Gujarat High Court
Solitaire Machine Tools Ltd vs Harish M Vaghela on 2 March, 2020
Author: Sonia Gokani
Bench: Sonia Gokani
C/SCA/6433/2009 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 6433 of 2009
FOR APPROVAL AND SIGNATURE:
HONOURABLE MS JUSTICE SONIA GOKANI
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1 Whether Reporters of Local Papers may be allowed to
see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law
as to the interpretation of the Constitution of India or any
order made thereunder ?
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SOLITAIRE MACHINE TOOLS LTD
Versus
HARISH M VAGHELA
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Appearance:
VMP LEGAL(7210) for the Petitioner(s) No. 1
MR TR MISHRA(483) for the Respondent(s) No. 1
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CORAM: HONOURABLE MS JUSTICE SONIA GOKANI
Date : 02/03/2020
ORAL JUDGMENT
1. 1. The petitioner-Company has preferred this petition, under Article 226 and 227 of the Constitution of India, seeking to challenge the judgment and award passed by the Labour Court, Vadodara, in Reference (L.C.V.) No. 618 of 2002, Dated: 04.10.2008, whereby, the Labour Court directed the petitioner to reinstate the respondent on his original post with continuity of service and 50% back-wages so also the costs of Rs.1,000/-.
2. The facts in capsulized form are as under:
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The petitioner is the Company, incorporated under the
Companies Act, 1956, and it is engaged in the business of machine tolls since the year 1988. The petitioner had obtained license from J.B.S. Machinery Corporation to sell center less grinders in the year 1987 and for the purpose of carrying out the said activity, it had employed workers for various purposes viz., boring, grinders, marking, assembly shop etc.. These posts were designated as machinist, fitter / machinist, turner / machinist, surface grinder operator, marker, machinist Computer Numeric Control (in brief, 'CNC') etc.. The respondent, herein, who possesses the qualification of 12th Class pass, applied for the post of Machinist with the petitioner-Company and in pursuance of the same, he came to be appointed on 01.07.1995, initially, on a probation period of six months vide appointment letter dated 30.06.1995.
2.1 It appears that in January, 2002, the petitioner-Company employed 23 employees on various posts and a Seniority List, was also prepared department wise. As per the said Seniority List, the respondent, herein, was the second last in Machine Shop department, with the designation as Machinist. The petitioner, at the relevant point of time, was producing centre less grinding machine of Model No.2, on boring machine without CNC, i.e. at that point of time, it was operated manually.
2.2 It is the say of the petitioner-Company that, at the relevant point of time, the machine tool business was passing through recession and the demand for machines, which the petitioner-Company was manufacturing, was not supporting the manpower strength, the petitioner-Company had at that point of time. The petitioner, therefore, thought it fit to retrench the respondent along with two other employees and the petitioner came to be retrenched from services vide order dated 31.01.2002. As per the said order, the respondent, at the time of his Page 2 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT retrenchment, had been paid one month's notice pay along with retrenchment compensation, equivalent to 15 days average pay for every completed year of continuous service so also salary for the month of January, 2002 along with gratuity. Thus, the respondent, in all, was paid a sum of RS.39.823.68/- by way of a cheque dated 31.01.2002, which was accepted by the petitioner. The respondent was also sent the Seniority List, as on 25.01.2002, vide order dated 31.01.2002. The petitioner-Company also gave a notice dated 25.01.2002 to the Secretary, Government of Gujarat, Education & Labour Department, as prescribed under Rule 80 of the Industrial Disputes Rule, 1966 ('the Rules', in short, read with Section 25F of the Industrial Disputes Act, 1947 ('the ID Act', herein after).
2.3 It is the grievance of the petitioner that, after accepting the amount of gratuity as well as retrenchment compensation along with gratuity, the respondent raised demand vide letter dated 11.02.2002 through Baroda Labour Union, seeking reinstatement. It is the say of the petitioner that, since, temporary work for about 20 days was available, it had informed the respondent about the same vide letter dated 20.03.2002 as well as another employee, namely Mr. Jagdish G. Mahida, to report for the work. It was clarified in the said letter that the work shall be offered to the person, who reports first. The petitioner- Company, then, received a letter from the respondent, Dated:
20.03.2002, wherein, it was stated that the letter sent by the petitioner- Company on 20.03.2002 was received by the respondent on 05.04.2002. It was also alleged by the respondent that when he reported for work, he was not offered work on 06.04.2002, as by that time, another employee, namely Mr. Mahida, had reported and he had already been given the work.
2.4 According to the petitioner, on the one hand, the respondent Page 3 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT accepted the notice pay, retrenchment compensation so also gratuity without any protest and he also did not report for work and on the other hand he raised the dispute, challenging the order of his retrenchment, which was referred for adjudication vide order of Reference dated 16.05.2002 to the Labour Court concerned, where, the petitioner-
Company filed its written-statement in August, 2002.
2.5 It is the say of the petitioner that with a view to remain in the competitive market, it had to modernize its machines for manufacture of centre less grinding machine, where, Model Nos.1 and 3 were in demand, whereas, Model No. 2 was needed to be upgraded with the latest technology. The petitioner-Company was also required to install boring machines with CNC operations for better quality product. According to the petitioner, a person holding a degree or diploma in Mechanical Engineering or having knowledge of computer, together with experience to operate CNC Machine would be able to operate boring machines having CNC technology.
2.6 It appears that, pursuant to an advertisement given by the petitioner-Company on 26.02.2003, the respondent applied for the job of Assembly Fitter on 30.01.2003. However, the same came to be rejected by the petitioner-Company vide letter dated 06.03.2003 on the ground that the respondent was not suitable for the said post. Since, the petitioner-Company had modernized its plant, it requires the persons, having qualification or experience to operate CNC machines. The petitioner-Company, therefore, gave another advertisement in July, 2003, where, the respondent wrote a letter dated 09.10.2003 to the petitioner-Company. However, the respondent was not called for the work, as, according to the petitioner-Company, he is not qualified to operate CNC machines.
Page 4 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020C/SCA/6433/2009 JUDGMENT 2.7 Then, again, the petitioner-Company gave advertisement on 24.11.2005 for the job of Boring Operator, where, the respondent applied on 25.11.2005. The respondent was informed vide letter dated 30.12.2005 that the interview shall be conducted on 09.01.2006 and along with the same, the respondent was also sent a common questionnaire with regard to CNC applications, where, the respondent, vide letter dated 05.01.2006, clarified that he had not applied to work on CNC machines, but, he had applied for job of boring machines only and he did not attend the interview on 09.01.2006, accordingly. In short, it is the stand of the petitioner-Company that the respondent is not having necessary qualifications for the job and he did not even attend the interview, and therefore, his application could not be accepted.
2.8 It appears that some of the machines were being manually operated in the year 2003-2004. The invoices for sale of machines were also produced before the Labour Court. Further, the balance sheets for the year 2004-2005 and 2005-2006 were also produced before the Labour Court to point out that because of the modernization of the plant, the petitioner-Company could not make the profit.
3. In the above background, the petitioner-Company is before this Court, seeking following reliefs:
"17. ...
