Supreme Court of India
MACKINON MACKENZIE & COMPANY LTD.versusMACKINNON EMPLOYEES UNION
- Citation
- 2015 INSC 154
- Decided
- 25 February 2015
- Disposal
- Dismissed
- Bench
- V GOPALA GOWDA
Holding
Non‑compliance with the mandatory procedural requirements of Sections 25F(a), 25F(c) (Section 25FFA) and 25G read with Rule 81 makes the retrenchment void ab initio and an unfair labour practice, so the appeal is dismissed and the award of reinstatement and back wages stands.
Summary
Mackinnon Mackenzie & Co. Ltd. retrenched about 98 workmen by serving a notice on 27 July 1992, claiming closure of its clearing and forwarding department due to severe financial losses. The workmen’s union challenged the retrenchment, alleging non‑compliance with the Industrial Disputes Act, 1947: no one‑month notice or salary in lieu (s.25F(a)), no 60‑day notice to the State Government (s.25FFA), and violation of the ‘last‑come‑first‑go’ principle and failure to display a seniority list as required by s.25G and Rule 81 of the Bombay Rules. The Industrial Court held these breaches amounted to an unfair labour practice, set aside the retrenchment and ordered reinstatement with back wages; the Bombay High Court affirmed. On appeal, the Supreme Court confirmed that the statutory procedures were mandatory, their breach rendered the retrenchment void ab initio and an unfair labour practice, and therefore dismissed the appeal, upholding the award of reinstatement and back wages.
Issues considered
- The appellant‑Company complied with the notice and salary‑in‑lieu requirements of Section 25F(a) of the Industrial Disputes Act?
- The appellant‑Company gave the mandatory 60‑day notice to the State Government under Section 25FFA (Section 25F(c))?
- Did the retrenchment observe the ‘last‑come‑first‑go’ rule and the seniority‑list requirement of Section 25G read with Rule 81 of the Bombay Rules?
- Was the alleged closure of the clearing and forwarding department a ‘closure’ within the meaning of Section 2(cc) of the Act, thereby attracting the procedural safeguards?
- Does non‑compliance with the above statutory provisions render the retrenchment void and constitute an unfair labour practice under Schedule IV of the Maharashtra Act?
- Is the award of reinstatement and back‑wages appropriate despite the alleged closure of the department?
Legislation cited
- Industrial Disputes Act, 1947s. 25F, s. 25FFA, s. 25G
- Industrial Disputes (Bombay) Rules, 1957s. Rule 81
- Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971s. Schedule IV Item 9
Subjects
retrenchmentIndustrial Disputes Actnotice periodlast‑come‑first‑goseniority listunfair labour practiceclosureback wagesreinstatement
Judgment
[2015] 4 S.C.R. 45
MACKINON MACKENZIE & COMPANY LTD. A
v.
MACKINNON EMPLOYEES UNION
(Civil Appeal No. 5319 of2008) B
FEBRUARY 25, 2015
[V. GOPALA GOWDA AND C. NAGAPPAN, JJ.)
INDUSTRIAL DISPUTES ACT, 1947:
c
s. 25F - Retrenchment notice - Conditions precedent
for retrenchment- One month's notice and one month's salary
- Held: In the instant case, neither one month's notice served
nor one month's salary in lieu of retrenchment given to the D
retrenched workmen - Thus, there was non-compliance of
s.25F - Maharashtra Recognition of Trade Unions and
Prevention of Unfair Labour Practices Act, 1971 - Schedule
IV Item No. 9- Industrial Disputes (Bombay) Rules, 1957 - E
r. 81.
s.25FFA- Notice on the State Government- Held: In
the instant case, 60 days notice to the State government
regarding the closure of unit stating its reason for the same F
not given - Thus mandatory provision uls.25FFA not
complied with.
s.25G - Retrenchment- Challenged on the ground
that no list of seniority was put on notice board as required u/ G
r. 81; that there was breach of s. 25G as principle of 'last come
first go' was not followed- Held: There were no valid reasons
to justify the action of the Company in not following the
principle of 'last come first go' as mandated u/s. 25G rlw r. 81
of the Bombay Rules to retrench the concerned workmen H
45
46 SUPREME COURT REPORTS (2015] 4 S.C.R.
A who were senior to the workmen who were retained in the
department - Further, non display of category wise seniority
list was also against the law- There was clear breach of s. 25G
r!w r. 81 of Bombay Rules.
