Further, it is urged by the learned senior Counsel on behalf of Appellant-Company that there is no question of reinstatement of the concerned workmen and payment of back wages to them since the concerned department/unit of the Appellant-Company in which they were employed no longer exists and therefore, requested this Court to mould the relief granted by the courts below. The said contention is rightly rebutted by the learned senior Counsel on behalf of the Respondent-Union by placing reliance on the case of Workmen of Sudder Workshop (supra), wherein this Court held that the Court cannot sympathise with a party which gambles in litigation to put off the evil day, and when that day comes, prays to be saved from its own gamble. The said contention urged on behalf of the Respondent-Union must be accepted by us as the same is well founded. Therefore, we hold that moulding of the relief is not permissible in this case at this stage when the matter has reached this Court keeping in mind the legal principle laid down by this Court on this aspect of the matter in the case referred to supra.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 5319 OF 2008
MACKINON MACKENZIE & COMPANY LTD.
V
MACKINNON EMPLOYEES UNION
Citation;AIR2015SC1373, (2015)4SCC544,
Coram:
V. GOPALA GOWDA, J.
The
correctness
appellant-Company
of
the
judgment
has
questioned
and
order
the
dated
5.05.2006 passed in L.P.A. No. 141 of 1996 in Writ
Petition No. 2733 of 1996 by the Division Bench of
the High Court of Judicature at Bombay, affirming
the
Award
dated
08.03.1996
of
the
Industrial
Page 1
2
Court, Mumbai in Complaint (ULP) No. 1081 of 1992
raising
certain
questions
of
law
and
urging
various grounds in support of the same and prayed
to
set
aside
the
impugned
judgment,
order
and
award of the Industrial Court.
2.
The
relevant
facts
are
briefly
stated
to
appreciate the rival legal contentions urged on
behalf of the parties in this appeal.
The
appellant-Company
was
engaged
in
shipping business from its premises at Mackinnon
Building, Ballard Estate, Mumbai. The activities
were
divided
into
ship
agency,
shipping
management, ship owning and operating, travel and
tourism,
clearing
and
forwarding,
overseas
recruitment and property owning and development.
It had approximately 150 employees who were all
workmen and members of the respondent-Union. The
respondent-Union
is
registered
under
the
provisions of the Trade Union Act, 1926. A letter
dated
27.07.1992,
retrenchment
reasons
purportedly
together
enclosed
with
therewith
the
was
a
notice of
statement of
served
upon
Page 2
3
approximately 98 workmen by the appellant-Company
stating that
closing of
statement
the
same
business
of
will
on
reasons,
it
be
effective
04.08.1992.
was
stated
from
In the
that the
appellant-Company was accumulating losses and the
proprietors had taken a decision to rationalise
its activities apart from the property owning and
development department, a portion of the clearing
and
development
business
relating
to
contracts
with the Government of India, Institutions such
as, Central Railway and Lubrizol India Ltd. The
respondent-Union
who
are
the
concerned
workmen
filed the complaint before the Industrial Court.
Since there was a deviation from the seniority
list
of
some
workers
in
the
clearing
and
forwarding departments and some of the remaining
workers from the alleged closed departments of the
appellant-Company were to be transferred to the
aforesaid retained departments of the appellant-
Company, a seniority list of all the workmen in
the establishment was also allegedly put up on the
notice
board.
However,
the
finding
of
fact
Page 3
4
recorded by the Industrial Court while answering
the relevant contentious issues is that this plea
taken by the appellant-Company was not proved.
3.
Aggrieved by the said action of the appellant-
Company, the concerned workmen of the respondent-
Union filed
Court at
a
complaint
Mumbai
before
alleging
the
the
Industrial
unfair
labour
practices on the part of the appellant-Company in
not
complying
under
item
with
No.
Maharashtra
9
certain statutory
of Schedule
the
Recognition
of
Trade
provisions
IV
of
the
Unions
and
Prevention of Unfair Labour Practices Act, 1971
(hereinafter
Act”),
in
referred
proposing
to
to
as
the
retrench
“MRTU
the
&
PULP
concerned
workmen. It has assailed the legality and validity
of
the
notice
concerned
legal
of
workmen
contentions
retrenchment
by
the
urged
upon the
appellant-Company. The
by
the
served
workmen
in
the
complaint were as follows:
(i) That the notice was defective in as such
though one month’s salary in lieu of notice
was offered, current month’s salary was not
offered to be paid and was not included in the
cheques which had been given to the workmen.
Thus, the condition precedent under Section
Page 4
5
25F of the Industrial Disputes Act (for short
the I.D. Act) is not complied with. Further
the said notice did not indicate that notice
in the prescribed form has been sent to the
State Government or the authorities specified
under Section 25F.
(ii)That no list of seniority of workmen in
different categories from which retrenchment
was contemplated had been put up on the notice
board as mandatorily required under Rule 81 of
the Industrial Disputes (Bombay) Rules, 1957
(for short ‘the Bombay Rules’).
(iii)That
in
the
statement
of
reasons,
assuming without admitting the same, that the
activities of the appellant-Company had to be
rationalised,
this
directly
led
to
the
retrenchment of workmen. However, there is an
admitted decrease in the number of employees
to be employed in different department which
are under the control of the appellant-
Company. This directly attracts items Nos. 9
and 10 of Schedule IV of the I.D. Act. Thus a
notice under Section 9A of the I.D. Act was
bound to be given. This has not been done.
(iv)That the appellant-Company was bound to
give notice at least 60 days before the
intended closure to the State Government, this
has not been done. Therefore, Section 25FFA of
the I.D. Act has not been complied with by the
appellant-Company.
(v)That in the seniority list prepared and
relied on by the appellant-Company large
number of employees who are not junior must
have been retrenched. Therefore this is in
violation of the provision under Section 25G
of the I.D. Act.
4. On 28.01.1993, on the basis of the pleadings,
the Industrial Court framed the following issues:-
“1.Whether any seniority list was displayed as
provided in Rule 81 of the Industrial Disputes
(Bombay) Rules, 1957?
2.Whether a Complaint for an alleged breach of
the provisions of the Industrial Disputes
Page 5
6
(Bombay) Rules, 1947 is maintainable under item
no. 9 of Schedule IV of the MRTU & PULP Act,
1971?
3.Whether a Complaint for an alleged breach of
Rule 81 of the Industrial Disputes (Bombay)
Rules, viz., displaying the seniority list, is
maintainable under item no.9 of the Schedule IV
of the MRTU & PULP Act?
4.Whether the respondent has committed breach
of Section 25F(b) of the I.D.Act 1947?
5.Has it been proved that the respondent has
committed unfair labour practice, as pleaded,
by not sending notice to the Government under
Section 25F(c) of the I.D. Act, 1947?
6.Whether the provisions of Section 25FFA of
the I.D. Act are applicable and whether any
unfair labour practice on the court is proved
to have been committed.
7.Whether the respondent has committed unfair
labour practice as contemplated by Section 25G
of the I.D. Act 1947, by not following the
principle of last come first go, as pleaded by
the respondents?
8.Whether any custom, practice or usage has
become an agreement, settlement or award, and
breach thereof, if any amounts to unfair labour
practices?
9. Whether the facts of the case require
notices under section 9-A of the I.D. Act,
1947?”
5.
Before
the
Industrial
Court
the
appellant-
Company has filed its counter statement denying
the averments made on the alleged contraventions
made by the appellant-Company under the I.D. Act,
and MRTU PULP Act in issuing retrenchment notice
to the concerned workmen.
It has further denied
the various averments made in the complaint filed
by
the
respondent-trade
Union
against
the
Page 6
7
appellant-Company
retrenchment
alleged
in
of
closure
the
concerned
of
appellant-Company.
justification
of
its
on the
department/unit
the
workmen of the
Nine witnesses on behalf of
the concerned workmen and two witnesses on behalf
of the appellant-Company were examined before the
Industrial
Court
to
justify
their
respective
claims and counter claims.
6.
On appreciation of facts, points of dispute,
evidence on record, issues raised and decisions
relied upon by both the parties, the Industrial
Court held by answering the contentious issue no.
