., 1975 (48) FJR 212 : 1975 (31) FLR 329 :
1975 II LLN 413 (Mad.HC)

g) Unavoidable circumstances excludes

Note: In all these following cases under this sub-head, closure compensation is payable

1. Gherao and mere threatening speech without any evidence of physical

injury (S.C.3J)
Kalinga Tubes, Ltd. v. Their Workmen, 1969 I LLJ 557 : 1968 (34) FJR 393 : 1968 (17) FLR 311 : 1969
LIC 90 : 1969 AIR (SC) 90 (S.C.3J)
Note: Please see related ratio/s under the above citation in this section

2. Financial difficulties resulting in the company being taken over by

corporation (S.C.2J)
Inland Steam Navigation Workers Union & Anr. v. Union of India & Ors., 2001 I LLJ 730 : 2001 (99)
FJR 140 : 2001 (88) FLR 976 : 2001 II LLN 620 : 2001 I CLR 695 : 2001 SCC (L&S) 513 : 2001 SCC (3)
47 (S.C.2J)
Note: Please see related ratio/s under the above citation in this section

2624

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

3. Stopping of credit by financing bank and accumulation of stocks (Mad.DB)

5A.923
The employer closed the company as the financing bank stopped giving money to him
and for accumulation of stocks. No notice of closure nor any compensation paid to workmen as per
Industrial Disputes Act. On workmens application Single Judge ordered the employer to pay
compensation to the workmen as per first part of Sec. 25FFF. Being aggrieved, employer appealed
to Division Bench contending that second part of Sec. 25FFF would apply. Division Bench upheld
the order of Single Judge since the reasons of closure were not due to unavoidable circumstances
which was beyond the control of employer.
S. Anthony Raj & Anr. v. A Shanmugam & Ors., 1995 II LLJ 1208 : 1995 (70) FLR 508 (Mad.DB)
Note: Please see related ratio/s under the above citation in this section

4. Workers indiscipline, delayed deliveries and defective workmanship

contributing to the financial difficulties by causing decline in orders
(Pat.DB)
Bharat Collieries Ltd. Owners of Ekra Enineering Works, Bansjora v. P.O. Labour Court, Chota
Nagpur, Ranch & Ors., 1969 LIC 1424 (Pat.DB)
Note: Please see related ratio/s under the above citation in this section

5. Closure due to financial difficulties and mismanagement (S.C.CB)

F 5A.924 Since state of financial difficulties or accumulation of undisposed stock may be
temporary and a result of past mismanagement, closure is accordingly not result of unavoidable
circumstances beyond the control of employer and hence restrictions imposed are not
unreasonable and violative of constitution.
M/s. Hathising Manufacturing Co., Ltd., Ahmedabad & Ors., (2) D. P. R. Cassad (3) Shri Digvijayshinji
Spinning and Weaving Mills Ltd. Jamnagar & Anr. v. (1) Union of India & Anr, (2) Regional Labour
Commr. (Central) Bombay & Anr, (3) Union of India & Ors, (4) P. Ranchoddas, Intervener, 1960 II LLJ
1 : 196061 (18) FJR 181 : 1960 (1) FLR 402 : 1960 AIR (SC) 923 (S.C.CB)
A state of financial difficulties or accumulation of undisposed of stocks may be temporary, it may be
brought about by past mismanagement directly attributable to the employer or may even be deliberately
brought about. The closure on account of financial difficulties or accumulation of undisposed of stocks is
accordingly not necessarily the result of unavoidable circumstances beyond the control of the employer.
That, in certain events, a statute may impose restrictions which will be irksome and may be so regarded by
certain citizens as unreasonable, is not decisive of the question whether it imposes a reasonable
restriction. (Page: 10, Para: 2)
Note: Now this is covered by explanation to proviso as inserted in the year 1971by way of amendment
F 5A.925 The undertaking has been closed down by reason merely of financial losses. The
explanation to sub-Sec. (1) of the Sec. 25FFF makes it clear that an undertaking which is closed
down by reason merely of financial difficulties (including financial losses) shall not be deemed to
have been closed down on account of unavoidable circumstances, beyond the control of the
employer. Hence the company will not therefore be entitled to claim the benefit of the proviso to
sub-Sec. (1) of Sec. 25FFF.
M/s. West Jamuria Coal Co. Ltd. v. Their Workmen, 1971 I LLJ 549 : 1972 (24) FLR 140 : 1972 LIC 1151
(S.C.3J)
Having due regard to the balance sheets, referred to by the Tribunal, it is clear that the undertaking has
been closed down by reason merely of financial losses. The explanation to sub-s. (1) of Sec. 25FFF makes
it clear that an undertaking which is closed down, by reason merely of financial difficulties (including
financial losses), shall not be deemed to have been closed down on account of unavoidable
circumstances, beyond the control of the employer. (Page: 553, Para: 23)

Sec. 25FFF

Closure for unavoidable Circumstances beyond the control

2625

The appellant will not therefore be entitled to claim the benefit of the proviso to sub-s. (1) of Sec. 25FFF.
If so, it follows that the award of the Industrial Tribunal holding that the appellant is liable to pay
compensation, under the principal part of sub-s. (1) of Sec. 25FFF, is correct.(Page: 554, Para: 24)
F 5A.926 Financial impossibility to carry on business citing Government notification on
minimum wages as excessive and unworkable by the management excludes the proviso to Sec.
25FFF(1).
Ramakrishna Ramnath v. The Presiding Officer, Labour Court, Nagpur & Anr., 1970 II LLJ 306 : 1972
(41) FJR 209 : 1970 (21) FLR 159 : 1973 LIC 87 : 1970 (3) SCC 67 (S.C.2J)
The minimum rate/rates of wages made payable as from 1st July, 1958 are so excessive and unworkable
that it is impossible for any employer to give effect to them. This is so particularly in relation to clause 6 of
the notification. Thus the changes introduced by the notification ..... regarding wages, chhat and other
matters are such as to attract the provisions of cl. 11 of the Standing Orders. (Page: 308, Para 3)
On the facts of this case we find ourselves unable to hold that the undertaking was closed down on
account of the unavoidable circumstances beyond the control of the employer within the meaning of
S. 25-FFF. (Page:314, Para 1)

6. Serious illness since it is not a reason connected with the running of the
business (Bom.HC)
5A.927
Closure of an undertaking must be for unavoidable circumstances which must have
nexus with the functioning of the undertaking, therefore, employer suffering from a disease due to
which he is unable to run business is not contemplated by Sec. 25FFF(1) and hence liability to pay
compensation would not be limited to 3 months wages but should be in accordance with Sec. 25F of
the Act.
Shyamsunder v. P.O. Labour Court, Amravati & Ors., 1986 LIC 767 (Bom.HC)
5A.928
In order to fall within the proviso of Sec. 25FFF (1) the closure must be on account of
unavoidable circumstances beyond the control of employer. However affliction from Tuberculosis
is a circumstance not connected with the functioning of the undertaking. It is only his personal
difficulty. Therefore such personal disease not a reason connected with the business and therefore
the proviso is not attracted and therefore the workmen are entitled to full compensation upon
closure.
Kuttancherry Ouseph Antony v. P.V. Kumaran & Ors.,1979 I LLJ 406 : 1979 (54) FJR 404 : 1979 (38)
FLR 285 : 1979 (39) FLR 86 : 1979 I LLN 470 : 1979 LIC 1165 (Ker.HC)

7. Closure brought about by the pressure of workmen for leasing it out to

another company due to financial losses and shortage of raw nuts (Ker.HC)
5A.929
Management leased out factory to the corporation and settlement was agreed between
the management and workmen of which one term states that the factory shall be deemed closed
with effect from 28.2.1971 and another term states that adjudication to be sought on compensation.
Tribunal held that factory was closed down because of the pressure of the workman for leasing it to
Cashew development Corporation on account of financial losses and shortage of raw nuts terming
it as reason beyond the control of management and awarded compensation as per Sec. 25FFF(1)
and held that payment be made after lease period of 5 years. Against the said award workers filed a
writ petition where High Court held that the Tribunal erred in ordering payment after the lease
period and quashed the decision that the factory was closed on account of unavoidable
circumstances beyond the control of the employer, hence matter remanded to Tribunal for
disposal in accordance with law.
Karunagappilly Taluk Cashewnut Workers Union v. Minerva Cashew Co. Pvt. Ltd. & Ors., 1978 II LLJ
244 (Ker.HC)

2626

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

8. Non-availability of orders for supply of goods and non co-operation of

workmen and high percentage of rejection (S.C.2J)
F 5A.930 Closure due to financial condition of the employer, non availability of orders for
supply of goods and non co-operation from the workmen in standardization of the working force
and for reduction of the high percentage of rejection were held not to constitute unavoidable
circumstances beyond the control of the employer so as to fall within the proviso to Sec. 25FFF(1)
Tatanagar Foundry Co., Ltd. v. Their Workmen, 1970 I LLJ 348 : 1970 (38) FJR 16 : 1970 (20) FLR 115 :
1970 LIC 1420 : 1970 AIR (SC) 1960 : 1969 (3) SCC 464 (S.C.2J)
The Tribunal has found that the appellant was not right in its contention that the closure was due to
unavoidable circumstances beyond its control. According to the appellant the main reasons for the
closure are: (1) financial condition of the appellant, (2) non-availability of orders for supply of goods; (3)
non-cooperation from the workmen in standardisation of the working force and for reduction of the high
percentage of rejection. The Tribunal has gone into the oral and documentary evidence adduced by the
parties and reached the conclusion that the closure of the business was not due to unavoidable
circumstances beyond the control of the appellant. We see no reason for interfering with the finding of the
Tribunal on this aspect of the case. The result, therefore, is that the workmen are entitled to compensation
under the main clause of Section 25FFF of the Industrial Disputes Act, 1947. (Page: 351, Para 5)

9. Winding up order of the Court resulting in closure when it is due to

non-repayment of debts (Bom.HC)
5A.931
The Court held that in every case of winding up order under Companies Act merely
because there is an intervention of the Court, it cannot and does not justify the conclusion that the
undertaking of the company was closed down on account of unavoidable circumstances beyond the
control of the employer because petitions in most of the cases for winding up are based on the
companies failure to dischange their debts in due course of business. Hence the Court held before
bringing them under the proviso proper investigation is imperative.
In re: Shree Madhav Mills Ltd.,1967-68 (32) FJR 315 :1967 (15) FLR 430 : 1966 II LLJ 827 (Bom.HC)

XV. Rights of workmen to dues over those of other creditors of the company
whether protected in the absence of liquidation proceedings
a) Rights of pledgee/pawnee of goods of sugar mill will prevail over rights of
workmen u/s. 33C since they rank as secured creditors in the absence of
liquidation proceedings (S.C 2J)
5A.932
Where a sugar mill obtained credit from a Bank and pledged its goods as security, it is
well settled that such lender or pledgee has a right to retain the chattel until a proper tender of the
amount due is made. u/s. 173 of Contract Act, the right of the pawnee is safeguarded to retain the
goods for payment of debt and interest and for other expenses. However disregarding these laid
down and settled law, the Cane Commissioner on behalf of Sugar Cane growers and Labour
Commissioner u/s. 33C on behalf of workmen employed in the sugar mills passed orders for
recovery of amount due leading to take possession of stock of sugar by recovery authority forcibly
when the writ petition against the orders of Labour and Cane Commissioners was pending. The
High Court by interim order directed to sell the sugar stocks and disburse out of proceeds of Rs.
1,53,50,400 a sum of Rs 4,30,000 to Labour Commissioner for dues of workmen and Rs. 6,00,000 to
Cane Commissioner and only the balance to the Pawnee Bank, that also subject to sanction of
BIFR. Therefore orders are challenged before Supreme Court. The Supreme Court setting aside
the order of High Court held both the Cane Commissioner and Labour Commissioner or for that
matter workmen in the absence of liquidation stand only as unsecured creditors and their rights
can not prevail over the rights of pawnee of the goods so long as his claim is not satisfied, no other
creditor of the pawnor has any right to take away the goods or its price. The Government was
bound to reimburse the pawnee the amount to which he was entitled to by realization in ordinary
course. The Cane Commissioner and workman are only, at the most to be regarded as unsecured

Sec. 25FFF

Closure when valid

2627

creditors. Where no liquidation of the company had taken place the right of cane growers and
workmen cannot precede the pawnee to appropriate the sale proceeds. They become secured
creditors only when there is winding up.
Central Bank of India v. Siriguppa Sugars and Chemicals Ltd. & Ors., 2007 (2) SCC (L&S) 919 (S.C 2J)
The right of the lender, or pledgee, is to retain the chattle until a proper tender of the amount due is made.
(See The Law of Mortgages by Edward F. Cousins) Under Section 173 of the Contract Act, a pawnee has
the right to retain the goods pledged for payment of the debt including interest on the debt and all
necessary expenses incurred by the pawnee in respect of the possession or for the preservation of the
goods pledged. (Page: 922, Para: 7)
In our judgment the High Court is in error in considering that the rights of the pawnee who had parted
with money in favour of the pawnor on the security of the goods can be defeated by the goods being
lawfully seized by the Government and the money being made available to other creditors of the pawnor
without the claim of the pawnee being fully satisfied. The pawnee has special property and a lien which is
not of ordinary nature on the goods and so long as his claim is not satisfied no other creditor of the pawnor
has any right to take away the goods or its price. After the goods had been seized by the Government it
was bound to pay the amount due to the plaintiff and the balance could have been made available to
satisfy the claim of other creditors of the pawner. But by a mere act of lawful seizure the Government
could not deprive the plaintiff of the amount which was secured by the pledge of the goods to it. As the act
of the Govenrment resulted in deprivation of the amount to which the plaintiff was entitled it was bound
to reimburse the plaintiff for such amount which the plaintiff in ordinary course would have realized by
sale of goods pledged with it on the pawnor making a default in payment of debt. (Page: 923, Para: 6)
Thus, going by the principles governing the matter, propounded by this Court there cannot be any doubt
that the rights of the appellant-bank over the pawned sugar had precedence over the claims of the Cane
Commissioner and that of the workmen. The High Court was, therefore, in error in passing an interim
order to pay parts of the proceeds to the Cane Commissioner and to the Labour Commissioner for
disbursal to the cane growers and to the employees. There is no dispute that the sugar was pledged with
the appellant bank for securing a loan of the first respondent and the loan had not been repaid. The goods
were forcibly taken possession of at the instance of the revenue recovery authority from the custody of the
pawnee, the appellant-bank. In view of the fact that the goods were validly pawned to the appellant bank,
the rights of the appellant-bank as pawnee cannot be affected by the orders of the Cane Commissioner or
the demands made by him or the demands made on behalf of the workmen. Both the Cane Commissioner
and the workmen in the absence of a liquidation, stand only as unsecured creditors and their rights cannot
prevail over the rights of the pawnee of the goods. (Page: 925/926, Para: 17)
We are also of the view that pending the writ appeals, the High Court ought not to have passed such an
interim order of consequence especially in the light of the legal principles settled by this Court. The order
of the High Court, therefore, cannot be sustained and calls for interference. (Page: 926, Para: 18)

XVI. Closure when valid

Note: also refer to Sec. 2(cc) for more ratios on validity of closure

a) The factum of closure by whatever reasons financial, business or hazards to

staff or management etc. shall be the focal point of consideration by Courts
(S.C.3J)
F 5A.933 The entire set of facts leading to the closure is always deserved to be taken into account
and no one fact or set of facts in isolation alone need be considered for determination of a factum of
closure. It may be financial or purely for business reasons. It may also due to hazards or danger to
staff or members of management in running the business. In essence, the factum of closure by
whatever reasons irrespective of motive is the focal point of consideration.
Kalinga Tubes, Ltd. v. Their workmen, 1969 I LLJ 557 : 1968 (34) FJR 393 : 1968 (17) FLR 311 : 1969
LIC 90 : 1969 AIR (SC) 90 (S.C.3J)

2628

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

The discussion of the above decisions yields the result that the entire set of circumstances and facts have
to be taken into account while endeavouring to find out if, in fact, there has been a closure and the
Tribunal or the Court is not confined to any particular fact or set of facts or circumstances. In one case the
Management may decide to close down an undertaking because of financial or purely business reasons.
In another case it may decide in favour of closure when faced with a situation in which it is considered
either dangerous or hazardous from the point of view of the safety of the Administrative staff or members
of the Management or even the employees themselves to carry on the business. The essence of the matter
therefore, is the factum of closure by whatever reasons motivated. (Page: 563, Para: 2)

b) Closure is valid when effected due to gherao endangering the safety of the staff
continued for several hours (S.C.3J)
F 5A.934 Factum of the closure by whatever reason motivated is essential to determine whether
there was a closure or not hence considering the facts of the case in the instant case where workmen
staged a gherao in administration building for several hours which was dangerous to the safety of
the staff and management, Supreme Court held that the danger and hazard associated with such
type of activity is also a ground which renders the closure justified.
Kalinga Tubes, Ltd. v. Their Workmen, 1969 I LLJ 557 : 1968 (34) FJR 393 : 1968 (17) FLR 311 : 1969
LIC 90 : 1969 AIR (SC) 90 (S.C.3J)
The discussion of the above decisions yields the result that the entire set of circumstances and facts have
to be taken into account while endeavouring to find out if, in fact, there has been a closure and the
Tribunal or the Court is not confined to any particular fact or set of facts or circumstances. In one case the
Management may deride to close down an undertaking because of financial or purely business reasons. In
another case it may decide in favour of closure when faced with a situation in which it is considered either
dangerous or hazardous from the point of view of the safety of the Administrative staff or members of the
Management or even the employees themselves to carry on the business. The essence of the matter
therefore, is the factum of closure by whatever reasons motivated. (Page: 563, Para: 1)
There can be no manner of doubt from what has been found by the Tribunal itself that a large number of
workers about 150 of them virtually staged a gherao during the several hours preceding the declaration of
closure. (Page: 563, Para: 4)
.It is not possible to say in categorical terms that closure in the aforesaid background and
circumstances would not be genuine or that a great deal of suspicion would attach to the action taken
simply because the Company was a profitable and going concern. There are a number of supplement facts
which show that the Management was faced with a situation in which it could well take a decision to close
down the undertaking. (Page: 564, Para: 2)

c) Closure is valid even if a single unit is closed since the word undertaking
covers even closure of a single unit (S.C.3J)
F 5A.935 The expression Undertaking in Sec. 25FFF of the section was held to cover not just
the entire undertaking but also any work, enterprise, project or business undertaking and hence
closure of even a single unit would be covered under the section therefore as the employee who was
employed on a project and terminated on completion of the project can seek compensation nothing
more than that in terms of the provision of Sec. 25FFF only.
Management of Hindustan Steel Ltd. v. Their Workmen & Ors., 1973 (43) FJR 192 : 1973 (26) FLR 136 :
1973 I LLN 208 : 1973 LIC 461 : 1973 SCC (L&S) 195 : 1973 AIR (SC) 878 : 1973 (3) SCC 564 (S.C.3J)
The word undertaking as used in SEC. 25FFF seems to us to have been used in its ordinary sense
connoting thereby any work, enterprise, project or business undertaking. It is not intended to cover the
entire industry or business of the employer as was suggested on behalf of the respondents. Even closure
or stoppage of a part of the business or activities of the employer would seem in law to be covered by this
sub-section. The question has indeed to be decided on the facts of each case. In the present case the
Ranchi Housing Project was clearly a distinct venture undertaken by the appellant and it had a distinct
beginning and an end. Separate Office was apparently set up for this venture and on the completion of the
project or enterprise that undertaking was closed down. The Tribunal has actually so found. Its

Sec. 25FFF

Closure when valid

2629

conclusion has not been shown to be wrong and were have no hesitation in agreeing with its view. There
is no cogent ground for reopening the Tribunals conclusion under Article 136 of the
Constitution. (Page: 199, Para: 1)
Now, under Sec. 25FFF (1) which creates a statutory fiction, all that Shri Naidu was entitled to, was
notice and compensation in accordance with the provisions of Section 25-F as if he had been retrenched.
Retrenchment notice, Ex. 7, dated June 29, 1968, quite clearly complies with this requirement. On behalf
of the respondent, as already noticed, it is not disputed that there has been no failure to give notice as
required by Section 25F, in case Clause (b) is held inapplicable. (Page: 199, Para: 2)

d) Closure is valid though all branches are not closed down (S.C.2J)
F 5A.936 To effect closure it is not necessary that management should close down all the
branches of the business.
Isha Steel Treatment, Bombay v. Association of Engineering Workers, Bombay & Anr., 1987 I LLJ 427 :
1987 (71) FJR 11 : 1987 (54) FLR 454 : 1987 I LLN 741 : 1987 LIC 1028 : 1987 I CLR 232 : 1987 SCC
(L&S) 91 : 1987 AIR (SC) 1478 : 1987 (2) SCC 203 (S.C.2J)
It is not necessary that in order to effect closure of business the management should close down all the
branches of its business. In Management of Hindustan Steel Ltd. v. The Workmen, (1973) 3 SCR 303:
(AIR 1973 SC 878) this Court has held that the word undertaking used in S. 25-FFF seems to have been
used in its ordinary sense connoting thereby any work, enterprise, project or business undertaking. It is
not intended to cover the entire industry or business of the employer. Even the closure or stoppage of a
part of the business or activities of the employer would seem in law to be covered by the said provision. In
deciding the above case this Court relied upon its earlier decision in Workmen of the Indian Leaf Tobacco
Development Co. Ltd., Guntur v. Management of the Indian Leaf Tobacco Development Co. Ltd.,
Guntur (1969) 2 SCR 282: (AIR 1970 SC 860). In that case the Court observed that a genuine closure of
depots or branches, even though it did not amount to closure of the business could not be interfered with
by an Industrial Tribunal. It further held that the closure was stoppage of part of the activity or business of
the management and such stoppage is an act of management which is entirely in the discretion of the
management. The Court further observed that no Industrial Tribunal could interfere with the discretion
exercised in such a matter. (Page: 432, Para: 8)

e) Closure is valid even if products are outsourced after closure (S.C.2J)

F 5A.937 If the company, after closure of the factory obtains articles manufactured by others
which it was manufacturing earlier, stamps them with its own trade mark and sells them in the
market, it cannot be said it was continuing the manufacturing process and the closure cannot be
challenged as sham on the ground of such out-sourcing of the manufacturing activity and hence the
finding of the Tribunal that the closure was genuine was upheld.
Workmen of M/s. Sur Iron & Steel Co. Pvt. Ltd. v. M/s. Sur Iron & Steel Co. Pvt. Ltd. & Anr., 1971 I LLJ
570 : 1969 (18) FLR 223 : 1970 (3) SCC 618 (S.C.2J)
.On the behalf of the Workmen, a case was put forward & was sought to be supported by the
evidence of some witnesses to the effect that the Company had set up factories at four different places
where it was carrying on the work of manufacture of the same articles which it was manufacturing earlier
in this factory. (Page: 575, Para: 5)
.The Tribunal has fully discussed the evidence on this question & has recorded the finding that
there is no proof that the Company has set up any other manufacturing undertaking. It appears that, after
the closure of the factory, the Company started doing another type of business & that was to obtain
articles manufactured by other manufactures of the same type which the Company was earlier
manufacturing, to stamp them with its own trade-mark , & to sell those articles in the market. In fact, it
was because the Company had put its own trademark on some of those articles sold by it subsequently that
the witness on behalf of the Union stated that the Company was manufacturing those very goods at some
other places.. On these facts, the Tribunal recorded the conclusion that the closure was genuine &
bona fide, further, that the closure was for reasons beyond the control of the management.On the
face of it, that finding could not be challenged, because it is very clear that the Company is not carrying on

2630

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

any manufacturing business at all since 22nd April, 1962. The closure was bona fide in the sense that the
Company in fact ceased to carry on that industry & the step taken of the closure was not a cloack for a
lock-out or for carrying on the business under some other disguise. (Page: 574, Para: 6)

f) Closure is valid even though the same activity is resumed after some time
(S.C.2J)
F 5A.938 Resumption of publication of newspapers subsequent to award and after lapse of four
years cannot be made a basis to carry out a probe as to whether prior closure was real or a mere
devise to coerce and intimidate employees.
The Andhra Prabha Ltd., & Anr. v. The Secretary, Madras Union of Journalists & Ors., 1968 I LLJ 15 :
1967-68 (33) FJR 318 : 1967 (15) FLR 435 : 1967 AIR (SC) 1869 (S.C.2J)
On behalf of the employees an application has been made for leading additional evidence. In this
application events which took place after the publication of the award are relied on as going to show that
the discontinuance of the Publications from Madras was a mere ruse and a device adopted by the
company to coerce and intimidate the employees and that publication of the newspapers had been
commenced soon after the publication of the award. We do not think it necessary to go into this matter at
any length because a break of over four years had intervened in between and what the company does after
the lapse of this long period cannot and ought not to be taken into consideration in order to find out
whether the closure was a real one or was a mere device as suggested by the employees. The evidence on
record shows that Ramnath Goenkas plan was not to give up the business of newspaper publications
altogether but he wanted to distribute his business to different places. Whatever may be the motive behind
such plan, he had only carried out that plan into effect after the publication of the award and this cannot
lead us to the conclusion that the closure was an assumed one. (Page: 25, Para: 1)

g) Closure of tool workshop is valid when closure of main section is bonafide

(Mys.DB)
5A.939
After closure of main Bobbins section on account of becoming uneconomical,
workmen of subsidiary section (workshop), maintained for manufacture of tools for and repair of
main section struck work demanding reinstatement of main section workers thus resulting in
closure of workshop also, it was held where Labour Court had found that closure of main section
was bona fide, closure of workshop will be natural and hence it cannot conclude that there was
unjustified lockout in workshop section just because employer had used services of a contractor to
fulfill order of one solitary customer and award of Labour Court granting back wages along with
compensation u/s. 25FFF was quashed.
Industrial and General Engineering Company v. Their Workmen & Anr., 1964 II LLJ 438 : 1963-64 (25)
FJR 264 (Mys.DB)
.Petitioner decided to.would be uneconomical. (Page: 440, Para: 1)
.a dozen workmen who.the bobbins section. (Page: 440, Para: 2)
.The award made by.this writ petitioner. (Page: 440, Para: 6)
.the workshop was a.Government porcelain factory.and if, as.an illegal
lockout. (Page: 442, Para: 2)
In the viewIs accordingly quashed. (Page: 444, Para: 7)

Sec. 25FFF

Closure when valid

2631

h) Closure of the bank valid when it is due to compulsory liquidation (Cal.DB)

5A.940
The business of the bank was closed as a result of winding up order u/s. 445(3) of the
Companies Act and the discharge of the employees on compulsory liquidation cannot be
considered as retrenchment. Hence the employees will not be entitled to claim the amounts agreed
upon in the tripartite agreement between the parties. The employees are however entitled to claim
compensation u/s. 25FFF the official liquidator is directed to decide the claims.
Ram Hari Dev v. Offical Liquidator, High Court, Calcutta, 1965 II LLJ 230 : 1965-66 (28) FJR 300
(Cal.DB)
The tripartite agreement.Act, 1947. (Page: 232, Para: 3)
.the So called tripartite.not otherwise. (Page: 233, Para: 1)
..the meaning of.closure of business. (Page: 233, Para: 3)
It will be observed.that of retrenchment. (Page: 234, Para: 4)
The result is.Court below. (Page: 236/237, Para: last)

i) Closure is valid when due to inability to produce standardized products with

available machinery (Mad.DB)
5A.941
Closure effected due to inability to produce standard products conforming to ISI
Standard and Essential Commodities Act with available machinery held to be beyond the control
of employer and hence bonafide.
Engineering Metal & General Workers Union v. M. Jeevanlal (1929) Ltd. & Ors., 1981 I LLJ 317 : 1980
(57) FJR 111 : 1981 I LLN 124 (Mad.DB)
In this case.management. (Page: 325, Para: 19)
We are.of order. (Page: 326, Para: 20)
As a matter.to costs. (Page: 326, Para: 20/21)

j) Closure is valid when due to unavoidable circumstances of stoppage of raw

material supply (Mad.DB)
5A.942
Closure of the employers business has been due to unavoidable circumstances of
stoppage of supply of raw material and not due to any acts of the employer. Hence the closure being
bonafide, compensation paid to workman will not exceed amount provided u/s. 25FFF.
Venkatarama Naidu v. Labour Court, Madurai & Anr., 1979 (54) FJR 364 : 1980 LIC 923 : 1979 I LLN
504 (Mad.DB)
But in.world. (Page: 368, L: 39 to Page: 369, L: 12)
In these.Article 226. (Page: 369, T.L: 18 to B.L: 24)

2632

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

k) When employer was unable to produce goods that can be marketed (Mad.HC)
5A.943
When an employer closed down an undertaking paying closure compensation to the
workman as it was unable to produce articles which could be marketed in accordance with the
standard specification, tribunal held that the matter had gone beyond the employers hand and as
such he was justified in closing the undertaking and awarding closure compensation which was
upheld by High Court as well as Supreme Court.
Jeewanlal (1929) Ltd. v. Industrial Tribunal, Madras & Ors., 1975 (48) FJR 212 : 1975 (31) FLR 329 :
1975 II LLN 413 (Mad.HC)

l) Closure valid though machinery is leased out to sister concern which is a

separate unit (Mad.HC)
5A.944
After 3 to 4 months closure, the machinery of the firm leased out to a sister concern.
Workman contended that the closure was a pretence and there was functional integrality between
two firms, which was rejected by the Labour Court as they had separate factory license, separate
registration under Sales Tax, PF, ESI and there was no evidence that two firms were under
common management or that there was financial inter-relationship from which it could be inferred
that there was functional integrality. High Court upheld the award of Labour Court holding that
merely leasing of machineries after keeping them idle for several months could not warrant the
conclusion that there was in fact no closure or closure effected earlier was unreal.
Workmen of Bharat Skin Corporation v. P.O. I Addl. Labour Court & Anr., 2000 I LLJ 303 (Mad.HC)

m) Closure of maternity hospital run by Red Cross society valid despite running
other centres like Family Planning and Vikalang Centre when there is no
functional integrality among them (S.C.2J)
F 5A.945 Red Cross Society was running a maternity hospital on the basis of donations without
the help of any grant from Government unlike its other units such as drug de-addication centre,
family planning centre and Vikalang centre which run on Government aid. The Maternity
Hospital was then closed due to depletion of donations, resulting in the termination of services of a
nurse who contended that the closure is not legal as other units are functioning. Apex Court held
that there is no functional integrality among the units and the word undertaking is not to cover
the entire business/industry of the employer but can even cover an independent unit of it, hence
closure is held valid.
District Red Cross Society v. Babita Arora & Ors., 2007 III LLJ 777 : 2007 (114) FLR 1040 : 2007 IV
LLN 199 : 2007 III CLR 325 : 2007 LLR 1125 : 2007 (2) SCC (L&S) 631 : 2007 AIR (SC) 2879 (S.C.2J)
The position in law is, therefore, well settled that if the entire establishment of the employer is not closed
down but only a unit or undertaking is closed down which has no functional integrity with other units or
undertaking, the provisions of Section 25FFF of the Act will get attracted and the workmen are only
entitled to compensation as provided in Section 25FFF of the Act which Page 3283 has to be calculated in
accordance with Section 25F of the Act. The Tribunal and also the High Court clearly erred in holding
that as other units of the appellant Red Cross Society like Drug De-Addiction-cum-Rehabilitation Centre,
Family Planning Centre and Viklang Kendra were functioning, the termination of services of the
respondent would amount to retrenchment. The Maternity Hospital was functioning as a distinct entity. It
was not receiving any grant from the Government and was being run entirely on charitable basis from
donations received from public. Due to financial stringency, the Maternity Hospital had to be closed
down. The other three units, viz., Drug De-Addiction- cum-Rehabilitation Centre, Family Planning
Centre and Viklang Kendra are receiving grants from Government and are functioning as separate
entities and the mere fact that they have not been closed down, cannot lead to the inference that the
termination of services of the respondent was by way of retrenchment which was illegal on account of
non-compliance of the provisions of Section 25F of the Act (Page: 778, Para: 9)

Sec. 25FFF

Closure when valid

2633

In view of the findings recorded above, the respondent would be entitled to compensation only in
accordance with Section 25FFF of the Act and the award for reinstatement in service with back wages
passed by the Tribunal which was affirmed by the High Court cannot be sustained and must be set aside.
(Page: 778, Para: 10)

n) Closure of unit of an establishment which is distinct from and does not enjoy
functional integrality with other units is valid (S.C.3J)
F 5A.946 Where the company is undertaking construction work spread all over India, may be
all over the world there is no proximity between the several units and therefore each unit is distinct
establishment and merely because the management reserved the liberty of transferring employees
from one place to another it will not make all the units into a single establishment. Mere unity of
ownership management and control are not of much significance and that by the facts the
Hyderabad Unit was held to be a separate unit with no functional integrality with other units and
therefore upon closure of the same the employees had no right to demand absorption in other unit
except compensation in terms of Sec. 25FFF.
Hindustan Steel Works Construction Ltd. & Ors. v. Hindustan Steel Workers Construction Ltd.
Employees Union Hyderabad & Anr., 1995 LIC 1590 : 1995 (70) FLR 946 : 1995 I LLN 792 : 1995 SCC
(L&S) 702 : 1995 AIR (SC) 1163 : 1995 (3) SCC 474 (S.C.3J)
It has been held repeatedly that all the tests evolved in the several decisions of this Court need not all be
satisfied in every case. One has also to look to the nature and character of the undertaking while deciding
the question. The tests evolved are merely to serve as guidelines. Now, let us look at the
appellant-Company. It is a Government company wholly owned and controlled by the Government of
India. Its job is to undertake construction works both in India and abroad. The construction works are not
permanent works in the sense that as soon as the construction work is over, the establishment comes to an
end at that place. In such a case, functional integrality assumes significance. The nature of the
construction work may also differ from work to work or place to place, as the case may be. It is not even
suggested by the respondent-Union that there is any functional integrality between the several units or
several construction works undertaken by the appellant. It is not suggested that closure of one leads to the
closure of others. There is no proximity between the several units/works undertaken by the appellant;
they are spread all over India, indeed all over the world. It would thus appear that each of the works or
construction projects undertaken by the appellant represent distinct establishments and did not constitute
units of a single establishment. The Division Bench, however, was influenced by the fact that (i) when the
workers are transferred from one unit to other unit they carried their seniority with them; (ii) the orders of
appointment say that the employees are liable to be transferred to one place to other; that indeed, forty
three out of hundred workers concerned herein were brought to Hyderabad on transfer from other places
and (iii) initially, Hyderabad and Visakhapatnam were under the same administrative control and that
when they were separated the workers were not asked to exercise their option to remain in one or the other
unit. In our opinion, however, the fact that the Management reserved to itself the liberty of transferring
the employees from one place to another did not mean that all the units of the appellant constituted one
single establishment. In the case of a construction company like the appellant which undertakes
construction works wherever awarded, does that work and winds up its establishment there and
particularly where a number of local persons have to be and are appointed for the purpose of a particular
work, mere unity of ownership, management and control are not of much significance. Having regard to
the facts and circumstances of this case and the material on record, the conclusion is inevitable that the
units at Hyderabad were distinct establishments. Once this is so, workmen of the said unit had no right to
demand absorption in other units on the Hyderabad units completing their job. (Page: 1603, Para: 16)

o) Closure valid inspite of non-compliance since it merely entitles workmen to

notice and compensation (AP.HC)
5A.947
Non-compliance of Sec. 25FFF of the Act does not render closure illegal as sub-Sec. (1)
of Sec. 25FFF implies that the workers are entitled to notice and compensation as laid down u/s.
25F of the Act.
N. Narasimhalu & Ors. v. Commissioner of Industries, A.P. & Anr., 1987 II LLJ 482 : 1988 (57) FLR 17 :
1987 II LLN 243 (AP.HC)