B Dismissing the appeal, the Court
HELD: 1. In the Statement of Reasons for
retrenchment, the appellant-Company stated that it was
not able to improve its revenue and was having
c cumulative losses and was finding itself in great
difficulty in paying salaries to the staff on time. The
retrenchment notice served upon the concerned
workmen was an action of closure of Clearing and
Forwarding section of appellant company. The finding
D that the workmen were retrenched from their services
on account of the alleged closure of the Clearing and
Forwarding department/unit of the appellant-Company,
was not proved by the appellant-Company. If a statutory
provision prescribes a particular procedure to be
E 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
F held to be null and void ab initio in law. The statutory
provisions contained in Section 25FFA of the l.D. Act
manda1te that the intended closure notice to the
Appropriate Government should be served atleast 60
days before the date on which the Company intended
G to close down its concerned department/unit. As could
be seen from the pleadings and the findings recorded
by the Industrial Court, there was a categorical finding
of fact recorded that there was no such mandatory
notice served on the State Government by the appellant-
H
MACKINON MACKENZIE & CO. LTD. v. MACKINNON 47
EMPLOYEES UNION
Company. The object of serving of such notice on the A
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 B
hardship of the workmen and their family members.
Further, the said provision of the l.D. Act is the statutory
protection given to the concerned workmen which
prevents the appellant-Company, from retrenching the C
workmen arbitrarily and unreasonably & in an unfair
manner. [Paras 25, 28, 33, 35] [71-D; 73-F-G; 82-C-D; 83-
F-H; 84-A-C]
2. Section 25F clause .(a) states that no workman
0
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 E
lieu of such notice, wages for the period of r :>tice. In the
case on hand, the workman were served with the
retrenchment notice on 27 .07 .1992 stating that their
services stood retrenched from the close of business
hours on 04.08.1992 in terms of the reasons appended F
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, there was no cogent evidence to
prove that one month's salary of the concerned G
workmen in lieu of the retrenchment notice was actually
paid to them. Further, the concerned workmen were
given notice of retrenchment with Statement of Reasons
appended therewith only on 27 .07 .1992 which was H
48 SUPREME COURT REPORTS [2015] 4 S.C.R.
A 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
B appellant-Company is a clear cut breach of the said
provision of condition precedent for retrenchment of
the workmen as provided under Section 25F clause (a)
of the l.D. Act. Further, with regard to the provision of
C Section 25F clause (c), the appellant-Company did not
produce cogent evidence that notice in the prescribed
manner was served by it to the State Government prior
to the retrenchment of the concerned workmen.
Therefore, the appellant-Company did not comply with
o the conditions precedent to retrenchment as per Section
25F clauses (a) and (c} of the l.D. Act which are mandatory
in law. [Para 27] [72-D-H; 73-A-E]
3. There are no valid reasons assigned in the
E 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 l.D. Act read with
Rule 81 of the Bombay Rules to retrench the concerned
workmen who are seniors to the workmen who were
F retained in the department. The concurrent finding of
fact recorded by the High Court with regard to non-
compliance of Section 25G of the l.D. Act by the appellant-
Company is also the statutory violation on the part of
the appellant-Company in retrenching certain
G concerned senior workmen. 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
H under Section 25G of the l.D. Act read with Rule 81 of
MACKINON MACKENZIE & CO. LTD. v. MACKINNON 49
EMPLOYEES UNION
the Bombay Rules which is not properly complied with A
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 B
justifiable reasons. Further, no category wise seniority
list of the workmen was displayed on notice board of
the appellant-Company as required in law. [Para 37,
38] [85-D-G; 86-B-D]
c
Rao Shiv Bahadur Singh & Anr. vs. St.ate of Vindhya
Pradesh AIR 1954 SC 322: 1954 SCR 1038; Babu
Verghese & Ors v. Bar Council Of Kera/a & Ors. (1999)
3 SCC 422: 1999 (1) SCR 1121; BhCJrat Forge Co.
D
Ltd. v. Uttam Manohar Nakate (2005) 2 SCC 489:
2005 (1) SCR 545; Anoop Sharma v. Executive
Engineer (2010) 5 SCC 497; Deepa/i Gundu Surwase
v. Adhyapak Mahavidyala (2013) 10 SCC 324: 2013
(9) SCR 1; Bhuvnesh Kumar Dwivedi v. Hindalco E
(2014) 11 sec 85 - relied on.