A. Your Lordships may be pleased to issue a writ of certiorari or a writ in the nature of mandamus or any other appropriate writ or order of direction to quash and set aside the award dated 04/10/2008 passed by the Labour Court, Baroda in Reference (L.C.V.) No. 618 of 2002 at Annexure "Q" to the petition;
B. Pending the hearing and final disposal of the present petition, Your Lordships may be pleased to stay the award dated 04/10/2008 passed by the Labour Court, Page 5 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT Baroda in Reference (L.C.V.) No. 618 of 2002 at Annexure "Q" to the petition;
C. Ex-parte ad-interim relief in terms of Prayer-B above may kindly be granted;
D. ..."
4. This Court (Coram: Mr. S.R. Brahmbhatt, J.), while issuing notice on 01.07.2009, stayed the operation, execution and implementation of the impugned award qua backwages only. The petitioner-Company, therefore, reinstated the respondent in service in the year 2009 and since then, he is working with the petitioner-Company.
4.1 This Court has heard the learned Advocate, Mr. Patel, for the petitioner, who has argued along the line of the memo of the petition, emphasizing that the modernization of the plant had rendered many workers useless. It is, further, urged that it is the right of the employer to continue or to retrench a workman and it is not for the Labour Court to question the wisdom of the management. It is, further, urged that in absence of any evidence regarding unfair labour practice or victimization on the part of the petitioner-Company, the Labour Court could not have passed the impugned award and thereby, it has exceeded its jurisdiction in deciding, whether, the action of the petitioner-Company of retrenchment was proper or not. It is again urged that it is the wisdom of the employer and management to take a call to take steps to survive and to grow its business in the competitive world by upgrading the technology and by employing the qualified persons. It is urged that the Labour Court failed to consider that the respondent has accepted the notice pay, retrenchment compensation, gratuity etc. without any protest or objection, and therefore, the respondent has no right to challenge the order of his retrenchment. It is also urged that the grant of 50% backwages is also impermissible, as there was no breach Page 6 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT of any of the provision of the ID Act and the respondent has failed to prove that aspect.
4.2 In support of his say, he has relied on the decision of the Calcutta High Court in 'PARRY & CO. LTD. VS. P.C. PAL, JUDGE OF THE SECOND INDUSTRIAL TRIBUNAL, CALCUTTA AND OTHERS', AIR 1970 SC 1334. He also has placed reliance on the decision of this Court in 'TORRENT POWER LTD. VS. CHELABHAI NATHABHAI LUHAR', 2018 (1) GLR 392.
5. Per contra, learned Advocate, Mr. Mishra, appearing for the respondent has fervently urged that the respondent has been working with the petitioner-Company since 2009. It is, further, urged that he has passed 12th Standard so also the examination of machinist from ITI. He was diligently working with the petitioner-Company even after the use of the modern technology and there was no complaint against him. It is, further, urged that his retrenchment was completely illegal, and therefore, the Labour Court also held in terms that the same cannot be sustained. It is, further, urged that it is not at all difficult for the respondent to operate these machines and at the best, if required, he is ready and willing to undergo any training that the petitioner-Company may impart. It is contended that he has been operating these machines for years, and therefore, the same cannot be a ground to throw him out of the job. He is young and requires service.
5.1 He has relied on the decision, in support of his say, of the Apex Court in 'NOVARTIS INDIA LTD. VS. STATE OF WEST BENGAL AND OTHERS', 2009 II LLJ 41, so also on the decision of the Division Bench of this Court in 'AGRICULTURE PRODUCE MARKET COMMITTEE VS. KANUBHAI LAXMANBHAI PATEL', 2009 LLJ 73 (Gujarat).
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6. Having heard, extensively, the learned Advocates on both the sides, the law on the subject would require consideration, at this stage.
6.1 In 'PARRY & CO. LTD.' (Supra), the challenge was made to the propriety of the order of retrenchment so also the reasonableness of the policy decision, alleging absence of good reasons for relinquishing agencies, alleging that artificial condition to show fall in business and surplus staff was created to break the union. The relevant observations run as under:
" 14. It is well established that it is within the managerial discretion of an employer to organise and arrange his business in the manner he considers best. So long as that is done bona fide it is not competent of a tribunal to question its propriety. If a scheme for such reorganisation results in surplusage of employees no employer is expected to carry the burden of such economic dead weight and retrenchment has to be accepted as inevitable, however unfortunate it is. The Legislature realised this position and therefore provided by sec. 25F compensation to soften the blow of hardship resulting from an employee being thrown out of employment through no fault of his. It is not the function of the Tribunal, therefore, to go into the question whether such a scheme is profitable or not and whether it should have been adopted by the employer. In the instant case, the Tribunal examined the propriety of reorganisation and held that the company had not proved to its satisfaction that it was profitable. The Tribunal then held (a) that the scheme was' not reasonable inasmuch as the number of agencies given up in Madras was less than that in Calcutta, (b) that though development of manufacturing activity was taken up in Madras, no such activity was undertaken in Kidderpore, and (c) that the company should have developed its manufacturing activity in Kidderpore simultaneously with the surrender of the agencies. It is obvious that while reorganising its business it is not incumbent on the company to develop its manufacturing side at the very place where it has surrendered its agencies, namely, Calcutta, nor to do so at the very same time. These considerations which the Tribunal took into account were totally extraneous to the issue before Page 8 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT it and the Tribunal ought not to have allowed its mind to be influenced by such considerations and thereby disabling itself from viewing the issue from proper perspective. It was also beyond its competence to go. into the question of propriety of the company's decision to reorganise its business. Having come to the conclusion that the said policy was not actuated by any motive of victimisation or unfair labour practice and therefore was bona fide, any consideration as to its reasonableness or propriety was clearly extraneous. Therefore, its finding that the company had failed to establish that it was profitable was incompetent. It is for the employer to decide whether a particular policy in running his business will be profitable, economic or convenient and we know of no provision in the industrial law which confers any power on the tribunal to inquire into such a decision so long as it is not actuated by any consideration for victimisation or any such unfair labour practice.
15. The finding that the policy decision was actuated by parochial considerations, namely, for transferring the company's resources from Calcutta to Madras at the cost of the former, was without evidence and was entirely speculative. Even assuming that the company had decided to concentrate its activity in Madras there is nothing in the industrial law to compel it to continue its business in Calcutta. As regards the Tribunal's finding that there was no surplusage in spite of the company having given up more than half of its agencies, the manager produced the statement, Ex. G, showing 'that on his calculations there would be a surplusage of 66 employees. The Tribunal rejected the case of surplusage on the grounds that though 4 agencies were given up 989 in Calcutta in 1960 the company had during that year engaged 17 temporary employees, that there was overload of work on the remaining employees after retrenchment and that retrenchment could have been avoided by transferring the retrenched employees to other branches especially as their conditions of service included the liability of being transferred. It is true that no retrenchment was carried out in 1960 and there was evidence of the union's secretary that work had accumulated when he gave his evidence in January 1962. These facts, however, would not by themselves mean that there was no surplusage and that retrenchment was unjustified. As laid down in Workmen of Subong Tea Estate(x), it is for the management to decide the strength of its labour force to carry out efficiently the Page 9 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT working of its undertaking. If, as a result of reorganisation, the number of its existing employees exceeded the reasonable and legitimate needs of the undertaking the management, subject to its obligation to pay compensation, can effect retrenchment. So long as retrenchment carried out is bona fide and not vitiated by any consideration for victimisation or unfair labour practice and the employer comes to the conclusion that he can carry on his undertaking with reasonable efficiency with the number of employees retained by him after retrenchment, the Tribunal ought not ordinarily to interfere with such decision., The fact that in 1960 17 temporary appointments were made or that the union's secretary deposed that work had accumulated would not mean that the surplusage calculated by the manager was unjustified. Accumulation of work at a given point of time, unless it is constant, may be seasonal or due to various reasons and not necessarily because there was no surplusage. The management had worked out the surplusage which would occur in consequence of their giving up the agency business. Barring the bare statement of the union secretary that work had accumulated and that employees were doing overtime work there was no rival data available to the Tribunal to come to the startling conclusion that there would be no surplusage at all even though a little more than half of the agency business was given up. Such a conclusion could be arrived at only on the assumption that the accumulation of work was permanent, which assumption could not follow from the evidence.
