V. Ramaswami, J.
1. The appellants in these two writ appeals are the Management of Coimbatore Pioneer B. Mills Ltd., Coimbatore. On the 19th of October, 1970 at 3 A.M. they put up in the notice board of the mill a notice stating that the management had decided to retrench 87 women reelers with effect from 19-10-1970 for the reasons explained in the annexure to that notice. After giving particulars of the total workers and the retrenched workers, the notice further stated that 'the workers concerned have been/will be paid compensation as required by and in accordance with Clause (b) of Section 25F of that Act' (The Industrial Disputes Act, 1947--hereinafter referred to as the Act). Among the reasons given for retrenchment, it is stated that the mills have decided to produce mainly fine counts and cone yarn to meet the demand of importers from other countries which has resulted in considerable reduction of reeled production rendering a large number of reelers idle, with about 75 to 100 women reelers being laid-off day to day involving the concern to considerable economic strain and needless and wasteful expenditure. It was further stated that besides searing prices of cotton stapel fibre is not at all available and this is also added to their problems and difficulties. The preparatory work had to be confined to six days while the spinning section was working for seven days. There was also an annexure which gave a list of female reelers retrenched and details of workers, compensation, notice pay and leave wages. The management sent retrenchment notice to the Secretary, Labour Department, Madras under copy to the Labour Officer and the Commissioner of Labour, Coimbatore proposing to retrench the 87 workers. When the 87 workers turned up for work in the morning, they were informed that they have been retrenched and were not permitted to work. The workers of the mill went on a strike from 12 noon. On 20-10-1970 another notice was put up by the management and it was stated in that notice that the compensation salary and other amounts would be paid on 20-10-1970 and 21-10-70 at the office of the B. Mills and on 22nd to 24th October, 1970 at the A. Mills Office. It was also stated therein that if the amounts were not received on these days, they would be deposited in the Court.
2. The Labour Officer, Coimbatore held conciliation proceedings with respect to the retrenchment of the 87 workers. On 9-11-1970 the Labour Officer made certain suggestions to the management and the union. One of the suggestions made was to keep the retrenchment in abeyance for thirty days and to pay for 30 days' lay-off compensation and this lay-off compensation was paid by the management. In the meantime, 47 of the workers accepted the retrenchment compensation. On the basis of a conciliation failure report, the Government in G.O.R.T. No. 861 Department of Labour dated 23-4-1971 referred for adjudication to the Labour Court, Coimbatore, the following dispute:
Whether the retrenchment of 40 workers (as detailed in Annexure 2) by the management of the Coimbatore Pioneer B. Mills, is justified; if not, to what relief they are entitled.
3. Before the Labour Court it was contended on behalf of the workers that the notice pay and retrenchment compensation as provided under Section 25F(a) and (b) had not been paid and the provisions of Section 25F(c) was also not complied with and that, therefore, the retrenchment was invalid. They also questioned the validity of the retrenchment on the ground of violation of the provisions of Section 25G of the Act which was on the basis that the management is having two textile mills Pioneer A. Mills and Pioneer B. Mills and both formed a single establishment and for the purpose of applying the 'last come first go' rule, the seniority of the workers in both these mills should be taken together and if so taken, Section 25G has been violated. They also pleaded that the retrenchment was illegal, wilful and not bona fide. On these contentions, they prayed that the retrenchment made may be held as not justified and direct reinstatement with back wages.
4. The management contended that the reeling department had not been working fully for the last five years, that in view of the change of requirement of cone yarn by the foreign countries, the mills had to concentrate on cone yarn and the reeling department could not be worked fully and in the circumstances mentioned in the counter and the notice of retrenchment, the management had no option but to retrench, and the retrenchment was absolutely bona fide. They also contended that Pioneer A. Mills and Pioneer B. Mills are two separate units and that the seniority will have to be with reference to each of the mills and that the management had not offended the principle of 'last come first go'. They further stated that on the 19th October, 1970 itself they have paid retrenchment compensation for some people and had made an unconditional offer or tender of payment to the others, but they had not received. They also pleaded that the notice in Form R. was sent to the Government, the Labour Officer and the Commissioner of Labour as required under Section 25F(c) of the Act and the Rules. They denied the general allegation that the provisions of the Act and the Rules have not been complied with and stated that the retrenchment was bona fide, legal and valid.
