# PARRY & co. LID v. P. C. PAL & ORS

- **Citation:** [1969] 2 S.C.R. 976
- **Court:** Supreme Court of India
- **Decided:** 1968-11-21
- **Bench:** J. M. Shelat, V. Bhargava, C. A. Vaidialingam
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/parry-co-lid-v-p-c-pal-ors-4822
- **Pages:** 16

## Headnote

Industrial Dispute-Decision to Reorganise
business-Retl'enchment
in consequence-Propriety of Tribunal to go into question.
West Bengal Industrial Disputes Rules, 1958, rr. 77(1) and provisoNotice given 2 days prior, if proviso applicable.
Constitution of India, Art. 226-Certiorari-When can lie.
In pursuance of its policy of reorganising its business by concen·
!rating more on manufacturing side than agency business, the appellant·
company gave up more than half of its agencies in Calcutta and some
agencies in other places including Madras. The Union representing the
workmen wrote to the Labour Commissioner to intervene stating that ·
due to the company's said policy it feared retrenchment. The company
served notices on some of the employees for retrenchment to take effect
two days thereafter.
Also notice was given to the Labour Commissioner
and the Conciliation Officer as required under s. 25F ( c) of the industrial
Disputes Act. On reference of the dispute to the industrial Tribunal,
the company justified the retrenchment and the Manager of the Calcutta
branch gave evidence that retrenchment was done in pursuance of the
said policy decision taken by the company. The Tribunal l)eld that
a
good case for retrenchment was not made out and ordered reinstatement.
The Tribunal did not accept the manager's evidence holding that the
development on the manufacturing side of the company's business should
have been contemporaneous with the surrender of agencies in Calcutta.
The Tribunal also held that the policy decision was actuated by parochial considerations for transferring the company's resources from Calcutta to Madras, that there was
overload of work on the
remaining
employees; that the retrenchment could have been
avoided by
transferring the retrenched employees to other branches specially as their
conditions of service included the liability of being transferred; and that
the retrenchment was in breach of s. 25F(c) as the notice of retrenchment was two days prior to the date of the retrenchment and not with
immediate effect, the proviso to r. 77(1) of the West Bengal Industrial
Disputes Rules, 1958, did not apply and a notice of one month, as required by sub-cl. (1) of that rule, was necessary.
The company filed a
petition for a writ of certiorari. The Single Judge of the High Court set
•side the award and remanded the case to the Tribunal only for enforcing the retrenchmeqt according to the principle of "last come first go''.
The Division Bench of the High Court in appeal, agreed with the findings
of the Tribunal and held that the Single Judge was not competent to
interfere with those findings.
In appeal this Court,
HELD : Some of the findings arrived at by the Tribunal and which
influenced its verdict were beyond its competence.
The rest were either
speculative or contrary to the evidence on record and were consequently
!table to be set aside in a "Tit petition for certiorari.
(i) A writ of certiorari i" generally granted when a court has •cted
without or in excess of its jurisdiction. It jg available, in those cases
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PARRY & CO, V. P. C. LAL
977
where a tribunal, though competent to enter upon an enquiry, acts. in
flagrant disregard of the rules of procedure or violates the. prmc1ples
of natural justice where no particular procedure
IS. prescbbe.d.
But
a mere wrong decision cannot be corrected by
~ W!It ?f certiorari ~s
tllat would be using it as the cloak of an appeal m d1sgruse but a mamfest error apparent on the face of the proceedings based on a clear ignorance or disregard of the provisions of law or absence of or excess
of jurisdiction, when shown, can be so corrected. [985 C--EJ
Basappa v. Nagappa, [1955] S.C.R. 250, Dharangadhara
Chemical
Works Ltd. v. State of Saurashtra, [1957] S.C.R. 152 and Andhra Pradesh & Ors. v. Sree Ram Rao, A.I.R. 1963 S.C. 1723, followed.
(ii) The Tribunal wrongly rejected the comp~ny's evidence on the
ground that the policy decision being the functi

## Text

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PARRY & co. LID.
v.
P. C. PAL & ORS.
November 21, 1968
(J. M. SHELAT, V. BHARGAVA AND C. A. VAIDIALINGAM, JJ.]
Industrial Dispute-Decision to Reorganise
business-Retl'enchment
in consequence-Propriety of Tribunal to go into question.
West Bengal Industrial Disputes Rules, 1958, rr. 77(1) and provisoNotice given 2 days prior, if proviso applicable.
Constitution of India, Art. 226-Certiorari-When can lie.
