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N.M. Mehta Vs. Coromandal Fertilizers Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtAndhra Pradesh High Court
Decided On
Judge
Reported in(1977)ILLJ151AP
AppellantN.M. Mehta
RespondentCoromandal Fertilizers Ltd. and ors.
Excerpt:
- maximssections 2(xv) & 3(1) & (3): [v.v.s. rao, n.v. ramana & p.s. narayana, jj] ghee as a live stock product held, [per v.v.s. rao & n.v. ramana, jj - majority] since ages, milk is preserved by souring with aid of lactic cultures. the first of such resultant products developed is curd or yogurt (dahi) obtained by fermenting milk. dahi when subjected to churning yields butter (makkhan) and buttermilk as by product. the shelf life of dahi is two days whereas that of butter is a week. by simmering unsalted butter in a pot until all water is boiled, ghee is obtained which has shelf life of more than a year in controlled conditions. ghee at least as of now is most synthesized, ghee is a natural product derived ultimately from milk. so to say, milk is converted to dahi, then butter......sambasiva rao, j.1. the scope of section 40 of the shops and establishments ac. falls for consideration in these two matters the claims for back wages by a discharged worker is another question which requires our determination.2. w.a. no. 155 of 1975 is against the decision of our learned brother ramachandra raju, j., in w.p. no. 161 of 1973. aggirieved by it, the 3rd respoadent in the writ petition, who is the discharged employee, has brought this appeal. though the facts are different, w.p. no. 4758 of 1973 is also posted with the appeal since the same questions arise therein also.3. we will now briefly narrate the circumstances which have led to the filing of the writ appeal. we will refer to the parties as they were arrayed in the writ petition. the 3rd respondent was working in the.....
Judgment:

Sambasiva Rao, J.

1. The scope of Section 40 of the Shops and Establishments Ac. falls for consideration in these two matters The claims for back wages by a discharged worker is another question which requires our determination.

2. W.A. No. 155 of 1975 is against the decision of our learned brother Ramachandra Raju, J., in W.P. No. 161 of 1973. Aggirieved by it, the 3rd respoadent in the writ petition, who is the discharged employee, has brought this appeal. Though the facts are different, W.P. No. 4758 of 1973 is also posted with the appeal since the same questions arise therein also.

3. We will now briefly narrate the circumstances which have led to the filing of the writ appeal. We will refer to the parties as they were arrayed in the writ petition. The 3rd respondent was working in the writ petitioner's company as Accounting Supervisor drawing a salary of Rs. 1,335 per month from 1-4-1970. By an order, dated 16th April, 1971 his services were terminated by the company without assigning any reasons. He was, however, paid a total sum of Rs. 15,456-10 p. made up of Rs. 43,407 towards three months' salary, Rs. 1,312-12 towards leave accumulation, Rs. 4,4'iO-35 p., towards superannuation fund, Rs. 2,951-12 p. towards traveling concession and Rs. 2, 315-10 p. towards provident fund. Claiming that Section 40 of the Shops and Establishments Act (hereinafter referred to as 'the Act ') would apply to him, he preferred an appeal on 15th June, 1971 before the Labour Officer, who was constituted the appellate authority, under Section 41 of the Act. His contention in the appeal was that his termination was illegal and he, therefore, sought reinstatement with back-wages. The company opposed this appeal contending that the Act did not apply to him because he was in a managerial post drawing more than Rs. 500 p.m. Further, it was urged on behalf of the company that the 3rd respondent had not opted to be governed by the Act as required by Section 63. it was also urged that he had been discharged in accordance with the terms of the employment contract and, therefore, there was no application of the Act to such terminations. The appellate authority allowed the appeal holding that Section 40(1) would apply to the case of the 3rd respondent and directed his reinstatement with, back wages. The petitioner's second appeal to the Labour Court was dismissed. Thereupon, the company filed the writ petition which was disposed of by Ramachandra Raju, J. The learned Judge's decision is reported in Coromandal Fertilizers Lid. v. The Labour Court [1975-II L.L.J. 386]; (1975) I.A.P.L.J. 78. The learned Judge allowed the writ petition holding that it was not possible to construe Section 40(1) of the Act to the effect that no employer can, without a reasonable cause, terminate the services of an employee without giving such employee one month's notice or wages in lieu thereof. In the learned Judge's opinion, if an employer is prepared to pay the amounts as mentioned in Sub-section (1) of Section 40 of the Act, the services of the employee can be dispensed with even without giving any reason. In regard to backwages it was held that the 3rd respondent had not shown that he remained unemployed during the relevant period and so he was not entitled to them.