Workmen of Sudder Workshop of Jorehaut tea Co. v.
The Management of Jorehaut Tea Co. AIR 1980 SC
1454- held inapplicable. F
Swadesamitran Ltd., Madras v. Their Workmen AIR
1960 SC 762: 1960 SCR 144- distinguished.
Jaipur Development Authority v. Ramsahai & Anr.
(2006) 11 sec 684:2006 (8) Suppl. SCR 95; State of G
Rajasthan v. Sarjeet Singh & Anr. (2006) 8 SCC 508:
2006 (7) Suppl. SCR 614; /sha Steel Treatment,
Bombay v. Association of Engineering Workers,
Bombay&Anr. (1987) 2 SCC 203: 1987 (2) SCR 414;
H
50 SUPREME COURT REPORTS [2015] 4 S.C.R.
A J.K. Synthetics v. Rajasthan Trade Union Kendra &
Ors. (2001) 2 sec 87: 2000 (5) Suppl. SCR 552;
Kalinga Tubes Ltd. v. Their Workmen AIR 1969 SC
90: 1969 SCR 287; PVK Distillery Ltd. v. Mahendra
Ram (2009) 5 SCC 705; S. G. Chemicals And Dyes
B Trading Employees' Union v. S. G. Chemicals And
Dyes Trading Ltd. & Anr. (1986) 2 SCC 624: 1986
(2) SCR 126 - referred to.
Case Law Reference
c
AIR 1980 SC 1454 held inapplicable Para 11
1960 SCR 144 distinguished. Para 11
2006(8)Suppl. SCR 95 referred to. Par:a 11
0
2006(7) Suppl.SCR 614 referred to. Para 11
1987 (2) SCR 414 referred to. Para 11
E 2000(5)Suppl.SCR 552 referred to. Para 14
1969 SCR 287 referred to. Para 15
(2009) 5 sec 705 referred to. Para 16
F 1986 (2) SCR 126 referred to. Para 18
1954 SCR 1038 relied on. Para 33
1999 (1) SCR 1121 relied on. Para 34
G 2005 (1) SCR 545 relied on. Para 36
(201 O) 5 sec 497 relied on. Para 43
2013 (9) SCR 1 relied on. Para 43
H
MACKINON MACKENZIE & CO. LTD. v. MACKINNON 51
EMPLOYEES UNION
(2014) 11 sec 85 relied on. Para 43 A
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
5319of2008
From the Judgment and Order dated 05.05.2006 of the B
High Court of Judicature at Bombay in Appeal No. 141 of 1996
in Writ Petition No. 2733 of 1996.
Jamshed Cama, Gaurav Goel, Ankur Saigal, E. C.
Agrawala, Parul Shukla for the Appellant.
c
C. U. Singh, Mihir S., Rishi K. S. Gautam, Dhaval
Mehrotra, Anurag Pandey for the Respondent.
The Judgment of the Court was delivered by
D
V. GOPALA GOWDA, J. 1. The appellant-Company
has questioned the correctness of the judgment and order
dated 5.05.2006 passed in LP.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 E
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.
F
2. 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 G
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
H
52 SUPREME COURT REPORTS [2015] 4 S.C.R.
A 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
B 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
C 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,
o 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
E 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
F while answering the relevant contentious issues is that this plea
taken by the appellant-Company was not proved.
3. Aggrieved by the said action of the appellant-
Company, the concerned workmen of the respondent-Union
G 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
H Recognition of Trade Unions and Prevention of Unfair Labour
MACKINON MACKENZIE & CO. LTD. v. MACKINNON 53
EMPLOYEES UNION [V. GOPALAGOWDA, J.]
