Parry & Co. Ltd. Vs. P.C. Pal
& Ors [1968] INSC 296 (27 November 1968)
27/11/1968 SHELAT, J.M.
SHELAT, J.M.
BHARGAVA, VISHISHTHA VAIDYIALINGAM, C.A.
CITATION: 1970 AIR 1334 1969 SCR (2) 976
CITATOR INFO :
F 1973 SC 878 (10) R 1973 SC1156 (9,10)
ACT:
Industrial Dispute-Decision to Reorganise
business- Retrenchment in consequence-Propriety of Tribunal to go into
question.
West Bengal Industrial Disputes Rules, 1958,
rr.77( 1 ) and proviso-Notice given 2 days prior, if proviso applicable.
Constitution of India, Art.
226-Certiorari-When can lie.
HEADNOTE:
In pursuance of its policy of reorganising
its business by concentrating more on manufacturing side than agency business,
the appellant company gave up more than half of its agencies in Calcutta and some
agencies in other places including Madras. The Union representing the workmen
wrote to the Labour Commissioner to intervene stating that due to the company's
said policy it feared retrenchment. The company served notices on some of the
employees for retrenchment to take effect two days thereafter. Also notice was
given to the Labour Commissioner and the Conciliation Officer as required under
s. 25F (c) of the Industrial Disputes Act. On reference of the dispute to the
Industrial Tribunal, the company justified the retrenchment and the Manager of
the Calcutta branch gave evidence that retrenchment was done in pursuance of
the said policy decision taken by the company. The Tribunal held that a good
case for retrenchment was not made out and ordered reinstatement. The Tribunal
did not accept the manager's evidence holding that the development on the
manufacturing side of the company's business should have been contemporaneous
with the surrender of agencies in Calcutta.
The Tribunal also held that the policy
decision was actuated by parochial considerations for transferring the
company's resources from Calcutta to Madras, that there was overload of work on
the remaining employees; that the retrenchment could have been avoided by
transferring the retrenched employees to other branches specially as their
conditions of service included the liability of being transferred; and that the
retrenchment was in breach of a. 25F(c) as the notice of retrenchment was two
days prior to the date of the retrenchment and not with immediate effect, the
proviso to r. 77(1) of the West Bengal industrial Disputes Rules, 1958, did not
apply and a notice of one month, as required by sub- el. (1) of that rule, was
necessary. The company filed a petition for a writ of certiorari. The Single
Judge of the High Court set aside the. award and remanded the case to the
Tribunal only for enforcing the retrenchment according to the principle of
"last come first go". The Division Bench of the High Court in appeal,
agreed with the findings of the Tribunal and held that the Single Judge was not
competent to interfere with those findings. In appeal this Court,
HELD: Some of the findings arrived at by the
Tribunal and which influenced its verdict were beyond its competence.
The rest were either speculative or contrary
to the evidence on record and were consequently liable to be set aside in a
writ petition for certiorari.
(i) A writ of certiorari is generally granted
when a court has acted without or in excess of its jurisdiction.
It is available, in those cases 977 where a
tribunal though competent to enter upon an enquiry, acts in flagrant disregard
of the rules of procedure 0r violates the principles of natural justice where
no particular procedure is prescribed. But a mere wrong decision cannot be
corrected by a writ of certiorari as float would be using it as the cloak of an
appeal in disguise but a manifest error apparent on the face of the proceedings
based on a clear ignorance or disregard of the provisions of law or absence of
or excess of jurisdiction, when shown, can be so corrected. [985] Basappa v.
Nagappa, [1955] S.C.R. 250, Dharangadhara Chemical Works Ltd. v. State of
Saurashtra, [1957] S.C.R. 152 and Andhra Pradesh & Ors. v. Sree Ram Rao,
A.I.R. 1963 S.C. 1723, followed.
