The judgment emphasized the need for factual determination on the applicability of service rules and acceptance by the employees, and clarified the applicability of Model Standing Order 27 in determining the age of retirement.

1. The petitioner is a Credit Co-operative Society registered under the Maharashtra Cooperative Societies Act, 1960. Its members consist of workmen employed in the Ammunition Factory and its allied establishments at Khadki. The Co-operative Society was formed with the objective of providing loan facilities to its members. The finance required by the society is raised through share capital, which is contributed by members of the Society. Persons who are not employed in the Ammunition Factory are not allowed to become members of the Society.

2. The 1st respondent joined the service of the Ammunition Factory as an Orderly in 1957 and was promoted through the ranks ultimately as an Upper Division Clerk. On 16/3/1989 the workman was informed that he would be attaining the age of 55 years on 28/7/1989 and that he should submit a certificate of medical fitness should he desire to continue in service. The workman submitted a certificate of medical fitness by a letter dated 3/7/1989. On 31/7/1989 the workman was superannuated from service under Clause 19 of the Staff Service Rules. Clause 19 of the Rules provides as follows:-

"An employee may be called to retire from the Society’s services at the age of 55 years provided the Managing Committee may extend the period of service of any employee beyond the age limit of 55 years. Managing Committee may further extend the period of service of the employees from year to year until he attains the age of 58 if, in the opinion of the Managing Committee, his services are necessary and he is found medically fit to continue."

3. The workman instituted a complaint of unfair labour practices under Item 1 of Schedule IV of the M.R.T.U. & P.U.L.P. Act, 1971. The case of the workman in the complaint before the Labour Court was that the employer had unilaterally framed Service Rules, which were approved by the Deputy Registrar of Co-operative Societies and a misrepresentation was made to the employees that they would be governed by those Rules. The workman stated that in terms of the communication received from the employer, he had submitted a certificate of medical fitness despite which he was not granted an extension in service beyond the age of 55 years under Clause 19 of the Service Rules. The workman contended that several other employees had been granted an extension and that Clause 19 had been observed in its breach. The alternate case of the workman was that under Section 38-B of the Bombay Shops and Establishments Act, 1948, the provisions of the Industrial Employment (Standing Orders) Act, 1946 were applicable and under the Model Standing Orders, the age of superannuation was 60 years. The workman accordingly sought reinstatement with continuity of service and full backwages from 31/7/1989.

4. The petitioner filed its Written Statement, in which it was stated that the Service Rules were approved by the General Body of the Society on 14/10/1976 and were certified by the Deputy Registrar of Co-operative Societies on 21/1/1977.

5. Evidence was adduced by the workman and on behalf of the Management.

6. By a judgment dated 10/1/1994 the Labour Court dismissed the complaint. The workman carried the dispute in Revision before the Industrial Court. The Industrial Court allowed the Revision on 21/3/1996 and held that the petitioner was guilty of unfair labour practices. The Industrial Court held firstly, that by virtue of the provisions of Section 38-B of the Bombay Shops & Establishments Act, 1948, the Standing Orders prescribed under the Industrial Employment (Standing Orders) Act, 1946 were applicable and the age of retirement under the Model Standing Orders was 60 years. Secondly, the Industrial Court was of the view that in any event under Clause 19 of the Service Rules, the petitioner was bound to extend the services of the respondent till the age of 58 years. Thirdly, the Industrial Court held that the services of certain other employees had been extended until they had attained th