In pursuance of its policy of reorganising its business by concen·
!rating more on manufacturing side than agency business, the appellant·
company gave up more than half of its agencies in Calcutta and some
agencies in other places including Madras. The Union representing the
workmen wrote to the Labour Commissioner to intervene stating that ·
due to the company's said policy it feared retrenchment. The company
served notices on some of the employees for retrenchment to take effect
two days thereafter.
Also notice was given to the Labour Commissioner
and the Conciliation Officer as required under s. 25F ( c) of the industrial
Disputes Act. On reference of the dispute to the industrial Tribunal,
the company justified the retrenchment and the Manager of the Calcutta
branch gave evidence that retrenchment was done in pursuance of the
said policy decision taken by the company. The Tribunal l)eld that
a
good case for retrenchment was not made out and ordered reinstatement.
The Tribunal did not accept the manager's evidence holding that the
development on the manufacturing side of the company's business should
have been contemporaneous with the surrender of agencies in Calcutta.
The Tribunal also held that the policy decision was actuated by parochial considerations for transferring the company's resources from Calcutta to Madras, that there was
overload of work on the
remaining
employees; that the retrenchment could have been
avoided by
transferring the retrenched employees to other branches specially as their
conditions of service included the liability of being transferred; and that
the retrenchment was in breach of s. 25F(c) as the notice of retrenchment was two days prior to the date of the retrenchment and not with
immediate effect, the proviso to r. 77(1) of the West Bengal Industrial
Disputes Rules, 1958, did not apply and a notice of one month, as required by sub-cl. (1) of that rule, was necessary.
The company filed a
petition for a writ of certiorari. The Single Judge of the High Court set
•side the award and remanded the case to the Tribunal only for enforcing the retrenchmeqt according to the principle of "last come first go''.
The Division Bench of the High Court in appeal, agreed with the findings
of the Tribunal and held that the Single Judge was not competent to
interfere with those findings.
In appeal this Court,
HELD : Some of the findings arrived at by the Tribunal and which
influenced its verdict were beyond its competence.
The rest were either
speculative or contrary to the evidence on record and were consequently
!table to be set aside in a "Tit petition for certiorari.
(i) A writ of certiorari i" generally granted when a court has •cted
without or in excess of its jurisdiction. It jg available, in those cases
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PARRY & CO, V. P. C. LAL
977
where a tribunal, though competent to enter upon an enquiry, acts. in
flagrant disregard of the rules of procedure or violates the. prmc1ples
of natural justice where no particular procedure
IS. prescbbe.d.
But
a mere wrong decision cannot be corrected by
~ W!It ?f certiorari ~s
tllat would be using it as the cloak of an appeal m d1sgruse but a mamfest error apparent on the face of the proceedings based on a clear ignorance or disregard of the provisions of law or absence of or excess
of jurisdiction, when shown, can be so corrected. [985 C--EJ
Basappa v. Nagappa, [1955] S.C.R. 250, Dharangadhara
Chemical
Works Ltd. v. State of Saurashtra, [1957] S.C.R. 152 and Andhra Pradesh & Ors. v. Sree Ram Rao, A.I.R. 1963 S.C. 1723, followed.
(ii) The Tribunal wrongly rejected the comp~ny's evidence on the
ground that the policy decision being the function of the Board of Directors, the Manager was not competent to depose about it and that if ~e
company wanted to establish it, it should . have. ~roduced a resolut~on
of the Board. In its letter to the Labour COmm1ss10ner and also durmg
conciliation proceedings the union had assumed that the company had
taken the said decision, that consequently, retrenchment was apprehended and that therefore that officer should
intervene. In these Circrunstances, the finding that the company had failed to establish its policy
was not only beyond the scope of the enquiry before the Tribunal but
totally invalid. [987 D-F]
I. K. Iron and Steel Co. v. Iron and Steel Mazdoor Union, [1956]
1 L.L.J. 227, followed.
(iii) It is within the managerial discretion of an employer to organise
and arrange his business in the manner he considers best. So long as that
is done bona fide it is not competent for a tribunal to question its propriety.
If a scheme for such reorganisation
results
in surplusage
of
employees, no employer is expected to carry the burden of such economic dead weight and retrenchment has to be accepted as inevitable, however unfoi lunate it is.
The Legislature therefore, provided by s.
25F
compensation to soften the blow of hardship resulting from an employee
being thrown out of employment through no fault of his. The Tribunal
having come to the conclusion that the said policy was not actuated by
any motive of victimisation or unfair labour practice and therefore was
bona fide, any consideration ·as to its
reasonableness or
propriety was
clearly extraneous. It is not the function of the Tribunal, to go into the
question whether such a scheme is profitable or not and whether it
should have be.en adopted by the employer.