2634

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

p) Closure valid despite fraught with malafides since it does not render the
closure unreal (S.C.2J)
F 5A.948 The two judge bench of S.C has held that the observation made by the Constitution
Bench in the case of Banaras Ice Factory Ltd. (1957 I LLJ 253) that if there is no real closure but of a
mere pretence of closure or if it is malafide, there is no closure in the eye of law, can not be said as
laying down an unqualified and categorical propostion of law that wherever a closure is malafide, it
must be deemed to be unreal or non existent & held that in the instant case, when the two Branch
offices are closed, the finding of malafides can not justify conclusion that branches should be
deemed to continue.
Tea Districts Labour Association, Calcutta v. Ex-employees of Tea Districts Labour Association & Anr.,
1960 I LLJ 802 : 1960-61 (18) FJR 298 : 1960 AIR (SC) 815 (S.C.2J)
As we have already indicated the conclusion of the tribunal on this point is based on the observations of
this Court in the case of Banaras Ice Factory Ltd. v. Its Workmen ((1957) S.C.R. 143). It will, therefore,
be necessary to examine those observations and decide whether they really justify the conclusion of the
tribunal. In that case this Court was dealing with the decision of the Labour Appellate Tribunal on a
complaint filed before it under s. 22 of the Industrial Disputes (Appellate Tribunal) Act (Act No. XLVIII
of 1950), hereafter called the Act. It appears that during the pendency of an appeal before the Labour
Appellate Tribunal the appellant Company decided to close down its business and gave notice to all the
workmen that their services would be terminated upon the expiry of 30 days from July 16, 1952. That led
to the complaint under s. 23 of the Act on the allegation that s. 22 of the said Act had been contravened.
The Labour Appellate Tribunal had found that the closure was bona fide. It conceded that the appellant
had the right to close its business for bona fide reasons; but nevertheless it took the view that permission
should have been obtained before the said closure. That is why according to it the appellant was guilty of
contravening s. 22(b) of the Act. This decision was reversed by this Court. In doing so, the true scope and
effect of S. 22 and 23 of the Act were considered and it was held that if the impugned closure was bona
fide then neither of the two sections came into operation. Thus the position was that the closure was bona
fide and that the appellant had committed no breach of s. 22(b) of the Act. In dealing with the scope and
effect of s. 23 this Court observed : There is hardly any occasion for praying for permission to lift the ban
imposed by s. 22, when the employer has the right to close his business and bona fide does so, with the
result that the industry itself ceases to exist. Then it was added : If there is no real closure but a mere
pretence of a closure or it is mala fide, there is no closure in the eye of the law and the workmen can raise
an industrial dispute and may even claim under s. 23 of the Act. It is on this latter observation that the
Tribunal has founded its decision. With respect we do not read the observations as laying down an
unqualified and categorical proposition of law that wherever a closure is mala fide it must be deemed to
be unreal and non-existent. What this Court has said is that in cases of pretence of closure no closure in
fact has taken place and for the purpose of s. 23 of the Act with which the Court was dealing a mala fide
closure may conceivably be treated as falling in the same class as a pretence of closure. But in the present
case the facts are not in dispute. There has been a closure and the agencies have been closed and their
business had been wound up. If it is found that the closure was not bona fide the consequences would be
the liability of the employer to pay the higher compensation under Sec. 25FFF of the Industrial Disputes
Act, 1947. But is difficult to see how when the two agencies have in fact been closed the finding about
mala fides can justify the conclusion that the said two agencies should be deemed to continue and how the
award can make an order on that basis. Besides, as we have already indicated even the finding about the
mala fides of the closure is itself open to serious doubt. In our opinion the said finding is based on mere
surmises and is entirely opposed to the weight of evidence adduced in this case. (Page: 806, Para 4)

XVII. Closure excludes

a) Taking over of a power company by MPEB on expiry of its licence (MP.DB)
5A.949
The power company has been taken over by the M. P. Electricity Board on expiry of
its licence and services of workmen were terminated on payment of compensation u/s. 25FFF. On
application by workmen u/s. 33C(2) claiming compensation u/s. 25F, the Labour Court held that

Sec. 25FFF

Closure excludes

2635

the case was not of closure but of transfer of undertaking by operation of law u/s. 25FF and granted
full compensation claimed; which was upheld by the Court which opined that Labour Court could
award retrenchment compensation u/s. 33C(2) which was payable u/s. 25F.
Central India Electric Supply Co. Ltd. Bilaspur v. P.O. District Labour Court, Gorakhpur Ward,
Jabalpur, & Ors., 1969 I LLJ 840 : 1969 (18) FLR 22 : 1969 LIC 1204 (MP.DB)
The company was ..under S. 25F (Page: 841, Para: 2)
Lastly it is.under S. 25F. (Page: 844, Para: 2)
.We have.Labour Court. (Page: 843, Para: 1)

b) Leasing of undertaking as going concern and employer continued to have

ownership (Mad.DB)
5A.950
Undertaking was leased as a going concern and employer continued to have title to
and owned the undertaking and same old employees were engaged under a scheme and setting
aside the order of official liquidator admitting the claims of workers for closure compensation it
was held that as there was no discharge contemplated under the scheme, present case was not of
retrenchment, also there was no transfer of business because good will of company continued and
since the workers and staff continued to be employed there was no closure and though under the
circumstances the stoppage of service might be termed as lay-off the workers were not entitled to
any closure compensation.
Jayajothi & Co. Rajapalayam v. Official Liquidator & Anr., 1963 (7) FLR 389 : 1963 II LLJ 739
(Mad.DB)
These appeals arise out.hereafter as the company. (Page: 390, Para: 1)
.The workers were.as a going concern. (Page: 394, Para: 1)
.the claim of the.retrenchment of lay-off. (Page: 394, Para: 3)
the question then is.paid by lessee. (Page: 395, Para: 3)
The sum up.on the matter. (Page: 395, Para: 3)
.under the circumstances.is accordingly set aside. (Page: 396, Para: 1)

c) Closure which is subjected to conditions stipulated in a scheme that are

discriminatory and arbitrary (Guj.HC)
5A.951
The writ petition filed by the textile labour association for granting relief from the
insertion of conditions regarding closure of a textile unit as laid down by the scheme which
provided that in order to claim the relief under the scheme the unit should have been declared to be
closed u/s. 25-O of the Act or an official liquidator should have been appointed in the process of
winding up. Further, if the closure of the unit were effected by an illegal strike by workmen, it
would not entitle workmen to claim the benefit of the scheme. And the benefit of the scheme should
not be extended to workers who were not on the pay roll of the mill at the time of closure. By
allowing the petition, High Court held, these conditions regarding closure of a unit, as
discriminatory, arbitrary, and offending Articles 14 and 16(1) of the Constitution. Further,
directed to pay the workers the benefit of the above said scheme called Textile Workers
Rehabilitation Fund Scheme.
Textile Labour Association v. Union of India, 2001 II LLJ 838 (Guj.HC)

2636

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

The present petition.Fund scheme.said condition.as under.Such a unit

should have.Act of 1947.would not entitle.time of closure.
(Page: 838, Para: 1)
In the result.of this judgment. (Page: 841, Para: 9)

XVIII. When closure is not genuine or not valid

a) Workmen continue to be workmen as before (S.C.3J)
F 5A.952 Where the finding of the Tribunal suggests that the business of proprietorship Co. was
not fully and genuinely closed nor a proper retrenchment was made but an uncalled for lockout
was made, the Supreme Court held that the finding in such cases cannot be interfered with at the
stage of the special leave and Tribunal is justified in its award that the workmen continue to be
workmen as before and never ceased to be the employees of the company and their
non-employment was illegal and therefore entitled to reinstatement.
Kays Construction Co. (P.) Ltd. v. Its Workmen, 1958 II LLJ 660 : 1958-59 (15) FJR 231 : 1959 AIR (SC)
208 (S.C.3J)
Thus, having considered the whole of the evidence adduced before it, the tribunal observed that enough
has been said to show that there is neither full nor genuine closure of Kays Construction Company, Ram
Baug, Allahabad, nor a proper retrenchment but only an uncalled-for lockout of the workmen. The
workmen continue to be workmen. It is in the light of these findings that the tribunal made its final
award. (Page: 664, Para: 3)
.A valid reference was made to the tribunal in regard to an industrial dispute between the
appellant and respondent 1 and the tribunal, having consideration the relevant facts, has come to the
conclusion that the workmen in question have been improperly locked out and are entitled to
reinstatement. Having regard to the material findings of fact recorded by the tribunal in the present case,
we do not think that the validity of the award can be challenged by the appellant on abstract legal grounds
sought to be raised by Mr. Sastri before us. (Page: 666, Para: 2)

b) When branch retail outlet which is functionally integral with head office and
other branches is closed (Del.DB)
5A.953
Considering established facts that there was common recruitment to the head office
and other retailing branches of whole sale cooperative stores as well as common conditions of
service, common joint seniority list of all the staff, there were inter transfers between various
branches and head office which were made by General Manager and work at the branches was
same, Court refused the contention of the Management that a branch retail outlet was a separate
distinct undertaking and upheld the award of Labour Court that it is an integral whole and
therefore the employer has to abide by the provision of Sec. 25F and since Sec. 25FFF is not
attracted and Sec. 25F is violated, the award of reinstatement with back wages was upheld and
hence upon its closure, workmen would be retrenched so as to attract provisions of Sec. 25F.
Delhi Consumers Co-operative Wholesale Stores Ltd. v. Secretary, Labour & Ors., 1983 (63) FJR 14 :
1983 II LLN 552 : 1983 LIC 1652 (Del.DB)
.the recruitment was.for each Coop. (Page: 21, Para: 3)
There were inter.Office and branches.The work at.of the stores.
(Page: 22, Para: 1)
In the present.not complied with. (Page: 22, Para: 3)

Sec. 25FFF

When closure is not genuine or not valid

2637

c) When mechanical workshop is closed since not being a separate undertaking

but being adjunct to main manufacturing activity (Guj.DB)
5A.954
Mechanical workshop adjunct to main manufacturing activity is not a separate
undertaking hence termination of services of all workshop employees will not fall u/s. 25 FFF and
hence in absence of any compliance with mandatory provisions of Sec. 25F terminated employees
were entitled to reinstatement with full back wages as they were not gainfully employed.
Umakant C. Acharya & Ors. v. Saurashtra Cement & Chemical Industries Ltd., 1993 (66) FLR 1080 :
1993 I LLN 379 (Guj.DB)
In the instant.of the Act. (Page: 1086, Para: 2)

d) When closure is without any grounds being established for it (Ori.DB)

5A.955
As finding of Tribunal holding closure as void was based on evidence that
management failed to establish any ground for closure and in fact there was no closure, the same
cannot be interfered with and its award was upheld.
The Management of M/s. Town Bidi Factory, Cuttack v. P.O. Labour Court & Anr., 1990 II LLJ 55 : 1990
II LLN 587 : 1990 LLR 461 : 1990 II CLR 358 (Ori.DB)

e) When Letter Press Section is closed since it is not an independent part of

establishment as workmen were interchangeable between Letter Press section
and Offset Press Unit (Del.HC)
5A.956
A printing press carried on both printing by offset press and by letter press, the
closure of letter press section cannot be said to be closure of an independent part of the
establishment as the workers were interchangeable and thus the tribunal was correct in its finding
that it was a case of retrenchment and not closure.
Raj Hans Press v. Labour Court, Delhi & Ors. & K.S. Sidhu & Ors., 1977 II LLJ 524 : 1977 (51) FJR 184
: 1978 (36) FLR 53 : 1977 II LLN 513 : 1977 LIC 1633 (Del.HC)

f) When closure is subjected to conditions stipulated in a scheme that are

discriminatory and arbitrary (Guj.HC)
5A.957
The writ petition filed by the textile labour association for granting relief from the
insertion of conditions regarding closure of a textile unit as laid down by the scheme which
provided that in order to claim the relief under the scheme the unit should have been declared to be
closed u/s. 25-O of the Act or an official liquidator should have been appointed in the process of
winding up. Further, if the closure of the unit were effected by an illegal strike by workmen, it
would not entitle workmen to claim the benefit of the scheme. And the benefit of the scheme should
not be extended to workers who were not on the pay roll of the mill at the time of closure. By
allowing the petition, High Court held, these conditions regarding closure of a unit, as
discriminatory, arbitrary, and offending Articles 14 and 16(1) of the Constitution. Further,
directed to pay the workers the benefit of the above said scheme called Textile Workers
Rehabilitation Fund Scheme.
Textile Labour Association v. Union of India, 2001 II LLJ 838 (Guj.HC)
The present petition.Fund scheme.said condition.as under.Such a unit
should have.Act of 1947.would not entitle.time of closure.
(Page: 838, Para: 1)
In the result.of this judgment. (Page: 841, Para: 9)

2638

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

XIX. Closure Lock-out distinction

a) Closure though effected in stages will not amount to lock-out (S.C.2J)
F 5A.958 The fact that the company i.e. Express News Papers did not come to an end in April
1959 but only its business of publishing several weeklies and news papers was closed as inferred
from the presence of valuable property on its hands after April 1959 and the retaining of some
persons including a reporter to look after the property and use of machinery like teleprinter service
up to October 1959 cannot be construed as to mean that there was no closure but only lock-out
between the two dates and hence it was held that closure was effective from April 1959 but not from
November 1959
The Andhra Prabha Ltd., & Anr. v. The Secretary, Madras Union of Journalists & Ors., 1968 I LLJ 15 :
1967-68 (33) FJR 318 : 1967 (15) FLR 435 : 1967 AIR (SC) 1869 (S.C.2J)
.We have to bear in mind that the company i.e., Express Newspapers (P) Ltd. did not come to an
end in April 1959. It only closed its undertaking of publishing several newspapers and weeklies. It had
very valuable property on its hands after April 1959 and some persons had to be retained in service to look
after the property. The fact that one of them was a reporter cannot lead to the inference that the company
did not close down its business but could take it up whenever it wanted to. Further, the failure to inform
the Provident Fund authorities was an omission but that cannot mean that the workers continued to be in
the service of the company or were meant to be taken back into its service as soon as they became
submissive to Ramnath Goenka. With regard to the teleprinter service, we were told that it had been paid
for up to a certain date and the fact that the Madurai and Vijayawada companies used the teleprinter
service till the end of October 1959 would not either by itself or taken in conjunction with the other
circumstances, justify the conclusion that the company retained the teleprinter service for its own use, if
necessary. (Page: 24, Para: 1)
To all intents and purposes, the business of the company was closed from April 29.and we see no
reason to hold with the Tribunal that the closure became effective sometime in November 1959.
(Page: 24, Para: 2)
Note: also refer to Sec. 2(cc) & 2(l) for connected ratios on this subject

b) Closure is not lock-out when board of directors ratified notice of closure and
employees discharged in large numbers retaining a few permanent employees
and no orders executed in the matter of sales (S.C.3J)
F 5A.959 There is no point in the contention of the employees and the finding of the Tribunal to
pinpoint to the conclusion that what had actually happened was a mere lock out in the guise of
closure and not a real closure because there was no evidence that the action taken in issuing a notice
of closure by Manager (Admn.) was not ratified or accepted by the Board of Directors or any other
officer who was competent to accord approval and all evidence strengthens the act of closure like
termination of all staff even in the branches except a few and no orders were obtained or executed
in the matter of sales and that the Supreme Court held that it is not necessary that company should
be wound up and machinery of the company should be transferred for an effective closure. The
Supreme Court therefore overruled the Tribunals contention that it is a lock out in the guise of
closure but held that it is a closure within Sec. 25FFF(1) for whatever reason.
Kalinga Tubes, Ltd. v. Their Workmen, 1969 I LLJ 557 : 1968 (34) FJR 393 : 1968 (17) FLR 311 : 1969
LIC 90 : 1969 AIR (SC) 90 (S.C.3J)
.It must be remembered that the notice which was served by the Management in the matter of
closure contained an affirmative declaration not only about the closing down of the factory but also that
compensation would be payable under the proviso to Section 25-FFF (1). It was open to the respondents
to ask for production of any resolution passed the Board of Directors or other form decision taken by the
Management and if any such attempt had been made and the necessary documents had not been produced
adverse inferences could have been legitimately drawn against the Company. There is no evidence that
the action taken by the Manager (Administration) was not ratified or accepted by the Board of Directors
or any other officer who was competent to accord approval. As a matter of fact, it appears that a large

Sec. 25FFF

Remedy for violation of the section Jurisdiction of Courts

2639

number of employees at Calcutta and Madras offices as also at the Choudwar Office had been discharged
from service or notices of termination of service had been served on them (vide Ex. 29 and the statement
of Management witness No. 4 G. C. Rath, page 164 of the printed record). It appears from Ex. 33 that only
a very small staff of officers and workers had been retained in service out of the permanent cadre. There is
no indication that after the closing down of the factory, any orders were being obtained or executed in the
matter of sales. It is difficult to accede to the contention of Mr. Govind Das that the Company must be
wound up or that there should have been a transfer of the machinery or the factory before it could be said
that the undertaking had been closed down. (Page: 564, Para: 2)

XX. Closure and its effect on workmans right to re-employment u/s. 25H
a) Retrenched workers though after a valid closure are entitled to be re-employed
if the same employer restarts manufacturing activity even after a lapse of
thirteen years (Bom.HC)
5A.960
The employer was a manufacturer of rubber products and issued notice of closure in
November 1980 due to bad financial condition. The union filed a complaint for unfair labour
practice which was dismissed by the Industrial Court holding that the closure is legal and valid.
After majority of workmen accepted the dues and compensation in 1982, the validity of closure was
agitated by the union again in the Industrial Court, High Court and finally by an SLP in Supreme
Court between 1982 to 1995. The Apex Court upheld the validity of closure. Subsequently, union
filed a complaint in the Court alleging that the employer restarted manufacturing activity at Pune
employing some previous employees and the respondent workmen too similarly be employed. The
complaint was allowed which was challenged in the High Court. The workman sought
re-employment u/s. 25H which was opposed by the employer. The High Court held that where the
same company which was closed, had started its manufacturing activities at a different place (at
Pune) more so during the pendency of SLP on the question of validity of closure and the legal entity
which existed at the time of closure continuous to be in existence when the manufacturing activity
restarted, the employer is under an obligation to offer re-employment u/s. 25H. However the order
of reinstatement of the complaints with 50% back wages was set aside as Sec. 25H does not confer
automatic employment on the complaint.
Oriental Rubber Industries Ltd., Pune v. Somayya S. Bhandari & Ors., 2007 II CLR 637 : 2007 AIR
(Bom.HC) 95 (Bom.HC)
Note: Please see related ratio/s under the above citation in Sec. 25H
Note: Also refer to the case of
Maruti Udyog Ltd. v. Ram Lal & Ors., 2005 I LLJ 853 : 2005 (104) FLR 820 : 2005 I LLN 1033 : 2005
LIC 864 : 2005 I CLR 964 : 2005 SCC (L&S) 308 : 2005 AIR (SC) 851 : 2005 (2) SCC 638 (S.C.2J)

XXI. Remedy for violation of the section Jurisdiction of Courts

a) Tribunal can decide issue of closure compensation while adjudicating on
closure (S.C.3J)
F 5A.961 The Tribunal while deciding the issue of closure, as a corollary is required to decide
the closure compensation and the same is not barred by Chapter V-A or u/s. 25FFF and hence it
cannot decline the same nor it is correct to plead that the jurisdiction of the Tribunal can only be
invoked u/s. 33C(2) in such cases of closure and hence refusal of the Tribunal to address this issue is
not justified.
Workmen of the Straw Board Manufacturing Co., Ltd., Appellant v. M/s. Straw Board Manufacturing
Co., Ltd., 1974 I LLJ 499 : 1974 (28) FLR 357 : 1974 (45) FJR 266 : 1974 II LLN 102 : 1974 LIC 730 :
1974 SCC (L&S) 406 : 1974 AIR (SC) 1132 (S.C.3J)

2640

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

We may now deal with another submission of Mr. Chitaley. According to the learned counsel, the
question of compensation cannot be gone into by the Tribunal on account of closure of the Mill as found
by the Tribunal. We are not impressed by this argument. (Page: 512, Para: 35)
.Indeed on the explicit terms of the reference, it is not possible to contend that the subject-matter
referred to is not an industrial dispute. Apart from that there is no legal bar to refer to the Tribunal to
determine the compensation on closure of an undertaking. The scheme of Chapter V-A or even the
language of S. 25-FFF, does not necessarily indicate that a claim under the said section can be made only
under S. 33-C of the Central Act and that the Industrial Tribunal, in a reference, has no jurisdiction to
grant appropriate relief in that behalf, as urged by the learned counsel. The submission of the learned
counsel is devoid of substance. (Page: 512, Para: 37)
.The Tribunal, however, did not address itself to this aspect of the matter as according to it since
it was a legitimate closure the question of compensation could not be determined by it. The matter,
therefore, was not at all considered by the Tribunal and the parties were also not allowed to adduce any
evidence with regard to the applicability or otherwise of the said proviso before the Tribunal.The
Tribunal committed a clear error of jurisdiction in not undertaking that enquiry.It will now,
therefore, be the duty of the Tribunal to afford adequate opportunity to the parties to establish their
respective pleas on the point, which appertains to the domain of the second issue in the reference.
(Page: 512, Para: 38)
.The reference stands restored to the file of the Tribunal for adjudicating only the question of
applicability or non-applicability of the proviso to Section 25-FFF (1) of the Central Act.
(Page: 512/513, Para: 39)

b) Workman receiving closure compensation in full and final settlement of claims

deemed to have waived his right to remedy (Mad.HC)
5A.962
The passing of individual receipts by the erstwhile employees in full and final
settlement of their claims amounts in law to an act of waiver, estoppel or election.
Andhra Laundry (preprietor, R.A. Mesllamani), Madras v. Additional Labour Court, Madras & Ors.,
1968 I LLJ 356 : 1967-68 (33) FJR 431 : 1968 (17) FLR 335 : 1969 LIC 227 (Mad.HC)

c) Closure cannot be challenged, after accepting the dues and compensation since
employer-employee relation comes to an end (Cal.HC)
5A.963
The employer was compelled to close his undertaking as there was devastating fire.
The employees after accepting the dues and all claims of closure still raised the dispute that the
closure was not genuine. The High Court held the Tribunals order favouring the employees was
not correct as the employees cannot challenge the closure after accepting the dues and
compensation under closure and that the employer-employee relation ceased to exit after
acceptance of compensation under Sec. 25FFF and that the employees should have challenged the
closure immediately on receipt of notice of closure. The High Court also held that the Limitation
Act though not applicable as far as writ petition is concerned the period fixed by the particular Act
for filing a suit for corresponding relief should be considered and also though it was not possible to
interfere with the order of the Tribunal it was possible to examine whether the award was based on
any evidence or not and whether all issues were addressed. Hence, the order of the Tribunal was
quashed.
Waxpol Industries Ltd. v. State of West Bengal Ors., 2006 (111) FLR 732 : 2006 III CLR 298 (Cal.HC)

Sec. 25FFF

Remedy for violation of the section Jurisdiction of Courts

2641

d) Discharged workmen can apply to Labour Court u/s. 33C(2) for compensation
without raising dispute (Pat.DB)
5A.964
Workman discharged on closure of undertaking can directly apply to Labour Court
u/s. 33C(2) for determination of closure compensation without raising industrial dispute and Court
while determining the same can incidentally determine in which part of the Sec. 25FFF the case
falls.
Management of Junkundar Colliery of M/s. D. Mandal & Co. v. Sahdeo Thakur & Ors., 1973 (27) FLR
460 : 1974 LIC 417 (Pat.DB)
I have no.of the Act. (Page: 462, Para: 4)

e) Tribunals findings on the fact of closure not to be interfered with since it

involves mixed questions of law and fact (Cal.DB)
5A.965
Question regarding closure being a mixed question of law and fact, finding of
Tribunal cannot be interfered u/Art. 226 unless it is shown to be a finding without evidence and
hence finding on facts by Tribunal that there was a closure entitling workman to the benefit of
Sec. 25F in terms of Sec. 25FFF was upheld while dismissing petition.
Subrata Majumdar v. State of West Bengal & Ors., 1982 LIC 1574 (Cal.DB)
.the Tribunal came.25F, I.D. Act. (Page: 1575, Para: 5)
.The question whether.any evidence what so ever. (Page: 1575, Para: 6)
.In our opinion.the instant case. (Page: 1576, Para: 9)
.the appeal.is dismissed. (Page: 1576, Para: 10)

f) Tribunal to determine the status of employees as workmen and their

entitlement to compensation while adjudicating on justifiability of closure
(Cal.HC)
5A.966
An industrial dispute regarding the closure of an establishment was referred to
Industrial Tribunal. The reference also included the question as to what relief the concerned
workmen were entitled to. The Tribunal held that the closure was justified but did not consider the
question about the compensation to concerned workmen u/s. 25F and 25FFF. Aggrieved,
employees moved High Court. The High Court quashed the award on the ground that it is
eminently desirable that the Tribunal shall on evidence on record come to the conclusion as to
whether the employees were workmen u/s. 2(s) and entitled to compensation u/s. 25F and 25FFF
and remanded back the matter to Tribunal.
Workmen of Ashok Biri Factory v. Ashok Biri Factory & Ors., 1964 II LLJ 340 : 1964 (9) FLR 56
(Cal.HC)

g) Writ of mandamus can lie against a private company when resorted to

wholesale termination of work force in violation of Secs. 25FFA and 25FFF
(Guj.DB)
5A.967
The term person u/Art. 226 has same meaning as laid down in Sec. 3(42) of General
Clauses Act as provided u/Art. 367 hence a writ of mandamus would lie against a private company
since wholesale termination of entire work force by a notice without complying with provisions of
Sec. 25FFA and 25FFF amounts to injury of public nature, therefore such notice was held as null
and void, was quashed and reinstatement with full back wages and continuity in service was directed.
Miscellancous Mazdoor Sabha v. State of Gujarat & Ors., 1995 III LLJ 677 : 1992 (65) FLR (Sum) 37 :
1992 II LLN 694 : 1992 II CLR 754 : 1993 LLR 763 (Guj.DB)

2642

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

.question is whether.Nos. 3 and 6. (Page: 679, Para: 7)

.Even though.on the other. (Page: 690, Para: 24-A)
It therefore.and 25FFF. (Page: 691, Para: 25)

h) Civil Court is barred from adjudicating claim of workman removed on closure

of factory, when relief is available under Chapter V-A (Bom.DB)
5A.968
The relief claimed in a civil suit by the workman who had been illegally removed on
closure of the factory and had not been re-employed on its restarting, were available to him
u/s. 25FFF and 25H of the Industrial Disputes Act. The reliefs which fall within the scope of
Chapter V-A, but not involving an industrial dispute impliedly bar the jurisdiction of the Civil
Court. Hence the order of the Appellate Court quashing the trial Courts decree which dismissed
the suit for want of jurisdiction, is set aside.
Pigment Lakes & Chemical Manufacturing Co. Pvt. Ltd. v. Sitaram Kashiram Konde, 1969 (19) FLR 71
(Bom.DB)
In our opinion.Relief Act. (Page: 73, Para: 3)
In view of.present suit. (Page: 74, T.L.: 8)
Thus the Act.impliedly barred. (Page: 75, T.L.: 11)
It is therefore.of the Act. (Page: 75, B.L.: 9)
Whether a suit.impliedly barred. (Page: 76, Para: 2)
The Industrial.to support. (Page: 77, T.L.: 20)

i) On fresh employment subsequent to closure, increment and higher salary

cannot be claimed (S.C.2J)
F 5A.969 Cement corporation of India is not liable to grant any benefit of increment or higher
salary to the workmen who was re-employed by way of fresh appointment letter for service
rendered in the erstwhile employer i.e. Dadri Cement Ltd., which paid off the compensation on
closure of the Company and whose management was taken up by the corporation subsequently.
Cement Corporation of India Ltd. v. Presiding Officer, Industrial Tribunal-cum-Labour Court & Anr.,
2001 II LLJ 231 : 2002 (94) FLR 455 (S.C.2J)
From the narration of the facts it is clear that the services of respondent No. 2 stood terminated from the
erstwhile Dalmia Dadri Cement Ltd. on his closure and in fact the respondent No. 2 made an application
in terms of Section 17 of the Dalmia Dadri Cement Ltd. (Acquisition and Transfer of undertaking) Act,
1981 wherein he made a claim that compensation as provided under Section 25-F and 25-FFF of the
Industrial Disputes Act which was adjudicated by the Commissioner of the payment for Dalmia Dadri
Cement Ltd. and that such amount was received by him. (Page: 232, Para: 5)
Thereafter, a fresh agreement appears to have been entered into between appellant management of the
workmen to recruit ex-employment of the erstwhile Dalmia Dadri Cement Ltd. factory on certain terms
and conditions in the light of Section 25-H of the Industrial Disputes Act. (Page: 232, Para: 6)

Sec. 25FFF

Remedy for violation of the section Jurisdiction of Courts

2643

In the circumstances, it is clear that the respondent No. 2 started a fresh career under the appellant on
being appointed with effect from December 18, 1981. He may have been given benefit of certain
increments with higher start of salary but that circumstances would not confer any right upon him to make
any claim for any advantage for period of service rendered in the erstwhile employment from which he
was retrenched. Therefore the Labour Court could not order payment of three additional increments. In
that view of the matter the order made by the Labour Court shall stand quashed to that extent only.
However, since Responded No. 2 has retired form service now, whatever payments may have been made
to him need not be recovered. (Page: 232, Para: 7)

j) Re-employment of Government servants can be on same terms as per

directions consequent up on termination (S.C.3J)
F 5A.970 Employees of A.P. State Construction Corpn Ltd. were terminated on account of
closure were directed to be employed in Government Department or corporation on same terms
and condition.
G. Govinda Rajulu v. The A.P. State Construction Corporation, Ltd., & Anr., 1988 I LLJ 328 : 1988 II
LLN 348 : 1988 LIC 110 : 1987 SCC (L&S) 71 : 1987 AIR (SC) 1801 : 1986 Suppl. SCC 651 (S.C.3J)
We have carefully considered the matter and after hearing learned counsel for the parties, we direct that
the employees of the Andhra Pradesh State Construction Corporation Limited whose services were
sought to be terminated on account of the closure of the Corporation shall be continued in service on the
same terms and conditions either in the Government departments or in the Government Corporations.
(Page: 328, Para: 1)

k) Employee terminated on closure in violation of Sec. 25FFF entitled to

re-employment (All.HC)
5A.971
Workmen resigned after they were informed that employer had decided to close down
the factory but it was restarted after two years. A dispute was raised as management refused to
take back the workmen and Labour Court held that closure in pursuance of notice issued was not
in accordance with Sec. 25FFF. Thus, termination amounted to retrenchment and they were
entitled to re-employment as per Sec. 6Q of U.P. Industrial Disputes Act. The High Court upheld
Labour Courts order.
Saroop Vegetable Product Industries Ltd. v. State of U.P. & Ors., 1986 (53) FLR 218 : 1986 II LLN 835 :
1987 LIC 1286 (All.HC)

l) No relief of regularization when compensation as per section is paid (S.C.2J)

F 5A.972 On the closure of Dandakaranya Project the Apex Court held that the employees who
were working since 1958 are to be paid compensation in accordance with the Act and order of
tribunal directing the project authority to regularize 425 NMR workers was set aside.
Management of Dandakaranya Project, Koreput v. Workmen through Rehabilitation Employees Union
& Ors., 1997 I LLJ 833 : 1997 (90) FJR 299 : 1997 (75) FLR 357 : 1997 II LLN 39 : 1997 LIC 858 : 1997
II CLR 42 : 1997 LLR 193 : 1997 SCC (L&S) 434 : 1997 AIR (SC) 852 : 1997 (2) SCC 296 (S.C.2J)
Even after coming to the conclusion that the project has been wound up and there is no employment
facilities for these N.R.R. workers for regular absorption yet issued the direction requiring the project
authorize to find out the work for the N.R.R workers who have been working in the project continuously
for more than 240 days. It may be stated tht even though the project has been wound up and its assets and
liabilities have been transferred to the State of Orissa and State of Madhya Pradesh yet on account of an
interim order passed by this Court the 425 workers are sitting idle and getting wages to the tune of 1.50
lacs per month which is undoubtedly an unnecessary financial strain on the public exchequer... State
Governments of Orissa and Madhya Pradesh but affidavit has been filed indicating how they failed in
their attempt to get these NMR workers absorbed on regular basis and we have already held that attempt
was made bona fide made and yet the authority failed to get these NMR workers absorbed on regular
basis. (Page: 837, Para: 11)

