My photo




Friday, February 27, 2015

award passed by the Industrial Court =We affirm the impugned judgment and order of the Division Bench of the High Court. The order dated 14.08.2006 extending protection to the appellant-Company shall stand vacated. Since, the concerned workmen have been litigating the matter for the last 23 years, it would be appropriate for us to give direction to the appellant-Company to comply with the terms and conditions of the award passed by the Industrial Court by computing back-wages on the basis of revision of pay scales of the concerned workmen and other consequential monetary benefits including terminal benefits and pay the same to the workmen within six weeks from the date of receipt of the copy of this Judgment, failing which, the back-wages shall be paid with an interest at the rate of 9% per annum. The appellant-Company shall submit the compliance report for perusal of this Court. There shall be no order as to costs.


                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 5319 OF 2008




                           J U D G M E N T


    The appellant-Company has questioned the  correctness  of  the  judgment
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.

  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  served  upon  approximately  98
workmen by the appellant-Company stating that the  same  will  be  effective
from closing of business on 04.08.1992. In the statement of reasons, it  was
stated  that  the  appellant-Company  was  accumulating   losses   and   the
proprietors had taken a decision to rationalise its  activities  apart  from
the property owning and development department, a portion  of  the  clearing
and development business  relating  to  contracts  with  the  Government  of
India, Institutions such as, Central Railway and  Lubrizol  India  Ltd.  The
respondent-Union who are the concerned workmen filed  the  complaint  before
the Industrial Court. Since there was a deviation from  the  seniority  list
of some workers in the clearing and forwarding departments and some  of  the
remaining workers from the alleged  closed  departments  of  the  appellant-
Company were to be transferred to the aforesaid retained departments of  the
appellant-Company, a seniority list of all the workmen in the  establishment
was also allegedly put up on the notice board. However, the finding of  fact
recorded by the Industrial Court while answering  the  relevant  contentious
issues is that this plea taken by the appellant-Company was not proved.

 Aggrieved by the  said  action  of  the  appellant-Company,  the  concerned
workmen of the respondent-Union filed  a  complaint  before  the  Industrial
Court at Mumbai alleging the unfair labour practices  on  the  part  of  the
appellant-Company in not complying with certain statutory  provisions  under
item No. 9 of the Schedule  IV  of  the  Maharashtra  Recognition  of  Trade
Unions and Prevention of Unfair  Labour  Practices  Act,  1971  (hereinafter
referred to as the  "MRTU  &  PULP  Act"),  in  proposing  to  retrench  the
concerned workmen. It has assailed the legality and validity of  the  notice
of retrenchment served upon the concerned workmen by the  appellant-Company.
The legal contentions  urged  by  the  workmen  in  the  complaint  were  as
(i) That the notice was defective in as such though one  month's  salary  in
lieu of notice was offered, current month's salary was  not  offered  to  be
paid and was not included in  the  cheques  which  had  been  given  to  the
workmen. Thus, the condition precedent under Section 25F of  the  Industrial
Disputes Act (for short the I.D. Act) is  not  complied  with.  Further  the
said notice did not indicate that notice in the  prescribed  form  has  been
sent to the State Government or  the  authorities  specified  under  Section

(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

(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  employees  who  are  not  junior  must  have  been
retrenched. Therefore this is in violation of the  provision  under  Section
25G of the I.D. Act.

On 28.01.1993, on the basis of the pleadings, the  Industrial  Court  framed
the following issues:-
"1.Whether any seniority list was displayed as provided in Rule  81  of  the
Industrial Disputes (Bombay) Rules, 1957?
2.Whether a Complaint for  an  alleged  breach  of  the  provisions  of  the
Industrial Disputes (Bombay) Rules, 1947 is maintainable under  item  no.  9
of Schedule IV of the MRTU & PULP Act, 1971?
3.Whether a Complaint for an alleged breach of Rule  81  of  the  Industrial
Disputes  (Bombay)  Rules,  viz.,  displaying   the   seniority   list,   is
maintainable under item no.9 of the Schedule IV of the MRTU & PULP Act?
4.Whether the respondent has committed  breach  of  Section  25F(b)  of  the
I.D.Act 1947?
5.Has it been  proved  that  the  respondent  has  committed  unfair  labour
practice, as pleaded, by not sending notice to the Government under  Section
25F(c) of the I.D. Act, 1947?
6.Whether the provisions of Section 25FFA of the  I.D.  Act  are  applicable
and whether any unfair labour practice on the court is proved to  have  been
7.Whether  the  respondent  has  committed   unfair   labour   practice   as
contemplated by Section 25G of the I.D.  Act  1947,  by  not  following  the
principle of last come first go, as pleaded by the respondents?
8.Whether any custom, practice or usage has become an agreement,  settlement
or award, and breach thereof, if any amounts to unfair labour practices?
9. Whether the facts of the case require notices under section  9-A  of  the
I.D. Act, 1947?"

 Before the Industrial Court the appellant-Company  has  filed  its  counter
statement denying the averments made on the alleged contraventions  made  by
the appellant-Company under the I.D. Act,  and  MRTU  PULP  Act  in  issuing
retrenchment notice to the concerned workmen.  It  has  further  denied  the
various averments made in the complaint filed by the respondent-trade  Union
against the appellant-Company in justification of its  retrenchment  of  the
concerned workmen on the alleged  closure  of  the  department/unit  of  the
appellant-Company.  Nine witnesses on behalf of the  concerned  workmen  and
two witnesses on behalf of the appellant-Company were  examined  before  the
Industrial Court to justify their respective claims and counter claims.

  On appreciation 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 Rule 81 of  the  Bombay  Rules  was
held to have been committed by the appellant-Company. Thus,  the  Industrial
Court answered the points of dispute and relevant contentious issues  framed
by it in favour of the  concerned  workmen  and  set  aside  the  notice  of
retrenchment served upon them. The Industrial Court held that  the  rest  of
the unfair labour practices alleged in the complaint were  not  proved.  The
Industrial Court passed an interim order directing the appellant-Company  to
cease and  desist  from  enjoining  the  said  unfair  labour  practice  and
continue the employment of retrenched workmen in service and pay  them  full
wages every  month.  The  appellant-Company  was  further  directed  by  the
Industrial Court after  adjudicating  the  industrial  dispute  between  the
parties to pay arrears of all such wages to the retrenched workmen from  the
date of alleged retrenchment till the  date  of  the  said  award  and  also
directed the appellant-Company to pay them future wages regularly  from  the
date they are actually allowed or continued to work as per the award of  the
Industrial Court.

