ARMED FORCES EX OFFICERS MULTI SERVICES COOPERATIVE SOCIETY LTD.versusRASHTRIYA MAZDOOR SANGH (INTUC)

                        [2022] 6 S.C.R. 1057                             1057


            ARMED FORCES EX OFFICERS MULTI                               A
           SERVICES COOPERATIVE SOCIETY LTD.
                                  v.
           RASHTRIYA MAZDOOR SANGH (INTUC)
                   (Civil Appeal No. 2393 of 2022)                       B
                         AUGUST 11, 2022
          [B. R. GAVAI AND PAMIDIGHANTAM SRI
                     NARASIMHA, JJ.]
       Service Law – Reinstatement of employees – Drivers-members
                                                                         C
of the respondent Union were employed by appellant-Cooperative
society through a settlement for pay and allowances – The settlement
expired – Fresh negotiation commenced – In the negotiations, the
employees demanded for a pay hike and permanency of employment
– The said demand resulted into failure of settlement – Conciliation
proceedings invoked – During pendency of conciliation proceedings        D
employees resorted to strike – After a short span of strike, the
employees rejoined services – Appellant retrenched the services of
employees on the ground of closure of business – Respondent Union
raised the concern regarding the same before the Conciliation
Officer and demanded reinstatement – The appellant offered re-
                                                                         E
employment to employees on new terms and conditions, and as fresh
employment – Upon failure of conciliation proceedings matter was
referred to Industrial Tribunal – Tribunal set aside the termination
of employees and directed reinstatement with continuity of service
and 75% back wages – Appellant filed writ petition before the High
Court – The High Court affirmed the findings of the Tribunal –           F
Before the Supreme Court, the appellant submitted that, (i) it was
not the case of closure but a simple case of retrenchment; (ii) it was
a case of re-organising business; (iii) Tribunal was not justified in
directing continuity of service; and (iv) direction to pay 75% back
wages was contrary to the principles laid down by the Supreme
                                                                         G
Court – Held: The Tribunal as well as the High Court have held
that the method and manner by which the workmen were retrenched
clearly demonstrates that it is virtually a closure – These findings
of facts are confirmed – The bonafide policy decision for
reorganising business is within an enterprise’s propriety decision –
However, in the instant case, the Tribunal has come to the conclusion    H
                                 1057
1058            SUPREME COURT REPORTS                      [2022] 6 S.C.R.


 A     that the entirety of business was not lost due to the strike and the
       retrenchment was imposed as retribution against the workmen for
       going on a strike – Thus, bonafide policy decision for reorganising
       business will not apply to the facts of the instant case – As far as
       direction of continuity of service and back wages are concerned,
       the order of retrenchment was not bonafide, once the orders of
 B
       retrenchment are set aside, the workmen will naturally be entitled to
       continuity of service with backwages – The Tribunal had considered
       the matter in detail and after appreciating the oral and documentary
       evidence, the Tribunal directed reinstatement of the employees with
       only 75% back wages – The said finding was upheld by the High
 C     Court, thus cannot be interfered with by the Supreme Court u/Art.136
       of the Constitution.
              Dismissing the appeal, the Court
              HELD: 1. With respect to the first submission of appellant,
       that this is not at all a case of closure but a simple case of
 D     retrenchment, the Tribunal as well as the High Court have held
       that the method and manner by which the workmen were
       retrenched clearly demonstrates that it is virtually a closure. This
       Court have no hesitation in confirming these findings of fact. The
       act of terminating the services of all the drivers at the same time,
 E     coupled with the statement of the Appellant that the entire
       business is closed down, was sufficient to convey to the workers
       and the Union that the transport business had come to a standstill
       and that there was no scope of continuing the business any further.
       Further, This Court also concur with the findings of fact about
       the lack of bona fide in the Appellant’s offers of re-employment
 F     on new terms and conditions, and without continuity of service.
       [Para 14][1064-E-G]
             2. The second submission of appellant that the management
       has a right to organise its business based on economic
       considerations is well taken. There is also no quarrel with the
 G     principle of Parry & Co. Ltd. v. P.C. Pal which laid down the
       proposition that a bona fide policy decision for reorganising the
       business based on economic considerations is within an
       enterprise’s proprietary decision and retrenchment in this context
       must be accepted as an inevitable consequence. The answer is
 H     here itself, and pertains to the material requirement of bona fide
  ARMED FORCES EX OFFICERS MULTI SERVICES CO-OP. SOCIETY v.              1059
            RASHTRIYA MAZDOOR SANGH (INTUC)


