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Judgment
G. Mehrotra, C.J.—By a notification dated the 3rd July, 1961 the following points were referred to the Labour Court. Assam by the State Government for adjudication.
1(a) Whether the management are justi fied in retrenching Shri Section Chakravarty?
(b) If not is he entitled to re instatement or any other relief in lieu thereof?
2(a) Whether the management are justified in refusing to promote Shri T.K. Pujan to technical grade or selection grade?
(b) If not, what relief is he entitled to
The labour Court by its award dated the 20th December 1963 held that Management was not justified in retrenching Sri Chakravarty and directed his reinstatement in the post with continuity of service from the date of (sic) with full back wages that may be due after making necessary adjustment of the amount paid to him as retrenchment compensation The labour Court further directed that on reinstatement Shri Chakravarty for the period of his employment in the Calcutta University will be entitled to the difference of his pay and allowances for that period at Tocklai and those in the Calcutta University Regarding issue No. 2(a) the Labour Court found that the Management''s action in not placing Shri Pujari in the Senior Technical Grade was justified He, however held that in the circumstances of the ease the Management should have promoted him to the Selection Grade with effect from the 4th April. 1961, It is against this award that the present petition has been filed by the Management under Article 226 of the Constitution.
I shall first take up the award on issue No. 2. The contention of the Management is that the question whether an employee should be given the Selection Grade or not is entirely within. the powers of the Management and the Labour Court was not right in holding that the Management was not justified in refusing to promote him to the Selection Grade. The giving of Selection Grade is purely a managerial function and unless it is held that the action of the Management in not promoting Shri Pujari was mala fide, the Labour Court has no jurisdiction to interfere with the exercise of such a managerial function by the Management There appears to be force in this contention. It is urged by the counsel for Shri Pujari that by implication the Labour Court found that the order refusing, to promote him to the Selection Grade was not bona fide We do not think that there is any force in this contention There is no finding by the Labour Court that the refusal to promote Shri Pujari to the Selection Grade was mala fide In these circumstances the award in so far as it directed that Shri Pujari should have been promoted to the Selection Grade and award ed him all the benefits is illegal and we set aside that part of the award
Coming to issue No. 1(a) and (b). Shri S. Chakravarty was working as Second Chemist under Dr. N.B. Chanda He was work ing in his special research work on favour of lea The services of Shri Chakravarty were terminated The case of the Management is that due to financial difficulty and the fact that the research of the favour of tea had vielded no result for six years, the Management decided to close this branch and to retrench the employee connected with the said favour research work The termination of the services of Shri Chakravarty on the Management''s own showing amounts to retrenchment as defined unde the Industrial Disputes Act The Labour Court has held that the reasons given by the Management for closing the favour research section and for terminating the services of Shri Chakravarty are not genuine and the retrenchment was not bona fide The finding of the Labour Court is assailed on the ground that the relevant questions for determining whether the retrenchment was bona fide or not have not been taken into consideration by the Labour Court It is also urged that the Labour Court is not right in observing that there is no evidence in support of the statement'' showing the fall in income.
''Retrenchment'' has been defined u/s 2(oo) of the Industrial Disputes Act as meaning the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include:
(a) voluntary retirement of the work man; or
(b) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf; or
(c) termination of the service of a workman on the ground of continued ill-health, Broadly thus retrenchment means termination of service by any means other than by way of punishment. The termination of service in the present case thus amounts to retrenchment. The Labour Court has held that the Management has failed to prove that the income of the Tocklai Expert mental Station has gone down. The reasons given for the closure of the favour branch and termination of the service of Mr. Chakravarty have been two-fold firstly that the expense of the scientific department was rising and that the income of the Tocklai Experimental Station has gone clown and secondly that after six vears work the favour branch has shown no results. Even assuming that the Management has failed to establish that the income of the Indian Tea Association has gone down, the termination of the services cannot he said to be main fide If a particular activity of the Indian Tea Association has vielded no result for a long time and the said activity necessarily involves some expenditure, if cannot be said that the closure of a part of the activity of the Association is mala fide Merely because the Association continues its other activities and is spending its money over the oilier activities. It does not necessarily follow that the closure of a particular activity is not justified and fur ther that the retrenchment due to the closure of that particular activity is mala fide. The finding thus of the Labour Court that the retrenchment was a cloak is not instilled on the proved facts.