2644

Chapter VA Lay-Off and Retrenchment

Sec. 25FFF

Under the Industrial Disputes Act if an Industry is closed the employees thereof are entitled to
compensation as provided u/s. 25FF F of the Industrial Disputes Act. During the pendency of this appeal
on behalf of the Union a Scheme has been framed seeking 100 months full pay as compensation,
..On the admitted position that the Dandakaranya Project has been completely wound up since 1990
and these N.M.R. workers would have been otherwise retrenched but the for the interim order of this
Court in consequence of which the project authorities have been paying every month to these workers to
the tune of Rs. 1.50 lacs without getting them engaged in any work, we think that any direction to pay
compensation in terms of the Scheme will not be in the interest of justice. But, however, the workers
would be entitled to their rightful dues on account of closure of the project as envisaged u/s. 25FF F of the
Industrial Disputes Act. (Page: 837, Para: 12)
In the circumstances we hold that the direction issued by.The award of the Industrial Tribunal, so
far as it relates to 425 N.M.R. workers is accordingly set aside and we hold that these N.M.R. workers
should be entitled to compensation as provided u/s. 25FF F of the industrial Disputes Act. The interim
order passed by this Court in relation to these N.M.R. workers stands vacated. The appeal is accordingly
allowed. (Page: 837/838, Para: 13)

m) Principle of last come first go of Sec. 25G not applicable to termination due to
closure since it is not retrenchment (Ker.DB)
5A.973
The termination of the services of the employees was held not retrenchment but
termination of services on the closure of the Industry and the principle last come first go of Sec.
25G has to be followed by the official liquidator as a general rule emphasizing the principle of
justice equity and good conscience. However an inefficient unreliable a habitually irregular
employee, merely he is senior, cannot assert his right in preference to his efficient juniors. Hence
the official liquidator was directed to look in the justifiability of the departure and remove in
justice if any done to their if the past record was clean.
Chandrasekharan v. Official Liquidator & Anr., 1966 I LLJ 844 (Ker.DB)
.the termination of the services.he adjusted accordingly. (Page: 844/845, Para: 1)

n) Sec. 25G is not applicable when closure of a unit was genuine having no
functional integrality to other units (S.C.2J)
F 5A.974 In instant case since closure of one unit which did not have any functional integrality
with the II unit, was held bonafide, the principle of first come last go u/s. 25G which is applicable
to a case of retrenchment was held to be inapplicable.
Isha Steel Treatment, Bombay v. Association of Engineering Workers, Bombay & Anr., 1987 I LLJ 427 :
1987 (71) FJR 11 : 1987 (54) FLR 454 : 1987 I LLN 741 : 1987 LIC 1028 : 1987 I CLR 232 : 1987 SCC
(L&S) 91 : 1987 AIR (SC) 1478 : 1987 (2) SCC 203 (S.C.2J)
.The question of application of S. 25-G of the Act arises only when the services of the workmen
are retrenched.Hence if the case is one of genuine closure then the question of applying S. 25-G of
the Act which is applicable to a case of retrenchment would not arise. (Page: 432, Para: 7)
.the Tribunal had reached the conclusion that the closure of the I Unit was bona fide, that it did
not have any functional integrality with the II Unit and that there was no victimisation of workmen for
their trade union activities. On going through the award passed by the Tribunal we feel that it had not
committed any error in recording the said findings. (Page: 432, Para: 10)
We, therefore, set aside the judgments of the Division Bench and of the learned single Judge and restore
the award passed by the Tribunal. (Page: 433, Para: 11)

Sec. 25G

Object and Scope

2645

Note: Please also refer to the following cases of closure of establishments in the context of functional
integrality
Hotel Mahaveer v.RPF Commissioner, 2002 I LLJ 224 (Karn.HC)
District Transport manager (Admn.) O.S.R.T.C., Orissa v. Dilip Kumar Nayak & Anr., 1997 II LLJ 382 :
1997 (90) FJR 289 : 1997 II LLN 10 : 1997 I CLR 354 : 1997 (9) SCC 296 : 1997 SCC (L&S) 1297 : 1997
(10) SCC 260 (S.C.2J)
Aditya Synthetics v. Union of India, 1994 II LLJ 76 (Raj.HC)
U.P. Hotels v. State of Rajasthan, 1998 (2) WLC (Raj.HC)
Regional Provident Fund Commissioner, Jaipur v. M/s. Naraini Udyog & Ors., 1996 II LLJ 1063 : 1996
(5) SCC 522 (SC)(S.C.2J)
Rajasthan P.K. Goods Transport Co. v, RPF Commissioner, 1997 AIR (SC) 58 : 1996 (4) SCC 454 :
1996 II LLJ 662(S.C.2J)
Pai Sales Corporation v. Regional Provident Fund Commissioner, 1996 (88) FJR 323 (Ker.HC)
Workmen of the Straw Board Manufacturing Co., Ltd. v. M/s. Straw Board Manufacturing Co., Ltd.,
1974 I LLJ 499 : 1974 (28) FLR 357 : 1974 (45) FJR 266 : 1974 II LLN 102 : 1974 LIC 730 : 1974 SCC
(L&S) 406 : 1974 AIR (SC) 1132 (S.C.3J)
Sadhana Lodh v. National Insurance Co. Ltd., 2003 AIR (SC) 1561 : 2003 (3) SCC 524
Times publishing House Ltd. v. Regional Provident Fund commissioner and others 2007 III LLJ 1068
(Raj.HC)

K. Procedure for Retrenchment Sec. 25G

I. Object and Scope
a) To safeguard the workmen against discrimination, victimisation and unfair
labour practice (S.C.3J)
F 5A.975 Although the principle of last come-first go is intended to safeguard the workmen
against discrimination, victimisation or unfair labour practice it is not intended to deny freedom to
the employer to depart from the said rule for sufficient and valid reasons and hence the Industrial
Tribunal shall be satisfied that the departure from the rule was made for sound and valid reasons,
like efficiency or trust worthy character of the employees etc. and hence the burden of proof lies on
the employer and where the employer fails to discharge the said burden and justify the departure,
from the rule, retrenchment so made was held to be malafide and as a result of ulterior
consideration and therefore amount to unfair labour practice and victimization.
M/s. Swadesamitran Limited Madras v. Their Workmen, 1960 I LLJ 504 : 1960-61 (19) FJR 46 : 1960 (1)
FLR 337 : 1960 AIR (SC) 762 (S.C.3J)
Note: Please see related ratio/s under the above citation in this section

b) Sec. 25G and 25F are regarding statutory rights & right to livelihood u/Art. 21
(Cal.DB)
5A.976
Disputes about termination of service in violation of Sec. 25F and 25G are not cases to
enforce private rights or contractual rights or obligations but statutory rights and also right to
livelihood u/art. 21 and hence the writ Court cannot decline to interfere with them on the ground
that they are domestic disputes under private law.
Pancha Mayurakashi Cotton Mills Employees Union & Ors. v. State of West Bengal & Ors., 1995 I LLN
1222 : 1996 LIC 328 : 1995 LLR 749 (Cal.DB)
Note: Please see related ratio/s under the above citation in this section

2646

Chapter VA Lay-Off and Retrenchment

Sec. 25G

c) Sec. 25G & 25F form implied part of Contract of Service (Bom.DB)
5A.977
Sec. 25F and 25G of the Industrial Disputes Act would form implied terms of contract
of service of the appellants and failure to comply with the same amounts to breach of agreement
within the meaning of item 9 of Sch. IV of MRTU and PULP Act 1971.
Dattatraya Shankarrao Kharde, Arun Tukaram Wankhede v. Executive Engineer, Chief Gate Erection
Unit No.2, Nagpur, & Anr., 1994 I LLJ 395 : 1994 I LLN 297 (Bom.DB)
Turning then.Act also. (Page: 400, Para: 17)
It is thus clear.accepted. (Page: 411, Para: 54)
It has.under appeal. (Page: 412, Para: 57)

d) Sec. 25G is independent of Sec. 25F (Bom.DB)

Navbharat, Hindi Daily, Nagpur v. Navbharat Shramik Sangha, 1984 II LLN 132 : 1984 LIC 445
(Bom.DB)
Note: Please see related ratio/s under the above citation in this section

II. Principle of last come first go

a) When applicable
1. Applicable when employees are retrenched (Del.HC)
5A.978
While ordering retrenchment the accepted principle of last come first go should be
applied i.e. employer should commence with latest recruitee and progressively retrench workmen
higher up in seniority list.
Municipal Corporation of Delhi v. Shyam Lal & Ors., 1994 II LLN 1144 : 1995 I CLR 315 (Del.HC)
Note: also refer to the following cases
Ram Sahay Patel v. Madhya Pradesh Pollution Control Board, Bhopal & Ors., 2003 II LLN 155
(MP.HC)
Termination without complying with Sec. 25F, 25G, illegal and non-est.
M.S.E.B. Workers Federation, Pune v. Maharashtra State Electricity Board & Ors., 1998 III LLJ (Sum)
293 : 1995 II CLR 588 (Bom.HC)

2. Applicable while terminating employees even on closure of industry

(Ker.DB)
5A.979
The termination of the services of the employees was held not retrenchment but
termination of services on account of closure of the industry and the principle of last come first go
of Sec. 25G has to be followed by the official liquidator on the principles of justice, equity and good
conscience but it can only be deviated on grounds of efficiency and trustworthy character of the
employees who is directed to review the termination of services of employees already made and the
rights of the employees are to be adjusted accordingly.
Chandrasekharan v. Official Liquidator & Anr., 1966 I LLJ 844 (Ker.DB)
.the termination of the services.he adjusted accordingly. (Page: 844/845, Para: 1)

Sec. 25G

Principle of last come first go

2647

Note: The Apex Court in Hariprasad Shivshankar Shukla & Anr. v. A. D. Divelkar & Anr., AND Barsi
Light Railway Co. Ltd. v. K. N. Joglekar & Anr., 1957 I LLJ 243 : 1956-57 (11) FJR 317 :1957 AIR (SC)
121 (S.C.CB) held that the principle is applicable only to continuing industry and hence not applicable to
industry in case of closure

3. Applicable to workmen within the same category of the same establishment

and not of different branches unless inter-transfer of workmen is
permissible among them (S.C.CB)
F 5A.980 Relief under the section is granted only to workmen within the category of workmen
proposed to be discharged, therefore unless rules provide for automatic transfer from place to
place with regard to seniority and grades the section is not attracted in case of different branches
having different pay scales and categories of workmen hence in instant case each branch of the
company is to be treated as a separate industrial establishment.
Indian Cable Co. Ltd. v. Its workmen, 1962 I LLJ 409 : 1962-63 (22) FJR 262 : 1962 (4) FLR 444
(S.C.CB)
Then again on the terms of Sec. 25G, the relief provided therein is to be granted with in the category of
workmen who are proposed to be discharged. This posits that there is one code governing the grades of
workmen and their scales of wages and that is ordinarily possible only when the establishment is
functioning at a given place. If there are different branches in different places and there are different
scales of wages, the rule laid down in Sec. 25G would be incapable of compliance unless all the branches
have one scale of wages and the rules provide for automatic transfer from place to place having regard to
the seniority and grades. Thus whether we have regard to the popular sense of the words industrial
establishment, or to the limitation of relief under S.25G to workmen in the same category, the conclusion
would appear to be inescapable that each branch of a company should normally be regarded as a distinct
industrial establishment. (Page: 417, Para: 1)

4. Applicable not only to permanent employees but also to temporary reserve

conductors (Ker.DB)
5A.981
Sec. 25G was held applicable not just to permanent employees satisfying Sec. 25F but
is also applicable in case of proposed termination of temporary reserve conductors not in
continuous service for one year.
P. Prabhakaran & Ors. v. General Manager, Kerala State Road Transport Corporation .& Anr., 1981
(42) FLR 113 / 222 : 1981 I LLN 510 (Ker.DB)
.Another point advanced.by Section 25F. (Page: 114, Para: 1)
.the legislative intent.regarded as valid. (Page: 115, Para: 3)
.we hold that.petitioners before us. (Page: 115, Para: 5)

5. Sec. 25G is an independent provision and is applicable even where an

employee did not complete 240 days of service or put in continuous service
in terms of Sec. 25B (Raj.HC)
5A.982
The workman was appointed on a leave vacancy for a fixed term and he was
automatically terminated after the expiry of the said period. Workman raised a dispute contending
that he was wrongfully terminated. Tribunal found that workman had rendered only 79 days
service but granted him reinstatement as Sec. 25G, 25H violated. On appeal, High Court upheld
the order of the Tribunal and held that both Sec. 25G and Sec. 25H are independent provisions and
applicable to all cases of retrenchment and completion of 240 days service was not a necessary
condition for applying the said provision.
Oriental Bank of Commerce v. P.O. Central Government Industrial Tribunal & Anr., 1994 II LLJ 770 :
1993 (66) FLR (sum) 27 : 1993 I LLN 316 : 1993 I CLR 205 (Raj.HC)

2648

Chapter VA Lay-Off and Retrenchment

Sec. 25G

Note: also refer to the following case/s

Gopal v. M.C.D. & Anr., 2003 III CLR 1016 (Del.HC)

6. Sec. 6P of U.P. I.D. Act which is pari materia to Sec. 25G is applicable
though the workman is not in a continuous service within the meaning of
Sec. 6N of U.P. I.D. Act (S.C.2J)
F 5A.983 Since Sec. 6P (corresponding to Sec. 25G of Central Act) is not subject to any
conditions as to length of service contained in Sec. 6N (corresponding to Sec. 25F of the Central
Act) it does not become applicable only on completion of any particular period of continuous
service and hence it was held that High Court was erroneous in rejecting relief to a worker
terminated in violation of last come first go principle on the ground that only three and half
months service was rendered
Samishta Dube v. City Board, Etawah & Anr., 1999 I LLJ 1012 : 1999 (81) FLR 746 : 1999 II LLN 1 :
1999 LIC 1125 : 1999 I LLR 460 : 1999 SCC (L&S) 592 : 1999 AIR (SC) 1056 : 1999 (3) SCC 14
(S.C.2J)
Note: Please see related ratio/s under the above citation u/s. 25F
F 5A.984 Continuous work in terms of Sec. 25B of the Act is not necessary before he was
retrenched so far as statutory requirements u/s. 25G and 25H are concerned Sec. 6P which is pari
materia to Sec. 25G does not require any particular period of continuous service as required by
Sec. 6N of U.P. Act. Hence, Supreme Court held that the High Court was wrong in relying on the
fact that the appellant had put in only 3 months of service and in denying relief u/s. 25G and High
Court also was wrong when it held that no rule of seniority was applicable to daily wagers.
Jaipur Development Authority v. Ram Sahai & Anr., 2007 (1) SCC (L&S) 518 : 2007 I LLJ 429 : 2006
(111) FLR 1178 : 2007 I LLN 78 : 2007 LIC 274 : 2007 I CLR 221 : 2007 LLR 92 (S.C.2J)
Mr. Jain appears to be right when he submits that continuous work in terms of Section 25B of the Act is
not necessary in so far as statutory requirements under Sections 25G and 25H are concerned. The said
question appears to have been considered by this Court in some decisions (Page: 524, Para: 24)
We shall next deal with the point whether, in case employees junior to the appellant were retained, the
directions issued by the Labour Court could be treated as valid. Section 6-P of the U.P. Act (which
corresponds to Section 25G of the Central Act of 1947) states that where any workman in an industrial
establishment 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 workmen in this behalf the
employer shall ordinarily retrench the workmen who was the last person to be employed in that category,
unless for reasons to be recorded, the employer retrenches any other person. Now this provision is not
controlled by conditions as to length of service contained in Section 6-N (which corresponds to Section
25F of the Industrial Disputes Act, 1947). Section 6-P does not require any particular period of
continuous service as required by Section 6-N. In Kamlesh Singh v. Presiding Officer in a matter which
arose under this very Section 6-P of the U.P. Act, it was so held. Hence the High Court was wrong in
relying on the fact that the appellant had put in only three and a half months of service and in denying
relief. (Page: 524, Para: 26)
Nor was the High Court correct in stating that no rule of seniority was applicable to daily-wagers. There
is no such restriction in Section 6-P of the U.P. Act read with Section 2(z) of the U.P. Act which defines
workman. (Page: 524, Para: 26)

7. Applicable only in the case of surplusage (AP.HC)

5A.985
Principle of last come first go cannot be applied to each and every form of
termination of service. The principle applies only to a case of surplusage.
Mallaiah Pvt. & Ors. v. Andhra Bank (by Assistant General Manager), Hyderabad, 1983 I LLN 613
(AP.HC)

Sec. 25G

Principle of last come first go

2649

8. Applicable to daily wagers also (Pat.HC)

5A.986
The daily wager of Bihar State Schedule Caste Co-Operative Development
Corporation were terminated as per Sec. 25F. But High Court observed that Last come first go
rule was not followed and similarly placed workmen were reinstated by an order of High Court.
Therefore, termination was set aside and reinstatement directed.
Shankar Prasad v. State of Bihar & Ors., 2001 (91) FLR 262 : 2001 III LLN 296 (Pat.HC)

9. Applicability to be examined with reference to each branch as a seperate

entity but not with reference to the whole establishment as one entity when
there does not exist functional integrality (S.C.CB)
F 5A.987 Where the scales of pay were different for different branches with different categories
of workmen and their services are not transferable from one branch to another and the branch was
not geographically proximate to the Head Office and each had separate accounts, industrial labour
union, banking accounts, the branch at Ambala was held to be a distinct industrial establishment,
and it is immaterial that the Head Office appoints and dismisses employees, prepares a
consolidated balance sheet and rules regarding provident fund, gratuity, bonus are applicable to
the employees in all the branches and as control of branches rests in company and only one annual
balance sheet for company was prepared and therefore each of the branches is to be regarded as
independent for the purposes of Sec. 25G of the Act in as much as there is no functional integrality
between various Branches.
Indian Cable Co. Ltd. v. Its workmen, 1962 I LLJ 409 : 1962-63 (22) FJR 262 : 1962 (4) FLR 444
(S.C.CB)
.In this situation the course which we propose to adopt is first to determine whether the branch at
Ambala is a separate Industrial establishment within S. 25G. of the Act, and then decide the rights of the
parties in accordance therewith. (Page: 416, Para: 1)
Now the facts on which the above conclusion was reached may be classed into two categories-those
which have reference to the management of the Industry and those which bear on the service conditions
of the workmen. Dealing with the former, the tribunal finds that it is the company with its registered office
at Calcutta that controls and runs all the branches, that it is the company that employs the workmen and
dismisses them, that the six respondents were appointed not by the Ambala branch but by the company
and that they were discharged on 8 May 1958 by the company, that the branches do not prepare each its
own individual annual balance-sheet, but that it is only the company that prepares its annual
balance-sheet, including therein the accounts of all the branches and that it is the company that meets the
financial requirements of the branches. (Page: 417, Para: 2)
We are of the opinion that the facts stated above do not support the conclusion of the tribunal that all the
branches form one unit of industrial establishment. If a company establishes several branches, the control
of these branches must necessarily vest in it, and under the provisions of the Indian companies Act, there
cab be only one annual balance-sheet for the whole company. (Page: 417, Para: 3)
It is therefore clear that while the branches have their own separate accounts, the company has its own
consolidated annual balance-sheet as required by the provisions of the Companies Act. In our opinion,
the facts stated above do not necessarily lead to the conclusion that the head office and the branches must
all be regarded as forming one Industrial establishment. (Page: 418, Para: 2)
Turning next to the facts relating to service conditions of the workmen, the finding is that the rules of the
company relating to provident fund, gratuity and bonus and service conditions in general are applicable to
the employees of the company in all its branches. But this again appears to us to be not of much
consequence. It only signifies that all the employees of the company were treated alike in the matter of
provident funds, bonus and similar benefits. It does not lead to the inference that all the branches were
treated as one. What is material for the purpose of the present discussion is whether the same rules
relating to the category of workmen and their scales of wages are in force in all the branches. It is only
then that S. 25G. could be applied. On that the uncontradicted evidence of R. W. 1 is that the Indian
Cable Company has different scales of pay for different branches. On this evidence, there can be no

2650

Chapter VA Lay-Off and Retrenchment

Sec. 25G

question of integrating workmen retrenched in one branch to another branch and, in consequence, the
establishment in each branch must be treated as a separate entity. (Page: 418, Para: 3)
The appellant also contends that each branch has its own labour union, maintains its own accounts and
has its own banking accounts and that those facts go to show that each branch is a distinct Industrial
establishment. (Page: 419, Para: 1)
.And in this case the branches are located in different places and there is also a lack of functional
intergrality. We are of opinion that each branch is a separate Industrial establishment.
(Page: 419, Para: 1)
5A.988
Since there was no unity of employment and conditions of service between four
departments i.e. (1) clearing and shipping Agency (2) Insurance Agency (3) Godown keeping and
(4) Cotton supervisors and controllers and they were distinct and complete units carrying on
different lines of business, having separate and independent management, each department
employed its own staff, employees belonged exclusively to that staff and as rule not transferable
and seniority of employees being department wise, it was held that for retrenchment of employees
of one department all the departments cannot be treated as one single establishments for purpose
of applying Sec. 25G and hence tribunals award holding so was set aside.
Tulsidas Khimji v. F. Jeejeebhoy., 1961 I LLJ 42 : 1960-61 (19) FJR 396 (Bom.DB)
The petitioners are a.the said respective departments. (Page: 43, Para: 2)
The Tribunal held.Industrial establishment and.the retrenchment was.to be
reinstated. (Page: 44, Para: 4)
.the four departments of.against the respondents. (Page: 49, Para: 5)
.the contention urged.passed by respondent. (Page: 49, Para: 6)
Note: for more ratios on functional integrality, see Section 2(ka) and 25FFF

10. All units to be considered as one entity for the purpose of applicability of
Sec. 25G when functional integrality exists among them (AP.DB)
5A.989
After considering the fact that accounts of all units of the Company i.e. Hyderabad,
Vizag etc. though separately prepared were consolidated in corporate office and were published
and put before the Board of Directors, that the Balance Sheet of the Company was consolidation of
accounts of all the units together, that conditions of service, pay scales, gratuity etc. in all the units
were uniform, that workmen were transferred freely from one unit to another and their seniority
at new unit was fixed as per length of service in old unit and as per their appointment order,
workers were liable to serve in any part of India, High Court held that there was functional
integrality between workmen at Vizag unit and units at Hyderabad and hence setting aside order
of Single Judge which affirmed decision of Tribunal, retrenchment of workmen of Hyderabad unit
in violation of Sec. 25G by retaining workmen junior to them at Vizag unit was held illegal and void
Hindustan Steel Works Construction Ltd., Secunderabad & etc. v. Hindustan Steel Works Construction
Ltd., Employees Union, Hyderabad & Anr., 1986 LIC 107 (AP.DB)
From the evidence.the said order. (Page: 115, Para: 32)
From the foregoing.govern the situation. (Page: 116, Para: 37)
Viewed from any.Tribunal is confirmed. (Page: 116, Para: 38)

Sec. 25G

Principle last come first go when not applicable

2651

5A.990
In the instant case since there was unity of management, supervision and control,
unity of finance and employment, labour, conditions of service, functional integrality and general
unity of purpose and geographical proximity between activity of flavour branch which was closed
and the establishment (Tocklai Experimental Station), the decision of the Labour Court that
Flavour branch was not a separate industrial establishment but a department of Tocklai
Experimental Station was upheld and thus in not considering service of other people in the
establishment while retrenching the biochemist of the Flavour branch,the rule of first come last
go u/s. 25G was violated in relation to whole establishment and followed only in relation to flavour
branch and thus the retrenchment of flavour branch scientist was unjustified.
Tocklai Experimental Station v. Labour Court, Assam & Ors., 1966-67 (30) FJR 311 (Ass.DB)
.Mr. Goswamis contention is.Tocklai Experimental station. (Page: 315, Para: 1)
.There is unity of management.in the present case. (Page: 317, Para: 2)
In our opinion.was not justified. (Page: 319, Para: 2)
Note: for more ratios on functional integrality, see Section 2(ka) and 25-FFF

11. Applicable to F.C.I godown since industry (Cal.HC)

F.C.I. Workers Union & Anr. v. Food Corporration of India & Anr., 1992 (65) FLR 1014 : 1992 II CLR
730 (Cal.HC)
Note: Please see related ratio/s under the above citation in this section

III.Principle last come first go when not applicable

a) Not applicable in case of closure of establishment (S.C.CB)
F 5A.991 The cognate Sec. 25G and 25H apply only to an existing or continuing industry hence
these Sections would not apply in cases of closure.
Hariprasad Shivshankar Shukla & Anr. v. A. D. Divelkar & Anr., AND Barsi Light Railway Co. Ltd. v. K.
N. Joglekar & Anr., 1957 I LLJ 243 : 1956-57 (11) FJR 317 :1957 AIR (SC) 121 (S.C.CB)
Two other cognate Sections to which our attention has been drawn are Ss 25.-G and 25-H. They are
applicable, clearly enough, to a running business only. The learned Attorney-General, who has appeared
for the principal respondent in one of the appeals, has pointed out that if the definition clause covers the
case of termination of service in a continuing business as also termination of service on a closure of
business, the circumstances that Ss.25-G and 25-H provide for some instances of retrenchment only is no
ground for holding that they exhaust all possible cases of retrenchment or that S.25-F must also be
restricted to a running business only. We agree that if it is conceded that definition clause includes cases
closure of business, no difficulty is presented by Ss. 25-G and 25-H. But the fundamental question at
issue is, does definition clause cover cases of closure of business, when the closure is real and bona fide?
The point to be egmphasised in that connection is that there is no provision (except perhaps S 25-FF
inserted in 1956 by Act 41 of 1956 to which we shall presently refer) which can be said to bring a closed
or dead industry within the purview of the Act. The provisions of the Act, almost in their entirety, deal
with an existing or continuing industry. All the provisions relating to lay off in Ss. 25-A to 25-E are also
inappropriate in a dead business. (Page: 249, Para: 2)
F 5A.992 When a branch of an establishment situated outside the state, is closed down and such
unit was held to be separate and independent having no functional integrality, it was held that the
question of applicability of Sec. 25G does not arise unless the closure itself is impugned as bad on
the ground not bonafide. As such it was held that the affected employees are not entitled to any
relief under that section.
Indian Cable Co. Ltd. v. Its workmen, 1962 I LLJ 409 : 1962-63 (22) FJR 262 : 1962 (4) FLR 444
(S.C.CB)

2652

Chapter VA Lay-Off and Retrenchment

Sec. 25G

On this finding it follows that the dispute of the respondents in an Industrial Dispute as defined in Sec.
2(k), as that has been raised by the majority of the workmen of the Ambala branch which is an Industrial
establishment. But as the establishment has been closed and the closure itself is no impugned as bad on
the ground that it is colorable and not bonafide, Sec. 25G has no application and the respondents,
therefore, are not entitled to any relief under that Section. (Page: 419, Para: Last)

b) Protection of seniority u/s. 25G not available in case of break-in-service

(Ker.DB)
5A.993
A person reappointed under the condition that break in service would be treated as
leave without service, cannot claim seniority over other person who got benefit of seniority as a
result of said persons resignation on application of rule of last come, first go.
Association of Planters, Kerala v. Industrial Tribunal, Trivandrum & Ors., 1962 I LLJ 491 : 1961-62
(21) FJR 514 : 1962 (4) FLR 16 (Ker.DB)
.when so reappointing.and fresh employment. (Page: 492, Para: 1)
.The fact remains.1 October 1949. (Page: 492, Para: 4)
.treating the break.favour of John. (Page: 493, Para: 1)

c) Not applicable to termination of temporary Government employee (S.C.3J)

F 5A.994 It is held that the temporary Government employee who does not hold a post can be
terminated any time without enquiry in terms of condition of service and rules framed there under
and the principle of last come-first go does not apply to such cases where the work and conduct of
temporary employee although senior, was found to be unsuitable while junior employee was found
suitable, the termination of senior temporary employee was held does not violate the principle of
equality enshrined u/Art. 14 and 16 of the Constitution and cannot be held to be illegal.
State of U.P. & Ors. v. Kaushal Kishore Shukla, 1991 (62) FLR 350 : 1991 (78) FJR 441 : 1991 I LLN
343 : 1991 I CLR 732 : 1991 SCC (L&S) 587 : 1991 (1) SCC 691 (S.C.3J)
.In our opinion, the principle of last come first go is applicable to a case where on account of
reduction of work or shrinkage of cadre, retrenchment takes place and the services of employees are
terminated on account of retrenchement. In the event of retrenchment the principle of last come first go
is, applicable under which senior in service is retained while the juniors services are terminated. But this
principle is not applicable to a case where the services of a temporary employee are terminated on the
assessment of his work and suitability in accordance with the terms and conditions of his service. If out of
several temporary employees working in a department a senior is found unsuitable on account of his work
and conduct, it is open to the competent authority to terminate his services and retain the services of
juniors who may be found suitable for the service. Such a procedure does not violate the principle of
equality, enshrined under articles 14 and 16 of the Constitution. If a junior employee is hard working,
efficient and honest his services could not be terminated with a view to accommodate the senior employee
even though he is found unsuitable for the service. If this principle is not accepted there would be
discrimination and the order of termination of a junior employee would be unreasonable and
discriminatory. On the admitted set of facts, the order of termination in the instant case could not be
rendered illegal or unjustified on the ground of juniors being retained in service. The view taken by the
High Court is not sustainable in law. (Page: 353, Para: 1)

d) To an apprentice appointed under Apprenticeship Act even though his

apprenticeship training is extended as per the terms of agreement (Raj.HC)
5A.995
Training period of an apprentice u/ Apprenticeship Act, 1961 was extended to enable
him to complete his apprenticeship training as per one of the clauses of the agreement under
Apprenticeship Act, 1961. It was held that in such a case he cannot be treated as a workman even
after one years training. Thus, there is no question of violation of Sec. 25G and Sec. 25H of the Act.
Rajasthan State Road Transport Corporation v. Mahaveer Singh & Anr., 1999 II LLN 609 (Raj.HC)

Sec. 25G

Procedure for implementing last come-firstgo principle

2653

e) Not applicable when retrenched employee is the only employee of the

department (Bom.DB)
Arvind Anand Gaikwad v. Uni Abex Alloy Products, Ltd., & Ors., 1994 III LLJ 684 : 1988 I LLN 239 :
1988 I CLR 26 (Bom.DB)
Note: Please see related ratio/s under the above citation in this section

f) Not applicable to termination on loss of confidence (AP.HC)

5A.996

Sec. 25G not applicable to termination on account of loss of confidence.

