Bombay High Court
M/S. Kec International Ltd. vs Kamani Employees Union & Others on 17 April, 1998
Equivalent citations: 1998(3)BOMCR590
Author: F.I. Rebello
Bench: F.I. Rebello
ORDER F.I. Rebello, J.
1. Rule in all petitions. Respondents waive service. By consent heard forthwith.
Writ Petition No. 1761 of 1997 is preferred by the company against the order dated 25th September, 1997 passed by the Industrial Court, Mumbai. The company has been restrained temporarily to act on the V.R.S. application or to refuse to allot work and to pay wages to enlisted workers till further orders with a further direction that the 55 (fifty-five) enlisted employees be allowed to work and be paid wages subject to deposit of their cheques with the respondent company.
Writ Petition No. 1917 of 1997 has been preferred by the Union claiming to represent the workers employed by the company, being the only trade union of employees of the petitioner company. The reliefs in the petition amongst others are to restrain the company from acting on the V.R.S. announced by notice dated 8th August, 1997; restrain the company from selling, disposing or in any manner alienating the plant, machinery, raw material and finished products from the company premises at Kurla without the permission of the Court; restraining the respondent company from refusing work and wages to the employees who have applied for withdrawal of V.R.S. application and not to abolish the posts of workmen whose resignations are accepted and to keep the posts vacant and some other prayers.
2. The facts giving rise to the complaint and the petitions are as under;
The company introduced what is known as "Voluntary Retirement Scheme". At the time of introduction of the Scheme there were altogether 690 workmen, out of whom 645 opted for the V.R.S. by making applications between 29-8-1997 and 31-8-1997. According to the company from amongst these 645 workmen, 542 applications were received after 14th August, 1997. The company pursuant to the offers made by the workmen, paid the workers their dues under the Scheme, including Provident Fund, Gratuity, Leave Encashment, etc., by cheques dated 31st August, 1997. Workmen, who had received and accepted cheques between 28th August, 1997 and 31st August, 1997, were to be relieved by 31st August, 1997 but the benefits and other dues were to be paid by 3rd September, 1997. On and from 1st September, 1997, 92 (102) workmen informed the company by identical applications that they wished to withdraw their applications opting for V.R.S., as they were made under misunderstanding and without looking into all the consequences. Out of these 102 workmen, 10 workmen again approached the company to issue, them fresh cheques as they had deposited the cheques issued with the Union, which had refused lo return the cheques.
3. The petition by the Union also challenges the order dated 25th September, 1997 to the extent that the V.R.S. Scheme introduced by the company is in violation of provisions of section 9-A of the Industrial Disputes Act read with Items 10 and 11 of Schedule IV of the said Act. It is contended that no notice as contemplated under section 9-A of the I.D. Act, 1947 was issued and consequently the action of the management in accepting the applications for Voluntary Retirement Scheme was ab initio null and void and it must be deemed that the workmen are in service. It is in that context that they have prayed for various reliefs for the 105 workers who are enlisted at Exhibit "c" who have withdrawn their V.R.S. applications.
4. Writ Petition No. 1821 of 1997 has been filed by the All India Blue Star Employees Federation. The challenge in the said petition is to the order dated 24th October, 1997 whereby the Industrial Court has refused interim relief to the Union. It is the contention of the Union, that it is a registered Trade Union and the only recognised Union in the company. The Union represents 900 employees of the company and is carrying on Union activities since 1975. It is pointed out that the respondent No. 4 put up a notice on the Notice Board informing the employees about the Voluntary Retirement Scheme with selected portions of the Voluntary Retirement Scheme only. It is pointed out that the scheme was implemented from 1-9-1997 to 30-10-1997. However, the employees have not been informed fully about the contents. Pursuant to the said Scheme a large number of employees sought voluntary retirement which was accepted by the company in terms of the scheme as formulated. The complaint was filed about one and half months thereafter. The principal contention on behalf of the Union was that the Voluntary Retirement Scheme was in violation of provisions of section 9-A of the I.D. Act as it had adverse effect on the conditions of services of the employees working with the respondent company and consequently was null and void.
5. Considering the facts as set out in the above 3 petitions, the principal question that needs to be decided is whether the Voluntary Retirement Scheme known as "VRS" attracts the provisions of section 9-A of the ID Act 1947 read with Item 10 and 11 of the IVth Schedule to the Industrial Disputes Act". The answer will decide the other ancillary reliefs prayed for in the various petitions.
6. The relevant portion of section 9-A of the I.D, Act is reads as under :--
"9-A. No employer, who proposes to effect any change in the conditions of service applicable to any workmen in respect of any matter specified in the Fourth Schedule shall effect such change,---
(a) without giving to the workmen likely to be affected by such change a notice in the prescribed manner of the nature of the change proposed to be effected; or
(b) within twenty-one days of giving such notice."
The proviso is omitted as it has no relevance in deciding the controversy involved in these petitions.
Items 10 and 11 of the IVth Schedule to the I.D. Act read as under :---
"10. Rationalisation, standardisation or improvement of plant or technique which is likely to lead to retrenchment of workmen.
11. Any increases or reduction (other than casual in the number of persons employed or to be employed in any occupation or process or department or shift. (not occasioned by circumstances over which the employer has no control) ".
Rules 37 and 38 of the Industrial Disputes (Bombay) Rules, 1957 read as under-
"37. Notice of Change-Any employer intending to effect any change in the conditions of service applicable to any workman in respect of any matter specified in the Fourth Schedule appended to the Act shall give notice of such change in Form XIII.
38. Manner of Service of Notice of Change.---(1) Where there are numerous workmen affected by a notice of change and the majority of such workmen are members of any trade union the service of notice by registered post on the Secretary, or where there is no Secretary, on the principal officer of the trade union shall be deemed to be service on all such workmen. The employer shall, at the same time, arrange to exhibit the notice by affixing it to a notice board in the manner specified in sub-Rule (2) :
Provided that if the Secretary or the principal officer refused to receive the notice or that for any other reason the notice cannot be served on the Secretary or the principal officer in the ordinary way the exhibition of the notice in the manner specified in sub-Rule (2) shall be deemed to be in service on all such workmen.
(2) Where there are numerous workmen affected by a notice of change and the majority of such workmen are not members of any trade union or association, the employer shall, where personal service is not practicable cause the service of any such notice to be made by affixing the same to a notice board at or near the entrance or entrances of the establishment concerned and the notice shall remain so affixed for a period of twenty-one days. The notice shall be in English, the regional language and the language understood by the majority of the workmen in the establishment concerned.
(3) A copy of the notice shall simultaneously be forwarded by the employer to the Conciliation Officer concerned and the Deputy Commissioner of Labour of the area concerned, namely, Deputy Commissioner of Labour (Administration), Bombay/Deputy Commissioner of Labour, Poona, Deputy Commissioner of Labour, Nagpur."
From a reading of section 9-A and Items 10 and 11 of Fourth Schedule of the I.D. Act what in effect it means is where an employer, proposes to effect any change in the conditions of service applicable to any workman in respect of any matter specified in the Fourth Schedule, the employer can effect such change, only by giving to the workmen likely to be affected by such change (a) notice in the prescribed manner, disclosing the nature of the change proposed to be effected (b) not before the expiry of 21 days of giving such notice and (c) the change must be in respect of the Hems listed under the Fourth Schedule. A reading of the Industrial Disputes, Bombay Rules requires notice to be given in Form Xlll, In case where a majority of such workmen are members of the Union notice given to the Secretary by Registered Post shall be deemed to be notice on all such workmen. There are some other procedural requirements as can be seen from the Rules. A copy of the notice has to be forwarded by the employer to the Conciliation Officer concerned and another.
