Janata Mazdoor Union vs Tas Engineering Pvt. Ltd. And Ors.
2002 Latest Caselaw 416 Bom

JUDGMENT

R.J. Kochar, J.

1. The petitioner is a trade union representing the workmen employed under respondent No. 1. The petitioner is aggrieved by the Award dated 26th October, 1994 passed by the Industrial Tribunal, Thane in Reference I.T. No. 19 of 1985, referred by Government of Maharashtra under section 10(1)(d) of the Industrial Disputes Act, 1947 for adjudication of the industrial dispute raised by the petitioner union on behalf of the 18 workmen mentioned in the order of reference. The industrial dispute on behalf of the said 18 workmen was in respect of their demand of reinstatement with full backwages and continuity of service with effect from 31st January, 1985.

2. The petitioner union appeared before the Tribunal and filed its statement of claim to justify its claim of reinstatement with full backwages and continuity of service. It was the case of the petitioner union that the respondent company had on 30th January, 1985 effected retrenchment of 20 workmen at the closing working hours on that day in contravention of the mandatory provisions of sections 25-F and 25-G of the I.D. Act, 1947. It was the case of the petitioner union that the respondent company had not offered or tendered in cash the amount of retrenchment compensation strictly in accordance with section 25-F of the Act simultaneously on 30th January, 1985. The union also complained that the respondent company had violated section 25-G of the Act as the Rule of seniority prescribed under section 25-G and Rule 79 in respect of retrenchment was not followed. According to the union one senior workman was retrenched while two junior workmen were retained in the employment. The petitioner also made a grievance to challenge the legality of the action of the retrenchment on the ground that the company had neither offered nor paid one month's wages for the period of the notice as contemplated under section 25-F(a) of the Act. The union demanded that the wages in lieu of the notice period ought to have been the total wages for one month i.e. 30 days as the provision contemplates one month's notice which means 30 days notice and which further means wages in lieu of 30 days. According to the petitioner union, there was no justification for the act of retrenchment resorted to by the respondent company. It also challenged the ground of retrenchment viz., that the order position of the company had become weak and that there was no sufficient work for the workmen to be given for the whole month. According to the petitioner, even the compensation computed was actually not correct as in the daily wages considered for retrenchment compensation, the company did not include medical allowances and the benefit of leave travel allowance. The petitioner further challenged the order of retrenchment on three other points viz.,

(i) The company had not given a notice of change under section 9-A of the I.D. Act before effecting retrenchment;

(ii) The company had not given notice under section 25-C of the I.D. Act to the Government.

(iii) The order of retrenchment was signed by the Managing Director of the company which was the Appellate Authority under the provisions of the Standing Orders and, therefore, the order of retrenchment was illegal as it ought to have been signed by the manager and not by the managing director, depriving the workmen of filing an appeal before the Managing Director.

3. On all the above grounds the petitioner sought to challenge the legality and propriety of the order of retrenchment before the Tribunal and prayed for the relief of reinstatement with full backwages and continuity of service. The respondent company appeared before the Tribunal and file its written statement contesting the reference on each and every ground of challenge, explaining and justifying its action of retrenchment. According to the respondent company, there was no violation of section 25-F of section 25-G of the Act as it had strictly complied with both the provisions of the law.

