Venkataramiah, J. - (1.) The question arising for decision in this case is whether an employer whose establishment is governed by the Andhra Pradesh Shops and Establishments Act, 1966 (hereinafter referred to as 'the State Act') is required, while retrenching any worker, to comply with the provisions of section 25F of the Industrial Disputes Act, 1947 (hereinafter referred to as 'the Central Act') or with Section 40 of the State Act.
(2.) The petitioner in this case is a cooperative society carrying on business at Vijayawada in the State of Andhra Pradesh. It retrenched nine of its clerks - Respondents 1 to 9 herein. Respondents 1 to 4 were retrenched on 1-10-1978 and respondents 5 to 9 were retrenched on 22-9-1978 on the ground that the business of the management did not warrant the continuance of its heavy establishment. All the respondents challenged the orders terminating their services in an appeal filed under S. 41(1) of the State Act before the appellate authority. The appellate authority set aside the orders of retrenchment by nine separate judgments delivered on August 1, 1979 and directed the reinstatement of the respondents with full back wages. Aggrieved by the decision of the appellate authority the management, the petitioner herein, filed nine appeals before the Labour Court, Guntur under S. 41(3) of the State Act. The Labour Court allowed the appeals filed against respondents 5 to 9 and set aside the orders which had been passed by the first appellate authority. It however, dismissed the appeals filed against respondents 1 to 4 holding that the orders of retrenchment were bad in law since employees junior to these respondents had been retained in service. It, however, directed that any amount paid to respondents 1 to 4 as notice pay and gratuity etc. under S. 40 of the State Act on account of the termination of their services may be deducted from the back wages payable to them. Aggrieved by the decision of the Labour Court respondents 5 to 9 filed writ petition No. 163 of 1981 on the file of the High Court of Andhra Pradesh and the management, the petitioner herein, filed writ petition No. 6151 of 1980 before the High Court against respondents 1 to 4. The learned single Judge who heard the said two writ petitions dismissed Writ Petition No. 163 of 1981 filed by respondents 5 to 9 and allowed Writ Petition No. 6151 of 1980 filed by the management against respondents 1 to 4. The learned single Judge took the view that respondents 5 to 9 could not claim the benefit of S. 25F of the Central Act in a proceeding initiated under S. 41 of the State Act and dismissed their writ petition. He, however, allowed the writ petition filed by the management and remanded the case to the Labour Court to rehear the case after permitting respondents 1 to 4 to implead four other employees, namely, Seetharamaiah, Rajagopal Rao, Krishna Murthy and Khader Husain, who were alleged to be seniors to respondents 1 to 4 and hearing them on the question of inter se seniority between them and the said four other employees. The learned Judge, however, observed that if S. 25F of the Central Act was applicable to the cases 'I have no doubt that these orders of termination would have to be set aside, because S. 25F denies the rights of the employer to terminate the service of an employee without payment of retrenchment compensation' and that compensation had not been paid in accordance with S. 25F. But he found that S. 25F of the Central Act was not applicable to proceedings under the State Act. Aggrieved by the decision of the learned single Judge respondents 1 to 4 and respondents 5 to 9 filed writ appeal Nos. 892 of 1983 and 893 of 1983 respectively before the Division Bench of the High Court. The common contention urged by both the groups of employees, who were appellants in these two appeals, was that the question of their retrenchment was governed by S. 25F of the Central Act and since the orders of retrenchment had not been passed in conformity with the provisions of S. 25F of the Central Act the said orders were liable to be set aside and they were entitled to be reinstated. The Division Bench accepted the above contention of respondents 1 to 9 and allowed both the appeals holding that the orders of termination were unsustainable. Aggrieved by the decision of the Division Bench of the High Court the petitioner has filed these Special Leave Petitions under Art. 136 of the Constitution.
(3.) The only question which arises for decision in this case, as mentioned above, is whether the retrenchment of an employee in an establishment governed by the State Act is governed by the provisions of S. 40 of the State Act or by the provisions of Chapter V A of the Central Act which deals with lay-off and retrenchment. For purposes of convenience S. 40 of the State Act is set out below: "40. Conditions for terminating the services of an employee and payment of gratuity:- (1) No employer shall without a reasonable cause and except for misconduct terminate the service of an employee who has been in his employment continuously for a period of not less than six months without giving such employee, at least one month's notice in writing or wages in lieu thereof and in respect of an employee who has been in his employment continuously for a period of not less than five years, a gratuity amounting to fifteen days' average wages for each year of continuous employment. (a) the expression 'wages' does not include overtime wages: (b) the expression 'average wages' means the daily average of wages for the days an employee actually worked during the thirty days immediately preceding the date of termination of service ; (c) an employee in an establishment shall be deemed to have been in continuous employment for a period of not less than six months, if he has worked for not less than one hundred and twenty days in that establishment within a period of six months immediately preceding the date of termination of the service of that employee ; (d) where the total continuous employment is for a fraction of a year or extends over a fraction of a year in addition to one or more completed years of continuous employment, such fraction, if it is not less than a half year shall be counted as a year of continuous employment in calculating the total number of years for which the gratuity is to be given. (2) Where a gratuity is payable under subsection (1) to an employee, he shall be entitled to receive his wages from the date of termination of his service until the date on which the gratuity so payable is actually paid subject to a maximum of wages for two months. (3) An employee, who has completed the age of sixty years or who is physically or mentally unfit having been so declared by a medical certificate, or who wants to retire on medical grounds or to resign his service, may give up his employment after giving to his employer notice of at least one month in the case of an employee of sixty years of age, and fifteen days in any other case; and every such employee and the dependant of an employee who dies while in service shall be entitled to receive a gratuity as provided in subsection (1). He shall be entitled to receive the wages from the date of giving up the employment until the date on which the gratuity so payable is actually paid, subject to a maximum of wages for two months. (4) The services of an employee shall not be terminated for misconduct except, for such act or omissions and in such manner, as may be prescribed.";