# MACKINON MACKENZIE & COMPANY LTD v. MACKINNON EMPLOYEES UNION

- **Citation:** [2015] 4 S.C.R. 45
- **Court:** Supreme Court of India
- **Decided:** 2015-02-25
- **Case number:** Civil Appeal No. 5319 of2008
- **Bench:** V. Gopala Gowda, C. Nagappan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/mackinon-mackenzie-company-ltd-v-mackinnon-employees-union-30597
- **Pages:** 48

## Headnote

INDUSTRIAL DISPUTES ACT, 1947:
s. 25F - Retrenchment notice - Conditions precedent
for retrenchment- One month's notice and one month's salary
B
c
- 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 appellantH
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; 83F-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 w

## Text

_Characters 0–39,866 of 85,551. This is a partial read: ask again with offset=39866 for what follows._

[2015] 4 S.C.R. 45
MACKINON MACKENZIE & COMPANY LTD.
A
v.
MACKINNON EMPLOYEES UNION
(Civil Appeal No. 5319 of2008)
FEBRUARY 25, 2015
[V. GOPALA GOWDA AND C. NAGAPPAN, JJ.)
INDUSTRIAL DISPUTES ACT, 1947:
s. 25F - Retrenchment notice - Conditions precedent
for retrenchment- One month's notice and one month's salary
B
c
- 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 appellantH
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; 83F-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 noncompliance of Section 25G of the l.D. Act by the appellantCompany 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]
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.
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
(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.
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
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;
c
D
E
F
G
H
50
A
B
c
SUPREME COURT REPORTS
[2015] 4 S.C.R.
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
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
AIR 1980 SC 1454
held inapplicable Para 11
1960 SCR 144
distinguished.
Para 11
0
2006(8)Suppl. SCR 95
referred to.
Par:a 11
2006(7) Suppl.SCR 614
referred to.
1987 (2) SCR 414
referred to.
E 2000(5)Suppl.SCR 552
referred to.
1969 SCR 287
referred to.
(2009) 5 sec 705
referred to.
F 1986 (2) SCR 126
referred to.
1954 SCR 1038
relied on.
1999 (1) SCR 1121
relied on.
G 2005 (1) SCR 545
relied on.
(201 O) 5 sec 497
relied on.
2013 (9) SCR 1
relied on.
H
Para 11
Para 11
Para 14
Para 15
Para 16
Para 18
Para 33
Para 34
Para 36
Para 43
Para 43
MACKINON MACKENZIE & CO. LTD. v. MACKINNON
51
EMPLOYEES UNION
(2014) 11 sec 85
relied on.
Para 43
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
5319of2008
A
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. U. Singh, Mihir S., Rishi K. S. Gautam, Dhaval
Mehrotra, Anurag Pandey for the Respondent.
The Judgment of the Court was delivered by
c
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.
2. The relevant facts are briefly stated to appreciate
the rival legal contentions urged on behalf of the parties in this
appeal.
F
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 appellantCompany, 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 appellantCompany 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
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
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
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 appellantCompany 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
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.
c
D
E
F
G
H
54
A
B
c
D
E
F
G
H
SUPREME COURT REPORTS
.[2015] 4 S.C.R.
(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.
(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.
Act.
4. On 28.01.1993, on the basis of the pleadings, the
Industrial Court framed the following issues:-
"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
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.,
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?
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?
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 appellantCompany. Nine witnesses on behalf of the concerned
F
workmen and two witnesses on behalf of the appellantCompany 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 appellantCompany 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 appellantCompany 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 respondentworkmen 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 appellantCompany 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 respondentA
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.
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
E
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 Co1, 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
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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
0
principle of 'last come first go' on the part of the appellantCompany. 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) 11 sec 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 appellantC
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 appellantCompany. 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 backwages 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."
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
E
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/orkmen7, 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 appellantCompany 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
0
notice of retrenchment dated 27.07.1992 served upon the
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.
H
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
• 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
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
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
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 subsection (1) of Section 25-0 is made, the closure of the
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 eighty9 (1986) 2 sec 624
D
E
F
G
H
66
A
8
c
SUPREME COURT REPORTS
[2015] 4 S.C.R.
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
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
labour practice."
19. The learned senior counsel for the respondentUnion contended that the alleged closure of the departmenU
0
unit is void ab initio in law for non-compliance of the aforesaid
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 appellantG 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.
21. The learned senior counsel for the respondentUnion submitted that the above contention of the learned senior
counsel on behalf of appellant-Company is wholly untenable
B
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.