Appeal No 131 of 1966
Appeal by special leave from the Award dated the September 10 1965 of the Labour Court Delhi in ID No 23 of 1965
M C Setavad B P Maheshwari and M section Narasimhan for the appellant
 Madan Mohan for the respondents
The Judgment of the Court was delivered by Shah J
The appellant is engaged in carrying on the business of regulating forward trade in groundnut oil and mustard seed and is recognised as an Exchange under the provisions of the Forward Contract Act 1952
On June 1 1964 the Government of India issued an order prohibiting trading in diverse commodities including groundnut oil and mustard seed and in consequence thereof no further business could be carried on through
the appellant Exchange
On July 17 1965 the appellant served notices of retrenchment upon 30 out of its 37 employees and paid them salary for the period of notice and retrenchment compensation under section 25F of the 14 of 1947
The workmen then raised an industrial dispute
Conciliation proceedings to solve the dispute having failed the Delhi Administration referred to the Labour Court the dispute whether retrenchment of the workmen by the appellant was unjustified and illegal
The workmen pleaded that retrenchment on the ground of the ban imposed on forward trading in groundnut oil and mustard seed was mala fide and that in retaining seven workmen the appellant did not follow without any adequate ground the first come last go rule and on that account all the workmen were entitled to be reinstated with full wages from the date of determination of employment and with continuity of service
The appellant denied that in retrenching the workmen the management had acted mala fide or that retrenchment amounted to an unfair labour practice
The appellant further submitted that retrenchment of the workmen was not liable to be challenged because some junior members of the staff were retained since the Company had recorded in the resolution its reasons for departing from the rule first come last go and had adhered to the principles contained in section 25F of the Industrial Disputes Act as far as possible
At the hearing of the reference before the Labour Court Delhi counsel for the workmen conceded that the appellant was justified in retrenching its employees and that the number of employees required to carry on the work after the imposition of a ban against the business of the appellant could not exceed the number retained by the appellant
Counsel however contended that since the appellant failed in effecting retrenchment of the workmen 76 to observe the principle of first come last go the order in its entirety was illegal
The Labour Court accepted the contention of the workmen and held that departure from a principle which was part of the law relating to industrial employment rendered the retrenchment of all workmen unjustified and improper and on that account retrenchment of clerks and peons who were affected by the departure from the rule was illegal and mala fide
In the view of the Labour Court workmen Nos 1 to 14 and 16 to 23 in Ext
W 1 the List of Seniority were so affected
The Labour Court ordered that as the appellant required only four clerks in cluding the Accountant R N Seth the Accountant and three senior clerks Shiv Das Sharma Kishan Lal Grover and Surinder Singh be retained and that the senior clerks named be reinstated with full back wages subject to adjustment of compensation money paid to them against their salary
The Court also directed that clerks Nos 4 to 14 be paid in addition to the retrenchment compensation received by them 50 per cent of the wages as compensation for the period they remained in unemployment up till the date when the award became enforceable but they may not be reinstated and that peons Tara Shanker and Om Prakash be reinstated with full wages and peons Nos
18 to 23 in Ext
W 1 be paid in addition to the retrenchment compensation 50 per cent of the wages they would have been entitled to
 With special leave the Company has appealed to this Court
It is an accepted principle of industrial law that in ordering retrenchment ordinarily the management should commence with the latest recruit and progressively retrench employees higher up in the list of seniority
But the rule is not immutable and for valid reasons may be departed from
It was observed by this Court in Swadesamitran Ltd vs Their Workmen1 that if a case for retrenchment is made out it would normally be for the employer to decide which of the employees should be retrenched but there can
be no doubt that the ordinary industrial rule of retrenchment is first come last go and where other things are equal this rule has to be followed by the employer in effecting retrenchment
The question then is whether in departing from the rule the management had acted mala fide or that its action amounted to an unfair labour practice
The Tribunal has to determine in each case whether the management has in ordering retrenchment acted fairly and properly and not with any ulterior motive it cannot assume from mere departure from the rule that the management was actuated by improper motives or that the management had acted in a manner amounting to an unfair labour practice
Nor has the Tribunal authority to sit in appeal over the decision of the management if for valid and justifiable reasons the management has departed from the rule that the senior employees may be retrenched before his junior in employment 1 77 The management of the appellant has recorded a resolution which sets out the reasons for retention of the employees Ram Lal Sethi Jagdish Pershad Kidar Nath Thukral Om Prakash Juneja Jai Narain Budhpal Singh and Laljimal
About Ram Lal Sethi the Company has stated that he was looking after the accounts and income tax cases of the Company and he was the only Accountant in the service of the Company and the senior most employee in the Accounts Section
The Labour Court has upheld his retention and nothing more need be said about him
Jagdish Pershad was it was stated looking after the share work collection of building rent and court work and the realisation of rents and that he was in charge of the share work for the last many years