7. The complaints have been filed under the provisions of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971. It is the contention of the Union that effecting changes, without giving notice as contemplated by section 9-A of the I.D. Act 1947 attract Items 9 and 10 of Fourth Schedule of the said M.R.T.U. & P.U.L.P. Act. The said Items read as under:-
"9. Failure to implement award, settlement or agreement.
10. To indulge in act of force or violence."
In terms of the provisions of M.R.T.U. & P.U.L.P. Act, if there is violation of the said Items, it would amount to an Unfair Labour Practice and a complaint can be maintained under section 32 of the Act. In terms of sub-section (2) of section 30 a Court hearing a case of Unfair Labour Practice has also the power to grant interim relief pending the final decision.
The expression "failure to implement Award or settlement or agreement has now been well settled and need not be examined in detail suffice it to say that in the case of S.G. Chemicals Employees Union v. S.G. Chemicals, reported in 1986(1) L.L.J. 490 the Apex Court has held that a breach of a statutory provision like section 9-A of the I.D. Act would constitute an Unfair Labour Practice under Item 9 of Schedule IV of the M.R.T.U. & P.U.L.P. Act.
8. Answering the question raised involves interpretation of the provisions of the Industrial Disputes Act, 1947 read with the Maharashtra Recognition of Trade Unions & Prevention of Unfair Labour Practices Act, 1971. The scope and effect of the two legislations, one Central, and the other, State, has been the subject matter of interpretation by the Apex Court in the case of Hindustan Lever Limited v. Ashok Vishnu Kate & others, 1995(11) C.LR. 832. The Apex Court has noted that the provisions of M.R.T.U. & P.U.LP. Act do not supplant, but supplement the provisions of the Industrial Disputes Act and if an act amounts to unfair labour practice the Labour Court or Industrial Court can direct the management to desist from committing unfair labour practice and also to grant interim relief pending the hearing and final disposal of the petition.
With this background it would be necessary to deal with the submissions made on behalf of the Unions and employers in these petitions.
9. It is contented on behalf of the workmen that inviting applications under the Voluntary Retirement Scheme amounts to change in the conditions of service and failure to comply with the provisions of section 9-A would amount to breach of item 9 of the M.R.T.U. & P.U.L.P. Act and constitute an unfair labour practice. It is further contented that a notice as required, must be given prior to the actual introduction or implementation of the Voluntary Retirement Scheme. It is further sought to be contended that V.R.S. cannot be equated with resignation and it is not excluded under Item No. 11 of Schedule IV of the I.D. Act or for that matter even Item 10 of Schedule IV of the I.D. Act is attracted. It is also pointed out that introduction of V.R.S. in a given case as in the instant case would be a clear violation of the provisions of Chapter V-B of the I.D. Act. The mandatory provisions of Chapter V-B are statutory conditions and if the strength of workmen falls below 100, provisions of Chapter V-B particularly section 25-N and 25-O would no longer apply and as such the conditions of service of the workmen are likely to be automatically affected. It is then pointed out that non-compliance of the provisions of section 9-A renders V.R.S. void/illegal and that the failure to give notice cannot be cured.
On behalf of the employers it is contended that section 9-A can only be attracted in the case of an affirmative action by the company which would have effect of affecting the conditions of service of workmen in employment. It, therefore, cannot apply to those who have voluntarily retired. It is pointed out that in the present case there is no affirmative action by the company and the act of resignation/retirement is purely a voluntary act on the part of the workmen over which the company has no control. It is further pointed out that Item 10 would not be attracted as Item No. 10 will be attracted only when retrenchment is likely on account of rationalisation, standardisation or improvement of plant or technique. In the instant case it is pointed out that definition of section 2(oo) of the I.D. Act pertaining to retrenchment, excludes voluntary retirement and, therefore, admittedly Item No. 10 would not be attracted, as the resignations accepted are also not on account of rationalisation, standardisation or improvement of plant or technique. It is further pointed out that once the voluntary retirement is excluded from Item No. 10 it cannot be read into Item No. 11, as Item No. 11 pertains to increase or reduction in the number of persons employed or to be employed in any occupation or process or department or shift, not occasioned by circumstances over which the employer has no control. It is, therefore, pointed out that in a case where workers seek to resign or seek voluntary retirement, it is not a case where the employer seeks to change the conditions of service, but it is an act on the part of the workmen and consequently the provisions of section 9-A would not be attracted. Consequently Item No. 11 also would not be attracted. In addition, it is sought to be contended that increase or reduction must contemplate that there is a work force, which has been agreed to and it is only in the case of reduction of this work force or increase in the said work force that would attract Item No. 11.
In so far as the provisions of the Income Tax Act is concerned, it is pointed out that V.R.S. can either be floated by the company independently or by taking permission of the Income Tax Authorities. This would not in any way result in affecting the conditions of services as the act is purely voluntary on the part of the individual workman. It is also contended that the complaint if at all can be maintained by the workers in employment and a complaint at the instance of workmen, who have retired and/or at the instance of the Union, is not maintainable.
In so far as petitioners in Writ Petition No. 1761 of 1997 are concerned, it is further contended that the Scheme was in force from 9th August, 1997 to 31st August, 1997 and as such there has been a clear notice of 21 days. As such, the provisions of section 9-A would not be attracted. In Writ Petition No. 1821 of 1997 is contended that V.R.S. was introduced upto 3rd September, 1997 and was to be in force upto 31st October, 1997. There was as such clear notice as required by section 9-A of the Act. It is also pointed out that the challenge cannot be against the introduction of V.R.S., but at the best can be attracted against rationalisation, standardisation or improvement of plant or technique. There is no such averments in the petition. It is further pointed out that non-compliance of section 9-A cannot render the V.R.S. void as section 9-A does not apply to those who have accepted V.R.S., but only to those who continue in service.
10. In the context of these submissions the issues now need to be decided. Suffice it to say that these petitions arise from interlocutory orders. As the question raised was of importance and at the request of the parties the petitions are being finally disposed of on the questions of law only. What is being decided in these petitions is whether the V.R.S. Scheme has the effect of affecting the conditions of services of the workmen; whether Items 10 and 11 of Schedule IV of I.D. Act are attracted and if so what is the effect of non-compliance with the provisions of section 9-A of the Act.
11. It is an admitted position that the V.R. Schemes of both companies have the approval of the Income Tax Authorities. A Scheme for the purpose of section 10(10-C) of the Income Tax Act must be in terms of Rule 2-BA. Section 10(10-C) of the Income Tax Act excludes any payment received by an employee at the time of his voluntary retirement in accordance with the Scheme framed from payment of Income Tax which meets the requirement of Rule 2-BA. Section 10 of the Income Tax Act is the provision pertaining to income which is not assessable to Income Tax. Section 10 as of 1-4-1987 excluded the Voluntary Retirement Scheme of a Public Sector Company. By subsequent amendments other companies and organisations have also been brought in its purview. For the purpose of attracting section 10(10-C) the scheme as framed must be in accordance with the following requirements:--
"(i) It must apply to an employee who has completed 10 years of service or completed 40 years of age;
(ii) it must apply to all employees (by whatever name called) including workers and executives of a company or of an authority or of a Co-operative Society, as the case may be, excepting Directors of a company or of a Co-operative Society;
(iii) the scheme of voluntary retirement has been drawn to result in overall reduction in the existing strength of the employees."