4. In regard to Section 40(1) of the Act the only aspect that was debated before us was whether an employee of a shop or establishment, whose services have been discharged and who has been given one month's notice or wages in lieu thereof and gratuity, can challenge the termination and seek reinstatement on the ground that the termination is bad. The other questions as to whether the Act would apply to him or not, since he occupied a managerial position and was drawing more than Rs. 500 p.m. and also for the reason that he had not opted to be governed by the Act as required under Section 63 were not argued before us. What was impugned before us by the petitioner and what was sought to be supported by the learned Counsel for the establishment is the view of our learned brother Ramachandra Raju, J.

5. Our learned brother held that if an employer is prepared to pay the amounts as mentioned in Sub-section (1) of Section 40, the employer can dispense with the services of an employee even without giving any reason. On behalf of the employee-appellant it was urged that Section 40 is a provision in the Act which was intended to safeguard the employment conditions of service personnel in shops and establishments and to protect them from arbitrary discharge. Their reading of Sub-section (1) of Section 40 is that it imposed an embargo on an employer that he shall not dispense with the services of an employee unless there is a reasonable cause. If such discharge is founded on a reasonable cause, then he would be obliged to give the employee one month's notice or wages in lieu thereof and also the benefits of gratuity. If on the other hand, the discharge was for misconduct, these benefits need not be given. But certain procedure will have to be followed before such discharge is effected on the ground of misconduct. In other words, the interpretation of the learned Counsel for the appellant given to Section 40 is that it is a safeguard against arbitrary termination or discharge without reasonable cause and misconduct. Sri Srinivasa Murthy, learned Counsel for the establishment, on the other hand, endeavoured to persuade us to accept the construction laid by our brother on Sub-section (1).

6. It is always unsafe and not at all desirable to just pick out a provision and try to understand it without reference to the scheme of the statute, the intendment of the Legislature and the context in which the particular provision occurs. No doubt, the language of the provision itself is important and the purpose for which the Legislature has made it will have to be gathered from the language employed is the section itseif. But when there is an ambiguity or a doubt the entire scheme of the Act, the purposes for which the Act itself has been made, the context in which the section occurs will all aid and help in the interpretation of the provision.

7. Now let us read the material portions of the provision itself. That section reads as follows;

40. Conditions for terminating the services of an employee and payment of gratuity;-- No employer shall without a reasonable cause and except for misconduct,; terminate the service of an employee who has been in his employment continuously for a period of not less than six months without giving such employee, at least one month's notice in writing or wages in lieu thereof and a gratuity amounting to fifteen days' average wages for each year of continuous employment.

Explanation: For the purpose of this Sub-section-

(a) * * *(b) * * *(c) an employee in an establishment shall be deemed to have been in continuous employment for a period of not less than six months, if he has worked for not less than one hundred and twenty days in that establishment within a period of six months immediately preceding the date of termination of the service of that employee ;

(d) where the total continuous employment is for a fraction of a year or extends over a fraction of a year in addition to one or more completed years of continuous employment, such fraction if it is not less than a half year shall be counted as a year of continuous employment in calculating the total number of years for which the gratuity is to be given.

