Permanent Magnets Ltd. vs Vasant Ganu Patekar And Anr.
2001 Latest Caselaw 138 Bom

ORDER

R.J. Kochar, J.

1. The petitioner, in its anxiety to make the unit economically viable, introduced on October 12, 1997 a Voluntary Retirement Scheme (VRS). Under the scheme the employees were given one month's period from October 20, 1997 to November 19, 1997 to opt for voluntary retirement and to get the benefits under the scheme. The Respondent employee who was employed as a Machine Operator applied for VRS benefits on November 17, 1997. The Petitioner-Company communicated its acceptance of his application under the Scheme and to relieve him from employment as per the Schedule of the Scheme i.e., by March 31, 1998. It appears that the Respondent workman had a second thought and addressed a letter on January 19, 1998 expressing his desire to withdraw his earlier application under the Scheme. There was no response from the Petitioner-Company to this letter therefore he addressed a second letter on February 9, 1998 which was replied by the Petitioner- Company on February 24, 1998 not allowing the withdrawal of the application filed by the Respondent workman. Aggrieved by the said decision of the Petitioner Company the Respondent workman filed a Complaint, on March 27, 1998, of unfair labour practices before the Industrial Court, Maharashtra at Mumbai invoking Items 9 and 10 of Schedule IV of the MRTU and PULP Act, 1971 (for short "the said Act"). In the said complaint he had also prayed for an interim order restraining the Petitioner Company from relieving him with effect from March 31, 1998. He however failed to get any interim orders and therefore, he stood relieved with effect from March 31, 1998 from employment under the VRS. Both the parties adduced their oral and documentary evidence before the Industrial Court. By its order dated October 20, 1998 the learned Member of the Industrial Court held in favour of the Respondent workman and directed the Petitioner Company to permit him to report for work and continue him to work till the age of retirement i.e., 60 years and also to pay him wages for the intervening period. The Industrial Court has accepted the contention of the Respondent workman that the VRS was an illegal act on the part of the Petitioner Company as no notice of change under Section 9-A of the Industrial Disputes Act was given by the Petitioner Company as by introducing the VRS it intended to effect a change contemplated under Item 11 of Schedule IV of the Act i.e., "11. Any increase 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)".

2. The Industrial Court has held that by the mode of VRS the Petitioner company intended to reduce the number of persons employed and therefore, it attracted a notice of change under Section 9-A of the Industrial Disputes Act. Since the Petitioner Company had not followed such a procedure the entire scheme was in contravention of the provisions of the Industrial Disputes Act. The Industrial Court has also accepted the second contention of the workman that the Petitioner Company had engaged in an unfair labour practice under Item 9 of the MRTU and PULP Act as under the Model Standing Orders his age of retirement was 60 years and the Petitioner Company did not allow him to work till such age of retirement. It was his contention that though he had opted for the benefits under the VRS he had subsequently withdrawn the said application, and therefore, he was entitled to continue in employment and the refusal by the Petitioner Company to continue him in employment amounted to breach of the Model Standing Orders and the service contract. It was contended by Shri Ganguli for the workman that the application under the VRS must be treated on par with a resignation simpliciter which could be withdrawn by the resignee before it was given effect to. Shri Ganguli has submitted that the workman had withdrawn the application under the Scheme much before the Petitioner Company gave effect to on March 31, 1998, though it had accepted such application on November 25, 1997. Shri Ganguli has pointed out that the workman had applied to withdraw the retirement application much before March 31, 1998. According to the learned advocate, the act of the Petitioner Company in not allowing the workman to withdraw his application and in not allowing him to continue in employment amounted to an unfair labour practice within the meaning of Item 9 of the MRTU and PULP Act. Shri Ganguli has also submitted that there was an indirect use of pressure or force on the workman to apply for benefits under the VRS. It was pointed out from the Judgment of the Industrial Court that the Managing Director had given a threat of final closure of the company if the workman did not accept the VRS and in that contingency the workman would not get any benefits. According to Shri Ganguli, this was an act of threat or force contemplated by Item 10 of Schedule IV of the Act. The Industrial Court has accepted this contention on behalf of the workman on the ground that the workman was an illiterate person and he did not know English language, in which the VRS was drafted, and that it was not translated in Marathi language known to the workman and he was virtually forced to offer his application for VRS thinking that if the company would be closed he would not get any benefits. The Industrial Court has also held that the VRS intended to reduce the number of persons employed in violation of Section 9-A of the Act. Shri Ganguli has fully supported the judgment of the Industrial Court and submitted that no interference is called for by this Court under Article 226 of the Constitution of India.