16. As regards the company's refusal to transfer the retrenched employees, the Tribunal's finding was clearly against law. The liability of an employee to be transferred and the right of the company to transfer him did ,not mean that there was a corresponding obligation on the company to transfer the employee to another branch. No evidence was led by the union to show that if transferred, these workmen could have been absorbed at other places, either because there were vacancies or that the work there was the same as was done by them at Calcutta. There was equally no evidence whether wage-scales, dearness allowance and other conditions of service were the same in Madras and other centres. It is true that the company had started developing its manufacturing business in Madras but the Tribunal made no enquiry whether these employees could have been fitted in the manufacturing work when they had Page 10 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT done only administrative and other duties connected with the agency business, yet, the Tribunal drew the conclusion that because the company failed to transfer these employees to other centres retrenchment was not justified.
17. Equally the Tribunal's decision on rule 77 was contrary to its provisions. The rule by sub-cl. 1 provides that when an employer finds it necessary to retrench any workman he shall at least one month before the date of actual retrenchment give notice thereof to the Labour Commissioner and to the Conciliation 'Officer. The proviso to it states that where an employer retrenches any workman with immediate effect by paying him wages in lieu of notice he shall immediately after such retrenchment give notice thereof to the said officers. Obviously, sub-cl. 1 did not apply to the facts of this case. It is true that the notice was given two days before the actual retrenchment and was not given "immediately". But the Tribunal could not conclude that since the notice was not given immediately after retrenchment the proviso did not apply, and therefore, it would be sub-cl. 1 which would be applicable and since one month's notice was not given the retrenchment was invalid. In our view such a conclusion was not only incorrect but contrary to the very object of the rule. We are in agreement with the learned Single Judge that though the notice was not given immediately after the retrenchment but two days before it, the company had substantially complied with the requirements of the proviso. The object of the proviso clearly is that where it is not possible, for an employer to give one month's notice to the two authorities concerned by reason of his retrenching the employees with immediate effect, information should be supplied to the two officers immediately after such retrenchment. H instead of giving such information after the retrenchment it is given two days before the retrenchment takes place it is hardly possible to say that the requirement of the proviso was not carried out. So long as the object underlying the proviso was satisfied it did not make any difference that information was given a little earlier than the date when retrenchment took place."
6.2 This Court, in TORRENT POWER LTD.' (Supra), was considering the discharge from service of the workman, on the ground that he had settled for illegal gratification as a consideration to conceal Page 11 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT overload supply of electricity from the employer, where, this Court observed and held as under:
"12. It is noticed that the Labour Court and the appellate Court were swayed away by a misconception that a discharge simpliciter is necessarily retrenchment. After recording reasons for impeaching the order of discharge, a presumption came to be raised that the discharge simpliciter amounted to retrenchment and that in absence of observations of Section Page 36 of 49 HC-NIC Page 36 of 49 Created On Sat Aug 12 06:07:29 IST 2017 C/SCA/10126/2014 JUDGMENT 25-F of the ID Act, the order of discharge was not sustainable. 12.1. Retrenchment within the meaning of Section 25-F is one of the species of the discharge simpliciter. Section 25-F of the ID Act confines the protection to retrenched workman only. With the exceptions enumerated in clauses (a), (b), (bb) and (c), the retrenchment as is defined under Section 2(oo) means termination of the service of a workman for any reason whatsoever otherwise than as punishment. The expression "for any reason whatsoever" used in Section 2(oo) of the Act may cast an impression as if all non-penal terminations except those specifically excluded from the definition as above would amount to retrenchment. The definition in Section 2(oo) read with Section 25F, 25G and 25H of the ID Act makes it clear that the retrenchment would mean non- penal termination by the reasons of the workman being rendered surplus. The legal position in this regard is exhaustively explained In Kamleshkumar Rajanikant Mehta v. Central Government Industrial Tribunal No.1, & Anr. (supra) wherein in paragraphs no. 12 to 22 and 28 it is observed thus:
"12. This brings us to the main bone of contention between the parties. On behalf of the petitioner, it was urged by Mr. Udeshi that termination of the petitioner's service on the ground of loss of confidence would be retrenchment under S. 2(oo) of the Industrial Disputes Act and since the Bank had failed to pay the retrenchment compensation in breach of S. 25F(b) of the Act, the petitioner was entitled to reinstatement with continuity of service, full back wages and other benefits.
13. On the other hand, Mr. Damania, the learned counsel appearing on behalf of the Bank, urged that termination Page 37 of 49 HC-NIC Page 37 of 49 Created On Sat Aug Page 12 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT 12 06:07:29 IST 2017 C/SCA/10126/2014 JUDGMENT of service on account of loss of confidence does not, and cannot, amount to retrenchment within the meaning of S. 2(oo) of the Act, with the result that the provisions of S. 25F(b) are not attracted.
14. In order to appreciate these rival contentions urged before us, it would be pertinent to analyse the definition of "retrenchment". "Retrenchment" is defined in the Oxford English Dictionary as the act of cutting down, off, or out; curtailment limitation, reduction; the act of excising, deleting, or omitting; the act of economising or cutting down expenditure. It would, however, be trite to say that where an enactment itself provides the meaning, it is from the four corners of the enactment itself that the meaning must be gathered. For that, we turn to S. 2(oo) where "retrenchment"
is defined. Section 2(oo) reads as under :
"'retrenchment' means the termination by the employer of the service of a workman for any reason whatsoever otherwise than as a punishment inflicted by way of disciplinary action, but does not include, -
(a) voluntary retirement of the workmen, or
(b) retirement of the workmen on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf, or
(c) termination of the service of a workman on the ground of continued ill-health;"
In this petition, we are not concerned with sub-clauses (a) to
(c). An analysis of this definition in so far as the Page 38 of 49 HC-NIC Page 38 of 49 Created On Sat Aug 12 06:07:29 IST 2017 C/SCA/10126/2014 JUDGMENT present controversy is concerned, reveals 4 essential ingredients, namely, (1) there must be a termination of the service of a workman, (2) the termination must be by the employer, (3) for any reason whatsoever, and (4) otherwise than as by way Page 13 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT of punishment inflicted by way of disciplinary action. It is the 3rd ingredient that needs dissection and which has given rise to the controversy between the parties before us. What is the meaning of "for any reason whatsoever" ? On behalf of the petitioner, it was urged that these words are so tremendously wide, so as to include within their scope and ambit any conceivable reason for terminating the services of the workman, including loss of confidence. What we have, therefore, to determine is whether the words "for any reason whatsoever" in S. 2(oo) are so wide in their scope and admit so as to include all sins of commission and omission, with the result that even if the service of a worker is terminated, say, for insubordination, inefficiency or loss of confidence, would the same amount to retrenchment ?
