Maharashtra General Kamgar Union vs The State of Maharashtra

Mrs. Sujatha V. Manohar, J.—The appellants are the original petitioners. They are a Trade Union registered under the Indian Trade Unions Act, 1926 and have their registered office at 252, Janata Colony, R. N. Narkar Marg. Ghatkopar, Bombay-400 077. The workmen of Respondent No. 3, namely, Indian Cork Mills Ltd. are members of the Appellants since the year 1980.

Respondent No. 3 gave a notice of retrenchment dated 31st August, 1983 for the purpose of retrenching 308 workmen plus 5 members of clerical staff. In the Annexure to the notice of retrenchment reasons for the proposed retrenchment were set out as under :

"In view of heave overhead and administrative expenses, the company is suffering losses. The company''s profitability has dwindled considerably during the last few years. If appropriate action is not taken, then company may have to even face total closure. To avoid this, retrenchment has become inevitable."

A notice was served on the same date to the Secretary, Government of Maharashtra, Industries, Energy and Labour Department, under S. 25N(1)(c) of the Industrial Disputes Act, 1947. Section 25N(1)(c) of the Act required notice in the prescribed manner being served on the appropriate Government or such authority as may be specified as provided in that section and permission of such authority being obtained under Sub-s. (2) as a condition precedent to retrenchment of workmen. In the notice it is set out that out of a total 451 employees of Respondent No. 3, 308 workmen plus 5 members of the clerical staff numbering in all 313 would be affected by the proposed retrenchment. Thereafter an enquiry was held by Respondent No. 2 under the provisions of S. 25N(2) of the Industrial Disputes Act, 1947. At the enquiry the appellants filed an affidavit objecting to retrenchment. Respondent No. 3 also filed affidavits and produced material as required by Respondent No. 2 Respondent No. 3 relied upon their balance sheets and profits & loss accounts for the year 1979-80, 1980-81 and 1981-82. Respondent No. 3 have two Divisions - Plastic Division and Cork Division. In the year 1979-80 both these divisions made a profit and the total profit was Rs. 17.43 lakhs. In the year 1980-81 Plastic Division made a loss of Rs. 17.27 lakhs while the Cork Division made a profit of Rs. 18.70 lakhs making a total profit of Rs. 1.43 lakhs. In the year 1981-82 Plastic Division made a loss of Rs. 15.10 lakhs and Cok Division made a loss of Rs. 15.53 lakhs, making a total loss of Rs. 30.63 lakhs. Respondent No. 3 contended that while their sale position had not improved during these 3 years, their wage bill had gone up. It was their contention that available workload was not sufficient for their labour force and the workmen were lying idle in the factory. They, therefore, applied for permission to retrench 313 workmen. The application was opposed by the Appellants, who contended that Respondent No. 3 had diverted some of their profits to other allied concerns. They also raised various other contentions.

It is not necessary to examine all these contentions in detail. The 2nd Respondent after considering the material placed before him passed an order dated 1st February, 1984 in which reasons were set out in some detail. Respondent No. 2 granted permission to the 3rd Respondent to retrench 111 workmen who were recruited by the Company in the years 1982 and 1981 and 5 clerical staff subject to the condition that in effecting retrenchment the principles laid down in chapter V-A of the Industrial Disputes Act, 1947 shall be followed scrupulously. While the proceedings were going on before Respondent No. 2, the 3rd Respondent had also offered to the workmen voluntary retirement under a scheme which was framed by them. Under this scheme 92 workmen during the pendency of proceedings had voluntarily retired. The permission given under the order of 1st February, 1984 for retrenchment of 111 workmen is in addition to 92 workmen who have voluntarily retired.

The appellants are challenging the order of 1st February, 1984 passed by the 2nd Respondent under S. 25N of the Industrial Disputes Act, 1947.

The provisions of Ss. 25N(1)(c), 25N(2), 25N(3) and 25N(/) of the Industrial Disputes Act, 1947 at the material time were as follows :

25N. Conditions precedent to retrenchment of workmen :- (1) No workman employed in any industrial establishment to which this Chapter applies, who has been in continuous service for not less one year under an employer shall be retrenched by that employer until :-

xxx xxx xxx (c) notice in the prescribed manner is served on the appropriate Government or such authority as may be specified by the appropriate Government by notification in the Official Gazette, and permission of such Government or authority is obtained under Sub-s. (2). (2) On receipt of a notice under Cl. (c) of Sub-s. (1) the appropriate Government or authority may, after making such inquiry as such Government or authority thinks fit, grant or refuse, for reasons to be recorded in writing, the permission for the retrenchment to which the notice relates.

(3) Where the Government or authority does not communicate the permission or refusal to grant the permission to the employer within three months of the date of service of the notice under Cl. (c) of Sub-s. (1), the Government or the authority shall be deemed to have granted permission for such retrenchment on the expiration of the said period of three months.

xxx xxx xxx (7) Where at the commencement of the Industrial Disputes (Amendment) Act, 1976 (32 of 1976), a dispute relating, either solely or in addition to other matters, to the retrenchment of any workman or workmen of an industrial establishment to which this Chapter applies is pending before a conciliation officer or the Central Government or the State Government, as the case may be, and -

(a) there is an allegation that such retrenchment is by way of victimisation; or

(b) the appropriate Government is of the opinion that such retrenchment is not in the interests of the maintenance of industrial peace,

the appropriate Government, if satisfied that it is necessary so to do, may, by order, withdraw such dispute or, as the case may be, such dispute in so far as it relates to such retrenchment and transfer the same to an authority (being an authority specified by the appropriate Government by notification in the Official Gazette) for consideration whether such retrenchment is justified and any order passed by such authority shall be final and binding on the employer and the workman or workmen.