Mallaiah Pvt. & Ors. v. Andhra Bank (by Assistant General Manager), Hyderabad, 1983 I LLN 613
(AP.HC)

IV. Procedure for implementing last come-first go principle

a) Employer to maintain category wise seniority list when different categories of
workmen were appointed (S.C.2J)
F 5A.997 Category-wise seniority is required to be maintained by an employer when different
categories of workmen are appointed so as to apply the principle of last come first go, since it is
also required to be maintained so as to enable the employer to offer services to the retrenched
employees maintaining the order of seniority but said provisions, however, have no application in a
case where Sec. 2(oo)(bb) of Industrial Disputes Act is a attracted.
Bhogpur Co-op. Sugar Mills Ltd. v. Harmesh Kumar, 2007 I LLJ 488 : 2006 (111) FLR 1202 : 2007 I
LLN 95 : 2007 I CLR 227 : 2007 LLR 183 : 2007 AIR (SC) 288 (S.C.2J)
However, category-wise seniority is required to be maintained when different categories of workmen
are appointed so as to apply the principle of last-cum-first go. A seniority list is also required to be
maintained so as to enable the employer to offer services to the retrenched employees maintaining the
order of seniority. The said provisions, however, would have no application in a case where Section
2(oo)(bb) of the Act is attracted. (Page: 490, Para: 10)

b) Seniority List to be common for workers of both the yards when they have
same pay scales and their services were transferable between the two (Pat.DB)
5A.998
In view of the fact that the casual labour at Siliguri yard have come from Katihar yard
where they were working previously and some of the workmen on completion of the work at
Siliguri Yard, were transferred back to Katihar Yard and also, of the fact that the pay scales of the
casual workmen at both the yards were same, the two yards could be regarded as one establishment
though seperated by distance and hence the retrenchment by Railways, of workmen of the Siliguri
yard due to its closure on account of completion of work without adhering to the principle of last
come first go on the basis of common seniority list for both the yards was held violative of the
mandatory provision of the Section and hence illegal.
Somu Kumar Chatterjee & Anr. v. District Signal Tele-Communication Engineer & Anr.,
179 : 1970 (21) FLR 37 : 1970 LIC 629 (Pat.DB)
In the present.struck down. (Page: 193, Para: 26)
Note: please refer to Sec. 2(ka) and 25-FFF for ratios on functional integrality

1970 II LLJ

2654

Chapter VA Lay-Off and Retrenchment

Sec. 25G

c) Seniority list maintained by Divisional Executive Engineer to include service

only at divisional level but not entire period of service is proper (P&H.DB)
5A.999
Since Executive Engineer of a project is the employer in relation to daily rated
workers in their respective divisions, seniority list maintained by him at the divisional level by
considering service rendered by them at divisional level and not entire period of service rendered
by them in project was held justified.
Lachhman Dass v. Bhakra Beas Management Board & Ors., 1992 LIC 1997 (P&H.DB)
It is therefore.R.2. (Page: 1999, Para: 5)
The last.any force. (Page: 1999, Para: 6)
Admittedly.divisions. (Page: 1999, Para: 4)

d) Seniority of watchman promoted to the post of driver is to be computed from

the date of confirmation in that post (Bom.HC)
5A.1000 Workman was appointed as a watchman from 1976 and was promoted to the post of
vehicle driver from 1982. Services were terminated from w.e.f. 10.11.1983, while junior watchmen
were in service. It was held that he ceased to be watchman after he was confirmed on the post of
vehicle driver, hence the length of service of vehicle driver can only be calculated from the date he
was confirmed.
G.D. Shinde v. Associated Cement Co. Ltd, & Ors., 1995 I LLJ 1245 : 1995 (70) FLR 541 : 1995 I LLN
235 : 1995 I CLR 157 : 1995 LLR 234 (Bom.HC)

e) Reason for departure of seniority principle must be shown on the face of order,
mere recording reason in the file of employer is not sufficient (Ker.HC)
5A.1001 Retrenchment not following rule stated in Sec. 25G must be shown on the face of order
and merely presence of reasons in the file of employer is not sufficient.
Abdul Rahiman & Ors. v. The Divisional Supdt., Southern Rly. Olavakode & Ors., 1980 II LLN 392 :
1981 LIC 217 (Ker.HC)

f) Each branch of the company/concern to be a separate establishment, hence

seniority of workmen employed in a particular branch but not at all branches
to be considered (Mad.HC)
5A.1002 In case of a Concern having branches at more than one place, each branch is
considered to be separate industrial establishment for purpose of Sec. 25G of the Act, as held by
High Court, and workmen employed at the concerned branch alone must be taken into
consideration and not the entire strength of that category of workmen at all its branches.
India Tyre & Rubber Co. (India) Pvt. Ltd. v. Their Workmen., 1957 II LLJ 506 : 1957-58 (13) FJR 108
(Mad.HC)

g) Combined seniority of two units owned by the same employer to be considered

if transfer of employees from one unit is permitted to another unit (Bom.HC)
5A.1003 Two units were owned by the same employer, located at two different localities
workers were transferred from one unit to other. The condition of transfer from one unit to other
conclusively establishes that two units constituted same Industrial Establishment and thus the
employers were bound to take into consideration employees of both the units to determine the
seniority u/s. 25G for the purpose of retrenchment
K.D. Mistry & Co. v. Hari Narain Gole & Ors., 1984 (48) FLR 14 : 1983 II LLN 946 (Bom.HC)
Note: also refer to Sections 2(ka) and 25FFF for additional ratios on functional integrality

Sec. 25G

Deviation of principle last-come-first go when can be

2655

V. Deviation of principle last-come first go when can be

a) Expression ordinarily in the Section allows deviation for justified reasons
(S.C.2J)
F 5A.1004 Employer can deviate from the principle of first come last go by virtue of the use of
the expression ordinarily in the Section in case of lack of efficiency or loss of confidence etc. and
burden is on him to justify such deviation.
Samishta Bube v. City Board, Etawah & Anr., 1999 I LLJ 1012 : 1999 (81) FLR 746 : 1999 II LLN 1 :
1999 LIC 1125 : 1999 I LLR 460 : 1999 SCC (L&S) 592 : 1999 AIR (SC) 1056 : 1999 (3) SCC 14
(S.C.2J)
Note: Please see related ratio/s under the above citation in this section

b) Principle not absolute and can be deviated on valid grounds (Guj.HC)

5A.1005 On application by workmen Labour Court held that the retrenchment was illegal and
awarded reinstatement with back wages on the ground that last come- first go was not followed
and persons juniors to the workmen were retained. High Court set aside the award of Labour
Court and remitted the matter back to Labour Court as Sec. 25G itself contained that for valid
reason rule could be departed from and the rule is not an absolute rule and the workmen were not
placed in the same category as that of their juniors.
Dabhoi Nagarpalika v. Omkarbhai Somabhai Patel & Ors., 2000 III LLJ 461 (Guj.HC)

c) Reasons for deviation from the principle to be recoded (S.C.2J)

Jaipur Development Authority v. Ram Sahai & Anr., 2006 (111) FLR 1178 : 2007 I LLJ 429 : 2007 I LLN
78 : 2007 LIC 274 : 2007 I CLR 221 : 2007 LLR 92 : 2007 (1) SCC (L&S) 518 (S.C.2J)
Note: Please see related ratio/s under the above citation in this section

d) When services of an employee well versed with the activities of a corporation

and working knowledge is retained at the time of winding up of company
(P&H.HC)
5A.1006 Government decided to wind up corporation due to continuous loss and all the
employees should be retrenched. The Board of Directors took decision to retain a skeletal staff in
the capacity of caretaker staff till the liquidator is appointed. Notice of retrenchment was
challenged by one employee claiming to be entitled to retain in the service in preference to other
employee. The High Court held that the Corporation had the right to avail of the services of such
persons who had the working knowledge of different activities of the Corporation irrespective of
the original cadre. The High Court found that the decision of the Corporation to retain such staff
was for the purpose of utility and in the new arrangement post of Private Secretary was not there.
So the question of seniority does not arise in such a situation. Hence, the petition was dismissed.
P.C. Sharma v. State of Haryana & Ors., 2002 (95) FLR 1172 : 2002 IV LLN 333 : 2002 II CLR 916
(P&H.HC)
Note: also refer to the follwing case
Ombir Singh & Ors. v. Haryana Breweries Ltd. & Anr., 2007 LLR 257 : 2007 (112) FLR 256 (P&H.DB)

2656

Chapter VA Lay-Off and Retrenchment

Sec. 25G

e) Deviation can be justified when employees belong to any special category

(Cal.DB)
M/s. Gladstone Lyall & Co. Ltd. v. State of West Bengal & Ors., 1983 LIC 1425 (Cal.DB)
Note: Please see related ratio/s under the above citation in this section

f) When there is lack of efficiency on the part of employee and loss of confidence
in him (S.C.2J)
Samishta Bube v. City Board, Etawah & Anr., 1999 I LLJ 1012 : 1999 (81) FLR 746 : 1999 II LLN 1 :
1999 LIC 1125 : 1999 I LLR 460 : 1999 SCC (L&S) 592 : 1999 AIR (SC) 1056 : 1999 (3) SCC 14
(S.C.2J)
Note: for Text and RatioPlease see related ratio/s under the above citation in this section and also refer to
the following case
Tamilnad Transports, Coimbatore Pvt. Ltd. v. M. Mariappan & Ors. 1970 I LLJ 90 (Mad.HC)

g) When special skills, aptitude and specific experience justify deviation (S.C.3J)
M/s. Om Oil and Oil Seeds exchange, Ltd., Delhi v. Their Workmen, 1966 II LLJ 324 : 1965-66 (29) FJR
69 : 1966 (13) FLR 7 : 1966 AIR (SC) 1657 (S.C.3J)
Note: Please see related ratio/s under the above citation in this section

h) When female workers in mines are terminated due to working conditions &
statutory provisions (MP.DB)
Nowrozabad Colliery Mazdoor Sangh v. F. Jeejeebhoy & Anr., 1970 (37) FJR 225 : 1970 (20) FLR 284
(MP.DB)
Note: Please see related ratio/s under the above citation in this section

i) When workman whose appointment itself is void ab initio is terminated

(Jhar.HC)
Mineral Area Development Authority v. Presiding Officer, Labour Court & Ors., 2006 (110) FLR 270 :
2006 LLR 737 (Jhar.HC)
Note: Please see related ratio/s under the above citation in this section

j) Burden of proof in case of deviation

1. Is on employer
i) To prove that the deviation is based on sound and valid reasons (S.C.3J)
F 5A.1007 Although the principle of last come-first go is intended to safeguard the workmen
against discrimination, victimisation or unfair labour practice, it is not intended to deny freedom
to the employer to depart from the said rule for sufficient and valid reasons and hence the
Industrial Tribunal shall be satisfied that the departure from the rule was made for sound and
valid reasons, like efficiency or trust worthy character of the employees etc. and hence the burden
of proof lies on the employer and where the employer fails to discharge the said burden and justify
the departure from the rule, retrenchment so made was held to be malafide and as a result of
ulterior consideration and therefore amounts to unfair labour practice and victimization.
M/s. Swadesamitran Limited Madras v. Their Workmen, 1960 AIR (SC) 762 : 1960 I LLJ 504 : 1960-61
(19) FJR 46 : 1960 (1) FLR 337 (S.C.3J)

Sec. 25G

Deviation of principle last-come-first go when can be

2657

It is then urged that in entertaining the grievance of the respondents against their order of retrenchment
the Labour Appellate Tribunal has exceeded its jurisdiction.that retrenchment is and must be held
to be a normal management function and privilege.In holding an enquiry about the validity or
reasonableness of retrenchment of certain specified persons the appellate tribunal has trespassed on the
management function and as such has exceeded its jurisdiction.We must, however, add that when
it is stated that other things being equal the rule last come first go must be applied, it is not intended to
deny freedom to the employer to depart from the said rule for sufficient and valid reasons. The employer
may take into account considerations of efficiency and trustworthy character of the employees, and if he
is satisfied that a person with a long service is inefficient, unreliable or habitually irregular in the
discharge of his duties, it would be open to him to retrench his services while retaining in his employment
employees who are more efficient, reliable and regular though they may be junior in service to the
retrenchment workmen.It is not as if industrial tribunals insist inexorably upon compliance with
the industrial rule of retrenchment; what they insist on is on their being satisfied that wherever the rule is
departed from the departure is justified by sound and valid reasons.In dealing with case of
retrenchment it is essential to remember that the industrial rule of last come first go is intended to afford
a very healthy safeguard against discrimination of workmen in the matter of retrenchment, and so, though
the employer may depart from the rule, he should be able to justify the departure before the industrial
tribunal whenever an industrial dispute is raised by retrenched workmen on the ground that their
impugned retrenchment amounts to unfair labour practice of victimisation. (Page: 765/766, Para: 9)
.In fact it is clear from the record that at the original enquiry no evidence has been led by the
appellant to justify the departure from the rule even though it was conceded that the rule had not been
followed.This evidence consists of the testimony of Mr. Lakshminarasimhan.He works as
an Assistant Editor.He stated that he was having a personal supervision of the entire work and that
when retrenchment was actually effected a committee was appointed consisting of himself, the Manager
Mr. Ayyangar and the Press Manager Mr. Rajagopala Ayyangar. At the time of the enquiry the Manager
was dead.The witness gave evidence about the defects in the cases of the 39 workmen who were
retrenched; and in support of his oral testimony he filed two statements T-1 and T-2 giving material
particulars in respect of all the said workmen. It is admitted that no records were made at the time when
the cases of these workmen were examined, and so the witness was driven to give evidence merely from
memory. The tribunal has held that having regard to the nature of the defects attributed to the several
workmen to which the witness deposed it was impossible to accept his testimony as satisfactory, and the
tribunal was also not satisfied that it was likely that the witness should have any personal knowledge in
regard to the said defects.In such a case we do not see how in the present appeal the appellant can
successfully challenge the correctness of the conclusion that in substance the retrenchment of the 15
workmen amounts to an unfair labour practice and victimisation. (Page: 767, Para: 12)
Note: The case of Swadesamitran Limited settles the issue of burden of proof in case of deviation of the
principle of last come-first go.

ii) To prove the existence of special circumstances (Raj.DB)

5A.1008 Once it was shown that workman had actually worked for 240 days during period of
12 calendar months, both conditions u/s. 25B i.e. service for 240 days and employment for 12
months were fulfilled and also the employer failed to prove the special circumstances as claimed by
him in which principle of last come first go u/s. 25G was not required to be adhered and it was held
that even if appointment was de hors the Act, termination must conform to the law and hence
termination in violation of Sec. 25F was rightly set aside by Labour Court and Single judge and
reinstatement with 40% backwages was upheld.
State of Rajasthan & Ors. v. Mahendra Joshi & Anr., 2003 I LLJ 256 : 2002 (95) FLR 595 : 2003 III LLN
484 (Raj.DB)
..the termination wasIndustrial Disputes Act 1947 (Page: 257, Para: 4)
The Tribunal found..dispute about that (Page: 257, Para: 6)
..the workman was50% backwages (Page: 257, Para: 10)
The special circumstances..any ground whatever (Page: 259, Para: 26)

2658

Chapter VA Lay-Off and Retrenchment

Sec. 25G

Learned.1947. (Page: 259, Para: 27)

If the.retrenchment. (Page: 260, Para: 29)

iii) To prove lack of efficiency and trustworthy character of the employee

(Mad.HC)
5A.1009 The onus is on the employer to satisfy the Labour Court or Tribunal that the
departure from the principle last to come, first to go was justified when a retrenched workman
raises an industrial dispute. The employer may take into account considerations of efficiency and
trustworthy character of the employee.
Tamilnad Transports, Coimbatore Pvt. Ltd. v. M. Mariappan & Ors., 1970 I LLJ 90 (Mad.HC)

2. Deviation that junior was retained is to be pleaded in the written statement

(S.C.3J)
F 5A.1010 Retrenchment of employee was not held to be justified on grounds of non-observance
of the principle of first come last go and as the managements plea that as the junior employee was
rendering a special service he was retained, was not mentioned in the written statement, the
Tribunal rejected the contention which was upheld by Supreme Court.
M/s. National Iron & Steel Co. Ltd. & Ors. v. State of West Bengal & Anr., 1967 II LLJ 23 : 1966-67 (31)
FJR 425 : 1967 (14) FLR 356 : 1967 AIR (SC) 1206 (S.C.3J)
.Incidentally it may also be pointed out that the retrenchment of Sushil does not seem to be
otherwise justified in that following the principle of last come first to go, Sushil could not be called upon
to leave the companys service. Another employee by name Joy Kishen, junior to Sushil, was retained in
service. No doubt, the Labour Officer, Jha, tried to make out a case in his oral evidence that Joy Kishen
was retained in service because he was doing a special job at the time while Sushil was not. The Tribunal
rejected this contention on the ground that this plea had not been put forward in the written statements of
the company and we do not see any reason why we should take a different view. (Page: 30, Para: 1)

VI. Last come first go (Sec. 25G) when violated

a) When juniors retained as against seniors (S.C.2J)
F 5A.1011 Termination order which mentioned that the employees services were no longer
required was held to be bad in view of the fact that employees junior to the employee so terminated
were retained in service.
Om Prakash Goel, Petitioner v. The Himachal Pradesh Tourism Development Corporation Ltd., Shimla
& Anr., 1992 I LLJ 469 : 1993 (82) FJR 47 : 1991 (63) FLR 245 : 1991 II LLN 420 : 1991 LIC 1414 : 1991
AIR (SC) 1490 : 1991 (3) SCC 291 (S.C.2J)
In this context, the learned counsel also questioned the termination order from another angle. In that
order it is mentioned that the services of the petitioner are no longer required, therefore, they are
terminated. But from the record it is clear that juniors to the petitioner are retained and they are continuing
in service. In the affidavit it is clearly mentioned that juniors whose names are given there are retained in
service in violation of Arts. 14 and 16 of the Constitution.After a careful perusal of the record we
are satisfied that the juniors to the petitioner are retained. Therefore on this ground also the termination
order is liable to be quashed. (Page: 471/472, Para: 6)

Sec. 25G

Last come first go (Sec. 25G) when violated

2659

5A.1012 Retrenchment of the workman while retaining his juniors in service, without proper
reasons is in violation of Sec. 25G and hence invalid.
Management of Industrial Chemicals Ltd. v. P.O. Labour Court, Madras & Ors., 1977 II LLJ 137 : 1977
(34) FLR 403 : 1977 I LLN 607 (Mad.DB)
.We are.is invalid. (Page: 143, Para: 19)
5A.1013 Services of Temporary employees can be terminated at any time but not arbitrarily,
such as keeping junior employees without giving reasons while terminating senior employees.
Wajeeh Ullah v. District Assistant Registrar Coop Societies, Banda & Ors., 1992 (64) FLR 20 (All.DB)
The petitioners.Sustained. (Page: 24, Para: 7)
5A.1014 The workman was terminated as per Sec. 25F but the principle of last come first go
was not followed. Labour Court ordered reinstatement of workman with back wages but Single
Judge set aside Labour Courts order. Being aggrieved, workman moved Division Bench which
upheld Labour Courts order since it was clear from the record that workman was senior to two
other workmen.
Mohanbhai Ramjibhai Keratra v. Surendranagar District Panchayat, 2005 III LLJ 1070 : 2005 LLR
1209 (Guj.DB)
Note: also refer to the following case/s
Satya Pal & Anr. v. State of Haryana, 1997 I LLN 457 (P&H.HC)
Ishwar Chand and Ors. v. Manager Dalmia Dairy Industries AND Management M/s. dalmia Dairy
industries Ltd v. State of Rajasthan & Ors., 1997 LLR 366 (Raj.HC)
Municipal Corporation of Delhi v. Khacheru & Anr., 1993 I LLJ 351 : 1993 I LLN 370 : 1994 (84) FJR
196 (Del.HC)
Alok Kumar Pathak & Anr., Rajnish Kumar Tripathi & Omprakash Yadav v. Vice Chancellor, Rani
Durgawati Vishwavidyalaya, Jabalpur, 2002 III LLN 983 : 2002 LLR 658 (MP.HC)
R. Sankaran v. The P.O. Additional Labour Court, Madras & Anr., 1977 (50) FJR 28 : 1977 I LLN 94 :
1977 LIC 1338 (Mad.HC)

b) When casual workers completing 240 days service with artificial breaks
terminated in violation of principle of last come first go (Raj.DB)
5A.1015 Termination of casual workers completing 240 days of service in one calendar year
with artificial breaks of a day or two without complying with Sec. 25F and 25G is illegal.
Ram Chandra v. Union of India & Ors., 2001 II LLJ 431 : 2001 (90) FLR 55 : 2001 LLR 1034 : 2002 LLR
(Sum) 104 : 2002 LIC 1077 (Raj.DB)
.facts make it.Industrial Disputes Act. (Page: 433, Para: 8)
.it is declared.of the services. (Page: 433, Para: 16)

c) When deviation cannot be justified in the absence of evidence as to any special

category within the category of employees to justify retention of juniors
(Cal.DB)
5A.1016 The departure from the principle of last come first go cannot be held justified in the
absence of any reasons, recorded in support thereof, or evidence brought before the Tribunal like
showing any special category within the category of employees to justify retention of juniors.
M/s. Gladstone Lyall & Co. Ltd. v. State of West Bengal & Ors., 1983 LIC 1425 (Cal.DB)
.The facts.perverse. (Page: 1426/1427, Para: 7)

2660

Chapter VA Lay-Off and Retrenchment

Sec. 25G

d) When casual labour employed in normal course were retrenched and those
employed out of turn were retained without valid reasons (Ker.HC)
5A.1017 Casual labour with same terms of employment were employed in normal course
while their juniors were recruited out of turn and form a separate class and were preferred over
the casual labour employed in normal course for the purpose of regularisation. Order retrenching
labourers engaged in normal course and retaining out-of-turn labourers though junior to those
retrenched without stating reasons violates rule u/s. 25G.
Abdul Rahiman & Ors. v. The Divisional Supdt., Southern Rly. Olavakode & Ors., 1980 II LLN 392 :
1981 LIC 217 (Ker.HC)

e) If one employee retrenched and other retained when both were doing clerical
job and not having technical skill (Cal.HC)
5A.1018 The employer contended that the store keeper and stock clerk belong to different
categories to avoid applicability of Sec. 25G of the Act to one of them. Industrial Tribunal was
justified in holding that the two workmen who were retrenched belong to the same category as both
their functions were clerical and required no technical skill, hence Sec. 25G of the Act was
applicable.
B.N. Elias & Co. Pvt. Ltd. v. Fifth Industrial Tribunal , West Bengal & Ors., 1965 II LLJ 324 : 1961 II LLJ
14 : 1965-66 (28) FJR 257 (Cal.HC)

f) When workman in a hospital run by Municipal Corporation terminated

without considering seniority of workmen of all hospitals run by it (Del.HC)
5A.1019 Workman retrenched was working in a hospital run by Municipal Corporation.
There was no junior to him in the said hospital but while considering seniority of workmen all
workmen working in all the hospitals run by the Municipal Corporation on daily wages have to be
taken into account. Since that was not done, retrenchment was held illegal.
Municipal Corporation of Delhi v. Shyam Lal & Ors., 1994 II LLN 1144 : 1995 I CLR 315 (Del.HC)

g) When junior most employee spared on the ground of being in a different grade
when the employees placed in different grades only on the basis of pay scales do
the same work (S.C.2J)
Workmen of Sudder Workshop of Jorehaut Tea Co. Ltd. v. The Management of Jorehaut Tea Co. Ltd.,
Respondent and vice versa, 1980 II LLJ 124 : 1980 (56) FJR 513 : 1980 (40) FLR 474 : 1980 II LLN 151 :
1980 LIC 742 : 1980 SCC (L&S) 427 : 1980 AIR (SC) 1454 : 1980 (3) SCC 406 (S.C.2J)
Note: Please see related ratio/s under the above citation in this section

VII. Burden of proof in case of allegation of violation

a) Lies on the workman (Del.HC)
5A.1020 In the present case, the plea was that the juniors were retained and the service of the
senior workmen had been terminated. In such case the onus of proof would be on workman while
tribunal wrongly held that onus of proof was on Management.
Indian Refrigeration Industries & Anr. v. R.K. Baweja & Ors., 1981 (42) FLR 381 : 1981 II LLN 177
(Del.HC)

Sec. 25G

Effect of violation

2661

VIII. Effect of violation

a) Renders bad termination of services of temporary railway employee (Del.DB)
5A.1021 The termination of services of the Railway Employee employed on a temporary basis
under the Indian Railway Establishment code was held to be retrenchment within the meaning of
Sec. 2(oo) of the Industrial Disputes Act and it is bad in law as the provisions of Sec. 25F and 25G
have not been complied with. Order of termination is quashed.
Malkhan Singh v. Union of India & Ors., 1981 II LLJ 174 : 1981 (42) FLR 401 : 1981 II LLN 670 : 1981
LIC 1633 (Del.DB)
The petitioners.violated. (Page: 177, Para: 8)
In the present.invalid. (Page: 178, Para: 11)
In the present.retrenchment. (Page: 178, Para: 13)
The inevitable.invalid. (Page: 181, Para: 32)

b) Retrenchment can be held as invalid (Bom.DB)

5A.1022 As Sec. 25F and 25G are independent of each other, Tribunal after having found that
Sec. 25F was substantially complied with by employer can hold retrenchment as invalid on failure
to comply with provisions of Sec. 25G and in instant case as employer contravened mandatory Rule
81, finding of Tribunal that retrenchment was illegal due to non compliance of Sec. 25G and Rule
81 was upheld.
Navbharat, Hindi Daily, Nagpur v. Navbharat Shramik Sangha, 1984 II LLN 132 : 1984 LIC 445
(Bom.DB)
.it can never.under the Act. (Page: 138, Para: 16)
It was next.the retrenchment invalid. (Page: 138, Para: 18)
.failure to.illegal and invalid. (Page: 139, Para: 19)
Note: the following case/s may be referred
Nalinkumar A. Thakar & Ors. v. Gujarat State Civil Supplies Corporation Ltd. & Ors., 2003 I CLR 278
(Guj.HC)
Nirmaldan Nigam Gadhvi v. Narmada Nigam Ltd., 2004 (106) FJR 698 (Guj.HC)
5A.1023 The workmen of the Food Corporation of India are employees because Central
Warehousing Corporation merely acts as an agent and receive supervising charges. The provisions
of Sec. 25G and 25N apply not only to a factory but all industrial establishments, and as go-down is
covered under the definition of an industry, the said Sections are applicable to it. The retrenchment
notices issued without compliance with the said provisions cannot be sustained in law.
F.C.I. Workers Union & Anr. v. Food Corporration of India & Anr., 1992 (65) FLR 1014 : 1992 II CLR
730 (Cal.HC)

2662

Chapter VA Lay-Off and Retrenchment

Sec. 25G

IX. Last come first go (Sec. 25G) when not violated

a) When there is no proof that juniors were continued in service (Ori.DB)
5A.1024 In the absence of any proof that workman had worked for more than 240 days in
preceding 12 months and that his juniors were continued in service, his termination was held as
proper.
Gangadhar Labala v. P.O. Labour Court & Ors., 2002 I CLR 812 : 2002 I LLJ 484 : 2002 I LLN 452
(Ori.DB)
.The petitioner has not.had rendered service. (Page: 815, Para: 5)
.The fact that Sri.not been established. (Page: 815, Para: 6)
.We do not.calling for interference. (Page: 815, Para: 7)

b) When reasons for deviation from the principle are recorded (S.C.2J)
F 5A.1025 It was held that when Sec. 25G introduced the rule of last come-first go, it is not a rule
imperative in nature and the said rule would be applicable when a workman belonged to a
particular category of workmen. However the employer may retrench any other workman in
departure of the rule by recording reasons.
Jaipur Development Authority v. Ram Sahai & Anr., 2006 (111) FLR 1178 : 2007 I LLJ 429 : 2007 I LLN
78 : 2007 LIC 274 : 2007 I CLR 221 : 2007 LLR 92 : 2007 (1) SCC (L&S) 518 (S.C.2J)
Appellant herein is a State within the meaning of Article 12 of the Constitution of India. It is created
under the Jaipur Development Authority Act. Respondent was appointed on daily-wage basis from
September, 1986 to June, 1987. His services were dispensed with, with effect from 1.7.1987. He raised an
industrial dispute and on receipt of failure report dated 26.4.1988 of the Conciliation Officer, the
Government of Rajasthan made a reference for adjudication of the following dispute to the Presiding
Officer, Labour Court at Jaipur, in exercise of its power under Section 10(1)(c) of the Industrial Disputes
Act, 1947. (Page: 1179, Para: 1)
By reason of an Award dated 22.3.1999, the Presiding Officer, Labour Court held that the termination of
services of the workman was not legal. He was directed to be reinstated in service with full back-wages. It
was held:
The termination of workman Ramsahai son of Shri Chhotu Ram by the respondents w.e.f. 1.7.87 is not
reasonable and legal. He is reinstated back in service. His continuity in service is maintained, and from
the date of his termination till the date of award he is awarded all back wages along with other benefits
which he would have received while in continuous service and from the date of award the workman shall
receive the wages and other benefits which other similarly situated workmen junior to him are receiving
today. (Page: 1180, Para: 2)
The fact that Respondent was appointed on daily wages and he has not completed 240 days, is not in
dispute. Retrenchment of Respondent by Appellant, therefore, did not require compliance of the
provisions of Section 25F of the Act.
Section 25G introduces the rule of last come first go. It is not a rule which is imperative in nature. The
said rule would be applicable when a workman belongs to a particular category of workman. An
employer would, in terms thereof, is ordinarily required to retrench the workman who was the last person
to be employed in that category. However, for reasons to be recorded, the employer may retrench any
other workman.
Section 25H provides for re-employment of retrenched workman, which will apply in case where the
employer proposes to take into employment any person, an opportunity has to be given to him to offer
himself for re-employment. (Page: 1180/1181, Para: 4)

Sec. 25G

Last come first go (Sec. 25G) when not violated

2663

c) When retrenched employee is the only employee of the Department (Bom.DB)

5A.1026 Retrenched employee being the only person employed as special fitter in the
department, the principle of last come first go becomes inapplicable when the department ceases
to function.
Arvind Anand Gaikwad v. Uni Abex Alloy Products, Ltd., & Ors., 1994 III LLJ 684 : 1988 I LLN 239 :
1988 I CLR 26 (Bom.DB)
Mr. Ganguli then.retrench the appellant. (Page: 687, Para: 6)

d) When list is prepared category-wise and not for whole project (All.DB)
5A.1027 Even though the seniority list for the project has been prepared category wise, there is
no breach of Rule 77 regarding seniority list and the principle of last come first go has been
followed and the Court rejected employees contention that seniority list should have been for the
whole project.
Ravindra Kumar Srivastava v. Union of India & Ors., 1982 II LLN 427 : 1982 (45) FLR 214 : 1982 LIC
1739 (All.DB)
Rule 77.argument. (Page: 434, Para: 19)

e) When Seniority list of only the division closed is considered since it is separate
from other division having no functional integrality (AP.DB)
5A.1028 When two establishments of Hyderabad division of Hindustan Aeronautics Ltd. have
different trades are separate, there is no functional integrality between them and thus there cannot
be any violation of Sec. 25G if workmen were terminated on the basis of seniority list of the Begum
Pet establishment that was closed and some of them having requisite qualifications subject to
vacancy position in Hyderabad division were also absorbed
Mohammed Yousuf & Ors. v. The Industrial Tribunal & Anr., 1978 II LLJ 329 : 1978 LIC (Sum) 55
(AP.DB)
Having regard.closure. (Page: 332/333, Para: 6)
Having gone.seniority. (Page: 334, Para: 10)
Before any.before it. (Page: 336, Para: 12)
Note: for additional ratios on functional integrality, see Section 2(ka)

f) When the termination of workmen of a department was due to closure for

economic reasons and its work distributed among other employees (S.C.3J)
F 5A.1029 There is no contravention of the principle of last come first go u/s. 25G where in the
special department for painting, whitewashing and upholstering was closed for effecting economy
of expenditure resulting in the termination of employees and their work has been distributed
among other existing employees and hence it is held that the action cannot be characterized as
improper or amounting to unfair labour practice.
Hotel Ambassador v. Its workmen & Ors., 1963 II LLJ 87 : 1963 (7) FLR 140 (S.C.3J)
.The appellants case was that he had abolished this department and members of the staff. The
Tribunal, in fact, has found that in addition to their other work Budhram and Bhagat Singh are now doing
the work which the retrenched workmen use to do before.It however, held that Bhagat Singh
might have been retrenched and not Ram Singh I.Mr. Ram Lal Anand points out that the Tribunal
was in error because like Budharm, Bhagat Singh was a senior employees and could not have been

2664

Chapter VA Lay-Off and Retrenchment

Sec. 25G

retrenched in preference to Ram Singh I. Evidence show that both Budhram and Bhagat Singh were
drawing time, and so, what applies to Budhram applies equally to Bhagat Singh. In our opinion, this
contention is well-founded and must be upheld. (Page: 88, Para: 2)
.The tribunal, in fact, has found that in addition to their other work Budhram and Bhagat Singh
are now doing the work which the retrenched workmen used to do before, and it has held that since
Budhram was a senior employee, it could not be said that the appellant was in error in retaining him in
preference to the three retrenched employees. It, however, held that Bhagat Singh might have been
retrenched and not Ram Singh I. It is on this ground that the tribunal has directed the reinstatement of
Ram Singh I. (Page: 88, Para: 2)
Mr. Janardhan Sharma for the respondents attempted to support the finding of the Tribunal that the
appellant had acted improperly in not applying the principle of S. 25G of the Industrial Disputes Act,
1947 (Act 14 of 1947) Section 25 G requires that the retrenchment should be effected category-wise; and
that in effecting retrenchment, the principle of the last come first go must be applied. The difficulty in
accepting this arguments, however, is that in the present case the appellant has altogether closed the
special department for painting, whitewashing and polishing upholstering work, and it is not possible to
find fault with the appellant because one of the ways in which economy in expenditure could be effected
obviously was to close this department and distribute the work of the said department among some of the
pre-existing employees. That being so, it is not possible to hold that S. 25G has been contravened. Once it
is conceded that there was an occasion for effecting economy, the conclusion is inescapable that the
conduct of the appellant in closing the department and dividing its work amongst its other employees
cannot be reasonably characterized as improper, or as amounting to an unfair labour practice.
(Page: 88, Para: 3)

g) When there is lack of efficiency on the part of employee and loss of confidence
in him (S.C.2J)
F 5A.1030 Employer can deviate from the principle of first come last go by virtue of use of word
ordinarily in the Section in case of lack of efficiency or loss of confidence etc. and burden is on
him to justify such deviation.
Samishta Bube v. City Board, Etawah & Anr., 1999 I LLJ 1012 : 1999 (81) FLR 746 : 1999 II LLN 1 :
1999 LIC 1125 : 1999 I LLR 460 : 1999 SCC (L&S) 592 : 1999 AIR (SC) 1056 : 1999 (3) SCC 14
(S.C.2J)
It is true that the rule of first come, last go, in Section 6-P could be deviated from by an employer
because the Section uses the work ordinarily. It is, therefore, permissible for the employer to deviate
from the rule in cases of lack of efficiency or loss of confidence etc. as held in M/s. Swadesamitran
Limited, Madras v. Their Workmen, (1960 I LLJ 504) (SC). But the burden will then be on the employer
to justify the deviation. No such attempt has been made in the present case. Hence, it is clear that there is
clear violation of Section 6-P of the U.P. Act (Page: 1015, Para: 9)

h) When special skills aptitude and specific experience justify deviation (S.C.3J)
F 5A.1031 Though the principle of first come last go should be generally followed in ordering
retrenchment, it is not immutable and can be departed from for valid reasons, in the instant case
where management retained clerks for their special skills and aptitude besides experience in a
particular branch of business and passed resolution setting out reasons for retention, it was held
that Labour Court was wrong in reinstating employees after inferring that for mere departure
from the rule retrenchment was malafide and unjustified.
M/s. Om Oil and Oil Seeds exchange, Ltd., Delhi v. Their Workmen, 1966 II LLJ 324 : 1965-66 (29) FJR
69 : 1966 (13) FLR 7 : 1966 AIR (SC) 1657 (S.C.3J)
It is an accepted principle of Industrial law that in ordering retrenchment, ordinarily, the management
should commence with the latest recruit, and progressively retrench employees higher up in the list of
seniority. But the rule is not immutable, and for valid reasons may be departed form.The Tribunal
has to determine in each case whether the management has in ordering retrenchment acted fairly and
properly and not with any ulterior motive: It cannot assume from the rule that the management was

Sec. 25G

Last come first go (Sec. 25G) when not violated

2665

actuated by improper motive or that the management was actuated had acted in a manner amounting to an
unfair labour practice. Nor has the Tribunal authority to sit in appeal over the justifiable reasons the
management if for valid and justifiable reasons the management has departed form the rule that the senior
employee may be retrenched before his junior in employment. (Page: 327, Para: 2)
The management of the appellant has recorded a resolution which sets out the reasons for retention of
the employees.The rule has to be applied where other things are equal. The management of the
business must Act fairly to the employees; where however the management bona fide retains staff
possessing special aptitude in the interests of the business, it cannot be assumed to have acted unfairly
merely because the rule first come, last go is not observed. (Page: 327/328, Para: 2)
In the present case the four clerks retained had, beside, experience, special skill and aptitude in the
particuar branch of the business of the appellant they were attending to and the management had retained
them because of that skill or aptitude. The Labour Court inferred mala fides merely because the
management departed from the rule first come, last go. Whether the management in departing from the
rule has acted mala fide, must depend upon the circumstances of the case; it cannot be inferred merely
from departure from the rule. (Page: 329, Para: 2)
.The order of reinstatement of Tara Shanker and Om Prakash will stand vacated.
(Page: 329, Para: 1)
Note: also refer to the following case
Municipal Corporation of Delhi v. Shri Khacheru, Through Municipal Employees Union & Ors., 1993
(66) FLR 42 : 1993 I CLR 357 : 1993 LLR 5 (Del.HC)

i) When female workers in mines terminated due to adverse working conditions

and statutory provisions (MP.DB)
5A.1032 The termination of services of female workers who were not junior-most after
preparing separate list of male and female workers, was not in violation of Sec. 25G as the company
had done so in view of the working conditions such as underground work and shift rotation and
statutory provisions under the Mines Act viz. disabilities under the law to employ females in
underground work and their further disability to be rotated in shifts and hence the departure from
the rule in the circumstances of the case was justified.
Nowrozabad Colliery Mazdoor Sangh v. F. Jeejeebhoy & Anr., 1970 (37) FJR 225 : 1970 (20) FLR 284
(MP.DB)
In preparing.rule. (Page: 230, L: 10 to 20)
The interest.the case. (Page: 230, L: 28 to Page: 231, L: 4)

j) When workman terminated was due to his appointment being void ab initio
though other illegal appointees retained (Jhar.HC)
5A.1033 The employee was terminated from service on the ground of illegal appointment. On
reference, Labour Court held termination as illegal and awarded reinstatement with full back
wages, which was challenged in High Court. High Court held that since illegal appointment is void
abinitio, workman cannot claim any benefit merely because other appointees were retained in
service though their appointment is also illegal and quashed the impugned award.
Mineral Area Development Authority v. Presiding Officer, Labour Court & Ors., 2006 (110) FLR 270 :
2006 LLR 737 (Jhar.HC)