 The correctness of the said  award  passed  by  the  Industrial  Court  was
challenged by the appellant-Company before the High  Court  by  filing  Writ
Petition No. 2733 of 1996, urging various grounds and prayed  to  quash  the
award passed by the Industrial Court. The High Court dismissed the same  and
passed the judgment and order by recording  its  reasons  and  affirmed  the
findings of fact recorded by the Industrial Court on the points  of  dispute
and the contentious issues.

 Aggrieved by the same, L.P.A. No. 141 of 1996 was filed by  the  appellant-
Company before the Division Bench of the Bombay  High  Court.  The  Division
Bench of the High Court after adverting to  each  one  of  the  rival  legal
contentions urged on behalf of the parties has observed that in the  instant
case there is a clear cut breach of Section 25G of the I.D.  Act  read  with
Rule 81 of the Bombay Rules on the part of the  appellant-Company  and  held
that cumulative effect of the same  was  that  the  action  of  retrenchment
taken by the appellant-Company on the concerned workmen was totally  illegal
and amounted to an unfair labour practice.  The  Division  Bench  reaffirmed
the findings of fact  and  reasons  recorded  in  favour  of  the  concerned
workmen and affirmed the award of the Industrial Court in its judgment.  The
correctness of the same is challenged  in  this  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.

  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 & Co. 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  the
employees. Therefore, the concerned workmen were retrenched from  employment
and their legal dues were paid  as  contemplated  under  the  provisions  of
Section 25F clause (b) of the I.D. Act. The retrenchment  of  the  concerned
workmen in fact came into force at the close of business  on  04.08.1992  at
4:45  p.m.  as  per  the  retrenchment  notice  itself  served  upon   them.
Intimation of passing of the ex-parte ad interim order dated  04.08.1992  by
the Industrial Court was allegedly communicated to the appellant-Company  by
the respondent-Union vide its letter dated 04.08.1992 itself at  5:30  p.m.,
by which time the possession of the premises of the appellant-Company  where
the retrenched workmen were  employed  was  already  handed  over  to  three
independent Companies, who had acquired leave  and  licence  agreement  with
the premises of the appellant-Company on  28.07.1992.  Their  occupation  of
the premises alleged to have been deferred up to 04.08.1992 i.e.  until  the
completion of the process of retrenchment of the concerned  workmen  of  the
respondent-Union, which process had started much earlier.

   With respect to the violation of the principle of 'last  come  first  go'
under Section 25G of the I.D. Act read with Rule 81 of the Bombay  Rules  as
contended by the respondent-Union on behalf of the  concerned  workmen  that
no seniority list of the category wise workmen was  put  up  on  the  notice
board of the appellant-Company in accordance with Section 25G  of  the  I.D.
Act read with Rule 81 of the Bombay Rules i.e.  'last  come  first  go'  and
that the same was not done  within  7  days  of  the  proposed  retrenchment
notice, the said contention of  the  workmen  is  rebutted  by  the  learned
senior counsel for the appellant-Company saying that it is an admitted  fact
that at the very least, the workers had received the seniority list  several
days prior to 04.08.1992. They were  thus  well  aware  of  their  inter-se-
seniority list displayed before the  actual  date  of  closure/retrenchment,
whether it was 7 days in advance or not is not relevant for the  purpose  of
finding out whether the action of the appellant-Company is legal  and  valid
or not. Therefore, the concurrent finding  of  fact  recorded  by  the  High
Court in the impugned judgment accepting the case  of  the  respondent-Union
is not tenable in law and prayed to set aside the same.

  Further, it is contended  by  him  that  it  is  now  established  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[1],
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[2],  Jaipur  Development  Authority  v.  Ramsahai  &
Anr[3] and State of Rajasthan v. Sarjeet Singh & Anr.[4] in support  of  the
above legal proposition.
  It is further contended by the learned senior counsel  on  behalf  of  the
appellant-Company that in the present case, the respondent-Union  had  ample
notice of the closure/retrenchment on their own  admission  from  30.07.1992
i.e. at least 5 days before their date of retrenchment, they had a  copy  of
the seniority list. However, they have not at  any  time  indicated  to  the
appellant-Company that there was a deviation from  the  principle  of  'last
come first go' on the part of the appellant-Company. Further,  it  is  urged
by him that either the Industrial Court or the High Court has not been  able
to identify any such breach of the above mandatory provisions of the  Act  &
Rules.  However,  despite  the  same,  it  is  contended  by  him  that  the
conclusion of the High Court on the contentious issue  nos.  1-3  and  7  in
holding that there is a "clear-cut breach" of Section 25G of  the  I.D.  Act
read with Rule 81 of the Bombay Rules is not founded on any  material  facts
and evidence on record in this regard. A copy of the seniority list  of  the
workmen of the unit/department was exhibited  by  the  appellant-Company  on
the notice board of their establishment on 22.07.1992 i.e. 14 days prior  to
the date of  closure  of  the  unit/department  which  does  not  constitute
technical rationalisation  envisaged  under  the  item  no.  10  of  the  IV
Schedule of  the  I.D.  Act.  It  is  further  contended  by  him  that  the
respondent-Union has not led any cogent evidence in  this  regard  to  prove
the said allegation before the Industrial Court and therefore,  the  finding
recorded on this aspect is erroneous in law. Hence, the same  is  liable  to
be set aside.

