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2003 DIGILAW 199 (AP)

M. Nagabhushanam v. Twin Cities Steel Re. rolling Mills (P) Ltd. , Hyderabad

2003-02-06

BILAL NAZKI, G.YETHIRAJULU

body2003
G. YETHIRAJULU, J. ( 1 ) THIS appeal is directed against the judgment of a single Judge of this Court in w. P. No. 1389 of 1992 dated 30-3-1992 quashing the award passed by the additional Industrial Tribunal-cum-Addl. Labour Court, Hyderabad passed in favour of the workmen. ( 2 ) THE brief facts narrated by the writ petitioner leading to the filing of this appeal are as follows. ( 3 ) M/s. Twin Cities Re-rolling Mills (P) ltd. , ( the management for brevity) is a steel rolling unit established at Hyderabad in the year 1985. The management took a decision to close the industry and to retrench the workmen on the ground that the industry was facing many problems, including labour unrest and financial crisis and accordingly closed down the Unit w. e. f. 22-9-1988. They offered to all its workmen a salary of one month in lieu of one month notice required to be given before the closure of the industry and terminated their services from the date of its closure. Some of the workmen received the said amount and secured employment elsewhere. The appellants and respondents 5 to 8 herein raised a dispute vide I. D. Nos. 447 to 466 and 470 to 477 of 1988 before the Additional industrial Tribunal, Hyderabad ( the tribunal for brevity) challenging the decision of the management in closing down the industry and their retrenchment. ( 4 ) THE workmen contended that the management closed the industry temporarily without assigning any reasons and re-opened the same w. e. f. 25-12-1988 by recruiting new workers. It is their further contention before the tribunal that the management closed the industry only with an intention to throw out the workmen from the service. The workmen contended that the management failed to follow the procedure under Section 25-F of the industrial Disputes Act; 1947 ( the Act for brevity) and therefore the retrenchment of the workmen is illegal. They further pleaded that at the time of re-opening the industry also the management failed to apply sec. 25-H, therefore they are entitled for reinstatement with back wages. ( 5 ) THE Tribunal after considering the evidence adduced by both parties in its order dated 10-10-1991 directed reinstatement of all the workmen who raised the industrial dispute with continuity of service, but without back wages and other attendant benefits. 25-H, therefore they are entitled for reinstatement with back wages. ( 5 ) THE Tribunal after considering the evidence adduced by both parties in its order dated 10-10-1991 directed reinstatement of all the workmen who raised the industrial dispute with continuity of service, but without back wages and other attendant benefits. The tribunal further directed the management to issue orders of reinstatement within one month from the dates of requests made by the workmen seeking reinstatement after publication of the award. Subsequently, the Government of Andhra Pradesh issued Gazette notification in G. O. Rt. No. 2392, Women s development, Child Welfare and Labour (Lab. I) Department, dated 19-11-1991 publishing the said award. ( 6 ) THE management being aggrieved by the award of the tribunal filed W. P. No. 1389 of 1992 praying to issue a writ of Certiorari and to quash the award of the tribunal. The management submitted that the industry was closed for a period of two months and after mustering necessary resources, it decided to reopen the industry w. e. fl 25-12-1988. It could get co-operation from the present set of employees and stablise the industry. If the award of the tribunal is to be complied with, all those who have been working with the industry since three (03) years prior to the date of filing the writ petition have to be thrown out, which is not the intention of the Legislature when it conferred wide discretion to grant the order of reinstatement. The management therefore requested to quash the order of the tribunal by way of issuing a writ of Certiorari. ( 7 ) THE workmen resisted the writ petition denying the averments made by the management. They contended that after publication of the common award of the tribunal on 19-11-1991 directing them to submit applications to the management for reinstatement, they sent the request letters to the management, which were served on them on 26-12-1991,7-1-1992 and 20-2-1992. The management instead of issuing reinstatement orders filed the writ petition and obtained interim orders on 30-1-1992. The management after reopening the industry on 25-12-1988 employed new workers without giving preference to them as required under Section 25-H of the Act. The management instead of issuing reinstatement orders filed the writ petition and obtained interim orders on 30-1-1992. The management after reopening the industry on 25-12-1988 employed new workers without giving preference to them