DECISION These are two separate Appeals, one bearing No. KAR-332 of 1985 filed by Obab Khan and 25 others and the other is No. KAR-333 of 1985 filed by Syed Umar and 7 others, against the impugned orders, dated 13-10-1985, passed by the Sind Labour Court No. III, Karachi, who had dismissed the grievance petitions under section 25-A, I.R.O. 1969, of 34 appellants workmen. As, the facts and circumstances of these appeals are common, therefore, I propose to dispose of both these appeals by this single decision.
2. The brief facts of the case are that all these 34 appellants were employed in the Ring Department of the respondent Mills, namely, Rashid Textile Mills Ltd., Karachi, and their services were terminated by an order, dated 12-9-1984, and in that the reasons were stated that the termination of services of the workmen had been necessitated by the fact that the management had been forced by severe and continuing losses, so the Ring Department was to lease out on contract to a Contractor who shall be responsible for employing their own work force according to their requirement depending upon their production schedule, availability of raw material and other relevant facts. That the appellants had challenged the said order of termination on the ground that termination of their services is intended to crush the union and the sail termination is mala fide and that the respondent Mills is accustomed to violate the provisions of law and in the past they did not pay the benefits to them. That the respondent Mills is earning huge profits but they had shown artificials losses in order to deprive the workers of their rightful benefits. That, as the order of termination of the, services of the workmen of the Ring Department is on false pretext of huge losses and giving of the department on contract is mala fide, therefore, all of them are entitled to be re-instated with full back benefits.
3. The case of the respondent Mills is that they had been suffering huge losses during the last few years, so the various departments including the Ring Department was to be closed down and workers laid of during the last one year because of shortage of raw materials, funds and other trade reasons. That for this reasons, the Board of Directors of the mills had decided that the Ring Department be given on contract to the independent contractor. Further, that there was no element of mala fide or victimization involved in the retrenchment of these appellants as it was resorted merely due to financial and trade difficulties. The case of the respondent Mills further is that except these appellants, all other retrenched workers had taken their dues in full and final settlement, therefore, the appeals of the appellants be dismissed.
4. The appellants filed their affidavits-in-evidence and they were duly cross-examined before the learned Labour Court. There, an affidavit-in-evidence of one Abdul Ghaffar was also filed on behalf of the respondent Mills and he was also cross-examined. Thereafter, the learned Labour Court dismissed the grievance petitions of the appellants, hence, these appeals.
5. I have heard Mr. Shafique Qureshi, the learned Advocate for the appellants and Mr. Ali Amjad, the learned counsel on behalf of the respondent Mills and have perused the evidence, record and proceedings of the case.
6. The sole point involved in this case, to be determined is whether the respondent Mills was entitled to re-organize its factory in such a way as to give out on contract the whole or part of it including the Ring Department and terminate the services of the affected workers or the said termination was made in order to crush the union activities and/or to deprive of their workers of their legitimate rights. Mr. Shafique Qureshi, the learned Advocate for the appellants workmen has contended that the contracting out of the Ring Department is mala fide for the reason that the services of the appellants were terminated on 12-9-1984 on the ground of alleged re-organizing of the establishment due to losses and financial difficulties; but, just after a week thereof, i.e. On 22-9- 1984, a so-called Contractor was appointed to run the Ring Department. He contended that even in this case, the respondent Mills or the so-called Contractor was bound to re-call the retrenched workers as soon as the Ring Department was re-started. Mr. Shafique Qureshi has stressed upon the fact that the termination order, dated 12-9-1984 was male fide, illegal and against the principles of Natural Justice in as much as it was intended to avoid "a settlement, dated 20-12-1983, arrived at between the C.B.A. Union and the respondents Management and which was still in operation when the services of the appellants were terminated on 12-9-1984 or the contracting of the Ring Department on 23-9-1984. He pointed out that there shall be no change in the terms of employment and other benefits available to the workmen under various labour laws, such as retirement benefits, pension, gratuity, group insurance, social security benefits, leaves, education cess and the observation of Standing Orders Ordinance, 1968, but, according to an agreement, (Clause 5), made between the respondent Mills and the so-called contractor, powers were given to the said contractor to determine the terms and conditions of the employment of the workers re to his choice. Mr. Shafique Qureshi has pleaded that this agreement with the said contractor Was quite illegal, in violation and contrary to the specific terms and conditions of the already in existence settlement between the C.B.A. Union and the respondent Mills and some complaints against this breach of settlement were also filed. Mr. Shafique Qureshi, the learned Advocate for the appellant has referred to me the cross---examination of the witness of the respondent Mills namely, Abdul Ghaffar, before the learned Labour Court, as under: - "I do not know if the contractor pays gratuity, old age benefits, social security, leaves etc.To the workers. We used to pay all the benefits to the workers of Ring Department viz. Benefits of bonus, gratuity, group insurance etc. It is correct that we received letter from the Labour Directorate that we have not paid benefits and we are infringing the labour laws of the workers of Ring Department.