3
that
unfair
the
appellant-Company
labour
practice
by
has
committed
committing
breach
an
of
Rule 81 of the Industrial Disputes (Bombay) Rules,
1957,
(for
short
‘the
Bombay
Rules’)
by
not
displaying the seniority list of the workmen of
the
concerned
department/unit
of
the
appellant-
Company on the notice board prior to the date of
issuance of retrenchment notice to the concerned
98 workmen as contemplated by the MRTU & PULP Act,
1971 and the Bombay Rules. It was further held
Page 7
8
that the appellant-Company had committed an unfair
labour practice by committing breach of Section
25G of the I.D. Act read with Rule 81 of the
Bombay Rules by not following the principle of
‘last come first go’. Therefore, the Industrial
Court
held
that
breach
of
statutory
rules
and
provisions of the I.D. Act and the Bombay Rules
amounted
to
unfair
labour
practices
as
contemplated by item No.9 of the Schedule IV of
the MRTU & PULP Act. The breach of the mandatory
provisions of Section 25G of the I.D. Act read
with Rule 81 of the Bombay Rules was held to have
been committed by the appellant-Company. Thus, the
Industrial Court answered the points of dispute
and relevant contentious issues framed by it in
favour of the concerned workmen and set aside the
notice
of
retrenchment
served
upon
them.
The
Industrial Court held that the rest of the unfair
labour practices alleged in the complaint were not
proved.
The
Industrial
Court
passed
an
interim
order directing the appellant-Company to cease and
desist
from
enjoining
the
said
unfair
labour
Page 8
9
practice and continue the employment of retrenched
workmen in service and pay them full wages every
month. The appellant-Company was further directed
by
the
Industrial
industrial
arrears
dispute
of
all
Court
after
between
such
adjudicating
the
wages
parties
to
the
to
the
pay
retrenched
workmen from the date of alleged retrenchment till
the date of the said award and also directed the
appellant-Company
to
pay
them
future
wages
regularly from the date they are actually allowed
or
continued
to
work
as
per
the
award
of
the
Industrial Court.
7.
the
The correctness of the said award passed by
Industrial
Court
was
challenged
by
the
appellant-Company before the High Court by filing
Writ Petition No. 2733 of 1996, urging various
grounds and prayed to quash the award passed by
the Industrial Court. The High Court dismissed the
same
and
passed
the
judgment
and
order
by
recording its reasons and affirmed the findings of
fact
recorded
by
the
Industrial
Court
on
the
points of dispute and the contentious issues.
Page 9
10
8.
was
Aggrieved by the same, L.P.A. No. 141 of 1996
filed
Division
by
the
Bench
of
appellant-Company before the
the Court. The
Bombay
High
Division Bench of the High Court after adverting
to each one of the rival legal contentions urged
on behalf of the parties has observed that in the
instant
case
there
is
a
clear
cut
breach
of
Section 25G of the I.D. Act read with Rule 81 of
the Bombay Rules on the part of the appellant-
Company and held that cumulative effect of the
same was that the action of retrenchment taken by
the appellant-Company on the concerned workmen was
totally illegal and amounted to an unfair labour
practice.
The
Division
Bench
reaffirmed
the
findings of fact and reasons recorded in favour of
the concerned workmen and affirmed the award of
the
Industrial
correctness
appeal
by
of
the
Court
the
same
in
is
its
judgment.
challenged
appellant-Company
urging
in
The
this
various
grounds and prayed for setting aside the impugned
judgment and order and to quash the award of the
Industrial Court.
Page 10
11
9.
The learned senior counsel Mr. Jamshed Cama,
appearing
for
the
appellant-Company,
sought
to
justify the action of the appellant-Company, inter
alia, contending that due to severe recession in
the dominant areas of the industry in which the
concerned workmen were engaged and various other
factors having a direct bearing on their business
activities,
it
was
appellant-Company
to
found
shut
imperative
down
some
for
of
the
their
activities as detailed by them in their statement
of reasons appended to the retrenchment notice.
Further
it
has
been
stated
that
in
the
circumstances, the appellant-Company, according to
their business needs had decided to let out a part
of the premises housing their office on leave and
licence basis to M/s. Urmila & Co. Pvt. Ltd that
as
the
same
would
respondent-workmen
contemplated
the
as
not
the
be
for the
appellant-Company had
retrenchment
required
of
the
concerned
workmen. The said decision was also taken by the
appellant-Company to further ensure availability
of
funds
to
pay
the
employees.
Therefore,
the
Page 11
12
concerned workmen were retrenched from employment
and their legal dues were paid as contemplated
under the provisions of Section 25F clause (b) of
the I.D. Act. The retrenchment of the concerned
workmen in fact came into force at the close of
business on 04.08.1992 at 4:45 p.m. as per the
retrenchment
notice
itself
served
upon
them.
Intimation of passing of the ex-parte ad interim
order dated 04.08.1992 by the Industrial Court was
allegedly communicated to the appellant-Company by
the
respondent-Union
vide
its
letter
dated
04.08.1992 itself at 5:30 p.m., by which time the
possession
of
the
premises
of
the
appellant-
Company where the retrenched workmen were employed
was
already
Companies,
premises
over
to
three
on
who had acquired the premises of
28.07.1992.
alleged
04.08.1992
independent
leave
with
agreement
Company
handed
i.e.
to
Their
have
until
licence
appellant-
occupation
been
the
the
and
deferred
completion
of
the
up
of
to
the
process of retrenchment of the concerned workmen
of the respondent-Union, which process had started
Page 12
13
much earlier.
10.
With
respect
to
the
violation
of
the
principle of ‘last come first go’ under Section
25G of the I.D. Act read with Rule 81 of the
Bombay Rules as contended by the respondent-Union
on
behalf
of
the
concerned
workmen
that
no
seniority list of the category wise workmen was
put
up
on
the
notice
board
of
the
appellant-
Company in accordance with Section 25G of the I.D.
Act read with Rule 81 of the Bombay Rules i.e.
‘last come first go’ and that the same was not
done within 7 days of the proposed retrenchment
notice,
the
said
contention
of
the
workmen
is
rebutted by the learned senior counsel for the
appellant-Company saying that it is an admitted
fact
that
at
the
very
least,
the
workers
had
received the seniority list several days prior to
04.08.1992. They were thus well aware of their
inter-se-seniority
actual
date
of
list
displayed
closure/retrenchment,
before
the
whether
it
was 7 days in advance or not is not relevant for
the purpose of finding out whether the action of
Page 13
14
the appellant-Company is legal and valid or not.
Therefore, the concurrent finding of fact recorded
by
the
High
Court
in
the
impugned
judgment
accepting the case of the respondent-Union is not
tenable in law and prayed to set aside the same.
11.
Further, it is contended by him that it is
now established by the judgments of this Court
that the rule of ‘last come first go’ as provided
in Section 25G of the I.D. Act can be deviated by
the
appellant-Company
for
justifiable
reasons.
Reliance was placed by him in support of the above
legal contention on the decision of this Court in
the case of Workmen of Sudder Workshop of Jorehaut
Tea
Co
v.
The
Management
of
Jorehaut
Co1,
Tea
wherein, it was observed that for the application
of the provision of Section 25G of the I.D. Act
with
respect
to
the
above
principle,
it
was
necessary to treat all the workmen in the category
as
one
group
principle
of
and
‘last
concluded
come
that
first
the
go’
aforesaid
was
not
an
inflexible rule and that there must be a valid and
1
AIR 1980 SC 1454
Page 14
15
justifiable reason for deviation from the above
said principle. Further, reliance was also placed
by him on other decisions of this Court in the
cases
of
Swadesamitran
Ltd.,
Madras
v.
Their
Workmen2, Jaipur Development Authority v. Ramsahai
& Anr3 and State of Rajasthan v. Sarjeet Singh &
Anr.4 in support of the above legal proposition.
12.
It is further contended by the learned senior
counsel on behalf of the appellant-Company that in
the present case, the respondent-Union had ample
notice of the closure/retrenchment on their own
admission from 30.07.1992 i.e. at least 5 days
before their date of retrenchment, they had a copy
of the seniority list. However, they have not at
any time indicated to the appellant-Company that
there was a deviation from the principle of ‘last
come
first
go’
on
the
part
of
the
appellant-
Company. Further, it is urged by him that either
the Industrial Court or the High Court has not
been able to identify any such breach of the above
mandatory provisions of the Act & Rules. However,
2
3
4
AIR 1960 SC 762
(2006) 11 SCC 684
(2006) 8 SCC 508
Page 15
16
despite the same, it is contended by him that the
conclusion of the High Court on the contentious
issue nos. 1-3 and 7 in holding that there is a
“clear-cut breach” of Section 25G of the I.D. Act
read
with
founded
on
Rule
any
81
of
the
material
Bombay
facts
Rules
and
is
not
evidence
on
record in this regard. A copy of the seniority
list of the workmen of the unit/department was
exhibited by the appellant-Company on the notice
board of their establishment on 22.07.1992 i.e. 14
days
prior
to
unit/department
the
date
which
of
does
closure
not
of
the
constitute
technical rationalisation envisaged under the item
no. 10 of the IV Schedule of the I.D. Act. It is
further contended by him that the respondent-Union
has not led any cogent evidence in this regard to
prove the said allegation before the Industrial
Court and therefore, the finding recorded on this
aspect is erroneous in law. Hence, the same is
liable to be set aside.