(ii) The Tribunal wrongly rejected the
company's evidence on the ground that the policy decision being the function of
the Board of Directors, the Manager was not competent to depose about it and
that if the company, wanted to establish it, it should have produced a resolution
of the Board. In its letter to the Labour Commissioner and also during
conciliation proceedings the union had assumed that the company had taken the
said decision, that consequently, retrenchment was apprehended and that
therefore that officer- should intervene. In these circumstances, the finding
that the company had failed to establish its policy was not only beyond the
scope of the enquiry before the Tribunal but totally invalid. [987 D---F]
1. K. Iron and Steel Co. v. Iron and Steel
Mazdoor Union, [1956] L.L.J. 227, followed.
(iii) 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 for 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 tribuanaldead weight and retrenchment has to be accepted as
inevitable. however unfortunate it is. The Legislature therefore, provided by
s. 25F compensation to soften the blow of hardship resulting from 'an employee
being thrown out of employment through no fault of his. The Tribunal 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. It is not the function
of the Tribunal, to go into the question whether such 'a scheme is profitable
or not and whether it should have been adopted by the employer.
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 the earlier year some temporary appointments were
made or that the Union's Secretary deposed that work had accumulated would not
mean that the surplus age 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. [987 G, 989 D-F] (iv) While reorganising its business, it is not
incumbent on a 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 978
totally extraneous to the issue before it and the Tribunal ought not to have
allowed its mind to be influenced by such consideration and thereby disabling
itself from viewing the issue from proper perspective.
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 decided
to concentrate its activity in Madras there is nothing in the Industrial Law to
compel it to continue its business in Calcutta. [988 D, G] D. Marcropollo &
Co. v. Their Employees Union [1958] 2 L.L.J. 492, Ghatge & Patil Concern's
Employee's Union v. Ghatge & Patil (Transport) (P) Ltd. [1968] 1 S.C.R.
300, and Workmen of Subong Tea Estate v. The Outgoing Management of Subong Tea
Estate, [1964] 5 S.C.R. 602, followed.
(v) 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 men
could have been absorbed at other places, or that there were vacancies or that
the work there was the same as was done by them at Calcutta. There was 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 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. [989 G--990 A] (vi) Rule 77(1) of the West
Bengal Industrial Disputes Rules, provides that when an employer finds it
necessary to retrench any workmen he shall, at least _one month before the date
of actual retrenchment, give notice thereof to the Labour Commissioner and 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. Though the notice of retrenchment was not given immediately after
the retrenchment but two days before it, the company had substantially complied
with the requirements of the proviso to r. 77(1). The object of the proviso
clearly is that where it is not possible for an employer to give one months
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. 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. [990 C]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 284 of 1967.
979 Appeal from the judgment ,and order dated
December 23.
1964 of the Calcutta High Court in Appeal
From Original Order No. 90 of 1964.
S.V. Gupte, K.P. Bhandare and D.N. Gupta, for
the appellant.
A.1. S.R. Chari and fanardan Sharma, for
respondeat No. 3.
P.K. Chatterjee and P.C. Chakravarti, for
respondeat No. 4.
The Judgment of the Court was delivered by
Shelat, J. This appeal by certificate is directed against the judgment and
order of the Division Bench of the High Court of Calcutta setting aside the
order of a Single Judge of that High Court in a writ petition under Art. 226 of
the Constitution.
The facts relevant for this judgment may
first be set out. The appellant company was at the relevant time carrying on
business at various places in India including Calcutta as merchants, selling
agents and manufacturers. Its registered office is at Madras. Its business at
Calcutta was two fold:
(1) as selling agents of certain companies,
and (2) of conducting an engineering workshop at Kidderpore. According to the
company its agency business began to decline from 1954 and it had, therefore,
to retrench some of its employees in that year. The company consequently
decided upon a policy of reorganising its business by giving accent to its
manufacturing activities'and of giving up the agencies' held by it. In
pursuance of the said policy, the company relinquished between April 1, 1960
and September 30, 1961, 13 agencies in Bombay, 11 in Delhi, 8 in Madras and 11
in Calcutta. It also closed down 3 of its branches in Northern India and 11 in
South India. The total staff engaged at Calcutta consisted of 75 employees in
the workshop at Kidderpore and 225 in the Branch office.