15. We are unable to give the words "for any reason whatsoever" in S. 2(oo), the utterly wide scope and ambit that Mr. Udeshi invites us to do. The essential and basic element of "retrenchment" is surplus age. In other words, when an employer in an existing and running concern or industry, finds that he has staff or labour which is in excess of the number required and hence is surplus, the services of such as are in excess can be terminated and such termination would be retrenchment. The termination of service of workers due to closure of the Page 39 of 49 HC- NIC Page 39 of 49 Created On Sat Aug 12 06:07:29 IST 2017 C/SCA/10126/2014 JUDGMENT business or industry cannot be described as retrenchment. Surplus age in a running business or industry is the very basis of retrenchment. When can an employer be faced with the problem of surplus age, i.e. having surplus staff or labour ? The answer is obvious. He may want to cut down on expenditure, he may want to introduce new about-saving devices, are but two illustrations. Such is the motivation for pruning the labour or staff found to be in excess. In that event, the employer can tell his workers, "Amongst you all, A, B and C are in surplus. I, therefore, do not require you. I terminate your services. Take your compensation under S. 25F, and go." That is the concept of retrenchment. It is merely the discharge of surplus staff or labour in a running or continuing business or industry, for certain reasons illustrated above. If the termination is for any other reason, say, for loss of confidence, it is not retrenchment. Thus the expression "for any reason whatsoever" in S. 2(oo), even though seemingly wide, must necessarily draw within its Page 14 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT ambit, not any sin of commission and omission on the part of the workman but the concept that the termination of the surplus workers' service is due to reasons such as economy, nationalisation in industry, intailation or improvement of new labour-saving machinery or device, standardisation or improvement of plant or technique and the like. It is in conjunction with such reasons that the words "any reason whatsoever" must be read and construed. Thus, even without resorting to the dictionary meaning of "retrenchment", the same meaning can be extracted from S. 2(oo) itself. As observed by the Supreme Court in Hariprasad's case, Page 40 of 49 HC-NIC Page 40 of 49 Created On Sat Aug 12 06:07:29 IST 2017 C/SCA/10126/2014 JUDGMENT referred to hereinafter, in using the expression "for any reason whatsoever" in S. 2(oo), what the Legislature tells the employer is that it does not matter why he is discharging the surplus workers or staff; if the other requirements of the definition are fulfilled, then it is retrenchment.
16. The leading authority for this proposition is the case of Hariprasad v. A. D. Divalkar, A.I.R. 1957 S.C. 121, where the determination of the words "for any reason whatsoever"
came up for consideration before a Bench of 5 Judges of the Supreme Court. At page 127 of the report, it was observed as under :
"........ We agree that the adoption of the ordinary meaning gives to the expression 'for any reason whatsofever'a somewhat narrower scope; one may say that it gets a colour from the context in which the expression occurs; but we do not agree that it amounts to importing new words in the definition. What after all is the meaning of the expression 'for any reason whatso ever' ? When a portion of the staff or labour force is discharged as surplusage in a running or continuing business, the termination of service which follows may be due to a variety of reasons; e.g., for economy, rationalisation in industry, installation of a new labour saving machinery, etc. The Legislature in causing the expression 'for any reason whatsoever' says in effect : 'It does not matter why you are discharging the rusplus; if the other requirements of the definition are fulfilled, then it is retrenchment.' In the absence of any compelling words to indicate that the intention was even to include a Page 41 of Page 15 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT 49 HC-NIC Page 41 of 49 Created On Sat Aug 12 06:07:29 IST 2017 C/SCA/10126/2014 JUDGMENT bona fide closure of the whole business, it would, we think, be divorcing the expression altogether from its context to give it such a wide meaning as is contended for by learned counsel for the respondents. What is being defined is retrenchment, and that is the context of the definition. It is true that an artificial definition may include a meaning different from or in excess of the ordinary acceptation of the word which is the subject of definition; but there must then be compelling words to show that such a meaning different from or in excess of the ordinary meaning is intended. Where within the framework of the ordinary acceptation of the word, every single requirement of the definition clause is fulfilled, it would be wrong to take the definition as destroying the essential meaning of the word defined."
At page 128 of the Report, it was further observed asunder :
"... We do not, however, think that sub-els. (a), (b) and (c) are conclusive of the question before us; they, no doubt, apply to a running or continuing business only, but whether inserted by way of abundant caution or on account of excessive anxiety for clarity, they merely exclude certain categories of termination of service from the ambit termination of service from the ambit of the definition. They do not necessarily show what is to be included within the definition".
We have reproduced the above observations of the Supreme Court in Hariprasad's case at some length because what emerges in bold relief from the decision in that case is that the words 'for any reason whatsoever' Page 42 of 49 HC-NIC Page 42 of 49 Created On Sat Aug 12 06:07:29 IST 2017 C/SCA/10126/2014 JUDGMENT are not so very wide as to include termination of service on the ground, say, of insubordination or inefficiency or loss of confidence. What emerges from Hariprasad's case is that the expression "for any reason whatsoever" must necessarily be read in conjunction with reasons like, economy, rationalisation in industry, installation of a new labour - saving-machinery, etc. Thus, on the ratio laid down by the Supreme Court in Hariprasad's case, it would be a mistake to hold that loss of confidence could be included in the expression 'for any Page 16 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT reason whatsoever' and hence termination of service on that score would amount to retrenchment. Hariprasad's case also brings to the forefront that bona fide closure of business cannot be described as retrenchment. Hariprasad's case also brings to the forefront that the criterion in order to attract the provisions of S. 2(oo) is surplusage in a continuing or running industry, as is highlighted by the following observation at page 132 of the Report :
"...... On our interpretation, in no case is there any retrenchment, unless there is discharge of surplus labour of staff in a continuing or running industry."
17. Coming nearer home, the scope, ambit and meaning of the words "for any reason whatsoever" in S. 2(oo) came up for consideration before a Full Bench of this Court in National Garage v. Gonsalves (J), [1962-I L.L.J. 56] Following the decision of the Supreme Court in Hariprasad's case, it was held by the Full Bench of this Court that retrenchment within the meaning of the Industrial Disputes Act means discharge of surplus labour or staff in a continuing or running industry, but, if the Page 43 of 49 HC-NIC Page 43 of 49 Created On Sat Aug 12 06:07:29 IST 2017 C/SCA/10126/2014 JUDGMENT termination of service is due to any other reason, it will not constitute retrenchment.