Practices Act, 1971 (hereinafter referred to as the "MRTU & A
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 follows: B
(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 c
workmen. Thus, the condition precedent under Section
25F of the Industrial Disputes Act (for short the 1.0. Act)
is not complied with. Further the said notice did not
indicate that notice in the prescribed form has been sent
D
to the State Government or the authorities specified
under Section 25F.
(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
E
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- F
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
G
appellant-Company. This directly attracts items Nos. 9
and 10 of Schedule IV of the LO.Act. Thus a notice under
Section 9A of the 1.0. Act was bound to be given. This
has not been done.
H
54 SUPREME COURT REPORTS .[2015] 4 S.C.R.
A (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
25FFAofthe LO.Act has not been complied with by the
appellant-Company.
B
(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 l.D.
c Act.
4. On 28.01.1993, on the basis of the pleadings, the
Industrial Court framed the following issues:-
D "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
E 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.,
F
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 LO.Act 1947?
G
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 l.D.Act,
1947?
H
MACKINON MACKENZIE & CO. LTD. v. MACKINNON 55
EMPLOYEES UNION [V. GOPALA GOWDA, J.]
6.Whether the provisions of Section 25FFA of the 1.0. A
Act are applicable and whether any unfair labour practice
on the court is proved to have been committed.
7 .Whether the respondent has committed unfair labour
practice as contemplated by Section 25G of the I. D. Act B
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, c
if any amounts to unfair labour practices?
9. Whether the facts of the case require notices under
section 9-Aofthe LO.Act, 1947?"
5. Before the Industrial Court the appellant-Company D
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 E
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 departmenUunit of the appellant-
Company. Nine witnesses on behalf of the concerned F
workmen and two witnesses on behalf of the appellant-
Company were examined before the Industrial Court to justify
their respective claims and counter claims.
6. On appreciation of facts, points of dispute, evidence G
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
H
56 SUPREME COURT REPORTS [2015] 4 S.C.R.
A 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
B 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 1.0. Act read with Rule 81 of the Bombay
C 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 l.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
o mandatory provisions of Section 25G of the l.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
E 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
F 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
G 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.
H
MACKI NON MACKENZIE & CO. LTD. v. MACKINNON 57
EMPLOYEES UNION [V. GOPALAGOWDA, J.]
7. The correctness of the said award passed by the A
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 B
and affirmed the findings of fact recorded by the Industrial Court
on the points of dispute and the contentious issues.
8. Aggrieved by the same, LP.A. No. 141 of 1996 was
filed by the appellant-Company before the Division Bench of C
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 l.D. Act read D
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 E
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 F
judgment and order and to quash the award of the Industrial
Court.
9. The learned senior counsel Mr. Jamshed Cama,
appearing for the appellant-Company, sought to justify the G
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
H
58 SUPREME COURT REPORTS [2015] 4 S.C.R.
A 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
B 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
C 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
D provisions of Section 25F cl()use (b) of the l.D. Act. The
retrenchment of the concerned workmen in fact came into force
atthe close of business on 04.08.1992 at4:45 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
E 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
F 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
G completion of the process of retrenchment of the concerned
workmen of the respondent-Union, which process had started
much earlier.
10. With respect to the violation of the principle of 'last
H come first go' under Section 25G of the I. D. Act read with Rule
MACKI NON MACKENZIE & CO. LTD. v. MACKINNON 59
EMPLOYEES UNION [V. GOPALAGOWDA, J.]
81 of the Bombay Rules as contended by the respondent- A
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 l.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 B
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 i~ is an admitted fact that
at the very least, the workers had received the seniority list C
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. D
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.
E
11. 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 l.D. Act can
be deviated by the appellant-Company for justifiable reasons.
Reliance was placed by him in support of the above legal F
contention on the decision of this Court in the case of
Workmen of Sudder Worl<shop 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 G
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
1
AIR 1980 SC 1454 H
60 SUPREME COURT REPORTS [2015] 4 S.C.R.
A 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 and State of Rajasthan v. Sarjeet Singh
B &Anr. 4 in support of the above legal proposition.