Apprehending that the said policy would
result in retrenchment, the third respondent union wrote to the Deputy Labour
Commissioner requesting him to intervene stating that the Board of Directors
and the company had declared their policy of surrendering agencies and that in
the result the union feared that about 60 employees would be retrenched.
The Deputy Commissioner called for the
comments of the company's manager, who in his reply dated June 17, 1961
affirmed that the company had taken the said policy decision in consequence of
which some of the employees would have to be retrenched. On June 20,.. 1961 the
Deputy Commissioner held conciliation proceedings during which also the manager
made it clear that in pursuance of the policy of reorganising its business the
company had decided to give up cer- 980 tain agencies. On June 23, 1961 the
union sent to the company its demands inter alia claiming (a) that the
retrenchment must be fully justified, and (b) that transfer of service to other
places in the company's organisation should be offered to those who are willing
to accept such transfer. Neither in its letter to the Deputy Commissioner nor
in the conciliation proceedings, nor in the demands of the union disputed the
fact that the company had taken the said policy decision and that the decision
would result in retrenchment. Indeed, the said demands accepted the policy
decision but called upon the company to pay certain amounts to those
retrenched, to retrench only to the extent fully justified and to offer
transfer to those retrenched. On June 28, 1961 the company 'sent its comments
on the union's demands stating inter alia that (1) the company would pay one
month's wages in lieu of notice as also retrenchment compensation, (2) that 25
permanent and 17 temporary employees would be retrenched with effect from July
1, 1961, (3) that re-employment of retrenched workmen would be governed by the
provisions of sec. 25H, and (4) that the company's policy being to recruit
local persons at its branches, transfer from one place to another had not been
frequently resorted by the company but the company would consider transfer of
the employees concerned after employees retrenched at other branches had first
been absorbed. On June 29, 1961 the company_ gave the notice of retrenchment to
the employees concerned, also a notice to the Commissioner of Labour and the
Conciliation Officer under sec. 25F(c), paid one month's wages to the employees
concerned in lieu of notice and also retrenchment compensation. The State
Government by its order dated July 31, 1961 referred for adjudication to the
Second Industrial Tribunal, Calcutta, the question whether retrenchment of the
said 52 employees was' justified and to what relief, if any, they were
entitled.
In its statement of claim the union inter
alia pleaded that the company had in a spirit of vindictiveness and to break
the union retrenched the said. employees, that with that mala fide end in view
it gave up in the name of a policy of reorganisation agencies although they
were profitable, creating thereby an artificial condition to show fall in
business and surplus age in staff, that the company's mala fides were apparent
in that it gave up agencies in Calcutta only, that the company being dominated
by persons from Madras its real object was to divert its resources to Madras
from parochial and anti-union considerations, that as a result of giving up the
agencies the company had suffered in profits, that the work-load of the
remaining employees had increased, that there was in fact no real surplusage,
and lastly, that the company had not followed while retrenching the principle
of "last come. first go". The cormpany's reply was that retrenchment
was bona fide and in 981 accordance with law, that it had relinquished all the
pharmaceutical agencies, general sales agencies except one, and a number of
other agencies not only in Calcutta but also in Bombay, Delhi and Madras, that
it had absolute right to decide which business it should continue and which to
give up, that as a matter of business policy it had decided to discontinue the
agency business with the result that retrenchment had become inevitable, that
the union had indulged in incorrect, irrelevant and irresponsible allegations,
that though the actual surplusage was 66, it had retrenched only 52 employees
of whom 17 were temporary, and that the question whether the workload on the
remaining employees had increased or not was irrelevant. In support of its
reply the company produced two statements. Ex. D and E, showing the number of
and places where branches were closed and the agencies relinquished. The
Calcutta branch had at the time 21 agencies out of which 11 were given up.
Prima facie, the surrender of so many
agencies would result in surplusage of employees. On these pleadings and the
issues arising therefrom the only question before the Tribunal, therefore, was
whether retrenchment of 52 employees was justified.
