Madras High Court

D.Stephenunnimon vs The Management on 25 February, 2025

                                                                                  W.P.No.2193 of 2020

                                  IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                            Reserved on : 10.2.2025
                                           Pronounced on :     25.2.2025
                                                     CORAM:

                                  THE HON’BLE DR. JUSTICE A.D. MARIA CLETE


                                            W.P.No. 2193 of 2020

                D.StephenUnnimon
                S/o. N.S.Daniel,
                2/53, Bharath Nagar,
                Wellington,
                Barracks,
                Nilgiris District.                                                      ...Petitioner

                                                       Vs.

                The Management
                Wellington Gymkhana Club
                Barracks Post,
                Nilgiris District.                                                   …Respondent

                Prayer in W.P.2193 of 2020
                To issue appropriate Writs, Orders or Directions and in particular issue a Writ in
                the nature of Certiorarified Mandamus after calling for the records pertaining to the
                Award dated 22.11.2019 in I.D.No.35/2016 on the file of the Learned Additional
                Labour Court, Coimbatore, quash the same and consequently direct the respondent



                1/20
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                                                                                   W.P.No.2193 of 2020

                management to reinstate the petitioner with continuity of service, back wages and
                all other attendant benefits, after adjusting the amount of Rs.25,000/- which they
                have paid after the award, award costs.


                Appearance of Parties:

                For Petitioner      : Mr.R.Krishnaswamy,
                                      M/s. R.Krishnaswamy &V.AjoyKhose, Advocates

                For Respondent : Mr.T.Sella Pandian, Advocate
                                 For M/s.J.Franklin, Karthick and S.Valarmathi, Advocates

                                                     JUDGMENT

Heard.

2. The writ petitioner in this case is the workman. He has filed the present

writ petition challenging the award passed by the Additional Labour Court,

Coimbatore, in I.D. No. 35 of 2016, dated 22.11.2019, at its Udagamandalam

camp. By this award, the Labour Court held that instead of reinstatement, the

workman would be entitled only to a compensation of Rs.25,000/-.

3. In the writ petition, notice was issued on 30.01.2020. Upon receiving

notice, the respondent entered an appearance. Although time was sought for filing

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a counter affidavit, none was ultimately submitted. During the final hearing, it was

suggested that a compromise might be possible. However, even after ten days, no

memo was filed in this regard.

4. The workman’s case was that he was an ex-serviceman and had been

appointed as a Security Guard by the respondent club on 07.05.2013. While his

initial salary was Rs. 150 per day, by the time of his termination, he was earning

Rs.7,152 per month. Suddenly, he was issued a termination order dated15.12.2014.

The order, signed by the Secretary of the Club, read as follows:

1.As the security of the Club was not upto the satisfaction of the

Management, the security task is being outsourced to a private

security agency.

2. In view of the above, as per the terms and conditions of your

temporary employment letter No. WGC/APP/130930 dated 30 Sep

2013, you are hereby given one month notice with effect from 15 Janu

2015 for termination of your temporary service with the Club.

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5. Challenging his termination, the workman raised an industrial dispute

before the Government Labour Officer, Coonoor, under Section 2A of the

Industrial Disputes Act. As the Conciliation Officer was unable to mediate a

settlement between the parties, he issued a failure report dated 01.02.2016. Based

on this report, the workman filed a claim statement before the Labour Court,

Coimbatore, which was registered as I.D. No. 35 of 2016. He contended that his

termination was illegal and in violation of the notice issued by the employer. There

were no allegations of misconduct against him. By stating that his services were

not satisfactory, and the security task was given to a private security agency, the

Respondent was indulging in illegal act.

6. Upon receiving notice, the respondent entered an appearance through

counsel and filed a counter statement dated 16.11.2017. It was contended that the

dispute under the Industrial Disputes Act was not maintainable, as a claim under

Section 2A could only be raised in cases of termination. The respondent asserted

that one month's notice pay had been provided, and compliance with Section 25F

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of the Act had been ensured by issuing the requisite notice. It was further stated

that security services had been outsourced to Radiant Protection Force and that the

petitioner had been offered alternative employment with the outsourced agency.

