Sec 25 F

Workmen of Subong Tea Estate vs. The outgoing Management of Subong Tea
Estate and Anr, 1964 (5) SCR 692.

The right of management to effect retrenchment can not normally be questioned however when a
dispute arises before an industrial court, in regard to the validity of any retrenchment, it would be
necessary for industrial adjudication to consider whether the impugned retrenchment justified for proper
reason.

Pramod Jha and Ors. Vs. State of Bihar and Ors. 2003. INDLAW SC 203
Underlying object of Sec 25 F is two-fold:

a. A retrenched employee must have one month’s time available at his disposal to search for
alternate employment, and so, either he should be given one month’s notice of the proposed
termination or he should be paid wages for the notice period

b. The workman must be paid retrenchment compensation at the time of retrenchment, or before, so
that once having been retrenched there should be need for him to go to his employer demanding
retrenchment compensation and the compensation so paid is not only a reward earned for his
previous services rendered to the employer but is also a sustenance to the worker for the period
which may be spent in searching for another employment.

Sec 25 FFF

Gammon India Ltd. vs Niranjan Dass (1984) 1 SCC 509, discussed the issue that whether
the removal of employees due to recession and not amounting to a closure can be equated to
retrenchment.
In the instant case a three Judges Bench construing the one month’s notice of termination in that
case due to reduction of volume of business of the company said that on a true construction of the notice
served to the employees, it would appear that the respondent (employees/workers) had become surplus
on account of reduction in volume of work and that constitutes retrenchment even in the traditional sense
of the term. The recitals and averments in the notice leave no room for doubt that the service of the
respondent was terminated for the reason that on account of recession and reduction in the volume of
work of the company, respondent has become surplus. Even apart from this, the termination of service for
the reasons mentioned in the notice is not covered by any of the Clauses (a), (b) and (c) of Section 2 (oo)
which defines retrenchment and it is by now well settled that where the termination of service does not

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fall within any of the excluded categories, the termination would be ipso facto retrenchment. It was not
even attempted to be urged that the case of the respondent would fall in any of the excluded categories. It
is therefore indisputably a case of retrenchment.”
The Court also deliberated on the question whether the Single Judge was justified in coming to
the conclusion that the case was one of closure covered by Section 25FFF or the Industrial Tribunal was
right in holding that it is a case of retrenchment covered by Section 25 F of Industrial Disputes Act. This
point was answered by mere reference to the notice served by the appellant-company on the respondent
intimating to him that his services will no more be required. The notice recited that as a result of recession
in the volume of work of the company, services of the respondent would no more be required by the
company after October 14, 1967 and this notice may be treated as a statutory notice as contemplated by
Section 25F(a). However, there was no mention that the office to which the respondent was attached was
in the process of being closed down.
Even apart from this, the termination of service for the reasons mentioned in the notice is not
covered by any of the Clauses (a), (b) and (c) of Section 2(oo) which defines retrenchment and it is by
now well-settled that where the termination of service does not fall within any of the excluded categories,
the termination would be ipso facto retrenchment. It is therefore indisputably held to be a case of
retrenchment.

Sec 25 F

Ashok Kelwade and Ors. vs Vidarbha Gas Vessels Pvt. Ltd. 2008 (5) Bom CR18
On 28.7.1998 the respondent issued an order retrenching the complainants for the reasons that there
was severe recession in the market on accumulation of stock putting the respondent in financial
difficulties.
This retrenchment notice was admittedly neither served on all complainants individually nor was
the retrenchment compensation paid on the same day. The respondent employer stated in the
retrenchment notice that seniority list was displayed but there was no mention about the withdrawal of the
earlier retrenchment order dated 28.7.1998 nor any permission was sought from the Labour Court to take
action of retrenchment for the second time. The respondent has contravened the provisions of Section
25F and 25G and Rule 81 of the Industrial Disputed Act and Rules. The respondent was estopped from
issuing second retrenchment order in the above background.
It was also stated that there were 135 employees working with the respondent since one year and
therefore the provisions of Chapter V-B were applicable but before issuing retrenchment order three
months notice was not given and the retrenchment was in violation of Section 25 N, IDA, 1947.
The Court held that the validity of second retrenchment as unfair labour practice can however be
decided independently and even such second termination can be declared as a result of unfair labour

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practice, but to say that an employer cannot at all issue the second retrenchment order is to prevent the
employer from exercising his right to act according to law.
Thus, Section 25F of the Act requires service of individual notice on individual workman of the
retrenchment order at least in the present case because there is no positive reliable evidence on record
to show that all those proposed to be retrenched were present and had personally seen the notice of their
retrenchment. That apart, if according to the employer the retrenchment compensation was to be
collected along with the wages for the period from first termination to second termination from the
accounts department, the employer ought to have adduced documentary as well as oral evidence about
the funds being kept ready on the date of retrenchment with the accounts section of the Company. Since
there was no evidence it could not be immediately believed that the retrenchment compensation etc. were
ready for payment to the retrenched workers at the time of retrenchment because in the absence of proof
there will be violation of the mandatory provisions of Section 25F of the Industrial Disputes Act, which
requires payment of retrenchment compensation to a workman at the time of retrenchment. Thus, the
court held that section 25F, which is a mandatory provision, stands violated.