The next contention, however of the work man is that the procedure laid down in Section 25G of the Industrial Disputes Act has not been followed in the present case. The Labour Court has held that the rule of ''last come first go, which is normally followed in industrial concerns and which has now been statutorily recognised in Section 25G of the Industrial Disputes Act, has not been followed in the present case. Section 25G reads as follows:
Where any workman in an industrial establishment, who is a citizen of India, is to be retrenched and he belongs to a particular category of workmen in that establishment in the absence of any agreement between the employer and the workman in this behalf, the employer shall ordinarily retrench the work man who was the last person to be employed in that category unless for reasons to be recorded the employer retrenches any other workman.
Mr. Goswami for the Management has very strenuously contended that Section 25G is not attracted in the present case and even if it does, it has been complied with. An ''industrial establishment'' as defined in the explanation to Section 25A of the Industrial Disputes Act, does not apply to an industrial establishment contemplated u/s 25G. There can be an industrial establishment within a larger industrial unit Mr. Goswami''s contention is that the favour branch is an independent and separate industrial establishment and thus it cannot be said that Mr. Chakravarty though senior to some of the workers of the same category has been retrenched before the juniors had been retrenched. In the industrial establishment known as favour branch, there is no other employee of the same category. Thus the question of ''last come first go does not arise The Labour Court has held that the favour branch is not a separate industrial establishment. It is a department of the bigger establishment known as the Tocklai Experimental Station.
Mr. Goswami has referred to the case of Management of India Tyre and Rubber Company (India) Private Ltd. v. Workers of the India Tyre and Rubber Co. (India) Private Ltd reported in AIR 1958 Mad 205 and has laid emphasis on the following passage at p 208 of the report.
Before deciding whether the retrenchment ordered by the Petitioner violated the terms of Section 25G, what the Tribunal had to consider was whether the Madras office, in, which the retrenchment was effected, was an industrial establishment within the meaning of Section 25 G The learned Counsel for the Petitioner was. I think, well founded in his contention that virtually the Tribunal did not address itself to that question al all.
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From the scheme of the Act it should be clear that it envisages, each as a distinct concept. (1) an industry. (2) an industrial concern, within an industry. (3) an industrial establishment, which may itself be the whole of the industrial concern, or which may be part of a larger industrial concern. (4) a section of an industrial establishment and (5) categories of workmen in an industrial establishment or in a section thereof.
There can he no objection lo this broad proposition that an industrial establishment in Section 25G has not got a meaning given to it in Section 25A nor can it be said that an industrial establishment necessarily means an industrial concern In the present case on the facts the Labour Court has found that the favour branch cannot be said to be a distinct industrial establishment.
In the case of Indian Cable Co. Ltd. v. Its workmen reported in (1962) 1 Lab LJ 409 (SC) their Lordships of the Supreme Court have laid down certain criterion which will go (sic) case was whether a particular branch was a separate industrial establishment from the parent industrial concern. Their Lordships said that if the workmen recruited for that branch was not liable to be transferred from one branch to another branch, each branch having different categories of workmen on different scales of wages, each branch maintaining separate accounts ultimately consolidated and included in the balance-sheet of the company rules of the company relating to provident fund, gratuity, bonus and service conditions in general,'' applicable to the employees of the company in all its branches, the branch was a separate industrial establishment for the purpose of Section 25G of the Industrial Disputes Act. None of the conditions exist here. The workman Shri Chakravarty was employed in the biochemistry branch as an assistant chemist in the Tocklai Experimental Station. He worked for some, time in the other branches of biochemistry The Tocklai Experimental Station subsequently decided to work on favour of tea and Shri Chakravarty was put under Dr. N.B. Chanda to carry on the research work for that purpose. There was no separate grade of employees of the favour branch. It cannot be said that people working in other brandies of biochemistry could not be transferred to the favour branch as Shri Chakravarty himself was first working in the other branch and was subsequently placed in this branch.
Dealing with the question as to what is one establishment the Supreme Court in the case, of The Associated Cement Companies Limited, Chaibassa Cement Works, Jhinkpani Vs. Their Workmen, observed as follows:
The Act not having prescribed any specific-tests for determining what is one establishment'', in considering the question whether a cement factory and the adjacent time-stone quarry supplying lime-stone to it, are one establishment, one must fall back on such considerations as in the ordinary industrial or business sense determine the unity of an industrial establishment, having regard no doubt to the scheme and object of the Industrial Disputes Act and other relevant provisions of the Mines Act, 1952, or the Factories Act. 1948 It is, perhaps, impossible to lay down any one test as an absolute and invariable lest for all cases. The real purpose of these tests is to find out the true relation between the parts, branches, units etc. If in their true relation they constitute one integrated whole, the establishment is one; if on the contrary they do not constitute one integrated whole, each unit is then a separate unit. How the relation between the units will be judged must depend on the facts proved, having regard to the scheme and object of the statute which gives the right of unemployment compensation and also prescribes a disqualification there for. Thus, in one case the unity of ownership management and control may be the important test; in another case functional integrality (sic) may be the unity of employment.