13. The further legal contention urged further on
behalf of the appellant-Company is that there is
Page 16
17
no violation of Rule 81 of the Bombay Rules and
the complaint was not maintainable in law before
the
Industrial
Court
on
the
alleged
ground
of
violation of statutory provisions under Rule 81 of
the Bombay Rules and Sections 25F clause (b), 25G
of the I.D. Act to attract Item 9 of the Schedule
IV of the MRTU & PULP Act. He further contended
that
the
action
of
the
appellant-Company
in
issuing notice of retrenchment is pursuant to the
closure of the department/unit of the appellant-
Company and not retrenchment of workmen per se.
Therefore,
it
is
contended
that
there
is
no
statutory breach of the aforesaid provisions of
the I.D. Act as alleged to have been committed by
the appellant-Company. The learned senior counsel
for the appellant has further placed reliance upon
the judgment of this Court in the case of Isha
Steel
Treatment,
Bombay
v.
Association
of
Engineering Workers, Bombay & Anr.5, in support of
his submission that the concerned workmen have not
produced
neither
5
evidence
bonafide
to
nor
show
that
genuine,
the
which
closure
is
important
(1987) 2 SCC 203
Page 17
18
aspect of the case is not considered either by the
Industrial Court or the High Court. Hence, the
concurrent finding of fact recorded by them on the
relevant
erroneous
contentious
in
law
issue
and
No.1-3 and 7
same are wholly
the
are
unsustainable in law.
14. Further, it has been contended by the learned
counsel for the appellant-Company that the Award
of reinstatement and back-wages to be paid to the
concerned workmen by both the Industrial Court and
the High Court would not be possible in case of
admitted
closure
of
the
work
of
one
of
the
department/unit of the establishment and therefore
there
is
no
question
of
reinstatement
of
the
concerned workmen and awarding back-wages to them
and prayed for moulding the relief accordingly by
this Court. It is contended by him that in the
present case, it is an admitted fact that on and
from 04.08.1992, the premises of the appellant-
Company’s clearing department/unit had been handed
over to the licensees and that no work of this
appellant-Company was being carried out by them
Page 18
19
from the said premises or elsewhere, except the
two
activities
Therefore,
no
which
were
back-wages
partially
are
retained.
payable
to
the
workmen as awarded by the Courts below, as the
services of the concerned workmen were terminated
on account of the closure of the above unit of the
appellant-Company for the reasons stated in the
Annexure appended to the retrenchment notice. It
is
also
further
urged
by
him
that
it
is
an
established principle of law that there could be
neither reinstatement nor payment of back-wages to
the
concerned
workmen
in
a
closed
unit
of
the
appellant-Company in which retrenched workmen were
working. He has also urged that indeed, there can
be
no
industrial
dispute
between
the
concerned
workmen and appellant-Company after the closure of
its
clearance
department/unit,
which
fact
was
established by them before the Courts below by
producing evidence on record, which is ignored by
them while recording the finding on this relevant
issue
and
therefore,
the
finding
of
fact
is
erroneous in law. Hence, the same is liable to be
Page 19
20
set aside. Further, it is contended by him that
both the Industrial Court and the High Court have
failed to frame the relevant issue namely, whether
there
was
a
department/unit
closure
of
the
of
the
clearance
appellant-Company
or
not
despite there being a pleading in this regard in
its written statement. The issue in this regard
should have been framed by the Industrial Court as
per the law laid down by this Court in the case of
J.K. Synthetics v. Rajasthan Trade Union Kendra &
Ors.6 He referred to Para 22 of the judgment in
support
of
his
above
legal
contention,
which
paragraph is extracted hereunder:
“22. As has been set out hereinabove,
amongst other disputes which had been
referred to the Industrial Tribunal was
Dispute 2, which reads as follows:
“2. Whether the retrenchment in the 4
divisions of J.K. Synthetics (viz.
J.K. Synthetics, J.K. Acrylics, J.K.
Tyre Cord and J.K. Staple and Tows,
Kota) was justified and if not, to
what relief the workers are entitled?”
Thus, the Industrial Tribunal was required
to go into the question whether or not the
retrenchment was justified. The appellant
6
(2001) 2 SCC 87
Page 20
21
had sought to justify retrenchment of the
1164 workmen on the basis that there was a
closure of a section of the nylon plant.
Thus in order to come to the conclusion,
whether or not retrenchment was justified,
the Industrial Tribunal necessarily had to
first decide whether or not there was a
closure.”
15.
It
is
further
contended
by
him
that,
the
Industrial court has neither framed an issue with
regard to the justification of the closure nor
has it recorded any finding on this aspect. In
not doing so and recording the finding on this
important
aspect
appellant-Company
of
by
the
the
case
against
Industrial
the
Court
has
adversely prejudiced its case. The learned senior
counsel further placed reliance on the judgment
of this Court rendered in the case of Kalinga
Tubes Ltd. v. Their Workmen7, wherein it was held
that the Company has not justified the reason of
the
closure
of
the
undertaking
was
due
to
unavoidable circumstances beyond the control of
the
appellant-Company
compensation
undertaking
7
would
was
be
closed
therein
payable
down
"for
and
as
any
the
if
the
reason
AIR 1969 SC 90
Page 21
22
whatsoever" within Section 25FFF (1) of the I.D.
Act.
16.
Further, it was contended by him that in
the case of PVK Distillery Ltd. v. Mahendra Ram8,
this Court has held that a direction for awarding
back wages after a long interregnum is unfair and
that
the
Industrial
Court
ought
to
have
taken
notice of the case where the employer has been
declared sick and remained closed for many years
and therefore the award of back wages in favour
of the concerned workmen is unjustified in law.
17.
On the other hand, the above submissions
made by the learned senior counsel on behalf of
the appellant-Company
the learned
senior
are
strongly
counsel,
Mr.
rebutted
C.
U.
by
Singh,
appearing on behalf of the concerned workmen of
the
the
respondent-Union,
order
of
notice
by
placing
of
reliance
retrenchment
upon
dated
27.07.1992 served upon the concerned workmen.
18.
It is contended by him that the Statement
of Reasons appended to the retrenchment notice
8
(2009) 5 SCC 705
Page 22
23
issued to the concerned workmen by the appellant-
Company does not show that the retrenchment of
the workmen from their services is on account of
closure of the clearing department, which is the
part of the undertaking of the appellant-Company.
According to him, the concurrent finding of fact
recorded
by
the
courts
below
on
the
relevant
issue is on proper appreciation of pleadings and
both documentary and oral evidence on record and
is not shown to be erroneous, yet the same is
sought to be challenged by the appellant-Company
without
against
showing
the
material
finding
of
evidence
fact
on
the
on
record
points
of
dispute and relevant contentious issues framed by
the Industrial Court. He placed strong reliance
upon paragraphs 2 and 3 of the written statement
of
the
appellant-Company
to
the
complaint,
wherein it is stated that due to severe recession
in the dominant areas in the industry in which
the concerned workmen were engaged and various
other factors, which were having direct impact on
the
business
activities
and
therefore,
it
was
Page 23
24
found
imperative
for
the
appellant-Company
to
shut down some of their activities as detailed by
them in the Statement of Reasons appended to the
notice
of
retrenchment.
Strong
reliance
was
placed upon by him on the decision of this Court
in the case of S.G. Chemicals And Dyes Trading
Employees’
Trading
Union
Ltd.
&
v. S.G.
Anr.9, in
Chemicals
And
justification
of
Dyes
the
finding of fact recorded by the Industrial Court
and concurred with by the High Court on the issue
that the notice of retrenchment served upon the
concerned
workmen
is
bad
in
law.
