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Petitioner: MESSRS EMESCO INDUSTRIES LTD. VS Respondent: S. IRFAN AHMAD AND ANOTHER
Court Name: Labour Appellate Tribunal Judge(s): Z. A. Channa Title: MESSRS EMESCO INDUSTRIES LTD. vs S. IRFAN AHMAD AND ANOTHER Case No.: Appeals No. HYD-69, 70, .101 and 102 of 1982 Date of Judgment:1983-01-28 Reported As: 1983 PLC 981 Result: Order accordingly
Judgment DECISION These four appeals all directed against the decision of the learned Sixth Labour Court, given on 8th February, 1982 directing the reinstate--ment in service of five workmen, but rejecting their claim for award of back benefits. Two of the appeals are filed by M/s. Emesco Industries Limited, to which I will refer as the company, challenging the direction for the re-instatement in service of the workers, while the other two appeals have been preferred by workers Syed Irfan Ahmed and Muhammad Akram against rejection of their claim for award of back benefits. This order will dispose of all the four appeals. 2. The facts of this case, shortly stated, are that by notice, dated 9th July, 1981 the services of all the eleven employees of the company. In the twisting department were terminated on the ground that the said department has been given on contract with effect from 10th July, 1981 keeping in view the economic position of the company, and the retrenched workers were advised to collect their dues,' including one month's notice pay. It appears that six out of the eleven retrenched workers settled their accounts with the company but the remaining five retrenched workers, including workers Syed Irfan Ahmed and Muhammad Akram, challenged the retrenchment orders through separate grievance petitions filed before the learned Sixth Labour Court at Hyderabad 3. The three main grounds on which the orders of termination of services of the workers were challenged were, firstly, that the said orders were passed during- the pendency of an application for the registration of the Emesco Mazdoor Union, of which the said workers were either office -- bearers or members, secondly, that the termination of services of the workmen was mala fide and was actuated by the desire on the part of the Management to crush legitimate union activities, and thirdly, that orders of termination of services had not been served upon the workmen. The learned
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Labour Court repelled all these three contentions but was of opinion that the retrenched workers could have been given employment in the other Departments of the company and since they were senior to some of the employees in the other departments their retrenchment was in violation of Standing Order 13. The learned labour Court rejected the claim of the workers for back benefits on the ground that no evidence was led by them to show that after the termination of their services they had remained unemployed. 4. Separate appeals had been filed by the company in respect of each of the five workers who were ordered to be reinstated in service by the learned Labour Court . Similarly each of the five workers had filed an appeal against the refusal of his claim for award of back benefits. However, three of the workers. Namely, Muhammad Arshad, Muhammad Iqbal and Ali Nawaz, entered into settlements with the company and, accordingly their appeals and the appeals of the company in respect of them were disposed of in terms of the said settlement. As such, only the two appeals of the company against the workers, Syed Irfan Ahmed and Muhammad Akram, and the latters' appeals against the rejection of their claim for award of back benefits remain to be considered. 5. I have heard Mr. Kamal Mansur Alam, who appeared for the company, and Mr. Wasiullah Qureshi, who appeared for the two workmen, Syed Irfan Ahmed and Muhammad Akram. In view of the fact that one of the issues involved in these appeals was whether an employer, while giving the whole or part of the work in an establishment on -contract, was entitled to terminate the services of the workmen employed on such work, and if so on what terms, which issue was of general application and consequently of considerable importance, it was decided to hear amicus curiae in respect of this issue. In response to the notice in this behalf from this Tribunal, Mr. Mahmood Abdul Ghani, Mr. Muhammad Humayoon, Mr. A. Hafeez and Mr. Syed Qamaruddin Hasan were heard on the said issue. 6. Before taking up the above issue, l will dispose of the submissions of Mr. Wasiullah Qureshi and Mr. Kamal Mansur Alam on the other issues and points canvassed by them in these appeals. It was contended by Mr. Wasiullah Qureshi that giving of contract by the company of the twisting department was mala fide. The grounds on which the learned counsel for the two workmen based his contentions were, firstly that this decision was taken by the company as soon as the workers in the twisting department had decided to form a union for the protection of their interests and had applied to the Registrar, Trade Unions, for registration of their union, secondly that most of the office-bearers of the said union were working in the twisting department, and thirdly, that the so- called contract in respect of the twisting section was a manipulated and benami transaction as it was not given to an independent contractor but to a person who was employed as a supervisor in the company. On the other hand the case of the company is that for the better working of the company and on account of economic reasons, as asserted in the orders of retrenchment of the workers, it was decided long before . The formation of the workers union by the employees in the twisting department to give the said department on contract and that in fact the workers in the said department on learning of this decision of the company hurriedly formed a union in an attempt to prevent the company from implementing this decision. In support of their contentions that the giving of the twisting department on contract was necessitated by economic consideration and that this has been amply justified by the results and output after giving of the department on contract, the company has filed statements of expenses and the production in the twisting department before it was given on contract and for the period after it was given on contract. According to these statements, before the said department -was given on contract, the total monthly expenses on the eleven workers in two shifts in the said department was Rs. 7,511, p.