In that case it was held that there were unity of ownership, unity of management, supervision and control, unity of finance and employment, unity of labour and conditions of service of workmen, functional integrality, general unity of purpose and geographical proximity. All these tests apply to the facts of the present case. There is unity of management, supervision and control and conditions of workmen and the service conditions of workmen are also the same, there is functional integrality also inasmuch as Shri Chakravarty himself was working on another project of Biochemistry first and was transferred to the favour branch. It cannot, therefore, be said that the favour branch was an establishment by itself. If, therefore, it is held that the favour branch was not a separate establishment and that the Biochemistry department was a separate industrial establishment to which Shri Chakravarty belonged, it cannot be argued that the other people of the same category were not in the industrial establishment who should have been retrenched first. Mr. Chakravarty was senior to two other chemists of the same department and thus the procedure provided for u/s 25G was violated in the present case.
The next contention of Mr. Goswami is that the procedure is to be followed only if there is no agreement to the contrary and as in the present case the letter of appointment of Shri Chakravarty shows that his services could be terminated on giving a month''s notice, there was an agreement to the contrary This point does not appear to have been taken at all before the Labour Court. The question whether there has been an agreement between the employer and the workmen In this behalf is a matter which requires investigation and unless the point was raised before the Labour Court, this Court on the mere letter of appointment cannot say that there was an agreement between the employer and the workmen in this behalf as contemplated by Section 25G so as to empower the Management not to follow the procedure laid down u/s 25G.
Lastly it was urged that the provisions of Section 25G have been complied with as the reasons have been recorded by the Management for retrenching Shri Chakravarty and not others. Reliance is placed on the letter sent by the Director to Shri Chakravarty on the 25th November 1960, the relevant portion of which reads as follows:
The reason for the necessity to terminate your service and retrench you is that the work in which you are engaged has become redundant due to economic measures that have had to be undertaken and which are unavoidable. I regret that there is no post to which you could be transferred in which you could retain your present status and seniority.
If he belongs to the same category as other chemists in the biochemistry department, then there is no bar to his being transferred to the other work connected with the biochemistry department. Mr. Goswami has laid great emphasis on the fact that Shri Chakravarty being out of touch with the other work of the biochemistry department for the last six years and other assistants being engaged in some other research work in the biochemistry department, it would not have been in the interest of the research work to retrench the other chemist and place Mr. Chakravarty in charge of the work started by them. There is no material before us to show what was the nature of the work in which the other chemists were engaged at that time and further that Mr. Chakravarty was not qualified to take up that work.
In the case of Swadesamitran Limited, Madras Vs. Their Workmen, their Lordships of the Supreme Court have held as follows:
The management has the right to refrench the workmen provided retrenchment is justified. In effecting retrenchment the management normally has to adopt and give effect to the Industrial rule of retrenchment last come first go. For valid reasons it may depart from the said rule. If the departure from the said rule does not appear to the Industrial tribunal as valid or satisfactory, then the action of the management in so departing from the rule can be treated by the tribunal as being mala fide or as amounting to unfair labour practice; in other words departure from the ordinary industrial rule of retrenchment without any justification may Itself, in a proper case, lead to the inference that the impugned retrenchment is the result of ulterior considerations and as such it is mala fide and amounts to unfair labour practice and victimization.
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The employer may take into account considerations of efficiency and trustworthy character of the employees, and If he is satisfied that a person with a long service is inefficient, unreliable or habitually irregular in the discharge of his duties, it would be open to him to retrench his services while retaining in his employment employees who are more efficient, reliable and regular though they may be junior in service to the retrenched workmen Normally, where the rule ''last come first go'' is thus departed from, there should be reliable evidence preferably in the recorded history of the workmen concerned showing their inefficiency undesirability or habitual irregularity Wherever it is proved that the rule in question has been departed from, the employer must satisfy the industrial tribunal that the departure was Justified; and in that sense the onus would undoubtedly be on the employer.
In our opinion thus the Labour Court was right in holding that the retrenchment of Shri Chakravarty was not justified and the award of the Labour Court in so far as it relates to issue No. 1(a) and (b) is valid.
In the result, therefore this petition is partly allowed and the award of the Labour Court on issue No. 2(a) and'' (b) is set aside. The petition is rejected in so far it challenges the award of the Labour Court on issue No. (1)(a) and (b). As the petition has been partly allowed, the parties will bear their own costs.