JUDGMENT V. M. Sahai, J.
1. The short question that arises for consideration in this writ petition is whether the employees of Bhadohi Woollens Ltd., a Government company (in brief company) which has been winded up. can be absorbed under the Uttar Pradesh Absorption of Retrenched Employees of Government or Public Corporations in Government Service Rules, 1991 (in brief Rules 1991).
2. The company was a 100% State-owned company. Its shares, in entirety, were held by U. P. State Textile Corporation Ltd., Kanpur and U. P. Export Corporation Ltd., Kanpur. In S. S. Verma v. G. M. Elgin Mills. 1989 (2) VPLBEC 179, it was held that even a Government company which is wholly owned and controlled by the State is an instrumentality of the State within the meaning of Article 12 of the Constitution. Since the company was owned and controlled by the two Government corporations, whose affairs were fully owned and controlled by the State, it was a Government company as defined in Article 12 of the Constitution, therefore, amenable to writ Jurisdiction of the Court.
3. The petitioners, rather all the employees of the company were appointed prior to 1.10.1986. They were working with the company continuously when it became sick. On 27.11.1995, the Board of Industrial and Financial Reconstruction (B.I.F.R.) on a reference made to it recommended to this Court for its winding up under Sick Industry [Special Provisions) Act, 1985. The recommendation was accepted on 20.2.1996 and the company was winded up. The assets of the company were handed over to the Official Liquidator on 6.4.1996. On 18.5.1996, the Managing Director of the U. P. Textiles Corporation, who it is not denied was also the Managing Director of the company, wrote a letter dated 18.5.1996 to the Principal Secretary, Industrial Development Department of the Government that there were 323 employees of the company who, in consequence of winding up, were entitled to be absorbed in accordance with Government orders. When nothing was done with regard to absorption, the employees filed two petitions being Writ Petition No. 13439 of 1997 and 24240 of 1997 seeking absorption in some other government department in accordance with Rules 1991. Since no counter-affidavit was filed in any of the petition, both the writ petitions were disposed of by judgment dated 15.1.1998 directing the respondents to consider the claim of absorption of the petitioners by a speaking order.
4. By orders dated 28.4.1998 (Annexure-18 to the writ petition), the claim of absorption was rejected. It was held that a retrenched employee could not be absorbed on posts falling within the purview of Public Service Commission. So far absorption in Class III and IV posts was concerned, it was held that a retrenched employee could be given preference in direct recruitment provided he had been issued retrenchment certificates. But since no such certificate was issued in employees' favour by the appointing authority of the company, they were not entitled to be absorbed in accordance with the absorption rules. It was also held that the company having closed down, the employees were not entitled to absorption.
5. I have heard Sri Ashok Khare, the learned counsel for the petitioner and Sri V. K. Rai the learned counsel for the State. On the facts stated above and, the arguments advanced the questions that arise for consideration are, whether the employees of a Government company are entitled to benefit of absorption in Government department or corporation on winding up of a company, whether the petitioners could be held to be retrenched employees and whether an employee satisfying alt the requirements could still be denied the benefit of absorption on the ground that he did not possess a retrenchment certificate issued by the appointing authority/managing director.
6. Before taking up these issues, it is necessary to mention that the employees of the company had made a request to the managing director of the company, who was appointing authority as well, by letter dated 6.4.1996 for issuance of retrenchment certificate but the managing director instead of issuing any individual certificate to each employee wrote a letter to the Government on 18.5.1996 for absorption of all the employees. What is the effect of this letter will be examined later.
7. Retrenchment has been defined under Section 2 (s) of the U. P. Industrial Disputes Act, 1947 as follows :
"Section 2 (s)--"Retrenchment means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as punishment inflicted by way of disciplinary action, but does not include :
(i) voluntary retirement of the workman ; or
(ii) retirement of the workmen on reaching the age of superannuation if the contract of employment between the employer and workman concerned contains a stipulation in that behalf."