2666

Chapter VA Lay-Off and Retrenchment

Sec. 25G

k) If employee terminated was selected not through regular selection process and
the junior employee retained was appointed through selection process
(Raj.HC)
5A.1034 Termination of service of a person was on the ground that he is neither selected
through regular selection nor through the test held for regularization. A plea was raised by the
person for violation of Sec. 25G of Industrial Disputes Act and the principle of retaining a person
junior in service while dispensing with services of seniors which was contended to be arbitrary and
discriminatory. It was held that Sec. 25G of Industrial Disputes Act will not be attracted as person
who has been retained in service, have been selected through selection process.
Dilip Bhatnagar & Ors.etc. v. Rajasthan Agriculture University., 1994 LIC 1914 (Raj.HC)

l) When termination is on the expiry of the period of contract (All.HC)

5A.1035 Employee worked in bank for a period of 80 days from 20.9.1982 to 8.12.1982. No
order of termination was passed. Labour Court held the termination to be illegal for not following
Sec. 25G Last Come First Go rule and also for violation of Section 25-H. Held that Sec. 25G is not
applicable when there is an agreement between the parties for a fixed period of service. On the
expiry of the said period the services come to an end. Therefore award was set aside.
Management of State Bank of Bikaner & Jaipur v. Santosh Kumar Mishra & Anr., 2003 III LLJ 607 :
2003 (96) FLR 885 (All.HC)

m) When employee terminated due to bad performance (Raj.HC)

5A.1036 If the service of the employee has been dispensed with on the basis of his performance,
the same cannot be challenged on the ground of violation of the rule of last come first go as the
rule cannot be said to be immutable. Its departure for valid reason is definitely permissible and
certain amount of freedom to the employer to use his best judgment and discretion in the absence of
allegation of mala fide cannot be held as arbitrary.
Vikas Bunkar /son of Manshiram Balai v. Rajasthan State Handloom Development Corporation Ltd.,
1996 (74) FLR 2105 : 1996 I LLN 986 : 1996 LIC 808 : 1996 II CLR 182 (Raj.HC)
Note: the following case also decided on the above principle
Jaipur, & through its Managing Director, Chomu House, Jaipur., 1996 (74) FLR 2105 : 1996 I LLN 986
: 1996 LIC 808 : 1996 II CLR 182 (Raj.HC)

n) When seniority list is prepared as per grades and not as per category but in
accordance with the settlement with the union and accepted by the employees
(Bom.HC)
5A.1037 Employees grievance was that there is violation of Sec. 25G as the seniority list was
prepared in accordance with the grades and not in accordance with the category which resulted in
retaining a junior workman while retrenching a senior. The High Court observed that the said list
was prepared on the basis of both the category and the grade within the category. It was not the
basis of only grade or only category. Also the seniority list was prepared in accordance with the
settlement with the union and was displayed 23 days in advance from the date of retrenchment and
it was not alleged that such a list was wrong, therefore, in such cases Sec. 25G cannot be held to be
violative.
Janata Mazdoor Union v. Tas Engineering Pvt. Ltd. & Ors., 2002 (95) FLR 739 : 2002 IV LLN 772 :
2002 LIC 2873 : 2003 LLR (Sum) 107 (Bom.HC)

Sec. 25G

Reliefs for violation

2667

o) If terminated on the basis of seniority list published if its correctness was not
disputed by union (Cal.HC)
5A.1038 Principle of last come first go was not followed after retrenchment. Correctness of
seniority list published by the company was not disputed by the employees-union. It was held that
as the correctness of seniority list was not disputed, the said rule may be departed from.
Parrys (Cal) Employees Union & Anr. v. Third Industrial Tribunal, West Bengal & Ors., 2001 II LLJ 39
: 2001 (89) FLR 192 : 2001 LLR 462 : 2001 II LLN 743 : 2001 I CLR 777 (Cal.HC)

p) When the departure is made for the sake of efficiency and trustworthy
character of the employee (Mad.HC)
5A.1039 The onus is on the employer to satisfy the Labour Court or Tribunal that the
departure from the principle last to come, first to go was justified when a retrenched workman
raises an industrial dispute. The employer may take into account considerations of efficiency and
trustworthy character of the employee.
Tamilnad Transports, Coimbatore Pvt. Ltd. v. M. Mariappan & Ors., 1970 I LLJ 90 (Mad.HC)

q) When establishment was closed some juniors were retained as caretaker staff
since they have knowledge of different activities (P&H.DB)
5A.1040 When workmen raised dispute that their juniors are retained in service, it was held
that this plea does not stand to reason. There was a closure in the unit pursuant to the permission
granted by the Appropriate Government and in that situation there was no need or requirement to
continue with the workers. And if care taker staff retained in these circumstances the management
was within their right to avail the services of such persons who had the working knowledge of
different activities irrespective of their seniority.
Ombir Singh & Ors. V. Haryana Breweries Ltd. & Anr., 2007 LLR 257 : 2007 (112) FLR 256 (P&H.DB)
The petitioners.of employment. (Page: 258, Para: 1)
This plea.25F of the Act. (Page: 260, Para: 8)

X. Reliefs for violation

a) Who cannot claim
1. Employee who worked with intermittent breaks cannot when similarly
situated other employees were also terminated (Raj.DB)
5A.1041 Employee who has worked for 93 days, though with intermittent breaks was not
entitled to relief under the Section and as employees appointed along with him were also
terminated there can be no breach of Sec. 25G.
Raj Vimal v. State of Rajasthan & Ors., 2003 (97) FLR 1199 : 2003 III LLJ 86 (Raj.DB)
However.their service. (Page: 1200, Para: 6)

2. Employee who had failed to prove violation of Sec. 25H and 25G (Raj.DB)
5A.1042 As employee had worked for less than 240 days and failed to prove violation of Sec.
25H and 25G employee was not held to be entitled for any relief.
Ram Gopal Saini v. Labour Court No. II, Jaipur & Ors., 2001 I LLJ 1230 : 2001 (89) FLR 778 : 2001 LIC
610 : 2001 I CLR 907 : 2001 LLR 747 (Raj.DB)

2668

Chapter VA Lay-Off and Retrenchment

Sec. 25G

In this.employee. (Page: 1230, Para: 2)

We are.the purpose. (Page: 1231, Para: 8)

3. Government servants employed temporarily in construction division (Ori.DB)

5A.1043 The benefit of Sec. 25G is not available to Government servants and hence the
workman employed on a temporary basis in Rourkela construction division and subsequently
terminated from service, will not be entitled to any relief under this Section.
Panchanan Sabat v. State of Orissa & Anr., 1973 II LLN 413 (Ori.DB)
.the observations.Present Case. (Page: 415, Para: 4)

b) Relief of reinstatement
1. When can be granted
i) Reinstatement of workman with 240 days service is justified when principle
is violated (S.C.2J)
F 5A.1044 Supreme Court upheld the Labour Courts order that as the workmen had completed
240 days of service thereby violated Sec. 25F and also as the principle of last come first go was not
followed their termination was held to be bad and were directed to be reinstated.
Incharge Government Hide Flaying Centre & Anr. v. Rama Ram & Anr., 2003 III LLJ 1081 : 2003 (94)
FLR 909 : 2003 SCC (L&S) 1170 : 2003 (9) SCC 163 (S.C.2J)
The appellants are calling in question the award made by the Labour Court-cum-Industrial Tribunal,
Hissar by which the termination of services of certain employees was held to be bad and they were
directed to be reinstated with back wages and continuity of service and all other consequential benefits
arising therein. (Page: 1082, Para: 1)
.each of the employees have worked for more than 240 days and their services were sought to be
put to an end to without following the due procedure under Section 25-F of the Industrial Disputes Act.
This finding of fact cannot be seriously assailed. However, it may be pointed out that in the evidence
adduced before the Tribunal, the claimants before the Tribunal established that they were seniors to those
who have been continued in service and were described to be regular employees and that position is
neither challenged nor rebutted. Thus the principle of last-come-first-go was given a go-by. In these
circumstances we think that the order of the Tribunal, as affirmed by the High Court, is just and
proper. (Page: 1082, Para: 3)
Note: also refer to the following case
Rajkot Municipal Corporation v. Kishor Govind of Sidik Akbar & etc., 1997 III LLJ (Sum) 408 : 1996 II
LLN 1126 : 1996 LIC 1685 (Guj.HC)

ii) If workman is terminated in violation of seniority norm even if he did not

complete 240 days (Raj.HC)
5A.1045 A workman whose services were terminated in violation of the provision of the
Industrial Disputes Act approached Labour Court where it was found that the employer had not
maintained any seniority list required as per Rule 77 of the Rajasthan Industrial Disputes Rule
1957. Labour Court ordered reinstatement with full back-wages from the date of termination
though the workmen had not completed 240 days service. High Court dismissed the petition of the
employer ordering that the award should be complied within 3 months if it had not already been
complied with.
State v. Harchad, 2001 II LLJ 1593 : 2001 (90) FLR 744 : 2001 LLR 1064 (Raj.HC)

Sec. 25G

Reliefs for violation

2669

Note: also refer to the following case

Anavali Kshetirya Gramin Bank v. The P.O. Central Industrial Tribunal, Jaipur & Ors., 2002 (93) FLR
79 : 2002 II LLN 700 (Raj.HC)
Unnikrishna Pillai R, Padinjareplapparambil, Aroor, P.O. v. P.O. Labour Court & Anr., 2002 II LLJ 493
: 2002 (93) FLR 990 : 2002 (95) FLR 299 : 2002 LLR 790 (Ker.HC)
State of Rajasthan v. Harchand, 2001 II LLJ 1993 (Raj.HC)

iii) Reinstatement can be of retrenched casual labour when the scheme of

railways permits absorption (S.C.2J)
F 5A.1046 In a scheme by ministry of Railways to absorb retrenched project casual labour in
service as on 1st Jan 1984, Apex Court modified date of applicability of the scheme to those in
service on 1st Jan 1981 so as to avoid discrimination between those retrenched workers who
continued in service under orders of stay and those retrenched workers who did not get any stay
and even those who failed to come to Court.
Inder Pal Yadav & Ors, etc. v. Union of India & Ors., etc., 1985 II LLJ 406 : 1985 (51) FLR 138 : 1986 I
LLN 18 : 1985 SCC (L&S) 526 : 1985 (2) SCC 648 (S.C.2J)
The scheme envisages that it would be applicable to casual labour on projects who were in service as on
January 1, 1984. The choice of this date does not commend to us, for it is likely to introduce an invidious
distinction between similarly situated persons and expose some workmen to arbitrary discrimination
flowing from fortuitous Courts order. To illustrate, in some matters, the Court granted interim stay
before the workmen could be retrenched while some other were not so fortunate. Those in respect of
whom the Court granted interim relief by stay / suspension of the order of retrenchment, they would be
treated in service on 1st January, 1984 while others who fail to obtain interim relief though similarly
situated would be pushed down in the implementation of the Scheme. There is another area where
discrimination is likely to rear its ugly head. These workmen come from the lowest grade of railway
service. They can ill afford to rush to Court. Their Federations have hardly been of any assistance. They
had individually to collect money and rush to Court which in case of some may be beyond their reach.
Therefore, some of the retrenched workmen failed to knock at the doors of the Court of justice because
these doors do not open unless huge expenses are incurred. Choice in such a situation, even without
crystal gazing is between incurring expenses for a litigation with uncertain outcome and hunger from day
to day. It is a Hobsons choice. Therefore, those who could not come to the Court need not be at a
comparative disadvantage to those who rushed in here. If they are otherwise similarly situated, they are
entitled to similar treatment, if not by anyone else at the hands of this Court. Burdened by all these
relevant considerations and keeping in view all the aspects of the matter, we would modify part 5.1 (a)(i)
by modifying the date from 1st January, 1984 to 1st January, 1981. With this modification and consequent
rescheduling in absorption from that date onward, the Scheme framed by Railway Ministry is
accepted. (Page: 408/409, Para: 5)

iv) Reinstatement can be of temporary conductor terminated in breach of rule

(P&H.DB)
5A.1047 Termination of service of temporary conductor was made in violation of Sec. 25G
reinstatement was held to be justified.
State of Punjab & Anr. v. Kashmir Singh & Anr., 1993 III LLJ 565 : 1989 LIC 1596 : 1989 II CLR 800
(P&H.DB)
His services.to him. (Page: 565, Para: 2)
No other.with costs. (Page: 566, Para: 4)

2670

Chapter VA Lay-Off and Retrenchment

Sec. 25G

v) Reinstatement with 50% back wages proper even if workmen who refused
to accept new posting on transfer were terminated in violation of the
Section (Guj.HC)
5A.1048 Due to reduction in the work in tracing department workmen were offered alternative
work in the new project department but they refused to work after receiving the order of transfer
to the new department. Labour Court held that termination was not legal and ordered
reinstatement with 50% back wages since the employer had violated Sec. 25G of Industrial
Disputes Act r/w R. 81 of Industrial Disputes (Gujarat) Rules, 1966. High Court upheld the said
order stating that termination order needs to be in consonance with provisions of Sec. 25 F, 25 G
and Rule 18 to make it legal. Sec. 25 G needs to be complied with by the employer before
retrenching any employee and non- compliance with it need not be challenged by such employee.
The grant of 50% back wages is proper since employer has not produced any evidence to show that
workmen were earning during the intervening period. Hence petition is dismissed.
Gurjargruvers (P.) Ltd. v. Akbakhan Havaldarkhan, 2004 (105) FJR 346 : 2004 LLR 524 (Guj.HC)
.Labour Court.by this Court. (Page: 349, Para: 1)
.If the non implementation.bad in law. (Page: 352, Para: 4)
.Thus bare perusal.such findings. (Page: 353, Para: 4)
.Before the Labour Court.Constitution of India. (Page: 354, Para: 7)

2. When cannot be granted

i) Reinstatement is not mandatory relief in case of breach of Sec. 25F & 25G
when employee does not have prescribed qualification (Bom.DB)
5A.1049 Reinstatement is not a mandatory relief in case of breach of Sec. 25F and 25G hence
compensation awarded by Labour Court in lieu of reinstatement on finding that employee does not
have prescribed qualification to carry out or discharge duties of the post was held to be justified.
Vishwas Bhimrao Dhumal v. Kopargaon Nagarpalika & Ors., 1993 III LLJ 772 : 1988 (57) FLR 107 :
1988 II LLN 385 : 1988 I CLR 569 (Bom.DB)
The labour.qualification. (Page: 774, Para: 6)
The learned.faulted with. (Page: 774, Para: 6)

ii) Mere violation of Sec. 25G and H of the Act does not warrant reinstatement
in public employment when job was not of perennial in nature (S.C.2J)
F 5A.1050 A mere violation of Sec. 25G and H of the Act does not warrant reinstatement of a
workman who was not employed within the meaning of Art. 12 of the constitution, having regard to
the doctrine of public employment and whose job was not of perennial in nature. The Supreme
Court held that the Labour Court in the instant case should have probed deeper before reinstating
him with full back wages. Therefore compensation of Rs. 75,000 instead of reinstatement was held
proper.
Jaipur Development Authority v. Ram Sahai & Anr., 2007 SCC (L&S) 518 : 2007 I LLJ 429 : 2006 (111)
FLR 1178 : 2007 I LLN 78 : 2007 LIC 274 : 2007 I CLR 221 : 2007 LLR 92 (S.C.2J)
We would, therefore, proceed on the basis that there had been a violation of Sections 25G and 25H of the
Act, but, the same by itself, in our opinion, would not mean that the Labour Court should have passed an
Award of re-instatement with entire back wages. This Court time and again has held that the jurisdiction
under Section 11A must be exercised judiciously. The workman must be employed by a State within the
meaning of Article 12 of the Constitution of India, having regard to the doctrine of public employment. It

Sec. 25G

Reliefs for violation

2671

is also required to recruit employees in terms of the provisions of the rules for recruitment framed by it.
Respondent had not regularly served Appellant. The job was not of perennial nature. There was nothing
to show that he, when his services were terminated any person who was junior to him in the same
category, had been retained. His services were dispensed with as early as in 1987. It would not be proper
to direct his reinstatement with back wages. We, therefore, are of the opinion that interest of justice would
be sub-served if instead and in place of re- instatement of his services, a sum of Rs. 75,000/- is awarded to
Respondent by way of compensation as has been done by this Court in a number of its judgments.
(Page: 525, Para: 28)

iii) When workman was appointed under a scheme and the scheme itself came
to an end (S.C.2J)
F 5A.1051 Even where, there is a violation of Sec. 25G or 25H of the Act, it does not entitle the
Labour Court to direct reinstatement of the employee automatically because here apart from the
appointment being under the scheme, the very scheme had come to an end on completion of the
project.
State of Rajasthan v. Sarjeet Singh & Anr., 2006 (111) FLR 908 : 2007 I LLJ 236 : 2007 I LLN 122 : 2007
I CLR 126 : 2007 LLR 7 : 2006 SCC (L&S) 2032 : 2006 (8) SCC 508 (S.C.2J)
.He was initially appointed for a period of six months. The term of his appointment was extended
from time to time. The total period during which Respondent No. 1 remained employed was from
19.9.1996 to 7.11.1997. The Scheme was to be completed upto 7.11.1997. As the Scheme came to an end,
the services of Respondent No. 1 were terminated. He filed an application for his regularization of his
services as a pump driver before the Labour Welfare and Conciliation Officer, Hanumagarh. In reply to
the notice issued by the said authority, the Public Health & Engineering Department of the State inter alia
contended that Respondent No. 1 had never been appointed by it and in fact was appointed by the
Sarpanch of the Gram Panchayat, Indragarh (Page : 908/909, Para: 1)
In terminating the services of Respondent No. 1, we would assume that violation of Sections 25-G or
25-H occurred (although there is no factual basis therefor), but in any event, the same would not mean
that the Labour Court should have automatically passed an award of reinstatement in service with back
wages. We, however, although ordinarily would have set aside the impugned award and consequently the
judgment of the High Court. (Page: 912, Para: 9)

c) Relief of compensation in lieu of reinstatement

1. Proper when establishment is not in existence (S.C.2J)
F 5A.1052 Out of termination of 23 employees, termination of 16 employees was upheld as
retrenchment compensation was paid and Sec. 25G was followed and those of the remaining seven
were set aside by the Tribunal for violation of Sec. 25G negativing the contention of the
management that the seven fell in different category. The Apex Court concurring with Labour
Court and High Court held that though for the purpose of pay scales there was gradation of
employees it does not put the remaining 7 workmen in different categories and as there is no trade
test to mark efficiency, no grade wise allocation of duties within the same category, therefore the 7
workmen fall in the same category and hence as the principle of last come first go was not followed
it was in violation, hence relief was moulded and as the establishment was no longer in existence
instead of reinstatement compensation of 1 year wages was awarded.
Workmen of Sudder Workshop of Jorehaut Tea Co. Ltd. v. The Management of Jorehaut Tea Co. Ltd.,
Respondent and vice versa, 1980 II LLJ 124 : 1980 (56) FJR 513 : 1980 (40) FLR 474 : 1980 II LLN 151 :
1980 LIC 742 : 1980 SCC (L&S) 427 : 1980 AIR (SC) 1454 : 1980 (3) SCC 406 (S.C.2J)
It must be remembered that the above provision which we have quoted insists on the rule being applied
category-wise. That is to say, those who fall in the same category shall suffer retrenchment only in
accordance with the principle of last come first go. The short point raised is that the seven workmen are
not in the same category. The finding of the Tribunal, concurred in by the High Court is that they fell in
the same category.It will be seen that when there is no trade test or anything to mark efficiency,
there is no basis for placing the workmen in different grades and when all the workmen of the same

2672

Chapter VA Lay-Off and Retrenchment

Sec. 25G

category are to do the same work inasmuch as by the managements own evidence there is no gradewise
allocation of duty within the same category. Although in the evidence the Management wanted to justify
their departure from the principle of last come first go there is nothing to show that such a reason was
recorded for deviating from the principle. In the circumstances of the case it cannot be said that the
managements selection of persons to be retrenched leaving the juniormost in same category was justified
and the reason now adduced for deviating from the principle cannot be accepted in the absence of the
reason being not recorded at the time of retrenchment. Further it will be also noticed that although there is
classification of workmen into grades (?) within the category, there is nothing to distinguish one
workman of one grade from another workman of another grade inasmuch as there is no allocation of
duties amongst the workmen of different grades in the category.It is a confusion or unwarranted
circumvention to contend that within the same category if grades for scales of pay based on length of
service etc., are evolved, that process amounts to creation of separate categories. This fallacy has been
rightly negatived by a detailed discussion in the Award. The High Court has avoided the pitfall and we
decline to accept the submission. The result is that the Award must hold good in regard to the illegally
retrenched seven workmen. (Page: 127, Para: 7)
Counsel contends that the Workshop is not in existence now and reinstatement is physically impossible.
Sri Mridul, for the workmen, states that a just solution by the Court in the given circumstances is
acceptable. We direct that, in lieu of reinstatement, one years wages, calculated on the scale sanctioned
be the Wage Board recommendations, for each such workman be paid. (Page: 128, Para: 10)

2. When workman failed to prove that juniors are retained (Del.HC)

5A.1053 Labour Courts award of granting compensation instead of reinstatement with back
wages was upheld by High Court as the workman failed to prove that juniors to the workman were
retained in service or Sec. 25H was violated and it was held that even in cases of illegal termination,
Labour Court could deny relief of reinstatement and award compensation instead. It was the
discretion of Labour Court which could be exercised as per the facts and circumstances of the case.
R. Mugum & Ors. v. P.O. Labour Court No. VII & Anr., 2001 I LLJ 420 (Del.HC)

XI. Jurisdiction and procedural issues connected with the disputes under the
Section
a) Tribunal to arrive at conclusion on compliance after examining lists and
verifying documentary evidence (Pat.DB)
5A.1054 The Tribunal had rightly concluded that the provisions of Sec. 25G had been complied
with after examining the lists filed by the employer and also verifying other documentary evidence.
Workmen of Pure Kustore Colliery (represented by Khan Mazdoor Congress) v. Central Government
Industrial Tribunal-cum-Labour Court, Jabalpur & Anr., 1969 I LLJ 126 : 1969 (18) FLR 297 (Pat.DB)
.With respect to.any relief. (Page: 128, Para: 2 & 3)

b) Tribunal cannot decide violation if same is not disputed (S.C.2J)

F 5A.1055 Since the question whether the principle of Last come, first go should be observed in
respect of retrenched employees was not raised before the tribunal by the union, Supreme Court
held that Tribunal was not competent to go into that question.
M/s. Indian Hume Pipe Co. Ltd. v. Their Workmen, 1969 I LLJ 242 : 1968 (34) FJR 232 : 1968 (17) FLR
145 : 1968 LIC 1229 : 1968 AIR (SC) 1002 (S.C.2J)
.The Tribunal had evidence before it of at least two workers of the Barakar factory having been
transferred in the past to other places. On the basis of this evidence, the Tribunal went into the question as
to whether the company even ii it decided to effect a retrenchment of the 12 workmen should have applied
the principle last come first go and found out whether these workmen could be transferred to other
places if they were senior to those retained. It is not disputed that no such plea was taken in the written

Sec. 25G Jurisdiction and procedural issues connected with the disputes under the Section

2673

statement of the union and with all respect to the Tribunal it was not competent to go into that question at
all. There is no evidence here as to the terms of employment of the workers in other units of the factory.
The nearest units to the Barakar factory were the one at Konnagore and the other at Patna at a distance of
200 miles from Barakar. The point not having been raised by the union and without going into the
question as to whether it was feasible for the appellant to effect such transfers, the Tribunal should not
have attempted to apply the principle of last come first go. (Page: 246, Para: 1)

c) Dispute as to whether retrenchment was as per Sec. 25G cannot be decided in

proceedings u/s. 33C (Mys.DB)
5A.1056 Entire Sec. 33C deals with the recovery of money as proceedings under the said
Section are proceedings in nature of execution, hence Labour Court in proceedings under the
Section was wrong in deciding the dispute as to whether retrenchment of employee was in
accordance with Sec. 25G
Vithal Parappa Murari v. President Athani Municipality & Anr., 1965-66 (28) FJR 530 : 1964 I LLJ 691 :
1964 (9) FLR 289 (Mys.DB)
The petitioner was a.in Section 25 G. (Page: 531, Para: 1)
The dispute between the.33 C (2) of the Act. (Page: 531, Para: 2)
There is No.under Section 33 C. (Page: 531, Para: 4)
.The approach adopted.25 G or not. (Page: 532, Para: 2)

d) Retrenchment whether as per Sec. 25F & 25G, can be determined by appellate
authority u/A.P Shops Act (AP.DB)
5A.1057 The Appellate Authority has u/s. 41 of the Andhra Pradesh Shops and Establishments
Act, the jurisdiction to determine whether retrenchment of employees was in accordance with Sec.
25F and 25G of the Industrial Disputes Act and hence retrenchment is set aside and employer is
directed to comply with these provisions.
N.V. Purnachandra Rao & Ors. v. Krishna District Cooperative Marketing Society Ltd., Vijayawada &
Ors., 1987 II LLJ 237 : 1987 I LLN 517 (AP.DB)
In fact.Act. (Page: 238, Para: 5)

e) Writ Court cannot decline to interfere with disputes as to violation of Sec. 25F
& 25G as they are regarding statutory rights and right to livelihood involving
factual investigation (Ori.DB)
5A.1058 Court refused to decide the question as to whether there was any violation of principle
of last come first go by corporation while retrenching employees, since determination of such
question involved factual investigation by adjudicating authority, not possible for Court exercising
writ jurisdiction.
State Transport Accounts Association & etc. v. Orissa State Road, 1992 I LLJ 397 : 1990 LIC 1378
(Ori.DB)
.Is the retrenchment.come first go. (Page: 402, Para: 8)
.No factual investigation.point is warranted. (Page: 411, Para: 22)

2674

Chapter VA Lay-Off and Retrenchment

Sec. 25G

5A.1059 Disputes about termination of service in violation of Sec. 25F and 25G are not cases to
enforce private rights or contractual rights or obligations but statutory rights and also right to
livelihood u/Art. 21 and hence the writ Court cannot decline to interfere with them on the ground
that they are domestic disputes under private law.
Pancha Mayurakashi Cotton Mills Employees Union & Ors. v. State of West Bengal & Ors., 1995 I LLN
1222 : 1996 LIC 328 : 1995 LLR 749 (Cal.DB)
.In our view.pleases. (Page: 1226/1227, Para: 8)
That apart.writ jurisdiction.. (Page: 1228, Para: 12)

f) Labour Court can draw adverse inference when management failed to

produce documentary evidence or cross examine workmen (S.C.2J)
F 5A.1060 Since the question whether the principle of Last come first go should be observed in
respect of retrenched employees was not raised before the tribunal by the union, Supreme Court
held that tribunal was not competent to go into that question.
M/s. Indian Hume Pipe Co. Ltd. v. Their Workmen, 1969 I LLJ 242 : 1968 (34) FJR 232 : 1968 (17) FLR
145 : 1968 LIC 1229 : 1968 AIR (SC) 1002 (S.C.2J)
.The Tribunal had evidence before it of at least two workers of the Barakar factory having been
transferred in the past to other places. On the basis of this evidence, the Tribunal went into the question as
to whether the company even if it decided to effect a retrenchment of the 12 workmen should have
applied the principle last come first go and found out whether these workmen could be transferred to
other places if they were senior to those retained. It is not disputed that no such plea was taken in the
written statement of the union and with all respect to the Tribunal it was not competent to go into that
question at all. There is no evidence here as to the terms of employment of the workers in other units of the
factory. The nearest units to the Barakar factory were the one at Konnagore and the other at Patna at a
distance of 200 miles from Barakar. The point not having been raised by the union and without going into
the question as to whether it was feasible for the appellant to effect such transfers, the Tribunal should not
have attempted to apply the principle of last come first go. (Page: 246, Para: 1)
5A.1061 Where Management failed to produce any documentary evidence nor cross examined
workmen who alleged that principle of last come first go was violated, it was held that an adverse
inference could be drawn by Court and hence order of reinstatement with back wages by Labour
Court after finding that workman was terminated while his juniors were retained was upheld.
State of Haryana v. Mani Ram & Anr., 2001 II LLJ 1489 : 2001 LIC 2563 (P&H.DB)
The Labour Court.against the petitioner. (Page: 1490, Para: 4)

g) Tribunal cannot set aside termination as violative of Sec. 25G when the
reference does not contain the said question (S.C.2J)
F 5A.1062 Where the services of a messenger who worked for a period of 87 days, was terminated
he filed a claim for wages not paid for some holidays and Sundays u/s. 33C(2) which was allowed as
full and final settlement. After a year he raised a dispute alleging illegality in his termination. The
Central Government referred the dispute to Tribunal in which there is only a reference to Sec. 25H
none to 25G. The Tribunal held termination illegal holding violation of Sec. 25G and 25H. The
High Court upheld the award. The Supreme Court set aside the judgments of Courts below for the
reason that the reference was not made for Sec. 25G, nor the employee ever raised a plea of
violation of Sec. 25G nor the Tribunal noticed the fact that the two persons were not appointed
after termination of the respondent for the post of messenger nor the fact that the employee did not
respond to several advertisements offering reemployment to retrenched employees. His only case

Sec. 25G

Settled law on the issues under this section

2675

was that Sec. 25H was violated. Tribunal therefore has no jurisdiction to go on a tangent and
declare violation of Sec. 25G. The view therefore that his services were wrongfully terminated was
set aside on multiple grounds besides that of 25G.
Regional Manager, SBI v. Rakesh Kumar Tewari, 2006 I LLJ 748 : 2006 (108) FLR 733 : : 2006 I LLN
898 : 2006 LIC 883 : 2006 I CLR 395 : 2006 LLR 209 : 2006 (1) SCC 530 : 2006 SCC (L&S) 143 (S.C.2J)
In the first appeal, the respondent had raised no allegation of violation of Section 25-G in his statement
of claim before the Industrial Tribunal. His only case was that Section 25-H of the Act had been violated.
Section 25-H unlike Section 25-G deals with a situation where the retrenchment is assumed to have been
validly made. In the circumstances, if the employer wishes to re-employ any employee, he must offer to
employ retrenched workmen first and give them preference over others. The two Sections viz. Sections
25-G and 25-H therefore operate in different fields and deal with two contradictory fact situations. The
Tribunal ignored the fact that there was no pleading by the respondent in support of an alleged violation
of Section 25-G. Indeed the order of reference by the Central Government did not also refer to Section
25-G but only to Section 25-H. In the circumstances it was not open to the Tribunal to fly off at a
tangent and conclude that the termination of service of the respondent was invalid because of any
violation of Section 25-G by the appellant. (Page: 752, Para: 15)
In the first appeal, the respondent had raised no allegation of violation of Section 25-G in his statement
of claim before the Industrial Tribunal. His only case was that Section 25-H of the Act had been violated.
Section 25-H unlike Section 25-G deals with a situation where the retrenchment is assumed to have been
validly made. In the circumstances, if the employer wishes to re-employ any employee, he must offer to
employ retrenched workmen first and give them preference over others. The two Sections viz. Sections
25-G and 25-H therefore operate in different fields and deal with two contradictory fact situations. The
Tribunal ignored the fact that there was no pleading by the respondent in support of an alleged violation
of Section 25-G. Indeed the order of reference by the Central Government did not also refer to Section
25-G but only to Section 25-H. In the circumstances it was not open to the Tribunal to fly off at a
tangent and conclude that the termination of service of the respondent was invalid because of any
violation of Section 25-G by the appellant. (Page: 752, Para: 15)
Besides, in the second appeal admittedly several persons had been appointed prior to the respondent on a
temporary basis. They would have prior rights to re-employment over the respondent on the basis of the
principles contained in Section 25-G or 25-H. (Page: 754, Para: 26)
The Tribunal also failed to deal with the issue raised by the appellant in the first appeal that no grievance
had been made nor any demand raised by the respondent either in his application under Section 33-C(2)
or otherwise that his services had been illegally terminated. It may be that the principles of res judicata
may not disqualify the respondent from contending that his termination was invalid, nevertheless
non-raising of the issue earlier was a factor which the Tribunal should have taken into consideration in
weighing the evidence. Significantly, the High Court upheld the decision of the Tribunal as if the
Tribunal had proceeded under Section 25-H. As we have said Section 25-H proceeds on the assumption
that the retrenchment has been validly made. Therefore, the High Courts view that the termination was
invalid under Section 25-H cannot in any event be sustained. (Page: 753, Para: 18)

XII. Settled law on the issues under this section

a) Burden of proof to justify deviation of principle of Last come first go is on the
employer (S.C.3J)
Issue Burden of proof to justify deviation of principle of Last come first go is on the employer who
has to furnish valid and sound reasons
Caes Law M/s. Swadesamitran Limited Madras v. Their Workmen, 1960 I LLJ 504 : 1960-61 (19)
FJR 46 : 1960 (1) FLR 337 : 1960 AIR (SC) 762 (S.C.3J) CA 483 of 1958 dt. 1-3-1960
Please see related ratio/s under the above citation in this section
Note: The case of Swadesimitran Limited settles the issue of burden of proof incase of deviation of the
principle of last come-first go

2676

Chapter VA Lay-Off and Retrenchment

Sec. 25H

L. Re-employment of retrenched workmen Sec. 25H

I. Attributes of the section
a) Re-employment is the generally recognized principle of the Courts even prior
to introduction of chapter V-A (S.C.3J)
F 5A.1063 Subsequent to retrenchment of an assistant storekeeper whose work was substantially
clerical in nature, company employed three clerks. Retrenchment and appointment of clerks took
place prior to introduction of Chapter V-A of the Act It was held that even before Sec. 25H was
added industrial adjudication generally recognised the principle that even if retrenchment was
made as a result of surplus it was necessary that employer should re-employ the workman when
such occasion arises and hence Tribunals award directing reemployment of concerned workman
was held justified.
Cawnpore Tannery Ltd., Kanpur v. S. Guha & Anr., 1961 II LLJ 110 : 1961 (3) FLR 237 : 1967 AIR (SC)
667 (S.C.3J)
.Mr. Sen argues that though under S. 25-H of the Industrial Disputes Act the principle has now
been statutorily recognized that a retrenched workman must be given an opportunity of re-employment
when the employer has to employ an additional hand, at the relevant time this provision was not in the
statute book and it was erroneous in law to have virtually given effect to the said statutory provision
retrospectively. In our opinion, this argument is misconceived. Even before 25-H was added to the Act
industrial adjudication generally recognized the principle that if an employer retrenched the services of
an employee on the ground that the employee in question had become surplus, it was necessary that
whenever the employer had occasion to employ another hand the retrenched workman should be given an
opportunity to join service. This principle was regarded as of general application in industrial
adjudication on the ground that it was based on considerations of fair play and justice..Therefore,
we do not think that Mr. Sen is justified in contending that the order passed in the present proceedings
against the appellant is contrary to industrial law. (Page: 112, Para: 3)
Note: This judgment was given prior to introduction of Chap. V-A in the Act

b) Benefit granted by the section is prospective and not retrospective (S.C.CB)