So lo~g as. retrench~ent !'arried out is h:>na fide and not vitiated by
any cons1derat1on for v1cttm1sat10n or unfair labour practice and
the
employer comes to the conclusion that he can carry on his undertaking
v.;ith reasonable efficiency with .the number of employees retained
by
bun after ret~~nchment, the Tnbunal ought not ordinarily to interfere
w1~h such dec1s1on.
The fact that ~in the earlier year some temporary appomtments were made or that the Union's Secretary deposed that work
had accumulated would not mean that the surplusage calculated by the
'!'anager was. u~justifled. Accumulation of work at a given point
of
time, unless 1t is constant, may be seasonal or due to various reasons
and not necessarily because there was no surplusage. [987 G, 989 D-F]
(iv) While reorganising its business, it is not incumbent on a company to dev_elop its .manufacturigg side at the very place where it has
surrendered its agencies, namely, Calcutta, nor to do so at the very same
time.
These considerations which the Tribun!l took into
account were
978
SUPIU!MB couaT REPORTS
[1969] 2 S.C.R.
totally extraneous to the issue beore it and the Tribunal ought not tu
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have allowed its mind to be influenced by such consideration and thereby
disabling itself from viewing the issue from proper perspective.
The finding that the policy decision was actuated by parochial C\Jn•iderations, namely, for transferring the company's resources from Calcutta to Madras at the cost of the former, was without evidence
and
was entirely speculative. · Even assuming that the company decided to
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concentrate its activity in Madras there is nothing in the· Industrial Law
to compel it to continue its business in Calcutta. [988 D, G]
D. Marcropollo &: Co. v.
Their Employees Union
[1958] 2 L.L.J.
492, Ghatge & Patil Concern's Employee's
Union v, Ghatge &: Patil
(Transport) (P) Ltd. [1968] 1 S.C.R. 300, and Workmen of Subong
Tea Estate v. The Outgoing Management of Subong Tea Estate, [1964]
5 S.C.R. 602, followed.
(v) The liability of an employee to be transferred and the right of
the company to transfer him did not mean that there was a correspondc
ing obligation. on the company to
transfer the
employee to
another
branch. No evidence was led by the Union to show thal if transferred,
these men could have been absorbed at other places, or that there were
vacancies or that the work there was the same as was done by them
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at Calcutta.
There was no evidence whether wage scales,
dearness allowance and other conditiollll of service were the same in Madras and
other centres. It is true that the company had started developing its
manufacturing business in Madras but the Tribunal made. no
enquiry
whether these employees could have been fitted in the manufacturing
work wheo .they had done only administrative and other duties connected with the agency business, yet the Trjbunal drew the conclusion that
because the company failed to transfer these employees to other centres
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retrenchment was not justified. [989 G-990 Al
(vi) Rule 77(1) of the' West Bengal
Industrial
Disputes
Rules,
provides that when an employer finds it necessary to retrench any workmen he shall, at least one month before the date of actual retrenchment,
·give notice thereof to the Labour Commissioner and the Conciliation
Officer.
The proviso to it states that where an employer retrenches any
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workman
with immediate effect by paying him wages in lieu of notice
he shall immediately after r.uch retrenchment give notice thereof to the
said officers. Though the notice of retrenchment was not given immediately after the retrenchment but two days before it, the company had
substantially complied with the requirements of the proviso to r. 77(1).
The object of the proviso clearly is that where it is not possible for an
employer to give one month's notice to the two authorities concerned
by reason of his retrenching the employees with immediate effect, inforG
mation should be supplied to the two officers immediate.ly after such
retrenchment. If instead of giving such information after the retrenchment it is given two days before the retrenchment takes place it is hardly
possible to say that the requirement of the pro\iso was not carried out.
So long as the object underlying the proviso was satisfied it did not make
any difference that information was given a little earlier than the date
when retrenchment took place. [990 CJ
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CML APPELLATE JURISDICTION
Civil Appeal No. 284 of
1967.
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PARRY & CO. 11. P. C. LAL (She/at, J.)
979
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Appeal from the judgment and order dated December 23,
1964 of the Calcutta High Court in Appeal from Original Order
No. 90 of 1964.
S. V. 'Gupte, K. P. Bhandare and D. N. Gupta, for the appel-
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P. K. Chatterjee and P. C. Chakravarii, for respondent No. 4.
The Judgment of the Court was delivered by
Shela!, J. This appeal by certificate is directed against the judgment and order of the Division Bench of the High Court of
Calcutta setting aside the order of a Single Judge of that High
Court in a writ petition under Art. 226 of the Constitution.
The facts relevant for this judgment may first be set out. The
appellant company was at the relevant time carrying on business
at various places in India including Calcutta as merchants, selling agents and manufacturers. Its registered office is at Madras.
