Important point
Employees of State Federation of Consumers Cooperative Wholesales Stores would not fall in the definition of employees of an Industrial establishment so as to attract Section 25-N of Industrial Disputes Act on retrenchment and rather Section 25-F would be attracted.

Judgment

Arijit Pasayat, J.—Appellants call in question legality of the judgment rendered by a Division Bench of the Punjab and Haryana High Court holding that the appellants’ stand about applicability of Section 25-N of the Industrial Disputes Act, 1947 (in short the ‘Act’) was not correct.

2. Controversy lies within a narrow compass.

3. Appellants were employees of the Haryana State Federation of Consumers Co-operative Wholesales Stores Limited (in short the ‘CONFED’), fourth respondent herein. The service conditions of its employees are covered by CONFED Staff Service Rules, 1975 (in short the ‘Rules’). On account of continued financial losses, a restructuring plan for gainful employment for employees was prepared. It was noted that Retail Outlets (in short the ‘ROL’) were causing huge loss to the organization. Therefore, it was decided that all ROL should be closed being financially non-viable. Retrenchment compensation in terms of Section 25-F of the Act was paid. In the retrenchment order it was specifically stated as follows:

“It is made clear that employees of CONFED from where the retrenchment is being effected are not covered by Chapter V-B of the Industrial Dispute Act, 1947, necessitating any permission under Section 25-N of the said Act. Therefore the retrenchment is being effected in accordance with Chapter V-A by employing with Section 25-F and other provisions of the said Chapter.”

4. Questioning the retrenchment, writ petitions were filed before the High Court taking the stand that provisions of Section 25-N and not Section 25-F were applicable and in any event the appellants were entitled to the benefit in terms of Rule 35(b) of the Rules. High Court did not find any substance in the stand and dismissed the Writ Petitions holding that there was compliance with the requirements of Section 25-F(b) of the Act.

5. According to the learned counsel for the appellants the High Court has erroneously held that Section 25-N has no application. Even otherwise, it was contended that the appellants were entitled to the benefits available under Rule 35(b).

6. It was in this context submitted by the learned counsel for the appellants that after completion of the probation period, the appellants had become permanent employees and, therefore, they were governed by the Rules and the benefits under Rule 35(b) were clearly applicable.

7. In response, learned counsel for the respondents submitted that the High Court’s view is in order.

8. In order to appreciate rival submissions the relevant provisions need to be noted. Section 25-F, 25-K, 25-L and 25-N of the Act read as follows:

“25.F: Conditions precedent to retrenchment of workmen: No workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until-

(a) the workman has been given one month’s notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice;

(b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days’ average pay (for every completed year of continuous service) or any part thereof in excess of six months; and

(c) notice in the prescribed manner is served on the appropriate Government (or such authority as may be specified by the appropriate Government by notification in the Official Gazette).

25-K: Application of Chapter V-B: (1) The provisions of this Chapter shall apply to an industrial establishment (not being an establishment of a seasonal character or in which work is performed only intermittently) in which not less than one hundred workmen) were employed on an average per working day for the preceding twelve months.

(2) If a question arises whether an industrial establishment is of a seasonal character or whether work is performed therein only intermittently, the decision of the appropriate Government thereon