ARMED FORCES EX OFFICERS MULTI SERVICES COOPERATIVE SOCIETY LTD. VERSUS RASHTRIYA MAZDOOR SANGH (INTUC) 11.08.2022 SC
SUPREME COURT OF INDIA
SUPREME COURT MONTHLY
AUGUST 2022
2022(8) SCM 42
CENTRAL BANK OF INDIA THR. vs DRAGENDRA SINGH JADON
D/d: 11.08.2022
Read full Judgement below:
ARMED FORCES EX OFFICERS MULTI SERVICES COOPERATIVE SOCIETY LTD. VERSUS RASHTRIYA MAZDOOR SANGH (INTUC)
CIVIL APPEAL No. 2393 of 2022
J U D G M E N T
PAMIDIGHANTAM SRI NARASIMHA J.
1. The
Appellant is a cooperative society run by ex-officers of the three defence
forces, engaged in the business of providing support services such as
transportation, house-keeping and security services to companies and Government
establishments. Respondent is a labour union affiliated with the Indian
National Trade Union Congress, representing the drivers formerly employed by
the Appellant.
2. Fifty-five
drivers who are members of the Respondent Union were employed by the Appellant
from 1998 through a settlement for pay and allowances. As the settlement expired on 30.06.2004,
fresh negotiations between the employer and the employees commenced but did not
result in any easy settlement due to claims for pay hike and demands for
permanency of casual employees. Conciliation proceedings were invoked on
22.01.2007 and proceedings before the Deputy Commissioner of Labour, Pune were
going on.
3. While the
next date of conciliatory proceeding was fixed on 05.02.2007, the employees
resorted to strike on 23.01.2007. On the same day, the Appellant filed a
complaint before the Industrial Court, asserting that the strike was illegal,
and the employees should be made liable for unfair labour practices. The
Industrial Tribunal by an interim order dated 05.02.2007 directed employees to
refrain from obstructing the movement of men, material and vehicles from the
parking lots of the Appellant, and holding violent demonstrations within two hundred
meters of Appellant’s premises.
4. The
Industrial Tribunal later directed the Appellant to allow the employees to join
duties and the employees in fact joined services on 16.03.2007. We may mention
here itself that two years later, i.e. on 27.11.2009, the Industrial Tribunal
by its final order declared the strike carried out by the Respondents for the
period between 23.01.2007 and 15.03.2007 as illegal in terms of Section
24(1)(a) of the Maharashtra Recognition of Trade Unions And Prevention of
Unfair Labour Practices Act, 1971.
5. During
the pendency of the above referred proceedings, that is, immediately after
16.03.2007 when employees re-joined services, after the short period of strike,
the Appellant through individual letters dated 22.03.2007 ‘retrenched’ the
services of all the fifty-five employees, on the grounds that Appellant had
closed its business. By the said letter, the employees were offered
retrenchment compensation as per Section 25F of the Industrial Disputes Act, 1947
. The relevant portion of the Termination Letter is:
“You are being informed that as the bus services of the society have been broken from 23rd January, 2007 the concerned companies have decided to stop their bus services and as per that our transport contracts have expired. In this situation as the business is closed, it is not possible to give you work hence there is no option but to remove you from services.”
6. Respondent
Union raised concerns with the Conciliation Officer. They demanded
reinstatement of all fifty-five workmen with continuity of services and back
wages, contending that there was no closure of the transport activities of the
Appellant. They claimed that the act of
terminating all the employees is a virtual closure, which is completely
illegal.
7. While the
matter was being negotiated, the Appellant started offering reemployment to all
the employees through individual letters dated 13.09.2007, followed by a public
notice. This offer was on new terms and conditions, and as fresh employment.
This is an important fact and as the narration of events would witness, it had
a direct bearing on the decision of the Industrial Tribunal.
8. As the
Conciliation Officer submitted a Failure Report, the Government referred the
dispute to the Industrial Tribunal, Pune
for answering the demand of the workmen for reinstatement of fifty-five
drivers with continuity of service and full back wages. Before the Tribunal, the parties examined
thirty-one witness and marked documents with respect to matters such as strike,
salary slips, retrenchment order, re-employment offer, Appellant’s
communication with its business clients, etc.