However, the union challenged not only the
legality and propriety of the retrenchment but also the propriety and
reasonableness of the said policy decision alleging absence of good reason. for
relinquishing agencies and further alleging that an artificial surplusage was
caused for weakening the union and parochial considerations. The Tribunal
thought that these questions required elucidation by the company. It held that
though 11 agencies in all. in Calcutta were given up, since two of them were
given up July 1, 1961 and the third on August 1, 1961, only 8 agencies were
given up before the notice of retrenchment.
The Tribunal, however, failed to observe that
notices of giving up these three agencies were served by the company as early
as May 1, 1961.
The Tribunal held that though agencies were
surrendered in places other than Calcutta also, the company led no evidence
that the staff was retrenched in these places also and whether such retrenched
staff was absorbed in those places. In the union's statement of claim, however,
no such question was raised, the only question raised being that no agencies
were given up in places other than Calcutta. Next, the Tribunal rejected the
company's case about its policy of reorganising its business. The manager of
the Calcutta branch gave evidence and also produced an extract from a speech of
the managing director, East India Distilleries & Sugar Factores Ltd. of
which the appellant-company is a subsidiary. The manager also gave certain
other reasons which led the company to give up certain agencies. The Tribunal,
however, rejected this evidence on the ground that the manager could not give
982 evidence about the policy decision as that was the function of the Board of
Directors, that the extract from the said speech reflected the policy of the
East India Distilleries Co. but not necessarily of the appellant company and that
the additional reasons given by the manager showed that the real reasons for
giving up the agencies were those reasons and not the policy decision. The
rejection of the manager's evidence was totally unwarranted and the finding
that the pokey decision was not proved was contrary to the evidence on record.
As akeady stated, in the union's letter to the Labour Commissioner, the union
had based its request for intervention on the footing that it apprehended
retrenchment as a result of the company's said policy decision. During
conciliation proceedings also the manager had clarified that retrenchment was
inevitable on account of the said policy decision. Besides, there was no reason
why the manager could not depose about the company's said_decisiOn. The additional
reasons given by the manager were the reasons to show why of the 21 agencies
the particular 11 agencies were surrendered. The finding of the Tribunal that
those agencies were not given up on account of the company's said policy was
not only unwarranted but was contrary to the evidence on record. The further
reasoning of the Tribunal that there could be no such policy decision because
though the agencies were given up no corresponding development in manufacturing
activities was taken up was also without foundation.. The evidence of the
manager was that such development had already been launched in Madras and,
about the time of his giving evidence, also at Kidderpore. That evidence was
not accepted as according to the Tribunal the development on the manufacturing
side of the company's business should have been contemporaneous with the
surrender of the agencies in Calcutta. The fact that such activities were also
not undertaken in Kidderpore could not possibly be a reason for disbelieving
the company's case about the said policy. To disbelieve the company's case on
the ground 'that no ,such ,manufacturing activity was undertaken in Calcutta
was altogether unjustified. The Tribunal next found that there could not be any
real surplus age in the staff as the company had during the year 1960 made 17
appointments.
The Tribunal accepted the union's case that
this circumstance indicated that there was no need of retrenchment. It rejected
the company's explanation that until retrenchment was decided upon and calculations
were made about the extent of' retrenchment, temporary appointments had to be
made in place of those who retired or left the company's service. Even though
the agencies were given up winding-up work in connection with them would still
require the same staff. Besides, all. the 17 temporary employees were' included
in ,the list of the retrenched employees. As regards the statement Ex. G
showing surplusage. of 66' employees, the. Tribu- 983 nal questioned its
correctness on the ground that although four agencies were given up in 1960 no
retrenchment was made during that year, that on the other hand 17 temporary
hands were engaged, that the evidence of the union's secretary showed that
after the retrenchment workload of the remaining employees had increased, and
lastly, that retrenchment could have been avoided by transferring the employees
concerned to other branches of the company. Though the Tribunal gave a clear
finding that the company had not resorted to retrenchment with the intention of
victimisation, yet it held that "the allegations made by the union (as to
parochial considerations) do not appear to be unfounded or unreasonable".