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m., actual production by these eleven workers per shift, before giving of department on contract was 456 Kgs. After the giving of the department on contract, the actual production per shift increased to 550 Kgs. While the total monthly expenses per shift came down to Rs. 2,860, resulting in net savings to the company of Rs. 1,978 per month per shift, besides increase in the production by 94 Kgs. Per shift per day. These statements and figures have not been disputed or controverted by the two workmen. The factum of the twisting department being given on the contract by the company has been established through the contractor, Zafar Iqbal, who has produced a photostat copy of the contract agreement entered into by him with the company in this behalf. This witness has admitted that previously he was working in the company ,as shift supervisor but since taking the contract of the twisting department from the company he has left the job and has been replaced by Syed Aqdas Ali, The witness has further stated that since he has taken over on contract the work of the twisting depart--ment, the quality of the material produced is superior to what it was before the contract. It would, thus appear that by reason of giving the twisting department on contract not only has the company effected a substantial reduction in its expenses but at the same time has increased the production as well as improved the quality and work of the twisting department. 7. There also appears to be little substance in the contention of Mr. Wasiullah Qureshi that the company decided to retrench the services of the employees in the twisting department as a measure of victimization on account of their decision to form a Trade Union. Accord--ing to the grievance petitions filed by the two workmen, the decision to form the Emesco Mazdoor Union was taken in a General Body Meeting held on 28th June, 1981. However, from the letter; dated 25th June, 1981 addressed to the Mills Manager by the Executive Director of the company, it appears that the Board of Directors of the company had decided prior to 25th June, 1981 to give the work in the twisting department on contract. The particulars of the contract were actually approved by the company by their letter, dated 4th July, 1981 and the contract was actually executed on 10th July, 1981. `It was submitted by Mi. Kamal Mansur Alam that it could not have been a secret from the workers in the twisting depart--ment of the company that the Board of Directors had in June, 1981 decided to give the said department on contract and it was clearly in consequence of that decision that the workers had hurriedly held a meeting to form a Union to resist the implementation of the said decision. Taking all the facts into consideration I am inclined to think that the contention of Mr. Kamal Mansur Alam, does, have substance. In any case the mere fact that the two events, one of formation of workers' union by the employees of the company and the other the giving of the twisting department on contract, took place at about the same time cannot be itself justifiably lead to the inference that the company had decided to give the twisting department on contract 'merely by reason of the formation of a workers' union. 8. There is another circumstance suggesting that the formation of the workers union was in consequence of the decision of the company to give the twisting department on contract rather than the decision to give the twisting department on contract was in consequence of the formation of the workers' union. According to Mr. Wasiullah Qureshi most of the office-bearers of the workers' union belonged to the twisting depart--ment. The total number of employees in the said department admittedly was only eleven. It would be highly improbable for the majority of the office-bearers of the workers' union to be employees in the said department unless those employees took an active part in the formation of the workers' union. This, in turn, would indicate that it was mainly at the instance of the workers in the twisting department that the new workers' union was formed, who apprehended serious danger to their employment on account of the company's decision to give the twisting department on contract. On a careful appraisal of all the circumstances in the case, I am of the view that the workers have failed to establish that the giving