It is, therefore, important to note that a Scheme framed under section 10(10-C) of the Income Tax Act to enable an employee to get exemption under section 10 of the Income Tax Act must result in over all reduction in the existing strength of the employees.
On account of the scheme all that happens is that the money received by the workmen is exempt from Income Tax. The benefit is given to the employee if the employer frames the scheme with the purpose that there will be an over all reduction in the existing strength of the employees. The only conditions are that such employees must have completed minimum 10 years of service or completed 40 years of age; the vacancy caused by the voluntary retirement is not to be filled up; an employee so retired shall not be employed in any other company or concern belonging to the same management; the amount receivable does not exceed the amount equivalent to 3 months salary for each completed year of service or salary at the time of retirement multiplied by the balance years of service left before the date of his retirement or superannuation. It is thus clear that a V.R.S. Scheme which has the approval of the I.T. Authorities must necessarily result in reduction of work force.
12. The object and purpose of section 9-A has been discussed by the Apex Court in the case of M/s. Tata Iron and Steel Co. Ltd. v. The Workmen and others . The Apex Court in para 12 of the said judgment has observed as under :--
"The real object and purpose of enacting section 9-A seems to be to afford an opportunity to the workmen to consider the effect of the proposed change and, if necessary, to represent their point of view on the proposal. Such consultation further serves to stimulate a feeling of common joint interest of the management and workmen in the industrial progress and increased productivity. This approach on the part of the industrial employer would reflect his harmonious and sympathetic co-operation in improving the status and dignity of the industrial employee in accordance with the egalitarian and progressive trend of our industrial jurisprudence, which strives to treat the capital and labour as co-sharers and to break away from the tradition of labour's subservience to capital."
From the aforesaid observations of the Apex Court it is clear that the entire object is to enable parties to be in a position to put forward each others point of view in respect of the proposed changes. In fact section 9-A indicates the purpose of the Industrial Disputes Act itself. Whenever there is a dispute, a machinery has been instituted under the Act whereby such a dispute can be taken up in conciliation and if no conciliation is possible men to refer the matter for adjudication. The entire purpose and object is to avoid industrial strife by avoiding hardship to both, workmen on the one hand and management on the other and over all, to see that the production is not affected in the establishment on account of likely disputes. It is in this context that section 9-A has to be understood. If it is so understood then the purpose and object behind it is self evident.
13. Before proceeding to answer the issues, it will be relevant to understand what is the effect of non-compliance with the provisions of section 9-A of the I.D. Act.
In M/s. Tata Iron & Steel Co. (supra) the issue involved was a change in the weekly day off rest, without complying with the provisions of section 9-A read with Fourth Schedule. The Apex Court while answering the said issue held that if there was a change in the weekly off day without complying with the provisions of section 9-A then it could not be held that the refusal by the workmen to report for work on the weekly days which was earlier day of rest could be held to be illegal strike. The Apex Court held that such a change is ineffective and the previous schedule of weekly days off rest must be held to be still operative. In the case of The Workmen of the Food Corporation of India v. M/s. Food Corporation of India , the Apex Court again was dealing with the issue as to the effect amongst others of non-compliance of the provisions of section 9-A of the I.D. Act. The Apex Court in para 19 has observed as under :--
"19. It is at this stage necessary to examine the implication of section 9-A of the I.D. Act, 1947. As hereinbefore pointed out, section 9-A makes it obligatory upon an employer who proposes to effect any change in the conditions of service applicable to any workman in respect of any matter specified in the Fourth Schedule to give a notice of desired or intended change. It cannot do so without giving to the workmen likely to be affected by the change, a notice in the prescribed manner of the nature of the change proposed to be effected and within 21 days of giving such notice."
Thereafter in the same paragraph the Apex Court has again observed as under:-
"Therefore, obviously a notice of change was a must before introducing the change, otherwise it would be an illegal change. Any such illegal change invites a penalty under section 31(2) of the I.D. Act, 1947. Such a change, which is punishable as a criminal offence would obviously be an illegal change. It must be held that without anything more such an illegal change would be wholly ineffective."
In that case the employer had abolished the contract system and the workmen were directly paid the wages at piece rate' of service. This was sought to be changed by reinducting the intermediary contractor. This was resisted by the workmen. A settlement was arrived at. However, once again the Corporation changed the method of payment superseding the direct payment system and reintroducing contract system and that too without giving any notice of change as contemplated under section 9-A of the I.D. Act. As a consequence, the services of 464 workmen were discontinued and brought under the intermediary contractor and the workmen were treated as the workmen employed by the contractor. It was in those circumstances that the Apex Court was called upon to answer the issue as to whether the provisions of section 9-A were attracted and if attracted the effect thereof.
14. A Full Bench of the Kerala High in the case of P.V. Mani and others v. Union of India and others was considering amongst others the effect of non-compliance with the provisions of section 9-A of the I.D. Act. Certain changes in conditions of services were brought about by the Life Insurance Corporation of India. Various grounds were raised to challenge the changes brought about including invocation of section 9-A of the I.D. Act. The Full Bench of the Kerala High Court noted that there must be a change in the conditions of service applicable to any workman. Such change must be in respect of any matter specified in IV Schedule. For effecting any such change the workman who is likely to be affected shall be given notice in the prescribed manner of the nature of the change proposed to be effected and no such change shall be effected within 21 days of giving such notice. The Full Bench of the Kerala High Court noted the judgment in Tata Iron & Steel Company Limited (supra) as also another judgment in India Oil Corporation, to the effect that even of implied conditions of services are attracted, section 9-A of the I.D. Act would be attracted. Thereafter the Full Bench noted as under:-
"We are, therefore, constrained to hold, that in spite of the desirability of a productivity-linked wage structure, the provision for explanations by the concerned employees of his failure of achieve the minimum standards of business, and the appeals to higher authorities from any decision at lower level, conditions of service referable to matters included in the Fourth Schedule of the I.D. Act have been altered to the prejudice of the workmen concerned by the issue of Exts. P-2 and P-3, and that such alterations without compliance with the requirements of section 9-A of the I.D. Act cannot be but be held to be invalid from their very inception."
The Full Bench thereafter while answering the issues held as under :--
"Exts. P2 and P3 did alter the conditions of service of the petitioners to their prejudice without compliance with section 9-A of the I.D. Act and were therefore invalid ab initio."
Exts. P2 and P3 were subject to other terms with which we are not concerned with.
15. From the judgments noted above, what emerges is that the Apex Court has held change without notice as ineffective and/or illegal. The Full Bench of the Kerala High Court has held that such actions are invalid ab initio.
16. Counsel for the employer Companies contended that this Court in The Premier Automobiles Ltd. v. G.R. Sapre and others, reported in 1981 Lab.I.C. 221 in the case of Lockout where no registered notice has been given has held that the action would not be void ab initio. That the act if it has not complied with the requirement of notice would be ineffective, but the moment the necessary period has been complied with the act complained of can be held to be valid. In other words what is sought to be contended is that such an action would not be void ab initio and that it can be cured by a notice and at the highest the action previous to 21 days before such notice would be invalid, but subsequent to the completion of 21 days, the act would be valid. The said judgment is on the interpretation of section 24(2)(c) of the M.R.T.U. & P.U.L.P. Act.
Considering what has been laid down by the Apex Court and what has been observed by this Court the issue can now be answered.