The reasons given for this observation were that the company's head office was
at Madras, that the chairman and the directors of the company were from Madras
and that the agencies given up in Madras were less in number than in Calcutta.
On these findings the Tribunal held that the scheme of reorganisation was not
sufficiently established, that mere surrender of agencies was no proof of such
a scheme that therefore, a good case for retrenchment was not made out,. that
the company had failed to establish the exact number of surplus employees and
the extent of retrenchment, that it failed to observe the principle laid down
in sec. 25G, that the said notice dated June 29, 1961 was not in accordance
with rule 77 of the West Bengal Industrial Disputes Rules, 1958 as the notice
was of June 29, 1961 while retrenchment was to take effect from, July 1, 1961.
The Tribunal held that the retrenchment, therefore, was not with immediate
effect, the proviso. to that rule did not apply and a notice of one month, aS
required by sub-cl.
1 of' that rule, was necessary and that not
having been done the retrenchment was invalid as being in breach of sec.
25F(c). In accordance with these findings the
Tribunal ordered reinstatement and payment to the 52 employees of back wages as
from July 1, 1961.
Aggrieved by this order the company,filed a
writ petition for certiorari which was heard by a learned Single Judge of the
High Court. The learned Single Judge held that' an employer has the right to
reorganise his business in 'any manner he likes for the purpose of economy or
convenience,. that a Tribunal, therefore, cannot question its' propriety, the only
limitation being that it should be bona fide and not with the object of
victimising employees.
He observed that though the-Tribunal had
found that the union had failed to establish victimisation or any unfair labour
practice, it had, yet, come to an inconsistent finding that the probability
that the union's activity would be weakened by large scale retrenchment could
not be ignored or overlooked. The learned Judge found that in coming to this
finding the Tribunal acted not upon evidence but on mere conjectures. He also
held that interview of the evidence the Tribunal Was in patent error in 984
rejecting the company's case of relinquishment of agencies and the resultant
retrenchment. He further held that the finding of the Tribunal that the policy
of reorganisation was not bona fide but was for parochial consideration was
based on inferences for which there were no justifying premises. Lastly, he
held that the Tribunal's finding that the company did not establish
retrenchment of 52 employees was not justified as the ground given by it,
namely, (1) that retrenchment could have been avoided by transferring the
employees concerned to other centres, (2) that the principle of "last come
first go" was not followed, and (3) that the procedure under sec. 25F(c)
was not observed were not warranted by the evidence.
As regards the first ground, the learned
Judge held that that ground was not sustainable. As to the second ground he
held that that being a finding of fact he could not substitute his own opinion
in place of the Tribunal's and remanded that part of the case to the Tribunal
for further consideration. Regarding the third ground, he found that the
Tribunal was in error in holding that el. 1 of r. 77 of the said rules applied
and that a month's notice not having been given thereunder the retrenchment was
invalid.' He set aside the award and remanded the case to the Tribunal for the
limited purpose of enforcing retrenchment according to the principle of
"last come first go".
In appeal against the said judgment, a
Division Bench of the High Court held that the High Court could interfere in a
writ petition for certiorari with the Tribunal's findings only within
well-recognized limits, such as, where the inferior tribunal has acted without
jurisdiction or in excess of it or where it has acted illegally as when it acts
in breach of the principles of natural justice or where there is an error of
law apparent on record. The superior court in such cases acts in supervisory
and not appellate jurisdiction and therefore, cannot review findings of fact
however erroneous they are. The Division Bench found that the findings of the
Tribunal that the company had failed to prove its scheme of reorganisation,
that retrenchment was effected in Calcutta only, that the company was actuated
by parochial considerations, and therefore retrenchment was not bona fide could
not be said not to have been supported by evidence and that therefore the
learned Single Judge was not competent to interfere with those findings.