18. In Workmen v. Bangalore W. C. & S. Mills Co., , emphasising the criterion of superfluity or surplusage, it was held that the service cannot be said to be terminated unless it was capable of being continued and that if it was not capable of being continued, that is not a termination of the service. It was further held that where the workmen were discharged on the ground of ill-health, it is because they were unfit to discharge the service which they had undertaken to render and not because they had become surplus, with the result that those workmen could not be said to have been retrenched within the meaning of the Act.
19. At this stage, it would be pertinent to look to the scheme of the Act to ascertain whether the word "retrenchment" connotes surplusage and whether it is distinct from a case of ordinary termination or a case of termination for insubordination, inefficiency or loss of Page 17 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT confidence or some other reason. In this connection, reference can first be made to S. 2A of the Act. Section 2A reads as under :
Where any employer discharges, dismisses, retrenches or otherwise terminates the services of an individual work man, any dispute or difference between that workman and his employer connected with, or arising out of, such discharge, dismissal, retrenchment or termination shall be deemed to he an industrial dispute ...
" A plain reading of S. 2A gives a clear and unfailing indication that the Legislature itself had no intention of Page 44 of 49 HC-NIC Page 44 of 49 Created On Sat Aug 12 06:07:29 IST 2017 C/SCA/10126/2014 JUDGMENT confusing or identifying retrenchment with other forms of termination of service and that in order to bring the case of an individual worker within the four corners of retrenchment, recourse can only be had to the definition of that word contained in S. 2(oo).
20. Section 25G provides for the procedure for retrenchment, and which can be summarised by the phraseology "last come, first go." Such a procedure would have been inconceivable if termination of service in a case other than surplusage, viz. say, for loss of confidence, was intended by the Legislature to be categorised as retrenchment. This section also brings to the forefront that the centrifugal force revolving round the terminology 'retrenchment' is excess or surplusage or superfluity. It is thus in such a case is laid down the procedure that the last person to join must be the first to go. Section 25H makes this even clearer. That section provides for re-employment of retrenched workmen and states that where any workmen are retrenched and the employer proposes to take into his employ any person, he shall, in the prescribed manner, give an opportunity to the retrenched workmen to offer themselves for re- employment and such retrenched workmen shall have preference over other persons. This section, therefore, casts an obligation and makes it mandatory on the employer not only to take back a retrenched worker but also to give preference to such workman over others. It would be anomalous to the point of absurdity and would result in a horrifying situation if an employer, who terminates the service of his workman for the Page 18 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT loss of Page 45 of 49 HC-NIC Page 45 of 49 Created On Sat Aug 12 06:07:29 IST 2017 C/SCA/10126/2014 JUDGMENT confidence or inefficiency or insubordination and the like, is to be expected, may, to be compelled to re-employ that very worker in the same industry or business and that too in preference to other workmen whose services are not terminated either for loss of confidence, inefficiency, insubordination and the like. Taking Mr. Udeshi's contention to its logical conclusion, it would be ludicrous to expect an employer to terminate the service of an employee for lack of confidence and yet be compelled to employ the same worker in the same industry, despite the lack of confidence for which his services had earlier been terminated. The result would be utter chaos where industry and business would grind to a halt.
21. Chapter VB contains special provisions relating to lay- off, retrenchment and closure in certain establishments. This is a special chapter, the provisions whereof come into force when a certain contingency arises, namely, lay- off, retrenchment and closure. That this chapter should apply to retrenchment is also an indication that the concept of "retrenchment" as defined by S. 2(oo), was not intended by the Legislature to be resorted to in wild abandonment and indiscrimination, to each and every form of termination, but only as a special category not applicable to each and every form of termination of service. Item No. 10 of the Fourth Schedule, which provides for conditions of service for change of which notice is to be given, provides for "rationalisation, standardisation or improvement of plant or technique which is likely to lead to retrenchment of workmen." Rule Page 46 of 49 HC-NIC Page 46 of 49 Created On Sat Aug 12 06:07:29 IST 2017 C/SCA/10126/2014 JUDGMENT 81 of the Industrial Disputes (Bombay) Rules, 1957, provides for the maintenance of seniority list of workmen and states that the employer shall 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 pasted on a Notice Board in conspicuous place in the premises of the industrial establishment at least seven days before the actual date of retrenchment. Form XXIV-A-I of Form of Notice to be given by an employer under clause (c) of sub-s. (1) S. 25N of the Industrial Disputes Act, provides that the employer must Page 19 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT state that he proposes to retrench the particular workmen and he has to give a reply against each item mentioned in the annexure. Item 18 of that annexure to which the employer must give his reply is : "Anticipated savings due to the proposed retrenchment."
22. Thus Item No. 10, Rule 81 and Form XXIV-A-I are yet further indications that it was not, and could never have been, the intention of the Legislature to make retrenchment synonymous with termination on grounds like less of confidence, insubordination or inefficiency. The entire scheme of the Act emphasises this in abundant measure.
28. We summarise that the criterion for retrenchment is superfluity or surplusage of labour or staff in a running business caused by any reason whatsoever, such as, economy, rationalisation in industry, installation of new labour-saving machinery or devices standardisation or improvement of plant or technique and the like. Surplusage or superfluity is the fulcrum round which the concept of retrenchment must turn. In a line, if there is no superfluity, there can be no retrenchment."
13. This Court with respect records its agreement with the observations made in case of Kamlesh Kumar (supra) and it is held that the essential and basic element for invoking section 25F of the Act is surplus staff and it is the discharge of surplus staff or labour in a running or continuing business or industry that the action of the employer would amount to retrenchment and the expression retrenchment would not comprehend other forms of termination; be it simpliciter or punitive."
6.3 In ''AGRICULTURE PRODUCE MARKET COMMITTEE' (Supra), this Court observed that the benefit of Section 25H of the ID Act could not be denied to the workman, merely because he was not regularly appointed and there was no sanctioned post. The relevant observations are as follows:
Page 20 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020C/SCA/6433/2009 JUDGMENT "3. The contention raised on behalf of the appellants is that though the learned Single Judge has set aside the order which was under challenge, observations made by the learned Single Judge that appellant-Market Committee is a public authority under Section 2(h) of the Act is not correct and the appellants being aggrieved by the said conclusion recorded by the learned Single Judge, has preferred the present appeal.
4. Mr.Patel relied on decision of the Apex Court in case of Dalco Engineering Private Limited Vs Satish Prabhakar Padhey reported at (2010) 4 SCC 378 to contend that there is a difference between the body or institution established under or constituted under by the Act or under the Act. He submitted that the Market Committee is constituted under the Gujarat Agricultural Produce Market Act which is an Act made by State Legislature and not established by the Act and therefore, as the language is used under Section 2(h) for established or constituted by the Act, Market Committee would not be covered in the definition of Page 2 of 15 HC- NIC Page 2 of 15 Created On Sat Oct 24 00:59:18 IST 2015 C/LPA/1268/2015 ORDER Section 2(h) of the Act as public authority. Hence this Court may consider the said aspect in the appeal. "
6.4 In 'NOVARTIS INDIA LTD.' (Supra), the respondent-workman succeeded in getting quashed the order terminating their services by the Industrial Tribunal, on the ground that no domestic inquiry was conducted before passing such order. This order was also confirmed by the High Court. Therefore, the Company preferred appeal before the Apex Court, where, it observed and held thus:
19. There can, however, be no doubt whatsoever that there has been a shift in the approach of this Court in regard to payment of back wages. Back wages cannot be granted almost automatically upon setting aside an order of termination inter alia on the premises that the burden to show that the workman was gainfully employed during interregnum period was on the employer. This Court, in a number of decisions opined that grant of back wages is not automotic. The burden of proof that he remained Page 21 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT unemployed would be on the workmen keeping in view the provisions contained in Section 106 of the Evidence Act, 1972. This Court in the matter of grant of back wages has laid down certain guidelines stating that therefor several factors are required to be considered including the nature of appointment; the mode of recruitment; the length of service;
and whether the appointment was in consonance with Articles 4 and 16 of the Constitution of India in cases of public employment; etc.