F 5A.1064 Sec. 25H or its principles would not be applicable for disputes prior to its enactment
and hence it was held that Tribunal acted without jurisdiction when it granted benefits of the said
section on ground of social justice to workmen retrenched before the provision came into force and
Tribunals award confirmed by Labour Appellate Tribunal and High Court was quashed.
Rai Sahib Ramdayal Ghasiram Oil Mills and Partnership Firm v. The Labour Appellate Tribunal & Anr.,
1963 II LLJ 65 : 196364 (24) FJR 266 : 1963 (6) FLR 266 : 1964 AIR (SC) 567 (S.C.CB)
We will, however, say a word about the ground upon which the Tribunal thought it fit to give the
retrenched workers the benefit of the provisions of S. 25-H on the ground of social justice. Wide though
the powers of an Industrial Tribunal are while adjudicating upon industrial disputes, it cannot arrogate to
itself powers which the legislature alone can confer or do something which the legislature has not
permitted to be done. Section 25-H provides for re-employment of retrenched workmen in certain
circumstances in preference to newcomers. But Act 43 of 1953 which enacted this provision clearly
provides in sub-sec. (2) of S. 1 thereof that it shall be deemed to have come into force on the 24th of
October, 1953. Clearly, therefore, the provisions of this section cannot apply to workmen who had been
retrenched before this provision came into force. The legislature did not intend the provisions to come
into force before October 24, 1953. When that is the mandate of the legislature no Tribunal has
jurisdiction on the basis of its own conception of social justice to ignore it and apply the provisions or its
underlying principle to a dispute which arose before the provisions came into force.
(Page: 67/68, Para: 2)
.we allow the appeal and quash the award of the Industrial Tribunal. (Page: 68, Para: 2)

Sec. 25H

Attributes of the section

2677

c) Section prevails over Nationalization Act (S.C.2J)

F 5A.1065 The obligations of employer as contemplated in Sec. 25H of Industrial Disputes Act is
not affected by Sec. 9 of Nationalisation Act and also since Sec. 9 to Sec. 33 of Nationalisation Act
pertains only to pecuniary obligation and not to other matters where as Sec. 25H of Industrial
Disputes Act merely creates an obligation to provide preference in reemployment to retrenched
workman, such obligation does not fall u/s. 9 of Nationalisation Act hence claim u/s. 25H made by
employees retrenched before Nationalisation Act was enacted was held maintainable.
Workmen (represented by Akhil Bhartiya Koyla Kamgar Union) v. Employers in relation to Management
of Industry colliery of Bharat Coking Coal, Ltd. and Ors., 2001 AIR (SC) 1994 : 2001 I LLJ 1400 : 2001
(98) FJR 652 : 2001 (89) FLR 552 : 2001 II CLR 1 : 2001 II LLN 819 : 2001 LIC 1397 : 2001 SCC (L&S)
641 : 2001 SCC (4) 55 (S.C.2J)
.if we examine the scope of the Nationalisation Act, we may notice that in respect of properties
that vested in the Central Government, as provided under Sections 8 and 9, the Nationalisation Act
provides immunity to the Central Government or its company from prior liabilities. Chapter III of the
Nationalisation Act provides for payment of amount under that Chapter. Chapter VI provides for
appointment of Commissioner of Payments who has an obligation to deal with the claims made under
Section 23 of the said Act to persons who make a claim before the Commissioner within 30 days from the
specified date. On examination of the provisions thereof, we may relate all those items that have been
mentioned in Section 9 to Section 23 of the Nationalisation Act. They all pertain to pecuniary or
commercial obligations and not to other matters. The claim made in the present case is one relating to
employment under Section 25-H of the Act which merely creates an obligation that a retrenched
workman will have preference when fresh appointments are made and an opportunity will have to be
given to them to offer themselves for re-employment. Such an obligation does not fall within the scope of
Section 9 of the Nationalisation Act. (Page: 1996, Para: 6)

d) Sec. 25H contains no provision stipulating that re-employment should be on

the former terms and conditions (Bom.DB)
5A.1066 Sec. 25H provides for preference to retrenched workmen in the matter of
re-employment but there is no provision which states that such re-employment should be on the
previous terms and conditions of service since it entails inclusion of such previous service for
computation of retrenchment compensation if he is again retrenched after re-employment which is
not the intention of the legislature. When the retrenched workman had been re-employed and paid
wages as a new entrant at a rate lower than that which he previously received, the Labour Court
has erred in awarding him the wages claimed at the rate previously received by him. The award is
set aside.
Indian Hume Pipe Company, Ltd. v. Bhimarao Baliram Gajbhiya, 1965 II LLJ 402 : 1966-67 (30) FJR
486 : 1967 (14) FLR 92 (Bom.DB)
Sec.:25H only gives.Conditions of Service. (Page: 404, Para: 1)
.The only right.the employment. (Page: 404, Para: 2)
All that S. 25H provides.the Labour Court. (Page: 404, Para: 5/6)

e) Section does not bar claim by workmen for bonus declared by company after
their retrenchment (Cal.DB)
5A.1067 Subsequent to retrenchment of certain workers and dismissal of one workman,
company issued a notification declaring additional profit bonus for financial year prior to such
retrenchment and dispute regarding claim for bonus by retrenched employees was taken up by
other workmen of establishment through their union, Court dismissed challenge to the validity of
reference by the management and held that definition of Industrial Dispute is very wide and as
workmen raising dispute in instant case have community of interest with retrenched workmen in

2678

Chapter VA Lay-Off and Retrenchment

Sec. 25H

general interest of labour because they put forward a claim which is similar as in the present case,
they are entitled to claim bonus and also since claim for bonus was not barred by Sec. 25F or 25H as
the relief claimed was not relief under the Act but relief under declaration made by the company.
East Asiastic & Allied Co. (India) Pvt. Ltd. v. Fourth Industrial Tribunal West Bengal & Ors., 1961 I LLJ
720 : 1961-62 (20) FLR 309 (Cal.DB)
.By a notice dated.21 November 1956.upon the appellant.fourth
Industrial Tribunal. (Page: 722, Para: 1)
.By an award published.of the Tribunal. (Page: 722, Para: 2)
.The question of consideration.therefore very wide. (Page: 723, Para: 4)
In the case before.the appellant company. (Page: 724, Para: 4)
.I have comeis an Industrial Dispute. (Page: 724, Para: 5)
Sri Chowdhury also argued.of the appeal fails. (Page: 724, Para: 7)

f) Sec. 25H does not prescribe any time limit for employment (Ker.DB)
5A.1068 The question whether the claim of an employee declared surplus and was retrenched
survives for re-employment u/s. 25H of The Industrial Disputes Act after a period of one year,
came for decision in the light of the sub rule (3) of rule 78 of Kerala Industrial Dispute Rules 1957
which does not allow the same beyond a period of one year. Striking down the said rule, the High
Court held that it is ultra vires and void to the parent Act in which Sec. 25H has no such limit, it
being a statutory and substantive right u/s. 25H, it cannot be circunscribed by limiting the liability
of the employer.
M/s. Peirce Leslie India Ltd. & etc. v. The Secretary, Centre of Indian Trade Unions, Kanpur & Anr.,
2006 (109) FLR 929 : 2007 II LLN 955 : 2006 LIC 725 (Ker.DB)

g) Retrenched employees to be preferred over others in re-employment but not

entitled to reinstatement with back-wages (P&H.HC)
5A.1069 As per Sec. 25H of the Act, retrenched employees are to be preferred over others but
that does not give them any right to be reinstated with back wages.
Jaswinder Singh Passai & Ors. v. The Registrar, Co-Operative Societies, Punjab Udyog Bldg,
Chandigarh & Anr., 1992 II LLJ 177 : 1992 LIC 549 : 1992 II CLR 707 (P&H.HC)

II. Applicability
a) Sec. 25H has only prospective in effect and not applicable to retrenchment
effected prior to introduction of the section (Cal.HC)
5A.1070 Retrenchment of certain workmen was effected prior to introduction of Sec. 25H of
the Act, employer not bound to comply with its provisions, as this section is prospective and not
retrospective. Both retrenchment and re employment of retrenched workmen have to take place
after operation of Sec. 25H of the Act.
West Bengal Metal Workers Union v. Jeewanlal, Ltd. & Ors., 1961 II LLJ 23 : 1960-61 (18) FJR 295
(Cal.HC)

Sec. 25H

Applicability

2679

b) Section applies to the transferee even if employee receives retrenchment

compensation prior to transfer of undertaking (S.C.2J)
F 5A.1071 Demand of the workmen who were retrenched by bhugatdih colliery long before it
was taken over under Coking Coal mines Act, 1972 to be re-employed as per Sec. 25H, Industrial
Tribunal directed the new Government owned company to re-employ these workmen u/s. 25H
whereas High Court denied this benefit because as per Sec. 9 and 17 of Nationalisation Act
previous liabilities were not to be taken over by the new management whereas the Apex Court held
that unlike in civil law, the industriual law takes a different view with regard to successor and
where there is transfer of business from one owner to another, the rights and obligations that
existed between the old management and their workers continue to exist vis--vis the new
management after the date of the transfer provided there is continuity of service and identity of
business which is a fact in the instant case and also since the workmen were paid compensation u/s.
25F much before the transfer but not under Sec. 25FF they are still entitled to re-employment u/s.
25H since business of the erstwhile company is continued and retained identity of business.
Workmen (represented by Akhil Bhartiya Koyla Kamgar Union) v. Employers in relation to Management
of Industry colliery of Bharat Coking Coal, Ltd. & Ors., 2001 I LLJ 1400 : 2001 (98) FJR 652 : 2001 (89)
FLR 552 : 2001 II CLR 1 : 2001 II LLN 819 : 2001 LIC 1397 : 2001 SCC (L&S) 641 : 2001 AIR (SC)
1994 : 2001 SCC (4) 55 (S.C.2J)
.The High Court next considered whether the respondent is a successor-in-interest of the colliery
and on examination of Section 9 of the Nationalisation Act, took the view that the Government or the
respondent cannot be considered to be successor-in-interest of the Old business inasmuch as only the
right, title and interest of the Coking coal mines have been acquired by the Government under the
Nationalisation Act free from all encumbrances; that as long as both assets and liabilities have not been
acquired, it cannot be stated to be a successor-in-interest in question unless statute provides for the
same.On reaching these conclusions, the writ petition was allowed and the Award of the Tribunal
is quashed.. (Page: 1401, Para: 3)
We have already adverted to the decision of this Court in Workmen v. Bharat Coking coal Ltd., & Ors.,.
(surpa) which examines the scope of section 9 of the Nationalisation Act.. Unlike civil law, Industrial
law takes a different view with regard to as to who is the successor who runs the said industry
subsequently. Where there is transfer of business from one owner to another, the rights and obligations
that existed between the old management and their workers continue to exist vis--vis the new
management after the date of the transfer provided there is continuity of service and identity of business.
For purpose of continuity of service, section 17 makes the necessary provisions. Thus a person on such
transfer becomes the owner of the concern and the employer of the employees of the establishment, and
as long as there is identity of business itself and retains its identity, it must be held that the respondent is
also a successor-in-interest to that extent. (Page: 1403, Para: 3)
Shri Sinha submitted that as soon as transfer had been effected under section 25-FF of the Act all the
employees became entitled to claim compensation will not be entitled to claim re-employment under
section 25-H of the Act. The workmen in question have been retrenched long before the colliery was
taken over by the respondents and, therefore, the principle stated in Anakapalle Co-operative
Agricultural and Industrial Society Ltd., (surpa) in this regard cannot be applied at all. The workmen had
been paid compensation only under section 25-F and not under section 25-FF of the Act on transfer of the
colliery to the present management. That case has not been pleaded or established. Hence, we do not think
that the line upon which the High Court has proceeded is correct. The order made by the High Court
deserves to be set aside and the Award made by the Tribunal will have to be restored.
(Page: 1403, Para: 9)
Note: The following case/s may also be referred
B. Ashok Ors. v. The Chairman, Food Corporation of India & Ors., 1996 LIC 2808 (AP.HC) and also
refer to the case of Maruti Udyog Ltd. v. Ram Lal & Ors., 2005 I LLJ 853 : 2005 (104) FLR 820 : 2005 I
LLN 1033 : 005 LIC 864 : 2005 I CLR 964 : 2005 SCC (L&S) 308 : 2005 AIR (SC) 851 : 2005 (2) SCC
638 (S.C.2J)

2680

Chapter VA Lay-Off and Retrenchment

Sec. 25H

c) Applicable to retrenched employee having 240 days of continuous service

(S.C.3J)
F 5A.1072 Termination of workmen completing 240 days of continuous work could be treated as
retrenchment and hence the employer was directed to maintain a list of workmen who offered to
accept re-employment and proceed to give them the benefit of re-employment without any claim
for backwages or seniority.
U.P. Bijli Karamchari Sangh & Anr. v. U.P. State Electricity Board & Anr., 1990 LIC 1676 : 1990 AIR
(SC) 2139 (S.C.3J)
It is not in dispute that workmen had completed 240 days of continuous work and could-be treated as
retrenched workmen. We dispose of these appeals with the direction that the U. P. Electricity Board,
respondent No. I shall maintain a list of the workmen who offer to accept the reemployment and porceed
to give them the benefit of reemployment without any claim for backwages or seniority if they approach
the Board within three months from now. There will be no order as to costs. (Page: 1676, Para: 4)

d) Applicable to continuing industries (S.C.CB)

F 5A.1073 The cognate Sec. 25G and 25H apply only to an existing or continuing industry hence
these sections would not apply in cases of closure.
Hariprasad Shivshankar Shukla & Anr. v. A. D. Divelkar & Anr., AND Barsi Light Railway Co. Ltd. v. K.
N. Joglekar & Anr., 1957 I LLJ 243 : 1956-57 (11) FJR 317 :1957 AIR (SC) 121 (S.C.CB)
Two other cognate ........... in a dead business. (Page: 249, Para: 2)
Note: Please see related ratio/s under the above citation u/s. 25G

e) Section is not restricted to retrenchment only under Sec. 25F (S.C.2J)

F 5A.1074 The Apex Court held that the Sec. 25H merely mentions re- employment of
retrenched workmen but it must relate to a wide meaning of the term retrenchment to include all
kinds of retrenchment mentioned in Chapter V A and Sec. 25F merely qualifies the category to
whom that section applies and therefore Sec. 25H cannot be restricted to cases of Sec. 25F but to all
cases of retrenchment not covered by Sec. 25F also.
Central Bank of India v. S.Satyam & Ors., 1996 II LLJ 820 : 1997 (90) FJR 106 : 1996 (74) FLR 2063 :
1997 II LLN 31 : 1996 LIC 2248 : 1996 II CLR 1095 : 1996 SCC(L&S) 1273 : 1996 AIR (SC) 2526 :
1996 (5) SCC 419 (S.C.2J)
.The question is whether there is any reason to curtail this definition of retrenchment while
construing the meaning of the expression retrenched workmen in Section 25-H. In other words, is the
provision for re-employment of retrenched workmen confined only to the category covered by Section
25-F and cannot be extended to all retrenched workmen including those not covered by Section 25-F, like
the respondents?. (Page: 823, Para: 4)
The plain language of Section 25-H speaks only of re-employment of retrenched workmen. The
ordinary meaning of the expression retrenched workmen must relate to the wide meaning of
retrenchment given in Section 2 (oo). Section 28-F also uses the word retrenchment but qualifies it by
use of the further words workman.who has been in continuous service for not less than one year.
Thus, section 25-F does not restrict the meaning of retrenchment but qualifies the category of retrenched
workmen covered therein by use of the further words workman.who has been in continuous
service for not less than one year. It is clear that Section 25-F applies to the retrenchment of a workman
who has been in continuous service for not less than one year and not to any workman who has been in
continuous service for less than one year; and it does not restrict or curtail the meaning of
retrenchment.Chapter V-A deals with all retrenchment while Section 25-F is confined only to the
mode of retrenchment of workmen in continuous service for not less than one year.
(Page: 826, Para: 9)

Sec. 25H

Applicability

2681

Chapter V-A providing for retrenchment is not enacted only for the benefit of the workmen to whom
Section 25-F applies but for all cases of retrenchment and, therefore, there is no reason to restrict
application of Section 25-H therein only to one category of retrenched workmen. We are, therefore,
unable to accept the contention of Shri Pai that a restricted meaning should be given to the word
retrenchment in Section 25-H. This contention is, therefore, rejected. (Page: 827, Para: 11)
Note: also refer to the following case/s
Oriental Bank of Commerce v. P.O. Central Government Industrial Tribunal & Anr., 1994 II LLJ 770 :
1993 (66) FLR (sum) 27 : 1993 I LLN 316 : 1993 I CLR 205 (Raj.HC) 4732 of 1991 dt. Sep. 20, 1991
Jaipur Development Authority v. Ram Sahai & Anr., 2007 I LLJ 429 : 2006 (111) FLR 1178 : 2007 I LLN
78 : 2007 LIC 274 : 2007 I CLR 221 : 2007 LLR 92 : 2007 (1) SCC (L&S) 518 (S.C.2J)

f) Applicable to retrenched temporary workmen (P&H.HC)

5A.1075 Sec. 25H is wide enough as it covers the case of retrenched workman who had been
recruited temporarily for a specific period on an adhoc basis. Employer cannot contend that a
retrenched temporary workman was not entitled to the benefit of Sec. 25H when regular workmen
have been recruited.
Nawanshahr Central Co-operative Bank Ltd. v. Labour Court, Jullundur & Anr., 1980 (57) FJR 206
(P&H.HC)

g) Not attracted in case of termination on account of closure since the

compensation paid is not one u/s. 25F (S.C.2J)
F 5A.1076 The services of three workmen of Maruti Ltd came to an end with the closure of the
undertaking in 1977. They are retrenched and paid one months compensation under a settlement.
After the lapse of three years in 1980 it was taken over by the Central Government and its right,
title and interest vested with a new company known as Maruti Udyog Ltd. The three retrenched
employees there upon claimed re-employment u/s. 25H of Industrial Disputes Act. The Labour
Court gave an award supporting the claim. The Single Judge set aside the award. But the Division
Bench upheld and restored the award. The Supreme Court while setting aside the judgment of the
Division Bench held that the workmen in question ceased to be in the employment of the company
before the appointed date of acquisition. It clarified that Sec. 25F will have no application in a case
of transfer of an undertaking or closure thereof as contemplated in Sec. 25FF and 25FFF of the Act
and in such an event Sec. 25H will have no application. The term as if used in Sec. 25FF and
25FFF merely envisages computation of compensation and not the other consequences flowing
there from. These sections are introduced only for a limited purpose and this legal fiction cannot be
pushed too far.
Maruti Udyog Ltd. v. Ram Lal & Ors., 2005 I LLJ 853 : 2005 (104) FLR 820 : 2005 I LLN 1033 : 2005
LIC 864 : 2005 I CLR 964 : 2005 SCC (L&S) 308 : 2005 AIR (SC) 851 : 2005 (2) SCC 638 (S.C.2J)
The Respondents herein who are three in number were appointed by Maruti Limited as Electrician,
Helper and Assistant Fitter with effect from 274 1974, 8.11.1973 and 8.4.1974 respectively. Their
services stood terminated by the said company on or about 25/26.8.1977 as a result of closure of the
factory. (Page: 854, Para: 2)
How far and to what extent the provisions of Section 25F of the 1947 Act would apply in case of transfer
of undertaking or closure thereof is the question involved in this appeal. A plain reading of the provisions
contained in Section 25FF and Section 25FFF of the 1947 Act leaves no manner of doubt that Section 25F
thereof is to apply only for the purpose of computation of compensation and for no other. The expression
as if used in Section 25FF and Section 25FFF of the 1947 Act is of great significance. The said term
merely envisages computation of compensation in terms of Section 25F of the 1947 Act and not the other
consequences flowing therefrom. Both Section 25FF and Section 25FFF provide for payment of
compensation only, in case of transfer or closure of the undertaking. Once a valid transfer or a valid
closure comes into effect, the relationship of employer and employee does not survive and ceases to exist.
Compensation is required to be paid to the workman as a consequence thereof and for no other purpose.
(Page: 858/859, Para: 21)

2682

Chapter VA Lay-Off and Retrenchment

Sec. 25H

Once it is held that Section 25F will have no application in a case of transfer of an undertaking or closure
thereof as contemplated in Section 25F and 25FFF of the 1947 Act, the logical corollary would be that in
such an event Section 25H will have no application. (Page: 859, Para: 25)
5A.1077 On closure, workmen were paid statutory compensation under Industrial Disputes
Act, subsequently after 2 years, it was re-started, notification for employment was issued but some
workmen were not employed, it was held that Sec. 25H is not applicable in case of bonafide closure.
Dau Dayal Bhatnagar & Ors. v. Raza Textiles Ltd. & Ors., 1978 (37) FLR 435 : 1979 LIC (Sum) 36
(All.DB)
It is true.workmen. (Page: 436, Para: 2)
.There it was.is incorrect. (Page: 436, Para: 3)
5A.1078 On closure of the undertaking the workmen received compensation as per as Sec. 25FFF
r/w. Sec. 25F. However, later the undertaking started operating under BIFR scheme and the
workmen claimed re-employment in the undertaking. On refusal by employer, matter gone to
Labour Court, which ordered reinstatement of workmen. Single Judge remitted the matter to
Labour Court, directing employer to pay Rs. 10,000 as an adhoc amount to each workmen. On
appeal, Division Bench set aside the order of the Single Judge and Labour Court and held that Sec.
25H would not be applicable since closure was never challenged by workmen and they received
compensation for such closure.
Management of Wavin India Ltd., Chennai v. Presiding Officer, Principal Labour Court, Chennai &
Anr., 2005 III LLJ 152 : 2005 (106) FLR 557 : 2005 III LLN 288 : 2005 LLR 931 (Mad.DB)
5A.1079 So far as reemployment of the workmen retrenched on account of closure of the
establishment is concerned u/s. 25FFF of the Act once such valid closure comes into effect under an
agreement u/s. 18(1) of the Act, the relationship of employer and employee does not survive. Under
such closure they are only entitled for compensation and that Sec. 25H cannot be invoked for
reemployment.
M/s. Peirce Leslie India Ltd. & etc. v. The Secretary, Centre of Indian Trade Unions, Kanpur & Anr.,
2006 (109) FLR 929 : 2007 II LLN 955 : 2006 LIC 725 (Ker.DB)
Note: also refer to the following case
Kalinga Tubes Ltd. Choudwar v. State of Orrisa & Ors., 1972 (42) FJR 450 : 1972 LLN 536 (Ori.DB)
Note: The Bombay High Court held a different view in the case of Oriental Rubber Industries Ltd., Pune
v. Somayya S. Bhandari & Ors., 2007 II CLR 637 : 2007 AIR (Bom.HC) 95 (Bom.HC)

h) Not applicable unless the offer of reemployment is clear and unambiguous

(Bom.HC)
Vasanta Kundlik Kumbhare & Ors. v. Industrial Court (Maharashtra) Nagpur Bench, Nagpur & Ors.,
1999 (82) FLR 533 : 1999 II LLN 145 : 1999 I CLR 880 (Bom.HC)

i) Not applicable in case of genuine transfer of establishment where workmen are

paid compensation (S.C.CB)
Anakapalle Cooperative Agricultural & Industrial Society Ltd. v. Their Workmen & Ors., 1962 II LLJ
621 : 1963-64 (24) FJR 101 : 1963 (6) FLR 1 : 1963 AIR (SC) 1489 (S.C.CB)
Note: Please see related ratio/s under the above citation in this section
Note: also refer to the case of Maruti Udyog Ltd. v. Ram Lal & Ors., 2005 I LLJ 853 : 2005 (104) FLR
820 : 2005 I LLN 1033 : 2005 LIC 864 : 2005 I CLR 964 : 2005 SCC (L&S) 308 : 2005 AIR (SC) 851 :
2005 (2) SCC 638 (S.C.2J)

Sec. 25H

Re-employment means

2683

j) Not applicable to an apprentice appointed under Apprenticeship Act even

though his apprenticeship training is extended as per the terms of agreement
(Raj.HC)
5A.1080 Training period of an apprentice under Apprenticeship Act, 1961 was extended to
enable him to complete his apprenticeship training as per one of the clauses of the agreement under
Apprenticeship Act, 1961. It was held that in such a case he cannot be treated as a workman even
after one years training. Thus, there is no question of violation of Sec. 25G and Sec. 25H of the Act.
Rajasthan State Road Transport Corporation v. Mahaveer Singh & Anr., 1999 II LLN 609 (Raj.HC)

III. Re-employment means

a) Taking back a retrenched worker in same category to which he belonged
before retrenchment (Pat.DB)
5A.1081 Since re-employment u/s. 25H means taking back a retrenched worker in same
category to which he belonged before retrenchment, and Rules 79 and 80 of Industrial Disputes
(Bihar) Rules also support this conclusion, it was held that Sec. 25H is not applicable in the instant
case where concerned workmen were re-employed in other category and hence Court quashed the
award of the Tribunal granting the workers same wages which they were getting before
retrenchment and remitted the matter for reconsideration.
Bihar Sugar Works Pachrukhi v. S.G. Prasad & Ors., 1969 LIC 1430 (Pat.DB)
.sixteen workmen were.Tribunal for adjudication. (Page: 1431, Para: 2)
.in a particular.support this conclusion.under Rule 79.the same
conclusion.re-employment within the meaning.of Section 25-H.The case
of.Industrial Disputes Act. (Page: 1432/1434, Para: 2)

b) Does not mean resumption of work by workmen after discharge during

lock-out (S.C.3J)
F 5A.1082 Where notice of the lockout interalia provides for discharge of workmen and a
subsequent notice of lifting of lockout and direction to all those workmen desirous to resume their
work would be construed to mean discharge for lockout period only and resumption of work in
response to such subsequent notice will not mean re-employment.
M/s. Indian Iron and Steel Co., Ltd. & Anr. v. Their Workmen, Abdul Samad Khan & Anr., AND M/s.
Indian Iron and Steel Co., Ltd. & Anr. v. Bamapada Mukherjee & Anr., AND Akka Hussain & Anr. v. M/s.
Indian Iron and Steel Co., Ltd. & Anr., 195758 (13) FJR 377 : 1958 I LLJ 260 : 1958 AIR (SC) 130
(S.C.3J)
.It is worthy of note that the first notice states inter alia that in consequence of the illegal strikes
which took place on several previous dates, the Management has no option but to declare a lock-out of the
entire Works except some special shifts with effect from Monday August 24, 1953; then in the
concluding portion the notice states- The services of all other workers shall be deemed to be discharged
with effect from Monday, August 24, 1953. The expression shall be deemed to be discharged has to be
read in the context of the declaration of a lock-out; such an expression is neither usually employed nor apt
to effectuate an intention to terminate the services of the workmen altogether. A lockout, according to
the definition in the Industrial Disputes Act, 1947, means the closing of a place of employment, or the
suspension of work, or the refusal by an employer to continue to employ any number of persons
employed by him. In this context, the notice when it said that the services of all other workers shall be
deemed to be discharged with effect from the date of the lock-out really meant that the Company refused
to employ the respondent workmen during the period when the place of employment was closed. The
second notice dated September 17, 1953, places the matter beyond any doubt..The expressions used
in the second notice clearly show that the intention was not re-employment of discharged workmen, but
resumption of work by employees who desired to resume work and whose employment had been stopped

2684

Chapter VA Lay-Off and Retrenchment

Sec. 25H

on account of the lock-out. The third notice dated September 23, 1953.If the three notices referred
to above are read together against the background of events which had happened prior to August 23,
1953, the only reasonable construction is the one adopted by the Tribunals, viz., that the employees
whose employment had been refused during the lockout were permitted to resume work without any
conditions if they reported for duty by a particular date, and on fulfilment of a condition if they reported
for duty after that date. (Page: 383/384, Para: 1)

IV. When Sec. 25H attracted

a) When workmen terminated in violation of the seniority principle (Ker.HC)
5A.1083 Employees were recruited through Employment Exchange by the corporation and
their services were terminated whereas other employees were employed on the same posts. The
employees challenged their termination on the basis that they should have been re-employed in
accordance with Sec. 25H. Labour Court upheld their contention. Even High Court held that they
can be re-employed on the same post as management failed to comply with the provisions of
Sec. 25G by following the principle of last in 1st go.
Krishnankutty & Ors. v. General Manager, Kerala State Road Transport Corporation, Trivandrum, &
Ors., 1982 I LLN 369 (Ker.HC)

b) When new employment was made subsequent to retrenchment (S.C.3J)

F 5A.1084 Direction by Industrial Tribunal to give re-employment to retrenched workman was
held justified as subsequent to retrenchment, new employment was made and thereby employer
violated provisions of Sec. 25H which was although not in force but recognised by Tribunal in
industrial adjudication.
Cawnpore Tannery Ltd., Kanpur v. S. Guha & Anr., 1961 II LLJ 110 : 1961 (3) FLR 237 : 1967 AIR (SC)
667 (S.C.3J)
.In our opinion, this argument is misconceived. Even before 25-H was added to the Act industrial
adjudication generally recognised the principle that if an employer retrenched the services of an
employee on the ground that the employee in question had become surplus, it was necessary that
whenever the employer had occasion to employ another hand the retrenched workman should be given an
opportunity to join service. This principle was regarded as of general application in industrial
adjudication on the ground that it was based on considerations of fairplay and justice, vide Shri
Vishuddananda Saraswathi Hospital v. Their Employees, 1949-1 Lab LJ 111: (IT-West Bengal); Kilburn
and Co. and MacNeill and Co. v. Their Employees, 1950-2 Lab LJ 125 (IT-West Bengal) and Sri
Annapurna Mil1s v. Certain Workmen, (1953) 1 Lab LJ 43 (L..A.T.I. All). It is true that in the case of
Annapurna Mills the discharge of the workmen was the result of the fact that the employer had closed his
business and it was held that with improvement in circumstances if the employer re-opened his business it
was necessary that he should take back in his employment his old employees. It would be noticed that the
principle which was applied to the case of an employer who re-opened his business which had been
closed by him is substantially the same principle which requires the employer to give an opportunity to
his retrenched workman when he has occasion to engage another servant. That is why the Labour
appellate Tribunal has observed that the principle now statutorily recognised by Section 25-H was, before
the Act was amended, recognised by industrial adjudicators in dealing with such question. Therefore, we
do not think that Mr. Sen is justified in contending that the order passed in the present proceedings against
the appellant is contrary to industrial law. (Page: 112, Para: 1)
Note: refer to the following case also
Oriental Bank of Commerce v. Union of India & Ors., 1998 II LLJ 112 : 1997 (76) FLR 393 : 1997 LLR
462 (All.HC)

Sec. 25H

When Sec. 25H attracted

2685

c) If employer after termination retained similarly placed employees and

appointed new candidates with similar qualifications (Raj.HC)
5A.1085 Though the workman was appointed on temporary basis, the termination of
workman was held illegal, arbitrary, and improper on the ground that after terminating the
workman employer retained similarly placed workmen and appointed new candidates with similar
education qualification as that of terminated workman and held that the termination was a
colourable exercise of power.
Ziley Singh v. State of Rajasthan & Anr., 1997 LIC 884 (Raj.HC)
.In the present.of termination. (Page: 885, Para: 3)
In the result.is set aside. (Page: 886, Para: 4)
Note: The following case/s may also be referred
Manohar Lal v. Central Warehosing Corporation & Anr., 1995 (87) FJR 494 : 1996 (72) FLR (Sum) 29
(P&H.HC)

d) When vacancy arises in other projects for the retrenched project employee and
the same is not offered to him (S.C.2J)
F 5A.1086 By considering the affidavit and submission of the employer the special leave petition
was disposed off by directing the company to offer appointment to the project employee retrenched
due to the closure of the project whose names figured in the panel prepared by company in any
project as and where vacancies arise as per the principle of first come last go.
Sufal Jha & Ors. v. Union of India & Ors., 2002 SCC (L&S) 1127 : 2002 IV LLJ 1039 : 2002 (9) SCC 693
(S.C.2J)
After considering this affidavit and submission, as noticed hereinabove, learned counsel for the
petitioners submits that this petition may be disposed of as settled with the direction that for considering
the offer of appointments to the petitioners herein, whose names figure in the panel, they may be offered
appointments in any of the projects in Madhya Pradesh, as and when the vacancies arise, of course based
on the date of the retrenchment of the employees concerned. Mr. Pandey, learned counsel appearing for
the respondents does not object to that course being adopted. We record the statements of the learned
counsel for the parties and dispose of the special leave petition in the terms as noticed above.
(Page: 1128, Para: 3)

e) When workmen worked for 240 days terminated and vacancy is available
(MP.DB)
5A.1087
available.

The workmen who worked for 240 days are entitled to reinstatement if vacancy is

Nagar Panchayat, Jaura & Anr. v. Ashok Kumar Gupta & Ors., 2000 (86) FLR 560 : 2000 II LLR 1204
(MP.DB)
Accordingly.reinstatement. (Page: 564, Para: 10)

2686

Chapter VA Lay-Off and Retrenchment

Sec. 25H

f) Even though the termination of the workmen does not fall under Sec. 25F
(Del.DB)
5A.1088 In view of Supreme Court judgement in Central Bank of India v. S. Satyam & Ors.,
1996 (77) FLR 2063 even the workmen not covered by Sec. 25F were held entitled to benefits of
Sec. 25H.
Government of N.C.T. of Delhi v. Balbir Singh & Ors., 1997 (76) FLR 569 : 1997 II LLN 830 : 1997 II
CLR 509 : 1997 LLR 628 (Del.DB)
.Whether a workman.Section 25-F. (Page: 570, Para: 1)

g) Even though no pleading as to violation of 25H is made. (Guj.DB)

5A.1089
denied.

