TaxTMI 
TaxTMI 
2015 (2) TMI 1352
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....Appellant-Company was engaged in shipping business from its premises at Mackinnon Building, Ballard Estate, Mumbai. The activities were divided into ship agency, shipping management, ship owning and operating, travel and tourism, clearing and forwarding, overseas recruitment and property owning and development. It had approximately 150 employees who were all workmen and members of the Respondent-Union. The Respondent-Union is registered under the provisions of the Trade Union Act, 1926. A letter dated 27.07.1992, purportedly a notice of retrenchment together with the statement of reasons enclosed therewith was served upon approximately 98 workmen by the Appellant-Company stating that the same will be effective from closing of business on 04.08.1992. In the statement of reasons, it was stated that the Appellant-Company was accumulating losses and the proprietors had taken a decision to rationalise its activities apart from the property owning and development department, a portion of the clearing and development business relating to contracts with the Government of India, Institutions such as, Central Railway and Lubrizol India Ltd. The Respondent-Union who are the concerned workmen ....
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....mployees to be employed in different department which are under the control of the Appellant-Company. This directly attracts items Nos. 9 and 10 of Schedule IV of the I.D. Act. Thus a notice Under Section 9A of the I.D. Act was bound to be given. This has not been done. (iv) That the Appellant-Company was bound to give notice at least 60 days before the intended closure to the State Government, this has not been done. Therefore, Section 25FFA of the I.D. Act has not been complied with by the Appellant-Company. (v) That in the seniority list prepared and relied on by the Appellant-Company large number of employees who are not junior must have been retrenched. Therefore this is in violation of the provision Under Section 25G of the I.D. Act. 4. On 28.01.1993, on the basis of the pleadings, the Industrial Court framed the following issues: 1. Whether any seniority list was displayed as provided in Rule 81 of the Industrial Disputes (Bombay) Rules, 1957? 2. Whether a Complaint for an alleged breach of the provisions of the Industrial Disputes (Bombay) Rules, 1947 is maintainable under item No. 9 of Schedule IV of the MRTU & PULP Act, 1971? 3. Whether a Complaint for an alleg....
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.... the MRTU & PULP Act, 1971 and the Bombay Rules. It was further held that the Appellant-Company had committed an unfair labour practice by committing breach of Section 25G of the I.D. Act read with Rule 81 of the Bombay Rules by not following the principle of 'last come first go'. Therefore, the Industrial Court held that breach of statutory rules and provisions of the I.D. Act and the Bombay Rules amounted to unfair labour practices as contemplated by item No. 9 of the Schedule IV of the MRTU & PULP Act. The breach of the mandatory provisions of Section 25G of the I.D. Act read with Rule 81 of the Bombay Rules was held to have been committed by the Appellant-Company. Thus, the Industrial Court answered the points of dispute and relevant contentious issues framed by it in favour of the concerned workmen and set aside the notice of retrenchment served upon them. The Industrial Court held that the rest of the unfair labour practices alleged in the complaint were not proved. The Industrial Court passed an interim order directing the Appellant-Company to cease and desist from enjoining the said unfair labour practice and continue the employment of retrenched workmen in service ....
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....vities as detailed by them in their statement of reasons appended to the retrenchment notice. Further it has been stated that in the circumstances, the Appellant-Company, according to their business needs had decided to let out a part of the premises housing their office on leave and licence basis to M/s. Urmila & Company Pvt.. Ltd.. that as the same would not be required for the Respondent-workmen as the Appellant-Company had contemplated the retrenchment of the concerned workmen. The said decision was also taken by the Appellant-Company to further ensure availability of funds to pay the employees. Therefore, the concerned workmen were retrenched from employment and their legal dues were paid as contemplated under the provisions of Section 25F Clause (b) of the I.D. Act. The retrenchment of the concerned workmen in fact came into force at the close of business on 04.08.1992 at 4:45 p.m. as per the retrenchment notice itself served upon them. Intimation of passing of the ex-parte ad interim order dated 04.08.1992 by the Industrial Court was allegedly communicated to the Appellant-Company by the Respondent-Union vide its letter dated 04.08.1992 itself at 5:30 p.m., by which time the....
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....nd concluded that the aforesaid principle of 'last come first go' was not an inflexible rule and that there must be a valid and justifiable reason for deviation from the above said principle. Further, reliance was also placed by him on other decisions of this Court in the cases of Swadesamitran Ltd., Madras v. Their Workmen AIR 1960 SC 762, Jaipur Development Authority v. Ramsahai and Anr. (2006) 11 SCC 684 and State of Rajasthan v. Sarjeet Singh and Anr. (2006) 8 SCC 508 in support of the above legal proposition. 12. It is further contended by the learned senior Counsel on behalf of the Appellant-Company that in the present case, the Respondent-Union had ample notice of the closure/retrenchment on their own admission from 30.07.1992 i.e. at least 5 days before their date of retrenchment, they had a copy of the seniority list. However, they have not at any time indicated to the Appellant-Company that there was a deviation from the principle of 'last come first go' on the part of the Appellant-Company. Further, it is urged by him that either the Industrial Court or the High Court has not been able to identify any such breach of the above mandatory provisions of the ....
