Bombay High Court
Trade-Wings Limited vs Prabhakar Dattaram Phodkar And Ors. on 9 January, 1992
Equivalent citations: (1993)IIILLJ299BOM
JUDGMENT Ashok Agarwal, J.
1. The petitioners are Trade Wings Limited, a company, carrying on the business of Travel Agents as also Clearing and Forwarding Agents.
2. Respondents No. 1 to 9 were employed with the petitioners as Junior Assistants, Respondents No. 10 and 11 are the Presiding Officer and Member of the Labour Court and Industrial Court respectively whose decisions are impugned in the present petition.
3. Sometime in November, 1984 the management of the petitioners changed hands. It is the case of the petitioners that there were huge accumulated losses in respect of their Bombay Office. There was excess staff in the Accounts and Administrative Department. The petitioners, therefore, on 7th January, 1985 retrenched the services of Respondent No. 9 and one other, who is not before the Court. Similarly on 19th February, 1985 the petitioners retrenched the services of Respondents No. 1 to 8. Taking exception to the said order of retrenchment each of the Respondents No. 1 to 9 filed separate complaints under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (hereinafter referred to as the "MRTU & PULP Act"). The alleged offences are under Section 28 read with Schedule IV, Item 1 of the Act. According to the Respondents No. 1 to 9, the petitioners have indulged in unfair labour practice by wrongfully retrenching their services.
4. The complaints were resisted by the petitioners on the ground inter alia that the retrenchment was bona fide and had been brought about after following the requisite formalities. Common evidence was led in respect of 9 complaints. Respondents No. 1 to 9 examined three of the complainants viz. Manoj Chandrakant Mankami, Sanjeev Ramchandra Rele, and Abu Razak Sheikh. In rebuttal the petitioners examined their General Manager, Kirti Trimbalal Shah and their Administrative Manager, Madhav Narayan Nair.
5. By a judgment and order dated 20th September, 1985 Respondent No. 10, the Presiding Officer of the 8th Labour Court, Bombay, held that the petitioners had failed to display the seniority list of the employees on 24th December, 1984 and, therefore, the retrenchment dated 7th January, 1985 of Respondent No. 9 and one other was illegal. In regard to the seniority list dated 11th February, 1985 he held that even if the same were to be held as having been published, the same was in breach of the provisions of Rule 81 of the Industrial Disputes, (Bombay) Rules, 1957. Therefore, the retrenchment of Respondents No. 1 to 8 was also illegal. According to the Trial Court, the reason of retrenchment given in the termination/retrenchment letters is patently false. The retrenchment compensation tendered was short of the requisite amount inasmuch as it was calculated on the basis of monthly wages for 30 days instead of 26 days and hence short payment was no payment. The impugned retrenchment is illegal on this ground also. The Trial Court further held that the retrenchment was made in undue haste and the same was not in good faith. Pursuant to the aforesaid findings, the Trial Court held that the petitioners have engaged in unfair labour practice as contemplated in Item 1 (b), (d) and (f) of Schedule-IV of the Act. The petitioners were directed to cease and desist from continuing the unfair labour practice complained of They were directed to allow the Respondents No. 1 to 9 to resume work and carry on their normal duties.
6. Being aggrieved by the aforesaid judgment and order, the petitioners approached the Respondent No. 11, the Industrial Court, by filing separate revision applications. By a common judgment and order dated 4th April, 1986 the learned Respondent No. 11 set aside the finding of the learned Respondent No. 10 in regard to the unfair labour practice under Item No. 1 (d) of Schedule IV i.e. to discharge or dismiss employees for patently false reasons. He, however, confirmed the findings of the learned Respondent No. 10 in respect of the unfair labour practice under Item No. 1 (b) and (f) of Schedule IV i.e. to discharge or dismiss employees not in good faith, but in the colourable exercise of the employer's rights and in utter disregard of the principles of natural justice and with undue haste.
7. Taking exception to the above judgment and orders, the petitioners have preferred the present petition.
8. I have with the assistance of the learned Counsel appearing for the contending parties gone through the judgments of both the Trial Courts as also the Revisional Court and also the material evidence on record. In my judgment, the findings arrived at by both the Courts that the impugned retrenchment is illegal, is justified on the materials on record and no interference is called for in the present petition.
