1982 PLP 179 (PLC)

These appeals by the Utility Stores Corporation of Pakistan Ltd., a Government-controlled and Government-rust organisation, are directed against the decision of the learned Vth Labour Court, given on 30th April, 1981, holding that the termination of services of the 9 respondents herein was invalid and directing the appellants to re -instate them with full back benefits.

2. The appellant corporation is stated to have run into losses and financial difficulties and in consequence on or about 11th February, 1980, it terminated the services of a large number of employees, stated to be about 306, including the 9 respondents, of whom 5, namely; Ghous Buksh, Shaukhat Ali, Muhammad Sharif Khalid, Kafil Ahmed and Mehboob Noorul Amin are said to have been Stores Managers, and the remaining 4' respondents are said to have been Stores Supervisors. In each caste, it was specifically stated in the order of termination of services that the action had been necessitated on' account of excessive staff, for in excess of the requirements, and consequently there load been a retrenchment in service and re-organisation in the corporation. The respondents challenged the termination of their services, by way of separate grievance petitions before the learned Labour Court. These grievance petitions were resisted by the appellant corporation on the 2 main grounds that the respondents were appointed in a supervisory capacity and hence are not workman for the purposes of the Standing Orders and consequently, their grievance petitions are not maintainable and that further the termination of services of the respondents was due to bona fide retrenchment of the staff and hence could not be validly questioned or interfered with by consent of the parties all the grievapce petitions of the respondents were consolidated and heard together. The learned Labour Court has repelled both the objections of the appellant corporation. It has held, mainly relying on its own decision in the grievance petition filed by the Store' Manager of the Bata Shoe Company and the decision given by a single Member of, the National Industrial Relations Commission in the same tiled by such Stores Manager, that the respondents are workmen for the purposes of the Standing Orders, and consequently, their grievance petition are maintainable. On the second issue, though the learned Labour Court hoe not questioned the contention of the appellant Corporation that there was bona fide retrenchment of its employees, it has taken the view that as the appellant Corporation has failed to adduce tangible evidence that the retrenchment was on the principle of "last in first, to go therefore, the termination of services of the respondents was invalid. Aggrieved by this decision the appellant Corporation has filed separate appeals in respect of each respondent. These appeals have been heard together and are being disposed of by this Order.

3. I have heard Mr. Talib H. Rizvi and Dr. Yousuf Zai, the learned counsel for the appellant corporation, and Mr. Abdul Majeed, the learned representative for the respondent.

4. It was strongly urged by Mr. Talib Hussain Rizvi-- (1) That the termination of services of the respondents was on account of bona fide retrenchment and in accordance with the principles of such retrenchment; (2) That the respondents are not workmen for the purposes of the Standing Orders, and hence, they were not entitled to file and maintain grievance petitions against the termination of their services.

5. In regard to his first contention, Mr. Talib Hussain Rizvi submitted that as there were recurring losses in the appellant corporation, the organization, with the approval of the Central Government, decided to re-organise the working of the corporation and in consequence there was considerable retrenchment. He submitted that the bona ,fides of the retrenchment can be gathered from the fact that not a single person has been employed in the corporation in place of the retrenched staff. In support of his contention, Mr. Talib Hussain Rizvi relied upon paragraphs 4, 5 and 6 of the affidavit in evidence of Malik Muhammad Fareed, the Divisional Manager of the appellant corporation. The said paragraphs read as follows:- (4) That over the years, the respondent suffered considerable losses in business and was obliged to reorganize its administrative set up and retrench some of the staff which were surplus to the requirement of the respondent. (5) That the respondent, as a result, retrenched the aforesaid Stores Manager throughout the country having regard to his seniority in his grade. (6) That the applicant alongwith others whose case hits been consoli dated for purposes of evidence were working as Sore Managers, and in their respective grades and being redundant were accord ingly retrenched from service with one month's notice pay in lieu of notice by letter dated 11th February, 1980 issued by the respondent's Head Office at Islamabad which was received by the applicant on 14th February, 1980:"