as required under Section 25-H of the Act. ( 8 ) THE learned single Judge after considering the contentions of both parties and after referring to so much case law allowed the writ petition and quashed the award of the tribunal directing the management to pay compensation equivalent to 45 days average pay to the 25 workmen who raised the industrial dispute. The learned single Judge also held that the workmen are not entitled for reinstatement. ( 9 ) IN this appeal, the workmen assailed the order on the ground that the learned judge failed to consider the provisions of section 25-F and Section 25-H of the Act. ( 10 ) IN the light of the contentions raised by the appellants-workmen, the following points arise for consideration of this Court: (1) Whether the retrenchment of appellants and respondents 5 to 8 is in accordance with the provisions of section 25-F of the Act? (2) Whether the appellants and respondents 5 to 8 are entitled for reinstatement? (3) Whether the appellants who offered themselves for re-employment are entitled for preference over other persons, as provided under section 25-H of the Act?point Nos. 1 and 2: ( 11 ) THE management closed the industrial establishment on 22-9-1988 and re-opened the same on 25-12-1988. The management issued only M. O. 5 notice on 22-9-1988, the day on which the industrial establishment was closed. No notices were issued to the workmen when it was reopened giving opportunity to offer themselves for re-employment as contemplated under Section 25-H of the Act. ( 12 ) THE learned single Judge referred to a document of settlement between the workers and the management, which was not signed by the appellants herein, except one. The learned Judge without referring to the specific acts of non-co-operation came to the conclusion that the production was reduced to 27 tonnes per day. Whether there was a settlement between the workmen, whether they promised to give 40 tonnes production a day, whether the management was able to give sufficient raw material and necessary infrastructure to reach the said production are all disputed questions of facts which will not be considered by a writ court. Whether there was a settlement between the workmen, whether they promised to give 40 tonnes production a day, whether the management was able to give sufficient raw material and necessary infrastructure to reach the said production are all disputed questions of facts which will not be considered by a writ court. The learned Judge further observed that the tribunal has no jurisdiction to go into the motives for closure and the tribunal was not justified in recording the finding that the closure is mala fide. It was further observed that the tribunal is only entitled to go into the question to find out whether the closure is real and genuine or whether it is a cause adopted to get rid of some of the employees. The learned single Judge also observed that the tribunal has to go into the totality of the circumstances and then record its findings. The learned Judge after taking into consideration the factual aspects came to the conclusion that the closure is genuine and the management has not resorted to any acts to get rid of the non-co-operative workers and it was necessitated by the financial crisis created by the workers in reducing the production and ultimately held that the workmen are entitled to the relief of payment of compensation, but not to the relief of reinstatement. ( 13 ) SECTION 25-F of the Industrial Disputes act deals with the conditions for retrenchment and it reads as follows: 25-F. Conditions precedent to retrenchment of workmen:- No workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until (A) the workman has been given one month s notice writing indicating the reasons for retrenchment and the period of notice has expired, or the workmen has been paid in lieu of such notice, wages for the period of the notice. (B) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days average pay (for every completed year of continuous service) or any part thereof in excess of six months; and (C) notice in the prescribed manner is served on the appropriate government (or such authority as may be specified by the appropriate government by notification in the official Gazette ). ( 14 ) THE closure of the industry was not done in strict compliance with Section 25-F of the Act. No notice was issued before closing of the industry, as required under section 25-F of the Act, and only Ex. M-5 notice was issued on the date of closing the industry. For re-opening also no notice was issued giving opportunity to the appellants to offer themselves for re-employment, as contemplated under Section 25-H of the Act. The management issued Ex. P-15 notice only offering to pay one month wages in lieu of notice. ( 15 ) THE learned single Judge came to the conclusion that the closure of the industry on 22-9-1988 is genuine. The learned Judge also observed that under Section 25-FFF of the Act