Counsel for the company raised three
contentions: (1) that since the Tribunal had held that there was no
victimisation, its jurisdiction was limited to the consideration only whether
the employees were retrenched within the meaning of sec. 2(00) of the Act and
whether the employer's obligations under ss. 25F, 25G and 25H were complied
with, (2) that the Tribunal had no juris- 985 diction to consider the question
whether the reorganisation scheme was for parochial considerations or
otherwise, i.e., whether the scheme had merits, which opinion is entirely
managerial, and (3) that some of the findings of the Tribunal were without
legal evidence and based on mere surmises and therefore perverse. The
contention on behalf of the union, on the other hand, was that the scope of
interference by the High Court in a certiorari petition was limited and only on
certain well-recognised grounds and that the learned Single Judge was not
correct in allowing the petition, for, that meant interfering with findings of
fact arrived at by the Tribunal.
The grounds on which interference by the High
Court is available in such writ petitions have by now been well- established.
In Basappa v. Nagappa(1) it was observed that a writ of certiorari is generally
granted when a court has acted without or in excess of its jurisdiction. It is
available in those cases where a tribunal, though competent to enter upon an
enquiry, acts in flagrant disregard of the rules of procedure or violates the
principles of natural justice where no particular procedure is prescribed. But
a mere wrong decision cannot be corrected by a writ of certiorari as that would
be using it as the cloak of an appeal in disguise but a manifest error apparent
on the face of the proceedings based on a clear ignorance or disregard of the
provisions of law or absence of or excess of jurisdiction, when shown, can be
so corrected. In Dharangadhara Chemical Works Ltd. v. State of Saurashtra(2)
this Court once again observed that where the Tribunal having jurisdiction to
decide a question comes to a finding of fact, such a finding is not open to
question under Art.
226 unless it could be shown to be wholly
unwarranted by the evidence. Likewise, in the State of Andhra Pradesh &
Ors.
v.S. Sree Ram Rao(3) this Court observed that
where the Tribunal has disabled itself from reaching a fair decision by some
considerations extraneous to the evidence and the merits of the case or where
its conclusion on the very face of it is so wholly arbitrary and capricious
that no reasonable person can ever have arrived at that conclusion interference
under Art. 226 would be justified. The question for our determination,
therefore, is whether the learned Single Judge was within the aforesaid well
recognised limits when he set aside the award. Before, however, we examine that
aspect of the case we may first consider the scope of the Tribunal's
jurisdiction in cases of retrenchment arising under see. 25F of the Act.
In D. Macropollo & Co. v. Their
Employees' Union(4) this Court held that if a scheme of reorganisation has been
adopted (1) [1955] S.C.R. 250. (2) [1957] S.C.R. 152.
(3) A.I.R. 1963 S.C. 1723. (4) [1958] 2
L.L.J.
492.
986 by an employer for reasons of economy or
convenience and it has been introduced in all the areas of its business, the
fact that its implementation would lead to the discharge of some of the
employees would have no material bearing on the question as to whether the
scheme was adopted by the employer bona fide or not In the circumstances, an
industrial tribunal considering the issue relating to retrenchment, should not
attach any importance to the consequences of reorganisation. The resulting
discharge and retrenchment would have to be considered as an inevitable, though
unfortunate, consequence of such a scheme. It also held that where the finding of
a tribunal is based on wrong and 'erroneous assumption of certain material
facts, such a finding would be perverse. A recent decision in Ghatge &
Patil Concern's Employees' Union v.