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....r, it has been contended by the learned Counsel for the Appellant-Company that the Award of reinstatement and back-wages to be paid to the concerned workmen by both the Industrial Court and the High Court would not be possible in case of admitted closure of the work of one of the department/unit of the establishment and therefore there is no question of reinstatement of the concerned workmen and awarding back-wages to them and prayed for moulding the relief accordingly by this Court. It is contended by him that in the present case, it is an admitted fact that on and from 04.08.1992, the premises of the Appellant-Company's clearing department/unit had been handed over to the licensees and that no work of this Appellant-Company was being carried out by them from the said premises or elsewhere, except the two activities which were partially retained. Therefore, no back-wages are payable to the workmen as awarded by the Courts below, as the services of the concerned workmen were terminated on account of the closure of the above unit of the Appellant-Company for the reasons stated in the Annexure appended to the retrenchment notice. It is also further urged by him that it is an esta....
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....iced its case. The learned senior Counsel further placed reliance on the judgment of this Court rendered in the case of Kalinga Tubes Ltd. v. Their Workmen AIR 1969 SC 90, wherein it was held that the Company has not justified the reason of the closure of the undertaking was due to unavoidable circumstances beyond the control of the Appellant-Company therein and the compensation would be payable as if the undertaking was closed down "for any reason whatsoever" within Section 25FFF(1) of the I.D. Act. 16. Further, it was contended by him that in the case of PVK Distillery Ltd. v. Mahendra Ram (2009) 5 SCC 705, this Court has held that a direction for awarding back wages after a long interregnum is unfair and that the Industrial Court ought to have taken notice of the case where the employer has been declared sick and remained closed for many years and therefore the award of back wages in favour of the concerned workmen is unjustified in law. 17. On the other hand, the above submissions made by the learned senior Counsel on behalf of the Appellant-Company are strongly rebutted by the learned senior Counsel, Mr. C.U. Singh, appearing on behalf of the concerned workmen of the Respond....
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....y-four workmen whose services were terminated on the ground that it had closed down its Churchgate division. As already held, the closing down of the Churchgate Division was illegal as it was in contravention of the provisions of Section 25-O of the Industrial Disputes Act. Under Sub-section (6) of Section 25-O, where no application for permission Under Sub-section (1) of Section 25-O is made, the closure of the undertaking is to be deemed to be illegal from the date of the closure and the workmen are to be entitled to all the benefits under any law for the time being in force, as if the undertaking had not been closed down. The eighty-four workmen were, therefore, in law entitled to receive from September 18, 1984, onwards their salary and all other benefits payable to them under the settlement dated February 1, 1979. These not having been paid to them, there was a failure on the part of the Company to implement the said settlement and consequently the Company was guilty of the unfair labour practice specified in Item 9 of Schedule IV to the Maharashtra Act, and the Union was justified in filing the complaint Under Section 28 of the Maharashtra Act complaining of such unfair labou....
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....provisions are mandatorily to be complied with by the Appellant-Company before taking action it against the concerned workmen. 22. The learned senior Counsel further contended that the non-compliance of Section 25F Clauses (a), (b) & (c) and Section 25G of the I.D. Act read with Rule 81 of the Bombay Rules i.e. deviation from 'last come first go' principle, reasons should have been recorded by the Appellant-Company for retrenching senior workmen while retaining the juniors in the department or unit. The Appellant-Company has not made out a case in this regard by adducing justifiable reasons for retaining the junior workers in the Company and thus, they have deviated from the principle of 'last come first go'. Thus, the concurrent finding of fact recorded on this important aspect of the case is based on evidence on record, which is in conformity with law laid down by this Court. It is further contended by the learned senior Counsel that onus is on the Appellant-Company to prove as to why juniors to the retrenched workmen are retained in the department or unit of the Company pursuant to the alleged closure of the unit/department of the Appellant-Company. The same is ....
