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Madhao Soiru Laad Vs. Chase Bright Steel Ltd. and Another - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtMumbai High Court
Decided On
Case NumberMisc. Petn. No. 2462 of 1979
Judge
Reported in[1984(48)FLR196]; (1984)ILLJ517Bom
Acts Industrial Disputes Act, 1947 - Sections 2, 18(1), 25F and 25G; ;Trade Unions Act, 1926 - Sections 28
AppellantMadhao Soiru Laad
RespondentChase Bright Steel Ltd. and Another
Excerpt:
.....in good faith but in colourable exercise of the employer's right and, therefore, constitutes the unfair labour practice under item 1(b) of schedule iv to the act and this complaint was based on the fact of violation of provisions of s. item 1(b) of schedule iv of the act provides that to discharge or dismiss employees not in good faith, but in the colourable exercise of the employer's right would amount to an unfair labour practice and the retrenchment of an employee in violation of the provisions of s. 25g of the industrial disputes act would certainly amount to an unfair labour practice unless it is established that such retrenchment was in good faith. its workmen (1960)iillj64sc ,it was observed in paragraph 6 of the judgment :the order of retrenchment should be left to the..........union filed complaint under s. 28 of the maharashtra recognition of trade unions and prevention of unfair labour practices act, 1971 (hereinafter referred to as the 'act') before the presiding officer, third labour court, at bombay complaining that the employer company had committed unfair labour practice under item 1 of the schedule iv to the act in retrenching the petitioner. the complaint, inter alia recites that the petitioner was an active worker of the union and the employer did not approve of the work of the petitioner in enrolling other employees as members of the union. as the petitioner had taken a leading part in organizing the workers and in other activities of the union, the petitioner earned the displeasure and wrath of the company. the union, the alleged that the employer.....
Judgment:

1. The petitioner was employed by respondent No. 1 in August 1961 as Stenographer and was working in the office of respondent No. 1 at Bombay. On May 13, 1975, the services of the petitioner were transferred to the Branch Office of respondent No. 1 at Madras and on November 24, 1975 the petitioner was retrenched from service with effect from December 1, 1975 on the ground that sufficient work was not available.

2. The petitioner was an active member of the 'Engineer Mazdoor Sabha' and the said Union filed complaint under S. 28 of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (hereinafter referred to as the 'Act') before the Presiding Officer, Third Labour Court, at Bombay complaining that the employer Company had committed unfair labour practice under Item 1 of the Schedule IV to the Act in retrenching the petitioner. The complaint, inter alia recites that the petitioner was an active worker of the Union and the employer did not approve of the work of the petitioner in enrolling other employees as members of the Union. As the petitioner had taken a leading part in organizing the workers and in other activities of the Union, the petitioner earned the displeasure and wrath of the Company. The Union, the alleged that the employer with a view to humiliate and punish, the petitioner was not allotted any worked and ultimately was transferred to Madras. It was clear that even at Madras the petitioner was given any work and ultimately he was retrenched. The Union alleged that the purported retrenchment is not a retrenchment at all and is a discharge and the whole action is mala fide and in bad faith and with ulterior motives. It was also claimed that, in any event, several persons junior to the petitioner have been retained in service and the petitioner was removed in clear violation of statutory provisions i.e. S. 25G of the Industrial Disputes Act.

3. The Company resisted the complaint by filing written statement and submitted that the petitioner was retrenched for want of sufficient work and the action of the Company was neither mala fide, not contrary to the provisions of law. It was claimed that owing to the continuous decline in the work at the Company's Head Office, the petitioner was transferred to its Branch Office at Madras. The transfer, according to the Company, was done in accordance with the desire of the President of the Union and the transfer was effected to avoid the retrenchment of the petitioner from the service in the Head Office itself. The Company claimed that the business carried out by the company was on decline over several years and the continuance of the petitioner in service was not necessary. The Company claimed that the retrenchment compensation alongwith other dues were paid to the petitioner and the retrenchment was in accordance with law.

4. The Labour Court recorded evidence and by the impugned order dated September 21, 1979 dismissed the complaint. The Labour Court expressed doubt as to whether the retrenchment would amount to discharge of the employer and whether retrenchment can be included in the term 'discharge' for the purpose of Item 1 in Schedule IV of the Act. After expressing the doubt, the Labour Court proceeded to consider the complaint on merit. The Labour Court held that the unfair labour practice claimed by the Union was mainly victimization of the petitioner on account of the Union activities and such complaint cannot be entertained by the Labour Court as it squarely falls under Item (4) of Schedule II of the Act and is triable exclusively by the Industrial Court. The Labour Court further held that the case of the Union that the retrenchment of the petitioner was for patently false reasons and, therefore, the unfair labour practice under Item. 1(a) of Schedule IV of the Act is not established. The Labour Court declined to consider the claim of the Union that the retrenchment of the petitioner was in contravention of the provisions of S. 25G of the Industrial Disputes Act on the ground that such contravention is not a subject matter of any unfair labour practice in any of the clauses in Item 1 of Schedule IV of the Act. The order passed by petition filed under challenge in this petition filed under Art. 226 of the Constitution of India.

