2015 (2) TMI 1352 - SC - Indian Laws

Supreme Court Upholds Ruling Against Company for Violating Industrial Disputes Act

The Supreme Court upheld the lower courts' findings, ruling that the Appellant-Company violated Sections 25F, 25FFA, and 25G of the Industrial Disputes ... Seniority list displayed as provided in Rule 81 of the Industrial Disputes (Bombay) Rules, 1957 or not - alleged breach of the provisions of the Industrial Disputes (Bombay) Rules, 1947 - alleged breach of Rule 81 of the Industrial Disputes (Bombay) Rules - breach of Section 25F(b) of the I.D. Act 1947 or not - unfair labour practice, as pleaded, by not sending notice to the Government Under Section 25F(c) of the I.D. Act, 1947 - unfair labour practice as contemplated by Section 25G of the I.D. Act 1947, by not following the principle of last come first go - custom, practice or usage has become an agreement, settlement or award, and breach thereof - Section 9-A of the I.D. Act, 1947. HELD THAT:- The statutory provisions contained in Section 25FFA of the I.D. Act mandate that the Company should have issued the intended closure notice to the Appropriate Government should be served notice atleast 60 days before the date on which it intended to close down the concerned department/unit of the Company. As could be seen from the pleadings and the findings recorded by the Industrial Court, there is a categorical finding of fact recorded that there is no such mandatory notice served on the State Government by the Appellant-Company. The object of serving of such notice on the State Government is to see that the it can find out whether or not it is feasible for the Company to close down a department/unit of the Company and whether the concerned workmen ought to be retrenched from their service, made unemployed and to mitigate the hardship of the workmen and their family members. Further, the said provision of the I.D. Act is the statutory protection given to the concerned workmen which prevents the Appellant-Company, from retrenching the workmen arbitrarily and unreasonably & in an unfair manner. The cumulative reading of the Statement of Reasons, the retrenchment notice served on the concerned workmen, the pleadings of the Appellant-Company and in the absence of evidence on record to justify the action of retrenchment of concerned workmen on the alleged closure of the department/unit of the Appellant-Company is shown as bona fide. However, the concurrent finding of fact recorded by the High Court on this aspect of the case cannot be held to be bad in law by this Court in exercise of its Appellate Jurisdiction in this appeal. It is very clear from the averments of the Appellant-Company in its written statement that its action in retrenching the workmen is sought to be justified before the Industrial Court, which, in fact, is not justified on the basis of evidence on record. It is clear from the pleadings at paragraphs 3 and 4 of the written statement filed by the Appellant-Company before the Industrial Court which would clearly show that the action of the Appellant-Company is a clear case of mala fide which cannot be sustained in law - the concurrent finding of fact recorded by the High Court with regard to non-compliance of Section 25G of the I.D. Act by the Appellant-Company is also the statutory violation on the part of the Appellant-Company in retrenching certain concerned senior workmen. Therefore, the courts below have rightly answered the issue against it. Hence, the same cannot be termed as erroneous for our interference. Principle of 'last come first go' - HELD THAT:- The principle of 'last come first go' should have been strictly adhered to by the Appellant-Company at the time of issuing retrenchment notice served upon the concerned workmen as provided Under Section 25G of the I.D. Act read with Rule 81 of the Bombay Rules which is not properly complied with by it for the reason that the custom clearance and dock clearance are totally different departments and it has retained 7 workmen who are undisputedly juniors to the concerned workmen, which action is sought to be justified by the Appellant-Company without giving justifiable reasons. Further, no category wise seniority list of the workmen was displayed on notice board of the Appellant-Company as required in law. The order dated 14.08.2006 extending protection to the Appellant-Company shall stand vacated - Appeal dismissed. Issues Involved:1. Compliance with Section 25F of the Industrial Disputes Act (I.D. Act).2. Display of seniority list as per Rule 81 of the Industrial Disputes (Bombay) Rules, 1957.3. Requirement of notice under Section 9A of the I.D. Act.4. Compliance with Section 25FFA of the I.D. Act.5. Adherence to the principle of 'last come first go' under Section 25G of the I.D. Act.Detailed Analysis:1. Compliance with Section 25F of the Industrial Disputes Act:The Appellant-Company issued a retrenchment notice on 27.07.1992, effective from 04.08.1992, citing accumulated losses and the need to rationalize activities. The Respondent-Union alleged non-compliance with Section 25F, claiming that one month's salary in lieu of notice was not paid, and the notice did not indicate its dispatch to the State Government. The Industrial Court found that the Appellant-Company failed to comply with Section 25F(a) by not providing one month's notice or salary in lieu thereof. The Court also noted the absence of evidence proving that notice was served to the State Government under Section 25F(c).2. Display of Seniority List as per Rule 81 of the Industrial Disputes (Bombay) Rules, 1957:The Respondent-Union argued that the seniority list was not displayed as required by Rule 81. The Industrial Court concluded that the Appellant-Company did not display the seniority list on the notice board, constituting a breach of Rule 81 and Section 25G of the I.D. Act. The High Court affirmed this finding, noting the absence of evidence from the Appellant-Company to justify any deviation from the 'last come first go' principle.3. Requirement of Notice under Section 9A of the I.D. Act:The Respondent-Union contended that a notice under Section 9A was required due to changes in the number of employees. The Industrial Court did not find sufficient evidence to support this claim, and the High Court upheld this decision.4. Compliance with Section 25FFA of the I.D. Act:The Respondent-Union claimed that the Appellant-Company failed to give a 60-day notice to the State Government before the intended closure, as mandated by Section 25FFA. The Industrial Court and the High Court found that the Appellant-Company did not comply with this requirement, rendering the closure and subsequent retrenchment void ab initio. The Courts emphasized that Section 25FFA is mandatory, not directory, and non-compliance invalidates the retrenchment.5. Adherence to the Principle of 'Last Come First Go' under Section 25G of the I.D. Act:The Respondent-Union alleged that the Appellant-Company violated Section 25G by not following the 'last come first go' principle. The Industrial Court found that the Appellant-Company retained junior employees while retrenching senior ones without justifiable reasons, breaching Section 25G. The High Court affirmed this finding, noting the absence of a category-wise seniority list and justifiable reasons for retaining junior employees.Conclusion:The Supreme Court upheld the findings of the Industrial Court and the High Court, confirming that the Appellant-Company's actions were in violation of Sections 25F, 25FFA, and 25G of the I.D. Act and Rule 81 of the Bombay Rules. The retrenchment was deemed void ab initio, and the Appellant-Company was directed to reinstate the retrenched workmen with full back wages and other consequential benefits. The appeal was dismissed, and the Appellant-Company was ordered to comply with the award within six weeks, failing which interest at 9% per annum would apply.