8. The dictionary meaning of 'retrenchment' is to cut down. The legislative meaning as is clear from the enactment extends to include any action of the management which results in putting an end to the service of the workman except to the extent mentioned in the section. The sweep of the section is very wide. The expression 'for any reason is significant. Its use with the words 'whatsoever' is a legislative method of putting It beyond any doubt that any action of the employer which results in termination of service or cutting down of employment and throwing out the workman out of employment would be retrenchment. The only exception to it is punishment by way of disciplinary action, which has been extended to include voluntary retirement and superannuation. In other words, barring these situations, the termination of service of a workman would be retrenchment. On the interpretation of the section, a workman whose services have come to an end otherwise than as punishment for disciplinary action or voluntary retirement or superannuation would be a retrenched employee. It was argued by learned State counsel that since the services of the petitioners came to an end by winding up of the company, it could not be termed as 'termination of service of a workman'. According to the learned counsel, it was an event on which the employer had no control and in any case, it could not be stretched to mean 'termination' by the employer of the services of the employees of the company. Similar argument was rejected by the Apex Court while Interpreting Section 2 (oo) of the Industrial Disputes Act, 1947 which defines retrenchment to mean, 'the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action'. In State Bank of India v. Shri N. Sundara Money. AIR 1976 SC 1111. It was held that:
"to protect the weak against the strong this policy of comprehensive definition has been effectuated. Termination embraces not merely the act of termination by the employer, but the fact of termination howsoever produced."
9. The view has consistently been reiterated by the Court in latter decisions. The argument of the learned counsel, therefore, has no merit. Any termination of service irrespective of howsoever it was brought would be retrenchment unless it is covered by one of the exceptions mentioned in the section. The Industrial Disputes Act is a welfare legislation. -It has to be interpreted liberally so as to advance the purpose of its enactment that is to protect the workman against any action of the employer leading to termination of his service.
10. As regards employees of Government company and corporations, two questions could arise one whether an employee of a Government company could on winding of the company be deemed to be a retrenched employee as understood in the Act and whether such an employee could also claim or entitled to re-employment or absorption as is availabie to workmen under the Act. Both these aspects have been taken care of by the Government when it framed the Absorption Rules in 1991. It explains that an employee of a Government company on winding up would be a retrenched employee and he shall be entitled for absorption in Government service in accordance with orders issued from time to lime. For better understanding the rules framed in 1991 are quoted below :
"In pursuance of the provisions of clause (3) of Article 348 of the Constitution, the Governor is pleased to order the publication of the following English translation of Notification No. 1/4/90-Karmik-2, dated May 9, 1991.
No. 3/4/90-Karmik-2 Dated May 9. 1991 In exercise of the powers conferred by the proviso to Article 309 of the Constitution, the Governor is pleased to make the following rules to provide for the absorption in Government Service of the retrenched employees of the Government or of public corporation.
THE UTTAR PRADESH ABSORPTION OF RETRENCHED EMPLOYEES OF GOVERNMENT OR PUBLIC CORPORATIONS IN GOVERNMENT SERVICE RULES. 1991
1. (1) These rules may be called the Uttar Pradesh Absorption of Retrenched Employees of Government of Public Corporation in Government Service Rules, 1991.
(2) They shall come into force at once.
(3) They shall apply to the posts under the rule making power of the Governor of Uttar Pradesh under the proviso to Article 309 of the Constitution.
2. Unless there is anything repugnant in the subject or context, the expression-
(a) "appointing authority" in relation to any post for which an employee was retrenched means the authority empowered to make appointment to such post ;
(b) "Public corporation" means a body corporate established or constituted by or under any Uttar Pradesh Act except a University of Local Authority constituted for the purpose of Local Self Government and includes a Government Company within the meaning of Section 617 of the Companies Act. 1956 in which the State Government has prepondering interest ;
(c) "retrenched employee" means a person who was appointed on a post under the Government or a public corporation on or before October 1, 1986 in accordance with the procedure laid down for recruitment to the post and was continuously working in any post under the Government or such corporation upto the date of his retrenchment due to reduction in, or winding up of, any establishment of the Government or the public corporation, as the case may be and in respect of whom a certificate of being a retrenched employee has been issued by his appointing authority.
