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TMI Blog2015 (2) TMI 1352X X X X Extracts X X X X X X X X Extracts X X X X ..... pleadings and the findings recorded by the Industrial Court, there is a categorical finding of fact recorded that there is no such mandatory notice served on the State Government by the Appellant-Company. The object of serving of such notice on the State Government is to see that the it can find out whether or not it is feasible for the Company to close down a department/unit of the Company and whether the concerned workmen ought to be retrenched from their service, made unemployed and to mitigate the hardship of the workmen and their family members. Further, the said provision of the I.D. Act is the statutory protection given to the concerned workmen which prevents the Appellant-Company, from retrenching the workmen arbitrarily and unreasonably in an unfair manner. The cumulative reading of the Statement of Reasons, the retrenchment notice served on the concerned workmen, the pleadings of the Appellant-Company and in the absence of evidence on record to justify the action of retrenchment of concerned workmen on the alleged closure of the department/unit of the Appellant-Company is shown as bona fide. However, the concurrent finding of fact recorded by the High Court on this a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and order dated 5.05.2006 passed in L.P.A. No. 141 of 1996 in Writ Petition No. 2733 of 1996 by the Division Bench of the High Court of Judicature at Bombay, affirming the Award dated 08.03.1996 of the Industrial Court, Mumbai in Complaint (ULP) No. 1081 of 1992 raising certain questions of law and urging various grounds in support of the same and prayed to set aside the impugned judgment, order and award of the Industrial Court. 2. The relevant facts are briefly stated to appreciate the rival legal contentions urged on behalf of the parties in this appeal. The Appellant-Company was engaged in shipping business from its premises at Mackinnon Building, Ballard Estate, Mumbai. The activities were divided into ship agency, shipping management, ship owning and operating, travel and tourism, clearing and forwarding, overseas recruitment and property owning and development. It had approximately 150 employees who were all workmen and members of the Respondent-Union. The Respondent-Union is registered under the provisions of the Trade Union Act, 1926. A letter dated 27.07.1992, purportedly a notice of retrenchment together with the statement of reasons enclosed therewith was serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment or the authorities specified Under Section 25F. (ii) That no list of seniority of workmen in different categories from which retrenchment was contemplated had been put up on the notice board as mandatorily required Under Rule 81 of the Industrial Disputes (Bombay) Rules, 1957 (for short 'the Bombay Rules'). (iii) That in the statement of reasons, assuming without admitting the same, that the activities of the Appellant-Company had to be rationalised, this directly led to the retrenchment of workmen. However, there is an admitted decrease in the number of employees to be employed in different department which are under the control of the Appellant-Company. This directly attracts items Nos. 9 and 10 of Schedule IV of the I.D. Act. Thus a notice Under Section 9A of the I.D. Act was bound to be given. This has not been done. (iv) That the Appellant-Company was bound to give notice at least 60 days before the intended closure to the State Government, this has not been done. Therefore, Section 25FFA of the I.D. Act has not been complied with by the Appellant-Company. (v) That in the seniority list prepared and relied on by the Appellant-Company large number of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation of facts, points of dispute, evidence on record, issues raised and decisions relied upon by both the parties, the Industrial Court held by answering the contentious issue No. 3 that the Appellant-Company has committed an unfair labour practice by committing breach of Rule 81 of the Industrial Disputes (Bombay) Rules, 1957, (for short 'the Bombay Rules') by not displaying the seniority list of the workmen of the concerned department/unit of the Appellant-Company on the notice board prior to the date of issuance of retrenchment notice to the concerned 98 workmen as contemplated by the MRTU PULP Act, 1971 and the Bombay Rules. It was further held that the Appellant-Company had committed an unfair labour practice by committing breach of Section 25G of the I.D. Act read with Rule 81 of the Bombay Rules by not following the principle of 'last come first go'. Therefore, the Industrial Court held that breach of statutory rules and provisions of the I.D. Act and the Bombay Rules amounted to unfair labour practices as contemplated by item No. 9 of the Schedule IV of the MRTU PULP Act. The breach of the mandatory provisions of Section 25G of the I.D. Act read with R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his appeal by the Appellant-Company urging various grounds and prayed for setting aside the impugned judgment and order and to quash the award of the Industrial Court. 