Pleading as to violation of Sec. 25H even if not made, benefit of section cannot be

Gujarat State Machine Tools Corp. Ltd. v. Deepak J. Desai, 1994 III LLJ 848 : 1987 (55) FLR 527 : 1987
I LLN 714 : 1987 LIC 1361 : 1988 I CLR 24 (Guj.DB)
.That without.Act. (Page: 849, Para: 1)
.The argument.dispute Act. (Page: 850, Para: 5)

h) When employer failed to prove that workmans tenure is fixed and new
appointments were made subsequent to his termination (MP.HC)
5A.1090 The workmen had rendered 5 years of service. On termination, they moved Labour
Court, as others who were terminated were taken back by the employer and new appointments
were made. Employer contended that workmen were appointed for fixed term. Labour Court
awarded reinstatement as fixed term employment was not proved by employer nor any reason was
shown as to why they were not re-employed. High Court upheld the award of Labour Court.
Secretary General, Family Planning Association, & Ors. v. Rajesh Kumar & Anr., 2005 LLR 694
(MP.HC)

i) When liquidation of the establishment leading to termination of employees set

aside (Raj.DB)
5A.1091 Workmen whose services were terminated on liquidation of Bhandar were held
entitled to be reinstated from the date of setting aside of liquidation with continuity of service and
50% back wages.
Pramod Chand v. State of Rajasthan & Ors., 1997 III LLJ 879 : 1997 LIC 322 : 1997 II CLR 140
(Raj.DB)
Because of the reason.long period. (Page: 881, Para: 6)

j) Re-employment for want of required qualification cannot be denied when the

new post does not require any technical qualification considering his length of
service (AP.HC)
5A.1092 Employer denied re-absorption of the retrenched employee as he did not possess
prescribed educational qualification. It was held that the employer should re-consider the case as
the new post did not require technical skill and also that the employee had put considerable length
of service before retrenchment.
B. Ashok Ors. v. The Chairman, Food Corporation of India & Ors., 1996 LIC 2808 (AP.HC)

Sec. 25H

When Sec. 25H attracted

2687

k) Part-time sweeper who worked for ten years shall have preference in regular
vacancy to the outsiders (AP.HC)
5A.1093 Employment in regular vacancy in preference to outsiders was sought by the
employee (petitioner) who was a part time sweeper working on his job for 10 years. The High Court
held that in view of the provisions of Sec. 25H of the Industrial Disputes Act, 1947, he is entitled to
have preference over other persons in case of filling up of the future vacancies.
M. Ganga v. Zonal Manager, Indian Bank, Hyderabad & Ors., 2002 (94) FLR 460 : 2002 II CLR 713 :
2002 LLR 709 (AP.HC)

l) If Termination is due to closure consequent to financial difficulties but not due

to unavoidable circumstances (Bom.HC)
5A.1094 Where the closure is effected due to financial difficulties and not by reason of
unavoidable circumstances beyond the control of employer, Sec. 25H will have an application.
Vasanta Kundlik Kumbhare & Ors. v. Industrial Court (Maharashtra) Nagpur Bench, Nagpur & Ors.,
1999 (82) FLR 533 : 1999 II LLN 145 : 1999 I CLR 880 (Bom.HC)

m) When an employee terminated and others were appointed on the same post
subsequently (P&H.HC)
5A.1095 Services of the technical assistant of a Bank was terminated on the ground that there
was no vacant post. Later on, two persons were appointed for the said post on contract basis and
then they were regularized. Held that u/s. 25H of the Act, it is incumbent upon Bank to offer it first
to the employee who was terminated. Direction was given to reinstate the employee.
Sangeet Karla v. State pf Haryana & Ors., 2002 I LLJ 1041 : 2001 LIC 3427 (P&H.HC)

n) When fresh advertisement was issued to recruit fresh hands while temporary
workman was discharged from duty in vioation of section (Guj.DB)
5A.1096 Temporary workman was discharged from duty without complying with statutory
requirement and fresh advertisement was issued to recruit fresh hands, it was held to be in
violation of 25H hence reinstatement was granted.
Gujarat State Machine Tools Corp. Ltd. v. Deepak J. Desai, 1994 III LLJ 848 : 1987 (55) FLR 527 : 1987
I LLN 714 : 1987 LIC 1361 : 1988 I CLR 24 (Guj.DB)
The appellant.in service. (Page: 850, Para: 4)

o) When retrenched workers are not intimated of vacancy and juniors are
employed instead (Guj.DB)
5A.1097 Re-employing juniors and failure to intimate vacancy to the workman retrenched is
violative of Sec. 25H.
Union of India & Anr. v. Bachu Badia, 2002 I LLN 1098 (Guj.DB)
It is evened.re-employed. (Page: 1099, Para: 5)
Note: Also refer to the following case in the above context
When new workmen recruited in place of retrenched workmen.
Indian Refrigeration Industries & Anr. v. R.K. Baweja & Ors., 1981 (42) FLR 381 : 1981 II LLN 177
(Del.HC)
Ram Chandra Yadav & Anr. v. Rajasthan State Road Transport Corpn. & Anr., 1990 II LLJ 408 : 1990
(60) FLR 267 (Raj.DB)

2688

Chapter VA Lay-Off and Retrenchment

Sec. 25H

p) When retrenched workers though after a valid closure were not re-employed
by the same employer when he restarted manufacturing activity even after a
lapse of thirteen years (Bom.HC)
5A.1098 The employer was a manufacturer of rubber products and issued notice of closure in
November 1980 due to bad financial condition. The union filed a complaint for unfair labour
practice which was dismissed by the Industrial Court holding that the closure is legal and valid.
After majority of workmen accepted the dues and compensation in 1982, the validity of closure was
agitated by the union again in the Industrial Court, High Court and finally by an SLP in Supreme
Court between 1982 to 1995. The Apex Court upheld the validity of closure. Subsequently, union
filed a complaint in the Court alleging that the employer restarted manufacturing activity at Pune
employing some previous employees and the respondent workmen too similarly be employed. The
complaint was allowed which was challenged in the High Court. The workman sought
re-employment u/s. 25H which was opposed by the employer. The High Court held that where the
same company which was closed, had started its manufacturing activities at a different place (at
Pune) more so during the pendency of SLP on the question of validity of closure and the legal entity
which existed at the time of closure continuous to be in existence when the manufacturing activity
restarted, the employer is under an obligation to offer re-employment u/s. 25H. However the order
of reinstatement of the complaints with 50% back wages was set aside as Sec. 25H does not confer
automatic employment on the complaint.
Oriental Rubber Industries Ltd., Pune v. Somayya S. Bhandari & Ors.,
(Bom.HC) 95 (Bom.HC)

2007 II CLR 637 : 2007 AIR

The petitioner.Court.thereafter.complaint. (Page: 639, Para: 2)

Thereafter.back wages. (Page: 640, Para: 6)
.on 8-3-1999.respondents. (Page: 640, Para: 7)
In my view.present case. (Page: 647, Para: 26)
.Taking.activity afresh. (Page: 648, Para: 28)
Another.workmen. (Page: 648, Para: 29)
He only question.application.similarly.wages. (Page: 648 & 649, Para: 32)
In view.set aside. (Page: 649, Para: 34)
Note: Also refer to the case of Maruti Udyog Ltd. v. Ram Lal & Ors., 2005 I LLJ 853 : 2005 (104) FLR
820 : 2005 I LLN 1033 : 2005 LIC 864 : 2005 I CLR 964 : 2005 SCC (L&S) 308 : 2005 AIR (SC) 851 :
2005 (2) SCC 638 (S.C.2J)

q) Even though the workman who did not serve for one year since it covers all
cases of retrenchment (Del.DB)
5A.1099 The benefit of re-employment under the section is available in all cases of
retrenchment and not only in case of those covered by Sec. 25F and hence a workman who did not
serve for one year is also entitled to the benefit of re-employment.
Government of N.C.T. of Delhi v. Hospital Employees Union, Delhi, 1997 II LLJ 516 (Del.DB)
.This point.section 25F. (Page: 516, Para: 1)
Note: also refer to Central Bank of India v. S.Satyam & Ors., 1996 II LLJ 820 : 1997 (90) FJR 106 : 1996
(74) FLR 2063 : 1997 II LLN 31 : 1996 LIC 2248 : 1996 II CLR 1095 : 1996 SCC(L&S) 1273 : 1996 AIR
(SC) 2526 : 1996 (5) SCC 419 (S.C.2J) which lays down that Sec. 25H is not restricted to cases falling
u/s. 25F.

Sec. 25H

When not attracted/not violated

2689

V. When not attracted/not violated

a) When compensation is paid consequent up on transfer (S.C.CB)
F 5A.1100 Sec. 25H is not applicable to cases of genuine transfer of establishment nor general
principles underlying provisions of Sec. 25H can be invoked when dealing with claim of
reemployment of transferors workmen by the transferees concern because double benefit, in the
form of compensation u/s. 25FF in the hands of transferor and immediate re-employment is not
based on considerations of fair play and justice. It is held that the claim of retrenchment
compensation and re-employment simultaneously is inconsistent, rather they are only entitled to
get compensation as provided by legislature as a measure of social justice.
Anakapalle Cooperative Agricultural & Industrial Society Ltd. v. Their Workmen & Ors., 1963 AIR
(SC) 1489 : 1962 II LLJ 621 : 1963-64 (24) FJR 101 : 1963 (6) FLR 1 (S.C.CB)
Mr. Chari then argues that though in terms Section 25-H may not apply to the present case, the general
principle underlying the provisions of the said section should be invoked in dealing with the claim
made.In our opinion, this argument is misconceived. Once we reach the conclusion that in the
case of a transfer of any undertaking the Legislature has by Section 25-FF provided for payment of
compensation to the employees on the clear and distinct basis that their services have been terminated by
such transfer, it is difficult to see how any questions of fair play or social justice would justify the claim by
the respondents that they ought to be re-employed by the appellant.In the present case, however,
the position is entirely different. As soon as the transfer is effected under Section 25-FF, all employees are
entitled to claim compensation, unless, of course, the case of transfer falls under the proviso, and if Mr.
Chari is right, these workmen who have been paid compensation are immediately entitled to claim
re-employment from the transferee. This double benefit in the form of payment of compensation and
immediate re-employment cannot be said to be based on any considerations of fair play or justice. Fair
play and justice obviously mean fair play and social justice to both the parties. It would we think, not be
fair that the vendor should pay compensation to his employees on the ground that the transfer brings
about the termination of their services, and the vendee should be asked to take them back on the ground
that the principles of social justice require him to do so.if the transfer or is by statute required to
pay retrenchment compensation to his workmen it would be anomalous to suggest that the workmen who
received compensation are entitled to claim immediate re-employment in the concern at the hands of the
transferee. The contention that in cases of this kind, the workmen must get retrenchment compensation
and re-employment almost simulataneously is inconsistent with the very basis of the concept of
retrenchment compensation. (Page: 1496/1497, Para: 20)

b) When new persons were appointed as per rules but not to posts identical to that
of daily wagers who were retrenched (Raj.HC)
5A.1101 Fresh recruitment while terminating the services of a workman was challenged and
the Tribunal favoured the bank. The High Court observed that there is no violation of Sec. 25H of
the Act. Termination of daily wagers as a consequence of regular appointment made according to
the rules does not amount to such violation. Therefore, the retrenched workman was held entitled
to opportunity of reemployment only in cases where appointments are made identical to that held
by him.
Union Bank Employees Association v. Union Bank of India, 2003 (96) FLR 48 : 2002 IV LLN 1063 (Raj.HC)

c) When workmen unable to prove that management re-employed others in their

category (Jhar.DB)
5A.1102 In a claim for reemployment under the section, since workmen were unable to prove
that Management has reemployed persons in their category, award of the arbitrator directing their
re-employment was held to be illegal.
Eastern Coalfields Ltd. v. S.K. Mukhopadhyaya, Arbitrator & Dy. Chief Commissioner (Central)
Dhanbad & Ors., 2003 (98) FLR 1174 : 2003 III LLJ 1082 : 2004 V LLN (Sum) 55 : 2004 V LLN (Sum)
56 : 2004 I CLR 224 (Jhar.DB)

2690

Chapter VA Lay-Off and Retrenchment

Sec. 25H

The workmen claimed.Disputes Act 1947. (Page: 1177, Para: 10)

Here in this.by the union. (Page: 1177, Para: 11)
.We are of.set aside. (Page: 1178, Para: 12)
Note: also refer to the following case
Eastern Coalfield Ltd. v. S.K. Mukhopadhyaya, Arbitrator & Deputy Chief Commissioner., 2003 (98)
FLR 1174 : 2003 III LLJ 1082 : 2004 V LLN (Sum) 55 : 2004 V LLN (Sum) 56 : 2004 I CLR 224 (Jhar.DB)
Netaji Subhash Institute of Technology v. Dilkhush Bairwa & Anr., 2006 (110) FLR 719 : 2006 LLR 847
(Del.HC)

d) When workmen give up their right to re-employment on revival of the

undertaking by virtue of a settlement u/s. 18 (Karn.DB)
5A.1103 Subsequent to closure, a valid settlement between the management and the workmen,
wherein workmen forgo their right of re-employment in case of revival of undertaking in lieu of
ex-gratia payment, is not void or against public policy and also operates as a bar for
re-employment.
M/s. Systems Manufacturing Ltd. v. Systems Employees Association, 2001 II LLJ 112 : 2001 LIC 939
(Karn.DB)
A bare reading of Section 25H of the Act clearly shows that this section has been engrafted for the
benefit of retrenched workmen who, if so desired, will have a right of reemployment in case the
management intends to employ any other person for its purpose. This section though cast a statutory
obligation on the employer to offer reemployment to a retrenched workman but it does not bind the
workman to necessarily avail the right of reemployment conferred on him. It lies within his volition to
either exercise the right of reemployment or waive the same. Waiver can be for various reasons and
considerations. Such a waiver even pursuant to agreement with the employer cannot be said to be void as
offending any public policy or statutory provision. (Page: 119, Para: 35)
.the workmen had entered into industrial settlement waiving their rights of seeking
reemployment for a valuable consideration. In law, this settlement could not have been avoided by the
parties to it, including workmen, since as per Section 18 of the Act it is binding on them. Neither the
Tribunal nor this Court could have held that the terms of the settlement touching upon this aspect were
void and null. We are of the considered opinion that in view of the settlement between the parties to which
they were statutorily bound, even if it be presumed that the manufacturing unit at Bangalore had been
restarted, still the present workmen could not have claimed any right of reemployment in terms of
Section 25H of the Act. Accordingly, it has to be held that the Tribunal has seriously erred in passing the
award in their favour. (Page: 119/120, Para: 36)

e) When employees retrenched consequent upon closure (Ori.DB)

5A.1104 Sec. 25H is applicable only when workmen are retrenched u/s. 2(oo) and in the instant
case where a factory partially resumed production after some months of closure the employment
came to an end as a result of closure i.e. it is case of termination and not discharge of surplus labour
and hence Sec. 25H does not apply on contingency of partial resumption of work therefore the
claim of old workmen to be reemployed u/s. 25H is untenable and thus reference made by State
Government on the matter being without jurisdiction was quashed.
Kalinga Tubes Ltd. Choudwar v. State of Orrisa & Ors., 1972 (42) FJR 450 : 1972 LLN 536 (Ori.DB)
The question referred.has no application.Relief claimed.make the reference.
(Page: 451, Para: 2)
The legal position.to such a contingency. (Page: 453, Para: 2)
We are satisfied.quash that order. (Page: 453, Para: 5)

Sec. 25H

When not attracted/not violated

2691

Note: The Bombay High Court held a different view in the case of Oriental Rubber Industries Ltd., Pune
v. Somayya S. Bhandari & Ors., 2007 II CLR 637 : 2007 AIR (Bom.HC) 95 (Bom.HC) but Apex Court in
the case of Maruti Udyog Ltd. v. Ram Lal & Ors., 2005 I LLJ 853 : 2005 (104) FLR 820 : 2005 I LLN
1033 : 2005 LIC 864 : 2005 I CLR 964 : 2005 SCC (L&S) 308 : 2005 AIR (SC) 851 : 2005 (2) SCC 638
(S.C.2J)held a different view

f) When workmen who had not completed 240 days of service failed to prove
violation of Sec. 25H and 25G (Raj.DB)
5A.1105 As employee had worked for less than 240 days and failed to prove violation of Sec. 25H
and 25G employee was not held to be entitled for any relief.
Ram Gopal Saini v. Labour Court No. II, Jaipur & Ors., 2001 I LLJ 1230 : 2001 (89) FLR 778 : 2001 LIC
610 : 2001 I CLR 907 : 2001 LLR 747 (Raj.DB)
In this.employee. (Page: 1230, Para: 2)
We are.the purpose. (Page: 1231, Para: 8)
5A.1106 Workman who had worked for not more than 89 days claimed retrenchment
compensation since they were not in continuous service of 240 days, as per Sec. 25B were held not
entitled retrenchment compensation and benefit of Sec. 25H
Indian Airlines v. Sebastian., 1994 III LLJ 498 : 1991 (62) FLR 755 : 1991 I LLN 247 : 1991 I CLR 43 :
1991 LLR 488 (Ker.DB)
Thus it is.S. 256. (Page: 503, Para: 8)
In our opinion.unsustainable. (Page: 506, Para: 15)
Note: The following case may be referred in the above context
S. Selvaraj v. Presiding Officer, Labour Court, Trichirapalli & Anr.2006 LIC 4183 (Mad. HC)
Also refer to Central Bank of India v. S. Satyam & Ors., 1996 II LLJ 820 : 1997 (90) FJR 106 : 1996 (74)
FLR 2063 : 1997 II LLN 31 : 1996 LIC 2248 : 1996 II CLR 1095 : 1996 SCC (L&S) 1273 : 1996 AIR
(SC) 2526 : 1996 (5) SCC 419 (S.C.2J) which lays down that Sec. 25H is not restricted to cases falling
u/s. 25F

g) When workman terminated due to non-renewal of contract of service

(Mad.DB)
5A.1107 Where service of workman is terminated due to non-renewal of contract of service, he
is not entitled to seek re-employment u/s. 25H.
Asservadham & Ors. v. Indian Airlines Ltd., 2003 I LLJ 1091 : 2003 (102) FJR 209 : 2003 (97) FLR 313
(Mad.DB)
Therefore, if.of their service. (Page: 1094, Para: 12)

h) If employee appointed on fixed tenure was terminated on expiry of term

(Raj.HC)
5A.1108 A lower division clerk was appointed on daily wage on a temporary basis for a fixed
period, his services were terminated on expiry of contractual period. In this case, it was held that
termination was not retrenchment, hence the question of re-employment does not arise, moreover
the name was also not sponsored by employment exchange and hence, he cannot claim legal right of
continuity in preference over other employees sponsored by employment exchange.
Chagan Lal Sethi v. The State of Rajasthan & Anr., 1996 I LLN 222 : 1995 LIC 2316 (Raj.HC)

2692

Chapter VA Lay-Off and Retrenchment

Sec. 25H

Note: also refer to the following case

Rajveer Singh v. Labour Court & Anr., 1998 III LLJ (Sum) 143 : 1996 I CLR 724 : 1996 LLR 61 (Raj.HC)

i) When workman is terminated for unsuitability for employment (Karn.DB)

5A.1109
vacancies.

Workmen retrenched on ground of unsuitability need not be preferred for future

Hutchiah v. Karnataka State Road Transport Corporation & Ors., 1983 I LLJ 30 : 1982 (61) FJR 207 :
1983 I LLN 205 (Karn.DB)
That being.suitability. (Page: 41, Para: 17)

j) Re-employment cannot be claimed against successor-in-interest when

workman ceased to be in employment prior to the date of acquisition (S.C.2J)
Maruti Udyog Ltd. v. Ram Lal & Ors., 2005 I LLJ 853 : 2005 (104) FLR 820 : 2005 I LLN 1033 : 2005
LIC 864 : 2005 I CLR 964 : 2005 SCC (L&S) 308 : 2005 AIR (SC) 851 : 2005 (2) SCC 638 (S.C.2J)
Note: Please see related ratio/s under the above citation in this section

k) When consequent upon closure employer-employee relationship is severed

(Del.HC)
.
5A.1110 On closure of factory workman were paid closure compensation and the management
entered into settlement with workman whereby they accepted benefits including compensation.
Factory was re-opened after 8 months. Held that by settlement, relationship of master and servant
was agreed to be terminated. Hence, Sec. 25H is not attracted. Therefore they will not be entitled to
re-employment.

Pac Workers Union (Regd.) v. Secretary (Labour) & Ors., 2003 II LLJ 966 : 2003 (98) FLR 872 : 2003 II
LLN 961 (Del.HC)

l) When intimation to ex-employees is given in newspapers when it is not

practical to intimate each worker through registered post (P&H.DB)
5A.1111 On reopening of an industrial establishment after one and half year of its closure, it
would have not be practically possible to intimate each and every ex-worker through Registered
Post. There cannot be any violation of any rule if the public notice is given to the ex-employees in
newspaper.
Ombir Singh & Ors. v. Haryana Breweries Ltd. & Anr., 2007 (112) FLR 256 : 2007 LLR 257 (P&H.DB)

VI. Procedure for re-employment

a) Offer of re-employment to be clear and unambiguous (Bom.HC)
5A.1112 Undertaking was closed in 1993 and re-opened in 1995. Notice of re-employment
given in two versions, Hindi and English. In Hindi version, there was no reference to the offer that
employment would be given on the same terms and conditions as existed at the time of closure and
workers were asked to sign them but refused to give copy of the same. There was dispute with
regard to wages offered on reemployment. Industrial Court dismissed the complaint considering
pendency of dispute regarding legality of closure. High Court held that in order that it should be an
offer within the meaning of Sec. 25H, it must be clear and unambiguous offer. The Hindi version
does not refer to re-employment on the same terms and conditions prevailing at the time of closure
which is at variance with English version. Hence offer cannot be said to be clear and unambiguous
offer within the meaning of Sec. 25H.
Vasanta Kundlik Kumbhare & Ors. v. Industrial Court (Maharashtra) Nagpur Bench, Nagpur & Ors.,
1999 (82) FLR 533 : 1999 II LLN 145 : 1999 I CLR 880 (Bom.HC)

Sec. 25H

Procedure for re-employmentd

2693

b) Casual employees who were terminated to be given preference (S.C.2J)

F 5A.1113 Applying the principle of last come first go it was held that the casual employees who
were terminated should be considered for appointment in preference to others.
Municipal Corporation, & Anr. v. Veer Singh Rajput & Ors., 1998 II LLJ 627 : 1998 (80) FLR 847 : 1998
SCC (L&S) 1178 : 1998 (9) SCC 258 (S.C.2J)
It is further urged by the respondents that recently the appellant Corporation has appointed some
employees on daily wages. In the absence of any instructions, learned counsel for the appellant is not in a
position to state before us if this is so and the circumstances in which such appointments have been made.
But if casual workers or daily rated workers are now being appointed by the appellant Corporation, in
fairness to the respondents whose services were terminated on the principal of last come first go, they
should be considered for appointment on daily wages in preference to others by waiving the age bar (if
necessary) if they are otherwise qualified and eligible for the post. (Page: 629, Para: 4)
Note: please refer to the following case
Krishna Murari Prasad & Anr. v. Allahabad Bank & Ors., 1992 (81) FJR 107 : 1992 (65) FLR 584
(Pat.HC)

c) Workmen on labour register to be preferred to outsiders for engaging them as

casual labour (Ori.DB)
5A.1114 Where employer issued advertisement for outsiders for engaging them as casual
labour and did not consider the casual workers named in the live casual labour Register, High
Court held that the workman on the register be preferred over others and directed employer to
consider their absorption.
Union of India & Ors. v. Sudarsan Barik & Ors. Etc., 2006 LIC 2928 : 2007 I LLJ 111 (Ori.DB)

d) Right of re-employment accrues to workmen when terminated u/s. 25F before

transfer of management but not u/s. 25FF (S.C.2J)
Workmen (represented by Akhil Bhartiya Koyla Kamgar Union) v. Employers in relation to Management
of Industry colliery of Bharat Coking Coal, Ltd. & Ors., 2001 I LLJ 1400 : 2001 (98) FJR 652 : 2001 (89)
FLR 552 : 2001 II CLR 1 : 2001 II LLN 819 : 2001 LIC 1397 : 2001 SCC (L&S) 641 : 2001 AIR (SC)
1994 : 2001 SCC (4) 55 (S.C.2J)
Note: Please see related ratio/s under the above citation u/s. 25FF

e) Re-employment to be as per the category of work performed by the employee

but not as per the designation born by him (S.C.3J)
Cawnpore Tannery Ltd., Kanpur v. S. Guha & Anr., 1961 II LLJ 110 : 1961 (3) FLR 237 : 1967 AIR (SC)
667 (S.C.3J)
Note: this judgement was given prior to introduction of Chap. V-A in the Act. For Text and Ratio please
see related ratio/s under the above citation in this section

f) Re-employment cannot be granted by Labour Court where the reference is

about determination of violation of the section (S.C.2J)
F 5A.1115 The service of the employee was terminated after working from 6.8.94 to 17.11.94. He
alleged that in his place his junior was appointed. He raised an industrial dispute u/s. 25H of the
Act. A reference was made to Industrial Tribunal. The Tribunal gave on award reinstating him
with 50% back wages on the ground that the employer failed to keep proper seniority register of
workman. The High Court upheld the decision of Labour Court. The Supreme Court set aside the
award and held that it had exceeded its jurisdiction in which it passed an award going beyond the

2694

Chapter VA Lay-Off and Retrenchment

Sec. 25H

terms of reference. The issue here is not termination but determination of the violation of Sec. 25H,
only because the employer did not maintain and preserve register it would not mean that the
employee would be entitled to be reinstated without establishing the violation of Sec. 25H of the Act
and in any event Labour Court did not arrive at a finding that the termination of services of the
appellant was illegally and when Sec. 25H was not violated the provisions of Sec. 25 of Industrial
Dispute Act 1947 was not required to be complied with.
State Bank of Bikaner & Jaipur v. Om Prakash Sharma, 2006 II LLJ 1046 : 2006 (109) FLR 1203 : 2006
III LLN 766 : 2006 LLR 747 : 2006 (5) SCC 123 : 2006 SCC (L&S) 930 (S.C.2J)
.Rule 77 may be mandatory in character as was urged by Mr. Calla, but, only because the
appellant herein did not maintain the prescribed register, the same by itself would not mean that the
respondent herein would be entitled to be reinstated in service with back wages without establishing that
the provision of Section 25H was violated. The termination of the workman was not in issue. In any event,
the Labour Court did not arrive at a finding that the termination of services of the appellant was illegal. He
had not completed 240 days of service. In that view of the matter, the provisions of Section 25F of the
Industrial Disputes Act, 1947 was not required to be complied with. (Page: 1049, Para: 11)
The specific issue which was, therefore, referred for determination by the Labour Court, related to the
dispute as regards violation of Section 25H of the Act. If the said provisions had not been found to be
violated, the question of setting aside the order of termination by the Labour Court did not and could not
arise. The learned Single Judge proceeded on the premise that the High Court, in exercise of its writ
jurisdiction, cannot sit in appeal over the Award of the Labour Court. The learned Single Judge was right,
but then, only because the jurisdiction of the High Court, while exercising of its power of judicial review
was limited, it would not mean that even a jurisdictional error could not have been corrected. The
provisions of Article 226 and 227 of the Constitution of India would be attracted if the inferior Tribunal
has, inter alia, committed a jurisdictional error. What would be the ground for judicial review, in regard to
the orders passed by an inferior Tribunal is no longer a res integra. (Page: 1049, Para: 12)
In the instant case, the Award of the Labour Court suffers from an illegality, which appears on the face of
the record. The jurisdiction of the Labour Court emanated from the order of the reference. It could not
have passed an order going beyond the terms of the reference. While passing the Award, if the Labour
Court exceeds its jurisdiction, the Award must be held to be suffering from a jurisdictional error. It was
capable of being corrected by the High Court in exercise of its power of judicial review. The High Court,
therefore, clearly fell in error in refusing to exercise its jurisdiction. The Award and the judgment of the
High Court, therefore, cannot be sustained. Consequently, the appeal is allowed and the judgment of the
High Court is set aside. The award is set aside to the extent of order of reinstatement with back
wages. (Page: 1049, Para: 14)

g) Workman need not fulfill age criterion on re-employment if he was within the
prescribed age limit at initial recruitment (AP.HC)
5A.1116 The question of applying for age qualification at the time of re-absorption into service
does not arise if an employee is well within the prescribed age limit at the time of initial recruitment.
B. Ashok Ors. v. The Chairman, Food Corporation of India & Ors., 1996 LIC 2808 (AP.HC)

h) Sec. 25H does not prescribe any order in which the workmen are to be
re-employed and employer not bound to offer re-employment on the basis of
length of the service or seniority of retrenched workmen (IC)
5A.1117 Sec. 25G states that employer shall ordinarily retrench the workman who was the last
person to be employed in that category, but does not confer any right upon a worker to get
re-employed according to the length of their service on the date of retrenchment. Also employer is
not bound to offer re-employment according to seniority of retrenched workmen as employer is
under obligation to employ those retrenched workmen who offer them for employment above
other persons. Sec. 25H does not prescrine any order in which the employer is required to offer
employment.
Nurmohmed Ismail v. Calico Mills Company, Ltd, 1957 II LLJ 89 (IC)

Sec. 25H

Admissibility of Benefits on re-employment

2695

VII. Admissibility of Benefits on re-employment

a) Higher salary of past employment is not admissible when re-employment is on
fresh conditions (S.C.2J)
F 5A.1118 Where the employee was appointed by way of fresh appointment letter, he cannot
claim any benefit of increment or higher salary as a matter of right for service rendered in the
erstwhile employment.
Cement Corporation of India Ltd. v. Presiding Officer, Industrial Tribunal-cum-Labour Court & Anr.,
2001 II LLJ 231 : 2002 (94) FLR 455 (S.C.2J)
Thereafter, a fresh agreement appears to have been entered into between appellant management of the
workmen to recruit ex-employees of the erstwhile Dalmia Dadri Cement Ltd. factory on certain terms and
conditions in the light of Section 25-H of the Industrial Disputes Act. (Page: 232, Para: 6)
In the circumstances, it is clear that the respondent No. 2 started a fresh career under the appellant on
being appointed with effect from December 18, 1981. He may have been given benefit of certain
increments with higher start of salary but that circumstances would not confer any right upon him to make
any claim for any advantage for period of service rendered in the erstwhile employment from which he
was retrenched. Therefore the Labour Court could not order payment of three additional increments. In
that view of the matter the order made by the Labour Court shall stand quashed to that extent only.
However, since responded No. 2 has retired form service now, whatever payments may have been made
to him need not be recovered. (Page: 232, Para: 7)

b) Retrenched workers are entitled to emoluments prevailing at the time of

retrenchment (AP.DB)
5A.1119 Even though Sec. 25H does not specifically provide for payment of same wages that
prevailed prior to retrenchment, it was held when retrenched workers are reemployed they are
entitled to same emoluments as at the time of re-employment because considering the dictionary
meaning of re-employment and also considering that the object of Act requires liberal
construction as obligation of employer to employ workmen on same emoluments is implicit in
concept of re-employment and therefore in instant case award of Labour Court as upheld by Single
Judge that management was not justified in offering wages at lower scale (scale of unskilled
workers) than what they were getting at time of retrenchment (Skilled and Semi Skilled scale) was
upheld.
Indian Hume Pipe Co. Ltd. v. Labour Court, Andhra Pradesh, & Ors., 1963-64 (24) FJR 333 : 1963 I LLJ
770 (AP.DB)
.Labour Court heldwere getting before. (Page: 336, Para: 4)
.The vital question.to retrenched workmen. (Page: 339, Para: 2)
We are afraid.structure at his will. (Page: 339, Para: 3)
.it follows that.the Labour Court. (Page: 340, Para: 1)

c) Back wages not admissible on re-employment (Jhar.DB)

5A.1120

Workmen reemployed under the section cannot claim back wages.