4. According to the company, on 30th January, 1985, it had offered and tendered in cash the exact and correct amount of retrenchment compensation and wages in lieu of notice for 28 days, the full month of February 1985. According to the company, the workmen who were present in the company refused to accept the same and, therefore, on the very same day it had despatched the orders of retrenchment along with pay orders for the amount of retrenchment compensation to each of the workmen. According to the company, it had displayed a seniority list 23 days in advance and there was no complaint or grievance made by either the petitioner union or by any individual workman at any time before retrenchment. According to the company, while computing the amount of retrenchment compensation, it had correctly computed the daily rate and the amount of compensation. It refuted the allegations of the union as untenable that in the daily rate the items such as medical allowance and leave travel allowance were not included. The respondent company pointed out that in the case of the workmen who were not covered by the E.S.I. Scheme, medical allowances were not included and in the other cases medical allowances were included. The company further submitted that the leave travel allowance was payable under certain conditions in the settlement arrived at and that benefit could not be computed in the daily rate while computing the amount of compensation. The company further justified its action of retrenchment by producing the relevant evidence and material in respect of the order position which was becoming weak and weak over a period whereby it was not possible for the company to maintain its economic viability. The company also pointed out that it was an admitted position that before resorting to the extreme step of retrenchment, it considered the decline in the order position on account of slump in the business and effected a lay off as first step in the month of April-May 1984. From 15th May, 1984, the workmen had resorted to an illegal strike for 15 days further adversely affecting the situation. Thereafter, there was a settlement with the union and it was agreed that the drilling machines would run for three shifts. In December 1984 till 24th January, 1985, there was again lay off of the workmen for the reason of reduction in the order position. On 7th January, 1985, the company displayed a seniority list which was never objected to by anybody. On 15th January, 1985, the company offered voluntary retirement scheme as a measure of reduction in the production cost, but there was no response from the workmen. Finally, the respondent was compelled to resolve in the meeting of its Board of Directors to retrench its workmen. The respondent company displayed and gave notice of retrenchment on 30th January, 1985 in Hindi, setting out the reasons for retrenchment and offering the dues in accordance with section 25-F of the I.D. Act. Since the workmen had refused to accept the cash offered along with the retrenchment orders, the company had sent the letters along with the pay orders from the bank on the very same date. Two workmen who were absent on that day were offered the retrenchment compensation on the next date when they reported for work but they also refused to accept the same. According to the respondent company, there was no breach or violation of either section 25-F or section 25-G of the Act. There was no short payment in respect of retrenchment compensation or in respect of wages in lieu of notice. Even on the count of mala fides, the respondent company firmly refuted the allegations of the petitioner union that its decision to retrench the workmen was mala fide. The respondent company pointed out that it was a very small company employing about 41 workmen and 9 personnel in the managerial and administrative capacity. It has a small business. The company had, as admitted by the petitioner union, good and cordial relationship through out and both the parties had entered into three long term settlements in respect of the wages of and other service conditions of the workmen. The company had explained its difficulties to the petitioner and the workmen that there was decline in the order position in view of slackness in the business. The respondent however did not jump to retrench the workmen at the outset but it made efforts to sustain its activities by trying to adjust with the worsening financial position. Initially it started lay off, whereafter it tried with V.R.S. and thereafter, it took the unpleasant decision of the retrenchment. In the aforesaid circumstances, the respondent justified its action of retrenchment in every respect. It prayed for rejection of the reference. Both the parties adduced their oral and documentary evidence before the Tribunal. The respondent company produced the documentary evidence in support of its plea in respect of the financial position. The Tribunal by its impugned awarded rejected the reference and refused to grant any relief to the workmen.

4. The learned Member of the Industrial Tribunal in his exhaustive award has considered each and every point raised before the Tribunal by both the parties. He has not left any point unanswered and any material untouched. The learned Member of the Tribunal has applied his mind to the pleadings, evidence, material and the submissions made before him across the bar by the parties. The learned Member has minutely and neatly answered all the points of attack by the petitioner union in respect of the legality and validity of the retrenchment orders issued by the respondent company. The learned Member of the Tribunal has considered all the facts threadbare and has come to the conclusion in accordance with law. Shri Grover the learned Counsel for the petitioner union has formulated his points from the whole case as under:-

(i) Retrenchment compensation was not actually offered in cash as alleged on 30th January, 1985, therefore, there was violation of section 25-F of the Act;

(ii) Sending of retrenchment compensation on 30th January, 1985 by pay orders to each of the workmen does not amount to compliance with section 25-F of the Act;