5. The Labour Court held that the retrenchment was bona fide and the reasons given for such retrenchment were also legal and valid. The Labour Court further held that Pioneer A, Mills and Pioneer B. Mills could not be treated as a single establishment and the provisions of Section 25G had not been violated. It also held that notice in Form R. was sent to the Government on 19-10-1970 itself and the provisions of Section 25F(c) had been complied with. But the Labour Court was not prepared to accept the contention of the management that there was an unconditional offer of notice pay and retrenchment compensation to the workers before retrenchment. Relying on certain decisions, the Labour Court further held that the payment of notice pay and retrenchment compensation before retrenchment was a condition precedent and the non-compliance with that condition rendered the retrenchment invalid. In considering the question of relief, the Labour Court made the following order:
This is a case of retrenchment of female workers who were in excess of the requirement because of the change in programme in the mills, scarcity of cotton and its searing prices and the continuous lay-off for the female workers in reeling and winding sections for a long time previous to the retrenchment. It is not advisable to order reinstatement of these workers. And the only course left is to assess the compensation that has to be paid with in respect to the retrenchment of these workers. The retrenchment was effected on 19-10-1970 and due to the intervention of the Labour Officer the workers were paid lay-off compensation for 30 days after the date of retrenchment. The reference in G.O. Rt. No. 861/Department of Labour to this Court is dated 23-4-1971. The workers and the management were given a reasonable opportunity to settle the matter within 30 days after 19-10-1970 but they failed to do so. We have found that the condition precedent in Section 25F of paying retrenchment compensation and notice pay has not been complied with by the management and so the retrenchment has to be found not to be valid. The reference has been with us from 4-6-1971 to this date. I feel that in lieu of reinstatement these 39 workers can be paid each a month's wages. In view of my discussion and conclusions, I find that, the workers are entitled to one month's wages each in lieu of reinstatement.
6. In the result, there will be an award (1) that the 39 workers except serial No. 39 in this reference be paid a month's wages in lieu of reinstatement each apart from the amounts specified in Ext. M. 6 and lay-off compensation for 30 days agreed to before the Labour Officer, with costs.
7. The appellants filed Writ Petition No. 265 of 1972 praying for quashing of the order of the Labour Court so far as it directed the payment of a month's wages in addition to the retrenchment compensation, notice pay and lay-off compensation for thirty days and questioned. the finding of the Labour Court that Section 25F had not been complied with. The workers also filed Writ Petition No. 6363 of 1973 contending that the Labour Court erred in not ordering reinstatement when it found that the retrenchment was illegal and prayed for reinstatement.
8. Mohan, J., who heard the writ petitions, by his order dated 19-3-1976 dismissed the writ petition filed by the management, and purporting to rely on the decision of the Supreme Court in Swadesamitram Ltd. v. Their Workmen : (1960)ILLJ504SC , allowed the writ petition filed by the workers holding that they are entitled to reinstatement. It is against this judgment, these two writ appeals have been filed by the management.
9. The learned Counsel for the appellants contended that on the finding of the Labour Court which was accepted by the learned single Judge that the retrenchment was bona fide and was necessitated for valid, legal and acceptable reasons, the order of the Labour Court directing payment of compensation in lieu of reinstatement was valid and could not have been interfered with by this Court under Article 226 of the Constitution. On the other hand, Mr. Dolia appearing for some of the workers' unions contended that after Chapter VA was introduced in the Act, the bona fides or justification of the retrenchment could not be an answer for reinstatement when the finding is that Section 25F has not been complied with. Once Section 25F is found to have been not complied with, the retrenchment becomes an illegal action and it cannot be justified either on facts or on law.
10. Under Section 25F of the Act no workman employed in an industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until notice pay and compensation has been paid. Considering this provision, the Supreme Court has held in State of Bombay v. Hospital Mazdoor Sabha : (1960)ILLJ251SC , that Section 25F(b) is mandatory, that the requirement prescribed by it is a condition precedent for retrenchment of the workman. Non-compliance with the said condition would render the retrenchment invalid and inoperative. On the finding of the Labour Court that the workers were not paid compensation on 19-10-1970 and that there was no unconditional offer to pay retrenchment compensation and the offer of payment was made only on 20-10-1970, the provisions of Section 25F have not been complied with by the management. But the more important question for consideration is whether while holding that Section 25F(b) had not been complied with, the Labour Court had any discretion to award compensation in lieu of reinstatement under any circumstance. There could be no doubt that even if Section 25F and the other provisions of Chapter VA relating to retrenchment are strictly complied with, the justification of the retrenchment itself could be questioned. Unless the management proves as a fact that the retrenchment was bona fide and necessary and the reasons for retrenchment are valid and the retrenchment was not an unfair labour practice, the retrenchment would have to be held invalid if an industrial dispute is raised on the validity of such retrenchment. The justification of the retrenchment is thus de hors the complying with the provisions of Section 25F of the Act. In fact Chapter VA is not the whole law relating to retrenchment. If the retrenchment is disputed and becomes an industrial