17. The important question to be decided is whether the provisions of section 9-A of the I.D. Act are attracted to V.R.S. Scheme. It would be interesting to note that if the conditions of services of even an individual employee are to be altered, which would have adverse effect on the other workmen, then such of the workmen who are likely to be adversely affected by the change in conditions of service are to be noticed. In a case where there is a Union representing the workmen, the notice of change served on the office bearers as per the rules would be service on such workmen and that would be compliance with the requirement of section 9-A of the I.D. Act. Under section 20 of the M.R.T.U. & P.U.L.P. Act a recognised union has the right in order to prevent industrial dispute or settle an industrial dispute to represent the employees and discuss the same with the employer. In fact under Item 5 of Schedule II of the M.R.T.U. & P.U.L.P Act refusal to bargain with the recognised Union by itself amounts to an unfair labour practice. Therefore, what has to be understood is that if there is a likelihood or probability of a workman likely to be affected then notice has to be given. The act must be which is likely to affect the conditions of service. The purpose behind the notice is to enable the parties to meet and discuss and put forward each others points of view as explained in M/s. Tata Iron & Steel Co. Ltd. (supra) and/or take appropriate steps before the change is effected.
18. The workmen or unions contend that the moment the V.R.S. scheme is proposed, that is the point of time when the management is bound to give notice as it is likely and/or probable that the V.R.S. would affect the conditions of services of the workmen at large. It is pointed out further that such changes could be in wages earned, productivity linked bonus and/or incentive, in the hours of work, etc. and/or making non-applicable Chapter V-B of the I.D. Act, etc. The contention, therefore, is that the moment the proposed change is likely to attract Items 10 and 11 of the IVth Schedule, a notice as contemplated must be given.
19. The employers, however, contend that what they are offering is a Voluntary Retirement Scheme. Whether the workers accept the Scheme or not is not within their hands and as such the question of issuing notice will not arise. It is pointed out that they are not affecting the conditions of service of any workman. What they are doing is merely putting a proposal and it is on the individual workman either to make an offer in terms of the scheme or not. There is neither any inducement nor threat or any action on the part of the employer which would result in affecting the conditions of service. It is argued that there is no affirmative action on the part of the employer and the employer is a passive spectator. It can only act if the workmen apply. It is further pointed out that once an offer is made it is an offer to retire from the service and a retirement cannot have the effect of affecting the conditions of services. Otherwise, it is pointed out that the "Master" and "Servant" relationship will cease to be in operation in as much as the workmen would have no right to terminate his employment if he so chooses and his termination will be depending upon whether the other workers would want him to retire or resign from service. It is pointed out that neither a workmen nor a Union can stop any other workmen from severing his relationship with his Master. It is pointed out that merely making an offer and persuading the workmen to make an offer cannot be said to be affecting the conditions of services of any workmen. It is further pointed out that in such cases there is no reduction in a post and as such the question of attracting Item 11 of the Fourth Schedule will not arise.
20. In the case of Amrit Banaspati Co. Ltd. and S. Taki Bilgrami and others, reported in 1971(II) L.L.J. 317 the Apex Court was considering section 42(1) and 46 and Item I of Schedule II of the Bombay Industrial Relations Act. Item 1 of Schedule II of the Bombay Industrial Relations Act, reads as under:--
"1. Reduction intended to be of permanent or semi-permanent character in the number of persons employed or to be employed in any occupation or process or department or departments or in a shift not due to force majeure."
It is pointed out that this terminology is similar to the terminology used in Item 11 of Schedule IV of the Industrial Disputes Act. It is pointed out that the Apex Court while interpreting this Item in the case of Amrit Banaspati Co. Ltd (supra) held that on the closure of the 3rd shift what the employer did was to retrench the surplus in that shift. It is a case of reduction of persons employed and not one of reduction of the number of persons employed. Hence it is not a case of reduction of posts.
It is only when there is a likelihood of reduction of posts, would section 9-A be attracted in view of Item 11 of Schedule IV of the I.D. Act. It is, therefore, pointed out that in the instant case at the highest this will be a case of voluntary retirement. It is reduction of persons employed and not of reduction of number of persons on account of reduction of posts.
In the case of Chaganlal Textile Mills Private Ltd. v. Chalisgaon Girni Kamgar Union, reported in A.I.R. 1959 S.C. 722, the Apex Court was again dealing with the issue of Item 1 of Schedule II of the Bombay Industrial Relations Act. The Apex Court noted that what the item refers to is reduction of post and not reduction of persons employed.
21. In the case of L. Robert D'Souza v. Executive Engineer, Southern Railway and another, reported in A.I.R. 1982 S.C. 854, the main issue before the Apex Court was whether the termination of the services of a workman amounting to retrenchment brought about without issuing a notice would be excluded in view of provisions to section 9-A of the I.D. Act. The Apex Court observed in para 9 as under:--
"9. It was obligatory upon the employer, who wants to retrench the workmen to give notice as contemplated by Clause (a) of section 25-F. When a workman is retrenched it cannot be said that change in his conditions of service is effected. The conditions of service are set out in Fourth Schedule. No item in Fourth Schedule covers the case of retrenchment. In fact, retrenchment is specifically covered by Item 10 of the Third Schedule. Now, if retrenchment which connotes termination of service, cannot constitute change in conditions of service in respect of any item mentioned in Fourth Schedule, section 9-A would not be attracted. In order to attract section 9-A, the employer must be desirous of effecting a change in conditions of service in respect of any matter specified in Fourth Schedule. If the change proposed does not cover any matter in Fourth Schedule section 9-A is not attracted and no notice is necessary."
The Apex Court then noted the argument in respect of violation of section 25-F and violation of section 9-A and has observed as under:--
"The basic fallacy in the submission is that notice of change contemplated by section 9-A and notice for a valid retrenchment under section 25-F are two different aspects of notice, one having no correlation with the other. It is, therefore, futile to urge that even if termination of the service of the petitioner constitutes retrenchment it would nevertheless be valid because the notice contemplated by section 25-F would be dispensed with in view of the provision contained in section 9-A, proviso (b) ....."
What emerges from the said judgment is that non-compliance with the provisions of section 25-F may render the retrenchment invalid. However, this would not amount to change of conditions of services which would attract section 9-A. Item 10 of Schedule IV covers only retrenchment brought on account of rationalisation, standardisation or improvement of plant or technique.
22. In the case of Narkeshari Prakashan Ltd. v. Nagpur Press Kamgar Sangh & others, reported in 1993(3) Bom.C.R. 565 : 1993(11) C.L.R. 1112, Relying on the observations of the judgment in L. Robert D'Souza's case Division Bench of this Court observed as under:-
"Even otherwise, assuming that notice of change under section 9-A of the Act was necessary for introducing the photo composing machines, it would not mean that the retrenchment of workmen concerned in the instant case without giving the notice of change under section 9-A of the Act would be illegal because as held by the Supreme Court in L. D'Souza's case cited supra, retrenchment as such is not covered by any item in the Fourth Schedule of the Act and, therefore, no notice of change is necessary before effecting retrenchment. It is clearly held in the said case that retrenchment does not constitute any change in the conditions of service in respect of any item in the Fourth Schedule of the Act and that notice of change under section 9-A and notice under section 25-F for effecting retrenchment are entirely two different aspects having no co-relation with each other."
The Division Bench thereafter observed that it was necessary to see what was the apprehension of the respondent/union of the workmen concerned that there was likelihood of retrenchment due to installation of the said photo composing machines.