(iii) There was short payment in wages payable in lieu of one month's notice;

(iv) Section 25-G of the Act was violated as the seniority list was prepared in accordance with the grades and not in accordance with the category and this has resulted in retaining a junior workman and retrenching a senior one;

(v) retrenchment was not justified on the basis of the order position of the company;

(vi) a notice of change under section 9-A of the I.D. Act before effecting retrenchment was not given and, therefore, the order of retrenchment was illegal;

(vii) notice of retrenchment was not forwarded to the Government under section 25-C of the Act;

(viii) Retrenchment orders were signed by the Managing Director who had no authority to issue such orders under the Standing Orders as he was an Appellate Authority under the Standing Orders;

5. Shri Grover has fairly not pressed the last three untenable points. It is now well established that section 9-A notice before effecting retrenchment is not required. It is also well established that sending a copy of the retrenchment notice to the Government under section 25-C is not a mandatory provision but a directory one. In the present case it appears to have been done so but even assuming that this is not done it will not invalidate the action of retrenchment. As far as the point of authority of the managing director is concerned, he is no doubt an Appellate Authority under the Standing Orders against the orders passed by the manager. He is made an Appellate Authority being the highest person at the helm of affairs to decide the matters. The Disciplinary Authority is vested in the manager who is to pass appropriate orders under the Standing Orders. An aggrieved workman is given a right of appeal under the Standing Orders against such orders to the managing director. It, therefore, cannot be said that the managing director has no right to pass an order of retrenchment in the company. An order of retrenchment is not an order under the Standing Orders in respect of the disciplinary proceedings. As the employer, the managing director has every right to pass such an order. It, therefore, cannot be said that he has no authority to sign an order of retrenchment. Shri Grover has rightly not pressed the aforesaid three points.

6. The learned Member of the Tribunal has dealt with all the aforesaid points on the basis of material on record. In my opinion, assuming that the retrenched workmen were not offered in cash the amount of retrenchment compensation on 30th January, 1985, still the order of retrenchment cannot be held to violative of section 25-F of the I.D. Act as the respondent company has despatched on the very same day the pay orders for the whole amount of retrenchment compensation and the wages in lieu of notice period. In my opinion, sending of the pay order (even a cheque) to the retrenched workman amounts to complete compliance with section 25-F of the Act. Section 25-F nowhere prescribes that the amount of retrenchment compensation must be offered or tendered in cash to the retrenched workman. Even offer of the compensation by cheque should be sufficient compliance provided the cheque is not dishonoured when presented. If, however, the cheque gets bounced the retrenchment order would certainly be vitiated and invalidated as such offer of cheque for retrenchment compensation would not be in consonance with the mandatory provision of section 25-F of the Act. In the present case, there is no dispute that the respondent company had despatched the retrenchment orders along with pay orders on the very same date to the workmen. There is no dispute that out of 20 workmen 12 had received the letters and the pay orders and they had encashed the pay orders and accepted the amounts while 8 workmen had refused to receive the letters which were returned by the postal authorities. It further appears that subsequently cheques were issued to the eight workmen who had encashed those cheques for retrenchment compensation. I am not able to accept the contention of Shri Grover that the offer of compensation must be in cash on the date of the retrenchment compensation. There is neither such provision nor I am shown any such authority that the amount of retrenchment compensation has to be in cash and it cannot be in any form such as cheques, pay orders etc. Such argument deserves to be rejected being totally absurd. The employers would not find it difficult to offer or pay the amount of retrenchment compensation in cash but it would be totally unsafe for the workmen, particularly in Mumbai to carry such amount in cash. It is always safe for the workmen to get the amounts by way of cheques, pay orders or demand drafts rather than in cash. Shri Grover further insisted that the contention of the company that it had offered the amount of retrenchment compensation in cash to the workmen is not proved. I need not enter into that controversy as on the very same date the company had forwarded the pay orders to the retrenched workmen. According to Shri Grover, the respondent company did not establish by producing its cash book before the Tribunal that on that date it had the amount of Rs. 2 lakhs with it in cash to have offered or tendered the same to the retrenched workman. Shri Grover further submitted that the pay orders were issued by the bank after 4.00 p.m. which fact could not be believed. Shri Grover further submitted that the two workmen who were not present in the company on that date, on their orders also endorsement of refusal was recorded which indicate that endorsement of refusal was totally false as in all the letters the company had mechanically endorsed that the workman had refused to accept the amount of retrenchment compensation offered to them. Ignoring the fact of offer of cash and refusal by workmen to accept the same, the fact remains that on the very same date the respondent company had sent to the retrenched workmen by registered letters the retrenchment orders with pay orders, which in my opinion, was absolute and complete compliance with section 25-F of the Act. It is immaterial and irrelevant for our purpose to find out whether the respondent company had the amount of Rs. 2 lakhs in cash or not when it claimed to have offered the same. The fact remains that at 4 o'clock the respondent company has despatched 20 pay orders to the retrenched workmen. That was absolute and complete compliance with section 25-F of the Act and it was the payment of compensation simultaneously with the order of retrenchment. There is absolutely no dispute about the fact that the pay orders were issued on the very same date. It is significant to note that out of 20 workmen 12 workmen had accepted the pay orders and eight had refused to accept the same but they had also subsequently accepted the cheques. I fail to understand why the workmen and union did not apply to the respondent company for gratuity which is still lying with the respondent company. I further fail to understand why even the company did not send the amounts of gratuity to them as it was its statutory liability to be discharged. It cannot keep quiet on a spacious plea that the workmen did not apply for gratuity.

