1. Employment termination due to redundancy — Refusal of alternative positions — Claim for enhanced severance and loan waiver under Industrial Disputes Act, 1947. (Para 2 )
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2018 Supreme(SC) 1196
SUPREME COURT OF INDIA
ABHAY MANOHAR SAPRE, INDU MALHOTRA, JJ.
Manju Saxena – Appellant
Versus
Union of India & Anr. – Respondents
Civil Appeal Nos. 11766-11767 of 2018 (Arising out of SLP (Civil) Nos. 30205-30206 of 2017)
Decided On : 03-12-2018
Important Points
IMPORTANT POINTS
When the employee, after his post becoming redundant, refuses to accept alternative posts and raises claims only in respect of enhancing compensation, the conduct constitutes abandonment of service.
Requirement of section 25F(c) is directory and mandatory.
When the employee, after his post becoming redundant, refuses to accept alternative posts and raises claims only in respect of enhancing compensation, the conduct constitutes abandonment of service.
Requirement of section 25F(c) is directory and mandatory.
Subject
Employment Law - Termination of Employment
Act Referred
Headnote
(a) Industrial Disputes Act, 1947 – S. 2(oo) – Appellant declining to accept any of the four posts offered by Bank – Raising claims only with respect to enhancement of compensation – Held, appellant’s conduct constituting abandonment of service. (Para 5)
(1964) 4 SCR 265; (2013) 10 SCC 253 – Relied upon
(b) Industrial Disputes Act, 1947 – S. 25F – Applies to an employee in continuous service – Instantly, Bank paying 6 months’ pay in lieu of notice as required by section 15F(a), compensation on the basis of 15 days’ salary for each completed year as required by section 25F(b) – No Notice was sent to the Appropriate Government or authority notified, in compliance with S. 25F(c) – However, requirement of section 25F(c) is directory and mandatory. (Para 5)
AIR 1960 SC 923; (1991) 1 SCC 189; (2003) 4 SCC 619 – Relied upon
Facts of the case:
On 01.10.2005, the Bank issued a Letter terminating the services of the Appellant on the ground that her current job had become redundant. The Appellant was offered several job opportunities, however, she did not choose any of these offers. The Bank had offered a generous severance package, which she was not prepared to accept. The Bank terminated her service, and paid 6 months’ compensation in lieu of Notice as per the contract of employment. In addition, as a special case, the Bank paid Compensation, which was equivalent to 15 days’ salary for every completed year of service. The total amount paid to the Appellant was Rs. 8,17,071/-.
The Appellant raised an Industrial Dispute before the Regional Labour Commissioner, and sought enhancement of the severance package paid to her. The Appellant did not raise any claim for reinstatement to the R2-Bank.
CGIT passed an Award dated 01.06.2009, and directed the R2-Bank to reinstate the Appellant, with full terminal benefits.
The Bank filed Writ Petition before the Delhi High Court, to challenge the Award passed by the CGIT.
The Writ Petition filed by the Bank was allowed by the Single Judge and the Award passed by the CGIT came to be set aside.
The LPA has been dismissed.
Finding of the Court;
The amounts received by her may be treated as a final settlement of all her claims.
Result: Appeals dismissed.
Legal Category Hierarchy
Table of Contents
2. Entitlement to enhanced severance and loan waiver — Whether refusal of alternative roles constitutes abandonment of service — Compliance with Section 25F, Industrial Disputes Act, 1947. (Para 3 , 4 )
3. Refusal of equivalent alternative roles constitutes voluntary abandonment of service — Section 25F(c) of Industrial Disputes Act is directory — Payments received exceed claimed severance. (Para 5 )
4. Voluntary abandonment of service through refusal of equivalent alternative employment negates the status of continuous service under Section 2(oo), Industrial Disputes Act, 1947. (Para 5 )
5. Appeals dismissed — Amounts already received treated as final settlement of all claims — High Court judgment modified accordingly. (Para 6 )
6. When does the refusal of alternative employment constitute abandonment of service?
Abandonment is inferred from facts proving the employee intended to abandon service, such as refusing multiple alternative positions offered on the same pay scale that do not require special training or technical know-how. (Para 5 )
7. How does voluntary abandonment of service affect the application of Section 25F of the Industrial Disputes Act, 1947?
Voluntary abandonment of service negates the status of continuous service under Section 2(oo), meaning the conditions precedent for retrenchment under Section 25F no longer apply to the employee. (Para 5 )
8. Is the requirement to serve notice to the appropriate government under Section 25F(c) of the Industrial Disputes Act, 1947, mandatory?