Its business at Calcutta was two fold : (1) as selling agents of
certain companies, and (2) of conducting an engineering workshop at Kidderpore. According to the company its agency business began to decline from 1954 and it had, therefore, to retrench
some of its employees in that year. The company consequently
decided upon a policy of reorganising its business by giving accent
to its manufacturing activities and of giving up the agencies held
by it. In pursuance of the said policy, the company relinquished
between April 1, 1960 and September 30, 1961, 13 agencies
in Bombay, 11 in Delhi, 8 in Madras and 11 in Calcutta. It
also closed down 3 of its branches in Northern India and 11 in
South India. The total staff engaged at Calcutta consisted of 75
employees in the workshop at Kidderpore and 225 in the Branch
office.
Apprehending that the said policy would result in retrenchment, the third respondent union wrote to the Deputy Labour
Commissioner requesting him to intervene stating that the Board
of Directors and the company had declared their policy of surrendering agencies and that in the result the union feared that about
60 employees would be retrenched.
The Deputy Commissioner
called for the comments of the company's manager, who in his
reply dated June 17, 1961 affirmed that the company had taken
the said policy decision in consequence of which some of the
employees would have to be retrenched. On June 20, 1961 the
Deputy Commissioner ,held conciliation proceedings during which
also the manager made it clear that in pursuance of the policy of
reorganising its business the company had decided to give up cer-
980
SUPREME ·COURT REPORTS
· (1969] 2 S.C.R.
tain agencies. On June 23, 1961 the union s~t to the company
its demands inter alia claiming (a) that the retrenchment must be
fully justified, and (b) that transfer of service to other places
in the company's organisation should be offered to those who are
willi,ng to accept such transfer. Neither in its letter to the Deputy
Commissioner nor in the conciliation proceedings, nor in the
demands of the union disputed the fact that the company had taken
the said policy decision and that the decision would result in retrenchment. Indeed, the said demands accepted the policy decision but called upon the company to pay certain amounts to those
retrenched, to retrench only to the extent fully justified and to
offer transfer to those retrenched. On June 28, 1961 the company
sent· its comments on the union's demands stating inter alia that
(1) the company would pay one month's wages in lieu of notice
as also retrenchment compensation, (2) that 25 permanent and
1 7 temporary employees would be retrenched with effect from
July 1, 1961, (3) that re-employment of retrenched workmen
would be governed by the provisions of sec. 25H, and (4) that
the company's policy being to recruit local persons at its branches, transfer from one place to another had not been frequently
resorted by the company but the company would consider transfer
of the employees concerned after employees retrenched at other
branches had first been absorbed.
On June 29, 1961 the company gave the notice of retrenchment to the employees concerned, also a notice to the Commissioner of Labour and the Conciliation Officer under sec. 25F( c), paid one month's wages to the
employees concerned in lieu of notice and also retrenchment compensation.
The State Government by its order dat,~d July 31,
1961 referred for adjudication to the Second Industrial Tribunal,
Calcutta, the question whether retrenchment of the said 52 employees was justified and to what relief, if any, they were entitled.
In its statement of claim the union inter alia pleaded that the
company had in a spirit of vindictiveness and to break the union
retrenched the said employees, that with that mala fide end in
view it gave up in the name of a policy of reorganisation agencies
although they were profitable, creating thereby an artificial condition to show fall in business and surplusage in staff, that the
company's ma/a fides were apparent in that it gave up agencies in
Calcutta only, that the company being dominated by persons from
Madras its real object was to divert its resources to Madras from
parochial and anti-union considerations, that as a result of giving
up the agencies the company had suffered in profits, that the
work-load of the remaining employees had increased, that there
was in fact no real surplusage, and lastly, that the company had
not followed while retrenching the principle of "last come first go".
The company's reply was that retrenchment was bona j~de and in
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PARRY .t CO. V. P. C. LAL (She/at, J.)
981
accordance with law, that it had relinquished all the pharmaceutical agencies, general sales agencies except one, and a number
of other agencies not only in Calcutta but also in Bombay, Delhi
and Madras, that it had absolute right to decide which business
it should continue and which to give up, that as a matter of business policy it had decided to discontinue the agency business with
the result that retrenchment had become inevitable, that the union
had indulged in incorrect, irrelevant and irresponsible allegations,
that though the actual surplusage was 66, it had retrenched only
52 employees of whom 17 were temporary, and that the question
whether the workload on the remaining employees had increased
or not was irrelevant. In support of its reply the company produced two statements. Ex. D and E, showing the number of and
places where branches were closed and the agencies relinquished.
The Calcutta branch had at the time 21 agencies out of which 11
were given up. Prima facie, the surrender of so many agencies
would result in surplusage of employees. On these pleadings and
the issues arising therefrom the only question before the Tribunal,
therefore, was whether retrenchment of 52 employees was justified.