 The further legal contention urged further  on  behalf  of  the  appellant-
Company is that there is no violation of Rule 81 of  the  Bombay  Rules  and
the complaint was not maintainable in law before  the  Industrial  Court  on
the alleged ground of violation of statutory provisions  under  Rule  81  of
the Bombay Rules and Sections 25F  clause  (b),  25G  of  the  I.D.  Act  to
attract Item 9 of the Schedule IV  of  the  MRTU  &  PULP  Act.  He  further
contended that the action of the  appellant-Company  in  issuing  notice  of
retrenchment is pursuant to  the  closure  of  the  department/unit  of  the
appellant-Company and not retrenchment of workmen per se.  Therefore, it  is
contended that there is no statutory breach of the aforesaid  provisions  of
the I.D. Act as alleged to have been  committed  by  the  appellant-Company.
The learned senior counsel for the 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 & Anr.[5], 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.

 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
04.08.1992,   the   premises    of    the    appellant-Company's    clearing
department/unit had been handed over to the licensees and that  no  work  of
this appellant-Company was being carried out by them from the said  premises
or elsewhere, except the  two  activities  which  were  partially  retained.
Therefore, no back-wages are payable  to  the  workmen  as  awarded  by  the
Courts below, as the services of the concerned workmen  were  terminated  on
account of the closure of the above unit of the  appellant-Company  for  the
reasons stated in the Annexure appended to the retrenchment  notice.  It  is
also further urged by him that it is an established principle  of  law  that
there could be neither  reinstatement  nor  payment  of  back-wages  to  the
concerned workmen in  a  closed  unit  of  the  appellant-Company  in  which
retrenched workmen were working. He has also urged that  indeed,  there  can
be no industrial  dispute  between  the  concerned  workmen  and  appellant-
Company after the closure of its clearance department/unit, which  fact  was
established by them  before  the  Courts  below  by  producing  evidence  on
record, which is ignored  by  them  while  recording  the  finding  on  this
relevant issue and therefore, the finding  of  fact  is  erroneous  in  law.
Hence, the same is liable to be set aside. Further, it is contended  by  him
that both the Industrial Court and the High Court have failed to  frame  the
relevant issue  namely,  whether  there  was  a  closure  of  the  clearance
department/unit of the  appellant-Company  or  not  despite  there  being  a
pleading in this regard in its written statement. The issue in  this  regard
should have been framed by the Industrial Court as per the law laid down  by
this Court in the case of J.K. Synthetics v. Rajasthan Trade Union Kendra  &
Ors.[6] He referred to Para 22 of the  judgment  in  support  of  his  above
legal contention, which paragraph is extracted hereunder:

"22. As has been set out hereinabove, amongst other disputes which had  been
referred to the Industrial Tribunal was Dispute 2, which reads as follows:

"2. Whether the retrenchment in the 4 divisions  of  J.K.  Synthetics  (viz.
J.K. Synthetics, J.K. Acrylics, J.K. Tyre Cord and  J.K.  Staple  and  Tows,
Kota) was justified and if not, to what relief the workers are entitled?"

Thus, the Industrial Tribunal was required to go into the  question  whether
or not the retrenchment was justified. The appellant had sought  to  justify
retrenchment 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[7],  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.
Further, it was contended by him that in the case of PVK Distillery Ltd.  v.
Mahendra Ram[8], this Court has held that  a  direction  for  awarding  back
wages after a long interregnum is  unfair  and  that  the  Industrial  Court
ought to have taken notice of the case where the employer has been  declared
sick and remained closed for many years and  therefore  the  award  of  back
wages in favour of the concerned workmen is unjustified in law.

On the other hand, the above submissions made by the learned senior  counsel
on behalf of the appellant-Company are  strongly  rebutted  by  the  learned
senior counsel, Mr. C. U.  Singh,  appearing  on  behalf  of  the  concerned
workmen of the respondent-Union, by  placing  reliance  upon  the  order  of
notice of retrenchment dated 27.07.1992 served upon the  concerned  workmen.

It is contended by him  that  the  Statement  of  Reasons  appended  to  the
retrenchment notice issued  to  the  concerned  workmen  by  the  appellant-
Company does not show that  the  retrenchment  of  the  workmen  from  their
services is on account of closure of the clearing department, which  is  the
part of the undertaking of the  appellant-Company.  According  to  him,  the
concurrent finding of fact recorded by the  courts  below  on  the  relevant
issue is on proper appreciation of pleadings and both documentary  and  oral
evidence on record and is not shown to be erroneous, yet the same is  sought
to be challenged by the appellant-Company without showing material  evidence
on record against the finding of fact on the points of dispute and  relevant
contentious  issues  framed  by  the  Industrial  Court.  He  placed  strong
reliance upon paragraphs 2 and 3 of the written statement of the  appellant-
Company to the complaint, wherein it is stated that due to severe  recession
in the dominant areas in the industry in which the  concerned  workmen  were
engaged and various other factors, which were having direct  impact  on  the
business  activities  and  therefore,  it  was  found  imperative  for   the
appellant-Company to shut down some of their activities as detailed by  them
in the Statement of Reasons appended to the notice of  retrenchment.  Strong
reliance was placed upon by him on the decision of this Court  in  the  case
of S.G. Chemicals And Dyes Trading Employees' Union v.  S.G.  Chemicals  And
Dyes Trading Ltd. &  Anr.[9],  in  justification  of  the  finding  of  fact
recorded by the Industrial Court and concurred with by  the  High  Court  on
the issue that the 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 [pic]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 being  in  force,
as if the undertaking had not been  closed  down.  The  eighty-four  workmen
were, therefore, in  law  entitled  to  receive  from  September  18,  1984,
onwards their salary and all  other  benefits  payable  to  them  under  the
settlement dated February 1, 1979. These  not  having  been  paid  to  them,
there was a failure on the  part  of  the  Company  to  implement  the  said
settlement and consequently the Company was  guilty  of  the  unfair  labour
practice specified in Item 9 of Schedule IV to the Maharashtra Act, and  the
Union was justified  in  filing  the  complaint  under  Section  28  of  the
Maharashtra Act complaining of such unfair labour practice."

