STATE OF TAMIL NADU AND ORS. vs NELLAI COTTON MILLS LTD. AND ORS.

The Supreme Court upheld the Madras High Court's interpretation of Section 3(2) of the Tamil Nadu Industrial Establishments (Conferment of Permanent Status to Workmen) Act, 1981, confirming that 'non-employment' includes retrenchment and that a discharged employee cannot be considered in continuous service. The Court noted that the legislature's amendments did not alter the High Court's interpretation, indicating legislative acceptance of the judicial ruling. The judgment clarified that continuity of service is restored only upon reinstatement through legal processes, without the need for special provisions.