However, the union challenged not only the legality and propriety of the retrenchment but also the propriety and reasonableness of the said policy decision alleging absence of good reason
. for relinquishing agencies and further alleging that an artificial
surplusage was caused for weakening the union and parochial considerations.
The Tribunal thought that these questions required elucidation by the company. It held that though 11 agencies
in all in Calcutta were given up, since two of them were given up
on July 1, 1961 and the third on August 1, 1961, only 8 agencies
were given up before the notice of retrenchment. The Tribunal,
however, failed to observe that notices of giving up these three
agencies were served by the company as early as May 1, 1961.
The Tribunal held that though agencies. were surrendered in
places other than Calcutta also, the company led no evidence that
the staff was retrenched in these places also and whether such
retrenched staff was absorbed in those places. In the union's statement. of cl~im, h_owever, no sue~ question. was raised, the only
questmn raised bemg that no agencies were given up in places other
than Calcutta. Next, the Tribunal rejected the company's case
about its policy of reorganising its business. The manager of the
Calcutta branch gave evidence and also produced an extract from
a speech of the mana~ing director, East India Distilleries & Sugar
Factores Ltd. of which the appellant-company is a subsidiary.
The manager also gave certain other reasons which Jed the company to give up certain agencies.
The Tribunal however rejected this evidence on the ground that the manage~ could not give
982
. SUPREME COURT. REPORTS
[1969] 2 S.C.R .
evidence about the policy decision as that was the function of the
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Board of Directors that· the extract from the said speech reflected
. the policy of the East India Distilleries Co. but not necessarily
of the appellant company and that the additional r~~son.s given
by the manager showed that the real reasons. for g1~?g up the
agencies were those reasons and not the policy dec1S1on.
The
rejection of the manager's evidence was totally unwarranted and
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the finding that the poli1;y decision was not proved was contrary
to the evidence on record. As already stated, in the union's let- ,,
ter to the Labour Commissioner, the union had based its request
for intervention on the footing that it apprehended retrenchment
as a result of the company's said policy decision.
During con-
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ciliation proceedings also the manager had clarified that retrenchc
ment was inevitable on account of the said policy decision. Besides, there was no reason why the manager could not depose
about the company's said decision. The additional reasons given
by the manager were the reasons to show why of the 21 agencies
the particular 11 agencies were surrendered. The finding of the
Tribunal that those agencies were not given up on account of
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the company's said policy was not only unwarranted but was
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contrary to the evidence on record.
The further reasoning of
the Tribunal that there could be no such policy decision because
though the agencies were given up no corresponding development
in manufacturing activities was taken up was also without foundation. The evidence of the manager was that such development
• had already. been launched in Madras and, about the time of his
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giving evidence, also at Kidderpore. That evidence was not accepted as according to th(: Tribunal the development on the manufacturing side of the company's business should have been contemporaneous with the surrender of the agencies in Calcutta. The
fact that such activities were also not undertaken in Kidderpore
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could not possibly be a reason for disbelieving the company's case
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about the said policy. To disbelieve the company's case on the
ground that no such manufacturing activity was undertaken in
Calcutta was altogether unjustified. The Tribunal next found that
there could not be any real surplusage in the staff as the company
had during the year 1960 made 17 appointments. The Tribunal
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accepted the union's case that this circumstance indicated that
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there was no need of retrenchment.
It rejected the company's
explanation that until retrenchment was decided upon and calculations were made about the extent of retrenchment, temporary
appointments had to be made in place of those who retired or
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left the company's service. Even though the agencies were given
up winding-up work in connection with them would still require
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the same staff.
Besides, all the 17 temporary employees were
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included in the list of the retrenched employees. As regards the
statement Ex. G showing surplusage of 66 employees, the Tribu-
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PARRY dt CO. v. P. C. LAL (Shela/, /.)
983
nal questioned its correctness on the ground that although f~ur
agencies were given up in 1960 no retrenchment was made durmg
that year, that on the other hand 17 temporary hands were engaged, that the evidence of the union's secretary showed that
after the retrenchment workload of the remaining employees had
increased, and lastly, that retrenchment could have been avoided
by transferring the employees concerned 10 other branches of the
company.
Though the Tribunal gave a clear finding that the
company had not resorted to retrenchment with the intention of
victimisation, yet it held that "the allegations made by' the union
(as to parochial considerations) do not appear to be unfounded
or unreasonable''. The reasons given for this observation were that
the company's head office was at Madras, that the chairman and
the directors of the company were from Madras and that the
agencies given up in Madras were less in number than in Calcutta.