Relevant
paragraph of the said case is extracted as under:
“23. ............If the services of a workman are
terminated in violation of any of the
provisions of the Industrial Disputes Act,
such
termination
is
unlawful
and
ineffective
and
the
workman
would
ordinarily be entitled to reinstatement
and payment of full back wages. In the
present case, there was a settlement
arrived at between the Company and the
Union under which certain wages were to be
paid by the Company to its workmen. The
Company failed to pay such wages from
September 18, 1984, to the eighty-four
workmen whose services were terminated on
the ground that it had closed down its
Churchgate division. As already held, the
9
(1986) 2 SCC 624
Page 24
25
closing down of the Churchgate Division
was illegal as it was in contravention of
the provisions of Section 25-O of the
Industrial Disputes Act. Under sub-section
(6) of Section 25-O, where no application
for permission under sub-section (1) of
Section 25-O is made, the closure of the
undertaking is to be deemed to be illegal
from the date of the closure and the
workmen are to be entitled to all the
benefits under any law for the time being
in force, as if the undertaking had not
been closed down. The eighty-four workmen
were, therefore, in law entitled to
receive from September 18, 1984, onwards
their salary and all other benefits
payable to them under the settlement dated
February 1, 1979. These not having been
paid to them, there was a failure on the
part of the Company to implement the said
settlement and consequently the Company
was guilty of the unfair labour practice
specified in Item 9 of Schedule IV to the
Maharashtra
Act,
and
the
Union
was
justified in filing the complaint under
Section
28
of
the
Maharashtra
Act
complaining
of
such
unfair
labour
practice.”
19. The learned senior counsel for the respondent-
Union contended that the alleged closure of the
department/unit is void ab initio in law for non-
compliance of the aforesaid statutory provisions
of the I.D. Act, the orders of retrenchment are
vitiated
in
law,
liable
to
be
set
aside
and
accordingly, the Industrial Court has rightly set
Page 25
26
aside the same and the High Court has rightly
confirmed the award of the Industrial Court.
20.
The learned senior counsel on behalf of the
respondent-Union
further
contended
that
the
admitted fact is that the appellant-Company did
not
adduce
any
evidence
before
the
Industrial
Court that the closure of the department/unit and
the retrenchment of the concerned workmen of that
department
was
made
by
complying
with
the
mandatory provisions of Section 25F clauses (a) &
(c) and Section 25G of the I.D. Act read with
Rule 81 of the Bombay Rules. The contention of
the
learned
senior
counsel
for
the
appellant-
Company that non-compliance of Section 25FFA (1)
in not serving the notice atleast 60 days before
the
intended
date
of
closure
on
the
State
Government is directory but not mandatory for the
reason
that
non-compliance
of
the
same
would
amount to penalty as provided under Section 30A
of
the
Company
I.D. Act
has to
and
face
therefore,
penal
the
action
appellant-
as
provided
under the above provision of the I.D. Act, since
Page 26
27
its action could not have been held as void ab
initio
in
law
by
the
Courts
below,
the
said
contention is vehemently rebutted by the learned
senior counsel for the respondent-Union.
21.
The
learned
respondent-Union
contention
of
senior
counsel
submitted
the
that
learned
for
the
senior
the
above
counsel
on
behalf of appellant-Company is wholly untenable
in
law.
He
provisions
contended
of
Section
that
the
25FFA
said
of
the
statutory
I.D.
Act
which contemplates issue of notice of closure of
the department/unit of the Company to the State
Government
are
mandatory
in
law
as
it
was
inserted by the Parliament by way of an Amendment
Act No. 32 of 1972, with an avowed object to
protect the workmen
account of the
who
such
will
be
closure
of
retrenched on
Industry or
unit/department, which amended provision of the
Act
has
come
into
force
with
effect
from
14.06.1972 and he has placed strong reliance upon
the Statement of Objects and Reasons of the above
amended
provisions,
which
would
clearly
state
Page 27
28
that the aforesaid provisions are mandatorily to
be complied with by the appellant-Company before
taking action it against the concerned workmen.
22.
The
Learned
senior
counsel
further
contended that the non-compliance of Section 25F
clauses (a), (b) & (c) and Section 25G of the
I.D. Act read with Rule 81 of the Bombay Rules
i.e.
deviation
from
‘last
come
first
go’
principle, reasons should have been recorded by
the
appellant-Company
workmen
while
for
retaining
retrenching
the
juniors
senior
in
the
department or unit. The appellant-Company has not
made
out
a
case
in
justifiable reasons
workers the
in
this
for
regard
by
retaining
Company
and
adducing
the
thus,
junior
they
have
deviated from the principle of ‘last come first
go’.
Thus,
the
concurrent
finding
of
fact
recorded on this important aspect of the case is
based
on
evidence
on
record,
which
is
in
conformity with law laid down by this Court. It
is
further
contended
by
the
learned
senior
counsel that onus is on the appellant-Company to
Page 28
29
prove as to why juniors to the retrenched workmen
are retained in the department or unit of the
Company pursuant to the alleged closure of the
unit/department
of
the
appellant-Company.
The
same is not established by the appellant-Company
by
assigning
brought
to
cogent
our
reasons.
notice
that
He
not
has
even
rightly
a
single
question was put to the witnesses of the workmen
in this regard in their cross-examination before
the
Industrial
Court
as
to
why
the
appellant-
Company retained junior workmen in the Company
while retrenching the senior workmen in the said
department/unit of the appellant-Company.
23.
The aforesaid rival legal contentions are
carefully examined by us with reference to the
pleadings, evidence adduced by both the parties
on
record
relevant
before
statutory
the
Industrial
provisions
of
Court,
the
I.D.
the
Act
inter alia, Section 2(cc) read with Sections 25F
(a) & (c), 25FFA, and 25G of the I.D. Act read
with Rule 81 of the Bombay Rules to find out as
to
whether
the
findings
recorded
by
the
Page 29
30
Industrial Court on the relevant issue nos. 1 to
3 and 7 in the award in favour of the concerned
workmen are either erroneous or bad in law and
warrant interference by this Court.
24.
The Industrial Court, being the original
court, for appreciation of facts & evidence on
record
has
rightly
applied
its
mind
to
the
pleadings and evidence on record and recorded its
finding
of
fact
on
the
contentious
issues
referred to supra by assigning valid & cogent
reasons
after
adverting
to
the
statutory
provisions of the I.D. Act and the law laid down
by
this
Court
and
the
High
Court
of
Bombay.
However, it would be necessary for this Court to
refer to the notice of retrenchment served upon
the concerned workmen on 27.07.1992 along with
Statement of Reasons assigned by the appellant-
Company in justification of the same which is
appended
to
the
retrenchment
notice.
The
same
reads as under:
“STATEMENT OF REASONS
Mackinnon Mackenzie & Company Limited has been
Page 30
31
carrying on the business of Ship Agency, Ship
Managing, Ship Owning Operating, Travel and
Tourism,
Clearing
and
Forwarding,
Overseas
Recruitment and property Owning and Development.
The Company is presently employing approximately
150 workmen.
Other than Clearing & Forwarding and property
owning
and
Development,
the
rest
of
the
activities of the Company are related to the
shipping industry.
Because of severe recession
in the industry from 1978 onwards, the Company's
accumulated
losses
have
been
increasing
dramatically from Rs.12.41 crores as at December
1983 to Rs.70 crores as at 31st march 1991.
Because of the financial condition of the
Company, the Ship manning and Ship Agency
Principals either set up their own separate
operations or appointed other agents for India.
These included our erstwhile parent company
namely, P & D Steam Navigation Company, London.
Apart from this, the Company has not been able
to improve its financial position or set off
substantially the accumulated losses, for the
following reasons:
1.
Stiff
competition
activities.
in
respect
of
all
2. Very high wages and dearness allowance and
other benefits payable as per the agreement to
the staff which are for higher than those paid
by our competitors to their staff.
3.Abnormal increases in other infrastructural
costs and overheads.
4. Decreasing work output in
staff employed to work on hand
relation
to
the
The company incurred a loss of Rs. 6.67 crores
for the year ended 31st March, 1990 which rose to
Rs.6,83 crores for the year ended 31st March,
1991.
During the current year the loss is
likely to escalate.
In most areas of our activities, including that
of Clearing & Forwarding, the Company has been
unable to improve its revenue by attracting
fresh business.
Over the past few years the
Company has found itself in a position of great
difficulty in paying salaries to the staff in
Page 31
32
Bombay office in the time.
The above situation principally relates to
Bombay office and in a situation where
Company cannot present itself to Principals
clients as a viable business institution,
position of the Company will continue
deteriorate.
the
the
and
the
to
The Board of Directors debated all aspects of
this issue extensively and, in view of the facts
stated above and the reduction of the workload
suffered in recent years, coupled with the high
cost of infrastructure and overheads, the Board
of Directors came to the decision to rationalize
the activities in the Bombay office of the
Company by closing down its activities apart
from Property
Owning and Development and a
portion of the Clearing and Development business
relating to contracts with Government of India
institutions, such as, Central Railway and
Lubrizol India Limited.
Needless to add, the Company will pay off all
workmen who have not been retained, their legal
terminal dues.
