Principle of social justice relevant factor.

The petitioner company manufactures and sells tyres, among other rubber goods, in India. It has its head-office at Bombay. One of its branch offices is at Madras with jurisdiction over the territorial area known as Madras District. The District extends over areas which lie outside the State, in Kerala, Mysore and Andhra Pradesh. The sub-depots at Ernakulam, Bangalore and Vijayawada are within the District of Madras.

On the recommendation of the Tariff Commission in 1953, the Government of India ordered a reduction in the sale price of tyres by 10 percent. The Tariff Commission pointed out in its Report that the proportion of administration, selling and distribution expense of the petitioner company was high, when compared with such charges incurred by other companies manufacturing and selling tyres in India. The petitioner company reorganised its methods of business, which resulted in a reduction in the amount of office work to be done in the Madras office. The petitioner found that to deal with the work on the reorganised basis twelve out of the thirty-three employees in the Madras office were in surplus of its requirements. On 22nd February, 1956 the petitioner company ordered a retrenchment of twelve of its employees and served each of the retrenched employees with a notice, paying each of them a month’s wages in lieu of notice.

The Workers’ Union challenged the right of the Management to terminate the services of these twelve employees. On 31st March, 1956 the dispute between the Management and the Workers was referred by the Government of Madras, under section 10 (1) (c) of the Industrial Disputes Act, for adjudication by the Industrial Tribunal, Madras. What was referred as an industrial dispute was:

“Whether the retrenchment of the following twelve workers is justified and to what relief they are entitled?”

The names of the twelve workers were then listed.

The Tribunal gave its award on 17th December, 1956 and it was duly published by the Government in the Gazette.

In paragraph 9 of its award the Tribunal recorded:

“ But the contention of the workers is that the retrenchment and reorganisation itself is not bona fide. Though the claim statement contains allegations of victimization and unfair labour practice Mr. Viswanathan at the time of his arguments definitely gave up those contentions. His mam argument is that this reorganisation and retrenchment is an attempt to retain or restore the excessive profits which the company had been deriving prior to the fixation of reduced prices for the tyres and tubes by the Government of India” .

Dealing with this contention the Tribunal observed in paragraph 14 of its award:

“ I am inclined to agree with the view of Mr. Viswanathan. If the retrenchmen? had been effected to avoid losses or to secure reasonable profits then something can be said in favour of the company. But in this case it is otherwise and the retrenchment is clearly prompted by a desire to secure profits lost by the price fixation. It is only an attempt to set at naught the object of the Government, namely, that the company should get lesser profits.”

After referring to a decision of the Labour Appellate Tribunal, that 6 percent, on paid-up capital and 4 percent, on the working capital constituted reasonable returns to a company, the Tribunal recorded in paragraph 15 of its award:

“Under such circumstances on considerations of social justice it must be held that the retrenchment of these twelve workers was not justified.”

Dealing next with the contention of the Union that, even if the retrenchment had been justified, the retrenchment of the twelve employees in question was not effected in accordance with law, and that it offended the statutory principle of last to come and first to go, the Tribunal recorded in paragraph 26 of its award:

“ The evidence of M.W.1 is, in my opinion, sufficient to prove the case of the workers that all these sub-depots which are controlled by the. Madras office are really parts of the Madras br