1992 PLP 192 (PLC)

4. The contention of the appellants is that respondents were not running into any losses but had terminated their services due to mala fide reasons. They also claimed that certain workers junior to them have been retained or have been recruited afresh. Admittedly respondents laid off the workers number of tunes from 21-5-1988 vide lay off orders Eah. A/1 to A/6. During the period of this lay off the respondents also entered into an agreement which has been produced as Exh. R/1 with the C.BA. on 23-6-1988. 1n this agreement it was agreed that the Company required only 200 workers and consequently 186 workers would be rendered surplus, who would be offered `Golden Shake?hand' Scheme. The validity of the `Golden Shake-hand' Scheme was up to 10-7-1988 and if the required number of workers did not resign voluntarily, the management would be free to act in accordance with law and the workers terminated as a result, would not be entitled to the benefits as detailed in this agreement. It is contended by the respondents that in pursuance of this agreement they terminated services of 88 junior most workers, including the two appellants, who were given one month's pay in lieu of notice under Standing Order 12 read with Standing Order 13 of the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968.

5. The termination order produced by the appellants shows explicit reasons as to why their services were terminated and also allows them one month's pay in lieu of notice. Thus prima facie there appears to be no violation of Standing Order 12(3) of the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968.

6. The only question that requires to be considered is whether the reason shown by the respondents in the termination order was mala fide or bona fide. It may be pertinent to reproduce the wordings of the reason in the termination order which reads as under:-- "As the establishment has been running in serious lack of sales, dump of production, financial crisis, tight liquidity position and reasons beyond control of the management to run the factory, the management has .decided to re-organise and retrench surplus workers according to category-wise keeping in view the principle of "last in first out".

7. To the two appellants in the cross-examination the only question suggested by the respondents was that the Company was going in losses since six months before the termination of their services. Both of them have replied to this question, that as they had never worked in the Accounts Section of the respondents-company, consequently they were not aware with regard to profits earned or losses incurred by the company or that the respondent-company was going in losses since six months prior to termination of their services. However, both of them admitted that the company had laid off workers from 21-5-1988 vide lay off orders ExhsA/1 to A/6. To none of the appellants it was suggested in the cross-examination that establishment had been running in serious lack of sales, dump of production or about tight liquidity position. With regard to the alleged losses within six months prior to the termination of services of the appellants it is admitted by Mr. Sadiq Hussain Khawaja, Manager of the respondent factory that company had not incurred any losses in the years 1986} 1987 and 1988. He had made this admission on the basis of `Annual Reports' of the Company which are produced as Exhs.R./4, R/5 and R/6. These reports belie the suggestions to the appellants cross-examination that company was running under losses. It may be pointed that the services of the appellants were terminated on 11-7-1988, but admittedly the respondent-company was not undergoing any losses from 1986 to 1988. In the year 1986 the profit, after taxation, is shown to be Rs.8,678,

000. In the year 1987 profit, after taxation, is shown to be Rs.3,704,

000. In the year 1988 the profit, after taxation, is shown to be Rs.1,175,

000. No doubt there appears to be decline in the amount of profit m the years 1987 and 1988 but in the report of 1988 under column `Future Prospects' it is shown that during 1988 some export orders were obtained from Canada, Australia and Gulf countries and the buyers' response was encouraging and hence the overall prospects showed the Company would be able to restore its earlier position in the market. These reports further show that in the year, 1986 the respondent-company had produced 6,35,275 sq. meters of goods whereas in the year 1987 production was increased to about 7,63,000 sq. meters, while in the year 1988 due to carry over of inventory for previous year the plant was run at lower capacity and production was about 4,41,000 sq., meters. These figures would show that, if the respondents had not over produced by about 1,27,000 sq. meters in 1987, there would have been not much fall in the production in the year 1988.

8. Mr.Faruq Abdul Ghani has relied upon on number of authorities in support of his contention that the employer had unhampered power to re?organise his establishment in the best interest of business and could retrench workers as a result of such re-organization. The first authority in this context relied upon by Mr. Faruq Abdul Ghani is decision of hon'ble Supreme Court in the case of Zeal Pak Cement Factory Ltd. Hyderabad v. Chairman, West Pakistan Industrial Court and others 1965 PLC

216. Their Lordships have observed:-- "Where there was a re-organization carried out for a bona fide purpose of the industry, and the notices of discharge were given exclusively in relation to the redundancy which thus resulted and without any taint of victimization and nothing in the nature of punishment was involved: it was held, that the action of the factory in respect of the employees retrenched as surplus to requirements being bona fide, it did not attract the control of Industrial Court under section 30 of the Industrial Court Disputes Ordinance, 1959."

9. This Tribunal in the case of Messer EMESCO Industries Ltd. v. S. Irfan Ahmed and another 1983 PLC 981 had held that `termination of services of workers simpliciter on account of reorganization including giving of contract of work to independent contractor was permissible provided such action taken was bona ride and not a cloak to get rid of workers or to crush genuine union activities.' In the case of Muhammad Serajuddin v. Labour Appellate Tribunal and another 1983 PLC 128C the worker challenged the order of his retrenchment due to re-organization on the ground of mala rides. The learned. Division. Bench of Sirdh High Court at Karachi held that `petitioner had failed to prove that termination of his services was in a way mala fide and that employer was free to make re-organization as was necessary and in consequence thereof retrench as many members of establishment as found redundant'.