The Directors have taken this opportunity to
convey their thanks to your years of service
with the Company.”
(Emphasis laid by this Court)
25.
It is evident from the Statement of Reasons
that the appellant-Company has not been able to
improve
losses.
its
revenue
and
was
having
cumulative
There is a reference with regard to the
activities
of
the
appellant-Company
including
that of Clearing and Forwarding Department. The
appellant-Company
business
and
was
further
unable
found
to
improve
itself
in
its
great
Page 32
33
difficulty in paying salaries to the staff on
time.
By
a
careful
reading
of
the
aforesaid
Statement of Reasons, it has not been explicitly
made clear that the Board of Directors of the
Company
have
taken
a
decision
to
close
down
Clearing and Forwarding Section, which is a part
of the undertaking of the appellant-Company. As
rightly contended by the learned senior counsel
appearing on behalf of the respondent-Union, the
cumulative effect of the pleadings, Statement of
Reasons appended to the retrenchment notice, it
is made very clear that the retrenchment notice
served upon the concerned workmen was an action
of closure of Clearing and Forwarding Section of
the appellant-Company.
According to the learned
senior counsel on behalf of the respondent-Union,
the concurrent finding of fact recorded by the
Industrial
Court
on
the
above
relevant
contentious issues is further fortified by the
retrenchment notice and the Statement of Reasons
annexed to the same.
26.
On the contention urged on behalf of the
Page 33
34
appellant-Company is that it was a closure of the
department/unit of the appellant-Company as per
the definition of “closure” under Section 2(cc)
of the I.D. Act, we are of the view that with
respect to the above contentious issues framed by
the Industrial Court has been answered against
the
fact
appellant-Company
recorded
contention
by
urged
based
it.
on
on
the
Therefore,
behalf
of
the
finding
the
of
said
appellant-
Company cannot be allowed to sustain in law.
27.
Further,
with
regard
to
the
allegation
against the appellant-Company that its action of
retrenchment
of
the
concerned
workmen
is
in
contravention with the provisions of Section 25F
clauses (a), (b) and (c) of the I.D. Act. Section
25F clause (a) states that no workmen employed in
continuous service for not less than one year
under an employer shall be retrenched until the
workman
has
been
given
one
month’s
notice
in
writing indicating the reasons for retrenchment
and
the
period
of
notice
has
expired,
or
the
workman has been paid in lieu of such notice,
Page 34
35
wages for the period of notice. In the case on
hand,
the
workman
retrenchment
notice
were
on
served
the
stating
27.07.1992
with that
their services stand retrenched from the close of
business
hours
on
04.08.1992
in
terms
of
the
reasons appended to the said notice and further
stated
the
amount
of
retrenchment
compensation
and one month’s salary in lieu of notices that
would be due to the concerned workmen. However,
no cogent evidence has been brought before us by
the
appellant-Company
referred
one
month’s
to
prove
salary
that
of
the
the
above
concerned
workmen in lieu of the retrenchment notice has
been
actually
concerned
paid
workmen
to
them.
were
Further, the
notice of
given
retrenchment with Statement of Reasons appended
therewith by
the
27.07.1992 which
was
appellant-Company
effective
from
only
on
4.08.1992.
Therefore, one month notice was not given to the
concerned workmen before their retrenchment came
into effect nor one month’s salary in lieu of the
retrenchment
notice
was
paid
to
the
concerned
Page 35
36
workmen.
Therefore,
the
said
action
by
the
appellant-Company is a clear cut breach of the
above said provision of condition precedent for
retrenchment
of
the
workmen
as
provided
under
Section 25F clause (a) of the I.D. Act.
The
Industrial Court after examining the facts and
evidence
on
record
has
rightly
answered
the
question of breach of Section 25F clause (b) in
the negative since no evidence has been produced
by the respondent-Union to prove the same and
further no calculation is brought to our notice
as to the amount received by way of retrenchment
compensation and also the actual amount sought to
have
been
paid
to
the
retrenched
workmen.
Further, with regard to the provision of Section
25F
clause
(c),
the
appellant-Company
has
not
been able to produce cogent evidence that notice
in the prescribed manner has been served by it to
the State Government prior to the retrenchment of
the concerned workmen. Therefore, we have to hold
that the appellant-Company has not complied with
the conditions precedent to retrenchment as per
Page 36
37
Section 25F clauses (a) and (c) of the I.D. Act
which are mandatory in law.
28.
Further
on
examining
the
aforesaid
retrenchment notice referred to supra that was
served upon the concerned workmen, we are of the
considered
view
that
they
are
retrenched
from
their services on account of the alleged closure
of the Clearing and Forwarding department/unit of
the
appellant-Company,
proved
by
positive
placing
the
evidence
The
in
appellant-Company,
reliance
Reasons.
which
on
this
upon
said
vital
the
above
finding
of
fact
by
is
not
adducing
aspect
except
Statement
fact
by
of
the
Industrial Court on the contentious issue Nos. 1-
3 and 7 on the part of the appellant-Company is
further supported by its conduct in not complying
with the mandatory provisions under Section 25FFA
of the I.D. Act as it has not served atleast 60
days notice on the State Government before the
alleged
closure
appellant-Company
same.
of
the
stating
department/unit
its
reasons
of the
for the
In this regard, the contention raised by
Page 37
38
Mr.
Jamshed
Cama,
the
learned
senior
counsel
appearing on behalf of the appellant-Company is
that the above said provision is not mandatory
but
directory
for
the
reason
that
there
is
a
penal provision under Section 30A of the I.D. Act
and therefore, the competent authority can take
penal
action
against
the
appellant-Company
for
non compliance of the above said provision. Per
contra, the learned senior counsel Mr. C.U. Singh
appearing on behalf of the respondent-Union has
rightly rebutted the above contention by placing
reliance
upon
the
Statement
of
Objects
and
Reasons by inserting Section 25FFA by Amending
Act
No.
definite
32
of
object
1972
to
to
be
the
I.D.
achieved.
Act
with
The
a
said
Statement of Objects and Reasons to the above
referred Amending Act is extracted hereunder:
"The
problem
of
closure
of
industrial
undertakings resulting of late in loss of
production and unemployment of large numbers of
workmen has become very serious. Employers have
declared
sudden
closures
of
industrial
establishments without any notice or advance
intimation to the Government. Several factors
appeared to have led to these closures, amongst
which are accumulated losses over a number of
years and mismanagement of the affairs of the
establishments.
The
unsatisfactory
state
of
Page 38
39
industrial relations (in the sense of labour
unrest making it difficult to sustain regular
production) has been pleaded as a precipitating
factor. Certain other causes like financial
difficulties and non-availability of essential
raw material had also been mentioned.
2.Since the problem of closure has been acute in
the State of West Bengal, a President's Act-The
Industrial Disputes (West Bengal Amendment) Act,
1971 was enacted on 28th August, 1971. This
provided that an employer who intended to close
down an undertaking should serve at least sixty
days' notice on the State Government stating
clearly the reasons for intended closure of the
undertaking. While enacting this legislation for
West Bengal Government considered it desirable to
promote Central legislation on the subject since
the problem of closure was not limited to West
Bengal but was found in varying degrees in other
States as well.
3.It is however, felt that before Central
legislation was enacted, the matter should be
considered by the Indian Labour Conference. The
Indian Labour Conference which met on the 22nd
and 23rd October, 1971 generally endorsed the
proposal for Central legislation gives effect to
the
recommendation
of
the
Indian
Labour
Conference. It provides for the service of a
notice, at least sixty days before the intended
closure of an undertaking is to become effective,
so that within this period prompt remedial
measures could be taken, where the circumstances
permit to prevent such closure. No notice will be
required to be served in the case of undertaking
set up for construction of buildings, roads,
canals, dams and other construction works and
projects or in the case of small establishments
employing less than fifty persons. The Bill also
provides penalty for closing down any undertaking
without serving the requisite notice". (Gazette
of India, 06.12.1971, Pt. II, Section 2, Ext.
page 893)
29.
The contention urged by Mr. C. U. Singh,
the learned senior counsel for the respondent-
Page 39
40
Union is that if the interpretation of provision
under Section 25FFA of the I.D. Act as contended
by
the
learned
counsel
on
behalf
of
the
appellant-Company is accepted to be directory and
not
mandatory
provision
as
it
against
would
the
attract
the penal
appellant-Company under
Section 30A of the I.D. Act, then the purpose and
intentment of the amendment in the year 1972 made
to
Section
defeated
25FFA
and
of
would
the
I.D.
nullify
Act,
the
will
Objects
be
and
Reasons for amending the provisions of the I.D.