19. The learned senior counsel for the respondent-Union contended  that  the
alleged closure of the department/unit is void ab initio  in  law  for  non-
compliance of the aforesaid  statutory  provisions  of  the  I.D.  Act,  the
orders of retrenchment are vitiated in law,  liable  to  be  set  aside  and
accordingly, the Industrial Court has rightly set aside  the  same  and  the
High Court has rightly confirmed the award of the Industrial Court.

The learned  senior  counsel  on  behalf  of  the  respondent-Union  further
contended that the admitted fact  is  that  the  appellant-Company  did  not
adduce any evidence before the Industrial Court  that  the  closure  of  the
department/unit and the  retrenchment  of  the  concerned  workmen  of  that
department was made by complying with the mandatory  provisions  of  Section
25F clauses (a) & (c) and Section 25G of the I.D. Act read with Rule  81  of
the Bombay Rules. The contention of  the  learned  senior  counsel  for  the
appellant-Company that non-compliance of Section 25FFA (1)  in  not  serving
the notice atleast 60 days before the intended date of closure on the  State
Government  is  directory  but  not  mandatory  for  the  reason  that  non-
compliance of the same would amount to penalty  as  provided  under  Section
30A of the I.D. Act and therefore, the appellant-Company has to  face  penal
action as provided under the above provision of  the  I.D.  Act,  since  its
action could not have been held as void ab  initio  in  law  by  the  Courts
below, the said contention is vehemently  rebutted  by  the  learned  senior
counsel for the respondent-Union.
The learned senior counsel  for  the  respondent-Union  submitted  that  the
above contention of the learned  senior  counsel  on  behalf  of  appellant-
Company is wholly untenable in law. He contended  that  the  said  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.
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  this  regard  by
adducing justifiable  reasons  for  retaining  the  junior  workers  in  the
Company and thus, they have deviated from the principle of 'last come  first
go'. Thus, the concurrent finding of fact recorded on this important  aspect
of the case is based on evidence on record, which is in conformity with  law
laid down by this Court. It is  further  contended  by  the  learned  senior
counsel that onus is on the appellant-Company to prove as to why juniors  to
the retrenched workmen are  retained  in  the  department  or  unit  of  the
Company pursuant to the  alleged  closure  of  the  unit/department  of  the
appellant-Company. The same is not established by the  appellant-Company  by
assigning cogent reasons. He has rightly brought  to  our  notice  that  not
even a single question was put to the  witnesses  of  the  workmen  in  this
regard in their cross-examination before the Industrial Court as to why  the
appellant-Company retained junior workmen in the Company  while  retrenching
the senior workmen in the said department/unit of the appellant-Company.

The aforesaid rival legal contentions are  carefully  examined  by  us  with
reference to the pleadings, evidence adduced by both the parties  on  record
before the Industrial Court, the relevant statutory provisions of  the  I.D.
Act inter alia, Section 2(cc) read with Sections 25F (a) & (c),  25FFA,  and
25G of the I.D. Act read with Rule 81 of the Bombay Rules to find out as  to
whether the findings recorded by the Industrial Court on the relevant  issue
nos. 1 to 3 and 7 in the award  in  favour  of  the  concerned  workmen  are
either erroneous or bad in law and warrant interference by this Court.

The Industrial Court, being the original court, for appreciation of facts  &
evidence on record has  rightly  applied  its  mind  to  the  pleadings  and
evidence on record and recorded its  finding  of  fact  on  the  contentious
issues  referred  to  supra  by  assigning  valid  &  cogent  reasons  after
adverting to the statutory provisions of the I.D. Act and the law laid  down
by this Court and the High Court of Bombay. However, it would  be  necessary
for this Court to refer to  the  notice  of  retrenchment  served  upon  the
concerned workmen on 27.07.1992 along with Statement of Reasons assigned  by
the appellant-Company in justification of the same which is appended to  the
retrenchment notice. The same reads as under:

      Mackinnon Mackenzie &  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

      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
Rs.12.41 crores as at December 1983 to Rs.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  per
the agreement to the staff which are for  higher  than  those  paid  by  our
competitors to their staff.
3.Abnormal increases in other infrastructural costs and overheads.

4. Decreasing work output in relation to the staff employed to work on hand

The company incurred a loss of Rs. 6.67  crores  for  the  year  ended  31st
March, 1990 which rose to Rs.6,83 crores for  the  year  ended  31st  March,
1991.  During the current year the loss is likely to escalate.

In most areas of our activities, including that of  Clearing  &  Forwarding,
the Company has been unable to  improve  its  revenue  by  attracting  fresh
business.  Over the past few  years  the  Company  has  found  itself  in  a
position of great difficulty in paying  salaries  to  the  staff  in  Bombay
office in the time.

The above situation principally relates  to  the  Bombay  office  and  in  a
situation where the Company cannot present itself to Principals and  clients
as a viable business institution, the position of the Company will  continue
to deteriorate.

The Board of Directors debated all aspects of this  issue  extensively  and,
in view of the  facts  stated  above  and  the  reduction  of  the  workload
suffered in recent years, coupled with the high cost of  infrastructure  and
overheads, the Board of Directors came to the decision  to  rationalize  the
activities in  the  Bombay  office  of  the  Company  by  closing  down  its
activities apart from Property  Owning and Development and a portion of  the
Clearing and Development business relating to contracts with  Government  of
India institutions, such as, Central Railway and Lubrizol India Limited.

Needless to add, the Company will pay off all  workmen  who  have  not  been
retained, their legal terminal dues.

The Directors have taken this opportunity to convey  their  thanks  to  your
years of service with the Company."
                                               (Emphasis laid by this Court)

It is evident from the Statement of Reasons that the  appellant-Company  has
not been able to improve its  revenue  and  was  having  cumulative  losses.
There is a reference with regard to the activities of the  appellant-Company
including that of Clearing and Forwarding Department. The  appellant-Company
was unable to improve  its  business  and  further  found  itself  in  great
difficulty in paying salaries to the staff on time. By a careful reading  of
the aforesaid Statement of Reasons, it has not been  explicitly  made  clear
that the Board of 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.