7. Before the Labour Court, the workman had examined himself as WW1

and submitted 11 documents, which were marked as Exhibits W1 to W11.

Onbehalf of the respondent, one Doughlas Groven was examined as MW1. Based

on the evidence presented by both sides, the Labour Court concluded that the

activities of the club fell within the definition of "industry" under Section 2(j) of

the Industrial Disputes Act and that the provisions of the Act were applicable.

8. In this context, it must be stated that the Supreme Court, in Bangalore

Water Supply and Sewerage Board v. R. Rajappa, reported in (1978) 2 SCC 213,

provided a broader interpretation of the term "industry" under Section 2(j) of the

Industrial Disputes Act. In doing so, it overruled the earlier decision in Madras

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Gymkhana Club Employees’ Union v. Management of the Gymkhana Club,

reported in AIR 1968 SC 554. Consequently, the issue is no longer res integra, as it

is settled by the larger bench judgment of the Supreme Court.Furthermore, based

on the facts, the Labour Court found that the club engaged in systematic activities

and possessed substantial funds collected through its operations.

9. Having held that the respondent falls within the scope of the Industrial

Disputes Act, the Labour Court examined the petitioner’s appointment order,

marked as Ex.W1, which indicated that he was a temporary employee and could be

discharged with one month's notice. The Labour Court noted that this condition

had been fulfilled through the issuance of Ex.W8 and the payment of the remaining

15 days' wages for the notice period.It further held that no prejudice was caused by

providing two half-months' wages. Since the termination was in accordance with

the terms of the appointment order and thestipulated conditions had been met, the

Labour Court accepted the respondent's action as valid.

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10. The Labour Court found that the workman initially joined as a daily

wage labourer on 07.05.2013 and was later appointed as a Security Guard on a

temporary basis from 01.10.2013. His employment continued only until

31.12.2014. Although he had expressed his desire for permanent employment, it

was not granted. The Labour Court further held that the requirements of Section

25F of the Industrial Disputes Act had been duly complied with, and therefore, the

termination could not be deemed illegal.

11. After addressing the main issue, the Labour Court also noted that the

management had decided to outsource security services to a private agency, which

led to the discontinuation of the workman's employment. During cross-

examination, the workman admitted that he was aware of the outsourcing

arrangement and that he had been offered employment with the outsourced agency.

His argument that security work could not be outsourced to a private contractor

was not accepted. However, while he was found ineligible for reinstatement, the

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Labour Court, considering his 19 months of temporary service and the prolonged

pendency of the dispute for over three years, directed the payment of Rs. 25,000/-

as compensation in full settlement of all claims.

12. Challenging this decision, the present writ petition was filed, as

previously noted. The learned counsel for the workman contended that the Labour

Court had adopted an erroneous approach in its findings. In support of this

contention, the counsel referred to the Supreme Court judgment in Devinder Singh

v. Municipal Council, Sanaur (2011 (6) SCC 584) and specifically relied on the

observations made in paragraphs 19 to 21, which are as follows:

“19. Section 25 couched in negative form. It imposes a restriction

on the employer's right to retrench a workman and lays down that

no workman employed in any industry who has been in continuous

Devinder Singh vs Municipal Council,Sanaur on 11 April, 2011

Indian Kanoon - http://indiankanoon.org/doc/180132319/ 6 service

for not less then one year under an employer shall be retrenched

until he has been given one month's notice in writing indicating the

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reasons for retrenchment and the period of notice has expired or he

has been paid wages for the period of notice and he has also been

paid, at the time of retrenchment, compensation equivalent to

fifteen days' average pay for every completed year of continuous

service or any part thereof in excess of six months and notice in the

prescribed manner has been served upon the appropriate

Government or the authority as may be specified by the

appropriate Government by notification in the Official Gazette.