(d) "service rules' means the rules made under the proviso to Article 309 of the Constitution, and where there are no such rules, the executive instruction Issued by the Government, regulating the recruitment and conditions of service of persons appointed to the relevant service.
3. (1) Notwithstanding anything to the contrary contained in any other service rules for the time being in force. the State Government may by notified order require the absorption of the retrenched employees in any post or service under the Government and may prescribed the procedure for such absorption including relaxation in various terms and conditions of recruitment in respect of such retrenched employees.
(2) The provisions contained in relevant service rules shall be deemed to have been modified to the extent of their Inconsistency with the provisions made in the notified order referred to in sub-rule (1).
By order NEERA YADAV, Secretary."
11. The necessity to frame Rules, 1991 appears to have arisen as in pursuance of the Directive Principles of the Constitution the Government of a welfare state took over sick companies to protect the Interests of workmen. The Government established corporations as well to provide employment. But such companies and corporations faced closure leaving the employees with no remedy. Therefore, the rules were framed to absorb such employees in Government service. Under Rules, 1991, an employee is entitled to benefit of absorption as a result of retrenchment, (a) if he was appointed on a post prior to 1.10.1986, (b) his appointment was In accordance with the procedure laid down for recruitment, (c) the employee worked on such post continuously, upto the date of retrenchment due to reduction or winding up, (d) and a certificate of retrenchment has been Issued by the appointing authority. A bare perusal of the definition of the retrenched employee Indicates that it is in two parts one the substantive or the basic on fulfillment of which an employee becomes retrenched employee and the second the procedural on compliance of which he is entitled for absorption. The first three requirements are substantive. An employee would not be a retrenched employee unless he was appointed prior to 1.10.1986. his appointment was in accordance with the procedure provided for recruitment and he worked continuously till the company was winded up. If an employee did not fulfil any of these conditions, he would not be a retrenched employee as explained in the rules. There is no dispute that the company was a Government company and it's employees were appointed prior to 1.10.1986 in accordance with procedure for appointment and they were in continuous employment till the company was winded up. Since the basic requirements of being a retrenched employee as mentioned in the rules was satisfied, it may now be examined if they could be denied the benefit of absorption in the Government service only because they were not possessed of a retrenchment certificate. The manner in which a welfare legislation has to be interpreted has also been explained in State Bank of India (supra). The Court held- "Statutory construction, when Courts consider welfare legislation with an economic justice bias, cannot turn on cold print glorified as grammatical construction but on teleological purpose and protective intendment."
12. What then is the objection of the rule. To remove the hurdle in absorption in Government service of such employees of the Government company who have been retrenched as a result of the winding up of a company. The Legislature was keen not only to protect a workman by providing for retrenchment compensation but also to ensure that he was re-employed when a vacancy arose. The objective was achieved when Section 6P and Section 6Q were added to the Act. Under these sections, the retrenchment of a workman could be done normally on the principle of last come first go and such workman has the right to be considered first if the employer proposes to re-employ anyone. These provisions are to operate notwithstanding anything inconsistent therewith contained in any other law. Similar provision has been made for the employees of the company by Rule 3 (1) of the Rules. It indicates the anxiety of the Government to provide absorption of the employees of the company in Government service by giving them priority. The scheme of re-
employment of retrenched workmen as given in the Act has been extended to employees of the company. I am, therefore, of the opinion that the right of absorption of an employee of a Government company cannot be curtailed by taking recourse to any technicality. The requirement of producing a certificate from an appointing authority is a matter of procedure. It cannot deprive a person of his basic right created by law for failure to comply with the procedure.