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 it. Therefore, the said contention urged  on
behalf of the appellant-Company cannot be allowed to sustain in law.
Further, with regard to the allegation against  the  appellant-Company  that
its action of retrenchment of the  concerned  workmen  is  in  contravention
with the provisions of Section 25F clauses (a), (b)  and  (c)  of  the  I.D.
Act. Section 25F clause (a) states that no workmen  employed  in  continuous
service for not less than one year under an  employer  shall  be  retrenched
until 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
notice. In the case on hand, the workman were served with  the  retrenchment
notice on 27.07.1992 stating that their services stand retrenched  from  the
close of business hours on 04.08.1992 in terms of the  reasons  appended  to
the said notice and further stated the amount of  retrenchment  compensation
and one month's salary  in  lieu  of  notices  that  would  be  due  to  the
concerned workmen. However, no cogent evidence has been  brought  before  us
by the appellant-Company to  prove  that  the  above  referred  one  month's
salary of the concerned workmen in lieu of the retrenchment notice has  been
actually paid to them. Further, the concerned workmen were given  notice  of
retrenchment with Statement of Reasons appended therewith by the  appellant-
Company only on 27.07.1992 which was effective  from  4.08.1992.  Therefore,
one month notice was  not  given  to  the  concerned  workmen  before  their
retrenchment came into  effect  nor  one  month's  salary  in  lieu  of  the
retrenchment notice was paid to the concerned workmen. Therefore,  the  said
action by the appellant-Company is a clear cut  breach  of  the  above  said
provision  of  condition  precedent  for  retrenchment  of  the  workmen  as
provided under Section 25F clause (a)  of  the  I.D.  Act.   The  Industrial
Court after examining the facts and evidence on record has rightly  answered
the question of breach of Section 25F clause (b) in the  negative  since  no
evidence has been produced by the respondent-Union to  prove  the  same  and
further no calculation is brought to our notice as to  the  amount  received
by way of retrenchment compensation and also the  actual  amount  sought  to
have been paid to the  retrenched  workmen.  Further,  with  regard  to  the
provision 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.

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 State  Government  before  the  alleged
closure of the department/unit of the appellant-Company stating its  reasons
for the same.  In this regard, the contention raised by  Mr.  Jamshed  Cama,
the learned senior counsel appearing on behalf of the  appellant-Company  is
that the above said provision is not mandatory but directory for the  reason
that there is a penal provision under  Section  30A  of  the  I.D.  Act  and
therefore, the  competent  authority  can  take  penal  action  against  the
appellant-Company for non  compliance  of  the  above  said  provision.  Per
contra, the learned senior counsel Mr. C.U. Singh  appearing  on  behalf  of
the respondent-Union has rightly rebutted the above  contention  by  placing
reliance upon the Statement of Objects  and  Reasons  by  inserting  Section
25FFA by Amending Act No. 32 of 1972 to the I.D. Act with a definite  object
to be achieved. The said Statement of  Objects  and  Reasons  to  the  above
referred Amending Act is extracted hereunder:
"The problem of closure of industrial  undertakings  resulting  of  late  in
loss of production and unemployment of large numbers of workmen  has  become
very  serious.  Employers  have  declared  sudden  closures  of   industrial
establishments without any notice or advance intimation to  the  Government.
Several factors appeared to have led to these closures,  amongst  which  are
accumulated losses over a number of years and mismanagement of  the  affairs
of the establishments. The unsatisfactory state of industrial relations  (in
the  sense  of  labour  unrest  making  it  difficult  to  sustain   regular
production) has been  pleaded  as  a  precipitating  factor.  Certain  other
causes like financial difficulties and  non-availability  of  essential  raw
material had also been mentioned.

2.Since the problem of closure has been acute in the State of  West  Bengal,
a President's Act-The Industrial Disputes (West Bengal Amendment) Act,  1971
was enacted on 28th  August,  1971.  This  provided  that  an  employer  who
intended to close down an undertaking should  serve  at  least  sixty  days'
notice on the State Government stating  clearly  the  reasons  for  intended
closure of the undertaking. While enacting this legislation for West  Bengal
Government considered it desirable to promote  Central  legislation  on  the
subject since the problem of closure was not limited to West Bengal but  was
found in varying degrees in other States as well.

3.It is however, felt that  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)

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
appellant-Company is accepted to be directory and not mandatory as it  would
attract the penal provision against the appellant-Company under Section  30A
of the I.D. Act, then the purpose and intentment of  the  amendment  in  the
year 1972 made to Section 25FFA  of the  I.D.  Act,  will  be  defeated  and
would nullify the Objects and Reasons for amending  the  provisions  of  the
I.D. Act and  it  would  be  contrary  to  the  legislative  wisdom  of  the
Parliament. The statutory protection has been given  to  the  workmen  under
the provision of Section 25FFA of the I.D. Act, with  an  avowed  object  to
protect workmen being retrenched due to closing down  of  a  department/unit
of the undertaking as the  livelihood  of  such  workmen  and  their  family
members will be adversely affected on account  of  their  retrenchment  from
their service. To  avert  such  dastardly  situation  to  be  faced  by  the
concerned workmen in the Company/establishment, the statutory obligation  is
cast upon the employer  to  serve  atleast  60  days  notice  on  the  State
Government before such intended closure of the department/unit to be  served
upon the State Government informing the reasons as  to  why  it  intends  to
close down its department/unit.