10. In the case of Soofi Muhammad Aslam v. Messrs M. Iftikhar & Company Ltd. 1985 PLC 989 this Tribunal held that `the law is that any management is free to re-organize, retrench the employees, provided retrenchment is of the junior most employees and it does not involve the victimization. I have seen the evidence and the impugned order. I have come to the conclusion that neither the victimization has taken place nor malice is encountered in the evidence nor anything else could be seen in favour of the appellant.

11. In the case of Lyallpur Cotton Mills v. Punjab Labour Appellate Tribunal and others 1991 PLC 32 a learned Single Judge of Lahore High Court had held:-- "The admitted position is that service; of the respondent No.3 was terminated as petitioner proceeded to close its weaving section of the mills. The observation of the learned Tribunal that if the weaving section is closed the goods produced in the winding section can be sold to other Mills where weaving is done. This is clearly beyond the jurisdiction. It is within the exclusive discretion of the employer to run the business " in tl:c manner he thinks more suitable and beneficial. The learned Tribunal overstepped its jurisdiction while basing its decision on this observation. The respondent was incumbent of the Weaving Department. Therefore, if the Department was closed the III ;H;.,~_emc:1t \.-;ls fully justified to say good-by to him."

12. It would be seen in all the above; cases the stress is upon the factum that the process of re-organization and consequent retrenchment should be bona tide. The question whether a particular act is bona ride or not is question of fact which would depend upon circumstances of each case and can be A gathered from the facts and circumstances surrounding the act complained of.

13. Word `bona fide' has been defined in Black's Law Dictionary to mean `for good faith; in good faith.'

14. In Words and Phrases, Permanent Edition, 1968 the word `bona fide' has been defined as in or with good faith; without fraud or deceit; genuine; word `bona fide' some times is used as equivalent to `frankly'.

15. Keeping in view the above definition we have to see whether the action of the appellant was bona fide? In the case of Tata Oil Mills Co. Ltd. v. Their Workmen, reported in 1963 PLC 1002; the Hon'ble Supreme Court of India observed as under:-- "If the Industrial Court is satisfied that the order of discharge is punitive, that it is mala fide, or that it amounts to victimisation of unfair labour practice, it is competent to the Industrial Court to set aside the order and, in a proper case, direct the reinstatement of the employee. In some cases, the termination of the employees' services may appear to the Industrial Court to be capricious or so unreasonably severe that an inference may legitimately and reasonably be drawn that in terminating the services, the employer was not acting bona fide. The test always has to be whether the act of the employer is bona fide or not. If the act is mala fide or appears to be a colourable exercise of the powers conferred on the employer either by the terms of contract or by the Standing Orders, then, notwithstanding the form of the order, industrial adjudication would examine the substance and would direct reinstatement in a fit case:'

16. According to Words and Phrases, 196,8 Permanent Edition; the proper distinction between `bona fide' and `mala fide' is that the former requires the thing to be, in fact, just what it purports to be. It is further observed therein that `mala fide' as used in reference to the character of a transaction which will render a conveyance void, is an intent not simply to assert one's rights, but, in addition to that, to defeat the rights of another, participated in by both parties to the instrument.

17. No doubt the over production was due to the either miscalculation or mismanagement on the part of the respondents but the fact remains that there had been great fall in the production in the year 1988. There was sharp reduction of profits which fell to less than fifty per cent. in the year 1987 and less than twenty per cent. in the year 1988 as compared to profits of 1986. Under the circumstances it was only natural and proper for the respondent 8 establishment to reduce the production and retrench the workers in order to effect some savings otherwise the establishment would have faced total collapse. The respondents did not take action of retrenchment in haste but laid off the workers for some time, entered into negotiations with the C.BA. and with the consent of C.BA. Union retrenched the surplus workers. Admittedly B 88 workers were retrenched out of whom only the two present appellants filed grievance applications.

18. The respondents have asserted that they retrenched workers on the basis of `first come last to go' in accordance with Standing Order 13 and there appears to be no proof to the contrary. The appellants have named certain workers who, according to them, were junior to them but had been retained by the respondents but the evidence on record shows that these workers were in category other than the category to which the appellants belonged. Standing Order 13 provides `where any workman is to be retrenched and he belongs to particular category of workmen the employer shall retrench the workman who is last person employed in that category. Therefore if any person, even junior to the appellants has been retained in some other category of workmen there would be no violation of Standing Order 13 to call for interference by the Labour Court or this Tribunal.

19. In view of the facts and circumstances discussed above the retrenchment of the appellants by the respondents was bona fide. No ma la p fides is proved against the respondents and as such I find no merits in these appeals.

20. No doubt the appellants did not avail of the benefit of `Golden Hand ?Shake' Scheme within the time fixed in the said agreement with C.BA. but under the circumstances of cases the appeals are dismissed with this modification that the appellants be given the benefits under the aforesaid `Golden Hand-Shake' Scheme within two months. H.B.T./1987/Lb. S ????????????????????????????????????????????????????????????????????????????? Appeals dismissed.