We have already briefly noticed the diverse interpretations sought to be given by both sides. Appellant's learned Counsel took the stand that Sub-section (1) lays down the safeguard against arbitrary termination and limit such termination only to the existence of a reasonable cause and misconduct. The words 'and except for misconduct', according to the learned Counsel, are intended only as an exception for giving one month's notice or wages in lieu thereof and the benefit of gratuity. These benefits are available only to termination with reasonable cause and are not available for termination for misconduct. All the same, termination of the service of an employee can be done either for a reasonable cause or on the ground of misconduct and in no other circumstance. Learned counsel for the establishment, on the other hand, pointed out that the employer is a private establishment and the conditions of service of employees in such establishments are governed by the contract of service entered into between the parties. According to the terms of the contract, the employer can terminate the service of an employee without any cause after giving one month's notice in writing or wages in lieu thereof. Indeed, according to that contract, even gratuity as laid down in Sub-section (U need not be paid. But in the present case, the employer took a generous attitude and gave all the benefits. Sub-section (1) does not purport to interfere with the contract of service in private employment. What all it says is that while an employer exercises his power to terminate the service of an employee of his, which inheres in him by virtue of the contract of employment, he will have to give one month's notice in writing or wages in lieu thereof in addition to gratuity. More than this, according to the learned Counsel, Sub-section (I) does not interfere with the right of the employer to terminate the service of an employee whenever he likes with reasons or without reasons. Learned Government Pleader gave his support to the construction laid by the employee-appellant. If Sub-section (1) is read by itself, it may be capable of either construction. Patently the wording of the Sub-section is not very happy. We hope and trust that the Legislature would, at the earliest point of time, amend the Sub-section in such a way as it would bring out its intention clearly and unambiguously. However, we must endeavour to learn what precisely is the intention of the Legislature in making Sub-section (i).

8. By starting the Sub-section with the words 'No employer shall' the. Legislature obiviously wanted to put an unqualified embargo on something it wanted to lay down. What is that embargo? He shall not terminate the service of an employee who has been in his employment continuously for a period of not less than six months without a reasonable cause. But for misconduct he can do so without bothering about reasonable cause; indeed misconduct would be a reasonable cause. If the termination is on account of reasonable cause, then the requirement of the later limb of the Sub-section would come into operation. He must give one month's notice in writing or wages in lieu thereof and also gratuity as stated therein. That the section is in two limbs is brought out by the expressions 'no employer shall without a reasonable cause ...terminate the service of an employee.,' and the words 'without giving such employee...'. The expression 'such employee' used in the later limb patently refers to the employee whose services have been terminated. Therefore, it appears to us that in the first part of the Sub-section, the Legislature has imposed an embargo on termination of the service of an employee without reasonable cause and in the second part, it has provided certain benefits to him on termination for reasonable cause. But all employees are not entitled to the benefit of the embargo; only those who have been in the employment continuously for a period of not less than six months are eligible for it. If that were not the intention of the Legislature in making Sub-section (1), and its purpose is only to provide for one month's notice and gratuity, then in Sub-section(1) there was no need to couch that idea in this composite form. It could have simply said that whenever an employer terminates the service of an employee with not less than six month's service, he shall give one month's notice in writing or wages in lieu thereof and gratuity amounting to fifteen days average wages for each year of continuous employment. On the other hand, the Legislature chose to employ the emphatic words 'no employer shall without a reasonable cause...terminate the service of an employee.' This leads us to the conclusion that it lays an embargo on termination or discharge without a reasonable cause. Of course for misconduct the services of an employee can be terminated. The words 'conditions for terminating the service of an employee' used in the head-note of the section add support to this conclusion. As we have said the general scheme of the Act and the intendment of the Legislature can be pressed into and whenever there is some difficulty in understanding a particular provision.

9. The Andhra Pradesh Shops and Establishments Act, 1966 is the result of unification of both the laws in the Telangana area and the Andhra area. Earlier, the Madras Act was in force in the Andhra area and the Hyderabad Act was in force in the Telangana area. In order to have a uniform law on the subject throughout the State, the Legislature made a unified legislation. This Act received the assent of the President. The source of power for making such a legislation can be traced to Entries 22, 23 and 24 of the Concurrent List in the Seventh Schedule to the Constitution. They relate to matters like industrial and labour disputes, employment and unemployment, welfare of labour including conditions of work, employer's liability, etc.