The learned senior counsel appearing for the  respondent-Union  has  rightly
placed reliance upon the judgments of  this  Court,  namely,  The  State  Of
Uttar Pradesh And Others V. Babu Ram Upadhya, State  of  Mysore  &  Ors.  v.
V.K. Kangan & Ors and Sharif-Ud-Din vs Abdul  Gani  Lone,  all  referred  to
supra, wherein this Court while referring to certain  statutory  provisions,
consistently held that the statutory provisions of the  statutory  enactment
are mandatory and not directory and that they are  required  to  be  rigidly
complied with. The relevant paras from the decision of  this  Court  in  the
case of Babu Ram Upadhya (supra) are extracted hereunder:

 "28. The question is whether Rule I of para 486 is directory. The  relevant
rule says that the police officer shall be tried in the  first  place  under
Chapter XIV of  the  Criminal  Procedure  Code.  The  word  "shall"  in  its
ordinary import is "obligatory"; but there are many  decisions  wherein  the
courts under different situations construed the word  to  mean  "may".  This
Court in Hari Vishnu Kamath v. Syed Ahmad Ishaque dealt  with  this  problem
at p. 1125 thus:
"It is well established  that  an  enactment  in  form  mandatory  might  in
substance be directory and 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
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   implied
nullification for disobedience. It is the duty of courts of justice  to  try
to get at the real intention of the Legislature by  carefully  attending  to
the whole scope of the statute to be construed."
A valuable guide for ascertaining the intention of the Legislature is  found
in Maxwell on The Interpretation of Statutes, 10th Edn., at p.  381  and  it
"On the other hand, where the prescriptions  of  a  statute  relate  to  the
performance of a public duty and where the  invalidation  of  acts  done  in
neglect of them would work serious general  inconvenience  or  injustice  to
persons who have no control over  those  entrusted  with  the  duty  without
promoting the essential aims of the legislature, such prescriptions seem  to
be  generally  understood  as  mere  instructions  for  the   guidance   and
government of those on whom the duty is imposed,  or,  in  other  words,  as
directory only. The neglect of them may be penal, indeed, but  it  does  not
affect the validity of the act done in disregard of them."
This passage was accepted by the Judicial Committee of the Privy Council  in
the case of Montreal Street Railway Company v. Normandin and by  this  Court
in State of U.P. v. Manbodhan Lal Srivastava.
29. The relevant rules of interpretation may be briefly stated thus: When  a
statute uses the word "shall", prima facie, it is mandatory, but  the  Court
may ascertain the real intention of the legislature by  carefully  attending
to the whole scope of the statute. For ascertaining the  real  intention  of
the Legislature the Court may consider,  inter  alia,  the  nature  and  the
design of  the  statute,  and  the  consequences  which  would  follow  from
construing it the one way or the  other,  the  impact  of  other  provisions
whereby the necessity of  complying  with  the  provisions  in  question  is
avoided,  the  circumstance,  namely,  that  the  statute  provides  for   a
contingency of the non-compliance with the provisions,  the  fact  that  the
non-compliance with the provisions is or is not  visited  by  some  penalty,
the serious or trivial consequences that flow  therefrom,  and,  above  all,
whether the object of the legislation will be defeated or furthered."

31. Further, the relevant paras 4 and 10 from the  case  of  V.K.  Kangan  &
Ors. (supra) are extracted hereunder:-

"4. The only point which arises for consideration is whether the  provisions
of Rule 3(b) were mandatory and therefore the failure to  issue  the  notice
to 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                           XXX                        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  pre-emptory
construction. As we said, the rule was enacted for the purpose  of  enabling
the Deputy  Commissioner  (Land  Acquisition  Collector)  to  have  all  the
relevant materials before him for coming to a conclusion to be  incorporated
in the report  to  be  sent  to  the  Government  in  order  to  enable  the
Government to make the proper decision.  In  Lonappan  v.  Sub-Collector  of
Palghat1 the Kerala High Court took the view that  the  requirement  of  the
rule regarding  the  giving  of  notice  to  the  department  concerned  was
mandatory. The view of the Madras High Court in K.V. Krishna Iyer  v.  State
of Madras is also much the same.
                                               (Emphasis laid by this Court)

32. Further in the case of Sharif-Ud-Din (supra) it was  held  as  under  by
this Court:-
"9. The difference  between  a  mandatory  rule  and  a  directory  rule  is
[pic]that while the former must be strictly observed, in  the  case  of  the
latter substantial compliance  may  be  sufficient  to  achieve  the  object
regarding which the rule is enacted. Certain broad  propositions  which  can
be  deduced  from  several  decisions  of  courts  regarding  the  rules  of
construction that should be followed in determining whether a  provision  of
law is directory or mandatory may be summarised  thus:  The  fact  that  the
statute uses the word "shall" while laying down a duty is not conclusive  on
the question whether it is a mandatory or directory provision. In  order  to
find out the true character of the legislation, the court has  to  ascertain
the object which the provision of law in question has to  subserve  and  its
design and the context in which it is enacted. If the object of a law is  to
be defeated by non-compliance with it, it has to be regarded  as  mandatory.
But when a provision of law relates to the performance of  any  public  duty
and the invalidation of any act done in disregard of that  provision  causes
serious prejudice to those for whose benefit it is enacted and at  the  same
time who have no control over the performance of the  duty,  such  provision
should be treated as a directory one. Where, however,  a  provision  of  law
prescribes that a certain act has to be done in a  particular  manner  by  a
person in order to acquire a right and it is coupled with another  provision
which confers an immunity on another when such  act  is  not  done  in  that
manner, the former has to be regarded as a mandatory one. A procedural  rule
ordinarily should not be construed as mandatory if the  defect  in  the  act
done  in  pursuance  of  it  can  be   cured   by   permitting   appropriate
rectification to be carried out at a subsequent stage  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 & Anr. vs. State of Vindhya Pradesh[10] 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 the I.D. Act have not been complied with and  therefore,
consequent action of the appellant-Company  will  be  in  violation  of  the
statutory provisions of Section 25FFA of the I.D.  Act  and  therefore,  the
action of the Company in retrenching the concerned workmen will  amounts  to
void ab initio in law as the same is inchoate and invalid in law.