9. The learned senior Counsel Mr. Jamshed Cama, appearing for the Appellant-Company, sought to justify the action of the Appellant-Company, inter alia, contending that due to severe recession in the dominant areas of the industry in which the concerned workmen were engaged and various other factors having a direct bearing on their business activities, it was found imperative for the Appellant-Company to shut down some of their activities as detailed by them in their statement of reasons appended to the retrenchment notice. Further it has been stated that in the circumstances, the Appellant-Company, according to their business needs had decided to let out a part of the premises housing their office on leave and licence basis to M/s. Urmila Company Pvt.. Ltd.. that as the same would not be required for the Respondent-workmen as the Appellant-Company had contemplated the retrenchment of the concerned workmen. The said decision was also taken by the Appellant-Company to further ensure availability of funds to pay th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the judgments of this Court that the rule of 'last come first go' as provided in Section 25G of the I.D. Act can be deviated by the Appellant-Company for justifiable reasons. Reliance was placed by him in support of the above legal contention on the decision of this Court in the case of Workmen of Sudder Workshop of Jorehaut Tea Co. v. The Management of Jorehaut Tea Co. AIR 1980 SC 1454, wherein, it was observed that for the application of the provision of Section 25G of the I.D. Act with respect to the above principle, it was necessary to treat all the workmen in the category as one group and concluded that the aforesaid principle of 'last come first go' was not an inflexible rule and that there must be a valid and justifiable reason for deviation from the above said principle. Further, reliance was also placed by him on other decisions of this Court in the cases of Swadesamitran Ltd., Madras v. Their Workmen AIR 1960 SC 762, Jaipur Development Authority v. Ramsahai and Anr. (2006) 11 SCC 684 and State of Rajasthan v. Sarjeet Singh and Anr. (2006) 8 SCC 508 in support of the above legal proposition. 12. It is further contended by the learned senior Counsel o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellant has further placed reliance upon the judgment of this Court in the case of Isha Steel Treatment, Bombay v. Association of Engineering Workers, Bombay and Anr. (1987) 2 SCC 203, in support of his submission that the concerned workmen have not produced evidence to show that the closure is neither bonafide nor genuine, which important aspect of the case is not considered either by the Industrial Court or the High Court. Hence, the concurrent finding of fact recorded by them on the relevant contentious issue No. 1-3 and 7 are erroneous in law and the same are wholly unsustainable in law. 14. Further, it has been contended by the learned Counsel for the Appellant-Company that the Award of reinstatement and back-wages to be paid to the concerned workmen by both the Industrial Court and the High Court would not be possible in case of admitted closure of the work of one of the department/unit of the establishment and therefore there is no question of reinstatement of the concerned workmen and awarding back-wages to them and prayed for moulding the relief accordingly by this Court. It is contended by him that in the present case, it is an admitted fact that on and from 04.08. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etrenchment of the 1164 workmen on the basis that there was a closure of a section of the nylon plant. Thus in order to come to the conclusion, whether or not retrenchment was justified, the Industrial Tribunal necessarily had to first decide whether or not there was a closure. 15. It is further contended by him that, the Industrial court has neither framed an issue with regard to the justification of the closure nor has it recorded any finding on this aspect. In not doing so and recording the finding on this important aspect of the case against the Appellant-Company by the Industrial Court has adversely prejudiced its case. The learned senior Counsel further placed reliance on the judgment of this Court rendered in the case of Kalinga Tubes Ltd. v. Their Workmen AIR 1969 SC 90, wherein it was held that the Company has not justified the reason of the closure of the undertaking was due to unavoidable circumstances beyond the control of the Appellant-Company therein and the compensation would be payable as if the undertaking was closed down for any reason whatsoever within Section 25FFF(1) of the I.D. Act. 16. Further, it was contended by him that in the case of PVK Distiller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice of retrenchment served upon the concerned workmen is bad in law. Relevant paragraph of the said case is extracted as under: 23...If the services of a workman are terminated in violation of any of the provisions of the Industrial Disputes Act, such termination is unlawful and ineffective and the workman would ordinarily be entitled to reinstatement and payment of full back wages. In the present case, there was a settlement arrived