On these findings the Tribunal held that the scheme of reorganisation was not sufficiently established, that mere surrender of agencies was no proof of such a scheme, that ther.efore, a good case
for retrenchment was not made out, that the company had failed
to establish the exact number of surplus employees and the extent
of retrenchment, that it failed to observe the principle laid down
in sec. 25G, that the said notice dated June 29, 1961 was not
in accordance with rule 77 of the West Bengal Industrial Disputes Rules, 1958 as the notice was of June 29, 1961 while retrenchment was to take effect from July l, 1961. The Tribunal
held that the retrenchment, therefore, was not with immediate
effect, the proviso to that rule did not apply and a notice of one
month, as required by sub-cl. 1 of that rule, was necessary and
that not having been done the retrenchment was invalid as
being in breach of sec. 25F(c). In accordance with these findings
the Tribunal ordered reinstatement and payment to the 52 employees of back wages as from July 1, 1961.
Aggrieved by this order the company filed a writ petition for
certiorari which was heard by a learned Single Judge of the High
Court. The learned Single Judge held that an employer has the
right to reorganise his business in any manner he likes for the
purpose of economy or convenience, that a Tribunal, therefore,
cannot question its propriety, the only limitation being that it
should be bona fide and not with the object of victimising employees. He observed that though the Tribunal had found that the
union had failed to establish victimisation or any unfair labour
practice, it had, yet, come to an inconsistent finding that the
probability that the union's activity would be weakened by large
scale retrenchment could not be ignored or overlooked.
The
learned Judge found that in coming to this finding the Tribunal
acted not upon evidence but on mere conjectures.
He also held
that in view of the evidence the Tribunal was in patent error in
SVPREME COlJRT REPORTS
[1969] 2 S.C.R.
rejecting the company's case of relinquishment of agencies and
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the resultant retrenchment.
He further held that the finding of
the Tribunal that the policy of reorganisation was not bona fide._
but was for parochial consideration was based on inferences for
w~ich there were no justifying premises, Lastly, he held that the
Tnbunal's finding that the company did not establish retrenchment
of 52 employees was not justified as the ground given by it, namely, (1) that retrenchment could have been avoided by transferring
the employees concerned to other centres, (2) that the principle of
"last come first go" was not followed, and (3) that the procedure under sec. 25F(c) was not observed were not warranted by
the evidence.
As regards the first ground, the learned Judge held that that
ground was not sustainable.
As to the second ground he held
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that that being a finding of fact he could not substitute his own
opinion in place of the Tribunal's and remanded that part of the
case to the Tribunal for further consideration.
Regarding the
third ground, he found that the Tribunal was in error in holding
that cl. 1 of r. 77 of the said rules applied and that a month's
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notice not having been given thereunder the retrenchment was
invalid.
He set aside the award and remanded the case to the
Tribunal for the limited purpose of enforcing retrenchment according to the principle of "last come first go''.
In appeal against the said judgment, a Division Bench of
the High Court held that the High Court could interfere in a
writ petition for certiorari with the Tribunal's findings ollly within well-recognized limits, such as, where the inferior tribunal
has acted without jurisdiction or in excess of it or where it has
acted illegally as when it acts in breach of the principles of natural justice or where there is an error of law apparent on record. The
superior court in such cases acts in supervisory and not appellat~
jurisdiction and therefore, cannot review findings of fact however
erroneous they are.
The Division Bench found that the findings
of the Tribunal that the company had failed to prove its scheme
of reorganisation, that retrenchment was effected in Calcutta only,
that the company was actuated by parochial considerations, and
therefore retrenchment was not bona fide could not be said not to
have been supported by evidence and that therefore the learned
Single Judge was not competent to interfere with those findings.
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Counsel for the company raised three contentions : (1) that
since the Tribunal had held that there was no victimisation, its
jurisdiction was limited to the consideration only whether the emH
ployees were retrenched within the meaning of sec. 2( oo') of the
Act and whether the employer's obligations under ss. 25F, 250
and 25H were complied with, (2) that the Tribunal had no juris-
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PARRY & co. v. P, c. LAL (She/at, J.)
985
diction to consider the question whether the reorganisation scheme
was for parochial considerations or otherwise, i.e., whether the
scheme had merits, which opinion is entirely managerial, and
(3) that some of the findings of the Tribunal were without legal
evidence and based on mere surmises and therefore perverse.
The contention on behalf of the union, on the other hand, was
that the scope of interference by the High Court in a certiorari
petition was limited and only on certain well-recognised grounds
and that the learned Single Judge was not correct in allowing the
petition, for, that meant interfering with findings of fact arrived
at by the Tribunal .
The grounds on which interference by the High Court is .available in such writ petitions have by now been well-estabhshed.