20. It is also trite that for the purpose of grant of back wages, conduct of the concerned workman also plays a vital role. Each decision, as regards grant of back wages or the quantum thereof, would, therefore, depend on the fact of each case. Back wages are ordinarily to be granted, keeping in view the principles of grant of damages in mind. It cannot be claimed as a matter of right.
21. Large number of decisions have been referred before us by the learned counsel for the parties. It is not possible to deal with each one of them. We may, however, notice a few of them.
22. In M.P. Sate Electricity Board v. Jarina Bee, [ (2003) 6 SCC 579] this Court observed that the award of full back wages was not the natural consequence of an order of reinstatement.
23. In Allahabad Jal Sansthan v. Daya Shankar Rai and another, [ (2005) 5 SCC 124 ] it was held :-
"6. A law in absolute terms cannot be laid down as to in which cases, and under what circumstances, full back wages can be granted or denied. The Labour Court and/or Industrial Tribunal before which industrial dispute has been raised, would be entitled to grant the relief having regard to the facts and circumstances of each case. For the said purpose, several factors are required to be taken into consideration. It is not in dispute that Respondent 1 herein was appointed on an ad hoc basis; his services were terminated on the ground of a policy decision, as far back as Page 22 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT on 24-1-1987. Respondent 1 had filed a written statement wherein he had not raised any plea that he had been sitting idle or had not obtained any other employment in the interregnum. The learned counsel for the appellant, in our opinion, is correct in submitting that a pleading to that effect in the written statement by the workman was necessary. Not only no such pleading was raised, even in his evidence, the workman did not say that he continued to remain unemployed. In the instant case, the respondent herein had been reinstated from 27-2-2001."
It was furthermore observed :-
"16. We have referred to certain decisions of this Court to highlight that earlier in the event of an order of dismissal being set aside, reinstatement with full back wages was the usual result. But now with the passage of time, it has come to be realised that industry is being compelled to pay the workman for a period during which he apparently contributed little or nothing at all, for a period that was spent unproductively, while the workman is being compelled to go back to a situation which prevailed many years ago when he was dismissed. It is necessary for us to develop a pragmatic approach to problems dogging industrial relations. However, no just solution can be offered but the golden mean may be arrived at."
24. Yet again in U.P. State Brassware Corporation Ltd. v. Uday Narain Pandey, [ (2006) 1 SCC 479 ], this emphasized that grant or denial of back wages would be subject matter of each case stating :-
"61. It is not in dispute that the respondent did not raise any plea in his written statement that he was not gainfully employed during the said period. It is now well settled by various decisions of this Court that although earlier this Court insisted that it was for the employer to raise the aforementioned plea but having regard to the provisions of Section 106 of the Evidence Act or the provisions analogous thereto, such a plea should be raised by the workman."
25. In G.M. Haryana Roadways v. Rudhan Singh, [ (2005) 5 SCC 591 ], which was mentioned in paragraph 54 of U.P. State Brassware Corporation Ltd. (supra) it was held :-
"8. There is no rule of thumb that in every case where the Page 23 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT Industrial Tribunal gives a finding that the termination of service was in violation of Section 25-F of the Act, entire back wages should be awarded. A host of factors like the manner and method of selection and appointment i.e. whether after proper advertisement of the vacancy or inviting applications from the employment exchange, nature of appointment, namely, whether ad hoc, short term, daily wage, temporary or permanent in character, any special qualification required for the job and the like should be weighed and balanced in taking a decision regarding award of back wages. One of the important factors, which has to be taken into consideration, is the length of service, which the workman had rendered with the employer. If the workman has rendered a considerable period of service and his services are wrongfully terminated, he may be awarded full or partial back wages keeping in view the fact that at his age and the qualification possessed by him he may not be in a position to get another employment. However, where the total length of service rendered by a workman is very small, the award of back wages for the complete period i.e. from the date of termination till the date of the award, which our experience shows is often quite large, would be wholly inappropriate. Another important factor, which requires to be taken into consideration is the nature of employment. A regular service of permanent character cannot be compared to short or intermittent daily-wage employment though it may be for 240 days in a calendar year."
26. Again in U.P.S.R.T.C. Ltd. v. Sarada Prasad Misra and another, [ (2006) 4 SCC 733 ], it was held that the grant of back wages is discretionary. It was reiterated that initially it was for the employee to prove that he had not been gainfully employed. It was observed :-
"16. From the above cases, it is clear that no precise formula can be adopted nor "cast-iron rule" can be laid down as to when payment of full back wages should be allowed by the court or tribunal. It depends upon the facts and circumstances of each case. The approach of the court/tribunal should not be rigid or mechanical but flexible and realistic. The court or tribunal dealing with cases of industrial disputes may find force in the contention of the employee as to illegal termination of his services and may come to the conclusion that the action has been taken otherwise than in accordance with law. In such cases obviously, the workman would be entitled to reinstatement Page 24 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT but the question regarding payment of back wages would be independent of the first question as to entitlement of reinstatement in service. While considering and determining the second question, the court or tribunal would consider all relevant circumstances referred to above and keeping in view the principles of justice, equity and good conscience, should pass an appropriate order."
27. In A.P.S.R.T.C. and another v. B.S. David Paul, [ (2006) 2 SCC 282], it was observed :-
"8. The principle of law on point is no more res integra. This Court in A.P. SRTC v. S. Narsagoud1 succinctly crystallised the principle of law in para 9 of the judgment on SCC p. 215:
`9. We find merit in the submission so made. There is a difference between an order of reinstatement accompanied by a simple direction for continuity of service and a direction where reinstatement is accompanied by a specific direction that the employee shall be entitled to all the consequential benefits, which necessarily flow from reinstatement or accompanied by a specific direction that the employee shall be entitled to the benefit of the increments earned during the period of absence. In our opinion, the employee after having been held guilty of unauthorised absence from duty cannot claim the benefit of increments notionally earned during the period of unauthorised absence in the absence of a specific direction in that regard and merely because he has been directed to be reinstated with the benefit of continuity in service.' "
( See also A.P. Sate Road Transport Corporation and others v. Abdul Kareem, [ (2005) 6 SCC 36 ]. and Rajasthan State Road Transport Corporation and others v. Shyam BiharI Lal Gupta, [(2005) 7 SCC 406] ).
