Case: Amrit Banaspati Co. Ltd Vs. S. Taki Bilgrami &amp; Ors

After an analysis of the contents of items 3 and 10 of Schedule I and item I of Schedule II, it has been held that item I relates only to posts and not to the personnel occupying the posts. Dealing with item No. I of Schedule II this Court observes as follows :"Furthermore, the language of item No. I of Schedule I 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. I 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." 25. From the above observations, it is clear that unless there is a reduction in posts, item I to Schedule II will have no application and in consequence there is no necessity to give a notice of change under S.46(2) read with S.42(1) of the Act. In the light of the above principles, if we examine the facts of the case before us, it is clear that on the closure of the third shift what the employer did was to retrench the employees working in that shift as they were found to be surplus in the establishment. Therefore, it was a case of reduction of persons employed and not one of reduction of the number of persons employed. Hence it is not a case or reduction of posts. 26. The matter can be considered from another point of view. Item No. I of Schedule II leaving out the portions which are not necessary for the present case refers to :"reduction intended to be of permanent or semi-permanent character in the number of persons to be employed in a shift." 27. If read in that manner it is clear that the shift is not abolished but is working and the employer effects a reduction in the number of persons employed in the shift. Under such a contingency, it may be considered that the employer has effected a reduction in the posts occupied by the persons whose services have been terminated, in which case it will be an illegal change unless notice has been given under S.42(1) as contemplated by S.46(2) of the Act. That is, for instance if twenty persons occupying twenty posts are necessary to work a shift and if five persons are sent out, that will amount to a reduction office posts, in consequence of which the work load on the remaining fifteen persons may be more. In these circumstances the Act provides for giving a notice of change and under S. 42(1) copies of such notice have to be given, apart from the representative of employees, to the Chief Conciliator and other officers mentioned therein. That will be a case of reduction of posts. But when the working of the entire shift is stopped there is no question of a reduction in the number of persons employed in a shift. On the other hand it is a case of termination of employment of all the persons employed in that shift which has been stopped. Such a case will not attract item No. I of Schedule II. To the employees whose services have been so terminated as the consequence of the closure of the entire shift, though other remedies are available to them in law, they cannot invoke item No. I of Schedule II. 28. We may also refer briefly to the facts of the case reported in Chaganlal Textile Mills Private Ltd. v. Chalisgaon Girni Kamgar Union, A.I.R. 1959 S.C. 722. On July 9, 1957 the company therein gave notice that the working of the second shift in their mill would be discontinued after one month. On August 9, 1957 the second shift was actually closed in terms of the notice. Fourteen employees, who were not workmen in the second shift but whose services were necessary to make all arrangements ready for the second shift to start working, were served with the notice on September 1, 1957 that their services were terminated. They were paid retrenchment compensation and other dues according to law. On November 9, 1957 the company gave a notice called "notice of change" that it wished to abolish 27 posts including the posts held by the 14 employees, whose services were terminated by the notice dated November 1, 1957. Even under those circumstances this court held that the notice given on November 1, 1957 terminating the services of 14 employees was only by way of retrenchment and was legal. It was further emphasized that as the said notice was legal, it did not cease to be so because within eight days a notice of change was also given. In the case before us it is not contended that the three clerks to whom notice had been given on January 7, 1958 were not given proper notice and that their dues have not been paid. Nor is it contended that after the admitted closure of the third shift with effect from December 8, 1957 the services of these three clerks did not become surplus to the appellant. We are satisfied that the notice dated January 7, 1958 is only a notice of retrenchment of surplus staff. By that notice the appellant has not effected any reduction in posts so as to attract item No. I of Schedule II, read with Ss.42(1) and 46(2) of the Act. If that is so, it follows that by terminating the services of the three clerks, the appellant has not made any illegal change within the meaning of S.46 of the Act.

