Case: Chaganlal Textile Mills Private, Limited Vs. Chalisgaon Girni Kamgar Union

Schedule II is in these terms:"Reduction intended to be of permanent or semi-permanent character in the number of persons employed or to be employed in any occupation or process or department or departments or in a shift not due to force majeure."6. It is not necessary to refer to any other provision of the Act for the purpose of this judgment.7. The Labour Court held that the termination of the services of the employees effected on November 1, 1957 amounted to a reduction of a permanent or semi-permanent character within the meaning of item No. 1 of Schedule II of the Act and it was illegal as no notice of change had been given. It held that the posts occupied by the retrenched employees were permanent or semi-permanent posts because a notice of change for the abolition of these posts was subsequently, namely, on November 9, 1957 given. It also held that the working of the second shift had been closed on August 9, 1957 and then the fate of the posts occupied by the retrenched employees had become certain. It, therefore, held that the retrenchment had amounted to a change within the meaning of item No. 1 of Schedule II and as it had been effected without a notice under S. 42 it was illegal. In this view of the matter, it directed the retrenched employees to be reinstated. On appeal the Industrial Court took the same view and affirmed the order of the Labour Court.8. In our view, both the Courts below were wrong. The notice of change contemplated by S. 42 is the expression of an intention to effect a change in any of the matters mentioned in Schedule II. In the present case we are concerned with Item No. 1 of that Schedule. It seems to us clear that that item relates only to posts and not to the personnel occupying the posts. A notice of change in respect of Item No. 1 of Schedule II does not automatically effect any retrenchment; an independent notice to retrench has also to be given under standing order No. 23(1) earlier set out. Without such notice no retrenchment can be legally effected. If Item No. 1 of Schedule II refers to the retrenchment of employees, then on the same subject there would be two provisions, for Item No. 10 of Schedule I also deals with the retrenchment of employees. In such a case two notices for the same purpose would be required by the Act, namely, a notice under S. 42 and another notice under standing order No. 23(1). But that could not have been intended.9. Furthermore, the language of Item No. 1 of Schedule II clearly refers to a reduction in posts. It deals with the reduction not of persons employed but with the number of persons employed. Therefore, it clearly contemplates posts. Again, this item also refers to the number of persons to be employed. That of course has nothing to do with the retrenchment of persons actually employed. Again, when a notice of change in respect of Item No. 1 of Schedule II is to be given, it is not to be given to any employee but to the representative of the employees which would include a union of employees. It could hardly have been intended that when employees were to be retrenched they would not be given any notice. The learned counsel for the appellant said that the reason for a notice of change is that when posts are reduced, the burden of the work on the remaining posts may become heavier and therefore the representative of the employees is given a hearing in this connection. This seems to be a plausible view. Again the Act provides for conciliation when there is difference between the representative of the employees and the employer regarding the subject matter of a notice of change though there is no such provision where employees are retrenched.All these considerations lead us to the view that Item No. 1 of Schedule II is concerned only with posts. The notice of November 1, 1957 was not a notice of change and its validity cannot be tested by reference to S. 42 of the Act.10. When, therefore, an employer does not desire to reduce the posts but only to retrench certain employees holding certain posts, no question of giving a notice of change as mentioned in S. 42 of the Act arises. This is what the appellant intended to do by notice of November 1, 1957. That notice was duly given in terms of standing order No. 23(1) earlier mentioned. This is not disputed by the respondent. The appellant paid all the retrenchment compensation and salary and other dues that under the law applicable, the retrenched persons were entitled to. In our view, the notice of retrenchment dated November 1, 1957 was legal and no exception can be taken to it. If it was legally given, it does not cease to be so because within eight days a notice of change was also given. It makes no difference that at the time the earlier notice was given the appellant knew that the later notice would have to be given. We have not been shown that by the procedure followed by the appellant the employees have in any way been prejudiced. We do not see that there was any attempt by the appellant to practise a fraud upon the Act: the rights of the employees under the Act had not been affected by anything that the appellant had done. Item No. 1 of Schedule II no doubt refers to reduction of a permanent or semi-permanent character and there is nothing on the record to establish that the retrenched persons were not permanent or semi-permanent employees.But that cannot make the notice of retrenchment given on November 1, 1957 a notice of change: the notice remains what it was, that is, a notice of termination of services of employees and not a notice of reduction of posts.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]8. In our view, both the Courts below were wrong. The notice of change contemplated by S. 42 is the expression of an intention to effect a change in any of the matters mentioned in Schedule II. In the present case we are concerned with Item No. 1 of that Schedule. It seems to us clear that that item relates only to posts and not to the personnel occupying the posts. A notice of change in respect of Item No. 1 of Schedule II does not automatically effect any retrenchment; an independent notice to retrench has also to be given under standing order No. 23(1) earlier set out. Without such notice no retrenchment can be legally effected. If Item No. 1 of Schedule II refers to the retrenchment of employees, then on the same subject there would be two provisions, for Item No. 10 of Schedule I also deals with the retrenchment of employees. In such a case two notices for the same purpose would be required by the Act, namely, a notice under S. 42 and another notice under standing order No. 23(1). But that could not have been intended.9. Furthermore, the language of Item No. 1 of Schedule II clearly refers to a reduction in posts. It deals with the reduction not of persons employed but with the number of persons employed. Therefore, it clearly contemplates posts. Again, this item also refers to the number of persons to be employed. That of course has nothing to do with the retrenchment of persons actually employed. Again, when a notice of change in respect of Item No. 1 of Schedule II is to be given, it is not to be given to any employee but to the representative of the employees which would include a union of employees. It could hardly have been intended that when employees were to be retrenched they would not be given any notice. The learned counsel for the appellant said that the reason for a notice of change is that when posts are reduced, the burden of the work on the remaining posts may become heavier and therefore the representative of the employees is given a hearing in this connection. This seems to be a plausible view. Again the Act provides for conciliation when there is difference between the representative of the employees and the employer regarding the subject matter of a notice of change though there is no such provision where employees are retrenched.All these considerations lead us to the view that Item No. 1 of Schedule II is concerned only with posts. The notice of November 1, 1957 was not a notice of change and its validity cannot be tested by reference to S. 42 of the Act.10. When, therefore, an employer does not desire to reduce the posts but only to retrench certain employees holding certain posts, no question of giving a notice of change as mentioned in S. 42 of the Act arises. This is what the appellant intended to do by notice of November 1, 1957. That notice was duly given in terms of standing order No. 23(1) earlier mentioned. This is not disputed by the respondent. The appellant paid all the retrenchment compensation and salary and other dues that under the law applicable, the retrenched persons were entitled to. In our view, the notice of retrenchment dated November 1, 1957 was legal and no exception can be taken to it. If it was legally given, it does not cease to be so because within eight days a notice of change was also given. It makes no difference that at the time the earlier notice was given the appellant knew that the later notice would have to be given. We have not been shown that by the procedure followed by the appellant the employees have in any way been prejudiced. We do not see that there was any attempt by the appellant to practise a fraud upon the Act: the rights of the employees under the Act had not been affected by anything that the appellant had done. Item No. 1 of Schedule II no doubt refers to reduction of a permanent orcharacter and there is nothing on the record to establish that the retrenched persons were not permanent oremployees.But that cannot make the notice of retrenchment given on November 1, 1957 a notice of change: the notice remains what it was, that is, a notice of termination of services of employees and not a notice of reduction of posts.