Summary
A cooperative society of ex-defence officers retrenched all 55 of its drivers days after they returned from a strike, saying its transport business had closed. A few months later it offered them fresh employment on new terms. The Industrial Tribunal found there was no real closure and that the retrenchment was retribution for the strike. It ordered reinstatement with continuity of service and 75% back wages and the Bombay High Court affirmed. The Court upheld these findings. Terminating all drivers at once while declaring the business closed was in effect a closure, and the re-employment offer lacked bona fides. Rules on bona fide reorganisation and continuity after re-employment apply only to bona fide retrenchment. The employer led no evidence of gainful employment, so the back wages finding stood. The appeal was dismissed.
Issues
- Whether the simultaneous retrenchment of all drivers on the ground of closure, followed by an offer of fresh employment on new terms, was bona fide.
- Whether the reinstated workmen were entitled to continuity of service and 75% back wages.
Provisions considered
- Sections 25F, 25FFA and 25H, Industrial Disputes Act, 1947Retrenchment compensation under Section 25F and re-employment preference under Section 25H did not save a retrenchment that was in effect a closure and not bona fide. The workmen were entitled to reinstatement with continuity of service. (¶¶ 5, 11, 12, 14, 16)
- Article 136, Constitution of IndiaWhether the workmen were gainfully employed is a question of fact. The concurrent finding of the Tribunal and High Court on back wages could not be interfered with. (¶ 18)
Held
- Terminating all the drivers at once, while stating that the entire business had closed, conveyed that the transport business had come to a standstill. It was virtually a closure. The concurrent findings to that effect, and that the re-employment offer on new terms without continuity of service lacked bona fides, were confirmed. (¶ 14)
- An employer may make a bona fide policy decision to reorganise its business for economic reasons, and retrenchment may follow, as Parry and Co. holds. Here the business was not wholly lost through the strike, and the retrenchment was retribution for the strike, so that principle did not apply. (¶ 15)
- The rule that retrenched workmen who are re-employed cannot claim continuity of service applies only where the retrenchment is bona fide. Once a mala fide retrenchment is set aside, the workmen are entitled to continuity of service with back wages as determined. (¶ 16)
- Following Deepali Gundu Surwase, an employer seeking to avoid full back wages must plead and prove by cogent evidence that the workman was gainfully employed. The workmen testified that they remained unemployed, and the employer led no evidence otherwise, so the award of 75% back wages stood. (¶¶ 17, 18, 19)
Result
Appeal dismissed, affirming reinstatement with continuity of service and 75% back wages; parties to bear their own costs.