at between the Company and the Union under which certain wages were to be paid by the Company to its workmen. The Company failed to pay such wages from September 18, 1984, to the eighty-four workmen whose services were terminated on the ground that it had closed down its Churchgate division. As already held, the closing down of the Churchgate Division was illegal as it was in contravention of the provisions of Section 25-O of the Industrial Disputes Act. Under Sub-section (6) of Section 25-O, where no application for permission Under Sub-section (1) of Section 25-O is made, the closure of the undertaking is to be deemed to be illegal from the date of the closure and the workmen are to be entitled to all the benefits under any law for the time bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id statutory provisions of Section 25FFA of the I.D. Act which contemplates issue of notice of closure of the department/unit of the Company to the State Government are mandatory in law as it was inserted by the Parliament by way of an Amendment Act No. 32 of 1972, with an avowed object to protect the workmen who will be retrenched on account of the such closure of Industry or unit/department, which amended provision of the Act has come into force with effect from 14.06.1972 and he has placed strong reliance upon the Statement of Objects and Reasons of the above amended provisions, which would clearly state that the aforesaid provisions are mandatorily to be complied with by the Appellant-Company before taking action it against the concerned workmen. 22. The learned senior Counsel further contended that the non-compliance of Section 25F Clauses (a), (b) (c) and Section 25G of the I.D. Act read with Rule 81 of the Bombay Rules i.e. deviation from 'last come first go' principle, reasons should have been recorded by the Appellant-Company for retrenching senior workmen while retaining the juniors in the department or unit. The Appellant-Company has not made out a case in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company Limited has been carrying on the business of Ship Agency, Ship Managing, Ship Owning Operating, Travel and Tourism, Clearing and Forwarding, Overseas Recruitment and property Owning and Development. The Company is presently employing approximately 150 workmen. Other than Clearing Forwarding and property owning and Development, the rest of the activities of the Company are related to the shipping industry. Because of severe recession in the industry from 1978 onwards, the Company's accumulated losses have been increasing dramatically from ₹ 12.41 crores as at December 1983 to ₹ 70 crores as at 31st march 1991. Because of the financial condition of the Company, the Ship manning and Ship Agency Principals either set up their own separate operations or appointed other agents for India. These included our erstwhile parent company namely, P D Steam Navigation Company, London. Apart from this, the Company has not been able to improve its financial position or set off substantially the accumulated losses, for the following reasons: 1. Stiff competition in respect of all activities. 2. Very high wages and dearness allowance and other benefits payable as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Directors of the Company have taken a decision to close down Clearing and Forwarding Section, which is a part of the undertaking of the Appellant-Company. As rightly contended by the learned senior Counsel appearing on behalf of the Respondent-Union, the cumulative effect of the pleadings, Statement of Reasons appended to the retrenchment notice, it is made very clear that the retrenchment notice served upon the concerned workmen was an action of closure of Clearing and Forwarding Section of the Appellant-Company. According to the learned senior Counsel on behalf of the Respondent-Union, the concurrent finding of fact recorded by the Industrial Court on the above relevant contentious issues is further fortified by the retrenchment notice and the Statement of Reasons annexed to the same. 26. On the contention urged on behalf of the Appellant-Company is that it was a closure of the department/unit of the Appellant-Company as per the definition of closure Under Section 2(cc) of the I.D. Act, we are of the view that with respect to the above contentious issues framed by the Industrial Court has been answered against the Appellant-Company based on the finding of fact recorded by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Section 25F Clause (c), the Appellant-Company has not been able to produce cogent evidence that notice in the prescribed manner has been served by it to the State Government prior to the retrenchment of the concerned workmen. Therefore, we have to hold that the Appellant-Company has not complied with the conditions precedent to retrenchment as per Section 25F Clauses (a) and (c) of the I.D. Act which are mandatory in law. 28. Further on examining the aforesaid retrenchment notice referred to supra that was served upon the concerned workmen, we are of the considered view that they are retrenched from their services on account of the alleged closure of the Clearing and Forwarding department/unit of the Appellant-Company, which