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on contract of the twisting department was mala fide and was motivated by a desire on the part of the company to crush the union activities of the workers. 9. It was next contended by Mr. Wasiullah Qureshi that inasmuch as the services of the two workers were terminated during the pendency of the application for the registration of the Emesco Mazdoor Union, of which. Workman Seed Irfan Ahmed was the President and workman Muhammad Akram was elected as cashier, and as further as the list of office-bearer of the union had been furnished to the company, the orders of termination of services of the two workmen are invalid, being in violation of section 8-A, I. R. O. Section 8-A, prohibits the transfer, discharge, dismissal or award of any other punishment to an officer of a trade union or workmen, during the pendency of an application for registration of the trade union with the Registrar save with the prior permission of the Registrar, provided that the union has notified the names of the office-bearers of the union to- the employer in writing. An essential pre-condition for the application of the bar under section 8-A is notification of the names of the office-bearers of the trade union to the employer in writing. 1n the instant case, the orders of termination of services of the two workmen were issued on 9th July, 1981 and on the same day were admittedly pasted on the Notice Hoard of the factory while the notice to the employer giving the names of the office-bearers of the Union is claimed by the workers to have . Been sent to the company on 6th Jttty;,1981. The said notice is not on the record of 'the two cases filed by the workmen but in para. 5 of their reply statement the company has admitted that information .Alongwith list of office-bearers was sent to the company to the effect that the workers' union was formed on 6th July, 1981. The reply statement, however, does not indicate when this information was actually received by the company. It has, however, been clarified by Muhammad Usman, the Technical Manager of the company, that information about the formation and the registration of the union was given to them through a letter of the Labour Department received in the third week of July, 1981. Since there is neither any evidence nor any admission on the part of the company that information to regard to the names of-office-bearers was given to the company prior to the issuance of the notice, dated 9th July, 1981 the essential requirement for the application of section 8-A is wanting. Moreover, the bar in section 8-A appears to be restricted to actions in the nature of award of punishment to workmen or office-bearers of workers' union and not to re-organization or termination of services simpliciter, as in the present case. In the case reported as Corning Glass (Pakistan) Ltd. v. Muhammad Hanif (1981 PLC 361), it was held by this Tribunal, following the decisions of the Supreme Court in the cases of Pakistan Petroleum Workers' Federation v. Burmah Shell Oil & Storage Co. (PLD 1961 SC 479) and Zeal Pak Cement Factory Ltd. v. Chairman, West Pakistan Industrial Court (1965 PLC 216), that termination simplicitor on account of bona fide reorganization during the -pendency of an industrial dispute does not attract the provisions of section 47, I. R. O., as the key words in the said section are "otherwise punish" and "termination of services simplicitor cannot be considered to be in the nature of a punishment". As the bar contained in section 8-A, I. R. O. Is substantially similar to the one contained in section 47, I. R. O., the above decisions would, by analogy, also be applicable in the cases of action under section 8-A, I. R. O. 10. Mr. Wasiullah Qureshi was unable to- cite any authority supporting the view that the termination of services simplicitor in case of bona fide reorganization or other valid reason, was prohibited by section 8-A, I. R. O. 11. This brings me to a consideration of the main issue involved in this case, namely, whether the company was entitled to give the twisting department on contract, and if so, whether it was further entitled to terminate the: services of the employees in the said department. In support of hits contention that such action on the part of the employer was valid and legitimate, Mr. Kamal Mansur Alam relied upon thedecisions reported as Climax Weaving Factory v. Muhammad Rafique (1980 PLC 301), Muhammad Umer and others v. M. M. Ispahani Ltd. (1980 PLC 888), M/s. Gizri
