TaxTMI 
TaxTMI 
2015 (2) TMI 1352
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....ed on behalf of the parties in this appeal. The 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. ....
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....ment of workmen. However, there is an admitted decrease in the number of employees 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 maintain....
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....artment/unit of the Appellant-Company on the notice board prior to the date of issuance of retrenchment notice to the concerned 98 workmen as contemplated by 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 dir....
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....d and various other factors having a direct bearing on their business activities, it was found imperative for the Appellant-Company to shut down some of their activities 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 I....
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....plication of the provision of Section 25G of the I.D. Act with respect to the above principle, it was necessary to treat all the workmen in the category as one group and 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-Compan....
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.... concurrent finding of fact recorded by them on the relevant contentious issue No. 1-3 and 7 are erroneous in law and the same are wholly unsustainable in law. 14. Further, 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 clos....
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....as it recorded any finding on this aspect. In not doing so and recording the finding on this important aspect of the case against the Appellant-Company by the Industrial Court has adversely prejudiced 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 submission....
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....was a settlement arrived at between the Company and the Union under which certain wages were to be paid by the Company to its workmen. The Company failed to pay such wages from September 18, 1984, to the eighty-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 t....
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....n of the Act has come into force with effect from 14.06.1972 and he has placed strong reliance upon the Statement of Objects and Reasons of the above amended provisions, which would clearly state that the aforesaid 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 A....
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....he shipping industry. Because of severe recession in the industry from 1978 onwards, the Company's accumulated losses have been increasing dramatically from Rs. 12.41 crores as at December 1983 to Rs. 70 crores as at 31st march 1991. Because 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 ....
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....it is made very clear that the retrenchment notice served upon the concerned workmen was an action of closure of Clearing and Forwarding Section of the Appellant-Company. According to the learned senior Counsel on behalf of the Respondent-Union, the concurrent finding of fact recorded by the Industrial Court on the above 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 ....
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....s per Section 25F Clauses (a) and (c) of the I.D. Act which are mandatory in law. 28. Further on examining the aforesaid retrenchment notice referred to supra that was served upon the concerned workmen, we are of the considered view that they are retrenched from their services on account of the alleged closure of the Clearing 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 ....
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....of a notice, at least sixty days before the intended closure of an undertaking is to become effective, so that within this period prompt remedial measures could be taken, where the circumstances permit to prevent such closure. No notice will be required to be served in the case of undertaking set up for construction of buildings, roads, canals, dams 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 f....
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....mately depend on the context. The following quotation from Crawford On the Construction of Statutes, at p. 516, is also helpful in this connection: The question as to whether a statute is mandatory or directory depends upon the intent of the legislature and not upon the language in which the intent is clothed. The meaning and intention of the legislature must govern, and these 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 fou....
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....subject-matter and consider the importance of the provision disregarded and the relation of that provision to the general object intended to be secured. No doubt, all laws are mandatory in the sense they impose the duty to obey on those who come within its purview. But it does not follow that every departure from it shall taint the proceedings with a fatal blemish. The determination of the question whether a provision is mandatory or directory would, in the 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 Kera....
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....y with the said requirement leads to a specific consequence, it would be difficult to hold that the requirement is not mandatory and the specified consequence should not follow. (Emphasis laid by this Court) 33. Apart from the said decisions, this Court has followed the Privy Council of 1939 and Chancellor's decisions right from the year 1875 which legal principle has been approved by this Court in the case of Rao Shiv Bahadur Singh and Anr. v. State of Vindhya Pradesh 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 ....
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....r 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. 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 ....
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....t it. Hence, the same cannot be termed as erroneous for our interference with the. 38. 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 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.....
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....hange, Ltd. Delhi v. Their Workmen, wherein this Court has held that breach of Section 25G of the I.D. Act would not per se make the action of the Company mala fide and as such, the action of the Appellant-Company in issuing retrenchment notice to the workmen cannot be quashed ipso facto. The learned senior Counsel contented on behalf of the Appellant-Company that in the present case, the principle laid down in Om Oil & Oil Seeds Exchange's case referred to supra is aptly applicable to the case on hand. 40. We are of the opinion that the High Court has 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 insta....
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....hop (supra), wherein this Court held that the Court cannot sympathise with a party which gambles in litigation to put off the evil day, and when that day comes, prays to be saved from its own gamble. The said contention urged on behalf of the Respondent-Union must be accepted by us as the same is well founded. Therefore, we hold that moulding of the relief is not permissible in this case at this stage when the matter has reached this Court keeping in mind the legal principle laid down by this Court on this aspect of the matter in the case referred to supra. 43. 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 ....