The Labour Court was of the view that a clerk employed in general office duties may be styled as a general assistant and that the posts of clerks are interchangeable and since clerks are not trained to handle any Particular kind of work the reasons given by the management for retaining this and other clerks cannot be accepted
However there was not in the employment of the Company any other clerk who could competently handle share work and attend to court work
Clerical work ordinarily does not require specialisation and clerks may be transferred from one department to another without detriment to the business
But if a clerk has been working in a branch of the business and he is shown to possess special aptitude for a particular duty performance of which requires application and experience the management may in the interests of the business while retrenching others retain him even if he is junior to others
The rule of first come last go is intended to secure an equitable treatment to the employees when having regard to the exigencies of the business it is necessary to retrench some employees
But in the application of the rule the interests of the business cannot be overlooked
The rule has to be applied where other things are equal
The management of the business must act fairly to the employees where however the management bona fide retains staff possessing special aptitude in the interests of the business it cannot be assumed to have acted unfairly merely because the rule first come last go is not observed
If retention of a clerical employee is regarded as necessary by the management in the interests of the business that opinion cannot be discarded merely on the ground that the clerk concerned is not the seniormost
There is nothing on the record to show that there was among the senior employees a clerk possessing the aptitude which Jagdish Pershad possessed
Kidar Nath Thakural was doing typing work and he was retained because he was the only typist with the Company
Our attention has not been invited to any evidence that there were other typists who were senior to him and they had been retrenched
A typist is undoubtedly a clerk in a business concern but that does not mean that every clerk unless specially trained can become a competent typist
Om Prakash Juneja was 78 retained because he was looking after the records of the Company and was fully conversant as to where different type of records were lying and that this employee was doing the work satisfactorily
A record keeper s work in a business cannot be performed efficiently without special training or long experience
It would be difficult to hold that in retrenching employees if the management retains an efficient record keeper in preference to a senior clerk who has no training or experience in record keeping the management acts mala fide or improperly or perpetrates an unfair labour practice
The Labour Court was of the view that retention of junior clerks in service could not be sustained on the ground that they had gained experience in a particular branch of clerical work
To accept that ground of preference observed the Labour Court was to destroy the rule first come last go itself since clerks are not specially trained to handle only a particular kind of work and their work is easily convertible and one can replace another without dislocation in the department
For ordinary clerical work this is undoubtedly true but even among the clerical staff if a degree of specialisation is necessary for discharging clerical duties efficiently retention of a junior clerk on the ground that the duty performed by him requires experience and aptitude will not expose the management to a charge of mala fide or perpetration of an unfair labour practice
It was submitted than in J K Iran and Steel Company Ltd vs Its workmen1 this Court has hold that in the matter of retrenchment of clerical staff departure from the rule first come last go may not be recognised when it is sought to be justified on the ground that the workman retained has experience of a particular branch of the clerical work and reliance was placed upon the following observations of Subba Rao J But if the preferential treatment given to juniors ignores the well recognized principle in the industrial law that the first come last go without any acceptable  or sound reasoning a tribunal or an adjudicator will be well justified to hold that the action of the management is not bona fide
In regard to the clerks what is the ground of preference given by the management It is said that junior clerks who were retained have experience in a particular branch of clerical work
To accept this ground of preference without more is to destroy the principle itself
It may be that the clerks entrusted with such works may continue to do the same work till a readjustment of the work is made
There is no particular or scientific skill required in one class of work rather than in another
Clerks are not specially trained to handle 1 79 only a particular kind of work
Their work is easily convertible and one can replace another without any dislocation in the department
 But the judgment does not enunciate a different principle
Ordinarily it is for the management to ascertain who on retrenchment should be retained in the interests of the business and the Industrial Tribunal will not interfere with the decision of the management unless preferential treatment is actuated by mala fides
Where those retrenched and those retained are doing substantially the same kind of work and no special skill or aptitude is required for doing the work which the retained clerk is doing preference given to the retained clerk on the ground that he has some ex perience in the branch may justifiably raise an inference of mala fides
Apparently in JK Iron and Steel Company s case1 the work required to be done by the clerks retained needed no special aptitude and the clerks retrenched could as well do the work which was done by the clerk retained
It was in those circumstances that the Court held that mere experience in a particular branch requiring no special aptitude was not sufficient to justify departure from the rule first come last go
