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The Bench consisting of Arun Mishra J. and MR Shah J., observed that termination for the reason of ‘invalid appointment’ is legally valid form of ‘Retrenchment’ u/s 25F and 2(oo) of Industrial Disputes Act. The term ‘Retrenchment’ is defined in Section 2(oo) of the Act and Section 25F lists the condition precedent to retrenchment of the workers.
The Labour Court, during the case on termination of workmen by Bihar State Scheduled Caste Corporation Limited, stated that if a workmen has worked for 240 days in a year and their retrenchment is illegal, then he is entitled to compensation equivalent to 3.33 years’ salary, including allowances but no reinstatement and basic wage can be provided to the workmen.
When the issue regarding, whether termination of a workmen for the reason of ‘invalid appointment’ amounts to ‘Retrenchment’? was raised before the Full Bench of Patna High Court, the Court held that when the appointment is itself void ab initio, then there is no necessity for a termination order and such termination will not amount to retrenchment as defined in Section 2(oo) of the Act and does not attract Section 25F of the Act. Thus, the workmen are not entitled to reinstatement as well as compensation, despite working for 240 days in a year.
On an appeal by the Management to the Supreme Court, the Court dismissed the appeal stating that ‘the retrenchment has rightly been held to be illegal’, wherein the impugned order of the Patna High Court stated that termination in this case, is not retrenchment as of Section 25F of the Act.
Even though the Supreme Court stated that termination of workmen owing to invalid appointment will amount to retrenchment. It did not set aside the Patna High Court Full Bench Judgement which held otherwise.
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