the workmen are entitled to compensation only and their reinstatement is not contemplated under the Act, but they are entitled to be considered only for re- employment, as provided under Sec. 25-H of the Act. ( 16 ) IN order to find out whether the circumstances narrated by the management justify its action in retrenching the workmen, we would like to verify the settled case law on this aspect. ( 17 ) IN N. Selvaraj v, MGMT. of S. W. C. Prodn. and Sales Soc. Ltd. the Madras High court held that non-payment of retrenchment compensation under Sec. 25-F of the Act makes the retrenchment order invalid. The High Court also found the termination was not a bona fide one and directed the management to reinstate the workman into service with back wages by setting aside the award of the Labour Court which granted monetary compensation in lieu of retrenchment. ( 18 ) IN Madan Singh Rawat v. A. C. C. Bank a Division Bench of the Rajasthan High court held that when the termination of an employee under Section 25-F (b) is illegal, reinstatement of the employee by the labour Court is justified. ( 19 ) IN Jakir Husain Munshi Khan v. UCO bank and others, a learned Judge of the madhya Pradesh High Court held that when there was an order of termination in violation of Section 25-F, the High Court can exercise its jurisdiction under Article 226 of the Constitution of India and set aside the order of termination directing reinstatement and payment of back wages. ( 20 ) IN H. W. Corpn. v. P. O. , Lab. , Conrt- cum-Indl. ( 20 ) IN H. W. Corpn. v. P. O. , Lab. , Conrt- cum-Indl. Trib. and another a Division Bench of the Punjab and Haryana High Court while considering the scope of retrenchment under Section 25-F held that unless clear case is made out, conditions prescribed to the retrenchment have to be fulfilled and failure to fulfill those conditions leads to the termination invalid and the workmen are entitled for reinstatement. ( 21 ) IN State Bank of India v. Sundaramoney the Supreme Court held that if the workman swims into the harbour of Section 25-F, he cannot be retrenched without payment of compensation at the time of retrenchment, xxxxxxxxx as prescribed therein read with section 25-B (2 ). ( 22 ) WE too agree with the views expressed by the learned Judges of High courts in the above decisions and apply the principle laid down by the Hon ble Supreme court. ( 23 ) THE learned Single Judge of this Court though noticed the non-issuance of the notice, non-assigning of reasons for retrenchment, failure to wait till the expiry of the period of notice, failure to pay one month wages in lieu of notice, failure to give compensation at the time of retrenchment, failure to give notice to the Government in the prescribed form was led away on the sole ground that the workmen failed to give the production as promised. This is a finding of fact. With due respect, we are of the opinion that the findings of the learned judge cannot sustain and we hold that the termination of the workmen was not bona fide. Point No. 3: ( 24 ) THE tribunal as well as the learned single Judge of this Court have categorically held that the management failed to follow the procedure prescribed under Sec. 25-F of the Act. When once there is failure to follow the procedure prescribed under Sec. 25-F, termination of the workmen from service becomes illegal and it can be safely concluded that there is no termination of the workmen in the eye of law. In the light of the legal position discussed supra, we have no hesitation to hold that the tribunal was right in holding that the order of termination is illegal. In the light of the legal position discussed supra, we have no hesitation to hold that the tribunal was right in holding that the order of termination is illegal. ( 25 ) THE workmen contended that though the management resorted to close the industrial establishment on the pretext of their non-cooperation and also due to financial crisis, it has adopted a method unknown to law in re-opening the industry within two (02) months and tried to justify its action by stating that it could mobilize the resources to reopen the industry. But, there was no proper answer from the management as to why they failed to follow the mandate of Section 25-H by offering reemployment to the workmen before taking new workers into service. ( 26 ) IT is not in dispute that the management has reopened the industry w. e. f. 25-12-1988 by recruiting fresh employees. The management has not offered the retrenched workmen for re- appointment after reopening the industry. At this juncture, we wish to reiterate the provisions of Section 25-H of the Act, which reads thus: 25-H. Re-employment of retrenched workmen:- (1) Where any workmen are retrenched, and the employer proposes to take into his employ any persons, he shall, in such manner as may be prescribed, give an opportunity to the retrenched workmen who are citizens of India to offer themselves for re-employment, and such retrenched