Details of the case:
Appellant : Koodaranji Service Corp. Bank
Respondent: Smt. M.M. Lissy & Ors.
Jurisdiction: Kerala High Court -
(1994) IILLJ 97 Ker.
I. Material Facts of the Case:
II. Issues Involved:
- Appellant is Koodaranji Service Co-operative Bank Ltd., Koodaranji,
Mukkom Kozhikode. First respondent, Smt. Lissy, was appointed in the Bank as a
Clerk on daily wages on March 2, 1983. She continued to serve the Bank in that
capacity up to April 1, 1989.
- Her services were terminated on the basis of the instructions issued by
the higher authorities under the Cooperative Societies Act. Termination of
her services gave rise to an industrial dispute.
- It was referred to the Labour Court, Kozhikode for adjudication.
Labour Court entertained the same. After appreciating the evidence let in by the
contesting parties, the Labour Court passed an award on January 21, 1992
directing the Bank to reinstate Smt. Lissy as a Clerk with back wages and
continuity of service. Bank challenged that award in O.P.
- Learned Single Judge dismissed that Original Petition by judgment dated
August 17, 1992 taking the view that the termination of service of Smt.
Lissy is retrenchment as defined under the Industrial Disputes Act, hereinafter
referred to as "the Act", since it does not fall within Clauses (a), (b) and (c)
of the definition in Section 2(oo) of the Act. Bank questions the correctness of
III. Related Legal Provisions:
- Whether the termination of service of Smt. Lissy will amount to
retrenchment as defined in the Act Section 2(oo) of the Act?
- Whether termination of Smt. Lissy from the services amounts valid &
Justifiable under this Act or not?
According to the Sec. 2(oo) of ID Act,
"Retrenchment" means the termination by the employer of the service of a workman
for any reason whatsoever, otherwise than as a punishment inflicted by way of
disciplinary Action, but does not include:
IV. Legal Reasoning:
- Voluntary retirement of the workman; or
- retirement of the workman on reaching the age of superannuation if the
contract of employment between the employer and the workman concerned
contains a stipulation in that behalf; or (bb) termination of the service of
the workman as a result of non-renewal of the contract of employment between
the employer and the workman concerned on its expiry or of such contract
being terminated under a stipulation in that behalf contained therein: or
- Termination of the services of a workman on the ground of continued
V. Precedents referred in this case:
- All retrenchments will result in termination of service of a workman by
the employer. But all terminations of service of a workman by the employer
will not fall within the definition of retrenchment.
- It must be the termination of the service of a workman by his employer.
This shows that there must be a valid relationship of master and servant
between the employer and the workman.
A retrenched workman is entitled to re-employment in preference to others
when the employer proposes to take into his employ any other person, as per
the provisions contained in Section 25-H of the Act.
This shows that the termination of service of the workman should have been
from a post to which he could have been continued. If the post is such that
its continuance is not possible, then the termination of service of the
workman from that post cannot amount to retrenchment as defined under the
- Section 80 of the Co-operative Societies Act enjoins the Government to
fix the number and designation of officers and servants of the different
classes of co-operative societies. In exercise of that power, Government
framed Rules. Rule 188 of the Co-operative Societies Rules, dealing with
staff pattern, mandates that every society shall adopt the staff pattern
indicated in Appendix III to the Rules.
As per that provision, where any society is in need of any change in the
pattern of staff, society must get prior approval of the Registrar of
Co-operative Societies for effecting the change. As per Appendix III
attached to the Rules, no co-operative society is entitled to engage daily
- In the case before us none has raised a contention that appellant
society got prior approval from the Registrar of Co-operative Societies to
engage workman on daily wages. So, the appointment of a workman in the
appellant bank was against the statutory provision. Smt. Lissy was appointed
on March 2, 1983 on daily wages basis at the rate of Rs. 10/- per day. The
wages was increased to Rs. 15/- per day and thereafter to Rs. 20/-.
She continued to get that enhanced ; wages till her services were terminated
on April 1, 1989. During the tenure of service, authorities under the
Co-operative Department instructed the appellant bank to terminate the
services of the daily rated employees. Those directions were not heeded to
by the appellant bank till the Vigilance Department initiated Action against
As a result of such Action, the bank was not in a position to continue the
services of Smt. Lissy. Consequently her services were terminated. These
facts clearly show that Smt. Lissy's services happened to be terminated
because it could not be continued. Since her services were terminated while
she was working as a Clerk on daily wages, she can be reinstated, if at all
possible, only to that category of daily rated employee.