dispute, it is decided as a dispute on a reference under Section 10(1). In fact, prior to the introduction of Chapter VA of the Act, that was the position and it was never held that a retrenchment as such could not be a subject of an industrial dispute. We are of the view that the provisions of Chapter VA only put additional condition for the validity of the retrenchment. Factually, therefore, the sequence of events must be a case of justification for retrenchment and when the management on the basis of such a case retrenches workmen, it would have to comply with the provisions of Section 25F. The provisions of Section 25F comes in as an act of retrenchment or a factual non-employment when there is a justification for such non-employment. We are, therefore, unable to accept the contention of Mr. Dolia that the Court will have to address first as to whether the act of retrenchment was in compliance with the provisions of Section 25F before going into the question of the need or bona fides or justification of the retrenchment. This sequence of findings will have a bearing on the question of the relief that could be granted by the Labour Court. In a case where to the satisfaction of the Court it is established that there was need and necessity for retrenchment in the industry and the management for legal and valid reasons decided to retrench, the Labour Court in our view would have to consider whether it will be just and reasonable to order reinstatement while it gave a finding that Section 25F had not been complied with. We are aware that the Supreme Court in clear and unmistakable terms has held in the decision in State of Bombay v. Hospital Mazdoor Sabha : (1960)ILLJ251SC , that the non-compliance with the conditions of Section 25F(b) relating to payment of compensation would render the impugned retrenchment invalid and inoperative. The decisions relied on by the learned Counsel for the workers in Sridharan Motor Service v. Industrial Tribunal, Madras and Ors. : (1959)ILLJ380Mad , and Indian General Navigation and Railway Company Ltd. and Anr. v. Their Workmen : (1960)ILLJ13SC , do not in any way advance further than holding that an illegal action can never be justified. In fact, the decision of the Supreme Court in State of Bombay v. Hospital Mazdoor Sabha, (supra) was interpreted and understood in Udaipur Mineral Development Syndicate Pvt. Ltd. v. M.P. Dave and Anr. , as holding that in such case there is no termination of the relationship of employer and employee. But in none of these decisions cited it has been held that even if the Labour Court were to find that there was need for retrenchment and the retrenchment was bona fide, there was no option for the Labour Court but to order reinstatement in all cases of noncompliance of the provisions of Section 25F of the Act. The decision in Swadesamitran Ltd. v. Their Workmen : (1960)ILLJ504SC , which was relied on by the learned single Judge and the learned Counsel for the workmen before us, is in our opinion, not an authority for this position. That was a case of non-compliance with the provisions of Section 25G. In the case of non-compliance with the provisions of Section 25G, certainly reinstatement could be ordered with justification. If instead of A.B. has been retrenched, on direction of reinstatement of B., the management can with justification sent out A. We have to understand the decision of the Supreme Court only in that light and with reference to the provisions of Section 25G. We are, therefore, of the view that in such circumstances of non-compliance with the provisions of Section 25F(b) where bona fides or the need for retrenchment is justified, the Labour Court will have a discretion with reference to the facts in each case, either to order reinstatement or direct payment of compensation in lieu of such reinstatement. The order of the Labour Court in such circumstances will be open to question if it is arbitrary or not based on valid or relevant criteria. In this case, the Labour Court in the passage extracted earlier has noted the reasons as to why it is not giving relief of reinstatement, but directing the payment of compensation in lieu of such reinstatement. We are of the view that the reasons given in the order are valid reasons and the order could not be termed in anyway arbitrary. The learned single Judge in fact had not found that if the Labour Court had any discretion, the discretion was not validly exercised or it was exercised arbitrarily. The learned Judge felt that the decision in Swadesimitran v. Their Workmen (supra) is clearly applicable to the facts of this case and that, therefore, the workers are entitled to be reinstated. As we have already, held that that is a decision with reference to the provisions of Section 25G of the Act and no decision of the Supreme Court has been brought to our notice which dealt with the provisions of Section 25F in relation to the relief to be granted. We are of the view that the order of the Labour Court, therefore, is not liable to be interfered with either at the instance of the management or at the instance of the labour.
11. Mr. S. Ramaswamy, learned Counsel appearing for one of the unions, contended that even on the basis that the award of the Labour Court in not ordering reinstatement is legal, the compensation of one month's wages in lieu of reinstatement awarded by the Labour Court is inadequate. The Labour Court had taken note of the fact that thirty days' wages were agreed to be paid as lay-off compensation and that was in fact already paid in addition to the retrenchment compensation and notice pay payable under Section 25F. The Labour Court has awarded one month's wages in addition to these in lieu of reinstatement. The learned Counsel appearing for the management fairly said that the management is willing to pay another sum of Rs. 375 to each of the forty workers retrenched which amounts to an addition of over 36% of the retrenchment compensation. We direct the management to pay this sura to the said workers in addition to the sum already granted by the Labour Court. Subject to this modification, the order of the Labour Court is confirmed. Accordingly, we allow Writ Appeal No. 145 of 1976 and dismiss Writ Appeal No. 146 of 1976. There will be no order as to costs in both the appeals.