9. By its
Award dated 07.09.2017, the Tribunal answered the reference in the affirmative
by setting aside the termination of employees and directing reinstatement.
While considering the legality of retrenchment, the Tribunal noted that there
was no complete shutdown of the company’s transport business, and that
retrenchment of all the drivers at one go amounted to closure, meted out as a
punishment for resorting to strike. The fact that all the retrenched employees
were offered re-employment shortly thereafter further evidenced the lack of
bona fide intention in the act of retrenchment. The Tribunal discarded the
re-employment offers as immaterial, as it forced the employees to accept fresh
appointment, losing their long-standing service. The orders of termination were
set aside and the workmen were directed to be reinstated with continuity of
service and 75% back wages, save eight employees who admitted to gainful
employment post retrenchment.
10. Aggrieved
by the Award, the Appellant preferred Writ Petition No. 1240 of 2018 before the
High Court of Bombay. The Respondent Union also filed Writ Petition No. 5075 of
2018 against the Tribunal’s decision to the extent of denial of back wages to
eight employees. The High Court affirmed the Tribunal’s findings on all counts,
and concluded that they were well-founded on evidence and were in accordance
with law. Thus, it confirmed the reinstatement of employees with 75% back wages
and other consequential benefits. It also confirmed the Tribunal’s denial of
back wages to the eight employees who admitted to being gainfully employed. It
is this order of the High Court that the Appellant challenges in the present
Civil Appeal.
11. Shri
Chander Uday Singh, Senior Advocate assisted by Shri Pratap Venugopal, Ms.
Surekha Raman, Shri Atman Mehta, Shri Anand Pai, Shri Akhil Abraham Roy, Ms.
Viddushi and Ms. Bidya Mohanty, Advocates appearing for the Appellant, made
four-fold submissions before us. They argued that the illegal strike carried
out by the Respondent led to the termination of Appellant’s transport contracts
with its clients, creating a situation of surplus of labour, necessitating the
retrenchment. Appellant did not effectuate any closure by the termination
letters dated 22.03.2007, but was merely re-organising its business by
temporarily shutting down their transport activities. He also challenged the
Industrial Tribunal’s finding regarding the offer of re-employment being
illegal, by arguing that Appellant was only complying with the stipulations of
Section 25H of the Act which grants preference to retrenched employees in
reemployment. He would finally submit that the directions of the Tribunal as
well as the High Court to pay 75% back wages is contrary to the principles laid
down by this Court. He relied on M.L.
Singla v. Punjab National Bank , Deepali Gundu Surwase v. Kranti Junior
Adhyapak Mahavidyalaya (D. Ed.) & Ors , Management of Regional Chief
Engineer, Public Health and Engineering Department, Ranchi v. Their Workmen.
12. Conversely,
learned counsels for the Respondent, Shri Nitin A. Kulkarni, assisted by Shri
Nitin S. Tambwekar, Advocate and Shri Seshatalpa Sai Bandaru, AOR, submitted
that the retrenchment, effectuated as if there was closure, is illegal as there
was no de facto closure of Appellant’s transport business. Even if such a
closure was effected, it is illegal as sixty-days’ notice was not given in
terms of Section 25FFA of the Act. With respect to the question of back wages,
he submitted that the Tribunal correctly relied on the testimonies of
retrenched drivers, admitting to unemployment post retrenchment. He relied on
the decisions of this Court in Mackinnon Mackenzie and Company Ltd v. Mackinnon
Employees Union, and Workmen of Subong
Tea Estate, Represented by the Indian Tea Employees Union v. Outgoing
Management of Subong Tea Estate and Anr.
13. In his
rejoinder, Shri C.U. Singh submitted that even as per the Statement of Claim
submitted by the Respondent Union before the Tribunal, it was clear that the
employees always understood their termination as retrenchment and not in course
of a closure.