The requirement of clause (c) of Section 25F, which mandates serving notice to the appropriate government or notified authority, is directory and not mandatory. (Para 5 )
JUDGMENT :
Indu Malhotra, J.
Leave granted.
1. The present S.L.P.s arise out of the impugned Judgment dated 14.07.2017 passed in L.P.A. No. 467/2017, and Order dated 13.09.2017 passed in R.P. No. 380/2017 of the Delhi High Court, wherein the High Court dismissed the L.P.A filed by the Appellant against the 2nd Respondent HSBC Bank.
2. Briefly stated, the factual matrix in which the present S.L.P. has been filed are summarized as under:
2.1 The Appellant was appointed on 01.04.1986 as a “Lady Confidential Secretary” by the 2nd Respondent-HSBC Bank, (hereinafter referred to as “the R2-Bank”).
Subsequently, on 23.04.1992 the Appellant came to be promoted as a “Senior Confidential Secretary” to the Senior Manager (North India) of HSBC.
2.2 In May 2005, the post of “Senior Confidential Secretary” became redundant, as the Officer with whom the Appellant was attached, left the services of the R2-Bank. Her services were utilized by giving her some other duties for the time being, till alternate jobs could be offered to her.
The Management admittedly offered her four alternate jobs of (i) Business Development Officer, (ii) Customer Service Officer, (iii) Clearing Officer, and (iv) Banking Services Officer. Each of these jobs were in the same pay scale.
The Appellant has admitted in her Statement of Claim dated 20.03.2006, that she declined to accept any of these jobs on the ground that such jobs were either temporary in nature, or the claimant did not possess the experience or work knowledge to take up such jobs.
2.3 On 01.10.2005, the Bank issued a Letter terminating the services of the Appellant on the ground that her current job had become redundant. The Appellant was offered several job opportunities, however, she did not choose any of these offers. The Bank had offered a generous severance package, which she was not prepared to accept. The Bank terminated her service, and paid 6 months’ compensation in lieu of Notice as per the contract of employment. In addition, as a special case, the Bank paid Compensation, which was equivalent to 15 days’ salary for every completed year of service. The total amount paid to the Appellant was Rs. 8,17,071/-.
2.4 The Appellant raised an Industrial Dispute before the Regional Labour Commissioner under the Industrial Disputes Act, 1947 (hereinafter referred to as the I.D. Act) on 03.10.2005, and sought enhancement of the severance package paid to her. It is relevant to note that the Appellant did not raise any claim for reinstatement to the R2-Bank.
Conciliation proceedings were commenced between the Appellant and R2-Bank, wherein the Appellant made the following claims:-
HEADS
AMOUNT (INR)
Severance
69,99,600.00
Provident Fund
8,90,111.60
Gratuity
3,81,209.00
Leave Encashment
86,541.40
Compensation + Notice Pay
8,17,071.00
TOTAL
91,74,533.00
The Bank, in response, offered the following package:-
HEADS
AMOUNT (INR)
Severance
32,79,600.00
Provident Fund
8,90,111.60
Gratuity
3,81,209.00
Leave Encashment
86,541.40
Compensation + Notice Pay
8,17,071.00
TOTAL
57,29,533.00
The only difference between the two parties was with respect to the amount of Severance payable to the Appellant. Since the parties were unable to arrive at a settlement, the conciliation proceedings failed.
2.5 The Appellant filed her Statement of Claim dated 20.03.2006, before the Central Government Industrial Tribunal (referred to as “the CGIT”) claiming inter alia an enhanced severance package, waiver of outstanding Housing Loan, and full pension. The Claim was opposed by the R2-Bank. The R2-Bank filed its Written Statement and contested the claim of the Appellant, stating that the Appellant was not a “workman” under the I.D. Act, 1947. The Bank further stated that they had followed the procedure outlined under the I.D. Act, while terminating the services of the Appellant.
The Ld. CGIT passed an Award dated 01.06.2009, and directed the R2-Bank to reinstate the Appellant, with full ter