6. Mr. Talib Hussain Rizvi further submitted that the respondent in their evidence had not contended the position that either there bad been recurring losses in the appellant corporation or that these losses necessitated retrenchment of the staff, but on the other band, it had been admitted by respondent Kafil Ahmed in his cross-examination before the learned Labour Court that he knows that the respondents (appellants herein) suffered losses all along with the result that retrenchment took place throughout the country. In view of the above evidence, it is established that the appellant Corporation had been suffering lasses and that in consequence it took the remedial measures of retrenchment. It is well settled that an employer has an inherent right to retrench its employed provided that the rastrenchment is bona fides and justified. In the caw of Sind Pantont Tiles Ltd. v. Karachi Factories Workers Union (1947-1957 L L C S I-189), the Industrial Tribunal held that where a company has suffered losses necessitating retrenchment of Labour, it has inherent right to make such retrenchment. The Indian Supreme Court, in the case of Swadasantran Ltd., Madras v. Their, Workmen (1961 P L E 95), has observed that when dealing with a question of retrenchment the Industrial Tribunal has to consider its two aspects viz. (i) was the employer justified in coming to the conclusion in exercise of his management function that a certain number of workmen had to be retrenched and, (ii) if yes, has the retrenchment been properly carried out" The Industrial Tribunal, East Pakistan, in the case of Karnaphuli Paper Mills Ltd., Chittagong Workers Union v. Karnaphuli Paper Mills Ltd. (1962 P L C 525) has held that "it is always within the competence of the employer to curtail expenditure by retrenchment of staff or other means". The Industrial Court of West Pakistan, in the case of Bata Shoe Company (Pakistan) Ltd., v. Muhammad Amin and others (1961 P L C 619) took a similar view as the Industrial Tribunal of East- Pakistan and observed that "it is conceded as a normal and necessary incident to industry and so long as it is not mala fide and is not prompted by unfair labour practice, the Industrial Court would not interfere with it because any interference might in the long run damage the industry irreparable." My learned predecessor, in the case of Messrs Adarts Ltd., Karachi v. Jawed Saeed (1974P L C Note 13 at p. 8), has held that "it is an inherent right of an employer to so arrange his business as to, enable him to, earn profit and where the business position was below normal, termination of service by way of retrenchment was considered to be bona fide."- In the case of Corning Glass (Pak.) Ltd., K4rachi v. Muhammad Hanif and another (1981 P L C 361), this Tribunal referred to a numbers of authorities on retrenchment, including the circumstances when it was justifiable, and came to the conclusion that retrenchment of services of employees in consequence of bona fide re-organization was permissible even during the pendency of an industrial dispute. This view was mainly founded on the decision of the Supreme Court in the case of Zeal Pak. Cement Factory Ltd. v. Chairman West Pakistan Industrial Court (P L D 1965 S C 420), wherein it has been held that discharge of redundant workers after notice as a measure of re-organization carried out for bona fide purpose of industry without any taint of victimization does not attract control of Industrial Court under section 30 of the Industrial Disputes Ordinance, 1959". Before concluding my discussion on this issue, I would refer to the decision of a learned Single Judge of the Lahore High Court in the case of Pakistan Tobacco Company Ltd. v. Punjab Industrial Appellate Tribunal Lahore, who has taken the view that the power to re-organize, mechanize or Improve upon the industrial process of an industrial establish meet was unconditional and more or less absolute provided that there was bona fide re-organization for, better management or to increase productivity.

7. It next falls to be considered whether the retrenchment has been properly carried out and the principle of "last in first to go out" has been followed in the instant case. As already pointed out the view taken by `learned Labour Court ' is that the appellant corporation has failed to establish that this principle has been followed in the instant case. With respect to the learned Labour Court, it appears that the view taken by him is misconceived. In paragraph 7 of the reply statement by the appellant corporation, it was specifically asserted that the services of the respondents were terminated strictly in accordance with the provisions of Standing Order 12 read with Standing Order

13. The principle of ."last in first to go out" is statutory enshrined in Standing Order

13. The stand of the appellant corporation thus was that it had complied with this statutory requirement. This stand was reiterated by Malik Mohammad Fareed, the Divisional Manager of the appellant corporation, in this affidavit before the learned Labour Court. In paragraph 5 of his affidavit, he has expressly stated that the Stores Managers throughout the country were retrenched having regard to their seniority in their grades. On the other hand, none of the respondents, in their grievance petition alleged that in carrying out the retrenchment, the provisions of Standing Order 13, bad not been followed. In fact, respondent, Kafil Ahmed has stated in his cross-examination before the learned Labour Court that all the managers and supervisors except 2 supervisors and 2 managers have been retrenched. It is not even alleged by any of the respondent th'at they were senior to the 2 supervisors and 2 managers who have been g retained in service. In the circumstances, no duty was cast on the appellant corporation to produce documentary evidence as to the relative seniority of the respondents stores managers and stores supervisors. I am, therefore, of the view that the requirements of 'Standing Order 13 were complied with in the instant case. At any rate, there is nothing on record to indicate that there had been an infringement of the provision of the said Standing Order.

8. It was, however, argued by Mr. Abdul Majeed, the learned representative for the respondents, that the so-called retrenchment was merely a cloak or a device adopted by the appellant corporation to get rid of the service of their employees against whom they had levelled serious charge, without following the procedure prescribed in Standing Order

15. This contention of the learned representative is based upon paragraph 7 of the affidavit of the appellants witness, Malik Mohammad arced, that at the time that the applicant was retrenched, he was working s manager Incharge of the stores and goods worth several thousand trusted to his charge were found to be short, and the admission of respondent Kafil Ahmed in his cross-examination that a case against some of the respondents had been referred to the F I A. It is, however, clear that the issue of shortage of stores of defalcation came to the notice of the appellant corporation after the termination of services of the respondents. Moreover, the termination letter makes no mention of any shortage of stores or defalcation on the part of the respondent and merely states that it was necessitated on account of the reorganization and over staffing in the appellant corporation. It is thus clear that the services of the respon dents were not terminated on account of misconduct but due to bona fide retrenchment necessitated by continued losses in the working of the appellant corporation.

9. In view of my finding that the services of the respondents were lawfully terminated on account of bona fide re-organization, and that further there has been no violation of the provisions of Standing Order 13 I find it unnecessary to examine and consider toe other issue raised, i.e whether the respondents are workmen for the purposes of the Standing Orders and their-grievance petitions were consequently maintainable.

10. For the reasons discussed by me above, I would set aside the impugned decision of the learned Labour Court and would allow the appeal. The amount of back benefits deposited by the appellant cor poration in pursuance of the order, dated 21st June, 1981, of this Tribunal is ordered to be returned to it.