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....use of the financial condition of the Company, the Ship manning and Ship Agency Principals either set up their own separate operations or appointed other agents for India. These included our erstwhile parent company namely, P & D Steam Navigation Company, London. Apart from this, the Company has not been able to improve its financial position or set off substantially the accumulated losses, for the following reasons: 1. Stiff competition in respect of all activities. 2. Very high wages and dearness allowance and other benefits payable as per the agreement to the staff which are for higher than those paid by our competitors to their staff. 3. Abnormal increases in other infrastructural costs and overheads. 4. Decreasing work output in relation to the staff employed to work on hand. The company incurred a loss of Rs. 6.67 crores for the year ended 31st March, 1990 which rose to Rs. 6.83 crores for the year ended 31st March, 1991. During the current year the loss is likely to escalate. In most areas of our activities, including that of Clearing & Forwarding, the Company has been unable to improve its revenue by attracting fresh business. Over the past few years the Company....
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....e relevant contentious issues is further fortified by the retrenchment notice and the Statement of Reasons annexed to the same. 26. On the contention urged on behalf of the Appellant-Company is that it was a closure of the department/unit of the Appellant-Company as per the definition of "closure" Under Section 2(cc) of the I.D. Act, we are of the view that with respect to the above contentious issues framed by the Industrial Court has been answered against the Appellant-Company based on the finding of fact recorded by it. Therefore, the said contention urged on behalf of the Appellant-Company cannot be allowed to sustain in law. 27. Further, with regard to the allegation against the Appellant-Company that its action of retrenchment of the concerned workmen is in contravention with the provisions of Section 25F Clauses (a), (b) and (c) of the I.D. Act. Section 25F Clause (a) states that no workmen employed in continuous service for not less than one year under an employer shall be retrenched until the workman has been given one month's notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such n....
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....g and Forwarding department/unit of the Appellant-Company, which in fact is not proved by the Appellant-Company, by adducing positive evidence on this vital aspect except placing reliance upon the above Statement of Reasons. The said finding of fact by the Industrial Court on the contentious issue Nos. 1-3 and 7 on the part of the Appellant-Company is further supported by its conduct in not complying with the mandatory provisions Under Section 25FFA of the I.D. Act as it has not served atleast 60 days notice on the State Government before the alleged closure of the department/unit of the Appellant-Company stating its reasons for the same. In this regard, the contention raised by Mr. Jamshed Cama, the learned senior Counsel appearing on behalf of the Appellant-Company is that the above said provision is not mandatory but directory for the reason that there is a penal provision Under Section 30A of the I.D. Act and therefore, the competent authority can take penal action against the Appellant-Company for non compliance of the above said provision. Per contra, the learned senior Counsel Mr. C.U. Singh appearing on behalf of the Respondent-Union has rightly rebutted the above contentio....
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....s and other construction works and projects or in the case of small establishments employing less than fifty persons. The Bill also provides penalty for closing down any undertaking without serving the requisite notice. (Gazette of India, 06.12.1971, Pt. II, Section 2, Ext. page 893) 29. The contention urged by Mr. C.U. Singh, the learned senior Counsel for the Respondent-Union is that if the interpretation of provision Under Section 25FFA of the I.D. Act as contended by the learned Counsel on behalf of the Appellant-Company is accepted to be directory and not mandatory as it would attract the penal provision against the Appellant-Company Under Section 30A of the I.D. Act, then the purpose and intendment of the amendment in the year 1972 made to Section 25FFA of the I.D. Act, will be defeated and would nullify the Objects and Reasons for amending the provisions of the I.D. Act and it would be contrary to the legislative wisdom of the Parliament. The statutory protection has been given to the workmen under the provision of Section 25FFA of the I.D. Act, with an avowed object to protect workmen being retrenched due to closing down of a department/unit of the undertaking as the livel....
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....e are to be ascertained, not only from the phraseology of the provision, but also by considering its nature, its design, and the consequences which would follow from construing it the one way or the other.... This passage was approved by this Court in State of U.P. v. Manbodhan Lal Srivastava. In Craies on Statute Law, 5th Edn., the following passage appears at p. 242: No universal rule can be laid down as to whether mandatory enactments shall be considered directory only or obligatory with an implied nullification for disobedience. It is the duty of courts of justice to try to get at the real intention of the Legislature by carefully attending to the whole scope of the statute to be construed. A valuable guide for ascertaining the intention of the Legislature is found in Maxwell on The Interpretation of Statutes, 10th Edn., at p. 381 and it is: On the other hand, where the prescriptions of a statute relate to the performance of a public duty and where the invalidation of acts done in neglect of them would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty without promoting the essential aims of the legislature,....
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.... ultimate analysis, depend upon the intent of the law-maker. And that has to be gathered not only from the phraseology of the provision but also by considering its nature, its design and the consequences which would follow from construing it in one way or the other. We see no reason why the rule should receive a permissible interpretation instead of a preemptory construction. As we said, the rule was enacted for the purpose of enabling the Deputy Commissioner (Land Acquisition Collector) to have all the relevant materials before him for coming to a conclusion to be incorporated in the report to be sent to the Government in order to enable the Government to make the proper decision. In Lonappan v. Sub-Collector of Palghat the Kerala High Court took the view that the requirement of the rule regarding the giving of notice to the department concerned was mandatory. The view of the Madras High Court in K.V. Krishna Iyer v. State of Madras is also much the same. (Emphasis laid by this Court) 32. Further in the case of Sharif-Ud-Din (supra) it was held as under by this Court: 9. The difference between a mandatory rule and a directory rule is that while the former must be strictly obs....
