UPTRON INDIA LTD. versus SHAMMI BHAN AND ANR.

Citation: [1998] 1 S.C.R. 719 · Decided: 06-02-1998 · Supreme Court of India · Bench: S. SAGHIR AHMAD · Disposal: Dismissed

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Judgment (excerpt)

'. J 
'( 
UPTRON INDIA LTD. 
A 
v. 
SHAMMI BHAN AND ANR. 
FEBRUARY 6, 1998 
[S. SAGHIR AHMAD AND M. JAGANNADHA RAO, JJ.] 
B 
Labour Law: 
Industrial Employment (Standing Orders) Act, 1946 : 
Objects-Employment-Under industrial law-Concept of-Transition c 
from contract to status under labour law enactment-Explained 
Contract Act, 1872 : 
General principles-Service contracts-Terms and conditions- D 
Applicability of-Stated-Confirmation-Held : Guarantees security of 
tenure-Hence, services of a permanent employee in an establishment, which 
is 'State' under Art. 12 cannot be terminated abruptly and arbitrarily by 
giving a simple notice-Constitution of India, 19.50, Art. 12. 
Unauthorised absence-Automic termination of service-Permissibility E 
of-Held: The expression "liable to automatic termination" in the Certified 
Standing Orders confers discretion upon the management to terminate or not 
to terminate the services of a permanent employee who overstays leave--
Such discretion cannot be exercised capriciously-Principles of natural justice 
have to be read into the relevant clause-Therefore, the affected employee 
must be given an opportunity of hearing-Hence, a provision in Certified F 
Standing Orders providing for automatic termination of service is bad unless 
it is directly related to production in a factory or an industrial establishment-
Administrative Law. 
Industrial Disputes Act, 1947 : Section 2(00). 
Retrenchment-Definition of-Held : is conclusive. 
G 
Section 2(oo)(bb)-Unauhorised absence-Automatic termination of 
service-Certified Standing Orders-Provided for atomatic termination of 
services of a workman if he overstayed on leave without permission for more H 
719 
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B 
c 
D 
E 
F 
G 
720 
SUPREME COURT REPORTS 
[ 1998] l S.C.R. 
than seven days-Validity of-Held : In the absence for a fixed term of 
contract termination of service in pursuance stipulation in the Cert(fied 
Standing Orders is not covered by S. 2(oo)(bb)-Hence, auotmatic termination 
in such cases amounts to retrenchment under S. 2(00). 
Practice and Procedure : 
Wrong concession on-Question of law-Made by counsel-Held : Not 
binding on his client-Further, such concession cannot constitute a binding 
precedent. 
The respondent was a confirmed employee of the petitioner, and acquired 
the status of "permanent" employee. The respondent's services were 
terminated due to her overstay on leave without permission in terms of 
clause 17(g) of the Certified Standing Orders, which provided for automatic 
termination if a workman overstayed on leave. 
The respondent raised an industrial before the Industrial Tribunal 
which held that the termination of services of the respondent amounted to 
"Retrenchment" within the meaning of Section 2( oo) of the Industrial Disputes 
Act, 1947. The Tribunal further held that since all other legal requirements 
had not been followed, the termination was bad and that the respondent had 
to be reinstated with fifty per cent back wages. 
The High Court dismissed the writ petition filed by the petitioner and 
held that while invoking the provisions of clause 17(g) of the certified 
Standing Orders, the respondent ought to have given an opportunity for 
he~ring. Hence, this Special Leave Petition. 
On behalf of the petitioner it was contended that as per remarks of this 
Court in an earlier case provision for automatic termination of services 
· could be validly made .in the Certified Standing Orders and therefore, 
automatic termination of services of the respondent for overstay on leave was 
valid. 
Dismissing the petition, this Court 
HELD : 1.1. The concept of employment under industrial law involves, 
like any other employment, three ingredients : 
(i) 
management/industry/factory/employer, who employs or, to put 
H 
it differently, engages the services of the workman; 
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UPTRONINDIALTD. v. S. BHAN 
721 
(ii) employee/workman, that is to say, a person who works for the A 
employer for wages or monetary compensation; and 
(iii) contract of employment or the agreement between the employer 
and the employee whereunder the employee/worlmtan agrees to 
. render services to the employer, in consideration of wages, 
subject to the supervision and control of the employer. 
B 
(726-C-EJ 
1.2. The general principles of the Contract Act, 1872 applicable to an 
agreement between two 1iersons having capacity to contract, are also applicable 
to a contract of industrial employment, but the relationshi1i

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