12. 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/
C 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-
0
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
E 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 l.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
F uniUdepartment 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 uniUdepartment which
does not constitute technical rationalisation envisaged under
the item no. 10 of the IV Schedule of the l.D. Act. It is further
G 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
H 2
AIR 1960 SC 762
' (2006) 11sec 684
4(2006J 8 sec 508
MACKI NON MACKENZIE & CO. LTD. v. MACKINNON 61.
EMPLOYEES UNION [V. GOPALAGOWDA, J.]
on this aspect is erroneous in law. Hence, the same is liable to A
be set aside.
13. 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 B
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 l.D.
Act to attract Item 9 of the Schedule IV of the MRTU & PULP
Act. He further contended that the action of the appellant- C
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
0
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 /sha Steel Treatment, Bombay v. Association of
Engineering Workers, Bombay & Anr. 5 , in support of his E
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 F
contentious issue No .1-3 and 7 are erroneous in law and the
same are wholly unsustainable in law.
14. Further, it has been contended by the learned
counsel for the appellant-Company that the Award of G
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
5
(1987) 2 sec 203
H
62
.
SUPREME COURT REPORTS [2015] 4 S.C.R.
A 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
B 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
C 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
o 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
E 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
F 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
G 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.
H Synthetics v. Rajasthan Trade Union Kendra & Ors. 6 He
• (2001) 2 sec 87
MACKI NON MACKENZIE & CO. LTD. v. MACKINNON 63
EMPLOYEES UNION [V. GOPALAGOWDA, J.]
referred to Para 22 of the judgment in support of his above A
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: B
"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, Kata) was justified
and if not, to what relief the workers are entitled?" c
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 o
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."
E
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 F
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
IJl/orkmen 7 , wherein it was held that the Company has not
justified the reason of the closure of the undertaking was due G
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 1.0. Act.
H
7
AIR 1969 SC 90
64 SUPREME COURT REPORTS [2015] 4 S.C.R.
A 16. Further, it was contended by him that in the case of
PVK Distillery Ltd. v. Mahendra Ram8, 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
B 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.
17. On the other hand, the above submissions made
C 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
0
concerned workmen.
18. It is contended by him that the Statement of
Reasons appended to th·e retrenchment notice issued to the
concerned workmen by the appellant-Company does not show
E 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
F 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
G 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
H
• c2009) s sec 705
MACKI NON MACKENZIE & CO. LTD. v. MACKINNON 65
EMPLOYEES UNION [V. GOPALAGOWDA, J.]
engaged and various other factors, which were having direct A
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 B
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 C
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
D
DisputesAct, 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 E
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 F
of the Churchgate Division was illegal as it was in
contravention of the provisions of Section 25-0 of the
Industrial .Disputes Act. Under sub-section (6) of Section
25-0, where no application for permission under sub-
section (1) of Section 25-0 is made, the closure of the G
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
ifthe undertaking had not been closed down. The eighty-
H
9
(1986) 2 sec 624
66 SUPREME COURT REPORTS [2015] 4 S.C.R.
A 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
8 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
c labour practice."
19. The learned senior counsel for the respondent-
Union contended that the alleged closure of the departmenU
unit is void ab initio in law for non-compliance of the aforesaid
0
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.
E 20. 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 departmenU
F 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-
G 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 1.0. Act and
H
MACKINONMACKENZIE & CO. LTD. v. MACKINNON 67
EMPLOYEES UNION [V. GOPALAGOWDA, J.]
therefore, the appellant-Company has to face penal action as A
provided under the above provision of the l.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.
B
21. 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 1.0. Act which contemplates issue of C
notice of closure of the departmenUunit 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 D
retrenched on account of the such closure of Industry or uniU
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 E
aforesaid provisions are mandatorily to be complied with by
the appellant-Company before taking action it against the
concerned workmen.
22. The Learned senior counsel further contended that F
the non-compliance of Section 25F clauses (a), (b) & (c) and
Section 25G of the l.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 G
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
H
68 SUPREME COURT REPORTS [2015] 4 S.C.R.
A 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
B 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
C 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
D the appellant-Company.