In Basappa v. Nagappa(') it was observed that a wri.t of certiorari is generally granted when a court has acted without or
in excess of its jurisdiction. It is available in those ~ases whe~e
a tribunal, though competent to enter upon an. enqmry, ac!s i_n
flagrant disregard of the rules of procedure or violates the prmciples of natural justice where no particular procedure is pre~
cribed. But a mere wrong decision cannot be corrected by a wnt
of certiorari as !hat would be using it as the cloak of an appeal
in disguise but a manifest error apparent on the face of the proceedings based on a clear ignorance or disregard of the provisions
of law or absence of or excess of jurisdiction, when shown, can be
so corected. In Dharangadhara Chemical Works Ltd. v. State of
Saurashtra( 2 ) this Court once again observed that where the
Tribunal having jurisdiction to decide a question comes to a finding of fact, such a finding is not open to question under Art. 226
unless it could be shown to be wholly unwarranted by the evidence. Likewise, in the State of Andhra Pradesh
& Ors. v. S .
Sree Ram Rao(') this Court observed that where the Tribunal
has dis~hled itself from reaching a fair decision by some considerations c:::traneous to the evidence and the merits of the case
or where its conclusion on the very face of it is so wholly arbitrary and capricious that no reasonable person can ever have arrived at that conclusion interference under Art. 226 would be
justified.
The question for our determination,
therefore, is
whether the learned Single Judge was within the aforesaid well
recognised limits when he set aside the award. Before, however,
we examine that aspect of the case we may first consider the scope
of the Tribunal's jurisdiction in cases of retrenchment arising
under sec. 25F of the Act.
In D. Macropollo & Co. v. Their Employees' Union(') this
Court held that if a scheme of reorganisation has been adopted
(1) [1955] S.C.R. 250.
(2) [1957] S.C.R. 152.
(3) A.l.R. 1963 S.C. 1723.
(4) [1958] 2 L.L.J. 492.
986
SUPR!lMli COURT RIPORTS
[19'69] 2 $.C.R.
by an employer for reasons of econo~y or ~onvenience: and it ~as
been introduced in all the areas of its busrness, the fact that its
implementation would lead to the discharge of some of the employees would have no material bearing on the question as to
whether the scheme was adopted by the employer bona fide or not.
In the circumstances, an industrial tribunal considering the issue
relating to retrenchment, should not attach any importance to
the consequences of reorganisation.
The resulting discharge
and retrenchment would have to be considered a~ an inevitable, though unfortunate, consequence of such a scheme. It
also held that where the finding of a tribunal is based on wrong
and erroneous assumption of certain material facts, such a finding
would be perverse. A recent decision in Ghatge & Patil' Concern's
Employees' Union v. Ghatge & Patel (Transport) (P) Ltd.(')
was a case of an employer reorganising his business from conducting a transport business himself through employees engaged
by him to conducting it through a contract system whereunder
he let out his motor trucks to persons who, before this change,
were his employees. Admittedly, this was done because he could
not implement some of the provisions of the Motor Transport
Workers Act, 1961. The change over to the contract system was
held by the Tribunal not to have been effected for victimising the
employees. The employees had voluntarily resigned and hired the
employer's trucks on contract basis. It was held tha1t a person
must be considered free to so arrange his business that he avoids
a regulatory law and its penal consequences which he has, without the arrangement, no proper means of obeying. In Workmen
of Subong Tea Estate v. The Outgoing Management of Subong
Tea Estate (2 ) this Court laid down the following propositions :
(1) that the management can retrench its employees only for
proper reasons, which means that it must not be actuated by
any motive of victimisation or any unfair labour practice, (2)
that it is for the management to decide the strength of its labour·
force, for the number of workmen required to catry out efficiently the work in his industrial undertaking must always be left to
be determined by the management in its discretion, (3) if the
number of employees exceeded the reasonable
and legitimate
needs of the undertaking it is open to the management to retrench
them, ( 4) workmen may become surplus on the ground of rationalisation or economy reasonably or bona fide adopted by the management or on the ground of other industrial or trad'~ reasons,
and (5) the right to affect retrenchment cannot normally be challenged but when there is a dispute about the validity of retrenchment the impugned retrenchment must ·be shown as justified on
proper masons, i.e., that it was not capricious or without rhyme
or reason.
(!) [1968] I S.C.R. 300.
(2) [1964] 5 S.C.R. 602.
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PAllRY & CO. v. I>. c. LAL (Shelat, J.)
987
Since this is an appeal arising from a writ petition for . certiorari we also would not interfere with the conclusions arrived at
by the Tribunal except on grounds on which the High Court
could have done.