10. These entries are comprehensive enough to confer power on the Legislature to make laws regulating not only the condilions of work but also conditions of employment, thereby interfering with the private contracts of employment between the employer and the employee. That the Legislature has such power was not disputed by Sri Srinivasa Murthy, learned Counsel for the establishment and rightly so in our opinion. As social conscience of the society and consequently that of the State has widened more and more laws for the amelioration of the conditions of work and life of the weaker sections have been undertaken by the Parliament and the Legislatures. Regulation of conditions of work and conditions of employment is an essential and integral part of social welfare legislation. True shops and establishments are private concerns and the employment therein is governed by the contract of service. But even here the Parliament and the Legislature have entered the area of private employment in order to see that the employees therein get fair deal and justice. With that intention not only the working conditions of the workers in such establishments but also the very conditions of employment are sought to be regulated in a way. It should not be forgot, ten that an employee is generally at a disadvantage when compared with the management because he is economically backward and cannot resist arbitrary action. That is why the Legislature thought it necessary to safeguard the interests of the employees not only in the matter of working conditions but also in employment conditions, by incorporating certain restrictive conditions in the contractual rights of the master to dispense with the service of his servant. Employees, who are under the protection of the Sub-section, have a certain assurance of security of tenure, since without reasonable cause of misconduct his services cannot be terminated. It is true that the expression 'reasonable cause' is not defined in the Act. Therefore, what constitutes 'reasonable cause' will have to be gathered from the circumstances and conditions of each individual case. The Shops and Establishments Act is one such step taken by the Legislature,

11. The preamble to the Act made in 1966 indicates the purpose of the Act in the following terms:

An Act to consolidate and amend the law relating to the regulation of conditions of work and employment in shops, commercial establishments, restaurants, theories and other establishments and for matters connected therewith.

It is pertinent to note that the Act intends to regulate, not only the conditions of work but also conditions of employment in shops, establishments, etc. Thus, it is clear that the Act has a vide amplitude and enters the field of employment regulating its conditions. In Chapters II, ill and IV, the Act deals with registration of establishments and working hours of shops and establishments. It is important to note that in Chapter V. it lays an embargo on engaging children in establishments. It clearly lays down that no child shall be required or allowed to work in any establishment. The Legislature thus excludes the possibility of any private contract of employment regarding engaging a child to work in an establishment. Then the Act proceeds to provide for the working hours of persons, maternity leave, allowances, leave, wages for overtime, etc. In Chapter VIII under the heading 'wages', Section 40 occurs. We have already noted Sub-section (1) of Section 40. Sub-section (4) of that section lays down that the services of an employee shall not be terminated for misconduct except, for such acts or missions and in such manner, as may be prescribed. The explanation makes it clear that even a part-time employee comes within the ambit of the term 'employee'. Sub-section (4) brings out the intention of the Legislature more clearly than Sub-section (1). In fact, it supplements the provision that was sought to be maiden Sub-section (1). While Sub-section (1) says that no employee with not less than six months service can be terminated without a reasonable cause; Sub-section (2) says that no employee shall be terminated for misconduct excepting in such manner as may be prescribed. There is an exception made in Sub-section (1) in regard to misconduct and that is filled up in Sub-section (4). The two provisions read together make it clear that the services of an employee can be dispensed with, only when there is a reasonable cause and if the discharge is for misconduct, it shall be done in accordance with the procedure laid down.

12. The next section, i.e., Section 41 is also important. It deals with appointment of authority to hear and decide appeals arising out of termination of services. It empowers the Government to appoint, by notification, authorities to hear and decide appeals arising out of the termination of service of employees under Section 40. Any employee whose service has been terminated may appeal to the authority concerned within the prescribed, time. After enquiry, for which procedure is laid down, the authority may either dismiss the appeal or direct reinstatement with or without back wages. A second appeal also is provided to the Labour Court. First and foremost, it is important to notice, that Section 41 does not specify that it deals with termination of service for misconduct alone. On the other hand, what it refers to is 'the termination of service of employees under Section 40'. If the section is limited to termination on the ground of misconduct alone, it would have clearly said so. By using the wide and general expression 'termination' under Section 40, it must necessarily include 'termination' for 'reasonable clause' as well. This, in its turn, gives strength to the-construction we have laid on Sub-section (1) of Section 40 that there should be no termination but for a reasonable cause and for misconduct. Equally important is the provision in Sub-section (2) of Section 41 that if the appellate-authority is satisfied that the termination is not valid, it can direct reinstatement, that termination that is to say, that if the termination was not for reasonable cause, it could be set aside and the employee could be directed to be reinstated with or without back wage. Therefore, a reading of Sub-sections (1) and (4) of Section 40 and Section 41 leads to the reasonable conclusion that an employer is statutorily prevented from terminating the services of an employee excepting for reasonable cause or for misconduct.