23. 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
E Court, the relevant statutory provisions of the l.D. Actinter a/ia,
Section 2(cc) read with Sections 25F (a) & (c), 25FFA, and
25G of the l.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
F favour of the concerned workmen are either erroneous or bad
in law and warrant interference by this Court.
24. The Industrial Court, being the original court, for
appreciation of facts & evidence on record has rightly applied
G 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 l.D. Act and the law laid down by
this Court and the High Court of Bombay. However, it would
H
MACKINON MACKENZIE & CO. LTD. v. MACKINNON 69
EMPLOYEES UNION [V. GOPALAGOWDA, J.]
be necessary for this Court to refer to the notice of retrenchment A
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:
B
"STATEMENT OF REASONS
Mackinnon Mackenzie & Company Limited has been
carrying on the business of Ship Agency, Ship Managing,
Ship Owning Operating, Travel and Tourism, Clearing and c
Forwarding, Overseas Recruitment and property Owning
and Development. The Company is presently employing
approximately 150 workmen.
Other than Clearing & Forwarding and property owning D
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 E
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 F
& 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:
G
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
H
70 SUPREME COURT REPORTS [2015] 4 S.C.R.
A are for higher than those paid by our competitors to their
staff.
3.Abnormal increases in other infrastructural costs and
overheads.
B
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
c 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
D
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.
E 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
F 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.
couQled with the high cost of infrastructure and
G
overheads, the Board of Directors came to the decision
to rationalize the activities in the Bombay office of the
ComQany by closing down its activities aQart from
ProQerty Owning and Develo12ment and a Qortion of the
H Clearing and DeveloQment business relating to contracts
MACKI NON MACKENZIE & CO. LTD. v. MACKINNON 71
EMPLOYEES UNION [V. GOPALA GOWDA, J.]
with Government of India institutions. such as, Central A
Railway and Lubrizol India Limited.
Needless to add, the Company will pay off all workmen
who have not been retained, their legal terminal dues.
B
The Directors have taken this opportunity to convey their
thanks to your years of service with the Company."
(Emphasis laid by this Court)
25. It is evident from the Statement of Reasons that the C
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 Forwardin,g Department. The appellant-
Company was unable to improve its business and further found D
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 E
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 F
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 G
the above relevant contentious issues is further fortified by the
retrenchment notice and the Statement of Reasons annexed
to the same.
H
72 SUPREME COURT REPORTS [2015] 4 S.C.R.
A 26. 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
B has been answered againstthe 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.
C 27. 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 1.0. Act. Section
25F clause (a) states that no workmen employed in continuous
0
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
E 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
F 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
G 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
H was effective from 4. 08.1992. Therefore, one month notice was
MACKINON MACKENZIE & CO. LTD. v. MACKINNON 73
EMPLOYEES UNION [V. GOPALAGOWDA, J.]
not given to the concerned workmen before their retrenchment A
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 B
25F clause (a) of the l.D. Act. The Industrial Court after
examining the facts and evidence on record has rightly
answered the question of breach or Section 25F clause (b) in
th.e negative since no evidence has been produced by the C
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- o
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 E
retrenchment as per Section 25F clauses (a) and (c) of the
1.0.Actwhich are mandatory in law.
28. Further on examining the aforesaid retrenchment
notice referred to supra that was served upon the concerned F
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 G
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 H
74 SUPREME COURT REPORTS [2015] 4 S.C.R.
A mandatory provisions under Section 25FFA of the 1.0. 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
8 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 1.0. Act and therefore, the competent
C 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
o and Reasons by inserting Section 25FFA by Amending Act
No. 32 of 1972 to the 1.0. Act with a definite object to be
achieved. The said Statement of Objects and Reasons to the
above referred Amending Act is extracted hereunder:
E "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
F 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
G 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.
H
MACKINON MACKENZIE & CO. LTD. v. MACKINNON 75
EMPLOYEES UNION [V. GOPALAGOWDA, J.]