Mr. Gupte's contention was that the findmgs
of the Tribunal were beyond its jurisdiction, that they were unwarranted by evidence on record and were based either on wrong
assumptions or mere conjectures without any foundation in ~e
evidence, and therefore, this is a fit case for our interference. It 1s
not in dispute that the company gave up 11 out of its 21 agencies
in Calcutta, that is, more than half of its agency business was given
up during the years 1960 and 1961. There was clear and unchallenged evidence that certain agencies were likewise given up
in other places including Madras.
The manager gave evidence
that this was done in pursuance of the policy decision taken by
the company to reorganise its business by concentrating more on
its manufacturing side than its agency business as the company
found the agency business unprofitable on account of import restrictions and other reasons. The Tribunal, however, rejected this
evidence on the ground that the policy decision being the function
of the Board of Directors, the manager was not competent to
depose about it and that if the company wanted to establish it
it should have produced a resolution of the Board and on that
ground held that the company had failed to prove the said policy.
In the first place we fail wholly to appreciate the Tribunal's view
that the said policy could not be proved through the manager. In
the second place, in the very first letter of the union to the Deputy
!--abou: Commissioner, as also during the conciliation proceedmgs, it was assumed that the company had taken such a decision,
that consequently retrenchment was apprehended and that therefore that officer should intervene.
In these circumstances
the
finding that the company had failed to establish its policy w~s not
only beyond the scope of the enquiry before the Tribunal but
totally invalid. As held in J.K. Iron and Steel Co. v. Iron and
Steel Mazdoor Union(') the Tribunal had to confine itself to the
pleadings and the issues arising therefrom and it was
therefore
not open to it to fly off at the tangent disregarding the pleadin~
and reach any conclusions that it thought as just and proper .
. It is well established that. it is within the managerial discretion of an employer to orgamse and arrange his business in the
manner he considers ~est. So long .as t!iat is done bona fide it is
not competent of a tribunal to question its propriety. If a scheme
for such !eorganisation results in surplusage of employees no
employer 1s expected to carry the burden of such economic dead
weight and retrenchment has to be accepted as inevitable however unfortun~te it is. The Legislature realised this positi~n and
.therefore provided by sec. 25F compensation to soften the blow
(I) [1956] I L.L.): 227.
988
SUPREME COURT REPORTS
(1969] 2 S.C.R.
of hardship resulting from an employee being thrown out of emA
ployment through no fault of his. It is not the function of the
Tribunal, therefore, to go into the question whether such a
scheme is profitable or not and whether it should have been adopted by the employer. In the instant case, the Tribunal examined
the propriety of reorganisation and held that the company had not
proved to its satisfaction that it was profitable. The Tribunal then
held (a) that the scheme was not reasonable inasmuch as the
number of agencies given up in Madras was less than that in
Calcutta, (b) that though development of manufacturing activity
was taken up in Madras, no such activity was undertaken in
Kidderpore, and (c) that the company should have devi:loped its
manufacturing activity in Kidderpore simultaneously with the surrender of the agencies. It is obvious that while reorganising its
business it is not incumbent on the company to develop its
manufacturing side at the very place where it has surrendered its
agencies, namely, Calcutta, nor to do so at the very same time.
These considerations which the Tribunal took into account were
totally extraneous to the issue before it and the Tribunal ought
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not to have allowed its mind to be influenced by such consideraD
tions and thereby disabling itself from viewing the issue from
proper perspective. It was also beyond its competence to go into
the question of propriety of the company's decision to r<:organise
its business. Having come to the conclusion that the said policy
was not actuated by any motive of victimisation or unfair labour
practice and therefore was bona fide, any consideration as to its
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reasonableness or propriety was clearly ~xtraneous. Therefore,
its finding t!1at the company ~ad failed to establish that it was profitable was mcompetent. It 1s for the employer to decide whether
a PlJ!ticular poli~y in running his business will be profitable, economic or convement and we know of no provision in the industrial
law which. ?onfers any PC:W~r on the tribunal to inquire into
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such a dec1S1on so long as 1t 1s not actuated by any consideration
for victimisation or any such unfair labour practice.
The finding that the policy decision was actuated by parochial considerations, namely, for transferring the company's resources from Calcutta to Madras at the cost of the former, was
without evidence and was entirely speculative. Even assuming that
the company had decided to concentrate its activity in Madras
there is nothing in the industrial law to compel it to continue its
business in Calcutta. As regards the Tribunal's finding that there
was no surplusage in spite of the company having given up more
than half of its agencies, the manager produced the statement,
Ex. G, showing that on his calculations there would be a surplusage of 66 employee~. The Tribunal rejected the case of surplusage on the grounds that though 4 agencies were given up
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PAllY & co. v. i>. c.