In the present case the four clerks retained had beside ex perience special skill and aptitude in the particular branch of the business of the appellant they were attending to and the management had retained them because of that skill or aptitude
The Labour Court inferred mala fides merely because the management departed from the rule first come last go
Whether the management in departing from the rule has acted mala fide must depend upon the circumstances of the case  it cannot be inferred merely from departure from the rule
We may turn to the cases of the three peons Jai Narain Budhpal Singh Laljimal
Retention of Jai Narain has been upheld by the Labour Court and nothing more need be said about him
The other two peons are Budhpal Singh and Laljimal who were working as chowkidars
They are said to be the senior most chowkidars and there is no evidence to show that there were in the employment of the Company other persons who could have worked as chowkidars
Peons Budhpal Singh and Laljimal were retained because they were the senior most chowkidars
Retention of the senior most chowkidars would not be interfered with by the Tribunal in the absence of clear proof of mala fides
It cannot be assumed without more that every peon can do the work of a chowkidar
The management may ordinarily require the chowkidar to possess good physique and ability to maintain watch over the building and its assets
There is no evidence that the two peons Tara Shanker and Om Prakash had ever worked as chowkidars or were suitable for work as chowkidars
The order 1 80 of reinstatement of Tara Shanker and Om Prakash will stand vacated
The second part of the order directing that clerks from Nos 4 to 14 and peons from Nos
18 to 23 in the seniority list shall be entitled in addition to the retrenchment compensation already paid to them 50 per cent of the wages as compensation for the period they remained unemployed is wholly indefensible
These employees had been properly retrenched that was conceded before the Labour Court
It was also conceded that for carrying on the business of the appellant after imposition of the ban by the Central Government not more than seven employees were required
If the management was entitled to retrench 30 workmen and did so after paying wages for the period of notice and retrench ment compensation we fail to appreciate the grounds on which an order for payment of 50 per cent of the wages in addition to retrenchment compensation may be made
Retrenchment compensation is paid as solatium for termination of service resulting in unemployment and if that compensation be paid there can be no ground for awarding compensation in addition to statutory retrenchment compensation
If the Industrial Tribunal comes to the conclusion that an order of retrenchment was not properly made and the Tribunal directs reinstatement an order for payment of remuneration for the period during which the employee remained unemployed or a part thereof may appropriately be made
That is because the employee who had been retrenched for no fault of his had been improperly kept out of employment and was prevented from earning his wages
But where retrenchment has been properly made and that order has not been set aside we are not aware of any principle which may justify an order directing payment of compensation to employees properly retrenched in addition to the retrenchment compensation statutorily payable
The appeal is therefore allowed and the award made by the Labour Court is substituted by the following award That retrenchment of the workmen was not unjustified or illegal and the workmen are not entitled to any relief
In the circumstances of the case there will be no order as to costs
Appeal allowed


Summary:
The respondents workmen of the appellant raised on indus trial dispute and pleaded before the Labour Court that the appellant s action in retrenching some of its employees was mala fide as the appellant did not follow the first come
last go rule
The appellant justified its action on the ground that the appellant had recorded valid reasons for departing from the rule
The reasons were that one of the employees retained was the only person capable of looking after the appellant s share work and court work another was the only typist with the appellant a third was the record keeper who alone knew where the different types of records were kept and the other two were peons who were retained as chowkidars because there was no other person who could do that work
The Labour Court accepted the respondents  contention ordered the reinstatement of those employees who were affected by the departure from the rule and directed that those employees who were properly retrenched should be paid in addition to the retrenchment compensation under section 25F of the  which had been paid by the appellant 50  of their wages as compensation till the date when the award became enforceable
In appeal to this Court
HELDi The Labour Court was in error in inferring mala ides merely because the management departed from the rule of first come last go
 Where other things are equal the ordinary industrial rule has to be followed by the employer but the rule is not immutable
It is for the management to ascertain who on retrenchment should be retained in the interests of the business and the industrial tribunal will not interfere with the decision of the management unless preferential treatment is actuated by mala fides
Preference given to the retained employees on the ground of mere experience may justify an inference of mala fides but in the present case the employees retained had beside experience special skill or aptitude in the Particular branch of the business of the appellant they were attending to and the management had retained them because of that skill or aptitude
76 E F 79B E
Swadesamitran Ltd V Their Workmen  and JK Iron and Steel Company Ltd vs its Workmen  referred to
ii Where retrenchment has been properly made and that order has not been set aside there is no justification for directing payment of compensation to employees Properly retrenched in addition to the retrenchment compensation statutorily payable
8O E