Act and it would be contrary to the legislative
wisdom
of
the
Parliament.
The
statutory
protection has been given to the workmen under
the provision of Section 25FFA of the I.D. Act,
with an avowed object to protect workmen being
retrenched
due
department/unit
livelihood
of
to
of
such
closing
the
down
undertaking
workmen
and
their
of
as
a
the
family
members will be adversely affected on account of
their retrenchment from their service. To avert
such
dastardly
situation
to
be
faced
by
the
Page 40
41
concerned workmen in the Company/establishment,
the
statutory
obligation
is
cast
upon
the
employer to serve atleast 60 days notice on the
State Government before such intended closure of
the department/unit to be served upon the State
Government informing the reasons as to why it
intends to close down its department/unit.
30.
The learned senior counsel appearing for
the respondent-Union has rightly placed reliance
upon the judgments of this Court, namely, The
State Of Uttar Pradesh And Others V. Babu Ram
Upadhya, State of Mysore & Ors. v. V.K. Kangan &
Ors and Sharif-Ud-Din vs Abdul Gani Lone, all
referred
referring
to
supra,
to
wherein
certain
this
statutory
Court
while
provisions,
consistently held that the statutory provisions
of the statutory enactment are mandatory and not
directory
and
that
they
are
required
to
be
rigidly complied with. The relevant paras from
the decision of this Court in the case of Babu
Ram Upadhya (supra) are extracted hereunder:
Page 41
42
“28. The question is whether Rule I of para
486 is directory. The relevant rule says
that the police officer shall be tried in
the first place under Chapter XIV of the
Criminal Procedure Code. The word “shall” in
its ordinary import is “obligatory”; but
there are many decisions wherein the courts
under different situations construed the
word to mean “may”. This Court in Hari
Vishnu Kamath v. Syed Ahmad Ishaque dealt
with this problem at p. 1125 thus:
“It is well established that an enactment
in form mandatory might in substance be
directory and that the use of the word
‘shall' does not conclude the matter.”
It is then observed:
“They (the rules) are well-known, and
there is no need to repeat them. But they
are
all
of
them
only
aids
for
ascertaining the true intention of the
legislature which is the determining
factor, and that must ultimately depend
on the context.”
The following quotation from Crawford On
the Construction of Statutes, at p. 516, is
also helpful in this connection:
“The question as to whether a statute is
mandatory or directory depends upon the
intent of the legislature and not upon
the language in which the intent is
clothed. The meaning and intention of the
legislature must govern, and these are to
be
ascertained,
not
only
from
the
phraseology of the provision, but also by
considering its nature, its design, and
the consequences which would follow from
construing it the one way or the other....”
This passage was approved by this Court in
State of U.P. v. Manbodhan Lal Srivastava.
In Craies on Statute Law, 5th Edn., the
following passage appears at p. 242:
“No universal rule can be laid down as to
whether mandatory enactments shall be
Page 42
43
considered directory only or obligatory
with
an
implied
nullification
for
disobedience. It is the duty of courts of
justice to try to get at the real
intention of the Legislature by carefully
attending to the whole scope of the
statute to be construed.”
A valuable guide for ascertaining the
intention of the Legislature is found in
Maxwell on The Interpretation of Statutes,
10th Edn., at p. 381 and it is:
“On
the
other
hand,
where
the
prescriptions of a statute relate to the
performance of a public duty and where
the invalidation of acts done in neglect
of them would work serious general
inconvenience or injustice to persons who
have no control over those entrusted with
the duty without promoting the essential
aims
of
the
legislature,
such
prescriptions
seem
to
be
generally
understood as mere instructions for the
guidance and government of those on whom
the duty is imposed, or, in other words,
as directory only. The neglect of them
may be penal, indeed, but it does not
affect the validity of the act done in
disregard of them.”
This passage was accepted by the Judicial
Committee of the Privy Council in the case
of Montreal Street Railway Company v.
Normandin and by this Court in State of
U.P. v. Manbodhan Lal Srivastava.
29. The relevant rules of interpretation may
be briefly stated thus: When a statute uses
the word “shall”, prima facie, it is
mandatory, but the Court may ascertain the
real
intention
of
the
legislature
by
carefully attending to the whole scope of
the statute. For ascertaining the real
intention of the Legislature the Court may
consider, inter alia, the nature and the
design of the statute, and the consequences
Page 43
44
which would follow from construing it the
one way or the other, the impact of other
provisions
whereby
the
necessity
of
complying with the provisions in question is
avoided, the circumstance, namely, that the
statute provides for a contingency of the
non-compliance with the provisions, the fact
that the non-compliance with the provisions
is or is not visited by some penalty, the
serious or trivial consequences that flow
therefrom, and, above all, whether the
object of the legislation will be defeated
or furthered.”
31. Further, the relevant paras 4 and 10 from the
case of V.K. Kangan & Ors. (supra) are extracted
hereunder:-
“4. The only point which arises for
consideration is whether the provisions
of Rule 3(b) were mandatory and therefore
the failure to issue the notice to the
department concerned as enjoined by the
rule was fatal to the validity of the
notifications under Sections 4 and 6 of
the Act.
XXX
XXX
XXX
10. In determining the question whether a
provision is mandatory or directory, one
must look into the subject-matter and
consider the importance of the provision
disregarded and the relation of that
provision to the general object intended
to be secured. No doubt, all laws are
mandatory in the sense they impose the
duty to obey on those who come within its
purview. But it does not follow that
every departure from it shall taint the
Page 44
45
proceedings with a fatal blemish. The
determination of the question whether a
provision
is
mandatory
or
directory
would, in the ultimate analysis, depend
upon the intent of the law-maker. And
that has to be gathered not only from the
phraseology of the provision but also by
considering its nature, its design and
the consequences which would follow from
construing it in one way or the other. We
see no reason why the rule should receive
a permissible interpretation instead of a
pre-emptory construction. As we said, the
rule was enacted for the purpose of
enabling the Deputy Commissioner (Land
Acquisition Collector) to have all the
relevant materials before him for coming
to a conclusion to be incorporated in the
report to be sent to the Government in
order to enable the Government to make
the proper decision. In Lonappan v. Sub-
Collector of Palghat1 the Kerala High
Court took the view that the requirement
of the rule regarding the giving of
notice to the department concerned was
mandatory. The view of the Madras High
Court in K.V. Krishna Iyer v. State of
Madras is also much the same.
(Emphasis laid by this Court)
32. Further in the case of Sharif-Ud-Din (supra)
it was held as under by this Court:-
“9. The difference between a mandatory
rule and a directory rule is that while
the former must be strictly observed, in
the
case
of
the
latter
substantial
compliance may be sufficient to achieve
the object regarding which the rule is
enacted. Certain broad propositions which
can be deduced from several decisions of
Page 45
46
courts regarding the rules of construction
that should be followed in determining
whether a provision of law is directory or
mandatory may be summarised thus: The fact
that the statute uses the word “shall”
while laying down a duty is not conclusive
on the question whether it is a mandatory
or directory provision. In order to find
out the true character of the legislation,
the court has to ascertain the object
which the provision of law in question has
to subserve and its design and the context
in which it is enacted. If the object of a
law is to be defeated by non-compliance
with it, it has to be regarded as
mandatory. But when a provision of law
relates to the performance of any public
duty and the invalidation of any act done
in disregard of that provision causes
serious prejudice to those for whose
benefit it is enacted and at the same time
who have no control over the performance
of the duty, such provision should be
treated
as
a
directory
one.
Where,
however, a provision of law prescribes
that a certain act has to be done in a
particular manner by a person in order to
acquire a right and it is coupled with
another
provision
which
confers
an
immunity on another when such act is not
done in that manner, the former has to be
regarded as a mandatory one. A procedural
rule ordinarily should not be construed as
mandatory if the defect in the act done in
pursuance of it can be cured by permitting
appropriate rectification to be carried
out at a subsequent stage unless by
according such permission to rectify the
error later on, another rule would be
contravened. Whenever a statute prescribes
that a particular act is to be done in a
particular manner and also lays down that
failure
to
comply
with
the
said
requirement
leads
to
a
specific
Page 46
47
consequence, it would be difficult to hold
that the requirement is not mandatory and
the
specified
consequence
should
not
follow.”
