Supreme Court Upholds Reinstatement of Retrenched Workers in Maharashtra Dispute

The case of Armed Forces Ex-Officers Multi Services Cooperative Society Ltd. vs. Rashtriya Mazdoor Sangh (INTUC) revolves around the legality of the retrenchment of fifty-five employees following a strike. The Supreme Court upheld the Bombay High Court’s decision affirming the Industrial Tribunal’s ruling, which reinstated the workers with 75% back wages.

Background of the Case

The appellant, a cooperative society run by ex-officers of the armed forces, provided support services such as transportation and security. The respondent, Rashtriya Mazdoor Sangh (INTUC), represented fifty-five drivers employed by the appellant. A wage settlement had expired in 2004, and negotiations for renewal failed, leading to conciliation proceedings in 2007.

During conciliation, on January 23, 2007, the employees went on strike demanding better pay and permanent employment. On the same day, the appellant filed a complaint before the Industrial Court, claiming the strike was illegal. The Tribunal issued an interim order restricting the workers from obstructing business operations. The employees resumed work on March 16, 2007, but days later, on March 22, 2007, the appellant terminated their employment, citing business closure.

Legal Issues Before the Court

Whether the retrenchment of all fifty-five workers constituted a lawful closure or a disguised punitive measure.
Whether the appellant’s offer of re-employment to the retrenched workers was legally valid.
Whether the reinstatement with 75% back wages was justified.

Arguments Presented

Petitioner’s (Appellant’s) Arguments

The appellant argued that the illegal strike caused contracts to be terminated, necessitating workforce reduction.
They contended that their offer of re-employment was lawful under Section 25H of the Industrial Disputes Act.
The appellant challenged the award of 75% back wages, stating that some workers had found alternative employment.

Respondents’ (Workers’ Union) Arguments

The union argued that the retrenchment was not a genuine closure but a retaliatory measure.
They highlighted that the business continued and that workers were later offered re-employment on different terms.
The Tribunal correctly awarded back wages since most workers remained unemployed post-termination.

Supreme Court’s Observations

On the Legality of Retrenchment

The Supreme Court, comprising Justice B.R. Gavai and Justice Pamidighantam Sri Narasimha, held that the retrenchment of all employees amounted to a closure disguised as reorganization.

“The act of terminating the services of all the drivers at the same time, coupled with the statement of the Appellant that the entire business is closed down, was sufficient to convey to the workers and the Union that the transport business had come to a standstill.”

On the Offer of Re-Employment

The Court noted that the offer of re-employment lacked bona fide intent.

“Once the retrenchment is found to be illegal, the offer of re-employment without continuity of service does not pass legal muster.”

On the Award of 75% Back Wages

The Court upheld the Tribunal’s findings on back wages.

“Whether a workman was gainfully employed is a question of fact, and the Tribunal’s findings on this issue cannot be interfered with in an appeal under Article 136 of the Constitution.”

Judgment and Its Implications

The Supreme Court dismissed the appeal and upheld the Bombay High Court’s order.

The retrenchment was set aside, and the workers were reinstated with continuity of service.
Seventy-five percent back wages were awarded, except for eight employees who found alternative employment.
The judgment reaffirms workers’ rights against unfair labor practices.

Significance of the Judgment

Protects Workers’ Rights: The ruling prevents arbitrary retrenchment and disguised closures.
Strengthens Industrial Tribunal’s Role: It underscores the Tribunal’s power to reinstate wrongfully terminated employees.
Reinforces Back Wage Principles: The judgment clarifies the legal standards for awarding back wages.

Conclusion

The Supreme Court’s ruling in Armed Forces Ex-Officers Multi Services Cooperative Society Ltd. vs. Rashtriya Mazdoor Sangh (INTUC) is a landmark decision affirming that retrenchment cannot be used as a tool for retaliation. The verdict upholds industrial jurisprudence, ensuring fair treatment of workers while maintaining the balance between business interests and labor rights.

Petitioner Name: Armed Forces Ex-Officers Multi Services Cooperative Society Ltd..
Respondent Name: Rashtriya Mazdoor Sangh (INTUC).
Judgment By: Justice B.R. Gavai, Justice Pamidighantam Sri Narasimha.
Place Of Incident: Maharashtra.
Judgment Date: 10-08-2022.

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