DECISION This is an appeal against the impugned order, dated 13-3-1986, passed by the Sind Labour Court No. III, Karachi, who allowed the grievance petitions of the respondents filed by them under section 25-A, I.R.O. 1969.
2. The brief facts of the case are that the respondents were employed in the appellant Management, namely, Messrs Allied Synthetic Mills, Karachi and these respondents had different length of service and designations. That, as there have been an average of 60 workers employed with the appellants Management, therefore, there was a Union of the workmen known as 'The Allied Synthetic Mills Labour Welfare Union Karachi' and which was also the Collective Bargaining Agent.
That on 3-2-1985, 14 workers were not allowed to resume the duties and were informed that such letters were already sent at their home addresses. That thereupon the Collective Bargaining Agent of the appellant Management raised an industrial dispute under section 26(1) of I.R.O. 1969 on 3-2- 1985, followed by a strike notice, dated 17-2-1985 and thereunder conciliation proceedings were also held. That in the meantime the appellants Management had terminated the services of rest of the workmen by completely closing down and suspending the work of the establishment, without obtaining prior permission of the Labour Court, as required under Standing Order 11-A of West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968, and that the appellant Management had terminated the services of the workmen including the respondents with ulterior motive which was unlawful for the reasons that permission to close down the establishment was not sought. Thus, the respondents submitted grievance petitions before the Labour Court.
3. The case of the appellants Management before the learned Labour Court was that the grievance petitions of the respondents under section 25-A, I.R.O. 1969, were highly misconceived and not maintainable, as there were not more than 30 workmen in the establishment. That the appellants Management had filed an application before the Labour Court under section 11-A of the Standing Orders, for permission to close down the establishment and it was pending. That, as the appellants were facing acute financial crisis and were not in a position to make day to day expense for the losses suffered during the years 1983-84 and 1984-85, therefore, they had to retrench 14 workers on 3-2-1985 and subsequently close down the whole establishment on 7-2-1985 and terminated the services of the rest of the workers. That they were manufacturers of Synthetic Fibres since 1971 but for the last several years they were not doing well in business as their export trade had run into serious difficulties and local market condition were not favourable and in the year 1984-85, they suffered considerable losses and it was not possible for them to run the establishment. That they had become indebted to the banks and other financial agencies to the tune of more than five million rupees, therefore, it was not possible for them to meet day to day expenses in requiring the business and so had decided to re-organize the business and initially they retrenched fourteen workers on 3-2-1985, and subsequently due to the extreme financial difficulties as well as due to the non -availability of the funds, they had to close down the establishment and terminate the services of all the workmen.
4. Both the parties filed their respective affidavits in evidence and they were duly cross-examined.
Consequently, the learned Labour Court has allowed the grievance petitions of the respondents, hence, this appeal.
5. I have heard the arguments, at length, of Mr. M.L. Shahani and Dr. Safri Yousufzai, the learned Advocates for the appellants Management and Mr. S.P. Lodhi, the learned representative of the respondents and have gone through the record and proceedings of the case. It was contended by Dr. Safi Yousufzai, the learned Advocate for the appellants Management that the Management is competent to retrench and terminate the services of the workers in the process of closing down the establishment and that prior permission of the Labour Court is not essential as it can be sought side by side. It was further argued by Mr. M.L. Shahani, the learned Advocate for the appellants management that although Standing Order 11-A of the Standing Orders Ordinance speaks of prior permission for the closure of whole of the establishment and termination of the services of all the workmen, yet the Supreme Court in a decision, reported in 1975 SCMR 49 has held that filing of the application from the management for closure of whole of the establishment will be the last step in the process of closure of the establishment and it is not at all necessary that the application for permission should be filed as a first step. This case was decided prior to the amendment in Standing Order 11-A by Act 11 of 1976, by virtue of which the following words were added 'terminate the employment of more than fifty per cent workmen'. However, from the perusal of the decision of the Supreme Court, it is clearly made out that permission of the Labour Court for closing down whole of the establishment could be the last step as the Standing Order does not spell out any sequence in which the various steps to close down the establishment had to be taken by an employer. Further, Mr. Shahani has relied on a Single Judge judgment, dated 13--7-1986, of Sind High Court in Constitutional Petitions Nos. S-12, 29 and 30 of 1986, wherein it was observed that 'it will thus be seen that but for Standing Order il-A, the employer was at liberty to close down his entire establishment or terminate the services of more than fifty per cent of the workmen employed therein. Even, after insertion of Standing Order 11-A in the above-said Ordinance, the employer is at liberty to terminate the services of fifty per cent of the total number of workmen employed by him. The purpose of Standing Order 11-A, therefore, does not appear to be to prevent the employer from terminating the services of his workmen arbitrarily, but to verify the bona fides of the employer vis-a-vis his need to close down the establishment. If the intention was to safeguard the employment of workmen, then, there is no doubt in my mind, that the Legislature would have imposed a complete embargo on termination of services of all the workmen employed in the establishment without permitting the employer to terminate the employment of fifty per cent of his workmen. In other words, the Legislature could not have laid down a dual policy for two different sets of workmen by permitting the employer to dispense with the services of fifty per cent of his workmen without prior permission from the Labour Court, but making it incumbent on the employer to seek such permission in respect of the rest of the workmen." In a case South British Insurance Employees Union v. Sind Labour Court No. 4 and others reported in 1975 SCM R 49 it was held by the Supreme Court that the application to Labour Court for permission to close down the establishment need not be the first step in the process but the same could well be the first step in the process. 'It therefore, consequently follows that the law as it then was permitted the employer to terminate the employment of almost all of its workmen and then apply to the Labour Court for permission to close down the establishment. In the present case, the appellant Management has also obtained permission from the Sind Labour Court No. II, Karachi vide, order, dated 21-5-1986 in Application No. 3 of 1986 under section 11-A of Standing Orders Ordinance, 1968; to close down the establishment on the ground of acute financial losses. I, therefore, hold that the action of the appellants Management, retrenching and terminating the services of the respondents on the ground of closing down the entire establishment due to extreme financial losses and due to the non-availability of the funds, is neither illegal nor incorrect, but is within its vested right.
6. On the other hand, Mr. S.P. Lodhi, the learned representative respondents workmen has vehemently argued that without winding up the establishment, the appellant Management was required to seek and obtain prior permission of the Labour Court for terminating services of more than fifty per cent or all of the workmen or for closing down the establishment, but it did so in February, 1.985, without obtaining prior permission of the Labour Coat and even without making a formal application before doing so. He contended that the so-called retrenchment and termination of services of the respondents by the appellants Management, merely, on the ground of financial losses was clearly victimization of the workers, and that the appellant Management sought permission to close down the establishment, much after their action against the present respondents. In view of the above legal and factual positions and other circumstances, I see no force in the contentions of Mr. S.P. Lodhi for the respondents.
7. For the reasons, stated by me above, I set aside the impugned order and would allow this appeal.
However, the appellant Management is directed to pay the legal dues and settle their accounts of the present respondents.