5. The doubt expressed by the Labour Court in Paragraph 7 of the order about whether the 'retrenchment' would be covered by the term 'discharge' for the purpose of Item I in Schedule IV of the Act is without any basis. It is now well-settled that the expression 'discharge' would also cover retrenchment of an employee and in the connection, a reference can be usefully made to the decision of the Supreme Court in the case of Santosh Gupta v. State Bank of Patiala : (1980)IILLJ72SC where it is observed in Paragraph 5 at page 75 and in the Paragraph 14 at page 77 :

'The expression 'termination of service for any reason whatsoever' in S. 2(oo) covers every kind of termination of service except those not expressly included in S. 25F or not expressly provided for by other provisions of the Act such as 25FF and 25FFF.' : (1979)ILLJ211Ker , : (1962)ILLJ56Bom , : overruled.

'Thus, the discharge of the workman on the ground she did not pass the test which would have enabled her to be confirmed was 'retrenchment' within the meaning of S. 2(oo) and, therefore, the requirements of S. 25F had to be complied with.'

In view of this well-settled position of law, the doubt expressed by the Labour Court was clearly misplaced.

6. Shri Shetye, learned counsel appearing on behalf of the petitioner, did not dispute the correctness of the finding of the Labour Court that the unfair labour practice alleged in the complaint based on averment that the petitioner was retrenched because of his Union activities could not be entertained by the Labour Court as such complaint would directly fall under Clause (f) of Item 4 of Schedule II of the Act and, therefore, exclusively triable by the Industrial Court. Shri Shetye made a faint attempt to urge that the finding recorded by the Labour Court that the retrenchment of the petitioner was not for patently false reasons and, therefore, not an unfair labour practice under Item 1(d) of Schedule IV of the Act is incorrect. It is not possible to accept the submission of the learned counsel on this count. The Labour Court on careful perusal of the evidence led by the parties, recorded a finding that due to uneconomic working of the Company and the failure to improve the situation over number of years, it was not possible for the Company to continue all the employees in service and was required to retrench the workmen. Indeed, a settlement was reached under S. 18(1) read with S. 2(P) of the Industrial Disputes Act and Rule 62 of the Industrial Disputes Rules between the Company and the Union, providing for retrenchment of workmen on certain grounds. The workers to be retrenched included the employees working as staff members in the Central office at Bombay. The Labour Court also found that the petitioner was not retrenched in Bombay office because of the recommendation of the President of the Union and the Company transferred the petitioner to its Branch Office in Madras with a hope that sufficient work would be found for the petitioner in that Branch. The Branch Office also could not provide sufficient work and, therefore, the company had no option but to retrench the petitioner. The Labour Court, therefore, recorded a finding that in face of this evidence, the claim of the petitioner that termination of service by retrenchment was for patently false reasons cannot be accepted. The finding recorded by the Labour Court on appreciation of evidence is a pure finding of the fact and cannot be disturbed in writ jurisdiction, apart from the fact that in my judgment, the finding is absolutely correct.

7. Shri Shetye then submitted that in the complaint filed before the Labour Court, it was claimed that the retrenchment was not in good faith but in colourable exercise of the employer's right and, therefore, constitutes the unfair labour practice under Item 1(b) of Schedule IV to the Act and this complaint was based on the fact of violation of provisions of S. 25G of the Industrial Disputes Act. The Union claimed that while retrenching the petitioner, the Company retained in service Stenographers who were junior to the petitioner and, therefore, the principle of 'last come, first go' was given a go-bye. Shri Shetye submits that not only a specific averment in this connection was made in the complaint but the petitioner also led evidence before the Labour Court to substantiate the contention and in spite of it, the Labour Court curiously in paragraph 11 of the Order, declined to consider the contention on the ground that the contravention of the provisions of S. 25G of the Industrial Disputes Act is not a subject matter of any unfair labour practice. The grievance of the learned counsel in this regard is justified. The Labour Court observed that contravention of S. 25G of the Industrial Disputes Act is not a subject matter of any of the clauses in Item 1 of Schedule IV of the Act and, therefore, the evidence led by the parties on this aspect can safely be ignored and it is not necessary to determine whether the termination was in violation of S. 25G of the Industrial Disputes Act. In my judgment, the finding recorded by the Labour Court on this aspect is entirely unsustainable. Item 1(b) of Schedule IV of the Act provides that to discharge or dismiss employees not in good faith, but in the colourable exercise of the employer's right would amount to an unfair labour practice and the retrenchment of an employee in violation of the provisions of S. 25G of the Industrial Disputes Act would certainly amount to an unfair labour practice unless it is established that such retrenchment was in good faith. In this connection, reference can be usefully made to the observations of the Supreme Court in the case of M/s. Swadeshmitran Limited, Madras v. Their Workmen : (1960)ILLJ504SC .

