1998 PLP 490 (PLC)

This petition is directed against the order dated 24-11-1994 passed by the learned Presiding Officer, Sindh Labour Court No.III (respondent No. l) on the application under Standing Order 11-A of the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 (hereinafter referred to as the Standing Orders Ordinance, 1968). Briefly stated the facts of the case are that respondent No.2 being a private limited company has been engaged in the manufacture of beverages (soft drinks) under the trade name of 7-Up/Diet, 7-Up and Like Cola. The petitioner is a trade union of the workmen employed in the establishment of respondent No.2. The Directors and shareholders of the respondent No.2 were changed with effect from 26-1-1992 and its shares were purchased by the new management which is also running another beverage manufacturing organization under the name and style of "Pakistan Beverages Ltd." The petitioner alleged that after purchasing the shares of the respondent No.2 the new management with ulterior motives and to get rid of its workmen decided to close the business and also to wind-up the company therefore, resolution dated 18-2-1992 was passed for that purpose and thereafter application under Standing Orders Ordinance, 1968 was filed on 12-3-1992 before respondent No.1 seeking permission to close down the whole of its establishment and also to terminate the services of the workmen on the ground that the company had been suffering losses from 1988 onwards and that there was no chance of recovery in future. That application was contested by the petitioner/union who denied the claim of the respondent No.2 having suffered any losses. Parties led their evidence. The respondent submitted affidavit in evidence of their notified Factory Manager Mr. Muhammad Ismail Zara. He was cross-examined at length by Mr. Khalilur Rehman representative for the applicant. Mr. Sadik Ali Shah, the General Secretary of the Union filed his affidavit-in-evidence on behalf of the petitioners and he was also cross -examined by Mr. Abdul Hafiz learned counsel for the respondent/applicant. After hearing both the sides the learned Presiding Officer passed the impugned judgment. I have heard learned counsel for the parties at length and perused the record. Learned counsel for the petitioner submitted that; (a) there was no evidence to warrant the order of the Sindh Labour Court granting permission to respondent No.2 to close its establishment. The plea of respondent No.2 that it was incurring losses was belied by the statement of its manager that no attempt was made to run the organization after it was taken over by the new management; (b) the new shareholders transferred the business of respondent No.2 to another company which was also owned by them and their object in closing down respondent No.2 was to get rid of the workmen of respondent No.2. The application under Standing Order 11-A was, thus, mala fide and with ulterior motive; (c) the Sindh Labour Court (respondent No. l) acted unlawfully by granting absolute permission for closure of the establishment of respondent No.2 without having kept in view the interest of a number of workmen who were going to be rendered unemployed. The Labour Court, thus, acted contrary to the purpose of Standing Order 11-A of the Standing Orders Ordinance, 1968 which was introduced to prevent victimisation of the workers by the unfair and arbitrary action of the employer. In support of his submissions the learned counsel for the petitioner cited M/s: Tatanager Foundry Co. Ltd. v. Their Workmen AIR 1970 SC 1960 and Banaras Ice Factory Ltd. v. Its Workmen AIR 1957 SC

168. Learned counsel for the respondent submitted that keeping in view the evidence brought on record no ground has been disclosed entitling the petitioner to the relief claimed in this petition. He also supported the impugned judgment and referred to the audit report, evaluation survey report as well, and further submitted that dues have also been paid to the workers. Therefore, no case at all has been made out for interference with the impugned judgment. Learned counsel for the respondent No.2 relied upon South British Insurance Employees' Union v. The Sindh Labour Court No.4 and others 1975 SCMR 49; Fouji Foundation and another v. Shamimur Rehman PLD 1983 SC 457; Muhammad Yasin v. Shabir Ahmed 1985 CLC 2111; Rana Mukhtar Ahmed v. Punjab Labour Appellate Tribunal and 2 others PLD 1992 SC

118. It would be advantageous to reproduce Standing Order 11-A of the Standing Orders Ordinance, 1968 as under:-- "11-A. Closure of establishment.