in fact is not proved by the Appellant-Company, by adducing positive evidence on this vital aspect except placing reliance upon the above Statement of Reasons. The said finding of fact by the Industrial Court on the contentious issue Nos. 1-3 and 7 on the part of the Appellant-Company is further supported by its conduct in not complying with the mandatory provisions Under Section 25FFA of the I.D. Act as it has not served atleast 60 days notice on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t before Central legislation was enacted, the matter should be considered by the Indian Labour Conference. The Indian Labour Conference which met on the 22nd and 23rd October, 1971 generally endorsed the proposal for Central legislation gives effect to the recommendation of the Indian Labour Conference. It provides for the service of a notice, at least sixty days before the intended closure of an undertaking is to become effective, so that within this period prompt remedial measures could be taken, where the circumstances permit to prevent such closure. No notice will be required to be served in the case of undertaking set up for construction of buildings, roads, canals, dams and other construction works and projects or in the case of small establishments employing less than fifty persons. The Bill also provides penalty for closing down any undertaking without serving the requisite notice. (Gazette of India, 06.12.1971, Pt. II, Section 2, Ext. page 893) 29. The contention urged by Mr. C.U. Singh, the learned senior Counsel for the Respondent-Union is that if the interpretation of provision Under Section 25FFA of the I.D. Act as contended by the learned Counsel on behalf of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the use of the word 'shall' does not conclude the matter. It is then observed: They (the rules) are well-known, and there is no need to repeat them. But they are all of them only aids for ascertaining the true intention of the legislature which is the determining factor, and that must ultimately depend on the context. The following quotation from Crawford On the Construction of Statutes, at p. 516, is also helpful in this connection: The question as to whether a statute is mandatory or directory depends upon the intent of the legislature and not upon the language in which the intent is clothed. The meaning and intention of the legislature must govern, and these are to be ascertained, not only from the phraseology of the provision, but also by considering its nature, its design, and the consequences which would follow from construing it the one way or the other.... This passage was approved by this Court in State of U.P. v. Manbodhan Lal Srivastava. In Craies on Statute Law, 5th Edn., the following passage appears at p. 242: No universal rule can be laid down as to whether mandatory enactments shall be considered directory only or obligatory with an im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the department concerned as enjoined by the rule was fatal to the validity of the notifications Under Sections 4 and 6 of the Act. XXX 10. In determining the question whether a provision is mandatory or directory, one must look into the subject-matter and consider the importance of the provision disregarded and the relation of that provision to the general object intended to be secured. No doubt, all laws are mandatory in the sense they impose the duty to obey on those who come within its purview. But it does not follow that every departure from it shall taint the proceedings with a fatal blemish. The determination of the question whether a provision is mandatory or directory would, in the ultimate analysis, depend upon the intent of the law-maker. And that has to be gathered not only from the phraseology of the provision but also by considering its nature, its design and the consequences which would follow from construing it in one way or the other. We see no reason why the rule should receive a permissible interpretation instead of a preemptory construction. As we said, the rule was enacted for the purpose of enabling the Deputy Commissioner (Land Acquisition Collector) to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unless by according such permission to rectify the error later on, another rule would be contravened. Whenever a statute prescribes that a particular act is to be done in a particular manner and also lays down that failure to comply with the said requirement leads to a specific consequence, it would be difficult to hold that the requirement is not mandatory and the specified consequence should not follow. (Emphasis laid by this Court) 33. Apart from the said decisions, this Court has followed the Privy Council of 1939 and Chancellor's decisions right from the year 1875 which legal principle has been approved by this Court in the case of Rao Shiv Bahadur Singh and Anr. v. State of Vindhya Pradesh AIR 1954 SC 322 and the same has been followed until now, holding that if a statutory provision prescribes a particular procedure to be followed by the authority to do an act, it should be done in that particular manner only. If such procedure is not followed in the prescribed manner as provided under the statutory