13. Section 58 declares that any contract or agreem whereby an employee relinquishes any right conferred on him under the Act is null and void. Therefore, if there is any contract of employment where under the employee agrees that his services may be terminated without any cause, that would be null and void.

14. Section 62 is the rule-making power. Rule 19 enumerates acts and omissions which constitute misconduct. Rule 20 lays down the procedure for enquiry into alleged misconduct. Rule 21 prescribes the manner in which appeals under Section 41 will have to be preferred.

15. Thus, a conspectus of the Act and the Rules made thereunder fully corroborates the construction we have laid on Sub-section (1) of Section 40.

16. Sri Srinivasa Murthy for the establishment maintained that Section 40 does not apply to the case of discharge simplidter which is effected according to the terms of the contract. According to him, discharge is in the power of the management and unless a discharge is vitiated by mala fides no authority can interfere with it. As per the terms of the contract of employment no reasons need be stated for discharge and when termination is effected the employee is entitled only to the terminable benefits. Even the benefit of gratuity has been introduced by the Hyderabad Act, 1959 for the first time. Thus, the sum and substance of the learned Counsel's argument is that termination of private employment is immune from challenge based on statute. We have already considered this aspect of the matter and expressed the opinion that the Legislature has intended to step inside the field of employment in the private sector as well, in order to safeguard the interests of the employees.

17. Some decisions have been relied on to substantiate this contention. Two of them are the decisions of the Supreme Court, Tata Engineering and Locomotive Co. v. Prasad [1969-II L.L.J. 799], was a case of discharge simplidter on notice. The standing orders of the company enabled the employer to discharge a worker on giving a notice or wages in lieu of notice. The Court did not think it proper to interfere with such discharge because it was in accordance with the standing orders. But is the case on hand a statutory protection is given to the employee against discharge without reasonable cause or misconduct. Therefore, the decision of the Supreme Court has no application. In the other decision of the Supreme Court, viz., Air India Corporation, Bombay v. K.A. Rebellow : (1972)ILLJ501SC , services of an Assistant Station Superintendent were terminated under Regulation 48 of the Service Regulations. The complaint was that the discharge was not discharge shinplaster but in breach of Section 33 of the Industrial Disputes Act. It was held that bona fide loss of confidence by the manage-merit is immune from challenge. Once again it is not a case of statutory protection against discharge excepting under certain circumstances.

18. Then two decisions of the Patna High Court were cited. The first one is Jagdish Vastralaya v. State of Bihar, : AIR1964Pat180 . It was a case which arose under Bihar Shops and Establishments Act. While upholding the constitutional validity of the Act, the Court construed the provisions of Section 26(1) which deals with dismissal or discharge of an employee who has been in employment continuously for the prescribed period. It was opined by the Division Bench that Section 26(1) does not apply to a case where there is termination of the contract of employment by the employer by virtue of an express or implied term of the contract itself. But there is nothing in the ruling which is contrary to what we have said. Ramaswami, C J., (as he then was) delivering the judgment of the Court said at page 183;

In my opinion the language of Section 26(1) must be construed to mean that the employer is empowered to discharge or dismiss an employee on grounds which are reasonable in the eye of law. In other words, Section 26(1) must be construed in the context of the existing Jaw of master and servant, and if so construed, it means that the section merely empowers an employer to discharge or dismiss an employee on lawful grounds. For instance, if the employee is guilty of misconduct, willful disobedience or habitual neglect, it is deemed in the eye of law that the employee has repudiated the contract of employment and it is open to the employer in such a case to treat the contract of employment as at an end and to summarily dismiss or discharge the employee.