Section 6N of the Act and Rule 42 of the Rules provide for conditions which an employer has to comply before retrenching a workman. The notice of retrenchment has to be given in Form XIX. The purpose of it is to enable the employee to know the reason for his retrenchment. He could on this basis seek employment or re-
employment. No other format was brought to my notice. The rules do not provide any particular manner in which a certificate of retrenchment has to be issued. In absence of any particular form, the requirement of producing a certificate has to be understood reasonably. The objective of the rule has already been explained. They have been framed by the Government for the welfare of the employees. The purpose of a retrenchment certificate is to enable the employer who will absorb him to know the reason for retrenchment. It obviates the necessity to find out whether the employee was terminated for any disciplinary action, etc. An employee satisfying all the requirements of retrenchment cannot be denied absorption only because he was not possessed of the certificate. In absence of a form or manner in which the certificate should be issued, the provision should be construed so as to advance the main objective of the rule, namely, absorption of an employee whose services have come to an end as a result of winding up of the company. The petitioners had applied for retrenchment certificate to the managing director. He did not refuse to issue it nor did he hold that the petitioners were not retrenched employees. Since there were 323 employees, the managing director instead of issuing individual certificate wrote a letter to the Government to absorb them in Government department. There is no reason as to why this letter of the managing director should not be construed as a retrenchment certificate. It is settled law that no one should suffer for the fault of others. What is not disputed is the fact that the petitioners applied for retrenchment cerllficates. Therefore, they did whatever was possible for them to avail of the benefit of absorption. If the managing director instead of issuing the certificate individually issued a letter generally for absorption, then I am of the opinion that the Rules, 1991 were complied and the employees could not be denied absorption as they were not possessed of retrenchment certificates. Therefore, the impugned orders cannot be upheld.
13. The learned counsel for the petitioner argued that the order was violative of Article 14 of the Constitution as the Government in Similar circumstances had issued Order No. 1917/18-4-3 (closed) T.T.L./95. dated 1.9.1995 directing absorption of employees of U. P. Tyre and Tubes which was a Government company which too was closed. I do not consider it necessary to deal with this argument as I have already held that the order is liable to be set aside on merits.
14. The respondent while rejecting the claim of petitioner held that even if a retrenched employee was found entitled to absorption, he could be given certain marks in accordance with the order issued by the Government under Rule 3. But the order does not refer fo any specific order of the Government. The petitioners have filed copies of two Government Orders issued on 4.5.1994 and 2.6.1994. The first Order No. 1974 directed that any vacancy arising in future should be filled by retrenched employee and such employee should be given preference and priority. The order further made it clear (hat the ban on appointments did not apply to regular appointments /promotions under service rules. The second Order No. 2356 directed to give priority to retrenched employees in all future appointments in accordance with their qualifications. These orders were issued under Rule 3 of the 1991 Rules which provides that the orders could be issued by the Government irrespective of anything contained in any other service rule. The sub-rule (2) of Rule 3 further provides that the relevant service rule shall stand modified to the extent an order is issued by the Government. It is. therefore, clear that a retrenched employee is not only entitled to absorption in accordance with the Government Orders but he is entitled to preference and priority in Government service for which he is qualified. The order of the respondent cannot be maintained even for this reason.
15. In the result, this petition succeeds and is allowed and the order dated 28.4.1998 (Annexure-l8 of the petition) are quashed. The respondents are directed to absorb the petitioners/employees of the Bhadohi Woollens Limited in Government service in accordance with their qualification in Class 3 and 4 posts forthwith.
16. Even though the petition has been filed by few employees only but all the employees are entitled for absorption as the Managing Director had written for absorption of all the employees. It shall, therefore, be open to other employees to approach the respondents within a period of three months from today for absorption in Government service and the respondents shall pass appropriate order in the light of this judgment.