Analysis:
14. With
respect to the first submission of Shri C. U. Singh, that this is not at all a
case of closure but a simple case of retrenchment, the Tribunal as well as the
High Court have held that the method and manner by which the workmen were
retrenched clearly demonstrates that it is virtually a closure. We have no
hesitation in confirming these findings of fact. The act of terminating the
services of all the drivers at the same time, coupled with the statement of the
Appellant that the entire business is closed down, was sufficient to convey to
the workers and the Union that the transport business had come to a standstill
and that there was no scope of continuing the business any further. Further, we
also concur with the findings of fact about the lack of bona fide in the
Appellant’s offers of re-employment on new terms and conditions, and without
continuity of service. It is for these reasons that the Tribunal and the High
Court held that it was virtually a case of closure and correctly so.
15. The second
submission of Shri C.U. Singh that the management has a right to organise its
business based on economic considerations is well taken. There is also no
quarrel with the principle of Parry & Co. Ltd. v. P.C. Pal , which laid
down the proposition that a bona fide policy decision for reorganising the
business based on economic considerations is within an enterprise’s proprietary
decision and retrenchment in this context must be accepted as an inevitable
consequence. The answer is here itself, and pertains to the material
requirement of bona fide of the decision. In the present case, the Tribunal has
come to the conclusion that the entirety of business is not lost due to the strike
and the retrenchment seems to have been imposed as retribution against the
workmen for going on a strike. It is for this reason that the decision of this
Court in the case of Parry Company (supra) will not apply to the facts of the
present case.
16. The
further submission of the Appellant that the Tribunal is not justified in
directing continuity of service, as in the case of retrenchment followed by
reemployment, the workmen are not entitled to continuity of service needs to be
answered. Even here, there is no quarrel with the principle of law that
reemployment of retrenched workmen does not entitle them to claim continuity of
service as held in Cement Corpn. of India Ltd. v. Presiding Officer Industrial
Tribunal-cum-Labour Court and Anr. , as well as the Maruti Udyog Ltd v. Ram Lal
and Ors. However, the principle laid down in these judgments will only apply
to cases where the retrenchment is bona fide. The Tribunal has held that the
retrenchment of all the drivers followed by an offer of re-employment on new
terms and conditions is not bona fide. Once the orders of retrenchment are set
aside, the workmen will naturally be entitled to continuity of service with
order of back wages as determined by a Tribunal or a Court of law.
17. As regards
the last submission by Shri C.U. Singh, about the legality of awarding 75% back
wages, it was argued before us that the workmen were obligated to prove that
they were not gainfully employed after the dismissal from service. It was also
submitted that they must at least plead on oath that they were unemployed. Shri
C.U. Singh took us through the evidence and on the basis of statements made
therein has submitted that the parties have admitted to have worked at some
place or the other through the pendency of the litigation.
18. The
Tribunal has considered the matter in detail and after appreciating the oral
and documentary evidence, the Tribunal directed reinstatement of the employees
with only 75% back wages. Whether a workman was gainfully employed or not is
again a question of fact, and the finding of the Tribunal as upheld by the High
Court, cannot be interfered with by the Supreme Court in exercising its power
under Article 136 of the Constitution of India. The following findings of the
Tribunal are conclusive:
“In so far as back wages to be paid to the workers are concerned, it is a matter of record that 27 workers have stepped into the witness box. Even the President of the Second Party union is also examined. All the workers and President of the Union have consistently stated in their examination in chief that they have remained unemployed after their termination and they failed to procure alternate employment also.”
19. In Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya (supra), this Court held:
“38.3 ……If the employer wants to avoid payment of full back wages, then it has to plead and also lead cogent evidence to prove that the employee/workman was gainfully employed and was getting wages equal to the wages he/she was drawing prior to the termination of service……..”
(emphasis added)
With respect to the obligation of the Appellant, the finding of the Tribunal is simple that:
“On the contrary, in the entire evidence filed by the First Party, the First Party has not brought an iota of evidence to show that all the workers were employed elsewhere and were earning for their livelihood.”
20. Having considered the matter in detail we uphold and
affirm the judgment of the High Court of Judicature at Bombay in W.P. No. 1240
of 2018 dated 17.01.2019, and dismiss the Civil Appeal No. 2393 of 2022.
Parties shall bear their own costs.
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