In that context the Division Bench observed as under:-
".....it was open to them to raise, at the time of installation of such machines or immediately thereafter, an industrial dispute under the Act on the question whether the appellant had introduced a change which necessitated notice of change under section 9-A of the Act and which was, therefore, in its absence illegal and ineffective. If such a dispute was raised and if it was found by the Industrial Tribunal that there was likelihood of retrenchment, it could have laid down appropriate norms to safeguard the interests of the workmen concerned, imposing certain conditions upon the appellant for allowing it to do its work of composing with the aid of the new photo composing machines installed by it."
It is clear from the above that the Division Bench of this Court did not exclude the applicability of section 9-A of the I.D. Act being attracted where on account of rationalisation, standardisation or improvement of plant or technique there was a likelihood of retrenchment of workmen.
23. In the case of The Workmen and Hindustan Lever Ltd. reported in 1973(1) L.L.J. 427 the Apex Court was considering the issue whether rationalisation and standardisation per se would come under item 10 of IVth Schedule even if they were not likely to lead to retrenchment. The Apex Court rejected the contention that rationalisation and standardisation per se would fall under item 10 of IV Schedule even if they were not likely to lead to retrenchment. The Apex Court observed that rationalisation or standardisation by itself would not fall under item 10 unless it is likely to lead to retrenchment of workmen. The Apex Court thereafter observed as under;-
"In this case it is not disputed that the re-organisation has not resulted in any retrenchment. The employer had made it perfectly clear that nobody would be retrenched. Hindustan Lever Ltd., being a large organization covering the whole of the country there was no difficulty about giving effect to the reorganisation scheme without retrenching anybody. The workers cannot, therefore, make a grievance of the voluntary retirement and non-filling of vacancies and try to bring it under Item 10.
As regards Item 11, section 9-A requires notice to be given to the workmen likely to be affected. "Affected" in the circumstances could only mean and refer to workers adversely affected and unless it is shown that the abolition of any department has adversely affected the workers it cannot be brought under Item 11. The same consideration applied to the question of change in usage under Item 8."
The Apex Court has further observed that the management has got the right to reorganise its work in the manner it pleases. In fact the issue that had been referred to the Industrial Tribunal by the Government of West Bengal read as under:-
"Is the human rationalisation as a measure of economic reorganisation of the company reflected through job-integration that have either been effected or proposed to be effected justified? To what relief, if any, are the workmen entitled?"
One of the arguments advanced before the Apex Court was if there was substantial compliance in respect of the notice under section 9-A of the I.D. Act the mere fact that a formal notice was not given under section 9-A would not make the scheme not valid. In the said judgment the Apex Court having come to the conclusion that section 9-A is not attracted did not answer the said question.
24. In the case of M/s. J.K. Cotton Spg. & Wvg. Mills Company Ltd. Katpal Road, Kanpur v. State of U.P. & others, reported in A.I.R. 1990 S.C. 542, sections 2(5) and 6-N of the Uttar Pradesh Industrial Disputes Act, was under consideration. This was a case of a workman who had voluntarily resigned. The issue was, when a resignation is accepted by the employer, whether such resignation amounts to retrenchment. The Apex Court held that where the contract of service is determined on the workman exercising the right to quit such termination cannot be said to be at the instance of the employer to fall within the first part of the definition of retrenchment in section 2(oo) of the I.D. Act. The Apex Court also noted that the expression "resign" would include retirement.
This judgment has been cited to point out that where a workmen voluntarily retires/resigns from service this would not fall within the meaning of retrenchment as contemplated by section 2(oo) of the I.D. Act.
25. In the case of The Raja Bahadur Motilal Poona Mills Ltd. v. 1. Girni Kamgar Sanghatana & another, reported in 1985(1) C.L.R. 188, a Single Judge of this Court was considering the expression 'force or violence' in terms of Item 10 of Schedule IV of M.R.T.U. & P.U.L.R Act. The Court noted that the word "force" used in the M.R.T.U. & P.U.L.P. Act means an action which is designed to compel another to do an act or refrain from doing an act. When an employer lays off workmen it is not for the purpose of compelling them to do a particular thing or not to do a particular thing. An employer cannot be said to indulge in an act of force by declaring a lay off in contravention of the provisions contained in section 25-M of the Industrial Disputes Act.
Another Single Judge of this Court in the case of The Premier Automobiles Ltd. v. The Engineering Mazdoor Sabha and others, 1982 Lab.I.C. 1759 (supra) has observed under:-
"There does not seem to be any bar in any of the statutes or the laws dealing with industrial disputes, which prevents the employer from telling an employee that there are two agreements and he is likely to get more wages in accordance with one of them and he should, therefore, accept payment according to that agreement. Persuasion is not the same thing as forcing a person and there is nothing in law to prevent an employer from persuading an employee that he should accept a particular agree-
ment and agree to be bound by it, though it will be for the employee to accept or reject such request of the employer."
26. In the case of P.S. Desikachari and others v. The Proprietors of M/s. Associated Publishers, Madras (P) Ltd., the Mail, Madras-2 and another , a Division Bench of the Madras High Court noted that unless the termination of services is the result of a voluntary move on the part o( the employee, he cannot be said to have "Voluntarily retired". A mere submission of the employee to the termination of service by the employer cannot be said to be voluntary act to the former.
27. In the case of Association of Engineering Workers and Air Workers (India) Engineering Pvt. Ltd. and offers., reported in 1994 (1) L.L.J. 1136 another Single Judge of this Court has observed as under:-
"Section 9-A does not apply to cases of retrenchment. Section 9-A applies to change in service conditions of existing workmen. By way of illustration, if on account of exigency of work the existing workers are required to put in more work on account of increased work load, then section 9-A would apply, but that is not the case in the matter of retrenchment."
In a case of retrenchment no notice under section 9-A is required, has also been upheld by another Single Judge of this Court in the case of Dinkar Ramchandra Ambonkar v. Photophone Limited and others, reported in 1992 (II) C.L.R. 529.
28. In (Banaras Ice Factory Ltd. and Their Workmen), reported in 1957 (I) L.LJ. 253, the Apex Court was considering whether Clause (a) of section 22 of the Industrial Disputes (Appellate Tribunal) Act applies to a running or existing industry only. The language of section 22 is similar to the language of section 9-A of the I.D. Act: The Apex Court was considering as to whether the word "discharge" which occurred in clause (b) of section 22 includes termination of the services of all workmen on a real and bona fide closure of his business by the employer. In that context the Apex Court observed as under:-
"Turning now to section 22 of the Act, is clear enough that Cl. (a) applies to a running or existing industry only; when the industry itself ceases to exist, it is otiose to talk of alteration of the conditions of service of the workmen to their prejudice, because their service itself has come to an end. The alteration referred to in Cl. (a) must therefore be an alteration in the conditions of service to the prejudice of the workmen concerned, in an existing or running industry."