workmen who offer themselves for re-employment shall have preference over other persons. A. P. State Amendment (sub-sec. (2) inserted): (2) Where a closed unit is re-opened the workmen on the roll of the unit immediately before its closure shall be given an opportunity to offer themselves for re-employment in the manner provided in sub-sec. (1) (vide A. P. Act 32 of l987 ). ( 27 ) SECTION 25-H is very clear that the workmen who are retrenched should be given an opportunity, as prescribed by the rules, before the management recruits fresh hands for the same posts. Failure to give notice to the workmen offering to re-employ them leads to violation of the provisions of section 25-H and on that ground also the workmen are entitled to be reinstated into service. Failure to give notice to the workmen offering to re-employ them leads to violation of the provisions of section 25-H and on that ground also the workmen are entitled to be reinstated into service. ( 28 ) THE learned single Judge referring to the provisions of Sections 25-0,25-Q, 25-R and 25-S of the Act, which are applicable to the industrial establishments where/there are more than 50 workers in an industry, interpreted Section 25-H by observing that giving opportunity to the workmen to offer themselves for re-employment is mandatory, but re-employing them is not mandatory and they are only entitled to have preference over others. The learned single Judge ultimately concluded that the workmen are entitled only for compensation and not for reinstatement, as reinstatement is not contemplated under the Act. ( 29 ) THE tribunal observed in unambiguous terms that the termination itself is illegal. When once the termination becomes illegal, it can be concluded that there is no termination at all in the eye of law. ( 30 ) RULE 77 of the Industrial Disputes (Central) Rules, 1957 creates an obligation on the employer to prepare a list of all workmen in the particular category from which retrenchment is contemplated. Rule 78 provides for re-employment of the retrenched workmen, which reads as follows: 78. Re-employment of retrenched workmen: At least ten days before the date on which vacancies are to be filled, the employer shall arrange for the display on a notice board in a conspicuous place in the premises of the industrial establishment details of those vacancies and shall also give intimation of these vacancies by registered post to every one of all the retrenched workmen eligible to be considered therefor, to the address given by him at the time of retrenchment or at any time thereafter. ( 31 ) THE management did not offer re-employment to the workmen at the time of re-opening the industry and the consequences of non-compliance of section 25-H are reiterated by the Apex court and High Courts in various decisions. ( 32 ) A Division Bench of the Gujarat High court in Gujarat S. M. T. Corpn. Ltd. v. Deepak held that retrenched employee must be given opportunity first by intimating the same through a registered notice, as required under Section 25-H of the industrial Disputes Act and Rule 82 (2) (b) of the Gujarat Industrial Dispute Rules, 1966. ( 32 ) A Division Bench of the Gujarat High court in Gujarat S. M. T. Corpn. Ltd. v. Deepak held that retrenched employee must be given opportunity first by intimating the same through a registered notice, as required under Section 25-H of the industrial Disputes Act and Rule 82 (2) (b) of the Gujarat Industrial Dispute Rules, 1966. ( 33 ) IN Oriental Bank of Commerce v. Union of India a single Judge of the Allahabad high Court held that failure of the management to offer re-employment at the time of filling up the vacancies amounts to violation of Section 25-H. If there was retrenchment of the workmen, the management would be under an obligation to give opportunity to the concerned workmen to offer themselves for re-employment. They are entitled to preference over others. In the absence of proof that the management discharged the legal obligation created by Section 25-H and Rules 77 and 78 of the Industrial Disputes (Central) Rules. 1957, the workmen are entitled to the relief of reinstatement. ( 34 ) AFTER going through the principles laid down by the Supreme Court and various High Courts, the relevant provisions of the Act and the rules, and the material placed by both parties we are of the considered view that (1) termination of service of the workmen is not bona fide; (2) the management failed to fulfill the conditions of Section 25-F at the time of termination of workmen from service; and (3) the conditions of Section 25-H are not fulfilled by failing to offer employment to the workmen before employing outsiders at the time of reopening the industrial establishment. ( 35 ) IN the light of the above findings, we are constrained to set aside the order of the learned single Judge in W. P. No. 1389 of 1992 dated 30-3-1992 and restore the common award of the tribunal dated 10-10-1991 in all respects. No costs.