Case: Mackinon Mackenzie Limited Vs. G.S. Raj and Others

Brief facts giving rise to this L.P.A. are asRespondent Company was engaged in the business of shipping, ship owning, managing ships and operating, clearing and forwarding, overseas recruitment and property owning and development. The complainant union is registered under Trade Union Act 1956. The Respondent company in its establishment at Ballard Pier, Bombay has approximately 150 employees who were all workmen and members of the complainant union. According to the complainant union, whenever there used to be any issue pertaining to the services of workmen or about their voluntary retirement etc. the Respondent company used to have negotiations with the complainant union. Thus there was a custom, usage and practice amounting to a condition of service and an agreement viz. any major decision affecting their members or employees is always used to be discussed with the complainant union before its implementation.3. Some time the last week of July 1992 there was a rumour in the company that large number of workers are going to be retrenched. The member of the complainant union therefore met the general manager of Respondent company onand he also confirmed the rumour and told them that retrenchment notices would be issued. Immediately thereafter i.e. onone of the member of the complainant union viz. A.P.Rodguries received a letter datedpurportedly to be a notice of retrenchment effective on closing of business onIt was stated in the said notice/letter that retrenchment compensation and one month salary in lieu of notice is being paid to him. The copy of the statement of reasons for retrenchment was also attached to the said notice. In the said statement of reasons it was mentioned that as a result of recession in the industry from 1988 the accumulated losses which were to the tune ofcrores in 1983 reached to Rs.70 crores. It was specifically mentioned in the statement of reasons that some of the departments of the company are being closed. The departments which were to be closed and which were to be continued, were also specified in the said statement of reasons.On perusal of the said notice as well as statement of reasons the complainant union found that Respondent company had not fulfilled the condition precedent under Section 25F of Industrial Dispute Act while taking any action for retrenchment nor they had sent notice required to be forwarded under prescribed proforma to the State Government. The company had also not published seniority list of workmen in different categories from which retrenchment was contemplated, as was required under Rule 81 of the Industrial Disputes (Bombay) Rules 1957.Besides this, there was also non compliance of the provisions of Section 9A of Industrial Disputes Act. The complainant union also noticed that though the Respondent Company had mentioned that various divisions of the company are going to be closed down they had not followed the procedure required under Section 25FFA of Industrial Disputes Act and as a result of which it was necessary for the company to issue notice at least 60 days before the intended closure, to the State Government.5. The Respondent company had also not called upon the trade union for discussion and negotiations before taking the decision of closing down the certain departments and consequently carrying out the process of retrenchment and thus the company had committed unfair labour practice under Item no.9 of Schedule IV of the Act.6. Admittedly, at the time of retrenchment, the company is required to follow the procedure laid down in Section 25G of Industrial Disputes Act. As per the principle laid down in the said section, the person last employed in a particular category has to go first. However, it was noticed that large number of senior workers were retrenched and those who were junior to them were retained and thus there was a clear violation of Section 25G of the Industrial Dispute Act. Hence on all these grounds the complainant union filed the above mentioned complaint application before the Industrial Court, Mumbai and prayed for a declaration that notice issued by the Respondent company regarding retrenchment of the workers of the company union is illegal and the company has thereby committed unfair labour practice under Item 9 of Schedule IV of MRTU AND PULP Act. Complainant union also prayed that Respondent company be directed to continue the workmen to whom notices of retrenchment have been issued and whose names appeared at Exh.E attached to the complaint shown without asterisk (*) against their names, in service and pay them their full wages from month to month.7. On the date of filing of the complaint, the complainant union also filed an application for exparterelief and after hearing the learned Advocate for the complainant union the learned Member, Industrial Court was pleased to grant interim relief in terms of prayer clause (a) whereby operation of the notices of retrenchment issued to the members of the complainant union, a list of whom was annexed as Exh.E with the complaint was stayed.8. The Respondent company filed its written statement and took several contentions. Firstly, the Respondent contended that the order regarding interim relief granted in favour of the complainant union was received by them through the notice of the Advocate of the complainant onp.m. when in fact retrenchment of the employees had come into effect at the close of business on35 p.m. Not only that but by that time the possession of the premises where the retrenched workers were employed was handed over to other 3 independent companies namely Ardeshir B. Crestjee and Co. Mackinnon