Bombay High Court: …re-structuring of the organisation ...not a liberty to an employer to dispense with the services of all the employees,
IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION
NO.791 OF 2022
MSL Group India & Anr. ..
Petitioners
Versus
Eknath Narayan Shelar ..
Respondent
…
Mr.Anand Pai i/b Udwadia & Co.
for the Petitioners.
None for the Respondent.
...
CORAM: RAVINDRA V. GHUGE, J.
DATED : 10th
FEBRUARY, 2022
IMPORTANT POINTS
It is a settled position of law that acceptance of retrenchment
compensation, does not amount to any worker comprising his rights qua his
retrenchment. Payment of retrenchment compensation to an employee, who has completed
240 days in 12 consecutive calendar months preceding the date of reference, is
provided in Section 25F. The payment of such compensation is a legal obligation
on the employer and receiving such compensation amount does not extinguish the
right of the worker to question his retrenchment.
…re-structuring of the organization or resizing of the
labour force does not give liberty to an employer to dispense with the services
of all the employees, the office assistants in this case and recruit fresh
hands in their place. Even if they may have been retrenched, if the employer
has not closed down the establishment and recruits fresh hands, the retrenched
workers have a right to claim reinstatement.
The three conditions set out in Section 25F of the ID Act, are axiomatic and
are necessary pre-conditions for retrenchment. In Umesh Chandra Pandey & Ors.
Vs. State of U.P. & Ors., 1991 Lab IC 1449, the Allahabad High Court
concluded that the acceptance of the retrenchment compensation offered by the
employer under Section 25F is not a bar for the retrenched employee to
challenge the retrenchment.
P.C:-
1. By this petition, the petitioner-Management has put forth
prayer clause 22(a) and 22(b) as under:-
(a) That this Hon’ble Court be pleased to issue a writ of certiorari
or a writ in the nature of certiorari or any other appropriate writ, order or
direction calling for the records and proceedings in Complaint (ULP) No.30 of
2016 and Revision Applications (ULP) Nos.81 of 2018 and 134 of 2017
respectively, and after examining the legality, validity and
propriety of the impugned Orders i.e. (i) the Order dated 6th November
2017 passed by the 6th Labour Court, Mumbai in Complaint (ULP) No.30 OF 2016
and (ii) Common Order dated 6th November, 2019 passed in Revision Application (ULP)
Nos.81 of 2018 and 134 of 2017 was passed by the Industrial Court, Mumbai being
Exhibits-”B” and “C” hereto, this Hon’ble Court be pleased to quash and set
aside the impugned Orders;
(b) That Pending the hearing and final disposal of this Petition,
this Hon’ble Court be pleased to stay the operation, implementation and
enforcement of the impugned orders i.e. (i) the Order dated 6th November, 2017
passed by the 6th Labour Court, Mumbai in Complaint(ULP) No.30 of
2016 and (ii) Common Order dated 6th November, 2019 passed in Revision
Applications (ULP) Nos.81 of 2018 and 134 of 2017 passed by the Industrial
Court, Mumbai and/or direct the Respondent not to take any coercive action in
furtherance of the impugned Orders”.
2. I have considered the strenuous submission of the learned
Advocate for the Management and with his assistance, I have gone through the
grounds (A to Z) and (AA to HH).
3. The admitted factors in this case are as under :-
(a) The respondent was appointed by order of appointment dtd.
25/05/2004.
(b) By an order dated 13/12/2015, he has been terminated from
service on the ground that the organization is undergoing a major
re-structuring and resizing, based on the new business requirements.
(c) The Management has neither averred nor taken a stand that
the respondent is not a workman as defned under Section 2(s) of the Industrial
Disputes Act, 1947 (for short, “the ID Act”).
(d) All the 15 employees who were office assistants, have been
removed from the service of the petitioner.
(e) The respondent was paid one month salary in lieu of notice
period.
(f) A seniority list of the workers/office assistants was
not displayed by the employer.
4. It is contended that the employer has a right to terminate
an employee as per the appointment order. Mere termination does not render the
order illegal. The termination order cannot amount to an unfair labour practice,
after the Management has paid one month’s salary and five months’ wages as
ex-gratia amount along-with leave encashment, the termination cannot be
interfered with. Having accepted the amounts, the employee is precluded from
challenging his termination.
5. I have gone through the judgments of the Labour Court and
the Industrial Court, dtd. 06/11/2017 and 06/11/2019, respectively. After the
respondent approached the Labour Court by preferring complaint (ULP) No.30 of
2016, the Management entered a written statement dated August, 2016.
There is not a whisper in the written statement that the complainant/worker
is not a workman. It is admitted that all the 15 office assistants have been
removed from employment. It is further admitted that the petitioner/ Management
has not permanently closed down it’s business.
6. It is a settled position of law that acceptance of retrenchment
compensation, does not amount to any worker comprising his rights qua his
retrenchment. Payment of retrenchment compensation to an employee, who has completed
240 days in 12 consecutive calendar months preceding the date of reference, is
provided in Section 25F.
The payment of such compensation is a legal obligation on
the employer and receiving such compensation amount does not extinguish the
right of the worker to question his retrenchment.
