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Mercantile Laws – II

Notes (iv) The definition excludes termination of service on the specified grounds or instances
mentioned in it. [Section 2(oo)]

The scope and ambit of Section 2(oo) is explained in the case of Santosh Gupta v. State Bank of
Patiala, (1980) Lab.I.C.687 SC), wherein it was held that if the definition of retrenchment is looked
at unaided and unhampered by precedent, one is at once struck by the remarkably wide language
employed and particularly the use of the word „termination for any reason whatsoever. If due
weight is given to these words, i.e. they are to be understood as to mean what they plainly say,
it is difficult to escape the conclusion that retrenchment must include every termination of
service of a workman by an act of the employer. In the case of Punjab Land Development Corporation
Ltd. v. Labour Court, Chandigarh, (1990) II LLJ 70 SC, the Supreme Court held that expression
“retrenchment” means termination by employer of services of workman for any reason
whatsoever except those expressly excluded in the Section itself.
The expression “for any reason whatsoever” in Section 2(oo) could not be safely interpreted to
include the case of discharge of all workmen on account of bona fide closure of business, because
for the application of definition, industry should be a working or a continuing or an existing
industry, not one which is altogether a closed one. So the underlying assumption would be of
course, that the undertaking is running as an undertaking and the employer continues to be an
employer (Hariprasad Shivshankar Shukla v. A.D.Divakar, (1957) SCR 121), hereinafter referred to
as Hariprasad case.
The Hariprasad case and some other decisions, lead to the unintended meaning of the term
“retrenchment” that it operates only when there is surplus of workman in the industry which
should be an existing one. Thus, in effect either on account of transfer of undertaking or an
account of the closure of the undertaking, there can be no question of retrenchment within the
meaning of the definition contained in Section 2(oo). To overcome this view, the Government
introduced new Sections 25FF and 25FFF, providing that compensation shall be payable to
workmen in case of transfer of an undertaking or closure of an undertaking to protect the
interests of the workmen. Thus, the termination of service of a workman on transfer or closure
of an undertaking was treated as „deemed retrenchment , in result enlarging the general scope
and ambit of the expression (retrenchment) under the Act.

10.1.2 Unfair Labour Practices

A new Chapter VC relating to unfair labour practices has been inserted. Section 25T under this
Chapter lays down that no employer or workman or a Trade Union, whether registered under
the Trade Unions Act, 1926 or not, shall commit any unfair labour practice. Section 25U provides
that any person who commits any unfair labour practice shall be punishable with imprisonment
for a term which may extend to six months or with fine which may extend to one thousand
rupees or with both.

Notes Dismissal, etc., of an individual workman to be deemed to be an industrial
dispute; Where any employer discharges, dismisses, retrenches or otherwise terminates
the services of an individual workman, any dispute or difference between that workman
and his employer connected with, or arising out of, such discharge, dismissal, retrenchment
or termination shall be deemed to be an industrial dispute notwithstanding that no other
workman nor any union of workmen is a party to the dispute.

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