  It would be appropriate for us to refer to the decision of this  Court  in
the case Babu Verghese & Ors v. Bar Council Of Kerala  &  Ors[11],  to  show
that if the manner of  doing  a  particular  act  is  prescribed  under  any
statute, and the same is not followed, then the action suffers from  nullity
in the eyes of law, the relevant paragraphs  of  the  above  said  case  are
extracted hereunder:

"31. It is the basic principle of law long settled that  if  the  manner  of
doing a particular act is prescribed under any  Statute,  the  act  must  be
done in that manner or not at all.
The origin of this rule is traceable to the decision in  Taylor  vs.  Taylor
(1875) 1 Ch.D 426 which was followed by Lord Roche in Nazir Ahmad  vs.  King
Emperor 63 Indian Appeals 372 = AIR 1936 PC 253 who stated as under :
 "Where a power is given to do a certain thing in a certain way,  the  thing
must be done in that way or not at all."
 This rule has since been approved by this Court in Rao Shiv  Bahadur  Singh
& Anr. vs. State of Vindhya Pradesh 1954 SCR 1098 =  AIR  1954  SC  322  and
again in Deep Chand vs.
State of Rajasthan 1962(1) SCR 662 = AIR 1961 SC 1527.
32. These cases were considered by a Three-Judge  Bench  of  this  Court  in
State of Uttar Pradesh vs. Singhara Singh & Ors. AIR 1964 SC 358 = (1964)  1
SCWR 57 and the rule laid down in  Nazir  Ahmad's  case  (supra)  was  again
upheld. This rule has since been applied to the exercise of jurisdiction  by
courts  and  has  also  been  recognised  as   a   salutary   principle   of
administrative law."
                                               (Emphasis laid by this Court)

  The statutory provisions contained  in  Section  25FFA  of  the  I.D.  Act
mandate that the Company should have issued the intended closure  notice  to
the Appropriate Government should be served notice atleast  60  days  before
the date on which it intended to close down  the  concerned  department/unit
of the Company. As could  be  seen  from  the  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 bonafide. 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  senior  counsel  for  the   appellant-Company   further
contended that violation of the above statutory provisions of the  I.D.  Act
and the infraction of the same on  the  part  of  the  appellant-Company  in
retrenching the concerned workmen must  have  been  pleaded  and  proved  by
them, which has not been done by them in the instant  case,  and  therefore,
the finding recorded by the Industrial Court is wholly erroneous in law  and
the same is liable to be set aside.  He  further  contented  that  the  said
finding of the  Industrial  Court  has  been  erroneously  accepted  by  the
Division Bench of the High  Court  without  examining  the  case  in  proper
perspective and  erroneously  rejected  the  contention  of  the  appellant-
Company as the same is devoid of merit. He further placed reliance upon  the
decision of this Court on case of Bharat Forge Co.  Ltd.  v.  Uttam  Manohar
Nakate[12], in support of his contention, wherein this  Court  has  observed
that the complainant must set out in the first  instance  the  deviation  to
show that the management has committed unfair labour practice and only  then
the other party be asked to lead evidence to rebut the same.

It is very clear from the averments of the appellant-Company in its  written
statement that its action  in  retrenching  the  workmen  is  sought  to  be
justified before the Industrial Court, which, in fact, is not  justified  on
the basis of  evidence  on  record.  It  is  clear  from  the  pleadings  at
paragraphs 3 and 4 of the written statement filed by  the  appellant-Company
before the Industrial Court which would clearly show that the action of  the
appellant-Company is a clear case of mala fide which cannot be sustained  in
law. Further, there are no valid reasons assigned in  the  explanatory  note
to justify the action of the Company  in  not  following  the  principle  of
'last come first go' as mandated under Section 25G  of  the  I.D.  Act  read
with Rule 81 of the Bombay Rules to retrench the concerned workmen  who  are
seniors to the workmen who were retained in the department.  At the time  of
filing written statement by  the  appellant-Company  before  the  Industrial
Court, no reason was assigned in retaining junior workmen to  the  concerned
workmen in the department. For the reasons recorded above, we have  to  hold
that the concurrent finding of fact recorded by the High Court  with  regard
to non-compliance of Section 25G of the I.D. Act  by  the  appellant-Company
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.

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 Jorehut Tea Co. Ltd.  (supra),  in
justification of the  action  of  the  appellant-Company  retaining  certain
junior workmen in the department/unit at the time of  retrenching  concerned
workmen. The relevant paragraphs are extracted hereunder:
"5. The keynote thought of  the  provision,  even  on  a  bare  reading,  is
evident. The rule is that the employer shall retrench the workman  who  came
last, first, popularly known as "last come, first go". Of course, it is  not
an inflexible rule and extraordinary situations may justify variations.  For
instance, a junior recruit who has a special  qualification  needed  by  the
employer may be retained even though another who is  one-up  is  retrenched.
There must be a valid reason for this deviation, and, obviously, the  burden
is on the Management to substantiate the special ground for  departure  from
the rule.

6. Shri Phadke brought to our notice the  decision  in  Om  Oil  &  Oilseeds
Exchange Ltd., Delhi v. Workmen to make out that  it  was  not  a  universal
principle which could not be departed from by the Management that  the  last
should go first. The Management had a  discretion  provided  it  acted  bona
fide and on good grounds. Shah, J., in  that  very  ruling,  while  agreeing
that a breach of the rule could not be assumed as prompted by mala fides  or
induced  by  unfair  labour  practice  merely  because  of  a  departure  or
deviation, further observed that the tribunal had to determine in each  case
whether the Management had acted fairly and not with  ulterior  motive.  The
crucial consideration next mentioned  by  the  learned  Judge  is  that  the
Management's decision to  depart  from  the  rule  must  be  for  valid  and
justifiable reasons, in which case "the senior employee  may  be  retrenched
before his junior in employment". Surely, valid and justifiable reasons  are
for the Management to make out, and  if  made  out,  Section  25-G  will  be
vindicated and  not  violated.  Indeed,  that  very  decision  stresses  the
necessity for valid and good grounds for varying the ordinary rule of  "last
come, first go". There is none made out here, nor even alleged,  except  the
only plea that the retrenchment was done in  compliance  with  Section  25-G
grade wise. Absence of mala fides by itself is no absolution from  the  rule
in Section 25-G. Affirmatively,  some  [pic]valid  and  justifiable  grounds
must be proved by the Management to  be  exonerated  from  the  "last  come,
first go" principle."
                                           (Emphasis supplied  by the Court)