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....esh AIR 1954 SC 322 and the same has been followed until now, holding that if a statutory provision prescribes a particular procedure to be followed by the authority to do an act, it should be done in that particular manner only. If such procedure is not followed in the prescribed manner as provided under the statutory provision, then such act of the authority is held to be null and void ab initio in law. In the present case, undisputedly, the statutory provisions of Section 25FFA of the I.D. Act have not been complied with and therefore, consequent action of the Appellant-Company will be in violation of the statutory provisions of Section 25FFA of the I.D. Act and therefore, the action of the Company in retrenching the concerned workmen will amounts to void ab initio in law as the same is inchoate and invalid in law. 34. It would be appropriate for us to refer to the decision of this Court in the case Babu Verghese and Ors. v. Bar Council of Kerala and Ors. (1999) 3 SCC 422, to show that if the manner of doing a particular act is prescribed under any statute, and the same is not followed, then the action suffers from nullity in the eyes of law, the relevant paragraphs of the abov....
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.... 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. 36. The learned senior Counsel for the Appellant-Company further contended that violation of the above statutory provisions of the I.D. Act and the infraction of the same on the part of the Appellant-Company in retrenching the concerned workmen must have been pleaded and proved by them, which has not been done by them in the instant case, and therefore, the finding recorded by the Industrial Court is wholly erroneous in law and the same is liable to be set aside. He further contented that the said finding of the Industrial Court has been erroneously accepted by the Division Bench of the High Court without examining the case in proper perspective and erroneously rejected the contention of the Appellant-Company as the same is devoid of ....
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....tedly 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 learned senior Counsel on behalf of the Appellant-Company placed reliance on the decision of this Court rendered in the case of Workmen of Sudder Workshop of Jorehaut Tea Co. Ltd. v. Management of Jorehaut Tea Co. Ltd. (supra), in justification of the action of the Appellant-Company retaining certain junior workmen in the department/unit at the time of retrenching concerned workmen. The relevant paragraphs are extracted hereunder: 5. The keynote thought of the provision, even on a bare reading, is evident. The rule is that the employer shall retrench the workman who came last, first, popularly known as "last come, first go". of course, it is not an inflexible rule and extraordinary situations may justify variations. For instance, a junior recruit who has a special qualification needed by the employer may be retained even though another who is one-up is retrenched. There must be a valid reason for this deviatio....
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.... rightly held that the ratio of the said case cannot be disputed, however, the facts of that case and facts of the case on hand are totally different. In Om Oil & Oil Seeds Exchange case (supra), it was established by the employer that the clerk working in a particular branch of the business had shown particular aptitude performance and considering the said performance and his expertise, the management felt in the interest of business to retain him though he is junior to other retrenched workmen, therefore, the same was held to be valid in law. The High Court has rightly held in the impugned judgment and order that in the instant case, the Appellant-Company had not adduced any such evidence or reasons of justification for retaining the junior workmen to the retrenched workmen. The reason assigned by the Appellant-Company is considered by the Industrial Court and held that there was a clear breach of Section 25G of I.D. Act read with Rule 81 of Bombay Rules in not following the principle of 'last come, first go'. The legal principle laid down in this aspect in the case of Workmen of Jorehaut Tea Co. (supra) does not apply to the fact situation of the case on hand, as the App....
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....Further, with regard to reinstatement of the concerned workmen and back-wages to be paid to them, the learned senior Counsel on behalf of the workmen has rightly placed reliance upon the case of Anoop Sharma v. Executive Engineer (2010) 5 SCC 497, wherein it was held that since termination of employment is in breach or violation of the mandatory provisions of Chapter V-A or V-B of the I.D. Act is void ab initio in law and ineffective and suffers from nullity, in the eyes of law and in the absence of very strong and compelling circumstances in favour of the employer, the Court must grant a declaration that the termination was non est and therefore the employees should continue in service with full back wages and award all the consequential benefits. Further, with respect to payment of back wages and consequential benefits, reliance was rightly placed on the decisions of this Court in the cases of Deepali Gundu Surwase v. Adhyapak Mahavidyala (2013) 10 SCC 324 and Bhuvnesh Kumar Dwivedi v. Hindalco (2014) 11 SCC 85. This Court opined thus in the case of Deepali Gundu Surwase (supra): 22. The very idea of restoring an employee to the position which he held before dismissal or remova....