Under S. 25N(1)(c) of the Industrial Disputes Act, therefore, an employer desiring to retrench workmen has to serve a notice on the appropriate Government and seek permission for such retrenchment. Under Ss. (2) of S. 25N, on receipt of such notice the appropriate Government is required to make such inquiry as it thinks fit and thereafter to grant or refuse to grant permission for retrenchment for reasons to be recorded in writing. Under Ss. (3) of S. 25N(1)(c) if such permission or refusal is not communicated by the authority within three months of the notice, the authority shall be deemed to have granted such permission on the expiry of the period of three months. Sub-section (2) and (3) have to be read together because they prescribe the manner of granting or refusing permission in response to notice given under Ss. (1)(c) of S. 25N(1)(c). Under Ss. (3) if grant of permission or refusal to grant permission is not communicated within 3 months, the Government is deemed to have granted permission. Under Ss. (2) the Government may after making such inquiry as it considers fit grant or refuse such permission. Since any grant or refusal or permission after enquiry has to be done within the period of 3 months, such an enquiry by its very nature cannot be an elaborate enquiry into detailed working of the Company in question and assessment of its economic viability and so on. Such a quasi-judicial enquiry would probably take much longer than 3 months. The shortness of the period available for enquiry and deeming provisions of Ss. (3) indicate that the enquiry before granting or refusing to grant permission to retrench is a preliminary enquiry. Presumably it should show that prima facie the employer has a reasonable cause for retrenching the workmen in question.

Appellants contend that the 2nd respondent should have examined in detail the various transactions entered into by the 3rd respondent to ascertain whether the 3rd respondent can financially support the existing workmen. They rely on Ss. (7) of S. 25N(1)(c) of the Act and submit that the enquiry to be made by respondent No. 2 under Ss. (2) is similar to an enquiry under Ss. (7). In our view, however, an enquiry under Ss. (2) has no relation to proceedings contemplated under Ss. (7) of S. 25N(1)(c). Sub-section (7) applies to a case where at the commencement of the Industrial Disputes (Amendment) Act, 1976 a dispute relating to retrenchment is interalia pending before a conciliation officer. In such a dispute there should be an allegation that retrenchment is by way of victimisation; in the alternative, in such a dispute the appropriate Government should form an opinion that such retrenchment would not be in the interest of industrial peace. In these special circumstance the appropriate Government under Ss. (7) has the power to withdraw the dispute from (inter alia) the Conciliation Officer. The appropriate Government may by notification transfer such a dispute to an authority specified in that sub-section for consideration. The decision of such an authority is made final and binding on the parties under that sub-section.

An enquiry to be held by the authority so appointed under Ss. (7) is a totally different enquiry from the enquiry to be made by Government for granting or refusing permission under Ss. (2). An enquiry under Ss. (2) cannot be considered as similar to an enquiry under Ss. (7) as contended by the appellants. In our view, at the stage of permission any elaborate judicial or quasi - judicial enquiry is not contemplated. The very scheme of S. 25N precludes such an elaborate enquiry. In the present case the 2nd respondent has taken into account relevant circumstances before granting permission. He has given a fairly detailed reasoning for granting permission to Respondent No. 3 to retrench some of the employees as stated in the order. The order is in consonance with the provisions of Ss. (2).

The appellants have contended that they have now come across certain documents to show that some profits were diverted by the 3rd respondents to an allied concern. The 3rd respondents have filed an affidavit denying this allegation by giving a cogent explanation of the documents so relied upon by the appellants. We do not see how all these disputes relating to the detailed working of the Company and involving a scrutiny of contracts entered into by the Company with third parties in the normal course of its work can be gone into or reopened by the authorities granting permission under S. 25N(2).

It should also be noted that granting of permission under S. 25N does not preclude either the industrial establishment or the workers from raising a dispute relating to such retrenchment and having it adjudicated upon before an Industrial Tribunal. Under Schedule III, item 10 of the Act Industrial Tribunal has jurisdiction to deal with matters relating to retrenchment of workmen. This jurisdiction is not taken away by reason of the fact that an industrial establishment has obtained permission under S. 25N(2) for retrenchment of workmen. Such permission is a condition precedent to retrenchment of workmen. Merits or demerits of the case can be adjudicated upon before the Industrial Tribunal. In view of this alternative remedy available to the appellants also, in our view, it is not a fit case where we should intervene in the order of 1st February, 1984.

Our attention was drawn to a decision of a Division Bench of this Court in the case of Workmen of Mukund Iron and Steel Works Ltd. Vs. Mukund Iron and Steel Works Ltd. and others, (to which one of us was a party). In that case permission to retrench granted under S. 25N was set aside because the Assistant Labour Commissioner while granting permission did not take into account an extremely relevant fact, namely, that work was available in the establishment for workers who were to be retrenched. The establishment had merely contended that such workmen would be given work only if workmen agreed to give a certain quantity of production as per agreed norms. Since the decision to grant permission did not take into account this very relevant circumstance the decision was set aside. The question of the nature of enquiry to be held under S. 25N(2) was not considered at all by the Division Bench in that case nor was this question raised before the Division Bench. The judgment, therefore, is not of much assistance in the present case.

In these circumstances, in our view, there is no substance in the appeal.

Appeal is dismissed. In the circumstances of the case there will, however, be no order as to costs.