of the decision. In the present case, the Tribunal has come to the       A
conclusion that the entirety of business is not lost due to the
strike and the retrenchment seems to have been imposed as
retribution against the workmen for going on a strike. It is for
this reason that the decision of this Court in the case of Parry
Company will not apply to the facts of the present case. [Para
                                                                         B
15][1065-B-C]
       3. The further submission of the Appellant that the Tribunal
is not justified in directing continuity of service, as in the case of
retrenchment followed by reemployment, the workmen are not
entitled to continuity of service. The Court held that there is no
quarrel with the principle of law that reemployment of retrenched        C
workmen does not entitle them to claim continuity of service as
held in various cases. However, the principle laid down in these
judgments will only apply to cases where the retrenchment is
bona fide. The Tribunal has held that the retrenchment is not
bona fide. Once the orders of retrenchment are set aside, the            D
workmen will naturally be entitled to continuity of service with
order of back wages as determined by a Tribunal or a Court of
law. [Para 16][1065-D-F]
       4. As regards the submission of Appellant, about the legality
of awarding 75% back wages, it was argued before this court that         E
the workmen were obligated to prove that they were not gainfully
employed after the dismissal from service. The Tribunal has
considered the matter in detail and after appreciating the oral
and documentary evidence, the Tribunal directed reinstatement
of the employees with only 75% back wages. Whether a workman
was gainfully employed or not is again a question of fact, and the       F
finding of the Tribunal as upheld by the High Court, cannot be
interfered with by the Supreme Court in exercising its power
under Article 136 of the Constitution of India. [Paras 17, 18][1065-
G; 1066-B-C]
      Deepali Gundu Surwase v. Kranti Junior Adhyapak                    G
      Mahavidyalaya (D. Ed.) & Ors. (2013) 10 SCC 324 :
      [2013] 9 SCR 1 – relied on.
      M. L. Singla v. Punjab National Bank (2018) 18 SCC
      21 : [2018] 11 SCR 455., Management of Regional
                                                                         H
1060            SUPREME COURT REPORTS                      [2022] 6 S.C.R.


 A           Chief Engineer, Public Health and Engineering
             Department, Ranchi v. Their Workmen (2019) 18 SCC
             814; Mackinnon Mackenzie and Company Ltd v.
             Mackinnon Employees Union, (2015) 4 SCC 544 :
             [2015] 4 SCR 45; Workmen of Subong Tea
 B           Estate,Represented by the Indian Tea Employees Union
             v. Outgoing Management of Subong Tea Estate and Anr.
             (1964) 5 SCR 602, Cement Corpn. of India Ltd. v.
             Presiding Officer Industrial Tribunal-cum-Labour Court
             and Anr. (2010) 15 SCC 754 : 2001 (1) Suppl. JT
 C           619; Maruti Udyog Ltd v. Ram Lal and Ors. (2005) 2
             SCC 638 : [2005] 1 SCR 790 – referred to.
             Parry & Co. Ltd. v. P. C. Pal (1969) 2 SCR 976 – held
             inapplicable.
                             Case Law Reference
 D
       [2018] 11 SCR 455                 referred to         Para 11
       [2013] 9 SCR 1                    relied on           Para 11
       [2015] 4 SCR 45                   referred to         Para 12

 E     [1969] 2 SCR 976                  held inapplicable Para 15
       [2005] 1 SCR 790                  referred to         Para 16
             CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2393
       of 2022.

 F           From the Judgment and Order dated 17.01.2019 of the High Court
       of Judicature at Bombay in Writ Petition No. 1240 of 2018.
            Chander Uday Singh, Sr. Adv., Pratap Venugopal, Ms. Surekha
       Raman, Atman Mehta, Anand Pai, Akhil Abraham Roy, Ms. Viddushi,
       Ms. Bidya Mohanty, M/s K J John and Co., Advs. for the Appellant.
 G           Nitin A. Kulkarni, Nitin S. Tambwekar, Seshatalpa Sai Bandaru,
       Advs. for the Respondent.