9. The first retrenchment dated 7th January, 1985 is sought to be justified by publishing a seniority list on 24th December, 1984. By the said order of retrenchment, Respondent No. 9 and one other person who is not before the Court, are retrenched. The Trial Court on appraisal of the evidence held that the petitioners had not displayed the seniority list on 24th December, 1984 as alleged. It found that though 24th December, 1984 was not a weekly off, the office of the petitioners was closed on account of the elections to the Parliament. The Revisional Court has chosen not to interfere with the said finding. The said finding is a finding of fact. I find no good reason to interfere with the same. Once it is held that the petitioners have failed to display the seniority list on 24th December, 1984 it follows that there is breach of Rule 81 of the Industrial Disputes (Bombay) Rules, 1957 which requires the employer to prepare a list of all workmen in the particular category from which retrenchment is contemplated arranged according to the seniority of their service in that category and cause a copy thereof to be posted on a Notice Board in conspicuous place in the premises of the industrial establishment at least seven days before the actual date of retrenchment. A Division Bench of this Court in the case of Navbharat Hindi Daily v. Navbharat Shramik Sangha reported in 1984 LAB.I.C. page 445, held that strict compliance of Rule 81 is necessary. The said provisions being mandatory the order of retrenchment of Respondent No. 9 will have to be quashed.
9A. As regards the order of retrenchment dated 19th February, 1985 in respect of Respondents No. 1 to 8, the Revisional Court has refused to interfere with the finding of the Trial Court stating that the said seniority list even if held to be displayed does not comply with the provisions of Rule 81 of the Industrial Disputes (Bombay) Rules 1957. 1 will therefore take for consideration the issue regarding legality or otherwise of the seniority list dated 11th February, 1985 which will decide the fate of Respondents No. 1 to 8. The said seniority list is annexed at Exhibit-C to the petition. It consists a list of 15 Junior Assistants in the Accounts Department. Out of 15, Junior Assistants at Sr. Nos. 7 to 15 have been retrenched. The workman at Sr. No. 8, Shri D.D. Jadhav did not impugn his retrenchment and it is therefore, not necessary to deal with his case. In the Bombay office the Company has three departments, first is clearing and Forwarding Departments, second is Travelling Department, and the third is Accounts and Administrative Department. The list itself mentions that the category of the workmen are Junior Assistants in Accounts Department. Kirti Trimbalal Shah, the General Manager of the petitioner has deposed that the said seniority list is in respect of the Junior Assistants (Accounts Department). The said witness has further stated that the Bombay office consists of the following posts viz. 1) Chief Accountant, 2) Accountant, 3) Assistant Accountant, 4) Sr. Assistant, 5) Junior Assistant, 6) Sr. Stenographer, 7) Jr. Stenographer, 8) Clerks, 9) Typists, 10) Chief Cashier, 11) Peons. He has further stated that in the departments of the Company the categories of Sr. Assistants, Junior Assistants etc, are common categories. According to him, the total strength of Junior Assistants as on 31st December, 1984 was approximately 26. He conceded that the Punch Operators are treated as Junior Assistants. He further conceded that the purported seniority list displayed on 10th February, 1984 was only in respect of the Junior Assistants, Account Department. He has admitted that Shri Karvei Respondent No. 9, was working as a clerk in the General Department. He further stated that the seniority list of category of Junior Assistants (Accounts) was only displayed on 11th February, 1985.
10. From the above evidence, which is evidence of none else but the evidence of the General Manager of the petitioners, it will reveal that the seniority which was displayed on 11th February, 1985 was in respect of only Junior Assistants in the Accounts Department. It Is further clear that the petitioners have more than one departments viz. 1) Clearing and Forwarding Department 2) Travel Department and 3): Accounts and Administrative Department. There are Junior Assistants both in the Accounts Department and the other Department. Hence what was required on the part of the petitioners was to publish seniority list, category wise, i.e. of all the Junior Assistants in all its departments.
We have then the evidence of Madhav Narayan Nair, Administrative Officer of the petitioners. He has also deposed that the seniority list displayed on 11th February, 1985 was in respect of Junior Assistants in the Accounts Department. Since the list which was displayed was only in respect. of the Junior Assistants in the Accounts Department, the same would not comply with the mandatory requirement of Rule 81 of the Industrial Disputes (Bombay) Rules, 1957 and Section 25G of the Industrial Disputes Act. Rule 81 of the Industrial Disputes (Bombay) Rules enjoins upon the employer before effecting retrenchment to prepare a list of workmen in the particular category from which retrenchment is contemplated arranged according to the seniority or their service in that category. The object of the Rule is apparent. It is to ensure the due compliance of Section 250 i.e. lass come first go. In the present case what has been done is a display of seniority list only of the Accounts Department and not in respect of Junior Assistants of the other departments of the petitioner Company. The provisions of Rule 81 are mandatory and, therefore, breach of the same would render the retrenchment invalid. The order of retrenchment of Respondents No. 1 to 8 will, therefore, have to be quashed.
