1968 (11) TMI 115 - SC - Indian Laws

Supreme Court reinstates Single Judge decision, orders retrenchment based on last come, first go principle.

Parry & Co. Ltd Versus P.C. Pal & Ors

Parry & Co. Ltd Versus P.C. Pal & Ors - 1970 AIR 1334, 1969 SCR (2) 976 Issues Involved:1. Legality and propriety of retrenchment.2. Bona fides of the company's policy decision.3. Compliance with statutory requirements under Sections 25F, 25G, and 25H of the Industrial Disputes Act.4. Jurisdiction of the Tribunal in evaluating managerial decisions.5. Applicability of Rule 77 of the West Bengal Industrial Disputes Rules, 1958.Detailed Analysis:1. Legality and Propriety of Retrenchment:The primary issue was whether the retrenchment of 52 employees was justified. The Tribunal initially found that the retrenchment was not justified, basing its decision on the grounds that the company did not prove its reorganisation policy and that there was no real surplusage of employees. The Tribunal also noted that retrenchment could have been avoided by transferring employees to other branches. However, the Single Judge held that the employer has the right to reorganise its business for economy or convenience, provided it is done bona fide and not for victimisation. The Single Judge found that the Tribunal's findings were based on conjectures and not on evidence.2. Bona Fides of the Company's Policy Decision:The Tribunal questioned the bona fides of the company's decision to relinquish certain agencies, suggesting it was done for parochial considerations to weaken the union. The Tribunal also noted that the company failed to establish the exact number of surplus employees and the extent of retrenchment. However, the Single Judge and later the Supreme Court found that the Tribunal's findings were speculative and not supported by evidence. The Supreme Court emphasized that it is within the managerial discretion of an employer to organise its business, and such decisions should not be questioned by the Tribunal if they are bona fide.3. Compliance with Statutory Requirements under Sections 25F, 25G, and 25H:The Tribunal found that the company did not follow the principle of 'last come, first go' as required under Section 25G and that the notice of retrenchment was not in compliance with Rule 77 of the West Bengal Industrial Disputes Rules, 1958. The Single Judge agreed that the principle of 'last come, first go' needed further consideration and remanded this part of the case to the Tribunal. However, the Single Judge found that the company had substantially complied with the requirements of Rule 77 by giving notice two days before the actual retrenchment.4. Jurisdiction of the Tribunal in Evaluating Managerial Decisions:The Tribunal's jurisdiction was questioned, particularly whether it could evaluate the merits of the company's reorganisation scheme. The Supreme Court reiterated that it is not within the Tribunal's competence to question the managerial decisions of an employer as long as they are bona fide and not aimed at victimisation. The Tribunal should confine itself to the issues arising from the pleadings and not delve into the propriety of business decisions.5. Applicability of Rule 77 of the West Bengal Industrial Disputes Rules, 1958:The Tribunal held that the notice given by the company was not in accordance with Rule 77, as it was given two days before the retrenchment instead of immediately after. The Supreme Court found that the company had substantially complied with the rule's requirements, as the object of the rule was to inform the authorities about the retrenchment, which was achieved.Conclusion:The Supreme Court allowed the appeal, set aside the order of the Division Bench, and restored the order of the Single Judge. The case was remanded to the Tribunal to prepare a list of 52 persons liable to be retrenched in accordance with the principle of 'last come, first go.' The Supreme Court emphasized that managerial decisions should not be questioned by the Tribunal if they are bona fide and not aimed at victimisation. The compliance with statutory requirements was found to be substantial, and the Tribunal's findings were deemed speculative and unsupported by evidence.