Only On Bonafide Retrenchment, Workman Not Entitled To Claim Continuity Of Service Upon Reemployment - SC

The Supreme Court has opined that only if the retrenchment of workmen was bonafide then the retrenched workmen are not entitled to claim continuity of service upon re-employment.

The Bench of Justice BR Gavai and Justice PS Narasimha observed thus "…there is no quarrel with the principle of law that re-employment of retrenched workmen does not entitle them to claim continuity of service as held in Cement Corpn. of India Ltd. v. Presiding Officer Industrial Tribunal-cum-Labour Court and Anr.9 , as well as the Maruti Udyog Ltd v. Ram Lal and Ors.10. However, the principle laid down in these judgments will only apply to cases where the retrenchment is bona fide."

In this case, 55 drivers who were also the members of the Rashtriya Mazdoor Sangh-respondents-labour union were employed by the Armed Forces Ex Officers Multi Services Cooperative Society Ltd.-appellants through a settlement. As the settlement expired fresh negotiations between the employer and the employees commenced but did not result in any easy settlement.

Following this, the employees resorted to strike. On the same day, the Appellant filed a complaint before the Industrial Court, asserting that the strike was illegal, and the employees should be made liable for unfair labour practices.

The Industrial Tribunal later directed the Appellant to allow the employees to join duties and the employees in fact joined services. When employees re-joined services, after the short period of strike, the Appellant 'retrenched' the services of all the fifty-five employees, on the grounds that Appellant had closed its business.

Respondent-Union raised concerns with the Conciliation Officer. They demanded reinstatement of all fifty-five workmen with continuity of services and back wages, contending that there was no closure of the transport activities of the Appellant. They claimed that the act of terminating all the employees is a virtual closure, which was illegal.

While the matter was being negotiated, the Appellant started offering re-employment to all the employees.

The Government referred the dispute to the Industrial Tribunal, in Pune for answering the demand of the workmen for reinstatement of fifty-five drivers with continuity of service and full back wages.

The orders of termination were set aside by the Tribunal and the workmen were directed to be reinstated with continuity of service and 75% back wages, save eight employees who admitted to gainful employment post retrenchment.

While considering the legality of retrenchment, the Tribunal noted that there was no complete shutdown of the company's transport business, and that retrenchment of all the drivers at one go amounted to closure, meted out as a punishment for resorting to strike.

The Bombay High Court affirmed the Tribunal's findings on all counts and concluded that they were well-founded on evidence and were in accordance with law.

Aggrieved appellants approached Supreme Court.

Senior Advocate, Chander Uday Singh, appeared for the appellant whereas Advocate Nitin A. Kulkarni appeared for the respondent.

The Supreme Court concurred with the findings of the Tribunal and the High Court and held thus "The Tribunal has held that the retrenchment of all the drivers followed by an offer of re-employment on new terms and conditions is not bona fide. Once the orders of retrenchment are set aside, the workmen will naturally be entitled to continuity of service with order of back wages as determined by a Tribunal or a Court of law."

The Court further observed that "The Tribunal has considered the matter in detail and after appreciating the oral and documentary evidence, the Tribunal directed reinstatement of the employees with only 75% back wages. Whether a workman was gainfully employed or not is again a question of fact, and the finding of the Tribunal as upheld by the High Court, cannot be interfered with by the Supreme Court in exercising its power under Article 136 of the Constitution of India."

Accordingly, the Court dismissed the appeal.

Cause Title- Armed Forces Ex Officers Multi Services Cooperative Society Ltd. v. Rashtriya Mazdoor Sangh

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