WORKMEN OF SUBONG TEA ESTATE versus THE OUTGOING MANAGEMENT OF SUBONG TEA ESTATE & ANOTHER

Citation: [1964] 5 S.C.R. 602 · Decided: 02-12-1963 · Supreme Court of India · Bench: P.B. GAJENDRAGADKAR · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

1963 
December 2 
602 
SUPREME COURT REPORTS 
[1964] 
WORKMEN OF SUBONG TEA ESTATE 
v .. 
THE OUTGOING MANAGEMENT OF SUBONG 
TEA ESTATE & ANOTHER 
(P.B. GAJENDRAGADKAR AND K.C. DAS GUPTA, JJ.) 
Industrial Dispute-Retrenchment of workmen-Validity-In-
dustrial Disputes Act, 1947 (14 of 1947), ss. 10(1) (d), 25F, 25G,' 
25H. 
On the 12th January, 1959, respondent no. I, who managed 
the Subong Tea Estate, agreed to transfer the aforesaid Estate 
of respondent no. 2. This agreement was subject to the approval 
to the Reserve Bank of India. The said approval was accorded 
on the 15th July, 1959, and the conveyance was actually executed 
on the 28th December, 1959. On the 17th February, 1959, the 
vendee i.e. respondent no. 2 was put in possession of the tea garden. 
On the 31st Augnst 1959, the manager of the vendor company, 
served notices on the 8 employees in question intimating to them 
that their services would be terminated with effect from the !st 
October, 1959. The eight employees were also paid retrench-
ment compensation. The Union representing the said emplo-
yees, protested against the retrenchment in question. The dispute 
in regard to the impugned retrenchment was referred to the Indus-
trial Tribunal, under s. 10(1) (d) of the Act. The Tribunal held 
that the impugned retrenchment had been validly effected by the 
vendor. It is against this award that the appellants have com" 
to this Court. 
Held: (i) Section 25F of the Industrial Disputes Act provides 
that no workmen employed in any industry who has beeu in con-
tinuous service for not less than one year under an employer shall 
be retrenched by that employer until one month's notice has b(:en 
served on him as prescribed by sub-s. (a); compensation paid to 
him as provided by sub-s. (b), and notice in the prescribed form 
is served on the appropriate Government as required by sub-s. (c). 
In other words, the three conditions prescribed by els. (a), i(b) 
and (c) of s. 25F appear prima facie to constitute conditions pre-
cedent before an industrial workman can be validly retrench,,d. 
(ii) Section 25F prescribes the conditions precedent for re-
trenchment, s. 25G prescribes the procedure for retrenchment and 
s. 25H, recognises the right of retrenched workmen for re-employ-
ment. 
(iii) The impugned retrenchment cannot, therefore, be taken 
to attract the operation of s. 25FF at all. It is not retrench-
ment consequent upon transfer; it is retrenchment effected after 
the transfer was made and it had been brought about by the trans-
feree who, in the meanwhile, had become the employer of the 
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5 S.C.R. 
SUPREME COURT REPORTS 
603 
retrenched workmen. The impugned retrenchment being invalid 
in law, cannot be said to have terminated the relationship of 
employer and employee between the vendee, respondent no. 2 
and 8 workmen concerned. Therefore, the Tribunal erred in law in 
holding that the impugned retrenchment had been properly effected 
by the vendor and that the only relief to which the retrenched 
1963 
Workmen of 
Subong Tea 
Estate 
employees were entitled was compensation and notice under 
v. 
s. 25FF of the Act. 
The Outgoing 
, 
(iv) The acceptance of retrenchment compensation by the Management of 
8 workmen should not be held to create a bar against them in the 
Subong Tea 
present proceedings for the reason that such technical pleas are Estate & Another 
not generally entertained in industrial adjudication. 
(v) In the present case, if the retrenchment effected by the 
vendor company is invalid because it had ceased to be the emplo-
yer, then it would follow that the retrenchment must be deemed 
to have been effected by the vendee. The retrenchment effected 
by the vendee is invalid for the reason that it has not complied 
with s. 25F or s. 25G of the Act. In the present case no case has 
been made out for effecting any retrenchment at all. The manage-
ment can retrench its employees only for proper reasons. The 
employer's right to retrench his employees can be validly exercised 
only where it is shown that any employee has become surplus 
in the undertaking. Workmen may become surplus on the ground of 
rationalisation or on the ground of economy reasonably and bona-
fide adopted by the management or of other industrial trade reasons. 
CIVIL APPELLATE JURISDICTION: 
Civil 
Appeal 
No. 132 of 1963. 
Appeal by special leave from the award dated 
July 5, 1961 
of the Industrial Tribunal Assam in 
Reference No. 39159. 
D.L. Sen, and Janard

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