2. Since the problem of closure has been acute in the A
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 B
Government stating clearly the reasons for intended
closure of the undertaking. While enacting this legislation
for West Bengal Government cc 1sidered it desirable to
promote Central legislation on the subject since the
c
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
D
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 E
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
wi,11 be required to be served in the case of undertaking F
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''. G
(Gazette of India, 06.12.1971, Pt. II, Section 2, Ext. page
893)
29. The contention urged by Mr. C. U. Singh, the learned
H
76 SUPREME COURT REPORTS [2015] 4 S.C.R.
A 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-
s Company under Section 30Aofthe LO.Act, then the purpose
and intentment of the amendment in the year 1972 made to
Section 25FFA of the 1.0. Act, will be defeated and would
nullify the Objects and Reasons for amending the provisions
C of the l.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 25FFAof the 1.0.
Act, with an avowed object to protect workmen being
retrenched due to closing down of a department/unit of the
o 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
E 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.
F 30. 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 \I. Babu Ram Upadhya, State of Mysore &
Ors. v. V.K. Kangan & Ors and Sharif-Ud-Din vs Abdul Gani
G 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
H complied with. The relevant paras from the decision of this
MACKINON MACKENZIE & CO. LTD. v. MACKINNON 77
EMPLOYEES UNION [V. GOPALAGOWDA, J.]
Court in the case of Babu Ram Upadhya (supra) are extracted A
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 B
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
Karnath v. Syed Ahmad /shaque dealt with this problem C
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 D
matter."
It is then observed:
"They (the rules) are well-known, and there is no need E
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."
F
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
G
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 H
78 SUPREME COURT REPORTS [2015] 4 S.C.R.
A considering its nature, its design, and the
consequences which would follow from construing it
the one way or the other. ... "
This passage was approved by this Court in State of U. P
B 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
c 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."
D
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 is:
E "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
F 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
G 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
H
MACKINON MACKENZIE & CO. LTD. v. MACKINNON 79
EMPLOYEES UNION [V. GOPALAGOWDA, J.]
Railway Company v. Normandin and by this Court in A
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 B
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 c
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-
D
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." E
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 F
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 G
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 provisfon
H
80 SUPREME COURT REP.ORTS [2015] 4 S.C.R.
A 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
B 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
c 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
D 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
E Government to make the proper decision. In Lonappan
v. Sub-Collector of Pa/qhat1 the Kera la 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.
F Krishna lyerv. 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
G held as under by this Court:-
"9. The difference between a mandatory rule and a
directory rule is that while the former must be strictly
observed, in the case of the latter substantial compliance
H may be sufficient to achieve the object regarding which
MACKI NON MACKENZIE & CO. LTD. v. MACKINNON 81
EMPLOYEES UNION [V. GOPALAGOWDAJ J.]
the rule is enacted. Certain broad propositions which can A
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 B
not conclusive on the question whether it is a mandatory
or directory provision. In order to find outthe 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
c
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 D
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 E
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 F
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
G
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 H
82 SUPREME COURT REPORTS [2015] 4 S.C.R.
A 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
B
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 ofVindhya Pradesh 10 and the same
c 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 proced.ure is not followed in the prescribed manner as
provided under the statutory provision, then such act of the
D 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 l.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 25FFAofthe l.D.Act and
E 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.
34. It would be appropriate for us to refer to the decision
F of this Court in the case Babu Verghese & Ors v. Bar Council
Of Kera/a & 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
G 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
H 10
AIR 1954 SC 322
11 (1999) 3 sec 422
MACKINON MACKENZIE & CO. LTD. v. MACKINNON 83
EMPLOYEES UNION [V. GOPALAGOWDA, J.]
Statute, the act must be done in that manner or not at all. A
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: B
"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 ofVindhya Pradesh
c
1954 SCR 1098 =AIR 1954 SC 322 and again in Deep
Chand vs.