7. Section 25B and 25F of the ID Act read as under :-
25-B. Definition of continuous service.- For the purposes of
this Chapter,-
(1) a workman shall be said to be in continuous service for a
period if he is, for that period, in uninterrupted service, including service
which may be interrupted on account of sickness or authorised leave or an
accident or a strike which is not illegal, or a lock-out or a cessation of work
which is not due to any fault on the part of the workman;
(2) where a workman is not in continuous service within the
meaning of clause (1) for a period of one year or six months, he shall be
deemed to be in continuous service under an employer-
(a) for a period of one year, if the workman, during a period
of twelve calendar months preceding the date with reference to which
calculation is to be made, has actually worked under the employer for not less
than-
(i) one hundred and ninety days in the case of a workman employed
below ground in a mine; and
(ii) two hundred and forty days, in any other case;
(b) for a period of six months, if the workman, during a period
of six calendar months preceding the date with reference to which calculation
is to be made, has actually worked under the employer for not less than
(i) ninety-fve days, in the case of a workman employed below
ground in a mine; and
(ii) one hundred and twenty days, in any other case.
Explanation. -For the purposes of clause (2), the number of days
on which a workman has actually worked under an employer shall include the days
on which-
(i) he has been laid-off under an agreement or as permitted
by standing orders made under the Industrial Employment (Standing Orders) Act,
1946 (20 of 1946), or under this Act or under any other law applicable to the industrial
establishment.
(ii) he has been on leave with full wages, earned in the previous
years;
(iii) he has been absent due to temporary disablement caused
by accident arising out of and in the course of his employment; and
(iv) in the case of a female, she has been on maternity leave;
so, however, that the total period of such maternity leave does not exceed
twelve weeks.]
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 in writing
indicating the reasons for retrenchment and the period of notice has expired,
or the workman 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 specifed by the appropriate Government
by notification in the Official Gazette.”
8. It is seen from the record that one month’s salary in
lieu of notice period has been paid. However, retrenchment compensation at the
rate of 15 days’ wages per year of service put in by the worker, has not been
paid. For the sake of assumption, the ex-gratia amount equivalent to five
months’ salary for the eleven years’ and six months’ service put in by the
worker, may be treated as payment of retrenchment compensation. However, it is
an admitted position that no notice was served upon the appropriate Government
as required under sub-section (c) of Section 25F. The Andhra Pradesh High Court
has held in Management of Oasis School, Hyderabad Vs. Labour Court,
Himayatnagar, Hyderabad & Ors. 1990 (Vol II) CLR 506 that it is competent
for retrenched workman to challenge the validity of retrenchment even after receiving
retrenchment compensation. The three conditions set out below Section 25F are
axiomatic and are necessary pre-conditions for retrenchment. In Umesh Chandra
Pandey & Ors. Vs. State of U.P. & Ors., 1991 Lab IC 1449, the Allahabad
High Court concluded that the acceptance of the retrenchment compensation
offered by the employer under Section 25F is not a bar for the retrenched
employee to challenge the retrenchment.
9. It is also an admitted position that the entire strength
of 15 office assistants were terminated, including the respondent/complainant.
This practically amounts to causing a closure of the establishment. If new
workers are to be engaged, such closure has to be lifted. Sections 25H and
25G of the ID Act read with Rule 82 of the Industrial Disputes (Bombay) Rules,
1957, have to be complied with and the retrenched employees have to be offered
re-employment by following their seniority.
10. In my view, re-structuring of the organisation or
resizing of the labour force does not give liberty to an employer to dispense
with the services of all the employees, the office assistants in this case and
recruit fresh hands in their place. Even if they may have been retrenched, if
the employer has not closed down the establishment and recruits fresh hands, the
retrenched workers have a right to claim reinstatement.
In view of the above, the Labour Court was right in coming
to a conclusion that the termination of the respondent would be covered by Item
1 of Schedule IV of the MRTU & PULP Act, 1971.
11. The contention of the Management that the appointment order
empowers it to terminate the service of an office assistant at any time, is
wholly misconceived. The services of a permanent employee, who has completed
240 days in each calendar year and is entitled to the deemed status of a permanent
employee in view of Standing Orders 4C and 4D of the MSO provided under the
Industrial Employment (Standing Orders) Act, 1946, are protected against
arbitrary termination.
12. The last limb of submissions of the Management that the Labour
Court did not grant back-wages and the Industrial Court erroneously granted 50%
back-wages, is unsustainable. It is noteworthy that the employee preferred
Revision (ULP) No.81 of 2018 and the Management preferred Revision (ULP) No.134
of 2017, under Section 44 of the State Act, before the Industrial Court. The
Industrial Court recorded that the employee had specifically led oral evidence
stating that he is not in gainful employment. The onus and burden of stepping into
the witness box and stating on oath that he is not gainfully employed, lies on
the shoulders of the workman in view of J. K. Synthetics Ltd. Vs. K.P.Agrawal
& Anr., [(2007) 2 Supreme Court Cases 433]. Once this burden is discharged,
it is for the Management to refute the claim and establish that he is in gainful
employment. In my view, the Industrial Court rightly adopted a pragmatic
approach after considering the law laid down by the Hon’ble Supreme Court in
the case of Deepali Gundu Surwase Vs. Kranti Junior Adhyapak Mahavidyalaya (D.Ed.)
and others [ (2013) 10 SCC 324] and granted 50% backwages.
13. As such, this petition, being devoid of merits, is, dismissed.
(RAVINDRA V. GHUGE, J.
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