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Corporation Ltd. v. Noor Muhammad (1980 PLC 1094) and a decision of the Indian Supreme Court reported as Macropollo & Co. Ltd. v. D. Macropollo & Co. Employees' Union (AIR 1958 SC 1012). Mr. Mamood Abdul Ghani substantially supported the contention of Mr. Kamal Mansur Alam and cited the cases reported as Tatanagar Foundry Company v. Their Workmen (1962 PLC 1265), Ghatge and Patil Concerns' Employees' Union v. Ghatge and Patil (Transport) (Private) Ltd. ((1968) I L L J 560), Wokrmen of M/s. Sur Iron & Steel Co. Ltd. v. M/s Sur Iron & Steel Co. Ltd. ((1969) 18 F L R 223), M/s. Parry ePc Co. Ltd. v. P. C. Paul and others ((1970) 2 L L J 429), Karachi Oil Mills Piece-rated Workers' Union v. Tariq Oil Mills (1977 PLC 345), Hafiz Textile Printing Works Lyallpur Rashid (1977 PLC 373), Sattar STIR Industries v. Muhammad Hanif and another (1981 PLC 555) Muhammad Shaiq v. Kohinoor Battery (1982 PLC 175) and Royal Calcutta Club v. Third Labour Court (1959-1960) 64 C W N 186) . Mr. Muhammad Humayoon also supported the contentions on this issue of Mr. Kamal Mansur Alain and submitted that clause (1) of Standing Order 12 gave a right to the employer to terminate the services of even a permanent workman on one month's notice, provided that the termination was not otherwise in violation of the law or the termination did not require the permission of the Registrar, Trade Unions, the Labour Court or other authority, as in cases covered by sections 8-A and 47, 1. R. O., and Standing Orders 11 and 11-A. Mr. A. Hafeez cited the cases reported as Zeal Pak. Cement Factory Ltd. v. Chairman, West Pakistan Industrial Court (PLD 1965 SC 420) and P. I. A. Shaver and Farm Ltd. v. Rahim Bux (1980 PLC 1224) in support of his contention that termination of services simplicitor on account of bona fide reorganization, including giving of contract of works to an independent contractor is permissible. Mr. Syed Qamaruddin Hasan submitted that if the giving of work on contract would result m the work being better performed and being more economically performed not only the giving of such work on contract would be permissible but further if in consequence thereof, retrenchment of workers had to be effected, the retrenchment would also be equally permissible. Even Mr. Wasiullah Qureshi, the learned counsel for the workmen, conceded that giving of work on contract by the employer is permissible and or bat account services of workmen could validly be terminated, provided that such action is taken bona fide and not as a cloak to get rid of workers or to crush genuine union activities. 12. Clauses (1) and (2) of Standing Order 12 empower an employer to terminate the services of any workman, provided that the termination of services is not for reasons of misconduct the termination orders are to writing, such orders explicitly state the reasons for the, action taken anti in the case of a permanent workmen, he is either given one month's notice or pay in lieu of notice. No doubt clause (3) of Standing Order XII entitles a workman aggrieved by the termination of his services to prefer a grievance petition under section 25-A, I. R. O., but a grievance petition under section 25-A, I. R. O., can only be filed in respect of any right guaranteed or secured to the workman by or under any law or any award or settlement. As such the grievance petition of the two workmen can only succeed if it can be shown that in terminating the services of the two workmen either the requirements of clauses (1) to (3) of Standing Order 12 have not been complied with or any other right, guaranteed to the workmen by a law settlement or award, has been violated. It may be[ pointed out that there are several provisions in the labour laws, such a, s those contained in sections x-A and 47, I. R. O., Standing Orders 11 and II-A, section 72 of the Provincial Employees' Social Security Ordinance, 1965, etc., which prohibit or restrict the termination of services of workmen except under specified circumstances or with the approval of a specified authority. In the instant case, admittedly, the order terminating the services of the two workmen is in writing, states the reason for terminat--ing their services, which is that the twisting section in which they were employed had been given on contract to an independent contractor, and also specifically states that the retrenched workmen would be entitled to one month's pay in lieu of notice. The order