These observations instead of supporting the contention of Sri Srinivasa Murthy give strength to the view we have expressed. The next decision of the Patna High Court is Calcutta Chemical Co. v. D.K. Barman : AIR1969Pat371 . The Division Bench there said that there are three ways by which the services of an employee can be dispensed with by an employer. One is by virtue of the express or implied term of the contract of service which would be outside the scope of Section 26 of the Bihar Act, whatever may be the reason for termination. The second way of dispensing with the services is to dismiss or discharge him on the existence of a reasonable cause. The third is for acts of misconduct. Therefore, it was argued that there could be a third way of dispensing with the services of the employee by virtue of an express or implied term of the contract of service. The present discharge of the appellant belongs to that category. Therefore, it is outside the scope of Section 10. If the meaning of Section 40(1) is what we have stated above, then the third way of terminating the service of an employee without any reasonable cause or misconduct is not available to the employer. Further, the case before the Patna High Court was one of discharge for misconduct, viz., negligence of duty and, therefore, the decision docs not render much assistance.

19. In Brooke Bond India Private Ltd v. Chandranayh Chowdary [1969-II L.L.J. 387]; A.I R. 1969 S.C. 912, the Supreme Court had an occasion to consider the ambit of Section 26(1) of the Bihar Shops and Establishments Act. The Court held that the section applies to all cases of dismissal and discharge and requires in both cases: (i) a reasonable cause, without which an employer cannot dismiss or discharge his employee; and (ii) a month's notice or one month's wages in lieu thereof. It is only in the case of termination of service for misconduct set out in Bihar Shops and Establishments Rules, 1955 supported by satisfactory evidence recorded at a domestic enquiry, that the proviso to the subsection dispenses with the notice required under Sub-section (1). We draw full support for our view from these observations of the Supreme Court.

20. Though a reference was made to a very recent Bench decision of this Court, dated 28th of July, 1976 in W.A. No. 304 of 1976 consisting of learned Chief Justice and Muktadar, J., the decision does not bear on the question we are now discussing. There, the Bench was concerned only with the point regarding payment of the amount due to the employee in lieu of one month's notice and when it should be paid to him or tendered to him when his service was terminated.

21. It is true that a workman may raise an industrial dispute. But we are here concerned with a statutory protection and a statutory safeguard to enforce that protection Therefore, it is not necessary for us to travel to Section 33 of the Industrial Disputes Act and the proviso thereto.

22. A view similar to ours has been expressed by Kondaiah, J. in Crompton Greaves Ltd., Secunderabad v. Presiding Officer, (1975) 1 An. W.R. In that case an employee's services were terminated on the ground that his qualifications and experience did not suit the requirements of the employer. An appeal was preferred under Section 41 of the Shops and Establishments Act. One of the questions posed and considered by the learned Judge was:

Whether on the facts and in the circumstances the order of termination of the services of the 2nd respondent employee by the employer-petitioner was for a reasonable cause within the meaning of Sub-section (1) of Section 40 of the Act.

In the course of the discussion, the learned Judge laid boon at page 105:

The heart of the matter is that any employee who has worked for a period of six months or more within the meaning of Section 40(1) cannot be removed by the employer except for a reasonable cause or for misconduct.

This wholly accords with our opinion.

23. Before we conclude our discussion on this question, we may usefully refer to Section 41 of the Andhra Act and Section 36 of the Telangana Act as they stood before they were repealed and the present consolidated Act has been passed. Section 41 of the Andhra Act was as follows:

Notice of dismissal.-(1) No employer shall dispense with the service of a person employed continuously for a period of not less than six months, except for a reasonable cause and without giving such person at least one month's notice or wages in lieu of such notice, provided however that such notice shall not be necessary where the services of such person are dispensed with on a charge of misconduct supported by satisfactory evidence recorded at an enquiry held for the purpose.

On the other hand, Section 36 of the Telangana Act stood as follows:

Condition of dismissal.- (1) No employer shall, except for misconduct, dispense with the services of an employee who has been in his continuous employment for a period of not less than six months -including the part of the period, if any, before the commencement of this Act) without giving such employee a gratuity amounting to 15 days average wages for each year of continuous service, subject to a maximum of average wages for 15 months.

