Sh. Satya Prakash Giri and Others vs Presiding Officer, Industrial Tribunal and Another

Satya Parkash Giri and 35 others through present petition filed by them under Articles 226/227 of the Constitution of India seek writ in the nature of certiorari so as to quash Award dated April 28, 1988, Annexure P-4, passed by the Industrial Tribunal, Haryana, Faridabad, by which reference sought by them u/s 10(1)(c) of the Industrial Disputes Act 1947, brought no results as their retrenchment was held to be justified and in order.

Initially, 38 workmen being aggrieved of the orders asking them to quit, sought reference u/s 10(1)(c) of the Industrial Disputes Act and even though thrice earlier the Government itself rejected their prayer, it made reference on their fourth attempt vide reference No. 431 of 1987. Their case as projected before the Industrial Tribunal was that they had been working with the Management of M/s. Northern India Lador Cloth Manufacturing Co. (hereinafter to be referred to as the Management) as per various dates given by them in Annexure W-1 with the statement of claim. They formed an union and their leaders espoused their cause but the Management with a view to scuttle their demands effected lay off of all the workmen without even paying them lay off compensation. After continuous lay off of 45 days, they were retrenched. It was pleaded that the main reason behind ordering them to quit the job was to avoid legal liabilities and it was for this precise reason that in their place others were employed. It was pleaded that the Management had started its regular production by employing new hands which in itself was sufficient to say that their lay off initially, and later retrenchment, was malafide. They also pleaded that even if it was a case of justified retrenchment, under the provisions contained in Section 25H of the Act they had right of precedence in employment, and management violated this provision of the Industrial Disputes Act by employing others without giving them offer of re-employment. It was also pleaded that their retrenchment was illegal and amounted to unfair labour practice. They prayed for setting aside of orders of retrenchment and asked for reinstatement with full back wages.

This matter was hotly contested by the Management and in the written statement that was filed on its behalf it was pleaded that the Management started its factory with 20 workers on November 20, 1978 to manufacture leather cloth at Faridabad. The workmen formed union by the name of Faridabad Chemical Shramik Union on April, 1983 and some officials of the Union kept on raising one demand or the other which was being conceded in the interest of industrial peace and harmony. A settlement was arrived at between the parties u/s 12(3) of the Act on June 3, 1983. The Management once again conceded some other demands of the workmen in a settlement that was arrived at u/s 18(1) of the Industrial Disputes Act. Insofar as lay-off is concerned, the stand of the Management is that during the months of June and July, 1985, recession started resulting into accumulation of stock. Their sales came down from 38.37 lacs to 5.71 lacs per month and in August, 1985 finished stock worth Rs. 8.57 lacs piled up in the factory, thus, resulting into lay-off of 69 workers w.e.f. August 18, 1985 to August 31, 1985. Since the position did not improve, lay off was extended till September 15, 1985 and thereafter upto October 1, 1985 and still thereafter upto October 3, 1985. During this period of lay-off, the workers gharaoed the officers of the Management in a concerted manner and pelted stones. A report in that connection was sent to the Police. On October 4, 1985 which was the 48th day of lay-off, Management effected retrenchment and full retrenchment compensation and notice pay were offered to each laid off workman at the gate. Since the same was refused, on the same day, the Management sent the amount of retrenchment compensation and notice pay by cheque along with individual notice under registered covers. An intimation was also sent to the Government in Form-P. With the efforts of the Management, finished stock was liquidated at substantial discount and some fresh orders were received due to festival season and in such changed circumstances, re-employment offer letters were sent to retrenched workmen by registered A.D. post at present as well as union address as envisaged u/s 26H of the Act but the registered letters were received back with the remarks ''refused''. However, only few workmen responded to the letters of reemployment and they were actually taken back in service. The workmen thereafter served demand notice and after conciliation proceedings failed, their demand was rejected by the Government vide letter dated March 7, 1986. The workmen thereafter filed an appeal before the Government which was rejected on June 18, 1986. Petitioners even approached the Labour Minister, Haryana but that representation moved on their behalf brought no results as the same was rejected on November 20, 1986. On the aforesaid facts it was, thus, pleaded that lay-off and retrenchment were justified, provisions of Section 25H were not violated and while retrenching the workmen, provisions of Section 25F of the Industrial Disputes Act were complied with. A plea was also taken that there was no espousal in the matter and reference of 39 workmen could not constitute industrial dispute in terms of Section 2(k). The Industrial Tribunal, on the pleadings of the parties, framed the following issues:-

(1) Whether the termination/retrenchment of Shri Satya Prakash Giri and 37 other workmen shown in Annexure KA is justified and in order? If not, to what relief are they entitled? OPM.