Eastern Coalfields Ltd. v. S.K. Mukhopadhyaya, Arbitrator & Dy. Chief Commissioner (Central)
Dhanbad & Ors., 2003 (98) FLR 1174 : 2003 III LLJ 1082 : 2004 V LLN (Sum) 55 : 2004 V LLN (Sum)
56 : 2004 I CLR 224 (Jhar.DB)
A retrenched employee.equated with reinstatement. (Page: 1178, Para: 14)

2696

Chapter VA Lay-Off and Retrenchment

Sec. 25H

.even if the.the same category. (Page: 1178, Para: 15)

.we are of.has no merit. (Page: 1178, Para: 16)

d) Back wages not admissible when workers refrained from joining work of their
own accord due to lower wages (AP.DB)
5A.1121 In case of re-employment whether workmen are entitled to back wages (for the period
of non-employment) depends on whether employer was in any way responsible for workmen not
joining service and in the instant case, workmen refrained from taking up work on their own
accord because they were offered lower wages than those at the time of retrenchment the grant of
back wages by Labour Court was quashed because workmen could have resumed work and then
raised an industrial dispute regarding wages.
Indian Hume Pipe Co. Ltd. v. Labour Court, Andhra Pradesh, & Ors., 1963-64 (24) FJR 333 : 1963 I LLJ
770 (AP.DB)
The question whether.not joining service. (Page: 340, Para: 3)
.The Labour Court did.respect to the wage structure. (Page: 341, Para: 1)
It is not stated.not resuming their work.without deciding that question.remarks
made by us. (Page: 341, Para: 2)

VIII. Remedy for violation of the section

a) Workman aggrieved can raise an industrial dispute (S.C.3J)
F 5A.1122 Definition of Industrial Dispute is wide enough to justify the union of which a
retrenched workman is a member to raise a dispute regarding propriety of retrenchment as well as
propriety of managements conduct by not reemploying him when the occasion arose.
Cawnpore Tannery Ltd., Kanpur v. S. Guha & Anr., 1961 II LLJ 110 : 1961 (3) FLR 237 : 1967 AIR (SC)
667 (S.C.3J)
Mr. Sen for the appellant has urged before us three points. He contends that there was and could be no
industrial dispute between the appellant and the respondents in regard to the retrenchment of Mr. Guha,
because Mr. Guha had been retrenched as long ago as May 1951, and had ceased to be the workman of the
appellant. In our opinion, there is no substance in this contention. Even after Mr. Guha was retrenched, it
would have been open to the Union of which Mr. Guha was a member to raise a dispute about his
non-employment.the definition of the term industrial dispute is wide enough to justify the
Union of which Mr. Guha as well as the propriety of the appellants conduct in not giving him an
opportunity to be re-employed when an occasion for the employment when an occasion for the
employment of an additional clerk arose. That is the view taken by the Labour Appellate Tribunal and we
are not satisfied that the said conclusion is erroneous in law so as to justify our interference.
(Page: 112, Para: 2)
Note: this judgement was given prior to introduction of Chap. V-A in the Act
5A.1123 Industrial Dispute u/s. 2(k) includes disputes connected with the employment or
condition of labour of any person and where a retrenched worker is denied re-employment u/s. 25H
he can raise an industrial dispute regarding his reemployment and also regarding rates of wages on
which he should be re-employed and hence finding of the Labour Court that reference was in order
was upheld.
Indian Hume Pipe Co. Ltd. v. Labour Court, Andhra Pradesh, & Ors., 1963-64 (24) FJR 333 : 1963 I LLJ
770 (AP.DB)

Sec. 25H

Remedy for violation of the section

2697

.the Labour Court.was in order. (Page: 336, Para: 4)

.what is contended.section 10(1) of the Act. (Page: 336, Para: 8)
We find it difficult.read with section 2(k) of the Act. (Page: 337, Para: 5)
In our judgement, the.gathered from section 25-H. (Page: 337, Para: 8)
.The terms of employment and.under section Industrial Dispute of the Act.
(Page: 339, Para: 6)

b) High Court can direct reference of the dispute if conciliation report fails to
mention violation of the section (Pat.DB)
5A.1124 In view of failure report by Conciliation Officer mentioning violation of Sec. 25H by
the Bank while terminating services of temporary workmen and also violating Rules 77 and 78 and
resorting to unfair labour practice of dispensing with the services of workmen appointed for short
time and making fresh appointments on same job, High Court directed Government to refer the
dispute for adjudication.
Giridhar Gopal Tiwary & Ors. v. Union of India & Ors., 1992 (81) FJR 197 : 1992 (65) FLR 519 : 1992 I
LLN 654 :1992 LIC 1616 : 1992 I CLR 992 : 1992 LLR 767 (Pat.DB)
.The main question.as the Act. (Page: 198, Para: 1)
.In the present.recruited by them. (Page: 203, Para: 2)
According to rules.appointing
proceedings. (Page: 203, Para: 3)

fresh

hands.After

the.of

conciliation

After having.Industrial Tribunal. (Page: 206, Para: 2)

Note: also refer to the following case/s
Delta Wires Pvt. Ltd. v. General Labour Union (Reg.Flag) & Anr., 1995 II LLJ 287 : 1996 (72) FLR 26 :
1995 (87) FJR 410 : 1995 II LLN 962 : 1995 LIC 103 (Bom.HC)

c) Reference cannot be rejected when there is clear finding of conciliation officer

that section was violated (Pat.DB)
5A.1125 Rejection of reference on ground of no dispute exists was set aside in view of clear
finding by conciliation officer that service of workmen were terminated in violation of Sec. 25H
since employer did not comply with Rule 76, 76A, 77 and 78 of Industrial Dispute Rules 1957.
Gridhar Gopal Tiwary & Ors. v. Union of India & Ors., 1993 III LLJ 293 (Pat.DB)
The grievance.(annexure5). (Page: 293, Para: 3)
In order to.earlier days. (Page: 297, Para: 16)
After considering.Bihar. (Page: 297, Para: 17)
After.today. (Page: 298, Para: 20)

2698

Chapter VA Lay-Off and Retrenchment

Sec. 25H

d) Writ will not lie when employees did not respond to employers advertisement
and delayed in applying for writ (Pat.DB)
5A.1126 As the employees did not file applications pursuant to the advertisement regarding
recruitment and also as there was a delay in filing writ application by which time selection process
was completed; no writ of mandamus, as sought by temporary employees with 240 days continuous
service, could be issued for seeking preferential appointment as per Sec. 25H.
Achyutanand Singh & Ors. v. Union of India & Ors., 1996 III LLJ 1208 : 1996 (88) FJR 63 : 1996 (73)
FLR 1415 : 1996 I LLN 213 (Pat.DB)
The petitioners in.of 12 months. (Page: 1208, Para: 1)
There cannot.of mandamus. (Page: 1210, Para: 18)
The petitioners.Act. (Page: 1210, Para: 19)

e) Workmen entitled to reinstatement since termination of workmens services

become illegal if Sec. 25F and 25H violated (AP.DB)
5A.1127 Non-fulfillment of provisions of Sec. 25F and 25H would render termination of
services of workmen services illegal and hence Court held that the workmen would be entitled to
reinstatement.
M. Nagabhushanam & Ors. v. Twin Cities Steel Re-rolling Mills Pvt. Ltd. & Ors., 2003 II LLJ 692 : 2003
(97) FLR 963 : 2003 LLR 687 (AP.DB)
The learned single.was not bonafide. (Page: 695, Para: 23)
.We are of.the industrial establishment. (Page: 697, Para: 34)

f) Does not entitle workman appointed under a scheme to reinstatement when

scheme itself came to an end (S.C.2J)
State of Rajasthan v. Sarjeet Singh & Anr., 2007 I LLJ 236 : 2006 (111) FLR 908 : 2007 I LLN 122 : 2007
I CLR 126 : 2007 LLR 7 : 2006 SCC (L&S) 2032 : 2006 (8) SCC 508 (S.C.2J)
Note: Please see related ratio/s under the above citation in Sec. 25G

IX. Issues pertaining to jurisdiction and proceedings under the Section

a) Proceedings regarding validity of retrenchment would not operate as res
judicata in the complaint of unfair labour practice (Bom.DB)
5A.1128 Question as to whether retrenchment was valid or not and whether retrenched
workman had to be offered employment, was rejected by the Court in earlier proceeding it was
held this would not operate as resjudicata in the complaint of unfair labour practice against
employer in not reemploying retrenched workman on restarting manufacturing activities and
hence dismissal of complaint by industrial Court on ground of res judicata was held incorrect.
Maharashtra General Kamgar Union, Ghatkopar (East), Bombay v. Universal Dyeing & Printing Works
& Anr., 1997 II LLJ 1097 : 1996 III LLN 453 : 1996 LIC 1705 : 1996 LLR 833 (Bom.DB)
Once the.in correct. (Page: 1100, Para: 5)

Sec. 25J

Scope and ambit of the section

2699

b) Civil Court has no jurisdiction to give relief to illegally removed workman,

which is available under Chapter VA (Bom.DB)
5A.1129 The relief claimed in a civil suit by the workman who had been illegally removed on
closure of the factory and had not been re-employed on its restarting, were available to him u/s.
25FFF and 25H of the Industrial Disputes Act. The reliefs which fall within the scope of Chapter
VA but not involving an industrial dispute impliedly bar the jurisdiction of the Civil Court.Hence
the order of the appellate Court quashing the trial Courts decree which dismissed the suit for want
of jurisdiction, is set aside.
Pigment Lakes & Chemical Manufacturing Co. Pvt. Ltd. v. Sitaram Kashiram Konde, 1969 (19) FLR 71
(Bom.DB)
In our opinion.Relief Act. (Page: 73, Para: 3)
In view of.present suit. (Page: 74, T.L.: 8)
Thus the Act.impliedly barred. (Page: 75, T.L.: 11)
It is therefore.of the Act. (Page: 75, B.L.: 9)
Whether a suit.impliedly barred. (Page: 76, Para: 2)
The Industrial.to support. (Page: 77, T.L.: 20)

M. Recovery of Moneys due from employers under this Chapter Sec. 25-I

N. Effect of laws inconsistent with this chapter Sec. 25J

I. Scope and ambit of the section
a) Provisions of the chapter prevail over rules made under Article 309 (MP.DB)
5A.1130 Since Sec. 25J provides that provisions of chapter will prevail over any law,
inconsistent therewith though service rules are made u/Art. 309 of the Constitution, provisions of
the chapter will prevail over it.
Union of India v. P.O. Central Industrial Tribunal, Jabalpur & Ors., 1996 (74) FLR 2222 (MP.DB)
.it was contended.employees. (Page: 2223, Para: 3)

b) Central Act overrides Sec. 2(s) of U.P. Industrial Disputes Act (S.C.2J)
F 5A.1131 Placing reliance on Sec. 2(s) of U.P. Industrial Disputes Act instead of Sec. 2(oo) which
clearly includes termination due to ill-health was held improper since by virtue of Sec. 25J of the
Central Act providing for the overriding effect of Central Act on the State Act.
Hindalco Industries Ltd. v. Labour Court, Varanasi & Anr., 2002 SCC (L&S) 187 : 2002 IV LLJ 837 :
2001 (9) SCC 178 (S.C.2J)
Learned counsel of the respondent workman submitted at the outset that the workman has crossed the
age of superannuation long back and therefore, no interference under Article 136 of the Constitution is
called for with the High Courts order granting relief to this workman. Learned counsel for the
respondent in all fairness did not dispute the fact that the provision of Section 25-J in the Industrial
Dispute Act, 1947 was overlooked by the High Court which makes it clear that the definition of

2700

Chapter VA Lay-Off and Retrenchment

Sec. 25J

retrenchment contained in the Central Act, i.e., Section 2(oo) of the Industrial Dispute Act, 1947 is to
be the basis for deciding the controversy in the present case. The definition of retrenchment contained
in Section 2(oo) clearly says that retrenchment does not include termination of the service of a workman
on the ground of continued ill health. It cannot be disputed that the unfitness of the respondent on
medical ground to function as a driver of a motor vehicle on account of failing eyesight could not
therefore, be treated as retrenchment to permit grant of the relief which the High Court has given to him. It
is necessary to say so for the purpose of correcting the conclusion reached by the High Court on this
question of law. (Page: 187, Para: 2)
.The High Court accepted the above finding of fact about the medical unfitness of the respondent
to function as driver of a motor vehicle, but placing reliance on the definition of retrenchment
contained in Section 2(s) of the U.P. Industrial Disputes Act, 1947 instead of the definition contained in
Section 2(oo) of the Industrial Dispute Act, 1947, it has held that such a termination amounts to
retrenchment. Accordingly, the High Court has granted the relief of reinstatement with full back wages to
the respondent. This appeal by special leave is against that judgment (Page: 187, Para: 1)
Having said as above, we are inclined to accept the submission of learned counsel for the respondent that
the relief granted by way of payment already received by the respondent may not be set aside since he has
already crossed the age of superannuation on account of which the question of his continuance in service
does not arise. (Page: 188, Para: 3)

c) Government instructions contrary to the provisions of Chapter V-A cannot

sustain (P&H.DB)
5A.1132 The Government instructions being inconsistent with the substantive provisions of
law i.e. Sec. 25F of the Act such instructions will not have the force of law and therefore cannot
override Sec. 25F. In fact u/s. 25J of the Act, the provisions of Chapter V-A shall have effect not
withstanding anything inconsistent therewith contained in any other law. Therefore when the
workman has completed 240 days in 12 calendar months preceding the date of termination, his
services cannot be terminated without complying with the provisions of Sec. 25F of the Act.
Senior Medical Officer, Incharge, Primary Health Centre, Dudhan Sadan, Patiala v. Sukhwinder Singh
& Anr., 2007 (112) FLR 1135 : 2007 LLR 484 (P&H.DB)

d) Sec. 25J does not grant compensation in addition to gratuity in the nature of
retrenchment compensation payable under a scheme (S.C.3J)
F 5A.1133 Construing proviso to Sec. 25J(1) it was held that provisions of the section was only
intended to ensure that compensation under any award is not reduced to the level provided u/s.
25F, and it was not the intention of the legislature that workmen on retrenchment should get
compensation twice, once under the Act and again also under the scheme in force providing for
compensation in the name of gratuity for retrenchment and Appellate Tribunals award granting
compensation twice was set aside and Tribunals order restored.
M/s. The Brahmachari Research Institute, Calcutta v. Their workmen, 1959 II LLJ 840 : 1959-60 (17)
FJR 282 : 1960 AIR (SC) 257 (S.C.3J)
.a proviso to sub-s. (1), which says that nothing contained in the Act shall have effect to derogate
from any right which a workman has under any award for the time being in operation or any contract with
the employer. This clearly means that if by any award or contract a workman is entitled to something
more as retrenchment compensation than is provided by S. 25F, the workman will be entitled to get that
and the provisions of S. 25F will not derogate from that right of the workman, i.e., will not reduce the
compensation provided under the award or contract to the level provided under S. 25F. It is obvious that it
was not the intention of the legislature that a workman on retrenchment should get compensation twice,
i.e., once under the Act and once under the scheme in force providing for retrenchment compensation, by
whatever name the payment might have been called. We cannot agree with the Appellate Tribunal that the
payment of gratuity in the event of retrenchment has nothing to do with the compensation payable to a
workman under S. 25F of the Act. The Appellate Tribunal seems to have been carried away by the word
gratuity used in the Award and it seems to think that gratuity on retrenchment is something different
from compensation on retrenchment. We are of opinion that this is not correct. Whether it is called

Sec. 25J

Applicability

2701

gratuity or compensation, it is in substance a payment to the workman on account of retrenchment;

and if a scheme like the present specifically provides payment for retrenchment as defined in S. 2(oo), we
see no justification for compelling that payment twice over, once under S. 25F and again under the
scheme in force in the concern.it must be held that gratuity provided therein on retrenchment is
nothing more nor less than retrenchment compensation provided under S. 25F of the Act, and the
workmen are only entitled to one or the other, whichever is more advantageous to them in view of S.
25J.We therefore allow the appeal, set aside, the decision of the Appellate Tribunal and restore
that of the Industrial Tribunal in this matter. (Page: 843/844, Para: 1)

e) Non-obstante clause is not applicable to the whole of Chapter VB (S.C.2J)

F 5A.1134 Non-obstante clause in Sec. 25J does not apply to entire Chapter VB and though
Chapter VAs applicability in relation to establishments covered by Chap.VB is permissible, it
cannot make Sec. 25-O of Central Act prevail over State Act.
Engineering Kamgar Union v. Electro Steels Castings Ltd., 2004 II LLJ 815 : 2004 (101) FLR 1086 :
2004 LIC 2356 : 2004 SCC (L&S) 782 : 2004 AIR (SC) 2401 : 2004 (6) SCC 36 (S.C.2J)
.Section 25J is not a part of Chapter VB. By reason of Section 25S, the provisions of Chapter
VA were made applicable only in relation to certain establishments referred to in Chapter VB. The
Parliament has deliberately used the words so far as may be which would also indicate that provisions
of Chapter VB were to apply to the industrial establishments mentioned in Chapter VA. The non
obstante clause contained in Section 25J does not apply to the entire Chapter VB. Applicability of
Chapter VA in relation to the industrial establishments covered by Chapter VB in terms of Section
25J visavis Section 25S is permissible but the contention cannot be taken any further so as to make
Section 25O of the Central Act prevail over the State Act by taking recourse to the non obstante clause.
Non obstante clause contained in Section 25J is, thus, required to be kept confined to Chapter VA only
and in that view of the matter we have no hesitation in holding that Chapter VB does not have an
overriding effect over the State Act. (Page: 826, Para: 39)

II. Applicability
a) Chapter VA applies to cases of retrenchment under A.P. Shops and
Establishment Act (S.C.2J)
F 5A.1135 By virtue of Sec. 25J(2) of Industrial Disputes Act 1947 u/s. 41(1) and (3) of Andhra
Pradesh Shop and Establishment Act 1966, Chapter V-A of Central Act will be applicable to decide
rights and liabilities arising out of retrenchment.
The Krishna Dist. Co-operative Marketing Society Ltd., Vijayawada, Petitioner v. N.V. Purnachandra
Rao & Anr., 1987 II LLJ 365 : 1987 (71) FJR 482 : 1987 (55) FLR 498 : 1987 II LLN 671 : 1987 LIC 1651
: 1987 AIR (SC) 1960 : 1987 (4) SCC 99 (S.C.2J)
We respectfully agree with the rule of construction expounded in the above passage. By enacting
Section 25J (2) Parliament, perhaps, intended that the rights and liabilities arising out of lay-off and
retrenchment should be uniform throughout India where the Central Act was in force and did not wish
that the States should have their own laws inconsistent with the Central law. If really the State Legislature
intended that it should have a law of its own regarding the rights and liabilities arising out of retrenchment
it would have expressly provided for it and submitted the Bill for the assent of the President. The State
Legislature has not done so in this case. Section 40 of the State Act deals with terminations of service
generally. In the above situation we cannot agree with the contention based on Article 254 (2) of the
Constitution since it is not made out that there is any implied repugnancy between the Central law and the
State law. (Page: 372, Para: 9)
.It is thus seen that Section 41 (1) and Section 41(3) of the State Act prescribed alternative
authorities to settle a dispute arising out of a retrenchment. Those authorities may exercise their
jurisdiction under the State Act but they have to decide such dispute in accordance with the provisions of
Chapter V-A. Sub-section (2) of Section 25J of the Central Act which makes the procedure for
securing relief under Section 41(1) and (3) of the State Act available to a workman emphasises that the
rights and liabilities arising out of retrenchment shall be decided in accordance with Chapter V-A of the

2702

Chapter VA Lay-Off and Retrenchment

Sec. 25J

Central Act. The said rights can be enforced by a workman personally by himself filing an appeal under
Section 41 (1) of the State Act. It is not necessary that a reference should be sought under the Central Act
by collective action of workers. The effect of Section 25J(2) of the Central Act.
(Page: 371, Para: 6)

b) Section renders Chapter VA applicable to retrenchment and lay-off benefits to

temporary employees (S.C.3J)
F 5A.1136 Since workmen of Beas project were employed on temporary basis they were not
entitled to any relief under Payment of Gratuity Act, Employees State Insurance Scheme or any
retrenchment benefits but Supreme Court held that these work charged employees have right as
industrial employees and provisions of chapter VA Lay-off and retrenchment shall have
applicability in their case.
Jaswant Singh & Ors. v. Union of India & Ors., 1979 II LLJ 371 : 1980 I LLN 44 : 1979 LIC 1362 : 1980
SCC (L&S) 36 : 1980 AIR (SC) 115 : 1979 (4) SCC 440 (S.C.3J)
The entire strength of Labour employed for the purposes of the Beas Project was work-charged. The
work-charged employees are engaged on a temporary basis and their appointments are made for the
execution of a specified work. From the very nature of their employment, their services automatically
come to an end on the completion of the works for the sole purpose of which they are employed. They do
not get any relief under the payment of Gratuity Act nor do they receive any retrenchment benefits or any
benefits under the Employees State Insurance Scheme. (Page: 382, Para: 43)
But though the work-charged employees are denied these benefits, they are industrial workers and are
entitled to the benefits of the provisions contained in the Industrial Disputes Act. (Page: 382,
Para: 44)
. In fact the work-charged employees possess a unique right as industrial employees since, by
reasons of S.25 J (1) of the Industrial Disputes Act, the provisions of Chapter VA, Lay-off and
retrenchment , have effect notwithstanding anything inconsistent therewith contained in any other law
including standing orders made under the Industrial Employment (Standing Orders) Act, 1946.
(Page: 382, Para: 45)

c) Section extends the benefits of retrenchment and lay-off to establishments

covered by Bombay Industrial Relations Act (Bom.HC)
5A.1137 The workman was terminated in violation of Sec. 25F. Labour Court refused to grant
any relief on the ground that establishment was covered by BIR Act, thus workman could not
invoke provisions of Industrial Disputes Act. High Court set aside the order of Industrial Court
and upheld the order of Labour Court since as per Sec. 25J provisions of Industrial Disputes Act
would apply in cases of lay-off and retrenchment notwithstanding anything inconsistent contained
in any other law and held that Sec. 25F was applicable in the instant case.
Pramod Prabhakar Kulkarni v. Balasaheb Desai Sahakari Sakhar Karkhana Ltd & Anr., 2006 I LLJ 616
: 2005 III CLR 482 (Bom.HC)

d) Does not apply if termination is due to retirement as per Standing Orders (S.C.2J)
F 5A.1138 While employing canteen employees, letter of appointment and Standing Orders
inter-alia provided that service could be terminated by payment of one month wages to the
employee and all employees in statutory canteen are temporary employees, subsequently Clause
3A was introduced in standing orders fixing age of retirement at 60 years and maximum
permissible service at 15 years, the services of concerned workmen were relinquished on
completion of 15 years and it was held that termination is valid and not in violation of Sec. 25J since
chapter VA does not provide for the period of service of employees, hence Sec. 25J has no
application.
Harmohinder Singh v. Kharga Canteen, 2001 (99) FJR 416 : 2001 (90) FLR 548 : 2001 III LLN 715 :
2001 LIC 2391 : 2001 II CLR 927 : 2001 LLR 849 : 2001 SCC (5) 540 : 2001 AIR (SC) 2681 (S.C.2J)

Sec. 25J

Expressions and meanings

2703

.The appellant was appointed as a salesman by the respondent canteen on 1st June, 1974 and
subsequently as a cashier on 9th August, 1975. The letter of appointment and the Standing Orders, inter
alia, provided that the service of the appellant could be terminated by one months notice by either party.
The Standing Orders also provided that the services of all canteen employees will be on temporary basis
extendable on six monthly basis. (Page: 418, Para: 1)
In 1988 Para 3-A was introduced in the Standing Orders of the respondent. It 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.
As the appellant had joined service in June, 1974 notice was issued to him on 15th May, 1989 to the effect
that his service would be relinquished (sic) with effect from 30th June, 1989 as he would complete 15
years of service. (Page: 418, Para: 2)
The Labour Court rejected the claim of the appellant and held that Para 3-A of the Standing Orders of the
respondent was binding on the appellant and the termination of the appellants service after the
contractual period was valid.The High Court dismissed the writ petition.
(Page: 419, Para: 3)
As far as Section 25J is concerned. There is no substantive provision in Chapter V-A of the Act
which pertains to the period of service of an employee. Consequently, Section 25J has no application at
all to the present case. We have already held that Paragraph 3-A of the Standing Orders of the respondent
was binding on the appellant and it is nobodys case that the termination was not in terms thereof.
(Page: 422, T.L.: 13)

III. Expressions and meanings

a) Expression Any other law in the section does not include any other provisions
of the Industrial Disputes Act (S.C.2J)
F 5A.1139 The word Any other law contained in the section will not include any other
provisions of Industrial Disputes Act and if the legislation had intended to include other provisions
of Industrial Dispute Act in the section then it would have specifically mentioned in any other part
of this Act which is not given in the section.
P. Virudhachalam & Ors. v. The Management of Lotus Mills & Anr., 1998 I LLJ 389 : 1998 (92) FJR 562
: 1998 (78) FLR 107 : 1998 I LLN 977 : 1998 LIC 834 : 1998 I CLR 1 : 1998 LLR 240 : 1998 SCC (L&S)
342 : 1998 AIR (SC) 554 : 1998 (1) SCC 650 (S.C.2J)
It is difficult to appreciate how the said proviso can be of any assistance to the appelants. All that is stated
is that anything inconsistent with the provisions of Chapter VA found to have been laid down by any
other law including standing orders etc. will have no effect. Even Sub-section (2) of Section 25-J is to the
same effect. Therefore, section 25-J overrides any inconsistent provision of any other law or otherwise
binding rule of conduct and makes. The provisions of Chapter VA operative of their own. The submission
of learned Counsel for the appellants in this connection was to the effect that any other law as provided
in Section 25-J(1) would include even the Industrial Disputes Act, specially the provisions contained in
Section 18 thereof. It is difficult to agree. Section nowhere provides that the provisions of Chapter VA
shall have effect notwithstanding anything inconsistent contained in any other chapter of the Industrial
Disputes Act as well as in any other law. Such a provision is conspicuously absent in Section 25-J (1). If

2704

Chapter VA Lay-Off and Retrenchment

Sec. 25J

submission of learned Counsel for the appellant is accepted, Section 25-J (1) will have to be re-written by
introducting the additional words therein in any other part of this Act or before the words any other
law as mentioned therein. On the Express language of the said provisions, therefore, such an exercise is
contra-indicated and is totally impermissible. (Page: 397, Para: 13)

IV. Consequence of Sec. 25J

a) Lay-off and retrenchment compensation payable u/Central Act when the State
Act does not make provision for lay-off and retrenchment compensation
(S.C.CB)
F 5A.1140 The provision of Sec. 33C(1) provides for claim of money dues and Chapter VA
provides for lay off and retrenchment compensation and as there is no such provision under the
C.P. and Berar Industrial Disputes Act for recovery of lay off compensation and as Sec. 25J
expressly provides that such claims to be heard under the central Act therefore Appropriate
Government or its delegate i.e. Labour Court had jurisdiction under Industrial Dispute to hear
such claims.
The Sawatram Ramprasad Mills Co. Ltd. Akola v. Baliram Ukandaji & Anr., (Babu Lal-Intervener),
1966 AIR (SC) 616 : 1966 I LLJ 41 : 1968 (34) FJR 420 : 1965 (11) FLR 394 (S.C.CB)
.The contention on behalf of the Mills, however, is that the Industrial Disputes Act. 1947 does
not apply to the present matter but the C. P. and Berar Industrial Disputes (Settlement) Act does. This
argument is put in two ways. By one argument the application of the Industrial Disputes Act is sought to
be evaded and by the second the C. P. and Berar Industrial Disputes (Settlement) Act is sought to be
applied. We shall examine these two arguments in the same order. The attempt to oust the Central Act is
based upon S. 31 of the 1956 (Amendment) Act and the opening part of S. 25-J. Section 31 can have no
application because S. 33-C has been included for the purpose, among others, of enabling the workmen to
claim any money due from their employers under the provisions of Chapter V-A. This is expressly so
stated in that section. Chapter 5-A is the only Chapter in which there is provision regarding lay off or
compensation for lay off. The C. P. and Berar Act contains no provision either for the recovery of money
or for compensation for lay off. It is thus obvious that if a workman has a claim for lay off it can only come
up for decision under the Industrial Disputes Act, 1947 and, indeed, S. 25-J (2) says so in express terms.
The attempt to keep out the provisions of the Industrial disputes Act, particularly Chapter V-A and S.
33-C must, therefore, fail. The next attempt, namely, that the C. P. and Berar Act applies is also
ineffective.Next, even if Ss. 31 and 25-J save the application of the C. P. and Berar Act they do so
subject to the condition that question of lay off must be decided in accordance with Chapter V-A and S.
33-C clearly provides that a dispute for any money due under Chapter V-A has to go before the
Appropriate Government or its delegate. (Page: 618, Para: 4)

b) Lay-off compensation u/s. 25C to be given but not as per Standing Orders since
the Central Act prevails over Standing Orders (All.HC)
5A.1141 The High Court held that the workmen are entitled to only compensation as per the
provisions of Sec. 25C which has already been paid because Sec. 25J provides that Sec. 25C
supersedes the standing orders of the establishment.
British India Corporation, Ltd., Kanpur v. B.P. Singh, P.O. Labour Court, Kanpur, & Ors.,1964 I LLJ
601 : 1964 (8) FLR 256 (All.HC)

Sec. 25J

Consequence of Sec. 25J

2705

c) Standing Orders providing for lesser lay-off compensation will not prevail
over the Central Act (S.C.CB)
F 5A.1142 Even though the Standing Orders of the company provide for lay-off due to fire etc.
and fix the quantum of compensation, the same cannot be invoked if the compensation is lesser
than that under the provision of Ch. V-A as the latter will prevail over the former by virtue of
Sec. 25J.
R.B. Bansilal Abirchand Mills Co. Pvt. Ltd. v. The Labour Court, Nagpur & Anr., etc., 1972 I LLJ 231 :
1972 (41) FJR 249 : 1972 (24) FLR 169 : 1972 LIC 285 : 1972 AIR (SC) 451 : 1972 (1) SCC 154 (S.C.CB)
The last point urged was that in view of standing Orders 19 and 21 the quantum of compensation had to
be scaled down or measured in terms of the Standing Orders. Under Standing Order 19 the employer
could, in the event of fire, breakdown of machinery etc. stop any machine or machines or department or
departments wholly or partially or the whole or a part of the establishment for any period, without notice
and without compensation in lieu of notice. Under standing Order 21, any operative played (sic) off under
Standing Order 19 was not to be considered as dismissed from service but as temporarily unemployed and
was not to be entitled to wages during such unemployment except to the extent mentioned in Standing
Order No. 19. The High Court rightly turned down the contention in view of S. 25-J of the Act under
which the provisions of Chapter V-A are to have effect notwithstanding anything inconsistent therewith
contained in any other law including Standing Orders made under the Industrial Employment (Standing
Orders) Act, 1946. (Page: 239, Para: 27)

d) Provisions of Chapter VA prevail over Sec. 7 of Andhra Pradesh Act, 1994 in

the matter of regularization hence daily wage workman who is protected under
Chapter VA cannot be terminated under A.P. Act, 1994 though the latter bars
regularization (AP.DB)
5A.1143 In view of Sec. 25J of Industrial Disputes Act the daily wage workman was protected
under Chapter V-A of Industrial Disputes Act she could not be terminated u/s. 7 of Andhra
Pradesh Civil Regulation of Appointment of Public Services and Rationalisation of Staff pattern
and Pay Structure Act 1994 which bars regularisation of daily wager and hence order of Single
Judge granting her substantive appointment was upheld as the Industrial Disputes Act prevails
over the Andhra Act.
Maize Beedar Agriculture Research Station Hyderabad & Anr. v. Smt. Silar Bee, 1996 LIC 1776
(AP.DB)
.we clear some.No. 17738 of 1988. (Page: 1776/1777, Para: 1)
.No ordinary law.to do so.Section 7 of.of services.taking
advantage of.the said Chapter.The provisions under.to the workmen.
(Page: 1777, Para: 1)
.learned Single Judge.act accordingly. (Page: 1779, Para: 2)

2706

Chapter VA Lay-Off and Retrenchment

Sec. 25J

e) Sec. 25F has overriding effect over REC (Railway Establishment Code)
provisions on retrenchment of railway workman (All.DB)
5A.1144 Termination of service of workman who was in employment of Railways for more
than a year amounts to retrenchment and provisions of Sec. 25F are applicable, overriding the
provisions of the Railway Establishment Code. Order of termination in contravention of Sec. 25F is
quashed.
Nand Lall v. The Union of India & Anr., 1978 LIC 1267 (All.DB)
Sec. 25J.Section. (Page: 1268, Para: 5)
From the.be quashed. (Page: 1269, Para: 6)

f) Benefits of Sec. 25F, 25G and 25H available to employees of shops and
establishments even after commencement of Punjab Shops & Commercial
Establishments Act (P&H.DB)
5A.1145 On a conjoint reading of Sec. 25J of Industrial Disputes Act and Sec. 33 of Punjab
Shops and Commercial Establishments Act 1958 it implies that benefits of Sec. 25F, 25G and 25H
will continue to be available to employees of shops and commercial establishment even after
commencement of 1958 Act.
Ram Sumer v. P.O. Industrial-cum-Labour Court-I, Faridabad & Ors., 1998 III LLJ 1151 : 1997 LIC
232 (P&H.DB)
.However1958 Act. (Page: 1157, Para: 16)

V. Proviso to sub-Section (1) of Sec. 25J

a) Benefits favourable under the Standing Orders will prevail over the Central
and State Acts (S.C.CB)
F 5A.1146 The Standing Orders relating to lay off and retrenchment which are more favourable
shall prevail over those of the State Act or Central Act by virtue of Sec. 25J(1)(2).
Rohtak & Hissar Districts Electric Supply Co. Ltd. & Anr. v. State of Uttar Pradesh & Ors., 1966 II LLJ
330 : 1965-66 (29) FJR 76 : 1966 (12) FLR 290 : 1966 AIR (SC) 1471 (S.C.CB)
Then as regards Standing Order No. 30, Mr. Setalvads contention is that this Standing Order conflicts
with S. 6-K of the U. P. Act. This section deals with the right of workmen laid-off for
compensation. (Page: 340, Para: 1)

Sec. 25J

Proviso to sub-Section (1) of Sec. 25J

2707

Section 6-R (1) provides that the provisions from Ss. 6-J to 6-Q shall have effect notwithstanding
anything inconsistent therewith contained in any other law (including Standing Orders) made under the
Industrial Employment (Standing Orders) Act, 1946.so, if the point raised by Mr. Setalvad had to
be decided solely by reference to the provisions of Ss. 6-K and 6-R, there would have been considerable
force in his argument. But the difficulty in accepting Mr. Setalvads argument is created by the provisions
of S. 25-J of the Central Act. (Page: 340, Para: 2)
It is thus clear that the last part of S. 25-J (2) categorically provides that the rights and liabilities of the
employers and workmen in relation to lay-off shall be determined in accordance with the provisions of
Ch. V-A of the Central Act. (Page: 340, Para: 3)
Once we reach this stage, we have to go the proviso to S. 25-J (1), and this proviso clearly and
unambiguously lays down, inter alia, that where under any Standing Orders, a workman is entitled to
benefits in respect of any matter covered by Ch. V-A which are more favourable to him than those to
which he would be entitled under this Act, he shall continue, to be entitled to the more favourable benefits
in respect of that matter, notwithstanding that he receives benefits in respect of other matters under this
Act. The position, therefore, is that S. 25-J (2) makes Chapter V-A of the Central Act applicable to
disputes in relation to compensation for lay-off, notwithstanding Ss. 6-K and 6-R of the U. P. Act; and
amongst the provisions thus made applicable by S. 25-J(2) is the proviso to S. 25-J(1) under which the
Standing Orders which give more favourable benefits to the employees in respect of compensation for
lay-off, will prevail over the provisions of the Central Act. (Page: 340/341, Para: 5)

b) Wages under Minimum Wages Act to be granted but not those fixed under an
award since the wages under the latter are lower (Cal.HC)
5A.1147 Because of Sec. 25J(1) of the Industrial Dispute Act, the rate of minimum wages fixed
under the provisions of the Minimum Wages Act will prevail over the rate of wages fixed under an
award passed by the Industrial Tribunal under the Industrial Dispute Act in the case when the
latter rates gof wages are lower than the rates fixed under the provisions of Minimum Wages Act,
even during the period during which the award is in force.
Shib Prasad Ghosh v. District Judge, 24-Parganas (Authority under the Minimum Wages Act) 1963 II
LLJ 184 (Cal.HC)

2708

Chapter VA Lay-Off and Retrenchment

Sec. 25J

VI. Rights and liabilities of employers and workmen relating to lay-off and
retrenchment compensation to be as per Chapter VA
a) Agreement between employer and employees not to be dehors the provisions of
Chapter VA (Mad.HC)
5A.1148 Sec. 25J(2) makes it clear that the provisions of Chapter VA ought to and will prevail
when the question relating to lay-off or retrenchment compensation payable by an employer arises.
The mandate is imperative and it imports an implied avoidance of any arrangement outside the
provisions of that chapter between the employer and the workmen. Therefore it cannot be
contended that an agreement de hors the provisions of the Act can be pressed into service in a claim
u/s. 33C(2) for lay- off compensation. Also held that the agreement referred only to badli workmen
but not to permanent workmen.
Sree Rajendra Mills Ltd. v. Labour Court, Coimbatore & Ors., 1970 (37) FJR 249 : 1970 (21) FLR 94
(Mad.HC)