It should be noted that in the Andhra Act there was no provision for payment of gratuity while it was there in the Telangana Act. Further, in the Atdhra Act there was a prohibition against an employer dispensing with the service of a person except for a reasonable cause and without giving one month's notice or wages in lieu thereof. That prohibition was not clearly stated in the Telangana Act. What all it made clear was that excepting for misconduct, no employer should dispense with the service of an employee without giving him gratuity. The present Act of 1966, which is an amalgam of the two 'provisions, has introduced this bar against termination excepting for a reasonable cause and for misconduct and has also incorporated the provision for paying gratuity. It is worthy of notice that even under the Andhra Act the Legislature thought it necessary then itself to enter the field of private employment and lay an embargo against arbitrary discharge.

24. For the foregoing reasons, we express our respectful disagreement with the view stated by Ramachandra Raju, J., in the order under appeal in his understanding of Section 40(1) of the Act. In our view, that provision lays down that any employer in any establishment or shop cannot dispense with the services of his employee excepting for a reasonable cause or for misconduct, and that if the discharge is for a reasonable cause, he must effect the discharge by giving one month's notice or wages in lieu thereof and in addition gratuity also.

25. Now applying that principle to the facts of the writ appeal, we find that the termination was founded on no reason. That is to say, no reason was assigned for the termination of the appellant's services. Therefore, the question whether the termination was for a reasonable cause or not did not arise at all. That is why the Labour Court held that it is contrary to Section 40(1) and consequently the appellant was entitled to reinstatement. We uphold this decision.

26. The other point that remains for decision is whether the learned Judge was right in holding that the appellant was not entitled to back wages. It is true, as stated by Gopal Rao Ekbote, J., (as he then was) in W.P. No. 32') 1 of 1969, dated 14th October, 1970, that it is the duty of the employee to show that he was unemployed during the relevant period in order to succeed in his claim for back wages, and that was for the reason that he was aware of that fact. However, if the employee has said in his chief-examination that he was unemployed and the same was not challenged in cross examination, it is no more necessary for the employee to show further that he had also made honest efforts to secure employment during the relevant period. Vide Biksha-pathv v. Depot Manager A.P.S.R.T.C., (1974) 2 An. W.R. 405, It is said that the appellant did not say anything in his evidence about his employment even though the management had alleged that he was employed in Bombay. There is such a statement here by the employee in his evidence and there was no cross examination. Therefore, the burden on the employee was discharged. Consequently, he is entitled to the wages from the date of discharge till the date of reinstatement.

27. In the result, we allow the appeal, set aside the decision of the learned single Judge in W.P. No. 161 of 1973 and uphold the decision of the Labour Court. The appellant is entitled to reinstatement, with back wages. He will have the costs of the appeal from 'he establishment 1st respondent. Advocate's fee Rs. 150.

28. In W.P. No. 4758 of 1973 the 3rd respondent was retrenched on the specific ground that there was no work for him. The contention was that if there was no sufficient work in the establishment from which the 3rd respondent was discharged, he could have been transferred to some other establishment. Curiously this found acceptance at the hands of the Labour Court though the Labour Officer in the first instance found that there was steep fall in the business of the petitioner-establishment and consequently in the work as well. The 3rd respondent belonged to the unit from which he was retrenched. If there was no sufficient work for all the employees, the management was certainly entitled to retrench some of them. That would be a reasonable cause within the meaning of Sub-section (1) of Section 40. The statement of business of the establishment filed before us shows that there was a steep fall in the turnover of the business of the establishment. That is why the Labour Officer found that there was reasonable cause for retrenchment. He, however, granted com. passionate allowance. Brushing aside these considerations the Labour Court set aside the retrenchment of the 3rd respondent and directed his reinstatement This is a per. verse approach to the problem and cannot be sustained. However, the petitioner should pay to the 3rd respondent one month's wages, if one month's notice had not been given, and also gratuity in accordance with the provisions of Section 40(1). If this amount is less than what has been sanctioned by the Labour Officer towards compassionate allowance, the difference should be paid.

29. The writ petition is allowed and the decision of the Labour Court, Guntur is set aside and that of the Labour Officer is restored. Since the 3rd respondent is a poor worker, we direct the parties to bear their own costs. Advocate's fee Rs. 150.


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