Ghatge & Patel (Transport) (P) Ltd.(x)
was a case of an employer reorganising his business from conducting a transport
business himself through employees engaged by him to conducting it through a
contract system where under he let out his motor trucks to persons who, before
this change, were his employees. Admittedly, this was done because he could not
implement some of the provisions of the Motor Transport Workers Act, 1961. The
change over to the contract system was held by the Tribunal not to have been
effected for victimising the employees. The employees had voluntarily resigned
and hired the employer's trucks on contract basis. It was held that a person
must be considered free to so arrange his business that he avoids a regulatory
law and its penal consequences which he has, without the arrangement, no proper
means of obeying. In Workmen Subong Tea Estate v. The Outgoing Management of
Subong Tea Estate(a). this Court laid down the following propositions: (1) that
the management can retrench its employees only for proper reasons, which means
that it must not be actuated by any motive of victimisation or any unfair
labour practice, (2) that it is for the management to decide the strength of
its labour force, for the number of workmen required to carry out efficiently
the work in his industrial undertaking must always be left to be determined by
the management in its discretion, (3) if the number of employees exceeded the
reasonable and legitimate needs of the undertaking it is open to the management
to retrench them, (4) workmen may become surplus on the ground of
rationalisation or economy reasonably or bona fide adopted by the management or
on the ground of other industrial or trade reasons, and (5) the right to affect
retrenchment cannot normally be challenged but when there is a dispute about
the validity of retrenchment the impugned retrenchment must be shown as 'justified
on proper reasons,- i.e., -that' it was not capricious or without rhyme or
reason.
(1) [1968] 1: S.C R., 300., (2) [1964] 5
S.C.R.
602.
987 Since this is an appeal arising from a
writ petition for certiorari we also would not interfere with the conclusions
arrived at by the Tribunal except on grounds on which the High Court could have
done. Mr. Gupte's contention was that the findings of the Tribunal were beyond
its jurisdiction, that they were unwarranted by evidence on record and were
based either on wrong assumptions or mere conjectures without any foundation in
the evidence, and therefore, this is a fit case for our interference. It is not
in dispute that the company gave up 11 out of its 21 agencies in Calcutta, that
is, more than half of its agency business was given up during the years 1960
and 1961. There was clear and unchallenged evidence that certain agencies were
likewise given up in other places including Madras.
The manager gave evidence that this was done
in pursuance of the policy decision taken by the company to reorganise its
business by concentrating more on its manufacturing side than its agency
business as the company found the agency business unprofitable on account of
import restrictions and other reasons. The Tribunal, however, rejected this
evidence on the ground that the policy decision being the function of the Board
of Directors, the manager was not competent to depose about it and that if the
company wanted to establish it it should have produced a resolution of the
Board and on that ground held that the company had failed to prove the said policy.
In the first place we fail wholly to appreciate the Tribunal's view that the
said policy could not be proved through the manager. In the second place, in
the very first letter of the union to the Deputy Labour Commissioner, as also
during the conciliation proceedings, it was assumed that the company had taken
such a decision, that consequently retrenchment was apprehended and that
therefore that officer should intervene. In these circumstances, the finding
that the company had failed to establish its policy was not only beyond the
scope of the enquiry before the Tribunal but totally invalid. As held in J.K.
Iron and Steel Co. v. Iron and Steel Mazdoor Union(x) the Tribunal had to
confine itself to the pleadings and the issues arising therefrom and it was,
therefore, not open to it to fly off at the tangent disregarding the pleadings
and reach any conclusions that it thought as just and proper.
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 (1)[1956] 1
L.L.J. 227.
988 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 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.
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 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.
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 (1)
[1964] 5 S.C.R. 602.
990 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 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.
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.
We have no doubt in our mind that some of the
findings arrived at by the Tribunal and which influenced its verdict were
beyond its competence. The rest were either speculative or contrary to the
evidence on record and were consequently liable to 991 be set aside in a writ
petition for. certiorari. The Division Bench of the High Court, therefore, was
not correct in its view that the learned Single Judge could not interfere with
those findings or that such findings did not fall under one or the other
recognized grounds justifying the High Court's interference.
In the result we allow the appeal, set aside
the order passed by the Division Bench and restore the order passed by the
learned Single Judge including his order of remand to the Tribunal to prepare a
list of 52 persons liable to be retrenched in accordance with the principle of
"last come first go". In the circumstances of the case we do not make
any order as to costs.
y.p. Appeal allowed.
L6Sup.
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