Notwithstanding anything contained in Standing Order 11, no employer shall (terminate the employment of more than fifty per cent. of the workmen or) close down the whole of the establishment without prior permission of the Labour Court in this behalf, except in the event of fire, catastrophe, stoppage of power supply, epidemics or civil commotion." The learned Labour Court was required to keep in view and follow the ingredients of the above-quoted provisions of law in letter and spirit but after having gone through the impugned judgment in the light of relevant record I am left with no doubt in my mind that the Labour Court neither adverted to the real controversy involved in the case nor did it examine the name in the real perspective. The Court even failed to narrate what it was called upon to decide in the case and merely reproduced the submissions of the parties and their evidence without having judiciously considered them. Standing Order 11-A, which has been reproduced above makes permission of the Labour Court a condition precedent to the termination of employment of more than 50 per cent. of the workmen or closing down the whole of the establishment except in the event of fire, catastrophe, stoppage of power supply, epidemics or civil commotion. It is obvious that such permission, if granted will deprive a number of workmen of their jobs in the establishment wherein they were henceforth employed. Standing Order 11-A while investing the Labour Court with discretion to grant such permission does not lay down the conditions where this permission can be given. Nevertheless discretion das to be exercised justly, fairly and honestly and not arbitrarily or capriciously. Discretion, said Coke, was scire per legam quod sit justum, it was, "science of understanding to discern between falsity and truth, between right and wrong, between shadows and substance, between equity and colourable glosses and pretences, and not to do according to their wills and private affections (Judicial Review of Administrative Action by S.A. de Smith, 1973, Third Edition, Chap. 6, p. 248). The Supreme Court of Pakistan in the case of Amanullah v. Federal Government of Pakistan reported in PLD 1990 SC 1092 (1147) has observed that, "Wherever wide- worded powers conferring discretion exists, there remains always the need to structure the discretion and it has been pointed out in the Administrative Law Text by Kenneth Culp Davis (page 94) that the structuring of discretion only means regularising it, organising it, producing order in it so that decision will achieve the high quality of justice. The seven instruments that are most useful in the structuring of discretionary power are open plans, open policy statements, open rules, open findings, open reasons, open precedents and fair informal procedure. Somehow, in our context, the wide-worded conferment of discretionary powers or reservation of discretion, without framing rules to regulate its exercise, has been taken to be an enhancement of the power and it gives that impression in the first instance but where the authorities fail to rationalise it and regulate it by Rules, or Policy statements or precedents, the Courts have to intervene more often, than is necessary, apart from the exercise of such power appearing arbitrary and capricious at times". Standing Order 11-A was introduced by the amending Act XXIII of 1973 and it was intended to curb ill-motivated closure of establishment or termination of employment. It, therefore, envisages that an employer who desires to terminate more than 50 per cent. of the workmen or its close down whole of the establishment ,must obtain prior permission of the Labour Court. A corresponding amendment was also made in the Industrial Relations Ordinance, 1969 through Act XVI of 1975 whereby, clause (i) was added to subsection (1) of section 15, whereby closure of the establishment and termination of employment being in violation of Standing Order 11-A is made punishable as unfair labour practice. This makes it absolutely clear that the application of the provisions contained in Standing Order 11-A must be meaningful and not mere formality. In Tatanagar Foundry Co. Ltd. v. Their Workmen (supra) it was held that, "The closure has to be genuine and bona fide in the sense that it should be a closure in fact and not a mere pretence of closure". Similarly in Banaras Ice Factory Ltd. v. Its Workmen (supra) it was held that, "if there is no real closure but a mere pretence of a closure or it is mala fide, there is no closure in the eye of law .... " The Labour Court has, therefore, to be satisfied that such a move on the part of the employer is genuine and not mala fide with the object of getting rid of the workmen. In the event of contest to an application under Standing Order 11-A by the workmen or their Union, the Court is obliged to examine all relevant facts to ascertain that there are real circumstances justifying the closure or termination of employment. The Court has also to see that the workmen also get what they are entitled to under the law in the shape of their wages and benefits. During the course of arguments, the parties submitted a list of workmen who were adversely affected by the closure of establishment arid also the payment made to them. There is a dispute with regard to the claims of these workmen but as was rightly urged by Mr. A. Hafiz, the learned counsel for the respondent No.2 that since it involves factual inquiry this Court under Article 199 of the Constitution is not competent to go into that' aspect. It was also pointed out that there is no material before this Court to arrive at a just conclusion regarding benefits. The upshot of the above discussion is that in my humble view the impugned order is not sustainable in law and it is a fit case to be remanded to the learned Labour Court to decide the application of the respondent No.2 under Standing Order 11-A of the Standing Orders Ordinance, 1968 afresh in the light of the observations made hereinabove. The petition stands disposed of in the foregoing terms. H.B.T./A-224/K Order accordingly.