(2) Whether there exists an industrial dispute between the parties as defined in Section 2K of the Act? OPM

(3) Whether the reference is bad in law as alleged? OPM.

(4) Relief.

The Industrial Tribunal recorded a firm finding of fact that lay off as also retrenchment of petitioners was justified and was within the managerial discretion of the Management to organise and arrange its business in the manner it considered best. It was also held that provisions contained in Section 25F of the Act were fully complied with and all those who responded to the letters written by the Management for re-employment were actually taken back in service, and inasmuch as petitioner despite offer having been made to them for re-employment cold-shouldered the same, they were themselves to be blamed for that and in the facts and circumstances it could not be said that the provisions of Section 25H of the Act were violated.

The aforesaid findings have been recorded after minutely observing the evidence that was led before the Labour Court. It is established that the respondent-company is engaged in manufacturing P.V.C. leather cloth. There was recession in this industry since April, 1985. Insofar as respondent-company is concerned its sales went on going down steeply and were reduced from Rs. 38 lacs per month to Rs. 5-1/2 lacs in August 1985. Number of parties cancelled their orders and deferred payment. Finished stocks accumulated to the tune of Rs. 8.57 lacs. It is not only with regard to respondent-company that sales came down but the other concerns dealing with the same item were even closed down. The list of the units which were actually closed are placed on record as Ex. M-9. It is settled law that it is the managerial discretion of an employer to organise the business in the manner he considers best. It is not competent for a workman to challenge its propriety so long as the business is organised in a bona fide manner. While re-organising the business, if the surplus employees are asked to quit, no employer can be burdened with carrying on with an economic dead weight and retrenchment has to be accepted as inevitable. No doubt, the hapless workman on retrenchment necessarily has to suffer immense loss as he loses his bread but if the action is not vitiated by the victimisation of unfair labour practices, the management is well within its right to organise its business in the manner it considers it best. The facts, as has been noticed above, demonstrate that the respondent-management initially effected a lay off and extended it from time to time but when the position further deteriorated, it was left with no choice but to effect retrenchment on 48 days of lay off. This course was open to the management by virtue of Section 25C of the Industrial Disputes Act which reads thus:-

"Provided further that it shall be lawful for the employer in any case falling within the foregoing proviso to retrench the workmen in accordance with the provisions contained in Section 25F at any time after the expiry of the first forty five days of the layoff and when does so, any compensation paid to the workmen for having been laid off during the preceding twelve months may be set off against the compensation payable for retrenchment."

The management had, however, to comply with the provisions of Section 25C of the Industrial Disputes Act and it is proved to the hilt while asking the petitioners to quit, pressed on account of circumstances mentioned above, one month''s notice pay indicating the reasons for retrenchment in lieu of such notice was given. Payment of compensation equivalent to fifteen days average pay for every completed year of continuous service or any part thereof in excess of six months was offered and even a notice to the appropriate Government in a prescribed manner, which is only directory, was also given. Retrenchment compensation and notice pay was offered to the workmen on October 4, 1985 but they refused to receive the same. Exhibits M-15 to M-48 are notices which have been placed on record. Thereafter retrenchment notices were sent by registered A.D. post along with cheques which too have been placed on record as Ex. M-49 to M-84. Postal receipts are also available on the records. The letters were, however, received back. All the formalities which were thus required to be complied with were strictly adhered to. Not only that, re- employment offer, to retrenched workmen were also given on October 10, 1985. The said inland letters have also been placed on record as Ex.M. 146 to M-183. These letters were not only sent at the address of the retrenched workmen but also at the Union address as well but the same were received back from both the addresses with the remarks that addressee had refused to receive them. The Industrial Tribunal in view of over-whelming evidence brought on the record came to a correct conclusion that even the provisions contained in Section 25H of the Industrial Disputes Act are complied with. Supreme Court in Tatanagar Foundry Company Vs. Their Workmen, held that "when dealing with a lay off which satisfied the test prescribed by the definition contained in Section 2(kkk), it is not open to the Tribunal to enquire whether the employer could have avoided the lay off if he had been more diligent, more careful or more far-sighted. That is a matter relating to the management of the undertaking and unless mala fides are alleged or proved, the Industrial Tribunal exceeds its jurisdiction in deciding the dispute whether a lay off was justified to sit in judgment over the acts of management of the employer and investigate whether a more prudent management could have avoided the situation which led to a lay off (p.385). In Parry and Co. Ltd. Vs. P.C. Pal and Others, , it was held that, "The Management can retrench its employees only for proper reasons, which means that it must not be actuated by any motive of victimisation or any unfair labour practice. It is for the management to decide the strength of its labour force. If the number of employees exceeded the reasonable and legitimate needs of the undertaking it is open to the management to retrench them. Workmen may become surplus on the ground of rationalisation or economy reasonably or bona fide adopted by the management or on the ground of other industrial or trade reasons, and the right to effect retrenchment cannot normally be challenged, but when there is a dispute about the validity of retrenchment the impugned retrenchment must be shown as justified on proper reasons i.e. that it was not capricious or without rhyme or reason." (p.437)