7. As far as the contention of Shri Grover that one month's notice means 30 days wages is concerned. I am not able to agree with the logic that the respondent company has committed breach of section 25-F(a) in sending the wages for 28 days in lieu of one month's notice period as provided. The provision is to offer one month's notice or wages in lieu of one month's notice period. The retrenchment had taken place on 30th January, 1985. If the employer was to give a notice on 30th January, 1985, the workmen would have worked for the succeeding month of February 1985 and would have earned wages for 28 days at the most. If they were not to get the wages for the four holidays in that case, they would have received the wages for 24 days. In the present case, the respondent has paid 28 days wages in lieu of notice period. In fact the respondent company has paid in excess by way of abundant precaution and being afraid of getting his retrenchment order struck down only on this technical breach of short payment in the wages for the notice period. It cannot be that it should always be one month notice, that is 30 days wages. If the succeeding month is of 31 days in that case, the employer is liable to pay wages in lieu of 31 days notice period minus the holidays. It would all depend upon the notice period i.e. the succeeding month for which notice was being issued. In the present case, the workmen are certainly not at all prejudiced by the act of the respondent company which had despatched wages for the month of February for all the days and the respondent had not deducted any wages for the holidays. In fact, the workmen were paid in excess. I am, therefore, not able to accept the contention of Shri Grover that the respondent company had violated section 25F(a) of the Act by sending 28 days wages instead of 24 days for the month of February 1985. Such an argument is to stretch the logic too far and to a breakable point which always should be avoided in the industrial adjudication.