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terminating the services of the two workmen, thus, can only be validly assailed on the ground that the action taken is either male fide or in contravention of any law, settlement or award. 13. I have already examined the contention of the two workmen that the action taken by the company. In terminating the services of the two workmen was male fide and was motivated by a desire to crush the legitimate union activities of the workmen and have repelled the same. There is nothing in the evidence on the record to indicate that the orders terminating the services of the two workmen are in contravention of any subsisting award or settlement. It thus remains to be considered whether the termination of services of the two workmen are in violation of any law or to put it conversely whether the company was entitled to give the twisting section on contract and on that ground to terminate the services of the workmen employed in the twisting section. Mr. Wasiullah Qureshi was unable to cite any provision of law prohibiting the giving of any work in an industrial establishment to a contractor and in fact conceded that the employer_ had the right to do, so, provided that the action was not male fide. If the employer has a right to manage his business in any manner he deems best, including the giving of any worm on contract, it necessarily follows that he would also be entitled to terminate the services of the workmen employed to do the work which is being given on contract, provided that the termination of services of p such workmen is not prohibited by law and further the termination of services is in accordance with the Standing Orders. I have already indicated that the requirements of the Standing Orders have been full' v complied with in the instant case, that the termination of services of the two workmen was not male fide and that no law was cited which prohibited the termination of their services. I am supported by a wealth of authorities on the issue that not only is an employer entitled to give any part of the work of his establishment on contract to an independent contractor but also is entitled to terminate the services of the workmen employed to do such work, provided that such action is bona fide and the termination of services is not hit by any provision of law. 14. I would first refer to the authorities on the subject from the Indian Jurisdiction. In the case of Macropollo & Co. The admitted facts were that prior to 1946 the outdoor salesmen who sold cigarettes on behalf of the company were in the employment of the company's distributors but in 1946 owing to communal riots this method of distribution and sales was abandoned and the company took the outdoor salesman in its direct employment in order to organise them on communal basis in the then prevailing circumstances. In 1954, the company came to the conclusion that it was not practicable from the business point of view to continue its outdoor sales department and so the company decided to close down the said department, to retrench the outdoor salesmen and to operate through the distributors. The workmen's union raised an industrial dispute in respect of the termination of services of the fourteen outdoor salesmen and the matter was referred to the Labour Court under sections 7 and 10 of the Industrial Disputes Act, 1947. The Labour Court found that the company terminated the services of the workmen in question as a matter of unfair labour practice and, thus, victimized them for their union activities. In the result it ordered that the retrenched outdoor salesmen should be reinstated together with back benefits. The matter was taken up in appeal to the Supreme Court of India; which set aside the orders of the Labour Court and held that if a reorganization scheme had been adopted by the employer for reasons of economy and convenience and it has been introduced in all areas of its business the fact that its implementation would lead to discharge of some of the employees would have no material bearing on the question whether the reorganization has been adopted by him bona fide or not. 15. In the case of Royal Calcutta Golf Club v. T. I. Tribunal, the facts were that the Royal Calcutta Golf Club decided to terminate the services of their female workers and to give the work which was
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being performed by them on contract as it was found difficult to supervise the work of the female workers and further it was felt that the women workers could not in any way produce the desired efficiency. The Industrial Tribunal, to which the matter was referred under section 10 of the Industrial Disputes Act, 1947, directed the reinstatement in service of the retrenched female workers on the ground that the work on which they were employed was continuing. The matter was taken up to the Culcatta High Court by the Golf Club and the High Court while quashing this direction of the Industrial Tribunal observed as follows :- "The Industrial Disputes Act has introduced a considerable restriction on such rights. It is not possible to dismiss workmen at will. Complicated rules have been laid down for regulating dismissals, retrenchments, lock-outs, etc. We are, however, not…
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