provision, then such act of the authority is held to be null and void ab initio in law. In the present case, undisputedly, the statutory provisions of Section 25FFA of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice served on the State Government by the Appellant-Company. The object of serving of such notice on the State Government is to see that the it can find out whether or not it is feasible for the Company to close down a department/unit of the Company and whether the concerned workmen ought to be retrenched from their service, made unemployed and to mitigate the hardship of the workmen and their family members. Further, the said provision of the I.D. Act is the statutory protection given to the concerned workmen which prevents the Appellant-Company, from retrenching the workmen arbitrarily and unreasonably in an unfair manner. The cumulative reading of the Statement of Reasons, the retrenchment notice served on the concerned workmen, the pleadings of the Appellant-Company and in the absence of evidence on record to justify the action of retrenchment of concerned workmen on the alleged closure of the department/unit of the Appellant-Company is shown as bona fide. However, the concurrent finding of fact recorded by the High Court on this aspect of the case cannot be held to be bad in law by this Court in exercise of its Appellate Jurisdiction in this appeal. 36. The learned sen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany is also the statutory violation on the part of the Appellant-Company in retrenching certain concerned senior workmen. Therefore, the courts below have rightly answered the issue against it. Hence, the same cannot be termed as erroneous for our interference with the. 38. The principle of 'last come first go' should have been strictly adhered to by the Appellant-Company at the time of issuing retrenchment notice served upon the concerned workmen as provided Under Section 25G of the I.D. Act read with Rule 81 of the Bombay Rules which is not properly complied with by it for the reason that the custom clearance and dock clearance are totally different departments and it has retained 7 workmen who are undisputedly juniors to the concerned workmen, which action is sought to be justified by the Appellant-Company without giving justifiable reasons. Further, no category wise seniority list of the workmen was displayed on notice board of the Appellant-Company as required in law. The learned senior Counsel on behalf of the Appellant-Company placed reliance on the decision of this Court rendered in the case of Workmen of Sudder Workshop of Jorehaut Tea Co. Ltd. v. Management of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mphasis supplied by the Court) 39. The learned senior Counsel further contended that the above legal principle is laid also down in the case of Om Oil and Oil Seeds Exchange, Ltd. Delhi v. Their Workmen, wherein this Court has held that breach of Section 25G of the I.D. Act would not per se make the action of the Company mala fide and as such, the action of the Appellant-Company in issuing retrenchment notice to the workmen cannot be quashed ipso facto. The learned senior Counsel contented on behalf of the Appellant-Company that in the present case, the principle laid down in Om Oil Oil Seeds Exchange's case referred to supra is aptly applicable to the case on hand. 40. We are of the opinion that the High Court has rightly held that the ratio of the said case cannot be disputed, however, the facts of that case and facts of the case on hand are totally different. In Om Oil Oil Seeds Exchange case (supra), it was established by the employer that the clerk working in a particular branch of the business had shown particular aptitude performance and considering the said performance and his expertise, the management felt in the interest of business to retain him though he i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s below. The said contention is rightly rebutted by the learned senior Counsel on behalf of the Respondent-Union by placing reliance on the case of Workmen of Sudder Workshop (supra), wherein this Court held that the Court cannot sympathise with a party which gambles in litigation to put off the evil day, and when that day comes, prays to be saved from its own gamble. The said contention urged on behalf of the Respondent-Union must be accepted by us as the same is well founded. Therefore, we hold that moulding of the relief is not permissible in this case at this stage when the matter has reached this Court keeping in mind the legal principle laid down by this Court on this aspect of the matter in the case referred to supra. 43. Further, with regard to reinstatement of the concerned workmen and back-wages to be paid to them, the learned senior Counsel on behalf of the workmen has rightly placed reliance upon the case of Anoop Sharma v. Executive Engineer (2010) 5 SCC 497, wherein it was held that since termination of employment is in breach or violation of the mandatory provisions of Chapter V-A or V-B of the I.D. Act is void ab initio in law and ineffective and suffers from nul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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