28. In Muir Mills Unit of NITC (U.p.) Ltd. v. Swayam Prakash Srivastava and another, [ (2007) 1 SCC 491 ], it was held :-
"46. We are also of the view that the award of the Labour Court is perverse as it had directed grant of back wages without giving any finding on the gainful employment of Respondent 1 and held that the discontinuance of the services of a probationer was illegal without giving any Page 25 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT finding to the effect that the disengagement of Respondent 1 was in any manner stigmatic. In the decision in M.P. SEB v. Jarina Bee2 this Court held that payment of full back wages was not the natural consequence of setting aside an order of removal. In the instant case, though the termination was as far back as in 1983, the industrial adjudicator has not given any finding on unemployment. This Court in a recent case of State of Punjab v. Bhagwan Singh18 has held that even if the termination order of the probationer refers to the performance being "not satisfactory", such an order cannot be said to be stigmatic and the termination would be valid."
29. In J.K. Synthetics Ltd. v. K.P. Agrawal and another, [ (2007) 2 SCC 433 ], Raveendran, J. speaking for the Division Bench held :-
"17. There is also a misconception that whenever reinstatement is directed, "continuity of service" and "consequential benefits" should follow, as a matter of course. The disastrous effect of granting several promotions as a "consequential benefit" to a person who has not worked for 10 to 15 years and who does not have the benefit of necessary experience for discharging the higher duties and functions of promotional posts, is seldom visualised while granting consequential benefits automatically. Whenever courts or tribunals direct reinstatement, they should apply their judicial mind to the facts and circumstances to decide whether "continuity of service" and/or "consequential benefits" should also be directed. We may in this behalf refer to the decisions of this Court in A.P. SRTC v. S. Narsagoud, A.P. SRTC v. Abdul Kareem14 and Rajasthan SRTC v. Shyam Bihari Lal Gupta."
30. Even if some income was derived by the employee, the same should be taken into for consideration for the purpose of consideration in regard to grant of entire back wages. Our attention has been drawn to a decision of the Bombay High Court in Navin J. Surti v. Modi Rubber Ltd. and another, [2004 II CLR 46] wherein it was observed :-
"Eventually, there would be a burden cast upon the employee to disclose the efforts made by him to secure another job during the time he was out of employment on Page 26 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT account of termination of the service, in order to justify the claim for the back wages in its entirety. Indeed, the Division Bench in Sadanand Patankar's case (supra) has clearly ruled that "Since the facts about the employment or non- employment and/or the efforts made or not made to secure an alternative employment during the period of enforced idleness are within the special knowledge of the employee, it is only fair and proper that he should first state whether, he was employed or not and during what period, the amount of income earned by him if any, the nature of efforts made by him for securing alternate employment or the circumstances which prevented him from making such efforts." It has also been clearly held that once such burden is discharged by the employee, it would be for the employer to prove facts to the contrary. Similarly is the decision of the learned Single Judge, as he then was (Sri Justice B.N. Srikrishna), in Indiana Engineering Works (Bombay) Pvt. Ltd. v. The Presiding Officer 5th Labour Court and Ors. 1995 (II) C.L.R. 890 where it has been clearly held that "I am of the considered view that the dismissed workman also owes a duty to the industrial adjudicator to honestly disclose full particulars of the facts which are purely within his knowledge and that any attempt to mislead the Tribunal must surely be looked at askance,"
It was furthermore observed :-
"Apart from the obligation on the part of the employer to establish gainful employment of the employee during such period, it would also be necessary for the employee to disclose the efforts made by him to get. some other job or employment during such period as well as about the source of income during the said period and if so, to what extent. Mere silence on the part of the employee in that regard cannot, in any manner, enure to the benefit of the employee to justify the claim for back wages in entirety. It cannot be forgotten that the order for payment of back wages has to be from the point of view of compensating the employee for the loss suffered during the time he was out of the employment and not a reward for having succeeded in establishing the action of termination of the service by the employer to be illegal."
6.5 The law on the subject, thus, is quite clear that it is always upon Page 27 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT the company to decide upon a policy of reorganizing its business, by giving accent to its manufacturing activities and of giving up the agencies' held by it and it can also relinquish its policies and can decide, how to organize its business and the reasonableness of the policy decision, in absence of any mala fide, cannot be questioned by the Court, even if, it is scrutinized. It is within the managerial discretion of an employer to organize and arrange his business in the manner he considers best. So long as that is done bona fide it is not competent for a tribunal to question its propriety. If a scheme for such reorganization results in surplusage of employees, no employer is expected to carry the burden of such economic tribunal dead weight and retrenchment has to be accepted as inevitable. however unfortunate it is. The Legislature therefore, provided, by Section 25F of the ID ACT compensation, to soften the blow of hardship resulting from 'an employee being thrown out of employment through no fault of his. The reinstatement and the backwages are not automatic and host of other facts also have to be take into consideration in each case.
6.6 Reverting to the facts of the case on hand, this Court notices that it was the policy decision on the part of the petitioner-Company not to continue manual machines. the petitioner-Company is engaged in the business of machine tolls since the year 1988. It also has obtained license to sell centre less grinders. For the purpose of carrying out the said activity, it had employed workers for various purposes viz., boring, grinders, marking, assembly shop etc. and those posts were designated as machinist, fitter / machinist, turner / machinist, surface grinder operator, marker, machinist CNC etc.. However, due to recession in the tools market, the petitioner-Company chose to modernize its machines for manufacture of centre less grinding machine, where, Model Nos.1 and 3 were in demand, whereas, Model No. 2 required up-gradation with the latest technology. The petitioner-company was required to so Page 28 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT do for better quality product. Thus, the main reasons given by the petitioner-Company for retrenchment are recession and the requirement of the market. The persons holding the diploma or degree in Mechanical Engineering were required for operating the machines, having CNC technology. It appears that the Seniority List is also maintained department wise. The respondent, herein, who possesses the qualification of 12th Class pass, had applied for the post of Machinist and in pursuance of the same, he came to be appointed on 01.07.1995, initially, on a probation period of six months vide appointment letter dated 30.06.1995. He continued to work with the petitioner-Company and for want of machines, he came to be retrenched on 31.01.2002. While retrenching his services, the respondent was paid one month's notice pay along with retrenchment compensation, equivalent to 15 days average pay for every completed year of continuous service so also salary for the month of January, 2002. He also accepted the amount of gratuity. Thus, the respondent, in all, was paid a sum of RS.39.823.68/- by way of a cheque dated 31.01.2002 and he accepted the same. The petitioner-Company also gave a notice dated 25.01.2002 to the Secretary, Government of Gujarat, Education & Labour Department, as prescribed under Rule 80 of the Industrial Rules read with Section 25F of the ID Act.
6.7 It appears that, later on, the respondent raised demand through Baroda Labour Union vide communication dated 11.02.2002. This Court also notices that the petitioner-Company had informed the respondent and another employee, namely Mr. Jagdish G. Mahida, that the work was available for about 20 days vide letter dated 20.03.2002 and had thereby, asked to report for the work. It was also clarified in the said letter that the work shall be offered to the person, who reports first. It is the say of the petitioner-Company that, subsequently, it received a letter from the respondent, Dated: 20.03.2002, wherein, it was stated that the Page 29 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT letter sent by the petitioner-Company on 20.03.2002 was received by him on 05.04.2002. It was also alleged, therein, by the respondent that when he reported for work on 06.04.2002, he was not offered work on the ground that another person, namely Mr. Mahida, had already reported and he had already been given the work. Thereafter, the matter was referred to the Labour Court for adjudication, where, after availing opportunity to both the sides, the Labour Court held in favour of the respondent.
