1985 Supreme(Mad) 17
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE G RAMANUJAM
Mount Mettur Pharmaceuticals Limited - Appellant
Versus
Second Additional Labour Court, Madras and Another - Respondent
Case No : Writ Petition No. 42 of 79
Decided On : 10 January 1985
Important Points
Subject
Industrial Law - RETrenchment
Act Referred
Headnote
INDUSTRIAL DISPUTES ACT, 1947 - SECTION 25F - RETRENCHMENT - JUSTIFIED RETRENCHMENT - VIOLATION OF SECTION 25F - RELIEF - REINSTATEMENT WITH BACK-WAGES OR COMPENSATION - DISCRETION OF LABOUR COURT.
Fact of the Case:
The appellant-management effected retrenchment of 15 workers due to recession. The Labour Court found that the retrenchment was justified but held that 4 out of the 15 workers were entitled to reinstatement with full back-wages for violation of Section 25F of the Industrial Disputes Act, 1947. The management challenged the award.
Finding of the Court:
The High Court held that the Labour Court erred in directing reinstatement with full back-wages without exercising its discretion to award compensation in lieu of reinstatement. The Court found that the management was justified in effecting retrenchment and that its decision was not mala fide.
Issues: 1. Whether the Labour Court erred in directing reinstatement with full back-wages without exercising its discretion to award compensation in lieu of reinstatement. 2. Whether the management was justified in effecting retrenchment.
Ratio Decidendi: 1. In cases where the Labour Court specifically finds that the retrenchment effected by the management is justified and not mala fide, the Labour Court should exercise discretion and pass, instead of directing reinstatement with full back-wages, an award directing a just amount of compensation in lieu of reinstatement. 2. The Labour Court erred in not exercising its discretion to award compensation in lieu of reinstatement, as the management was justified in effecting retrenchment and its decision was not mala fide.
Final Decision: The High Court set aside the order of the Labour Court and directed it to pass fresh orders fixing suitable compensation in lieu of reinstatement for the four workmen.
Ramanujam, J.
This appeal filed by the management of Mount Mettur Pharmaceuticals Ltd., Madras, is directed against the judgment of V. Ramaswami, J., upholding the award of the Labour Court, dated 4th May, 1978, in L.D. No. 192 of 1977.
2. The appellant, in view of the recession towards the end of 1975 and the beginning of March, 1976, effected reduction of labour and that resulted in the retrenchment of fifteen of its workers. That gave rise to a reference to the Labour Court on the question of non-employment of the said fifteen workmen and the said reference was taken on file as Industrial Dispute No. 192 of 1977. The claim petition filed before the Labour Court in the said reference by the workmen was to the effect that there had been a contravention of S.25F of the Industrial Disputes Act in effecting retrenchment and that, therefore, all of them should be reinstated in service with full back-wages. The said claim was opposed by the appellant-management before the Labour Court on the grounds that all the petitioners were casual employees, that the retrenchment was due to bona fide reasons of recession, that there was non-availability of work and that, therefore, the petitioners are not entitled to seek relief either on the basis of the infringement of S. 25F or otherwise. The Labour Court, on a consideration of the rival contentions, held that the retrenchment effected by the management was bona fide and that out of the fifteen workers who were casual, only four had put in a service of 240 days within the twelve calendar months immediately prior to the date of retrenchment and that, therefore, except claimants 6, 11, 14 and 15, the rest are not entitled to any relief. Thus the Labour Court has proceeded on the basis that the retrenchment was justified and that though S. 25F has been violated, the claimants, other than claimants 6, 11, 14, and 15, are not entitled to any relief for violation of S. 25F for the reason that they have not worked for 240 days within the twelve calendar months preceding the order of retrenchment so as to enable them to get the benefit of S. 25F. As regards the other four workmen who were found to have worked for more than 240 days in the twelve calendar months preceding the order of retrenchment, the Labour Court held that for infringement of S. 25F, the order of retrenchment, so far as they are concerned, cannot be taken to be valid and hence they are entitled to be reinstated with full back-wages.
3. The said order of the labour Court was challenged by the management in Writ Petition No. 2775 of 1978 and Ramaswami, J., has upheld the award of the Labour Court granting to the four workmen who had put in a service of 240 days within twelve calendar months immediately prior to the date of retrenchment the benefit of reinstatement with full back-wages. It is the said order of the learned Single Judge which is under challenge before us.
4. The learned counsel for the appellant-management put forward two contentions. They are :
(1) The Labour Court having held that the retrenchment is not mala fide but one which could be justified on the facts of this case, erred in directing reinstatement with full back-wages ignoring the position which had been established by the evidence on record that the management is in doldrums and is not in a position to provide work for the retrenched personnel; and
(2) on the facts and circumstances of this case, the Labour Court is in error in awarding the relief of reinstatement with full backwages and that only on award of compensation is called for in this case.
5. Though the learned counsel for the appellant contended that the finding of the Labour Court that the concerned four workmen have put in more than 240 days of service in the year preceding the order of retrenchment is not correct, he is not able to successfully challenge that finding in view of the fact that exhibit M-8 shows exactly the number of days worked by the employees for the period from 1st April