Abad and Co. and Urmila and co. Pvt. Ltd. As a result of the leave and license agreement executed with them onthe occupation of the premises however was differed uptoThe Respondent company also contended that they replied the complainants Advocate notice datedthrough their Advocate and brought to the notice of the complainant all the aforesaid facts and informed them that members of the complainant union to ensure that the members of the complainant union do not create any obstruction, coercion or intimidation to the Respondents licensees or their assets.9. The Respondent Company contended that onabout 200 members and strangers forcibly tried to enter the premises given to the licensees and as a result of the said incident, two of the said licensees viz. Urmila and Co. Pvt. Ltd and Ardeshir B. Crsetjee and Co. Pvt. Ltd. filed a suit in Bombay High Court bearing Suit Lodging No.2421 of 1992 seeking inter alia to restrain such conduct by the complainant union and its members and the court was pleased to pass an order ongranting interim relief in favour of the said licensees and restraining the members of the complainant union from forcibly entering in the premises, given to the licensees.10. The Respondent company further contended that there were in all 149 employees in their Bombay establishment prior to retrenchment. They admitted that previously at some time, there were some discussions and meetings with the complainant union with regard to the matters pertaining to the workmen but according to them that by itself would not constitute a custom, usage and/or practice amounting to a condition of service and/or agreement, that all major decisions affecting members or employees must always and invariably be discussed with the company union before its implementation. According to the Respondent in the last week of July 1992 i.e.they had displayed a seniority list within the meaning of Rule 81 of the Industrial Disputes (Bombay) Rule 1957. Even the members of the complainant union were aware about the critical financial position of the company. The Respondent admitted that onThe Respondent company further contended that allegations in the complaint are vague and the complainant ought to have stated specifically as to which of the provisions of law have been violated. They also contended that notices on retrenchment were not defective and the cheques for current salary i.e. for the month of July 1992 were not attached because at that time D.A. for the said month was not announced. However, company also showed willingness to pay D.A. and all salary as per previous month. The company also denied the allegation that they have not issued notice to the State Government regarding retrenchment. On the contrary vide their letter datedthey had issued such notice and it was received by the State Government.12. The Respondent company categorically denied the allegations of the complainant union that no seniority list of workmen from different categories was put on the companys notice board as required under Rule 81 of Industrial Dispute (Bombay) rules 1957. A notice setting out the seniority list from different category was placed on the companys notice board onThe company, therefore, contended that there is absolutely no breach of Rule 81 and the said Rule is not mandatory but it is a directory and as such that by itself would not in any event amount to unfair labour practice. They also denied the complainants allegation of non observance of provisions of Section 9A or 25FFA of Industrial Disputes Act. According to the Respondent, they were not at all bound to give 60 days notice to the State Government prior to action in question.13. The Respondent company denied the allegation that Rule of last come first go under section 25 G of Industrial Disputes Act is notAccording to the company the complainant union has wrongly treatedattached to the complaint as seniority list. A bear perusal of the saidestablishes that words in the title "Seniority list of Mackinnon Mackenzie and co. ltd. and asterisk represents those who are retained does not form part of the said document incorporated by the Respondents. According to the Respondent company the complainant has included the said portion in the said list. It is the contention of the Respondent company that the said documentto the complaint is a statement prepared by the Respondent for deciding the quantum of an annual increase. Besides this the Respondent Company contended that departure from rule "Last come first go" does not render retrenchment invalid where the employer is able to adduce satisfactory evidence in justification thereof. The Respondent, therefore submitted that they would adduce evidence for departure made in the said rule. According to them they had departed from the rule for valid consideration and as such retrenchment in question can not be held to be invalid on that count. It is their case that they have complied the provision of section 25F of the Industrial Disputes Act and not committed any unfair labour practice under Item 9 of Schedule IV of MRTU AND PULP Act. Hence on all these grounds the Respondent company prayed for dismissal of the complaint.14. On these pleadings the learned Member, Industrial Court, framed issues at Exh.In order to prove its case, the complainant union examined as many as 9 witnesses. As against this the Respondent company examined 3 witnesses. After considering the evidence adduced by both the parties and hearing the argument of both the learned Advocates the learned Member Industrial Court came to the conclusion that there was no substance in the allegations made in the complainant union that Respondent