The only contention of Mr. R.S. Sihota, learned Counsel appearing for the petitioners, is that initial lay off which continued for 48 days and ultimately resulted in retrenching the workmen was wholly unjustified and illegal. It was not permissible for the management to have laid off the workmen on the only ground as has been advocated on behalf of the Management that there was accumulation of finished goods and that there was recession in the industry. This Court is not at all impressed with the solitary contention of the learned Counsel as besides giving definite grounds on which the management can lay off workman, it is also borne out from Section 2(kkk) that it can be for any other reason. The lay-off can take place on one or more reasons specified in the definition and it can also be on account of any other reason that may not be mentioned in Section 2(kkk) of the Industrial Disputes Act. It may be on account of the reason that there is shortage of coal, power or raw material or accumulation of stocks or breakdown of machinery or for any other reason. The words "any other reason" have been specifically mentioned in the definition of Section 2(kkk). The words "any other reason" need not necessarily be specific to the reasons mentioned in the Section. In Management of Kairbetta Estate, Kotagiri Vs. Rajamanickam and Others, , it was held (pp. 277-278) "Section 2(kkk) defines a lay off as meaning the failure, refusal or inability of an employer on account of shortage of coal, power or raw material or the accumulation of stocks or the breakdown of machinery or for any other reason to give employment to a workman whose name is borne on the muster rolls of his industrial establishment and who has not been retrenched. There is an explanation to the definition which it is unnecessary to set out. It is clear that the lay off takes place for one or more of the reasons specified in the definition. Lay off may be due to shortage of coal or shortage of power or shortage of raw materials or accumulation of stocks or breakdown of machinery or any other reasons. "Any other reasons" to which the definition refers must, we think, be a reason which is allied or analogous to reasons already specified. It has been urged before us on behalf of the respondents that "any other reasons" mentioned in the definition need not be similar to the preceding reasons but should include any other reason of whatsoever character for which lay off has taken place; and in support of this argument reliance is placed on Section 25E(iii). Section 25E deals with three categories of cases where compensation is not liable to be paid to a workman even though he may have been laid off. One of these is prescribed by Section 25E(iii), if the laying off is due to a strike or slowing down of production on the part of workmen in another part of the establishment no compensation has to be paid. The argument is that laying off which is specified in this clause has been excepted because, but for the exception, it would have attracted the definition of Section 2(kkk) and would have imposed an obligation on the employer to pay lay off compensation. That no doubt is true; but we do not see how the case specified in this clause is inconsistent with the view that "any other reason" must be similar to the preceding reasons specified in the definition. If there is a strike or slowing down of production in one part of the establishment, and if lay off is the consequence, the reason for which lay off has taken place would undoubtedly be similar to the reasons specified in the definition. We are, therefore, satisfied that the expression "any other reason" should be construed to mean reason similar or analogous to the preceding reasons specified in the definition. That is the view taken by the Allahabad High Court in J.K. Hosiery Factory Vs. Labour Appellate Tribunal of India and Another, .

Finding no substance whatsoever in this writ petition, I dismiss the same leaving the parties to bear their own costs.