29. From a conspectus of all these judgments what appears is that Item 10 would not ordinarily apply to retrenchment unless it is on account of rationalisation, standardisation or improvement of plant and technique. Jt further emerges that who has to be given notice are the persons likely to be affected. If a workman had voluntarily retired there is no question of serving a notice on such a workman, as voluntary retirement does not amount to retrenchment within the meaning of section 2(oo) of the I.D. Act. It is further clear that the expression "force" in Item 10 of Schedule IV of the M.R.T.U. & P.U.L.P. Act would not include failure to comply with the provisions of law. It cannot be said that in such circumstances an act is brought about by force within the meaning of the Act. It is further clear that an employer can always persuade an employee to accept a condition of service and this is not prohibited in law. The change in conditions of services must be in respect of an establishment which is running and not an establishment which is closed. To attract the operation of Item 11 of Schedule IV of the I.D. Act there must be a reduction of post and not mere reduction in number of persons. Section 9-A to be attracted must be on account of an act on the part of the employer and not brought about by an act of a workman, even if such an act has an effect of affecting the conditions of service of other employees. 30. Issue as to whether the V.R.S. by itself would attract the provisions of section 9-A read with Items 10 and 11 of the I.D. Act is not the matter of any decision or atleast brought to the notice of this Court. The only judgment to which attention has been invited is in the case of Blue Star Limited v. Blue Star Workers Union and another, reported in 1994 (2) Bom.C.R. 352. That was also a case under Voluntary Retirement Scheme. A learned Single Judge while deciding the matter has not concluded the issue. In para 12 of that judgment the learned Single Judge observed that in his view, prima facie, such a scheme would attract Item Nos. 9, 10 and 11 of the IV Schedule to the Industrial Disputes Act, 1947, in view of which section 9-A of the said Act would be applicable and as such found substance in the contention on behalf of the Union that Items 9 and 10 of M.R.T.U. & P.U.L.P. Act were attracted.
31. The first question, therefore, which needs to be answered is whether V.R.S. leads to abolition of posts. The language of Item 11 of Schedule IV is reduction or increase in the number of persons employed. The expression is not workman as used in Item 10 of the IVth Schedule. However, we proceed to deal with the contention of the employers that it is not sufficient that there must be mere reduction of persons but there must be reduction of posts. It has been contended on behalf of the employers that if there is no reduction of posts the question of attracting Items 10 and 11 of the IVth Schedule to the Industrial Disputes Act, 1947 being attracted will not arise. It is contended that this visualises a situation where there is an agreed number of workmen and there is a reduction in this agreed number. It is contended that there is no settlement or award or for that matter any contract between the parties whereby the number of workmen has been agreed to or fixed. It is, therefore, submitted that in these circumstances there being no reduction of posts, Item No. 11 is not attracted so as to invoke section 9-A of the I.D. Act. I have already discussed the provisions of the Income Tax Act pertaining to V.R.S. The instant case is not of a scheme of voluntary retirement which has not been approved by the Income Tax Authorities as we are dealing with schemes which have been sanctioned under the provisions of the Income Tax Act. One of the requirements of section 16(10-C) of the Income Tax Act is that the scheme to be drawn up must result in over all reduction in the existing strength of the employees. In other words it must necessarily postulate reduction in the work force as existing when the scheme is sanctioned. If this be the case the contention on behalf of the employers that V.R.S. does not lead to abolition of posts has necessarily to be rejected. Approval of the V.R.S. under the IT. Act must necessarily result in the over all reduction in the existing strength of the posts as the post from which the person retires cannot be filled in. What the section contemplates is reduction of number of persons at the time when the condition of service is likely to be affected. If at that time the effect would be reduction in the number of existing posts, section 9-A would be attracted. The argument that there must be an agreement on the number of posts and only in such cases when the number of posts are increased or decreased would Item 11 be attracted has to be also rejected. Fixation of work-force is purely a managerial function. It is only in the event conditions of service are likely to be affected by increase or decrease in existing work-force Item No. 11 is attracted. I have, therefore, no hesitation in rejecting this contention raised on behalf of the employers. Even if the interpretation given to Item 2 of Schedule II of the B.I.R. Act is accepted as enunciated by the Apex Court in the case of Amrit Banaspati Co. Ltd. (supra) and Changantal Textile Mills Pvt. Ltd. (supra), however in the case of V.R.S. it is not merely reduction of persons but also posts as the posts cannot be filled in.
32. Even then it is contended that V.R.S. would not attract the provisions of section 9-A of the Industrial Disputes Act, 1947. The argument is that the notice of change would be required only in the event the employer proposes to effect any change in the conditions of service applicable to any workman in respect of any matters specified in the IVth Schedule. It is, therefore, sought to be contended that, notice of change is required to be given only to workmen who are in employment. In the event a workman voluntarily wants to opt out of employment by way of resignation and/or voluntary retirement, an employer cannot force a workman to continue in employment with the employer. The workman in terms of his conditions of service has a choice either to continue or to leave his employment. Conditions of service and/or terms of employment normally contain a clause whereby notice has to be given by the workman in the event he wishes to terminate his services with the employer. This is the only requirement and it is for the employer to waive the notice or insist on the compliance with the notice. Apart from this, the employer in no manner can prevent the workman terminating their employment. In the instant case it is pointed out that after the V.R.S. Scheme was announced it is the workers who have voluntarily offered to terminate the employment. It is, therefore, not the act of the employer which may result in change of conditions of service as a corollary. It is sought to be contended that such workmen can have no right to file a complaint as they are not covered by section 9-A of the I.D. Act. At the highest who can complain would be those workman in service and in so far as they are concerned there is no change in the conditions of service as the employer could not have prevented the workmen who have voluntarily retired from terminating their relationship with the employer. It will be difficult to accept this contention. Ultimately the scheme of V.R.S. is not an ordinary case of a workman terminating his services on his own volition. In the instant case it is pursuant to the inducement by the employer in the form of a package of monetary returns. It is the employer who induces the worker to terminate his employment. Therefore, the argument of the employer that they are not in any manner affecting the conditions of services has to be rejected at the threshold. Acceptance of the argument would be taking too simplicitie a view of the matter when the action is likely to have adverse impact on the conditions of workmen who remain in service. Once it is shown that the voluntary retirement of workmen is likely to affect the conditions of service, notice under section 9-A is a must. The question whether the workmen whose offers were accepted have retired have the right of maintaining a complaint will be dealt with later. Suffice it to say that in respect of both the complaints herein it is the Union of the workers who have filed the complaint of unfair labour practice. The complaint is based on an Unfair Labour Practice which collectively affects workmen the workmen. It is an industrial dispute which the Union could have espoused on behalf on its member.
33. The next point to be considered is whether Items 9, 10 and 11 of the IVth Schedule to the I.D. Act are attracted. In the instant case the Unions have chosen to restrict the arguments in so far as Items 10 and 11 are concerned. Let us first, therefore, deal with Item No. 10 which speaks of rationalisation, standardisation or improvement of plant or technique which is likely to lead to retrenchment of workmen. As pointed out earlier definition of retrenchment excludes voluntary retirement. In the instant case there is no material on record to show that V.R.S. Scheme was introduced on account of rationalisation, standardisation or improvement of plant or technique. The only material that has come on record as of today is that the employers are free to reduce their strength of workers the question is not the conditions of service of workers who have retired under V.R.S. The question is whether on account of the V.R.S. there is likely to be retrenchment on account of rationalisation, standardisation or improvement of plant or technique. In the notice put up by petitioner in Writ Petition No. 1761 of 1997 it is mentioned in the preamble that there is need for the company to continuously upgrade the quality of its products, Prima facie, therefore, item 10 can be attracted. This is however, subject to the material that comes on record finally.
That leaves us with Item No. 11. Item 11, as already referred to earlier speaks of increase or reduction in number of persons employed or to be employed in any occupation or process or department or shift, not occasioned by circumstances over which the employer has no control. I have earlier referred to the fact that once the approval is taken under the Income Tax Act the Scheme of V.R.S. must necessarily result in decrease in the existing strength of workers. Therefore, prima facie it must result in reduction of posts as earlier explained in para 31. Once that is so held there is no hesitation in holding that V.R.S. would necessarily be covered by Item 11 of IV Schedule to the Industrial Disputes Act, 1947.