3. Shri S.M. Naik, the learned counsel for the Petitioner Company has submitted that the entire approach of the Industrial Court was erroneous. The Petitioner Company has framed the VRS and got approval from the Income Tax Authorities under the Income Tax Act. There was no compulsion or force on the workman to opt for VRS. The Petitioner Company had framed the scheme which was entirely voluntary and it had offered benefits to those who were willing to accept the scheme. According to Shri Naik, in fact the Petitioner Company has acted in accordance with the scheme in accepting the application of the workman and in offering him the benefits thereunder. Even the refusal to allow the workman to withdraw his application was in accordance with the scheme and therefore there was no question of invoking Item 9 of the MRTU and PULP Act. Similarly Shri Naik has pointed out that the allegation of force and violence contemplated under Item 10 of Schedule IV of the Act is an afterthought. The workman has never even whispered at any time that there was use of force or threat and therefore he had applied for VRS. Neither in his letters nor even in the Complaint this allegation of force and threat was made by the workman. It was only in evidence he referred to one Shri Viju, the Supervisor, who allegedly forced the workman to sign the application for VRS. Shri Naik pointed out that all along it was the case of the workman that he had changed his mind and, therefore, he intended to withdraw the application for VRS.

4. Shri Naik also pointed out that there is no question of giving notice of change under Section 9-A of the Industrial Disputes Act that the Petitioner Company did not intend to reduce the number of persons employed at that stage as it was not known to the company at the time of introduction of VRS how many workmen would opt for voluntary retirement. By introducing the scheme the Petitioner Company intended to reorganise the company to make it economically more viable. The stage of notice of change under Section 9-A of the Act would be a next step after the workmen get voluntarily retired under the Scheme and the posts become vacant. Shri Naik has strenuously contended that it is the fundamental right of the Petitioner Company to reorganise its own affairs in the best interest of the company. He has relied on a judgment of the Supreme Court in the case of Hindustan Lever Ltd. and Ors. v. Ram Mohan Ray and Ors. . Shri Naik pointed out from the notice dated October 12, 1997 for VRS that the Petitioner Company was passing through extremely difficult period due to adverse economic condition and that the sale for the main product of the company had reduced. In addition, it is also stated in the notice that the cost of raw material, electricity and other consumable items and labour and administration have also increased leading to heavy losses in the working of the company. The keen competition in the industrial market is also one of the reasons to reorganise the affairs of the company. According to Shri Naik, the Petitioner Company wanted to reduce the production costs to make the unit economically viable and therefore, there was no question of giving any notice under Section 9-A as there was no adverse effect on the workmen and there was no compulsion on the workmen to accept the VRS.

5. The notice given by the Petitioner Company for VRS was an open offer made by the Petitioner Company to accept the benefits under the Scheme and leave employment voluntarily. It was not the case of the Respondent in the complaint that the company had used any force or violence or that there was a threat to him. If the Managing Director had explained the economic situation it cannot be said that he had used force or had given a threat to the workman. If we construe such explaining by the employer to the employees as force or threat in that case it would be impossible for the employer even to talk with the employees.

The Managing Director appears to have made the workmen acquainted with the situation and took them in confidence for introduction of VRS. By no stretch of imagination it can be said that he had given threat and had used force as contemplated under Item 10 of the Schedule IV of the Act. It is very pertinent to note that the Respondent workman had never even whispered in his letter that there was a force or threat. Even in his complaint there was no such pleading. I, therefore, do not agree with the findings of the Industrial Court that there was threat and force used on the respondent workman to accept the VRS benefits. No doubt he had a second thought and he might have genuinely considered that it was not a proper step for him to leave the employment. But this cannot be called as a threat or use of force by the employer.

6. The charge of unfair labour practice is a serious charge like a charge of victimisation which must be pleaded and proved. The charge of threat and force is merely an afterthought during the progress of the proceedings before the Industrial Court. There was no pleading and there was no proof of threat or force. Even in his two letters no such allegation was made by the workman. To repeat even in the complaint there was no such averment anywhere except using the Item 10 of the Schedule IV of the Act.