No co-operative society, as per the rules, can have a daily rated employee
in its service. Therefore, the termination of service of Smt. Lissy cannot
be considered as retrenchment as defined in the Act.
VI. Failure of defence taken by Smt. Lissy before High Court:
- In Workmen v. Bangalore W.C. & S. Mills Co. the Supreme Court took
the view that termination of service of workmen when the employer has no
option in law to continue them in service is not retrenchment.
Lordships observed (at p 216):
"It seems to us that a service cannot be said to be terminated unless it was
capable of being continued. If it is not capable of being continued, that is
to say, in the same manner in which it had been going on before, and it is,
therefore, brought to an end, that is not a termination of the service".
This statement of law applies on all fours to the Acts before us. The
services of Smt. Lissy as Clerk on daily wages were not capable of being
continued. Her services were terminated because she could not be continued
in the same manner in which she was engaged earlier. It was as a result of
such supervening impossibility the bank was compelled to terminate her
services. Such termination of service cannot amount to retrenchment as
defined in the Act.
- K.N. Gopalan v. State Bank of Travancore secured employment in
the bank without disclosing certain material fActs which if were disclosed
would have disentitled him from getting the post. When that concealment of
fActs was noticed by the bank, petitioner's services were terminated. A
Division Bench of this Court took the view that the termination of his
service without enquiry was valid, since the appointment itself was void.
- In Urakam Service Co-op. Society v. Sujatha the Cooperative
society was directed to terminate the service of an employee as the
appointment was made in violation of the provisions contained in the
Co-operative Societies Rules. That termination gave rise to an industrial
dispute. Labour Court took the view that the termination of the service was
bad and illegal. Consequently the society was directed to reinstate the
The correctness of that decision was challenged before this Court. This
Court allowed that Original Petition and quashed the award of the Labour
Court holding that the society had no alternative, but to terminate the
services of the employee in compliance with the orders of the Registrar. In
the instant case also the appointment of Smt. Lissy was against the
provisions contained in the Co-operative Societies Rules and the Registrar
directed the Bank to terminate her services.
Smt. Lissy brought to the court notice that a Division Bench decision of the
Rajasthan High Court in Prabhudayal Jat v. Alwar Sahkari Bhumi Vikas Bank Ltd
contended that the termination of service of an employee, whose appointment was
invalid, will also amount to retrenchment.
The Division Bench, without much discussion, took the view that the employee's
case there was not covered by any of the exceptions contained in the definition
of retrenchment given in the Act and so the termination of service amounts to
retrenchment. Court find that difficult to agree with this view. Therefore it
respectfully expressed their dissent from the said decision.
Also Respondent argued since she has worked in the bank for nearly six years.
But court was not impressed with this argument. Her appointment was against the
statutory rules. She cannot be continued in the post held by her. The management
is having no volition to continue her in the service as daily rated employee.
VII. Decision of the court:
In these situations, Court was clear in its mind that the termination of service
of Smt. Lissy cannot be considered as retrenchment as defined in the Act. The
result, therefore, is that the Labour Court was clearly in error in directing
the bank to reinstate Smt. Lissy as Clerk. In the result, appeal is allowed. The
judgment of the learned Single Judge is reversed and Exhibit P3 award passed by
the Labour Court, Kozhikode is quashed.
Form the above case-note, we can say that one should carefully handle the
concept of retrenchment while suing. The appointment of the Smt. Lissy in this
case was against to the rules and there by terminated from services. In case, if
removal leads to gross violation of natural justice or against the provisions,
we can take that as dispute.
- Section 2(oo) of Industrial disputes Act, 1947.
- Workmen v. Bangalore W.C. & S. Mills Co.,(1962-I-LLJ-213).
- K.N. Gopalan v. State Bank of Travancore, (L.L.R. 1980 (1) Kerala 81).
- Urakam Service Co-op. Society v. Sujatha, 1988 (2) K.L.T.S.N.15 - Case
- Prabhudayal Jat v. Alwar Sahkari Bhumi Vikas Bank Ltd.
- Kadimisetty Sai Sreenadh, Final year students of Damodaram
Sanjivayya National Law University, Visakhapatnam
Email: [email protected] and
- Vamsi Krishna Bodapati, Final year students of Damodaram
Sanjivayya National Law University, Visakhapatnam.
Email: [email protected]