34. The next contention which has been urged on behalf of the workmen is that the V.R.S. is void ab initio. I am unimpressed by this argument. V.R.S. has to be first sanctioned under the Income Tax Act wherever the employer seeks to give benefits to the employees from deduction in payment of tax on the money received by the employee on his opting out on voluntary retirement. If V.R.S. is framed by the employer, it has to satisfy the requirement of the provisions of the Income Tax Act. The authorities under the Income Tax Act if they are satisfied that the scheme complies with the requirements of the Income-Tax Act will grant sanction and/or approval to the Scheme. Therefore, the scheme on approval does not become null and void on account of section 9-A of the I.D. Act as section 9-A would come into operation at the highest only at the stage of implementation when the employer invites applications from its employees to seek voluntary retirement. Therefore, V.R.S. by itself is not void ab initio. The only question that will have to be seen is whether by subsequent operation of law on account of section 9-A of the I.D. Act it becomes ineffective or non est. The workers contend that it at this stage, when the employer invites application that section 9-A comes into operation whereas the employers contend that it is only an invitation and it is for the worker to accept or not and that the scheme has to be tested at the stage when the employer accepts the offer of the workman to retire from the service. If this be the case, it is pointed out that section 9-A would not be attracted and as such the question of giving notice would not arise. The contention on behalf of the workmen will have to be accepted while rejecting the submission on behalf of the employers. !t is the stage when the employer invites applications which would be the stage to consider the applicability of section 9-A of the Industrial Disputes Act, 1947. If there was no invitation from the employer no worker would apply. Further the worker is induced to apply on account of the attractive benefits and tax exemptions accorded. It is, therefore, an inducement by the employer to the workman. It is a bait dangled before the workmen. Whether the workmen accept it or not would depend on the circumstances existing at that stage. It is not a voluntary retirement as normally understood. It is a retirement on invitation and subject to the terms of the V.R.S. Even if the employer's condition is accepted that their invitation is merely persuasion to accept its point of view and therefore, does not amount to an Unfair Labour Practice, nonetheless the payments are exempted from payment of tax; amounts are fixed and the workers who can opt out are decided under the scheme framed in terms of the rules. At any rate material would have to be placed on record to show that the workers applied for voluntary retirement on their own volition without being attracted by V.R.S. On the facts of the present cases the contention has to be rejected at the threshold as it is the case of the employers themselves that they received applications pursuant to V.R.S. Therefore, there is no hesitation in holding on the facts of the present cases, that the applications for voluntary retirement are pursuant to the scheme framed by the employer and approved by the Income-Tax Authorities. It is the act of persuading the workman to opt for the V.R.S. Scheme that has the effect of affecting the conditions of service. Will this, therefore, attract section 9-A of the Industrial Disputes Act, 1947. Before proceeding to answer the said issue it must be remembered that all the case law referred to earlier is in respect of a direct change in the conditions of service of the employees and not likely changes in conditions of service. In the case of M/s. Tata Iron and Steel Co. Ltd. (supra) it was in the matter of change of weekly off. Therein workers who had not reported for duty on the changed weekly off were denied wages. The Apex Court held that this would amount to change in conditions of service and without giving a notice under section 9-A the change would be ineffective. In the case of The Workmen of the Food Corporation of India (supra) again the case directly affected the workers in employment. It was in these circumstances that the Apex Court held that the change to be ineffective. The Full Bench of the Kerala High Court in the case of P.V. Mans and others (supra) proceeded to hold that the alteration without requirement of section 9-A is invalid from the very inception. However, as I have pointed out earlier these were all cases where the conditions of those in employment were directly affected. In the instant case we have a set of employees who want to contend that their applications for V.R.S. are non est because of non-compliance with section 9-A and we have those who have not opted for V.R.S. contending that as large number of workmen have retired consequently there would be alteration in the conditions of services of those who are in employment. The question, therefore, is whether it is possible to hold that in one case the change brought about is null and void and in the second case it is only illegal and can be remedied if defects are overcome. What is the effect in the instant case. The effect on those who continue in employment as can be seen, could be increased working hours, increased work load and for that matter exclusion of certain provisions of various statutes on account of decreased work force. One such instance which can be highlighted would be Chapter V-B of the Industrial Disputes Act, 1947, Chapter V-B contains special provisions relating to lay-off, retrenchment and closure in certain establishments. This Chapter applies to Industrial Establishments covered by section 25(k) as long as 100 workmen were employed on an average per working day for the proceeding 12 months. In other words if the strength of the workmen falls below 100, Chapter V-B which was applicable would cease to apply and the employer could proceed to lay-off, retrench or close the establishment under the other provisions of the Industrial Disputes Act, 1947. Therefore, the effect of V.R.S. Scheme would have effect on the service conditions of workers in service and the ratio of M/s. Tata Iron & Steel Co. Ltd. (supra) will applly to their case and the change if any would be ineffective.
35. What is the change brought about which can be reversed or status quo ante restored in respect of those who had applied and whose offers are accepted. Can the workers who have voluntarily retired be told that the termination is non-est and that they be employees of the company. In that event what is the effect of they having accepted the benefits and severed their relationship with the company.