7. As far as the point of notice of change under Section 9-A of the Industrial Disputes Act is concerned in my opinion the notice of VRS itself is a notice of change. Once such a notice is given and displayed by the petitioner company in my opinion there need not be any second notice of change in the format prescribed under Section 9-A of the Act. The notice of VRS was sufficiently well in advance giving all the particulars including the reasons and the benefits which the employees who would accept the claims would get and how they would be relieved. Merely because the Petitioner Company has not used the words "as notice under Section 9-A of the Industrial Disputes Act". It cannot be argued that there was no notice of change as contemplated under Section 9-A of the Act. In the present VRS notice all the details are given about reorganisation and about the benefits which would be given to the employees who would opt for the scheme even assuming that Items 10 and 11 are attracted. According to me the notice of VRS itself is a sufficient compliance of Section 9-A of the Industrial Disputes Act. Not only there was no objection from any workman but all of them except the respondent workman accepted the benefits of the Scheme and were relieved in accordance with the Scheme. No: one else has come forward to say that he was forced or that he was misguided or misrepresented to get the benefits under the VRS. Both the parties have mutually accepted the Scheme and the benefits. The Petitioner Company succeed in reducing its labour costs by making additional payment to the voluntarily leaving workmen. The result of the notice of change under Section 9-A of the Industrial Disputes Act is an agreement or final settlement or an award under adjudication. By giving a notice of VRS the Petitioner Company has offered certain benefits to those workmen who would like to leave the employment voluntarily without any force, threat or violence. If any workman is tempted or allured to receive some sizeable amount the employer cannot be blamed. It is possible that the workman must have acted out of his desire to get some instant benefits to meet his necessities and for many other reasons. The offer given by the petitioner company was accepted by the workmen who had given applications expressing their desire to get the benefits under the Scheme. In this sense there was a mutual agreement or settlement. To appreciate the correct position of law in respect of notice of change under Section 9-A of the Industrial Disputes Act it is relevant to reproduce the Section:

"9-A Notice of change: No 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, shall effect such change,

(a) without giving to the workman 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:

Provided that no notice shall be required for effecting any such change-

(a) Where the change effected is in pursuance of any [settlement or award]; or

(b) where the workmen likely to be affected by the change are persons to whom the Fundamental and Supplementary Rules, Civil Services (Classification, Control and Appeal) Rules, Civil Services (Temporary Service) Rules, Revised Leave Rules, Civil Service Regulations, Civilians in Defence Services (Classification, Control and Appeal) Rules or the Indian Railway Establishment Code or any other rules or regulations that may be notified in this behalf by the appropriate Government in the Official Gazette, apply".

It is clear that if any employer intends to effect any change in the industrial matters specified in Schedule IV of the Act he has to give a notice of change and has to wait for 21 days before the proposed change is effected. If there is no objection or opposition from the workmen, the employer can effect the proposed change and if they object, no change can be effected. A notice for VRS benefits is in effect a notice of change in respect of Item 11 of the Schedule IV of the Act. The workmen have agreed to accept the change by giving their applications to the Petitioner Company. There is a valid agreement or settlement between the Petitioner Company and the workmen, and there was no dispute or difference between them to amount to be an industrial dispute. Further, there is no bar for the employer to effect the proposed change after expiry of 21 days as prescribed in the Section. If the workmen object to such a change an industrial dispute requiring adjudication would arise. If both the sides agree, an agreement or a settlement for the proposed change is the final result of the notice of change. By the VRS notice the employer proposes a change and when the workmen voluntarily accept the proposed change in the form of the VRS there is no illegality of any nature which can be said to have been committed by the employer. The notice for VRS itself can be treated as a notice under Section 9-A of the Act and no separate or further notice of change is necessary.

8. According to me, there is no unfair labour practice under Item 9 or under Item 10 of Schedule IV of the Act. The petitioner company has strictly acted under the Scheme and therefore it cannot be said that when it accepted the application filed by the workmen it had acted in contravention of any agreement, settlement or award. Similarly when the Petitioner company refused to allow the workman to withdraw his application such refusal was also under the Scheme and therefore it cannot be said that the Petitioner Company has acted in contravention of the offer made by the Petitioner Company under the Scheme. The workman having offered for voluntary retirement cannot agitate that he should be continued till the age of his retirement under the Standing Orders.

9. In the aforesaid circumstances I do not find any merits in the contentions of Shri Ganguli on behalf of the Respondent workman. The Judgment and Order of the Industrial Court cannot be sustained for the reasons stated by me hereinabove.

10. The Respondent workman has received all the benefits under the VRS by an order of this Court passed in Notice of Motion filed by the workman to get such benefits, though without prejudice to his rights and contentions in the Petition. I therefore make the rule absolute in terms of prayer Clause ('a') and I quash and set aside the Judgment and Order dated October 28, 1998 passed by the Industrial Court, Maharashtra at Mumbai and I dismiss the complaint of unfair labour practice filed by the Respondent workman. No order as to costs.