State of Rajasthan 1962{1) SCR 662 =AIR 1961 SC
D
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
E
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) F
35. 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 G
the date on which it intended to close down the concerned
departmenUunit 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 H
84 SUPREME COURT REPORTS [2015] 4 S.C.R.
A 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
departmenUunit of the Company and whether the concerned
B 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
C 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
0
evidence on record to justify the action of retrenchment of
concerned workmen on the alleged closure of the departmenU
unit of the appellant-Company is shown as bonafide. However,
the concurrent finding of fact recorded by the High Court on
E 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
F 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
G 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
H
MACKI NON MACKENZIE & CO. LTD. v. MACKINNON _85
EMPLOYEES UNION [V. GOPALAGOWDA, J.]
as the same is devoid of merit. He further placed reliance upon A
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 B
then the other party be asked to lead evidence to rebut the
same.
37. It is very clear from the averments of the appellant-
Company in its written statement that its action in retrenching C
the workmen is sought to be justifi<?d 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 D
Industrial Court which would clearly show that the action of the
appellant-Company is a clear case of ma/a 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' E
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 F
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 G
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
12
(2005) 2 sec 489 H
86 SUPREME COURT REPORTS [2015] 4 S.C.R.
A be termed as erroneous for our interference with the.
38. 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
B workmen as provided under Section 25G of the l.D. Act read
with Rule 81 of the Bombay Ru1es 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
C 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
0
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
E 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
F 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
G 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.
H
MACKI NON MACKENZIE &CO. LTD. v. MACKINNON 87
EMPLOYEES UNION [V. GOPALAGOWDA, J.]
6. Shri Phadke brought to our notice the decision in Om A
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 B
very ruling, while agreeing thata breach of the rule could
not be assumed as prompted by mala tides 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
c
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 D
"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 E
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 tides by itself is no absolution from the rule in F
Section 25-G. Affirmatively, some 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) G
39. The learned senior counsel further contended that
the above legal principle is laid also down in the case of Mis.
Om Oil & Oil Seeds Exchange, Ltd. Delhi v. Their Workmen,
H
88 SUPREME COURT REPORTS [2015] 4 S.C.R.
A 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 ma/a
fide and as such, the action of the appellant-Company in
issuing retrenchment notice to the workmen ca1:1not be
quashed ipso facto. The learned senior counsel contented on
B 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.
40. We are of the opinion that the High Court has rightly
C 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
D 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
E 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
F and held that there was a clear breach of Section 25G of l.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,
G 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-
H Company to establish as to whether there is a deviation of the
MACKINON MACKENZIE & CO. LTD. v. MACKINNON 89
EMPLOYEES UNION [V. GOPALAGOWDA, J.]
above principle or not by producing justifiable and valid A
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 B
distinguishable from the facts of this case on hand.
41. 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 C
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
0
accepted by this Court. The respondent-Union had laid factual
foundation in this regard and proved the same by adducing
evidence on record.
42. Further, it is urged by the learned senior counsel
on behalf of appellant-Company that there is no question of E
reinstatement of the concerned workmen and payment of back
wages to them'since the concerned departmenUunit of the
appellant-Company in which they were employed no longer
exists and therefore, requested this Court to mould the relief F
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 G
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
H
90 SUPREME COURT REPORTS [2015] 4 S.C.R.
A 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 supra.
B 43. 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
Engineer13, wherein it was held that since termination of
C employment is in breach or violation of the mandatory provisions
of ChapterV-AorV-B of the l.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
0
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
E on the decisions of this Court in the cases of Deepali Gundu
Surwase v. Adhyapak Mahavidya/a 14 and Bhuvnesh
Kumar Dwivedi v. Hindalco 15• This Court opined thus in the
case of Deepali Gundu Surwase (supra):
F "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
G 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
13
(2010) 5 sec 497
H " (2013) 10 sec 324
,. (2014) 11 sec 85
MACKI NON MACKENZIE & CO. LTD. v. MACKINNON 91
EMPLOYEES UNION [V. GOPALAGOWDA, J.]
the effect of severing the employer employee relationship, A
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 B
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
c
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 D
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 E
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 F
the emoluments."
44. 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 G
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 H
92 SUPREME COURT REPORTS [201~ 4 S.C.R.
A 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
8 copy of this Judgment, failing which, the back-wages shall be
paid with an interest atthe 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.
C Devika Gujral Appeal dismissed.
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