20. This Court has repeatedly held that the provisions contained in

Section 25F (a) and (b) are mandatory and termination of the

service of a workman, which amounts to retrenchment within the

meaning of Section 2(oo) without giving one month's notice or pay

in lieu thereof and retrenchment compensation is null and

void/illegal/inoperative--State of Bombay v. Hospital Mazdoor

Sabha AIR 1960 SC 610, Bombay Union of Journalists v. State of

Bombay AIR 1964 SC 1617, State Bank of India v. N. Sundara

Money (supra), Santosh Gupta v. State Bank of Patiala (1980) 3

SCC 340, Mohan Lal v. Bharat Electronics Ltd.(1981) 3 SCC 225,

L. Robert D'Souza v. Southern Railway (supra), Surendra Kumar

Verma v. Central Government Industrial Tribunal-cum-Labour

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Court (1980) 4 SCC 443, Gammon India Ltd. v. Niranjan Dass

(1984) 1 SCC 509, Gurmail Singh v. State of Punjab (1991) 1 SCC

189 and Pramod Jha v. State of Bihar (2003) 4 SCC 619.

21 In Anoop Sharma v. Executive Engineer, Public Health Division,

Haryana (supra), the Court considered the effect of violation of

Section 25F, referred to various precedents on the subject and held

the termination of service of a workman without complying with the

mandatory provisions contained in Section 25-F (a) and (b) should

ordinarily result in his reinstatement.”

13. The learned counsel also cited the Supreme Court judgment in Novartis

India Limited v. State of West Bengal & Others (2009 (3) SCC 124), emphasizing

that even if an employee is transferred or fails to join the new post, termination

without conducting a proper inquiry is not permissible. In support of this argument,

reliance was placed on paragraphs 14 and 16 of the judgment, which state as

follows:

“14….., even after the direction went against the employees,

respondents did not join their services at their transferred places.

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They might have committed a misconduct. Their services, however,

were terminated without holding any domestic inquiry. Only a

month's wages were paid. It is not in dispute that after passing of

the orders of transfer till the orders of termination, no amount by

way of salary or otherwise has been paid to them. No disciplinary

proceeding was initiated. No subsistence allowance was also paid.

15 …….

16. When an employee does not join at his transferred place, he

commits a misconduct. A disciplinary proceeding was, therefore,

required to be initiated. The order of discharge is not a substitute

for an order of punishment. If an employee is to be dismissed from

services on the ground that he had committed a misconduct, he was

entitled to an opportunity of hearing. Had such an opportunity of

hearing been given to them, they could have shown that there were

compelling reasons for their not joining at the transferred places.

Even a minor punishment could have been granted. Appellant

precipitated the situation by passing a post haste order of

termination of their services.”

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14. In the present case, it is undisputed that the workman was employed

from 07.05.2013 to 15.12.2014, serving for approximately 19 months, albeit in a

temporary capacity. At the time of his termination, he was informed that his role

had been outsourced to a private agency and was given the option to join that

agency. He was issued a notice along with 15 days’ wages, with the remaining

amount stated to have been paid later. However, no compensation for his 19

months of service, as mandated under Section 25F(b) of the Industrial Disputes

Act, was offered or paid, resulting in a clear violation of the provision. When work

is continuous and uninterrupted, there is no requirement to prove that the worker

had completed 240 days of service, The definition of the term “continuous service”

provided under the I.D.Act in Section 25B will clearly show that it is only in case

of broken service the actual service of 240 days will have to be completed.While

the respondent asserted that the workman was employed on a temporary basis, it

was never contended that his appointment was intermittently broken before his

termination.