11. There is yet another ground on which the impugned order of retrenchment deserves to be quashed. It is common ground that while effecting the impugned retrenchment, the petitioners have paid retrenchment compensation calculated on the basis of the monthly wages for 30 days and not 26 days. It is contended on behalf of the retrenched workers that this amounts to short payment which is equivalent to no payment and hence the impugned retrenchment is invalid as having been made with undue haste and not in good faith.
12. The Trial Court accepted the said contentions whereas the Revisional Court has rejected the same. The short question that arises for consideration is whether the retrenchment compensation is payable on the basis of the monthly wages for 30 days or for 26 working days. Section 25F of the Industrial Disputes Act insofar as the same is relevant for the present controversy provide that no workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until-
(a) the workman has been given one month's notice in writing indicating the reason for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice:
(b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days' average pay (for every completed year of continuous service) or any part thereof in excess of six months. It has been held by the Supreme Court in the case of Jeevanlal (1929) Ltd. etc., etc. v. Appellate Authority under the Payment of Gratuity Act and Ors. as follows:-
For the purpose of computation of "fifteen days wages" of a monthly rated employee under Sub-section (2) of Section 4 the monthly wages last drawn by him should be treated as wages for 26 working days and his daily rate of wages should be ascertained on that basis and not by taking the wages for a month of 30 days or fixing his daily wages by dividing his monthly wages by 30.
13. Counsel for the petitioner, however, contends that the above decision of the Supreme Court pertains to the provisions of Payment of Gratuity Act and the same can have no application to a case under Section 25F of the Industrial Disputes Act. Section 4(2) of the Payment of Gratuity Act provides as under:
4 (2) For every completed year of service or part thereof in excess of six months the employer shall pay gratuity to an employee at the rate of fifteen days wages based on the rate of wages last drawn by the employees concerned.
Provided that in the case of a piece rated employee daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his employment and for this purpose the wages paid for any overtime work shall not be taken into account.
Provided further that in the case of an employee employed in a seasonal establishment the employer shall pay the gratuity at the rate of seven days wages for each season".
14. The Counsel for the petitioner further points out that Section 25F(b) requires that the workmen should be paid retrenchment compensation equivalent to 15 days average pay for every completed year of continuous service. He points out that the term "average pay" is denned under Section 2(aaa) as under "average pay" means the average of the wages payable to a workman-
(i) in the case of monthly paid workman, in the three calendar months.
(ii) in the case of weekly paid workman, in the four complete weeks.
(iii) in the case of dally paid workman, in the twelve full working days.
The Counsel submits that the concept of average pay is totally absent in the Industrial Disputes Act. Therefore, the decision of the Supreme Court rendered under the Payment of Gratuity Act cannot be imported while construing the provisions of Section 25F of the Industrial Disputes Act.
15. In my judgment both under the payment of Gratuity Act, as also the Industrial Disputes Act what is made payable is 15 days wages. Whether the said wages are computed on the basis of 30 days calendar month or 26 working days is a question, which is common, in both the enactments. The Supreme Court in the above case has approved the view that an employee never works for all the 30 days of the month. He gets 52 days in a year as paid holidays. A worker gets full month's wages not by remaining on duty for all the 30 days in a month but by working and doing duty for only 26 days. Ordinarily of course of a month is understood to mean 30 days but the manner of calculating gratuity on the basis of 26 working days is reasonable. In my judgment, there is no significant distinction between the provisions of Section 4(2) of the Payment of Gratuity Act and Section 25F of the Industrial Disputes Act, so as not to make applicable the above decision which is rendered under the Payment of Gratuity Act to the case at hand. Merely because the phrase "average pay" has been separately defined under Section 2(aaa) of the Industrial Disputes Act, that does not detract from the view that retrenchment compensation should be computed on the basis of the monthly pay in respect of 26 working days. I see no reason why the said principle should not apply to the provisions of Section 25F of the Industrial Disputes Act. Hence I hold that the retrenchment compensation payable under Section 25F(b) of the Industrial Disputes Act is required to be computed on the basis of workman's monthly wages for 26 working days. The fifteen days average pay has to be worked out on the basis of his monthly wages drawn by him for 26 working days. His daily rate of wages should be ascertained on the basis of the wages earned for 26 working days. Therefore for a valid termination the fifteen days' average pay has to be worked out on this basis and not by taking the wages for a month of 30 days. Once it is held that 15 days wages which are to be calculated for the purpose of payment of retrenchment compensation are to be calculated on the basis of wages for 26 working days it follows that the retrenchment compensation paid in the instant case is a short payment which in law is no payment at all. The retrenchment for want of proper retrenchment compensation is, therefore, liable to be quashed.
16. For the foregoing reason I find that the present petition is without merit and the same is dismissed.
There shall, however, be no order as to costs.