company has committed breach of section 25F(b) and (c) of Industrial Disputes Act 1947 and there was no need of issuing notice under section 9A of the Industrial Disputes Act. He, however, held that company has failed to prove that they had published and displayed seniority list on 22/07/1992 as alleged by them. Thus, the Respondent company committed breach of Rule 81 of Industrial Disputes (Bombay) Rules, 1957. Besides this the company also committed breach of Section 25F of Industrial Disputes Act, 1947 and thus the Respondent company committed unfair labour practice and the retrenchment carried out by them was also illegal. He therefore allowed the application and granted declaration as mentioned above.15. Being aggrieved by the said decision the Respondent company filed writ petition No. 2733 of 1996 and challenged the said order. On hearing the said writ petition the Honble Single Judge of this Court passed the following order."In the present case in view of the breach of Rule, the Labour Court was right in passing the impugned order, hence, writ petition is rejected ".16. The above mentioned order is challenged by the Respondent company in the present L.P.A.In this appeal before us, Shri Cama, learned Counsel of the company has urged 3 points. Firstly, he submitted that the learned single judge of this Court has failed to consider that learned Industrial Court had not properly appreciated the evidence on record and relying on the interested words of the complainants witnesses wrongly held that Respondent company had not displayed the list of seinority and notice on the notice board of the company on 22/07/1992 and as a result of the same there was breach of Rule 81 of the Industrial Disputes (Bombay) rules 1957. Secondly, he canvassed before us that learned single judge of this Court failed to consider the ratio of the case Chemical Mazdoor Sabha V. Vithal O. Pvt. Ltd. Raigad and others, wherein, the single Judge of this Court has clearly held that Rule 81 of the Industrial Disputes (Bombay) Rule 1957 is directory and not mandatory. Thirdly, the learned Counsel for the Respondent company argued before us that Apex Court has held in M/s. Om Oil and Oil seeds Exchange Ltd. Delhi V/s. their workers that breach of section 25G of the Industrial Disputes Act would not per se make the action of the company malafide and as such can not be quashed ipso facto. Lastly, he submitted that the learned Single Judge of this Court should have held that the learned Industrial Court has failed to appreciate the reasons given by the Respondent company for deviation in observing Rule 25G of the Industrial Disputes Act. He therefore, submitted that Honble Single Judge of this Court ought to have held that the learned Industrial Court clearly erred in holding that closure of the undertaking or part thereof amounts to retrenchment. He also submitted that the learned Industrial Court erred in holding that the action of retrenchment in question carried out by the Respondent company was illegal and it had amounted to unfair labour practice. Hence he submitted that the order passed by the Member, Industrial Court be quashed and complaint filed by the complainant union be dismissed.

Court's reasoning:
20. Bearing in mind the above definitions if we see the pleadings of Respondent Company as well as the evidence on record then also it is very clear that case in hand is not a clear case of closure but it can only be said that it is pertaining to retrenchment arising out of a particular policy adopted by the company viz. curtailing certain activities and closing certain departments of the company. Even if we see the statement of reasons, attached to the notice issued to the workmen, then also we find that the company has nowhere stated therein that they have taken a decision to close down the business entirely. On the contrary, it is stated by them that as company is running into losses the Board of Directors after considering all aspects have taken the decision to rationalise the activities in Bombay office and closing down of its activities apart from the property owning and development and portion of clearing and forwarding business relating to the contracts with Government of India institution such as Central Railway and Lubricant India Ltd. Admittedly, it is not even the case of the company that they took the decision to retrench the workers working in the respective departments which were to be closed. In case of closure, there is an end to the whole or to part of the industry on the other hand retrenchment is a termination of surplus or other employees during the subsistence of an industry.If really the Respondent company had an intention to resort to the policy of closure then certainly they had issued 60 days notice contemplated as per above section, but, admittedly, company has not done so and on the contrary tried to issue notice required for retrenchment. So, from all this material on record and the position of law we have no hesitation to hold that case in question is not a clear case of closure as contemplated under Section 2(cc) mentioned above and it is the case of retrenchment. We are therefore not inclined to accept the argument advanced by the learned Counsel for Respondent company in this behalf.While considering compliance of above mentioned sections, we find that Respondent company has not come forward with clean hands and they have in fact resorted to the method of hide and seek. It was argued on behalf of the Respondent company that there were no proper pleadings on the part of the complainant union in this behalf. According to learned Counsel for the company Shri Cama, it was necessary for the