 H
   ARMED FORCES EX OFFICERS MULTI SERVICES CO-OP. SOCIETY v.                  1061
             RASHTRIYA MAZDOOR SANGH (INTUC)


      The Judgment of the Court was delivered by                              A
      PAMIDIGHANTAM SRI NARASIMHA J.
       1. The Appellant is a cooperative society run by ex-officers of the
three defence forces, engaged in the business of providing support services
such as transportation, house-keeping and security services to companies
and Government establishments. Respondent is a labour union affiliated        B
with the Indian National Trade Union Congress , representing the drivers
formerly employed by the Appellant.
      2. Fifty-five drivers who are members of the Respondent Union
were employed by the Appellant from 1998 through a settlement for pay
and allowances. As the settlement expired on 30.06.2004, fresh                C
negotiations between the employer and the employees commenced but
did not result in any easy settlement due to claims for pay hike and
demands for permanency of casual employees. Conciliation proceedings
were invoked on 22.01.2007 and proceedings before the Deputy
Commissioner of Labour, Pune were going on.                                   D
       3. While the next date of conciliatory proceeding was fixed on
05.02.2007, the employees resorted to strike on 23.01.2007. On the same
day, the Appellant filed a complaint before the Industrial Court, asserting
that the strike was illegal, and the employees should be made liable for
unfair labour practices. The Industrial Tribunal by an interim order dated    E
05.02.2007 directed employees to refrain from obstructing the movement
of men, material and vehicles from the parking lots of the Appellant, and
holding violent demonstrations within two hundred meters of Appellant’s
premises.
       4. The Industrial Tribunal later directed the Appellant to allow the   F
employees to join duties and the employees in fact joined services on
16.03.2007. We may mention here itself that two years later, i.e. on
27.11.2009, the Industrial Tribunal by its final order declared the strike
carried out by the Respondents for the period between 23.01.2007 and
15.03.2007 as illegal in terms of Section 24(1)(a) of the Maharashtra
Recognition of Trade Unions And Prevention of Unfair Labour Practices         G
Act, 1971.
       5. During the pendency of the above referred proceedings, that
is, immediately after 16.03.2007 when employees re-joined services, after
the short period of strike, the Appellant through individual letters dated
22.03.2007 ‘retrenched’ the services of all the fifty-five employees, on      H
1062                 SUPREME COURT REPORTS                        [2022] 6 S.C.R.


 A     the grounds that Appellant had closed its business. By the said letter, the
       employees were offered retrenchment compensation as per Section 25F
       of the Industrial Disputes Act, 1947 1. The relevant portion of the
       Termination Letter is:
                  “You are being informed that as the bus services of the society
 B                have been broken from 23rd January, 2007 the concerned
                  companies have decided to stop their bus services and as per
                  that our transport contracts have expired. In this situation as
                  the business is closed, it is not possible to give you work hence
                  there is no option but to remove you from services.”
 C              6. Respondent Union raised concerns with the Conciliation Officer.
       They demanded reinstatement of all fifty-five workmen with continuity
       of services and back wages, contending that there was no closure of the
       transport activities of the Appellant. They claimed that the act of
       terminating all the employees is a virtual closure, which is completely
       illegal.
 D
              7. While the matter was being negotiated, the Appellant started
       offering re-employment to all the employees through individual letters
       dated 13.09.2007, followed by a public notice. This offer was on new
       terms and conditions, and as fresh employment. This is an important
       fact and as the narration of events would witness, it had a direct bearing
 E     on the decision of the Industrial Tribunal.
              8. As the Conciliation Officer submitted a Failure Report, the
       Government referred the dispute to the Industrial Tribunal, Pune2 for
       answering the demand of the workmen for reinstatement of fifty-five
       drivers with continuity of service and full back wages. Before the Tribunal,
 F     the parties examined thirty-one witness and marked documents with
       respect to matters such as strike, salary slips, retrenchment order, re-
       employment offer, Appellant’s communication with its business clients,
       etc.
              9. By its Award dated 07.09.2017, the Tribunal answered the
 G     reference in the affirmative by setting aside the termination of employees
       and directing reinstatement. While considering the legality of
       retrenchment, the Tribunal noted that there was no complete shutdown
       of the company’s transport business, and that retrenchment of all the
       1
           hereinafter, referred to as ‘the Act’.
       2
 H         hereinafter, referred to as ‘the Tribunal’.
      ARMED FORCES EX OFFICERS MULTI SERVICES CO-OP. SOCIETY v.                1063
       RASHTRIYA MAZDOOR SANGH (INTUC) [PAMIDIGHANTAM SRI
                          NARASIMHA J.]