8. According to Shri Grover, the respondent company had violated section 25-G of the Act as one workman was senior and he was retrenched from employment. It is not possible for me to agree with Shri Grover on this point also. From the seniority list it was very clear that the same was prepared on the basis of both the category and the grade within the category. It was not only on the basis of only grade or only category. The respondent company had prepared the seniority list in accordance with the settlement with the union. The seniority list was displayed 23 days in advance from the date the of retrenchment. If the union or the workmen including the allegedly affected senior workman were aggrieved by the said seniority shown by the respondent they ought to have immediately pointed out to the company where the seniority list was wrong. The purpose of the provision of display of seniority list is to keep informed the workmen how retrenchment on the basis of "last come, first to go" would take place and if anyone had any objection in respect of his seniority he should place his objection before the employer to consider and decide. That was not done by the union or the concerned workman. In these circumstances, it is, therefore, not possible and it is too late to contend that the respondent has violated section 25G of the Act. The seniority list dated 7th January, 1985 is before me. According to Shri Grover, the workman Shri Baban Chougule at Sr. No. 10 was senior to the other workmen. It appears from the said list that the said workman was the only workman in his category as highly skilled I Fab Fitter. There is no other workman in his category and, therefore, it cannot be said that he was retrenched and any other junior workman was retained. There is, therefore, absolutely no substance in the submission of Shri Grover that the respondent company had violated the rule of "last come first go" as contemplated in section 25-G of the Act and the Rule 79 framed thereunder.

9. As far as the point of correctness of the retrenchment compensation is concerned, there was no dispute. The retrenched workmen were paid retrenchment compensation for 15 days wages per year of service. Their daily rate was multiplied by 15 days to arrive at the retrenchment compensation. The wages in lieu of notice period was also computed on the basis of the daily rate multiplied by 28 days.

10. As far as the last point of justification of the retrenchment was concerned, according to Shri Grover, the respondent company had not justified the ground of the retrenchment that there was weak order position and there were financial constraints. Shri Grover tried to point out from the statement produced by the company to show its order position from December 1983 to February 1986. According to Shri Grover, there was slight improvement in the order position before the retrenchment and, therefore, there was no justification for the respondent company to have resorted to retrenchment. I am not able to agree with the submission of Shri Grover in that respect also. At the outset. I must say that it is wholly for the employer to assess his financial position and fluctuation in the market and the business. Shri Singh has rightly described the position of an employer by saying that it is for the employer to feel where the shoe is actually pinching and where it is comfortable. Shri Singh has pointed out from the material on record that the respondent had not received the orders from three big companies as shown in Exh. C-45. Shri Singh has also pointed out from the statement at Exh. C-46 that from the period October 1982 to August 1987 the company had received 23 orders, 18 orders, 26 orders, 30 orders and 18 orders respectively. Its efforts to get more orders is also reflected. It had sent its quotations to 109 companies, 158 companies, 98 companies, 136 companies and 203 companies respectively for the said period. We cannot blame the respondent company if it has received such low number of orders though it had sent its quotations as aforesaid. Shri Grover has tried to point out that from 26 orders received for the month of October 84 to September 1985, in the next quarter the company had received 30 orders and, therefore, there was slight improvement in the financial position. Shri Grover, however, has ignored the fact that for the immediate next quarter the order position has fallen to 18. It is not that receipt of one or two orders would make any difference in the financial stability of the company. The company has to see the overall position in a reasonably long run and it cannot consider or assess in short period that it has received one more order and, therefore, its financial position had improved. From the Exh. C-48 it is clear that the order position of the company was indeed weak through out. Shri Singh has given me the average for the period from May 1984 to January 1985. It appears that there was hardly any improvement in the order position. For improvement of the financial position of the company there has to be a very remarkable jump or growth in the receipt of orders. One or two orders received by the company does not make any improvement in the financial position. It is very clear from the aforesaid exhibits that there has been tremendous fluctuation in the orders and the order position was not at all steady. There has been some times a deep fall also. On an average it has to be said that the company's order position had become weak. The company has to meet its overhead expenses for which it must get the bare minimum orders. It is for the employer to take the stock of its over all situation. The employer must constantly have his hand on the nerve of the market