complainant union to state specifically how and in respect of whom rule of last come first go is not followed. It was necessary for the complainant union to specifically plead that junior persons retained in the company and senior persons who have been retrenched were in fact of same ability, grade and skill and as such there was no reason for the company to deviate from Rule 25G. However, with due respect we disagree with this proposition of learned Advocate for the company as the same does not stand to reasons. The bear reading of Section 25G of Industrial Disputes Act shows that power is given to the employer to deviate from rule but at the same time the Section makes it obligatory that said deviation must be for reasons recorded by the employer. If such reasons are recorded by the employer and the same are made known to workmen then they will be in a position to say and point out as to whether the said reasons are correct or not or where the same have gone wrong, but when employer has utterly failed to fulfil the statutory obligation of recording reasons for deviation how one can expect the employees or workmen to plead anything in that behalf. In the instant case there is nothing on record to indicate that the employer while carrying out the process of retrenchment has in fact recorded any such reasons. A feeble attempt is made on the part of the learned Counsel for the company to show that employer is not bound to show the said reasons at the time of retrenchment but the same can be shown for the first time in the court of law. However, this proposition is also very difficult to swallow. If we strictly take into consideration the language of Section 25G, according to us it in fact presupposes recording of reasons whenever retrenchment is made by not following the rule and there is deviation. When we find that reasons are not at all given the question as to whether the same are valid and satisfactory or not in fact does not arise.The Respondent company has tried to place on record one list showing that at the end of such list reasons for deviation were given by the company. However, we find that the said list is in fact not duly proved by the companys witness and as such the same in fact cannot be read in evidence. There is absolutely not an iota of evidence on record to show that the company had in fact passed any specific order with regard to retrenchment of workers from different categories and from different sections and while deviating from Rule 25G recorded reasons for the same. While dealing with this aspect we may consider the evidence adduced by both the parties with regard to displaying of retrenchment notice and seniority list. Right from the beginning the complainant union had taken a stand that the company had never displayed the seniority list of different categories. However, it is the contention of the Respondent company that they had published such notice on the companys notice board onHowever, the complainant union has examined in all 9 witnesses and all of them have stated that at the relevant time they were working in the company and they used to pass by the side of the notice board but they never found any such seniority notice or list on the notice board as contended by the Respondent company. It is true that all these 9 witnesses have been retrenched and as such they may be called as interested persons. However, at the same time it must be noted that there is nothing in their cross examination which would indicate that they are not trustworthy. What is more to be noted is that if really the company had displaced the notice and the seniority list as contended by them onit could have very well examined atleast few workers from the company who have not been retrenched but company has not done so. Not only that but if we see the evidence of the general manager of the Respondent company then also we find that his evidence is very vague and he has in fact no personal knowledge about many things that were happening in the company. He said that at the relevant time franking machine was not in operation while from the evidence of Awatarkar on record it is very clear that the said franking machine was in working condition at that time. This also shows that in order to keep the proposed retrenchment secret the notices to workmen were sent by using other frankingis true that some complaint is lodged by the licensees who had taken the premises from the company but admittedly they were introduced in the premises for the first time onso this itself shows that the evidence adduced by the company to show that notice regarding retrenchment and seniority list were displayed on the notice board is not at all trustworthy. The learned trial Judge has considered entire evidence on this point minutely and has rightly held that evidence of the workers in this behalf is trustworthy and the evidence of Respondent company cannot be accepted and believed. So, he has recorded a finding of fact that no notice of retrenchment and seniority list were published by the company on the notice board onas contended by the Company. Naturally, there is no reason to interfere with the said finding of fact while exercising writproposition advanced by the learned Advocate for the Respondent company that manager can deviate from rule for valid and satisfactory reasons is not at all in dispute but in the instant case the management has miserably failed to show that when they deivated from the rule they recorded reasons for the same and the said reasons are valid and satisfactory. Similarly, even in J.K. Iron and Steel Co. V/s Its workmen AIR 1960 SC 1288   the Apex Court has observed that if the employer