The learned senior counsel further contended that the above legal  principle
is laid also down in the case of M/s. Om Oil  &  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.
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 is junior to other retrenched workmen,  therefore,  the  same  was
held to be valid in law. The High Court has rightly  held  in  the  impugned
judgment and order that in the instant case, the appellant-Company  had  not
adduced any such evidence or reasons  of  justification  for  retaining  the
junior workmen to  the  retrenched  workmen.  The  reason  assigned  by  the
appellant-Company is considered by the Industrial Court and held that  there
was a clear breach of Section 25G of I.D. Act read with Rule  81  of  Bombay
Rules in not following the principle of 'last come,  first  go'.  The  legal
principle laid down in this aspect in the case of Workmen  of  Jorehaut  Tea
Co. (supra) does not apply to the fact situation of the  case  on  hand,  as
the appellant-Company has not published the seniority list  at  all  on  its
notice board, which is the concurrent finding of fact  of  the  High  Court.
The same cannot be termed erroneous as it is  based  on  legal  evidence  on
record. It is for the appellate-Company to establish as to whether there  is
a deviation of the above principle  or  not  by  producing  justifiable  and
valid reasons but it has failed to do so by  producing  cogent  evidence  on
record. Therefore, reliance placed upon  the  aforesaid  judgments  of  this
Court by the learned senior counsel for the appellant-Company are  misplaced
as they are not applicable to the fact situation on hand  as  the  facts  of
those cases are distinguishable from the facts of this case on hand.
Further, the contention urged by the learned senior  counsel  on  behalf  of
the Company that the allegation of contravention of Section 25G of the  I.D.
Act is not sufficient to hold that the 'last come  first  go'  principle  is
not followed by the Company unless the  necessary  material  particulars  in
this regard are pleaded and proved by the workmen.  This contention  in  our
view is wholly untenable in law and cannot be accepted by  this  Court.  The
respondent-Union had laid factual foundation in this regard and  proved  the
same by adducing evidence on record.
Further, it is urged by the learned senior counsel on behalf  of  appellant-
Company that there is no question of reinstatement of the concerned  workmen
and payment of back wages to them since  the  concerned  department/unit  of
the appellant-Company in which they  were  employed  no  longer  exists  and
therefore, requested this Court to mould the relief granted  by  the  courts
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

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[13], 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 nullity, in the eyes of law and in the absence of  very  strong
and compelling circumstances in favour  of  the  employer,  the  Court  must
grant a declaration that the termination  was  non  est  and  therefore  the
employees should continue in service with full back wages and award all  the
consequential benefits. Further, with respect to payment of back  wages  and
consequential benefits, reliance was rightly  placed  on  the  decisions  of
this  Court  in  the  cases   of   Deepali   Gundu   Surwase   v.   Adhyapak
Mahavidyala[14] and Bhuvnesh  Kumar  Dwivedi  v.  Hindalco[15].  This  Court
opined thus in the case of Deepali Gundu Surwase (supra):
"22. The very idea of restoring an employee to the position  which  he  held
before dismissal or removal or  termination  of  service  implies  that  the
employee will be put in the same position in which he would  have  been  but
for the illegal action taken by the  employer.  The  injury  suffered  by  a
person, who is dismissed or removed or is otherwise terminated from  service
cannot easily be measured in terms of money. With the passing  of  an  order
which has the effect of severing the  employer  employee  relationship,  the
latter's source of income gets dried up. Not only  the  concerned  employee,
but his entire family suffers grave adversities. They are  deprived  of  the
source of sustenance. The children are deprived of nutritious food  and  all
opportunities of education and advancement in life.  At  times,  the  family
has  to  borrow  from  the  relatives  and  other  acquaintance   to   avoid
starvation. These sufferings continue till the competent adjudicatory  forum
decides  on  the  legality  of  the  action  taken  by  the  employer.   The
reinstatement of such an employee, which is preceded by  a  finding  of  the
competent judicial/quasi judicial body or Court that  the  action  taken  by
the  employer  is ultra  vires the  relevant  statutory  provisions  or  the
principles of natural justice, entitles the  employee  to  claim  full  back
wages. If the employer wants to deny back wages to the employee  or  contest
his entitlement to get consequential benefits, then it  is  for  him/her  to
specifically  plead  and  prove  that  during  the  intervening  period  the
employee was gainfully employed and was getting the same emoluments.  Denial
of back wages to an employee, who has suffered due to an illegal act of  the
employer would amount to indirectly punishing  the  concerned  employee  and
rewarding the employer by relieving him of the obligation to pay back  wages
including the emoluments."

For the foregoing reasons, the appeal is dismissed. We affirm  the  impugned
judgment and order of the Division Bench of the High Court. The order  dated
14.08.2006  extending  protection  to  the  appellant-Company  shall   stand
vacated. Since, the concerned workmen have been litigating  the  matter  for
the last 23 years, it would be appropriate for us to give direction  to  the
appellant-Company to comply with the  terms  and  conditions  of  the  award
passed by the Industrial Court by  computing  back-wages  on  the  basis  of
revision of pay scales of the  concerned  workmen  and  other  consequential
monetary benefits including terminal  benefits  and  pay  the  same  to  the
workmen within six weeks from the date  of  receipt  of  the  copy  of  this
Judgment, failing which, the back-wages shall be paid with  an  interest  at
the rate of 9% per annum. The appellant-Company shall submit the  compliance
report for perusal of this Court. There shall be no order as to costs.
                                [V.GOPALA GOWDA]

                                [C. NAGAPPAN]
     New Delhi,
     February 25, 2015
[1]    AIR 1980 SC 1454
[2]    AIR 1960 SC 762
[3]    (2006) 11 SCC 684
[4]     (2006) 8 SCC 508
[5]    (1987) 2 SCC 203
[6]    (2001) 2 SCC 87
[7]    AIR 1969 SC 90
[8]    (2009) 5 SCC 705
[9]    (1986) 2 SCC 624
[10]   AIR 1954 SC 322
[11]   (1999) 3   SCC  422
[12]   (2005) 2 SCC 489
[13]   (2010) 5 SCC 497
[14]   (2013) 10 SCC 324
[15]   (2014) 11 SCC 85

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.