(emphasis laid by this Court)
33. Apart from the said decisions, this Court has
followed
the
Privy
Council
of
1939
and
Chancellor's decisions right from the year 1875
which legal principle has been approved by this
Court in the case of Rao Shiv Bahadur Singh & Anr.
vs. State of Vindhya Pradesh10 and the same has
been
followed
statutory
until
provision
now,
holding
prescribes
that
a
if
a
particular
procedure to be followed by the authority to do an
act, it should be done in that particular manner
only. If such procedure is not followed in the
prescribed manner as provided under the statutory
provision, then such act of the authority is held
to be null and void
present
case,
ab initio in law. In the
undisputedly,
the
statutory
provisions of Section 25FFA of the I.D. Act have
not been complied with and therefore, consequent
action
10
of
the
appellant-Company
will
be
in
AIR 1954 SC 322
Page 47
48
violation of the statutory provisions of Section
25FFA of the I.D. Act and therefore, the action of
the Company in retrenching the concerned workmen
will amounts to void ab initio in law as the same
is inchoate and invalid in law.
34.
the
It would be appropriate for us to refer to
decision
of
this
Court
in
the
case
Babu
Verghese & Ors v. Bar Council Of Kerala & Ors11, to
show that if the manner of doing a particular act
is prescribed under any statute, and the same is
not followed, then the action suffers from nullity
in the eyes of law, the relevant paragraphs of the
above said case are extracted hereunder:
“31. It is the basic principle of law
long settled that if the manner of doing
a particular act is prescribed under any
Statute, the act must be done in that
manner or not at all.
The origin of this rule is traceable to
the decision in Taylor vs. Taylor (1875)
1 Ch.D 426 which was followed by Lord
Roche in Nazir Ahmad vs. King Emperor 63
Indian Appeals 372 = AIR 1936 PC 253 who
stated as under :
"Where a power is given to do a certain
thing in a certain way, the thing must be
done in that way or not at all."
This rule has since been approved by
11
(1999) 3
SCC
422
Page 48
49
this Court in Rao Shiv Bahadur Singh &
Anr. vs. State of Vindhya Pradesh 1954
SCR 1098 = AIR 1954 SC 322 and again in
Deep Chand vs.
State of Rajasthan 1962(1) SCR 662 = AIR
1961 SC 1527.
32. These cases were considered by a
Three-Judge Bench of this Court in State
of Uttar Pradesh vs. Singhara Singh &
Ors. AIR 1964 SC 358 = (1964) 1 SCWR 57
and the rule laid down in Nazir Ahmad’s
case (supra) was again upheld. This rule
has since been applied to the exercise of
jurisdiction by courts and has also been
recognised as a salutary principle of
administrative law.”
(Emphasis laid by this Court)
35.
The statutory provisions contained in Section
25FFA of the I.D. Act mandate that the Company
should have issued the intended closure notice to
the Appropriate Government should be served notice
atleast
intended
60
days
to
before
close
the
date
down
on
the
which
it
concerned
department/unit of the Company. As could be seen
from the pleadings and the findings recorded by
the
Industrial
Court,
there
is
a
categorical
finding of fact recorded that there is no such
mandatory notice served on the State Government by
the appellant-Company. The object of serving of
such notice on the State Government is to see that
Page 49
50
the it can find out whether or not it is feasible
for the Company to close down a department/unit of
the
Company
and
whether
the
concerned
workmen
ought to be retrenched from their service, made
unemployed and to mitigate the hardship of the
workmen
and
their
family
members.
Further,
the
said provision of the I.D. Act is the statutory
protection given to the concerned workmen which
prevents the appellant-Company, from retrenching
the workmen arbitrarily and unreasonably & in an
unfair manner.
The cumulative reading of the Statement of
Reasons, the retrenchment notice served on the
concerned
workmen,
the
pleadings
of
the
appellant-Company and in the absence of evidence
on record to justify the action of retrenchment
of concerned workmen on the alleged closure of
the department/unit of the appellant-Company is
shown
as
bonafide.
However,
the
concurrent
finding of fact recorded by the High Court on
this aspect of the case cannot be held to be bad
in law by this Court in exercise of its Appellate
Page 50
51
Jurisdiction in this appeal.
36.
The
learned
appellant-Company
senior
counsel
further
for
contended
the
that
violation of the above statutory provisions of
the I.D. Act and the infraction of the same on
the part of the appellant-Company in retrenching
the concerned workmen must have been pleaded and
proved by them, which has not been done by them
in the instant case, and therefore, the finding
recorded
by
the
Industrial
Court
is
wholly
erroneous in law and the same is liable to be set
aside. He further contented that the said finding
of
the
Industrial
Court
has
been
erroneously
accepted by the Division Bench of the High Court
without examining the case in proper perspective
and erroneously rejected the contention of the
appellant-Company as the same is devoid of merit.
He further placed reliance upon the decision of
this Court on case of Bharat Forge Co. Ltd. v.
Uttam
Manohar
Nakate12,
in
support
of
his
contention, wherein this Court has observed that
the
12
complainant
must
set
out
in
the
first
(2005) 2 SCC 489
Page 51
52
instance
the
deviation
to
show
that
the
management has committed unfair labour practice
and only then the other party be asked to lead
evidence to rebut the same.
37.
It is very clear from the averments of the
appellant-Company in its written statement that
its action in retrenching the workmen is sought
to
be
justified
before
the
Industrial
Court,
which, in fact, is not justified on the basis of
evidence
on
record.
It
is
clear
from
the
pleadings at paragraphs 3 and 4 of the written
statement filed by the appellant-Company before
the
Industrial
that
the
Court
action
of
which
the
would
clearly
appellant-Company
show
is
a
clear case of mala fide which cannot be sustained
in
law.
Further,
there
are
no
valid
reasons
assigned in the explanatory note to justify the
action
of
principle
the
of
Company
‘last
come
in
not
first
following
go’
as
the
mandated
under Section 25G of the I.D. Act read with Rule
81 of the Bombay Rules to retrench the concerned
workmen who are seniors to the workmen who were
Page 52
53
retained
in
the
department.
At
the
time
of
filing written statement by the appellant-Company
before
the
assigned
Industrial
in
concerned
Court,
retaining junior
workmen
in
the
no
reason
workmen
department.
was
to the
For the
reasons recorded above, we have to hold that the
concurrent finding of fact recorded by the High
Court with regard to non-compliance of Section
25G of the I.D. Act by the appellant-Company is
also the statutory violation on the part of the
appellant-Company
in
retrenching
certain
concerned senior workmen. Therefore, the courts
below have rightly answered the issue against it.
Hence, the same cannot be termed as erroneous for
our interference with the.
38.
The
should
principle
have
been
'last
strictly
appellant-Company
retrenchment
of
at
notice
the
served
come
adhered
time
upon
first
to
of
the
by
go'
the
issuing
concerned
workmen as provided under Section 25G of the I.D.
Act read with Rule 81 of the Bombay Rules which
is
not
properly
complied
with
by
it
for
the
Page 53
54
reason
that
the
custom
clearance
and
dock
clearance are totally different departments and
it has retained 7 workmen who are undisputedly
juniors to the concerned workmen, which action is
sought to be justified by the appellant-Company
without giving justifiable reasons. Further, no
category wise seniority list of the workmen was
displayed
on
notice
board
of
Company as required in law.
the
appellant-
The learned senior
counsel on behalf of the appellant-Company placed
reliance on the decision of this Court rendered
in
the
case
of
Workmen
of
Sudder
Workshop
of
Jorehaut Tea Co. Ltd. v. Management of Jorehut
Tea
Co.
Ltd.
(supra),
in
justification
of
the
action of the appellant-Company retaining certain
junior workmen in the department/unit at the time
of
retrenching
concerned
workmen.
The
relevant
paragraphs are extracted hereunder:
“5. The keynote thought of the provision,
even on a bare reading, is evident. The rule
is that the employer shall retrench the
workman who came last, first, popularly
known as “last come, first go”. Of course,
it
is
not
an
inflexible
rule
and
extraordinary
situations
may
justify
variations. For instance, a junior recruit
Page 54
55
who has a special qualification needed by
the employer may be retained even though
another who is one-up is retrenched. There
must be a valid reason for this deviation,
and, obviously, the burden is on the
Management
to
substantiate
the
special
ground for departure from the rule.
6. Shri Phadke brought to our notice the
decision in Om Oil & Oilseeds Exchange Ltd.,
Delhi v. Workmen to make out that it was not
a universal principle which could not be
departed from by the Management that the
last should go first. The Management had a
discretion provided it acted bona fide and
on good grounds. Shah, J., in that very
ruling, while agreeing that a breach of the
rule could not be assumed as prompted by
mala fides or induced by unfair labour
practice merely because of a departure or
deviation,
further
observed
that
the
tribunal had to determine in each case
whether the Management had acted fairly and
not with ulterior motive. The crucial
consideration next mentioned by the learned
Judge is that the Management’s decision to
depart from the rule must be for valid and
justifiable reasons, in which case “the
senior employee may be retrenched before his
junior in employment”. Surely, valid and
justifiable reasons are for the Management
to make out, and if made out, Section 25-G
will be vindicated and not violated. Indeed,
that very decision stresses the necessity
for valid and good grounds for varying the
ordinary rule of “last come, first go”.
