On February 14, 2020 the High Court of Madras had passed an order in the matter of ICICI Bank Limited and others vs. The Presiding Officer And others, dealing with the issue of whether discharge of an employee on account of ill health would amount to retrenchment and whether labour court has jurisdiction to interfere in discharge of an employee, where such discharge is not on account of punishment.

Facts of the Case:

In the present case, the employee (“Respondent”) had joined the service of Bank of Madura Limited on February 4, 1980. The said bank got merged with ICICI Bank Limited (“Petitioner”) in the year 2000 and the service of employees of Bank of Madura were taken on rolls of ICICI Bank on the same terms and conditions as were appliable to them, while they were working in the Bank of Madura. In the year 2009, the Respondent was discharged by the Petitioner on grounds of continuous ill health of the Respondent. The Respondent had argued that he was not put on notice that his service is going to be discharged on the ground of continuous ill health. If such an opportunity had been extended to him, then he would have submitted himself to necessary medical fitness tests.

The labour court had refused to grant the relief of reinstatement with backwages and continuity of services to the Respondent. However, the Labour Court invoked section 11 A of the Industrial Disputes Act, 1947 (“ID Act”) and converted the termination into compulsory retirement in order to enable the Respondent to be eligible for grant of pension. 

Hence the present appeal was filed by the Petitioner against the order passed by the labour court.

Madras High Court’s Observations and Findings:

The Madras High Court held that it cannot be disputed that the management is entitled to terminate the service of the employee on the ground of continued ill health. However, such termination cannot be construed as a punishment inflicted on the employee, nor can such termination of service of a workman on the ground of continued ill health would amount to retrenchment, in view of the express exclusion contained under sub clause (c) of Section 2(oo) of the ID Act. Further, the High Court held that when the reason of "continued ill health" was supported by admitted documents viz., leave applications, medical certificates followed by the Respondent’s own letter sent after his discharge admitting his continuous ill health, the order of discharge would not be vitiated for want of examination of the employee by Medical Board.

Regarding the issue of whether labour court could have exercised its power under Section 11A of the ID Act in case of a discharge of an employee not on ground of punishment, the Court noted the existence of such power in case of discharge or dismissal of workman, be it on account of punishment or otherwise.

However, the High Court was of the considered view that the employee must be granted a just and reasonable relief in view of the fact that the discharge was due to his continued ill health and used its power under Article 226 to treat such discharge as under voluntary retirement scheme, such as to enable the Respondent to all the benefits flowing out of such voluntary retirement scheme.

This update has been contributed by Arka Majumdar (Partner) and Juhi Roy (Associate).