Service Law – Reinstatement of employees – Drivers-members of the respondent Union were employed by appellant-Cooperative society through a settlement for pay and allowances – The settlement expired – Fresh negotiation commenced – In the negotiations, the employees demanded for a pay hike and permanency of employment – The said demand resulted into failure of settlement – Conciliation proceedings invoked – During pendency of conciliation proceedings employees resorted to strike – After a short span of strike, the employees rejoined services – Appellant retrenched the services of employees on the ground of closure of business – Respondent Union raised the concern regarding the same before the Conciliation Officer and demanded reinstatement – The appellant offered reemployment to employees on new terms and conditions, and as fresh employment – Upon failure of conciliation proceedings matter was referred to Industrial Tribunal – Tribunal set aside the termination of employees and directed reinstatement with continuity of service and 75% back wages – Appellant filed writ petition before the High Court – The High Court affirmed the findings of the Tribunal – Before the Supreme Court, the appellant submitted that, (i) it was not the case of closure but a simple case of retrenchment; (ii) it was a case of re-organising business; (iii) Tribunal was not justified in directing continuity of service; and (iv) direction to pay 75% back wages was contrary to the principles laid down by the Supreme Court – Held: The Tribunal as well as the High Court have held that the method and manner by which the workmen were retrenched clearly demonstrates that it is virtually a closure – These findings of facts are confirmed – The bonafide policy decision for reorganising business is within an enterprise’s propriety decision – However, in the instant case, the Tribunal has come to the conclusion that the entirety of business was not lost due to the strike and the retrenchment was imposed as retribution against the workmen for going on a strike – Thus, bonafide policy decision for reorganising business will not apply to the facts of the instant case – As far as direction of continuity of service and back wages are concerned, the order of retrenchment was not bonafide, once the orders of retrenchment are set aside, the workmen will naturally be entitled to continuity of service with backwages – The Tribunal had considered the matter in detail and after appreciating the oral and documentary evidence, the Tribunal directed reinstatement of the employees with only 75% back wages – The said finding was upheld by the High Court, thus cannot be interfered with by the Supreme Court u/Art.136 of the Constitution.
Dismissing the appeal, the Court
HELD: 1. With respect to the first submission of appellant, that this is not at all a case of closure but a simple case of retrenchment, the Tribunal as well as the High Court have held that the method and manner by which the workmen were retrenched clearly demonstrates that it is virtually a closure. This Court have no hesitation in confirming these findings of fact. The act of terminating the services of all the drivers at the same time, coupled with the statement of the Appellant that the entire business is closed down, was sufficient to convey to the workers and the Union that the transport business had come to a standstill and that there was no scope of continuing the business any further. Further, This Court also concur with the findings of fact about the lack of bona fide in the Appellant’s offers of re-employment on new terms and conditions, and without continuity of service. [Para 14][1064-E-G]
2. The second submission of appellant that the management has a right to organise its business based on economic considerations is well taken. There is also no quarrel with the principle of Parry & Co. Ltd. v. P.C. Pal which laid down the proposition that a bona fide policy decision for reorganising the business based on economic considerations is within an enterprise’s proprietary decision and retrenchment in this context must be accepted as an inevitable consequence. The answer is here itself, and pertains to the material requirement of bona fide of the decision. In the present case, the Tribunal has come to the conclusion that the entirety of business is not lost due to the strike and the retrenchment seems to have been imposed as retribution against the workmen for going on a strike. It is for this reason that the decision of this Court in the case of Parry Company will not apply to the facts of the present case. [Para 15][1065-B-C]
3. The further submission of the Appellant that the Tribunal is not justified in directing continuity of service, as in the case of retrenchment followed by reemployment, the workmen are not entitled to continuity of service. The Court held that there is no quarrel with the principle of law that reemployment of retrenched workmen does not entitle them to claim continuity of service as held in various cases. However, the principle laid down in these judgments will only apply to cases where the retrenchment is bona fide. The Tribunal has held that the retrenchment is not bona fide. Once the orders of retrenchment are set aside, the workmen will naturally be entitled to continuity of service with order of back wages as determined by a Tribunal or a Court of law. [Para 16][1065-D-F]
4. As regards the submission of Appellant, about the legality of awarding 75% back wages, it was argued before this court that the workmen were obligated to prove that they were not gainfully employed after the dismissal from service. The Tribunal has considered the matter in detail and after appreciating the oral and documentary evidence, the Tribunal directed reinstatement of the employees with only 75% back wages. Whether a workman was gainfully employed or not is again a question of fact, and the finding of the Tribunal as upheld by the High Court, cannot be interfered with by the Supreme Court in exercising its power under Article 136 of the Constitution of India. [Paras 17, 18][1065G; 1066-B-C] Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya (D. Ed.) & Ors. (2013) 10 SCC 324 : [2013] 9 SCR 1 – relied on.
M. L. Singla v. Punjab National Bank (2018) 18 SCC
21 : [2018] 11 SCR 455., Management of Regional Chief Engineer, Public Health and Engineering
Department, Ranchi v. Their Workmen (2019) 18 SCC 814; Mackinnon Mackenzie and Company Ltd v.
Mackinnon Employees Union, (2015) 4 SCC 544 :
[2015] 4 SCR 45; Workmen of Subong Tea
Estate,Represented by the Indian Tea Employees Union v. Outgoing Management of Subong Tea Estate and Anr. (1964) 5 SCR 602, Cement Corpn. of India Ltd. v. Presiding Officer Industrial Tribunal-cum-Labour Court and Anr. (2010) 15 SCC 754 : 2001 (1) Suppl. JT 619; Maruti Udyog Ltd v. Ram Lal and Ors. (2005) 2 SCC 638 : [2005] 1 SCR 790 – referred to.
Parry & Co. Ltd. v. P. C. Pal (1969) 2 SCR 976 – held inapplicable.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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