6.8 There is no dispute with regard to the employer-employee relation between the parties. This Court notices that there was neither any seniority list produced before the Labour Court nor was there any proof produced of serving of notice to the competent authority, as required under the law and it is not clear, as to whether, the notice under Section 80 had been served on the authority concerned or not. Further, according to the Labour Court, there was no evidence produced with regard to the payment of retrenchment compensation. The Labour Court also found that the calculation of the gratuity also had not been done properly. In absence of maintenance of Seniority List and the mechanism adopted to call the respondent, if, have not inspired confidence, the Labour Court committed no error, much less illegality in not upholding action of the petitioner.
6.9 This Court also notices that so far as the reason put forth, for the retrenchment of services of the respondent, of recession in the market, on account of which the manpower was surplus, also did not found favour with the Labour Court for the reason that the annual report of the petitioner- Company indicated that it had earned profit in the year 2004-2005. Further, the petitioner-Company had given 5% dividend in the year 2005-06. Therefore, the Labour Court found that the same were not the valid grounds. The Labour Court also held that, if, there was a need for modernization due to market forces, the duty is casted on the employer to give training to the employees to work on the machines with new technology. The Labour Court, therefore, held that mere Page 30 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT acceptance of cheque by the respondent would not mean that he had surrendered all his constitutional rights. In wake of the above, the Labour Court granted reinstatement on the original post, with continuity of service with 50% backwages.
6.10 This Court notices that the award was pronounced by the Labour Court on 04.10.2008 and thereafter, when this Court denied the stay of the award qua reinstatement, the respondent came to be reinstated in service by the petitioner-Company and since 2009, he is working with the petitioner-Company. This Court notices that, in the post 2009 period, there is no complaint made against the respondent by the petitioner-Company nor is there any departmental proceedings going on against him. Even, during this period, he is never issued any memo or notice. However, a serious question raised on the part of the petitioner by the learned Advocate, Mr. Patel, is with regard to the loss of confidence. However, this Court is not in agreement with such submissions made by the learned Advocate for the petitioner-Company, as there was no evidence, worth the name, produced before the Labour Court to point out the loss of confidence between the petitioner- Company and the respondent. Since, had that been the case, something would surely have come on record, after the reinstatement of the respondent by the petitioner-Company.
6.11 Assuming that the respondent was, initially, appointed on probation basis, the fact remains that he has passed 12th Standard exam so also the exam of machinist from ITI. It has been emphasized on the part of the respondent that he has been working with the machines for a long period and he is also ready and willing to undergo any further training, if, imparted by the petitioner-Company, at his own costs. This Court also had pertinent questioned the learned Advocate, Mr. Patel, for the petitioner, noticing the rich experience of the Page 31 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT respondent of working with machines, as to whether, there is any certifying agency, which can give certificate to the respondent for his becoming eligible, officially, to work with such machines. It is realized that the requirement for working on such machines is, though, not has been brought on record, it is, essentially, Autocad or ITI and the experience.
6.12 So far as the present respondent is concerned, he is possessing the qualification of having passed Standard 12 exam and the certificate of passing of exam of machinist from ITI. If, his interview had been taken in the year 2006, it would not mean that he is not having the required expertise. Further, the alleged bias, on the part of the petitioner-Company,also can be seen in the marks given to the respondent in the person interview. However, there being no evidence coming on record in that regard, this Court is not inclined to regard that aspect.
6.13 So far as the aspect of reinstatement is concerned, this Court does not find any need to interfere with the order of the Labour Court, which does not appear to have exceeded its jurisdiction or has acted outside its bound.
6.14 With regard to the aspect of grant of backwages is concerned, the Labour Court has granted 50% backwages, whereas, this Court, while issuing notice on 01.07.2009, stayed the impugned award qua backwages only. It is to be noticed that learned Advocate, Mr. Mishra, also, on instructions, has submitted that although, the respondent is entitled to 100% backwages, even if, backwages is reduced from 50%, the respondent has no objection.
6.15 It is true that a number of factors are required to be taken into Page 32 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT consideration by the Court at the time of granting backwages and the backwages would not come automatically with the direction for reinstatement. However, in each case, the Court is required to consider, whether the workman concerned is entitled to get the backwages or not. What is needed to be done is that this being a specific knowledge of the employee, it is for him, firstly, to bring on record that he is unable to find employment, despite of best of the efforts, and was unable to earn the amount, he used to earn, prior to his retrenchment. Once, the initial burden is discharged, the burden shifts on the employer to prove the facts contrary to the same.
6.16 At this stage, it is necessary to make a mention that, before the Labor Court, the respondent had stated that he was getting work for 2 to 5 days in a month and was getting Rs.600/- to Rs.700/-. Although, at the time of his retrenchment, he was getting nearly Rs.3,000/- per month. In the cross-examination, there was nothing brought out to indicate that this was a false certificate. Thereafter, when opportunity was given to the petitioner-Company and the burden was shifted on it, nothing contrary could be brought out on record by it to state that what has been stated by the respondent is incorrect. In that view of the matter, instead of granting him 100% backwages or the remaining of 70% or 75% backwages, which he was not getting in the subsequent employments, the Labour Court chose not to grant him full backwages and instead, it has granted 50% backwages.
6.17 On a specific query made by this Court to both the sides, it is not clear, as to whether the amount of Rs.39,823.68/- , which is alleged to be paid by the petitioner-Company to the respondent at the time of retrenchment, has been deducted from his salary, after his reinstatement in the year 2009. In any case, there is no resistance on the part of learned Advocate, Mr. Mishra, on further reduction of the Page 33 of 34 Downloaded on : Sun Jun 14 01:52:02 IST 2020 C/SCA/6433/2009 JUDGMENT amount of backwages. In wake of the above, if, the backwages is reduced to 40% from 50% that would meet the ends of justice.
7. Resultantly, this petition is PARTLY ALLOWED and the judgment and award passed by the Labour Court, Vadodara, in Reference (L.C.V.) No. 618 of 2002, Dated: 04.10.2008, is MODIFIED to the extent that the respondent shall be paid 40% backwages in stead of 50% backwages. Rest of the judgment and award of the Labour Court stands CONFIRMED.
7.1 The payment of 40% backwages shall be made within the period of 12 (TWELVE) WEEKS from the date of receipt of a copy of this order.
7.2 Further, since, the respondent has shown willingness to equip him with further training, if, the petitioner-Company is desirous to send him for further training, he shall undergo such a training of working on CNC machines. This last direction is necessitated, since, there were rival oral claims by both the sides, since, there was insistence on the part of the petitioner-Company that the Autocad for working on CNC machines is necessary. However, in wake of the fact that the respondent has already passed Standard 12 examination and is also having the certificate of machinist from ITI, it would not be a herculean task for him to learn Autocad, coupled with his vast experience. This issue also cannot be blown out of the proportion, as he has already agreed to reduction of backwages by 10%.
1. Rule is made absolute, accordingly. Direct service is permitted.
(SONIA GOKANI, J) UMESH/-
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