There is none made out here, nor even
alleged, except the only plea that the
retrenchment was done in compliance with
Section 25-G grade wise. Absence of mala
fides by itself is no absolution from the
rule in Section 25-G. Affirmatively, some
valid and justifiable grounds must be proved
Page 55
56
by the Management to be exonerated from the
“last come, first go” principle.”
(Emphasis supplied by the Court)
39.
The
learned
senior
counsel
further
contended that the above legal principle is laid
also down in the case of M/s. Om Oil & Oil Seeds
Exchange, Ltd. Delhi
v. Their Workmen,
wherein
this Court has held that breach of Section 25G of
the I.D. Act would not per se make the action of
the Company mala fide and as such, the action of
the
appellant-Company
notice
to
the
workmen
in
issuing
cannot
be
retrenchment
quashed
ipso
facto. The learned senior counsel contented on
behalf of
the
appellant-Company
that
in
the
present case, the principle laid down in Om Oil &
Oil Seeds Exchange’s case referred to supra is
aptly applicable to the case on hand.
40.
We are of the opinion that the High Court
has rightly held that the ratio of the said case
cannot be disputed, however, the facts of that
case and facts of the case on hand are totally
different. In Om Oil & Oil Seeds Exchange case
(supra), it was established by the employer that
Page 56
57
the clerk working in a particular branch of the
business
had
shown
particular
aptitude
performance and considering the said performance
and
his
expertise,
the
management
felt
in
the
interest of business to retain him though he is
junior
to
other
retrenched
workmen,
therefore,
the same was held to be valid in law. The High
Court has rightly held in the impugned judgment
and
order
that
appellant-Company
evidence
or
in
the
instant
had not
reasons of
case, the
any such
adduced
justification
for
retaining the junior workmen to the retrenched
workmen. The reason assigned by the appellant-
Company is considered by the Industrial Court and
held that there was a clear breach of Section 25G
of I.D. Act read with Rule 81 of Bombay Rules in
not following the principle of ‘last come, first
go’. The legal principle laid down in this aspect
in
the
case
of
Workmen
of
Jorehaut
Tea
Co.
(supra) does not apply to the fact situation of
the case on hand, as the appellant-Company has
not published the seniority list at all on its
Page 57
58
notice board, which is the concurrent finding of
fact of the High Court. The same cannot be termed
erroneous as it is based on legal evidence on
record.
It
is
for
the
appellate-Company
to
establish as to whether there is a deviation of
the
above
principle
or
not
by
producing
justifiable and valid reasons but it has failed
to do so by producing cogent evidence on record.
Therefore,
judgments
reliance
of
this
placed
Court
by
upon
the
the
aforesaid
learned
senior
counsel for the appellant-Company are misplaced
as they are not applicable to the fact situation
on
hand
as
the
facts
of
those
cases
are
distinguishable from the facts of this case on
hand.
41.
Further,
the
contention
urged
by
the
learned senior counsel on behalf of the Company
that the allegation of contravention of Section
25G of the I.D. Act is not sufficient to hold
that the ‘last come first go’ principle is not
followed
by
the
Company
unless
the
necessary
material particulars in this regard are pleaded
Page 58
59
and proved by the workmen.
This contention in
our view is wholly untenable in law and cannot be
accepted by this Court. The respondent-Union had
laid factual foundation in this regard and proved
the same by adducing evidence on record.
42.
Further, it is urged by the learned senior
counsel on behalf of appellant-Company that there
is no question of reinstatement of the concerned
workmen and payment of back wages to them since
the concerned department/unit of the appellant-
Company
exists
in
and
which
they
therefore,
were
employed
requested
no
this
longer
Court
to
mould the relief granted by the courts below. The
said
contention
learned
senior
is
rightly
counsel
rebutted
on
behalf
by
of
the
the
respondent-Union by placing reliance on the case
of Workmen of Sudder Workshop
(supra), wherein
this Court held that the Court cannot sympathise
with a party which gambles in litigation to put
off the evil day, and when that day comes, prays
to
be
saved
contention
from
urged
its
on
own
behalf
gamble.
of
the
The
said
respondent-
Page 59
60
Union must be accepted by us as the same is well
founded. Therefore, we hold that moulding of the
relief is not permissible in this case at this
stage
when
the
matter
has
reached
this
Court
keeping in mind the legal principle laid down by
this Court on this aspect of the matter in the
case referred to supra.
43.
Further, with regard to reinstatement of
the concerned workmen and back-wages to be paid
to them, the learned senior counsel on behalf of
the workmen has rightly placed reliance upon the
case
of
wherein
Anoop
it
employment
Sharma
was
is
held
in
v.
Executive
that
since
breach
or
Engineer13,
termination
violation
of
of
the
mandatory provisions of Chapter V-A or V-B of the
I.D. Act is void ab initio in law and ineffective
and suffers from nullity, in the eyes of law and
in
the
absence
of
circumstances in
Court grant
must
termination
13
very
was
favour
non
a
strong
of
the
and
employer,
declaration
est
and
compelling
the
that the
therefore the
(2010) 5 SCC 497
Page 60
61
employees should continue in service with full
back
wages
benefits.
and
Further,
award
with
all
the
respect
consequential
to
payment
of
back wages and consequential benefits, reliance
was rightly placed on the decisions of this Court
in the cases of Deepali Gundu Surwase v. Adhyapak
Mahavidyala14
and
Bhuvnesh
Kumar
Dwivedi
v.
Hindalco15. This Court opined thus in the case of
Deepali Gundu Surwase (supra):
“22. The very idea of restoring an
employee to the position which he held
before
dismissal
or
removal
or
termination of service implies that the
employee will be put in the same position
in which he would have been but for the
illegal action taken by the employer. The
injury suffered by a person, who is
dismissed or removed or is otherwise
terminated from service cannot easily be
measured in terms of money. With the
passing of an order which has the effect
of
severing
the
employer
employee
relationship, the latter's source of
income gets dried up. Not only the
concerned employee, but his entire family
suffers
grave
adversities.
They
are
deprived of the source of sustenance. The
children are deprived of nutritious food
and all opportunities of education and
advancement in life. At times, the family
has to borrow from the relatives and
other acquaintance to avoid starvation.
These
sufferings
continue
till
the
14 (2013) 10 SCC 324
15 (2014) 11 SCC 85
Page 61
62
competent adjudicatory forum decides on
the legality of the action taken by the
employer. The reinstatement of such an
employee, which is preceded by a finding
of the competent judicial/quasi judicial
body or Court that the action taken by
the employer is ultra vires the relevant
statutory provisions or the principles of
natural justice, entitles the employee to
claim full back wages. If the employer
wants to deny back wages to the employee
or
contest
his
entitlement
to
get
consequential benefits, then it is for
him/her to specifically plead and prove
that during the intervening period the
employee was gainfully employed and was
getting the same emoluments. Denial of
back wages to an employee, who has
suffered due to an illegal act of the
employer
would
amount
to
indirectly
punishing the concerned employee and
rewarding the employer by relieving him
of the obligation to pay back wages
including the emoluments.”
44.
For the foregoing reasons, the appeal is
dismissed. We affirm the impugned judgment and
order of the Division Bench of the High Court.
The order dated 14.08.2006 extending protection
to
the
appellant-Company
shall
stand
vacated.
Since, the concerned workmen have been litigating
the matter for the last 23 years, it would be
appropriate
for
us
to
give
direction
to
the
appellant-Company to comply with the terms and
Page 62
63
conditions of the award passed by the Industrial
Court
by
computing
back-wages
on
the
basis
of
revision of pay scales of the concerned workmen
and
other
consequential
monetary
benefits
including terminal benefits and pay the same to
the workmen within six weeks from the date of
receipt
which,
of
the
interest
at
the
copy
of
back-wages
the
appellant-Company
rate
shall
this
shall
of
Judgment,
be
9%
submit
paid
per
the
failing
with
annum.
an
The
compliance
report for perusal of this Court. There shall be
no order as to costs.
..................................................................J.
[V.GOPALA GOWDA]
..................................................................J.
[C. NAGAPPAN]
New Delhi,
February 25, 2015
Page 63
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