'The management has the right to retrench the workmen provided retrenchment is justified. In effecting retrenchment the management normally has to adopt and give effect to the industrial rule of retrenchment 'last come first go.' For valid reasons, it may depart from the said rule. If the departure from the said rule does not appear to the industrial tribunal as valid or satisfactory, then the action of the management in so departing from the rule can be treated by the tribunal as being mala fide or as amounting to unfair labour practice; in other words, departure from the ordinary industrial rule of retrenchment without any justification may itself, in a proper case, lead to the inference that the impugned retrenchment is the result of ulterior consideration and as such it is mala fide and amounts to unfair labour practice and victimisation. Civil App. No. 266 of 1958, dated 11th February, 1960 (SC), Expl.'

In another decision of the Supreme Court in the case of J. K. Iron and Steel Co. Ltd. v. Its Workmen : (1960)IILLJ64SC , it was observed in Paragraph 6 of the judgment :

'The order of retrenchment should be left to the management and the decision by the management that some are better qualified than others cannot be questioned by the Adjudicator, unless he comes to the conclusion that the preferential treatment was due to mala fides. But if the preferential treatment given to juniors ignores the well-recognised principle in the Industrial Law that 'the first come, last go' without any acceptable or sound reasoning, a tribunal or an adjudicator will be well justified to hold that the action of the management is not bona fide.'

From the above quoted observations, it is clear that it was necessary for the Labour Court to ascertain whether the complaint of the petitioner about the violation of provisions of S. 25G of the Industrial Disputes Act was justified or otherwise. In case, the Labour Court comes to the conclusion that there was a violation of the provisions of S. 25G of the Industrial Disputes Act, then the further question which requires determination is whether such retrenchment was in good faith and bona fide or otherwise. Even where an employee who is a senior is retrenched retaining the juniors in service, it is open for the employer to establish that the rule of 'last come first go' was departed from for sound and goods reasons. The observations of the Supreme Court in the case of M/s. Swadeshmitran Limited (supra) at pages 507 and 508 in this connection, are very appropriate :

'The employer may take into account consideration of efficiency and trustworthy character of the employee, and if he is satisfied that a person with a long service is inefficient, unreliable or habitually irregular in the discharge of his duties, it would be open to him to retrench his services while retaining in his employment employees who are more efficient, reliable and regular though they may be junior in service to the retrenched workmen. Normally, where the rule, 'last come first go' is thus departed from, there should be reliable evidence preferable in the recorded history of the workmen concerned showing their inefficiency, unreliability or habitual irregularity. Wherever it is proved that the rule in question has been departed from, the employer must satisfy the industrial tribunal that the departure was justified; and in the sense the onus would undoubtedly be on the employer.'

In my judgment, the Labour Court was clearly in error in ignoring the evidence led by the parties on this point and holding that the complaint in this connection cannot be entertained. The Labour Court has failed to exercise its jurisdiction and, therefore, the proceedings will have to be remitted back to the Labour Court for decision on this point. The Labour Court shall reconsider the question as to whether the retrenchment of the petitioner was in contravention of the provisions of S. 25G of the Industrial Disputes Act and, if so, whether the departure from the provisions of S. 25G of the Industrial Disputes Act was bona fide and in good faith. The Labour Court will have to record its finding on this aspect and then pass appropriate orders on the complaint filed by the Union.

8. Accordingly, the rule is made absolute and the order dated September 21, 1979 passed by the Presiding Officer, Third Labour Court, Bombay, is set aside and the complaint (ULP) No. 14 of 1976 is remitted back to the Third Labour Court for fresh disposal in accordance with the observations made in the judgment. It is made clear that the only issue which the Labour Court is required to determine is about the contravention of the provisions of S. 25G of the Industrial Disputes Act while effecting retrenchment of the petitioner and if so whether such contravention was bona fide and in good faith. In case, the finding of the Labour Court on either of these aspects is in favour of the Company, then the complaint must be dismissed. The Labour Court may permit both the parties to lead additional evidence, if so desired, on this aspect only. It is made clear that all other conclusions recorded by the Labour Court are upheld. The Labour Court to dispose of the complaint as expeditiously as possible. In the circumstances of the case, there will be no order as to costs.


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