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

Explanation:
0[ds]22. We have already indicated that the Industrial Court, in particular, has placed very great reliance on the letter dated February 10, 1958 for holding that by terminating the service of the clerks, the appellant has really effected a reduction in the clerical strength of the establishment which has the effect of reducing the posts of clerks. In fact the Industrial Court goes further and holds that there is an admission by the management itself in the said letter regarding their having effected reduction in the posts of clerks. This interpretation has found favour with the High Court23. We are not inclined to agree with the learned Judges of the High Court in the interpretation placed on the letter dated February 10, 1958. The letter which has to be read as a whole clearly indicates that the termination of the services of the clerks was necessitated owing to the closure of the third shift and that the reduction in the clerical strength in consequence of such termination has not resulted in any increase in the work load of others. This itself clearly shows that the appellants have not effected any reduction in the posts of clerks. On the other hand, they have only effected a retrenchment of the clerks, whom they considered to be surplus, in consequence of the closure of the third shift. There is a marked difference between the matters dealt with under items 3 and 10 of Schedule I and item I of Schedule II24. Item I of Schedule II has come up for consideration before this Court in Chaganlal Textile Mills Private Ltd. v. Chalisgaon Girni Kamgar Union, A.I.R. 1959 S.C. 722. After an analysis of the contents of items 3 and 10 of Schedule I and item I of Schedule II, it has been held that item I relates only to posts and not to the personnel occupying the posts. Dealing with item No. I of Schedule II this Court observes as follows :"Furthermore, the language of item No. I of Schedule I 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. I 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."25. From the above observations, it is clear that unless there is a reduction in posts, item I to Schedule II will have no application and in consequence there is no necessity to give a notice of change under S.46(2) read with S.42(1) of the Act. In the light of the above principles, if we examine the facts of the case before us, it is clear that on the closure of the third shift what the employer did was to retrench the employees working in that shift as they were found to be surplus in the establishment. Therefore, it was a case of reduction of persons employed and not one of reduction of the number of persons employed. Hence it is not a case or reduction of posts26. The matter can be considered from another point of view. Item No. I of Schedule II leaving out the portions which are not necessary for the present case refers to :"reduction intended to be of permanent or semi-permanent character in the number of persons to be employed in a shift."27. If read in that manner it is clear that the shift is not abolished but is working and the employer effects a reduction in the number of persons employed in the shift. Under such a contingency, it may be considered that the employer has effected a reduction in the posts occupied by the persons whose services have been terminated, in which case it will be an illegal change unless notice has been given under S.42(1) as contemplated by S.46(2) of the Act. That is, for instance if twenty persons occupying twenty posts are necessary to work a shift and if five persons are sent out, that will amount to a reduction office posts, in consequence of which the work load on the remaining fifteen persons may be more. In these circumstances the Act provides for giving a notice of change and under S. 42(1) copies of such notice have to be given, apart from the representative of employees, to the Chief Conciliator and other officers mentioned therein. That will be a case of reduction of posts. But when the working of the entire shift is stopped there is no question of a reduction in the number of persons employed in a shift. On the other hand it is a case of termination of employment of all the persons employed in that shift which has been stopped. Such a case will not attract item No. I of Schedule II. To the employees whose services have been so terminated as the consequence of the closure of the entire shift, though other remedies are available to them in law, they cannot invoke item No. I of Schedule II28. We may also refer briefly to the facts of the case reported in Chaganlal Textile Mills Private Ltd. v. Chalisgaon Girni Kamgar Union, A.I.R. 1959 S.C. 722. On July 9, 1957 the company therein gave notice that the working of the second shift in their mill would be discontinued after one month. On August 9, 1957 the second shift was actually closed in terms of the notice. Fourteen employees, who were not workmen in the second shift but whose services were necessary to make all arrangements ready for the second shift to start working, were served with the notice on September 1, 1957 that their services were terminated. They were paid retrenchment compensation and other dues according to law. On November 9, 1957 the company gave a notice called "notice of change" that it wished to abolish 27 posts including the posts held by the 14 employees, whose services were terminated by the notice dated November 1, 1957. Even under those circumstances this court held that the notice given on November 1, 1957 terminating the services of 14 employees was only by way of retrenchment and was legal. It was further emphasized that as the said notice was legal, it did not cease to be so because within eight days a notice of change was also given. In the case before us it is not contended that the three clerks to whom notice had been given on January 7, 1958 were not given proper notice and that their dues have not been paid. Nor is it contended that after the admitted closure of the third shift with effect from December 8, 1957 the services of these three clerks did not become surplus to the appellant. We are satisfied that the notice dated January 7, 1958 is only a notice of retrenchment of surplus staff. By that notice the appellant has not effected any reduction in posts so as to attract item No. I of Schedule II, read with Ss.42(1) and 46(2) of the Act. If that is so, it follows that by terminating the services of the three clerks, the appellant has not made any illegal change within the meaning of S.46 of the Act.