Pramod Jha and Ors. vs State of Bihar and Ors, 2003 SC 203
The daily wagers were informed that their services were terminated with effect from 10.08.1995
and the provisions of section 25F of Industrial Disputes Act would be complied with; that this letter must
be treated as notice in accordance with section 25 F of Industrial Disputes Act. On 1.7.1995 another
notice was issued giving each one of them opportunity to show cause against the proposed termination of
their employment, consistently with Section 25 F of the ID Act, on or before 17.7.1995.
The counsel for the appellant employees submitted that the retrenchment suffers from two
serious infirmities: firstly, the notice is not accompanied by the amount of requisite compensation, and
secondly, the amount of compensation has not been paid or tendered to the workmen; asking the
workman to come to the Divisional Office for collecting the amount of compensation cannot be said to be
compliance of Clause (b). Reliance was placed on a recent decision of this Court in Sain Steel Products
vs Naipal Singh. The counsel for the State Government submitted, on the other hand, that the
communications made on behalf of the State of Bihar and the steps taken by it fully and strictly satisfy the
requirements of Section 25F and no fault can be found therewith.
The Court found the appeals to be devoid of merits and they were accordingly dismissed.
However, for the convenience of the appellants the respondents were directed to have the banker’s
cheques renewed or fresh banker’s cheques drawn up in lieu of the earlier banker’s cheques for the
amount due and payable to the workers under Section 25F of the Act and inform the workers to collect
the same at an appointed time and place.

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R. Kondaiah vs Union of India (UOI) represented by the Chief of the Air Staff and
Ors. MANU/TN/1697/2003

The court held that the reliance placed upon the clauses providing for termination of service by
mere service of notice, cannot at all also be sustained in view of the well accepted proposition that any
such provision, clauses in the standing orders providing for automatic termination of service of a
permanent employee would be bad if it does not provide an opportunity of hearing (Domestic Enquiry /
Principle of Natural Justice). Which means either the termination should be within the scope of
retrenchment or in case of accepted proposition under standing orders, then at least provide an
opportunity of hearing through domestic enquiry.
Furthermore the Court held that Section 25-O of the Industrial Disputes Act deals with the
procedure for closing down an undertaking and admittedly in this case, no such prior permission was
sought for much less obtained from the appropriate Government. The court relying on the Supreme Court
ruling in N. Chopra vs Lab. Court. & Ors. 1994 (III) LLJ, 252 confirmed that termination without
compliance of Section 25-F would render the termination void ab initio and that the employee would be
entitled to reinstatement with full back wages and allowances.
The court also relied on the judgment of N. Ram vs C.O. & Jt. Commr. Of Lab., vs sp. & Ors.
1998 (III) LLJ 871 where it was held that if the employer intends to close down an undertaking and has
not applied for prior permission for closure, there was no closure of undertaking in the eye of law and that
the employer cannot on its own authority terminate the service of the employees.
Court opined that the provisions of the Industrial Disputes Act have been enacted for the welfare of the
working classes and being welfare legislation cannot be treated as subject to the institution being profit
earning establishment ignoring welfare of the employees.
Thus, the officials of the respondents ought to have followed the procedure as contemplated
under Chapter V-A, Chapter V-B of the Industrial Disputes Act. However, the relief was moulded and
officials were held entitled to receive the retrenchment compensation as contemplated under Section 25F
of the Act.

Rajendra Bhagat and Ors. vs The Labour Court and Anr. 2004 (102) FIR 680

The Court relying on the ruling of Surpeme Court in Post Graduate Institute of Medical Education
and Research, Chandigarh vs Vinod Krishan Sharma and Anr.2000 (3) LLJ (Suppl) 1678, held that where
the termination itself was found to be in violation of Section 25F of the Industrial Disputes Act, the result
was that the workman concerned will always be deemed to be in service throughout and once that
conclusion is reached and unless there is a clear evidence of gainful employment in the meantime, the
concerned workmen cannot be deprived of their back wages to any extent.

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Hakam Singh vs Presiding Officer, Labour Court and Anr. 2003 (134) PLR 690

The court held that since it had been established on record by evidence before the Labour Court
that the petitioner remained absent from duty without getting further extension of leave and without
making any such application. Before terminating the services of the petitioner on the ground of voluntary
abandonment of the service, the respondent Management issued notice to him and also published notice
in the daily news paper. In spite of that the petitioner did not come to resume his duties.
The court inferred this fact to establish that the petitioner was not serious for the job and he had
not cared to assume his duties immediately after the expiry of leave period or in spite of the notice sent by
the respondent Management.
The court ruled that the requirements of natural justice are:
• A workman should know the nature of the complaint or accusation;
• An opportunity to state his case; and
• The management should act in good faith which means that the action of the management should be
fair, reasonable and just.
In the instant case the principle of natural justice was held to be fully satisfied before terminating
the services of the petitioner. The respondent Management has clearly established before the Labour
Court that it has adopted a clear, reasonable and just procedure. Notice was duly issued to the petitioner
and when he did not respond, again notice was duly published in the news paper. In spite of that, the
petitioner did not respondent and resume his duties. In these circumstances, it was not necessary to
hold a domestic enquiry against the petitioner. In view of the aforesaid the court held the writ petition
to be merit less.

Chattar Singh and Ors. vs Indira Gandhi National Open University 2001 INDLAW
DEL 1071

It was discussed whether the Court could order regularisation of the petitioners under Section 25-
F of the Industrial Disputes Act, 1947 – The petitioner were appointed on contract basis for a period of
three months and had the provision for termination without assigning any reason, by giving a notice of
fifteen days. The terms were accepted by the petitioner without any protest at the time of appointment.
The petitioners were replaced with another set of employees in the same post. It was held that the Court
had no jurisdiction to pass the order for regularisation of the petitioners and the principle of waiver and
estoppel was applicable to the matter. Further, the petitioner had not undergone the process of selection
and the respondent was the best judge of the affairs and its affairs could not be substituted by the
decision of the Court.