and the business and has to act as a reasonable and prudent businessman and has to chalk out his plan to maximise his profits and reduce his losses. The employer has to keep business position steady and has to consider the future of his business also. The businessman or industrialist has to consider a host of factors which have bearing or effect on the market. He has to foresee the trend of recession, Government policies, interest rate money flow etc. Shri Singh has pointed out that the respondent company needed Rs. 7 lakhs per month and from the accounts it was very clear that the respondent company had sustained losses which it could not bear. Shri Singh has, therefore, rightly argued that it was the exclusively privilege and right of the employer to decide and re-organise his business in the best manner and in the best interest of the industry. Shri Grover tried to point out that the so called losses of the respondent company were due to different factors or grounds. Shri Grover pointed out that there was no cash loss and that the order position was not clear and that the losses shown were notional. I do not agree with these passing submissions in that regard. It was for the respondent company to have taken the entire stock of the situation. We also cannot forget the step of the lay off resorted to by the respondent company. Initially when the respondent company found that it was not possible for it to run the industry viably, it had given lay off to some workmen. It did not immediately rush for retrenchment. It waited for improvement in the market and in its business. Thereafter, the respondent company gave an opportunity to the workmen by accepting the V.R.S. At that end, the workmen restored to strike whereby the financial position of the company had further worsened. As a prudent employer, the respondent company tried to save the employment of the workmen and tried to reduce its loss at the same time. It appears that when it became impossible for the respondent company to pull on with the excessive number of workmen for its requirements, the respondent company restored to the extreme step of retrenchment. I do not find any fault with the decision of the respondent company. The respondent company is fully justified in its action of retrenchment. The law requires the company to broadly justify its bona fides and its action of retrenchment. It is not for the Tribunal or for the workmen to closely audit the industrial position of the company. If the workmen can broadly point out from the accounts, that there was absolutely no justification for the company to resort to retrenchment in that case, it can be said that the retrenchment was not justified on the ground of financial constraints. It is not for the union or the workmen or for the Tribunal or any Court to step in the shoes of the employer or to sit in appeal over the decision of the employer. We have to broadly see and find out on the basis of the material whether in a given similar situation the reasonable and prudent employer would have behaved in the same or similar manner. We must remember that no employer wants to close the business or reduce it easily or lightly. Such decisions are very harsh decisions having far reaching effects are taken only when concerned or compelled to do so. None starts his industry only to close it or harass or victimise the workmen unless they adopt a very unco-operative, unreasonable and adamant attitude which finally leads to the killing of the industry itself which would ultimately bring about disaster of the workmen themselves. In the present case, both the sides had lived and co-existed happily and therefore it cannot be said that the respondent company had any ulterior motive or mala fides. Shri Singh has pointed out that the respondent company needed Rs. 7 lakhs every month to meet its overhead expenses which were constant. He pointed out that the company had to incur almost Rs. 2 lakhs towards constant overheads. Shri Singh has pointed out that the respondent company could not even meet the said expenditure and, therefore, it had to decide to retrench the workmen. There is no material to doubt the bona fides of the company and its decision to retrench the workmen was fully justified besides being legal.

11. In the aforesaid circumstances, I do not find any reason or ground to interfere with the findings recorded by the Industrial Tribunal. The Industrial Tribunal has considered all the aforesaid factors and has come to a correct finding. I do not find any case in support of the petitioner that the respondent company had violated any of the provisions of law, either section 25F or section 25-G of the I.D. Act. According to me, the respondent company has fully justified its unpleasant step of retrenching 20 workmen. Shri Singh has pointed out that because of the aforesaid timely step by the respondent company, the company is surviving today with atleast 16 workmen. He further pointed out that it is not the allegation of the union that after retrenching 20 workmen, the respondent company has employed or engaged new or fresh hands in place of the retrenched workmen. Both the learned Advocates have cited various judgments. In view of the aforesaid findings recorded by me, it is not necessary to discuss all the aforesaid judgements which would burden the order unnecessarily.

12. The writ petition stands dismissed. Rule is discharged with no orders as to costs.

13. Shri Singh for the company has fairly stated that the respondent company would send the amount of gratuity to all the retrenched workmen with interest at 6% p.a. within one month from today.

14. All concerned to act on a copy of this order duly authenticated by the Sheristedar.