Can an employee be terminated automatically for overstaying leave?

Not without a fair hearing. The Supreme Court said a permanent employee cannot be removed only by an ‘automatic’ clause; natural justice must be followed.

Why did the Court call this ‘retrenchment’ under Section 2(oo)?

Because the service ended without following due process. That attracts the Industrial Disputes Act requirements and reliefs.

What relief did the worker get?

Reinstatement with back wages, as lower forums had found and the Supreme Court affirmed the need for procedural fairness.

What is the key takeaway for employers?

Even if Standing Orders allow action, you must give notice and a chance to be heard before terminating service.

Uptron India Limited v. Shammi Bhan & Anr. (1998) 6 SCC 538

Quick Summary

Can a company end a permanent worker’s service just by pointing to an “automatic termination” clause in its Standing Orders? No. The Supreme Court said the employer must follow natural justice—give notice and a chance to be heard. In Uptron v. Shammi Bhan, the termination based on Clause 17(g) (overstaying leave) without a hearing was unlawful and amounted to retrenchment under Section 2(oo). Reinstatement with back wages was ordered.

Issues

Was the termination of a female operator under Clause 17(g) proper and legal?
If improper, what relief should be given—reinstatement, back wages, or both?

Rules

Natural Justice: Even when Standing Orders provide a ground, dismissal needs notice and opportunity to be heard.
Section 2(oo): Termination without due process can amount to retrenchment under the Industrial Disputes Act, 1947.
Relief: Courts/Tribunals can order reinstatement and back wages where fairness is denied.

Facts (Timeline)

13 Jun 1980: Shammi Bhan joined Uptron as operator trainee.

13 Jul 1981: Appointed as operator; 13 Jul 1982 confirmed as permanent employee.

7 Nov 1984–29 Jan 1985: Approved maternity leave.

30 Jan–12 Apr 1985: Absence without leave application after maternity leave ended.

12 Apr 1985: Service terminated under Clause 17(g) (overstaying leave > 7 days).

1985–1990: Dispute filed; State Government referred the matter to Industrial Tribunal, Lucknow (18 Jul 1990).

21 Jul 1992: Tribunal: termination = retrenchment; ordered reinstatement + 50% back wages.

28 Oct 1997: Allahabad High Court upheld the award; said no hearing was given.

Supreme Court (1998): Confirmed the need for natural justice; automatic termination clause cannot replace a fair hearing.

Timeline of employment, leave, termination and litigation in Uptron v. Shammi Bhan

Arguments

Appellant: Employee

Termination by Clause 17(g) without hearing violates natural justice.
Ending service this way is retrenchment; statutory protections apply.
Seeks reinstatement and back wages.

Respondent: Management

Standing Orders permit automatic termination for overstay.
Long absence after maternity leave disrupted work.
Invoked Clause 17(g) in good faith.

Judgment

The Supreme Court held that a permanent employee’s service cannot be cut off solely by an “automatic termination” clause. Natural justice must be observed: notice and opportunity to explain are essential.

Termination in this manner amounted to retrenchment under Section 2(oo).
Reinstatement and back wages were justified to cure the denial of fairness.
Employers must exercise Standing Orders reasonably, not mechanically.

Judgment visual: fair hearing required before termination

Ratio Decidendi

An “automatic termination” clause cannot override the duty to act fairly. Before removing a permanent worker, the employer must follow natural justice. If not, the action is unlawful and treated as retrenchment.

Why It Matters

Protects workers from being removed without a fair chance to explain.
Guides HR: Standing Orders do not eliminate hearing requirements.
Clarifies when termination crosses into retrenchment territory.

Key Takeaways

Point	Quick Note
Hearing is mandatory	Standing Orders cannot replace natural justice.
Retrenchment triggered	Termination without due process falls under Section 2(oo).
Relief	Reinstatement and back wages may follow unlawful termination.
Reasonableness	Employer discretion must be exercised fairly and proportionately.

Mnemonic + 3-Step Hook

Mnemonic: “HEAR BEFORE YOU SEVER” — Hear the worker; Before action; or it becomes Sever without justice = retrenchment.

Ask: Is there notice and a fair chance to reply?
Check: Does the clause fit, and is action reasonable?
Result: If no fair hearing, termination fails; relief follows.

IRAC Outline

Issue: Can Uptron terminate a permanent employee automatically for overstay without a hearing?

Rule: Natural justice is required even when Standing Orders provide a ground.

Application: Clause 17(g) was applied mechanically; no opportunity to be heard.

Conclusion: Termination unlawful; treated as retrenchment; reinstatement and back wages ordered.

Glossary

Natural Justice: Basic fairness rules: notice and chance to be heard.
Standing Orders: Employer rulebook certified under law, listing service conditions and misconduct.
Retrenchment: Termination that attracts safeguards under the Industrial Disputes Act, 1947.

FAQs

No. They guide action, but you must still follow natural justice—give notice and a chance to explain.

Because the worker was removed without a fair hearing. The relief restores status and compensates for loss.

No. Facts matter, but even then, fairness is mandatory before ending service.

Issue a show-cause notice, hold a fair enquiry, record reasons, and only then decide proportional action.

Case Meta

CASE_TITLE	Uptron India Limited v. Shammi Bhan & Anr. (1998) 6 SCC 538
PRIMARY_KEYWORDS	natural justice; termination; Standing Orders; Clause 17(g); Section 2(oo); retrenchment
SECONDARY_KEYWORDS	reinstatement; back wages; domestic enquiry; maternity leave; Industrial Disputes Act
PUBLISH_DATE	23 Oct 2025
AUTHOR_NAME	Gulzar Hashmi
LOCATION	India
Slug	uptron-india-limited-v-shammi-bhan-1998-6-scc-538