drivers at one go amounted to closure, meted out as a punishment for           A
resorting to strike. The fact that all the retrenched employees were offered
re-employment shortly thereafter further evidenced the lack of bona
fide intention in the act of retrenchment. The Tribunal discarded the re-
employment offers as immaterial, as it forced the employees to accept
fresh appointment, losing their long-standing service. The orders of
                                                                               B
termination were set aside and the workmen were directed to be
reinstated with continuity of service and 75% back wages, save eight
employees who admitted to gainful employment post retrenchment.
       10. Aggrieved by the Award, the Appellant preferred Writ Petition
No. 1240 of 2018 before the High Court of Bombay. The Respondent
Union also filed Writ Petition No. 5075 of 2018 against the Tribunal’s         C
decision to the extent of denial of back wages to eight employees. The
High Court affirmed the Tribunal’s findings on all counts, and concluded
that they were well-founded on evidence and were in accordance with
law. Thus, it confirmed the reinstatement of employees with 75% back
wages and other consequential benefits. It also confirmed the Tribunal’s       D
denial of back wages to the eight employees who admitted to being
gainfully employed. It is this order of the High Court that the Appellant
challenges in the present Civil Appeal.
       11. Shri Chander Uday Singh, Senior Advocate assisted by Shri
Pratap Venugopal, Ms. Surekha Raman, Shri Atman Mehta, Shri Anand              E
Pai, Shri Akhil Abraham Roy, Ms. Viddushi and Ms. Bidya Mohanty,
Advocates appearing for the Appellant, made four-fold submissions before
us. They argued that the illegal strike carried out by the Respondent led
to the termination of Appellant’s transport contracts with its clients,
creating a situation of surplus of labour, necessitating the retrenchment.
Appellant did not effectuate any closure by the termination letters dated      F
22.03.2007, but was merely re-organising its business by temporarily
shutting down their transport activities. He also challenged the Industrial
Tribunal’s finding regarding the offer of re-employment being illegal, by
arguing that Appellant was only complying with the stipulations of
       Section 25H of the Act which grants preference to retrenched            G
employees in re-employment. He would finally submit that the directions
of the Tribunal as well as the High Court to pay 75% back wages is
contrary to the principles laid down by this Court. He relied on M.L.
Singla v. Punjab National Bank3, Deepali Gundu Surwase v. Kranti
3
    (2018) 18 SCC 21.                                                          H
1064             SUPREME COURT REPORTS                             [2022] 6 S.C.R.


 A     Junior Adhyapak Mahavidyalaya (D. Ed.) & Ors4, Management of
       Regional Chief Engineer, Public Health and Engineering
       Department, Ranchi v. Their Workmen5.
              12. Conversely, learned counsels for the Respondent, Shri Nitin
       A. Kulkarni, assisted by Shri Nitin S. Tambwekar, Advocate and Shri
 B     Seshatalpa Sai Bandaru, AOR, submitted that the retrenchment,
       effectuated as if there was closure, is illegal as there was no de facto
       closure of Appellant’s transport business. Even if such a closure was
       effected, it is illegal as sixty-days’ notice was not given in terms of Section
       25FFA of the Act. With respect to the question of back wages, he
       submitted that the Tribunal correctly relied on the testimonies of
 C     retrenched drivers, admitting to unemployment post retrenchment. He
       relied on the decisions of this Court in Mackinnon Mackenzie and
       Company Ltd v. Mackinnon Employees Union,6 and Workmen of
       Subong Tea Estate, Represented by the Indian Tea Employees Union
       v. Outgoing Management of Subong Tea Estate and Anr.7
 D            13. In his rejoinder, Shri C.U. Singh submitted that even as per
       the Statement of Claim submitted by the Respondent Union before the
       Tribunal, it was clear that the employees always understood their
       termination as retrenchment and not in course of a closure.
              Analysis:
 E
               14. With respect to the first submission of Shri C. U. Singh, that
       this is not at all a case of closure but a simple case of retrenchment, the
       Tribunal as well as the High Court have held that the method and manner
       by which the workmen were retrenched clearly demonstrates that it is
       virtually a closure. We have no hesitation in confirming these findings of
 F     fact. The act of terminating the services of all the drivers at the same
       time, coupled with the statement of the Appellant that the entire business
       is closed down, was sufficient to convey to the workers and the Union
       that the transport business had come to a standstill and that there was no
       scope of continuing the business any further. Further, we also concur
 G     with the findings of fact about the lack of bona fide in the Appellant’s
       offers of re-employment on new terms and conditions, and without

       4
         (2013) 10 SCC 324.
       5
         (2019) 18 SCC 814.
       6
         (2015) 4 SCC 544.
       7
 H       (1964) 5 SCR 602.
    ARMED FORCES EX OFFICERS MULTI SERVICES CO-OP. SOCIETY v.                 1065
     RASHTRIYA MAZDOOR SANGH (INTUC) [PAMIDIGHANTAM SRI
                        NARASIMHA J.]