To answer the question, the contention on behalf of the employers that, all that section 9-A requires is substantial compliance and as long as the workers have notice of the V.R.S. on expiry of the period of 21 days of displaying the scheme, it would meet and satisfy the requirements has to be answered first. In all cases herein, notice is given by the management of the essential particulars of the V.R.S. If at all there was an illegality, it is pointed out that the subsequent act of compliance with the provisions by putting up the V.R.S. would by itself be sufficient. Reliance is sought to be placed on the judgment of The Premier Automobiles Ltd. v. G.R. Sapre (supra). That was a case under section 24(2)(a) of the M.R.T.U. & P.U.L.P. Act. In that case the notice for lock-out was not given as required by law. The Division Bench of this Court held that if lock-out had commenced before expiry of the statutory period of 14 days at the highest it can be said that for the period falling short of the notice the lock-out would be illegal, but once the period is completed then there is compliance with the requirement of the notice and the lock-out will be legal after the expiry of the said period. We need not go into a detailed discussion on this issue as the Apex Court itself has proceeded on the footing that failure to comply with the requirement of notice under section 9-A makes the change ineffective, null and void. If it is void you cannot breath life into it on the period of the notice being complied with. This one reads from the ratio of judgment of the Apex Court in Tata & Steel Co., (supra). The only question is whether the requirements have to be strictly complied with or is substantial compliance sufficient. In the first instance it is not the case of the employers that the notice put up was a notice of change under section 9-A. As per their contention it is only an invitation to workers to apply. Let me however, proceed on the footing that it partakes of a notice. It is true that different provisions of the Industrial Disputes Act, 1947 have been construed differently. In so far as retrenchment under section 25-F is concerned, compliance of section 25-F(a) has been held to be mandatory whereas in respect of section 25-F(c) in so far as service of notice on the appropriate Government or authority is held to be directory. Section 9-A of the I.D. Act read with Rule 37 of the Bombay Rules requires 21 days notice in Form XII before any change in the conditions of service can be effected. In terms of the form the change/changes intended to be effected have to be disclosed. Rule 37 of the Bombay Rules requires that the notice must be given in Form XIII. Rule 38 sets out when there are numerous workmen affected by a notice of change and the majority of such workmen are members of any trade union, the service of notice by registered post on the Secretary, or where there is no Secretary, on the Principal Officer of the trade Union, shall be deemed to be service on all such workmen. The purpose behind it whether the Industrial Disputes Act, 1947 or the M.R.T.U. & P.U.L.P. Act is to avoid industrial strife and advance collective bargaining. M.R.T.U. & P.U.L.P. Act has gone one step further on conferring certain rights on recognised Unions only. In Tata Iron & Steel Co.'s case the Apex Court was pleased to explain the object and purpose of enacting section 9-A which is to avoid industrial strife by permitting an opportunity to the workmen to consider the effect of the proposed change and if settlement by collective bargaining is not possible to move the authorities under the Act. The Act itself contains provisions that during the period of conciliation, etc., conditions of service cannot be altered. In other words the entire purpose is that until the dispute is resolved either by mutual settlement or collective bargaining or by an award of a Court or Tribunal parties are not to give effect to change contemplated. If this be the purpose it must be held that there must be strict compliance with the requirement of notice. The entire purpose of the Act would be defeated if it is contended that there has to be only substantial compliance. It is sought to be argued that all that the workmen must know is that the employer has a scheme of V.R.S. Once this is known through the scheme that is displayed the worker is fully aware that the employer has introduced a scheme and the likely fall out. It is pointed out that once this is known to the workmen and the mere fact that the Union was not notified is of no consequence. The entire purpose as oft repeated being either to have collective bargaining or initiate conciliation proceedings and once the workers have full knowledge of the same there is compliance with section 9-A and Rule 37 and 38 of the Bombay Rules. The argument in the first flush seems to be attractive. Ultimately the purpose of the notice is to bring to the attention of those who are likely to be affected that there are some changes in the offing which will result amongst others in reducing the work force. However, the requirement of the section is that the change can be brought about only after the expiry of 21 days notice. The form for the notice is contained in the rules framed. The notice has to be served on the workmen and/or union as the case may be. In a case where the object is to ensure collective bargaining to avoid industrial strife, unilateral action on the part of either the employer or employees cannot be countenanced. Industrial harmony would prevail if both the parties are directed to comply with the requirement and the letter of law. This can only be met if there is strict compliance with the requirement. In the instant case it is pointed out that there is notice to the workmen in some form and, therefore, no prejudice is occasioned by not giving notice in the requisite form. Alternatively, it is sought to be argued that though 21 days notice has not been given on completion of 21 days the change which is already effected will become good. In the present case workers who have left cannot be told to come back against their will.
This interpretation if accepted would defeat the interpretation given by the Apex Court when it explained the object and purpose behind section 9-A of the I.D. Act in M/s. Tata Iron & Steel Go's case. Apart from that, failure to comply with the provisions of section 9-A and the Rules is punishable in terms of section 31(2) of the I.D. Act. Language of section 9-A itself makes the notice of change mandatory and to be given in the prescribed manner and only after the completion of 21 days can the change be effected. I am, therefore, unable to accept the contention on behalf of the employers that substantial compliance with the requirement of notice is sufficient.
On the failure to give the notice as required, can the company be compelled to call back the workers who have retired and/or their termination has to be held null and void. V.R.S. by itself when approved by the Income Tax Authorities is not non est It is only by subsequent acts or events of non-compliance with the requirement of section 9-A that it becomes ineffective. There are two situations. One of a worker who has fully accepted the benefits by encasing the cheque and the other if a worker who is yet to encash the cheque. The case of a workman who has voluntarily made the offer which was accepted by the employer and who has taken the benefit by encasing the cheque is different from similarly situated workers who have not encashed the cheques. It is true that the termination at law would be held to be bad in both the cases. However, in the first case a workman will be estopped by his conduct from maintaining a complaint. He who takes the benefits and chooses to sever his relationship cannot complain of an Unfair Labour Practice on the part of the employer. The only possible exception to this category will be those cases where the complaint is filed under Item No. 10 of Schedule IV of the M.R.T.U. & P.U.L.R Act. In respect of second category of workers who at the time of withdrawal of their application had not encashed the cheques they can maintain a complaint of violation of section 9-A of the I.D. Act. The act of termination is ineffective and non est in the eyes of law. Such workers will be deemed to be in service. This is so because the act of accepting the money by encashing it is yet to be completed. There is no severance of employer/worker relationship as the termination if and at all is ineffective in law being in violation of law and or contrary to the provisions of law. This can be the only harmonious interpretation. Those who have taken the benefit and chosen to walk out cannot be forced to come back nor can the employer be told to take them back. As the change is ineffective workers in service have a right to file a complaint. Relief will, however, depend on the facts of each case. That also answers the question of who can make the complaint. It is clear that a complaint can be maintained at the instance of workers in employment and also workers who have not encashed their cheques and/or on their behalf by a recognised Union or representative union as the case may be. In a situation were there is no recognised union either the workmen or others contemplated under section 21 of the M.R.T.U. & P.U.L.P. Act can file the complaint.
36. Summarising what has been decided the following conclusions emerge :--
(i) Voluntary Retirement Scheme as approved by the Income-tax Authorities is not non est at its inception unless the approval itself is contrary to the provisions of section 10(10-C) of the Income-Tax Act and Rules framed thereunder.
(ii) Voluntary Retirement Scheme results in reduction of posts and hence attracts Item 11 of Schedule IV of the Industrial Disputes Act, 1947. Item 10 can be attracted depending on the facts of the case. Notice, therefore, under section 9-A is mandatory.
(iii) Service of notice must be in terms of Rule 38 of the Industrial Disputes (Bombay) Rules, 1957 and compliance is mandatory.
(iv) The notice of change must be given at or before the time when the scheme is displayed and applications invited from the workmen. Notice of 21 days must elapse before the management can accept the offer of the workmen pursuant to the Scheme.
(v) Item 9 of the IVth Schedule to the M.R.T.U. & P.U.L.P. Act is attracted in a case of V.R. Scheme.
Application of Item 10 will depend on facts of each case,
(vi) Workers who have accepted the V.R.S. and availed of its benefits by encasing the cheques on account of their conduct are estopped from maintaining a complaint, except those who have filed the complaint under Item 10 of Schedule IV.
Workers who have not encashed the cheques and withdrawn their offer as long as notice under section 9-A of the I.D. Act read with Rule 38 of the Bombay Rules is not given and even if given if the withdrawal is before the completion of the statutory period of 21 days, continue to be workmen.
(vii) Workers covered by conclusion (vi) as also workers in service and/or their recognised or representative Union can maintain a complaint. When there is no recognised Union complaint can be filed by others contemplated by section 21 the M.R.T.U. & P.U.L.P. Act.
Hence, the following order :--
1. Writ Petition No. 1761 of 1997 is dismissed. Rule discharged.
2. In Writ Petition No. 1917 of 1997 Rule made partly absolute in terms of Prayer Clause (a) and (b)(i), (b)(ii), (iv) and (v) pending hearing and final disposal of the complaint. Relief in terms of prayers (b)(iii) and (b)(vi) are left open to be considered and decided by the Industrial Court.
3. In Writ Petition No. 1821 of 1997 the impugned interim order dated 24th October, 1997 is upheld. Rule discharged.
4. The Industrial Court to decide the complaints in terms of the conclusions and in accordance with law, within six months from today.
Considering the facts and circumstances, each party to bear their own costs.
37. Order accordingly.