DECISION ' The Adam Silk Mills Ltd., the first respondent in these two appeals, which are being heard together, are engaged in the manufacture of silk cloth. For this purposes, they have Weaving Department, Dyeing and Printing Department. On 27th June 1979, the services of as many as 46 workers in the Weaving Department were terminated on the alleged ground of lack of demand for silk cloth and consequent large accumulation of unsold cloth mills valued over sixty lacs. Subsequently, on 4th July 1979, the remaining 29 workers in Weaving Department were retrenched. The two retrenchment orders were preceded by lay off notices in accordance with the provisions of Standing Order 11. The Adam Silk Mills Employees' Welfare Union, the appellants in these appeals, challenged the two orders of retrenchment by its separate applications under section 34, I.R.O. Both these applications were heard together by the learned Third Labour Court, which has decided the same by the impugned order, dated 28th October 1980. By the said order, the learned Labour Court dismissed the two applications of the appellant under section 34, I. R.
0. And upheld the orders of retrenchment of the workmen in the Weaving Department. The learned Labour Court has taken the view that the retrenchment orders were justified as not only the respondent-Mills were burdened with large accumulation of stock of cloth worth several lacs of rupees but further during the preceding years the Company had suffered losses. It also repelled the contention of the appellants that the company had retrenched more than 50% of their workmen in violation of Standing Order 11-A, Dissatisfied with the orders of the learned Labour Court, the appellants have come up in appeal to this Tribunal.
2. I have heard Mr. S. P. Lodhi, the learned representative for the appellant-Union, and Mr. Kamal Mansoor Alam, who appeared for the respondent-Company. The first contention of Mr. Lodhi was that inasmuch as the respondent Company had terminated, by their two orders, dated 27th June 1979 and 4th July 1979, the services of 75 workmen, it had violated the provisions of Standing Order 11-A, which prohibits the termination of services of more than 50% of the workmen of an establishment without permission from the Labour Court. This contention was grounded in the proposition that the total number of workmen in the respondent mills was only 141. However, when the attention of Mr. Lodhi was drawn to the admission of Mr. Mohammad Yahya Khan, the General Secretary of the appellants, in his cross-examination before the learned Labour Court, that the total strength of the workers in the mills was 156, while out of this the members of their Union were 126, and his further admission that he could not state what was the present total strength of the workers in the Mills i,e, on the date that he was giving evidence before the learned Labour Court on 5th September 1979, the learned representative did not press this contention. The learned Labour Court also relied upon the admission made before it by the General Secretary of the appellant- Union in coming to the conclusion that at the relevant time the number of workmen in the respondent Mills was 156. It was, thus, premissible for the respondent-Mills to retrench the services of 75 workmen, without permission from the Labour Court, provided of course, the retrenchment was for good and valid reasons and was in accordance with the law.
3. This brings me to the main contention of Mr. S. P. Lodhi that the plea of the respondent mills that the retrenchment of workmen was necessitated due to huge accumulation of stocks of manufactured cloth worth several lacs of rupees and losses incured by the Company was without substance. The learned Representative attempted to support his contention by reference, firstly, to the balance-sheets of the respondent-Company for the years 1977 to 1979, and secondly, the assessm ent orders of the Income-tax Authorities in respect of the Returns submitted by the respondent-Company. Taking up first the issue of the stock position of the respondent-Company the learned representative pointed out that according to the balance-sheet of the Respondent- Company for the year ending 30th June 1977 the stocks of finished cloth in hand were valued at Rs, 57,98,240 ; according to the balance-sheet of the respondent-Company for the year ending 30th June 1978 the value of stocks of finished cloth in hand was Rs, 56,19,227.88; while according to the balance-sheet of the respondent-Company for the year ending 30th June 1979, the value of such stocks was Rs, 58,08,426.64. It was submitted by Mr. S. P. Lodhi, firstly, that the value of stock-in- band with the mills during the period from 1977 to 1979 was not unusual keeping in view the fact, as appears from the assessm ent orders for the years ending 30th June 1977 and 30th June 1978, of sales of cloth exceeding one crore per year and that, secondly, in any case, the stocks in hand were more than fully covered by the over draft facilities exceeding sixty five lacs given to the respondent company by the Habib Bank Limited. It is true that during the year 1977, the respondent-Company sold cloth of the total value of Rs, 1,24,24,718 and during the year ending 30th June 1978 it sold cloth of the value of Rs, 1,03,54,633 as appears from the assessment orders of the Income-tax Authorities but despite these seemingly large sales the stocks in hand represented at least 1/3rd value of the total stocks sold in the year. To my mind, this represents an unusually large accumulation of unsold cloth at the end of the year which must put a severe strain on the resources position of the respondent-Company. This inference find further support from the letter, dated 18th June 1979, from the Habib Bank Limited to the respondent-Company, requiring it to deposit the overdraft amount, exceeding the limit of the sixty five lacs over draft facilities forthwith, and prohibiting it from further drawing moneys from the Bank until it had reduced its drawing upto the sanctioned limits of sixty-five lacs. This letter could not but have added to the financial difficulties of the respondent-Company and made their resources condition difficult. I am, therefore, in agreement with the view of the learned Labour Court that the contention of the respondent-Mills that they were forced to retrench their workers in the Weaving Department and in fact closed it down completely because of huge accumulation of unsold cloth, is well-founded.
4. Mr. S. P. Lodhi next sought to show from the balance-sheets of the respondent-Company and the assessm ent orders of the Income-tax Authorities that the contention of the respondent-Company that they had been incurring losses is not well-founded. According to the balance-sheets of the respondent-Company, during the year ending 30th June 1977, it had incurred losses of Rs, 1,00,718, for the year ending 30th June 1978 it had incurred losses of Rs, 2,578 and for the year ending 30th June 1979 it had incurred further loss of Rs, 3,45,045 Mr. Lodhi contended that these balance-sheets, however, were not accepted by the Income-tax Authorities and from the assessment orders by the Income-tax Officer he sought to argue that the Company in fact bad not incurred losses. An examination of the assessm ent orders by the Income-tax Authorities, however, does not support his contention. The assessm ent order for the year ending 30th June, 1977 shows that losses of Rs, 87,921 were admitted by the Income-tax Authorities. No doubt according to the assessment order for the year ending 30th June 1978 the Company is said to have earned an income of Rs, 1,13,083 but accordingly, to the assessm ent order for the year ending 30th June 1979, a certified copy whereof was produced by Mr. Kama! Manzoor Alam, the respondent-Company had incurred losses of Rs, 4,77,745. Thus, according to the three assessment orders for the period from 1977 to 1979, the respondent-Company had incurred losses exceeding Rs, 4,60,000. An establishment which incurs losses in its working over an extended period of three years would certainly be entitled to reduce its expenditure and its losses by retrenchment of its staff. This retrenchment is in accordance with the provisions of Standing Orders 11 and 11-A. No fault can thus be found with the retrechment orders, dated 27th June 1979 and 4th July, 1979.
5. For the reasons discussed by me above, I would concur in the findings of the learned Labour Court and would dismiss the two appeals.