I do not know what to do in case there is infringements of agreement by the contractor. It is incorrect to suggest that if contractor.
It is correct that my Manager and myself and Spinning Master looks after the work of the Ring Department and of the whole establishment because Ring Department is part of my establishment.
It is correct that we determine the quality and the quantity of the yarn produced by Ring Department. We pay the electric charges of the Ring Department even if the Ring Department is run by the contractor.
I do not know what are the wages paid to the applicants by the contractor of the Ring Department.
Rasheed Textile Hills Meh natkar Union is C. B. A. It is correct that there is a settlement between the management and C.B.A. Still inforce. I see Annexure 'E' with the affidavit of Syed Momin and say it is the same settlement arrived at between the management and C. B. A. I do not know if the workers are paid wages and other benefits as per terms and settlement, dated 20-12-1983."
Mr. Shafique Qureshi has also referred to me the evidence of the appellants, as under: - ---The so, called contractor is Head Jobber of the respondent Company. The wages are being paid by the respondents' employees i.e. Cashier and Labour Officer Mr. A. Sattar. The Spinning Master, Assistant Spinning Master, Supervisors are looking after the Ring Department as usual. The workers employed by so-called contractors have been appointed and controlled by the respondents' Establishment. The so-called contractor is just an eye wash to circumvent the Labour Laws. The Annexure 'R-1' is denied being illegal, mala fide and was executed just to evade the labour laws otherwise Mr. Shah Barkhuadar is the Head Jobber for the last 20 years. , The appellants were not cross-examined by the respondent Mills on this particular and specific statement. Thus, this evidence of the appellants is un-challenged and un-rebutted. In this behalf, further evidence of the respondent Mills is as follows: - ---It is correct that Unit No.1 of Rasheed Textile Mills Limited located on A-1/24, S.I.T.E., Karachi, is one establishment under Factories Act and under the Standing Orders Ordinance., 1968. I am Director and occupier the respondents. A. Ghaffar Dhang is Manager of the establishment. It is correct that there is one gate of all workers of Rasheed Textile Mills including Weaving Department of Rasheed Textile Mills. I am the Occupier of Ring Department.
A. Ghaffar Dhang is a Manager of Ring Department of Rasheed Textile Mills. It is correct that the contractor of Ring Department is a not a separate establishment governed under Factories Act and under Standing Orders Ordinance, 1968. The Ring Department has neither separate Managers nor Occupier.
It is correct that my Manager and myself and Spinning Master look after the work of the Ring Department and of the whole establishment because Ring Department is part of my establishment."
7. In support of his pleadings, Mr. Shafique Qureshi, the learned Advocate for the appellants workmen also placed his reliance on an authority, reported in 1969 PLC 783 at Page 786. The relevant passage is as under: - "I would mention only one circumstances which would justify to confirm the finding of the learned Industrial Court. Mr. Tayab Ali, R.W.1 who is Time Keeper of the Mills candidly admitted in his cross- examination that 'the contractor of the Valika Textile Mills is the employee of the Valika Textile Mills'.
If the contractor are in the employment of the Mills, it cannot be said with any justification that they are independent person who provide labour to the company. Such a device can be rightly said to be only a cover to terminate the services of the workmen without observing the provisions of the Standing Order. It would be held to be a camouflage to get over the provisions of the Standing Order. The persons serving under such contractors will be held to be in the employment of the mills."
8. In view of this authority and taking into consideration the facts of the case, legal position, evidence as well as admission on record and other connected circumstances, I would hold that the contractor, in question, is not an independent contractor, as required by law and the above authority is very well applicable to the present case, therefore, A the appellants workmen are held to be the employees of the respondent Mills and thus, are entitled to be reinstated in service with full back benefits. Further, if it is presumed that the Ring Department of the respondent Mills was given on contract, then even in the case these appellants were not re-called, either by the contractor or by the respondent Mills, in accordance with the provisions of law, when the Ring Department was re-started with effect from 23-9-1984. This requirement of law (sic).
9. On the other hand, Mr. Ali Amjad, the learned Advocate for the respondent Mills has argued that the company was entitle to re-organize its business and it was also competent according to law to give out on contract the whole or part of the factory. In support of his case, he had placed reliance, mainly on an authority, reported in 1983 PLC 981. After careful perusal of this authority of this Tribunal, I would hold that the facts, evidence and other circumstances of that case are different than what have been brought on record of the present case, hence, distinguishable and not applicable, as far as the present appeals are concerned.
10. The upshot of the above discussion is that I would set aside the impugned order and would direct the respondent Mills to re-instate the present 34 appellants workmen in service with full back benefits forthwith. Both appeals are allowed accordingly.