departs from the rule of last come first go, without any acceptable or sound reasoning, a tribunal will be well justified to hold that the action of the management is not bonafide. It must be noted that it is only in his written submissions the learned Counsel for the Respondent company has tried to give some reasons for deviation from rule but as pointed out by us above the company had in fact not come with clean hands on this point and the learned trial Judge has rightly observed that there is no convincing evidence to show that proper seniority lists were displayed and deviation from the rule was for not validthe said case is of no use to the present company because here the company has not at all in fact published the seniority list. Besides, they had also not made known to all the workers as to who are the persons who have actually been retrenched and what is their seniority. When there was nothing on record for the workmen to come to know that there is deviation from Rule 25G the question of having pleadings that deviation is malafide does not arise. In such a case when workmen plead that there is a breach of Section 25G the same is certainly sufficient. It is for the company to establish as to whether there is no deviation and if there is deviation it is for the valid reasons. As pointed out by the learned Advocate for the complainant Union even in a case Industrial Chemicals Ltd. V/s Labour Court 1976 LLJ Madras 137   it has been held that in case of departure from the rule of "last come first go" the employer must assign reasons for retrenching workmen from service and record them in the notice of retrenchment. This is not done by respondent company in present case. So, the above stated case is also of no use to the Respondent Company.However, the facts of these cases are quite different and they in fact do not support the case o the present Respondent company. For example, in the later case the Court observed that the complainant must set out in the first instance the deviation to show that the management has adopted unfair labour practice and only then the other side be asked to lead evidence to rebut the same. In the present case by specifically raising plea that provision of Section 25G of Industrial Dispute Act have been followed by the Respondent company, the complainant union had in fact laid foundation regarding their grievance. Thereafter it was necessary for the Respondent company to adduce sufficient evidence to rebut the same and show that provisions of section 25G of Industrial Disputes Act are complied. However, as mentioned above Respondent company did not adduce any satisfactory evidence and as a result of the same the learned trial Court held that there was breach of Section 25G of Industrial Disputes Act.33. At the cost of repetition it must be observed that in the instant case the Respondent company has failed to establish that for reasons recorded by them they deviated from Rule 25G. They failed to prove from the seniority list the retrenched workers and the reasons for retrenchment for particular workers. If the Respondent company had adduced such evidence then complainant union was bound to rebut the said evidence but as the Respondent company itself failed to mention the reasons for deviation the question of complainant union pleading that said deviation was not bonafide does not arose. Thus, after careful scrutiny of the entire evidence and position of law we have absolutely no hesitation to hold that in the instant case there was clear cut breach of Section 25G by the Respondent company.34. The learned trial Judge has specifically held that the Respondent company had in fact not published the notice as well as the seniority list on the notice board as contended by them. It is in fact established that defendant company had tried to keep every thing in secret and for that purpose only they had not displayed any notice of retrenchment on the notice board initially. They preferred to send the notices to the workers who were to be retrenched by RPAD. Though usually the letters from the company are sent after franking at the companys machine for the notices in question the said machines was not used and some different machines was used. That was obviously with a view that workers should not come to know early about the process of retrenchment. The learned trial Judge has rightly recorded the finding that 7 days notice as contemplated in Rule 81 of the Industrial Disputes (Bombay) Rule 1957 was not issued in the instant case. The said finding of fact is based on the evidence on record and proper appreciation of the same. We therefore feel that the same isas in the instant case there is clear cut breach of Section 25G of Industrial Dispute Act and Rule 81 of the Industrial Bombay Rule 1957, cumulative effect of the same is that action of retrenchment taken by the management is totally illegal and amounts to unfair labour practice.36. We are therefore of the view that the learned trial Judge has rightly declared that Respondent company has committed unfair labour practice under Item 9 of Schedule VI of the M.R.T Act 1971 by not displaying the seniority list as provided in Rule 81 of Industrial Disputes (Bombay) Rules 1957 at the time of retrenching workers and by committing breach of Section 25G of Industrial Disputes Act by not following the Rule of lst come first go and for not recording the reasons for deviation from the said Rule. The order passed by the learned Member, Industrial Court was legal and correct and therefore, the learned single Judge of this Court rejected the writ petition filed by the Respondent company. Thus, there is no substance in this appeal.