continuity of service. It is for these reasons that the Tribunal and the      A
High Court held that it was virtually a case of closure and correctly so.
        15. The second submission of Shri C.U. Singh that the management
has a right to organise its business based on economic considerations is
well taken. There is also no quarrel with the principle of Parry & Co.
Ltd. v. P.C. Pal8, which laid down the proposition that a bona fide           B
policy decision for reorganising the business based on economic
considerations is within an enterprise’s proprietary decision and
retrenchment in this context must be accepted as an inevitable
consequence. The answer is here itself, and pertains to the material
requirement of bona fide of the decision. In the present case, the Tribunal
has come to the conclusion that the entirety of business is not lost due to   C
the strike and the retrenchment seems to have been imposed as retribution
against the workmen for going on a strike. It is for this reason that the
decision of this Court in the case of Parry Company (supra) will not
apply to the facts of the present case.
       16. The further submission of the Appellant that the Tribunal is       D
not justified in directing continuity of service, as in the case of
retrenchment followed by re-employment, the workmen are not entitled
to continuity of service needs to be answered. Even here, there is no
quarrel with the principle of law that re-employment of retrenched
workmen does not entitle them to claim continuity of service as held in       E
Cement Corpn. of India Ltd. v. Presiding Officer Industrial Tribunal-
cum-Labour Court and Anr.9, as well as the Maruti Udyog Ltd v.
Ram Lal and Ors.10. However, the principle laid down in these judgments
will only apply to cases where the retrenchment is bona fide. The Tribunal
has held that the retrenchment of all the drivers followed by an offer of
re-employment on new terms and conditions is not bona fide. Once the          F
orders of retrenchment are set aside, the workmen will naturally be
entitled to continuity of service with order of back wages as determined
by a Tribunal or a Court of law.
       17. As regards the last submission by Shri C.U. Singh, about the
legality of awarding 75% back wages, it was argued before us that the         G
workmen were obligated to prove that they were not gainfully employed
after the dismissal from service. It was also submitted that they must at
8
  (1969) 2 SCR 976.
9
  (2010) 15 SCC 754.
10
   (2005) 2 SCC 638.                                                          H
1066            SUPREME COURT REPORTS                          [2022] 6 S.C.R.


 A     least plead on oath that they were unemployed. Shri C.U. Singh took us
       through the evidence and on the basis of statements made therein has
       submitted that the parties have admitted to have worked at some place
       or the other through the pendency of the litigation.
              18. The Tribunal has considered the matter in detail and after
 B     appreciating the oral and documentary evidence, the Tribunal directed
       reinstatement of the employees with only 75% back wages. Whether a
       workman was gainfully employed or not is again a question of fact, and
       the finding of the Tribunal as upheld by the High Court, cannot be
       interfered with by the Supreme Court in exercising its power under Article
       136 of the Constitution of India. The following findings of the Tribunal
 C     are conclusive:
             “In so far as back wages to be paid to the workers are
             concerned, it is a matter of record that 27 workers have stepped
             into the witness box. Even the President of the Second Party
             union is also examined. All the workers and President of the
 D           Union have consistently stated in their examination in chief
             that they have remained unemployed after their termination
             and they failed to procure alternate employment also.”
            19. In Deepali Gundu Surwase v. Kranti Junior Adhyapak
       Mahavidyalaya (supra), this Court held:
 E
             “38.3 ……If the employer wants to avoid payment of full
             back wages, then it has to plead and also lead cogent evidence
             to prove that the employee/workman was gainfully employed
             and was getting wages equal to the wages he/she was drawing
             prior to the termination of service……..”
 F
                                                              (emphasis added)
             With respect to the obligation of the Appellant, the finding of the
       Tribunal is simple that:
             “On the contrary, in the entire evidence filed by the First Party,
 G           the First Party has not brought an iota of evidence to show
             that all the workers were employed elsewhere and were earning
             for their livelihood.”
             20. Having considered the matter in detail we uphold and affirm
       the judgment of the High Court of Judicature at Bombay in W.P. No.
 H
   ARMED FORCES EX OFFICERS MULTI SERVICES CO-OP. SOCIETY v.              1067
    RASHTRIYA MAZDOOR SANGH (INTUC) [PAMIDIGHANTAM SRI
                       NARASIMHA J.]

1240 of 2018 dated 17.01.2019, and dismiss the Civil Appeal No. 2393      A
of 2022. Parties shall bear their own costs.


Ankit Gyan                                            Appeal dismissed.

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