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15. The management’s clear position was that the workman’s employment

was discontinued due to the outsourcing of security services. Whether such a work

done by the employee of the club can be outsourced and what are the legal

requirements are also to be considered. As per Section 9A of the Industrial

Disputes Act, any proposed change in the service conditions of a workman

concerning matters listed in the Fourth Schedule requires prior notice. This notice

must be issued in the prescribed form, provided to the workman, and must allow a

minimum of 21 days before implementation. Item No. 10 in the Fourth Schedule of

the Act is as follows:

“Rationalisation, standardization or improvement of plant or

technique whichis likely to lead to retrenchment of workmen;”

16. Failure to issue notice under Section 9A before reducing the workforce

and implementing changes in the employment system constitutes a violation of the

provision, rendering any consequential retrenchment invalid for infraction of

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Section 9A. The Supreme Court, in Lokmat Newspapers Pvt. Ltd. v.

Shankarprasad (1999 (6) SCC 275), reaffirmed this principle, holding as follows:

“Point No, 5:….. The Industrial Court, on the other hand, came to

an equally erroneous finding on the applicability of item 10 of

Schedule IV of the I.D. Act when it held that the said item would

apply not at the time when the rationalisation scheme was

introduced, but at the time when the employer desired or decided to

terminate the services of the employees. This reasoning of the

Industrial Court is contrary to the very scheme of item 10

of Schedule IV of I.D. Act and totally ignores the term `likely to

lead to retrenchment' as found in the said item. The reasoning of

the Industrial Court almost amounts to rewriting the said phrase as

"decide to retrench the workmen". These patent errors of law

committed by the Labour Court and the Industrial Court were

totally bypassed by the learned Single Judge while he dismissed the

Writ Petition. These patent errors of law, therefore, were rightly set

aside by the Division Bench of the High Court in the Letters Patent

Appeal. It could not, therefore, be said that the impugned judgment

had tried to interfere with the pure findings of the fact reached by

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the authorities below on evidence against the respondent. It was

perfectly open to the Appellate Court in the hierarchy of

proceedings to interfere with such patent errors of law and to

correct them, otherwise it could have been said that it had failed to

discharge its duty and that would have also amounted to failure to

exercise jurisdiction on its part. The aforesaid point is, therefore,

answered in affirmative against the appellant and in favour of the

respondent by holding that the Appellate Court had corrected

patent errors of law and had not interfered with the pure findings of

the facts not connected with the relevant questions of law with

which they were intertwined.”

17. Therefore, the termination of the workman by the respondent club on

the ground that his work was outsourced constitutes a clear violation of Section

9A of the Industrial Disputes Act. The Supreme Court has held that when there

is a breach of Section 9A, it is unnecessary to examine the merits of the change,

as the mere failure to issue the required notice is sufficient to render the action

void in law. This principle was reaffirmed in Management of Indian Oil

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Corporation v. Its Workmen (1976 (1) SCC 63), where the Court observed as

follows:

“….even if s. 9A of the Act applied, the Tribunal should have gone into

the question on merits instead of giving the award on the basis of non-

compliance with the provisions of s. 9A. This argument also appears to us

to be equally untenable. On the facts and circumstances of the present

case the only point that fell for determination was whether there was any

change in the conditions of service of the workmen and, if so, whether the

provisions of s. 9A of the Act were duly complied with. We cannot

conceive of any other point that could have fallen for determination on

merits, after the Tribunal held that s. 9A of the Act applied and had not

been complied with by the appellant.”

It was also faintly suggested that there was no question of a customary

claim or usage because the period during which the compensatory

allowance was granted and withdrawn was too short. It is, how- ever, not

necessary to take any notice of this argument, because counsel for the

respondents Mr. Sen Gupta fairly conceded that he had not- based his

claim on any customary claim at all. It was argued by Mr. Sen Gupta that

after the Central Government notification of September 3, 1957, the

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appellant took an independent and voluntary decision on their own to

give the facility of the Assam Compensatory Allowance as an implied

term of the contract and having done so they could not wriggle out from

the provisions of s. 9A of the Act.”