DECISION ' This is a revision application under section 38(3-a) of the Industrial Relations Ordinance, 1969, invoking the rcvisional jurisdiction of this Tribunal with a prayer to call for the R & P of Application No,6 of 1987 from the Court of the learned Presiding Officer, Sindh Labour Court No,1 at Karachi, in order to examine the legality, propriety and correctness of order, dated 21-12-1989 passed by the learned Presiding Officer in the said application.
2. I have heard Mr. S.P. Lodhi, learned Representative for the applicant (hereinafter referred to as Union); and Mr. MA. Hassan learned Representative for the respondents and have also gone through the record and proceedings of the case.
3. The brief facts of the case appear to be, that on 21-11-1987, Messrs Sky International (hereinafter referred to as the Establishment); filed an application before the learned Labour Court under Standing Order 11-A of the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 (hereinafter referred to as the Ordinance) with a prayer that the Court may be pleased to pass an order for the total closure of the Establishment under Order 11-A of the said Ordinance. The Establishment is a factory which started stitching of ladies clothes since 1979 as a Contractor for the respondent No,2, namely, Messrs Mercury Garments Industries, on mutually agreed terms duly reduced in writing, on 22-9-1979. This agreement continued to be renewed after every 2 years till 4-7-1988. The respondent No,2, however, terminated the said Agreement from 6- 12-1987, vide Notice, dated 6-11-1987 under clause 17 of the Agreement as they had lack of orders of mixed fabrics. The Establishment who is Respondent No,1 in this Revision application, had requested the Respondent No,2, vide letter, dated 14-9-1987 to continue to supply the stitching work of any sort even on reduced rates. The Union, who is applicant in this Revision application, who was Respondent No,1 in the original application under Standing Order 11-A; who was also C.BA. Union of the workers of the Establishment, did not agree to reduction of the rates, therefore, the Respondent No,2 decided to terminate the Stitching Contract with effect from 6-12-1987. However, since 2-11- 1987, no fresh stitching work could be allocated to the workers by the Establishment and, therefore, they used to pay 'No work' allowance of Rs,40 per day to each worker in terms of Clause 7 of the Memo of Settlement with the C.BA. Dated 12-4-1987. The Establishment, therefore, filed an application under Standing Order 11-A in which the present applicant Union, namely, Sky International Workers Union was impleaded as respondent No,1 and Messrs Mercury Garments Industries were impleaded as respondent No,2. In reply statement, the respondent No,2 has supported the version put by the Establishment in their application. However, the Union have contended that the Establishment is a part of Mercury Group of Industries and that the Establishment had a lot of orders, but, they had moved an application only to crush trade union activities.
4. The Establishment filed the affidavit-in-evidence of their Manager, Abdul Salam Khan. The respondent No,2, namely, Messrs Mercury Garments Industries filed an affidavit-in-evidence of Muhammad Javed Yousaf, their Personnel Manager; whereas the Union filed affidavit-in-evidence of their General Secretary, Shahid Ahmed.
5. Mr. Abdul Salam Khan had re-iterated in his affidavit-in-evidence the averments made in the Application and has produced various agreements between the Establishment and also the Settlement, Annexure `U' reached with the C.B.A Union on 12-4-1987. He has produced the Registration Certificate of Messrs Sky International as Annexure 'M'. Mr. Javed Yousaf, Personnel Manager of respondent No,2, viz., Messrs Mercury Garments Industries had produced the Deed of Partnership of the said Industries as R.W.2/1. These 2 documents would show that Muhammad Sualeh; Javed Sultan and Badar-uz-Zaman are partners in both the establishments. Though Muhammad Asif and Muhammad Razi remaining partners of Mercury Garments Industries are not directly partners in the establishment, viz., Messrs Sky International; but, their sons are the Partners of Establishment. Therefore, this contention of the Union, that the Partners of the Establishment are also the partners of respondent No,2, appears to have some force. However, these 2 Establishments are registered separately. Though they apparently belong to one Group of Industries or to one family, but there appears to be no legal bar on a single person or group of persons to run 2 or more separate Establishments.
6. Mr. Shahid Ahmed, General Secretary of the Union had admitted in the cross examination that the management had given them the rates of cotton shirts verbally but he did not agree with the said rates and no settlement could be arrived at in respect of the demand for rates. He also admitted that in the Balance Sheet of the Establishment for the year 1987-88, net loss of Rs,18,83,964.37 is shown, but, he contended that this loss had been wrongly shown by the Establishment. He has not explained as to how this loss has been wrongly shown. He has admitted that no protest against this profit and loss had been filed and no question with regard to this loss had been put to the witnesses. He also admitted, that the workers including himself were retrenched by order, dated 17-12-1987 and that 112 workers had served grievance notices, dated 10- 3-1988 upon the management against the retrenchment order, but, they did not file any application under section 25-A, I.R.O. 1969, against the order of retrenchment. He also admitted that complaint of unfair labour practice was filed before the National Industrial Relations Commission which was dismissed by order, dated 13-11-1988. A copy of order has been produced as R.W.1/9. He further added that they had filed application for restoration on 1-10-1989 which was still pending. He has further admitted that since 19-12-1987, the production was totally closed. He has also admitted that Messrs Sky International and Mercury Garments are separately registered in the Income Tax Department, Social Security Institution and Employees Old Age Benefit Institution.
He also admitted that the Sky International is totally closed as regards production and was awaiting decision on application under Standing Order 11-A.
7. From the evidence on record, it is clear that the Establishment viz., Messrs Sky International were established in order to do stitching work on contract for respondent No,2. It has also come on record that respondent No,2 refused to give further work of stitching unless the rates were reduced, which the Union refused and consequently the respondent No,2 had cancelled the agreement and stopped giving of work to the Establishment. It is also not disputed that since 22-11-1987 the Establishment was paying 'No work allowance of Rs,40' to the workers till their services were terminated on 17-12-1987. It may be pointed that the application under Standing Order 11-A was filed by the Establishment on 21-11-1987; but, as admitted by Shahid Ahmed since 19-12-1987, the production was totally closed and it remained closed with regard to production at least till 1-11- 1989,, when Shahid Ahmed was cross examined in the Labour Court. The Standing Order 11-A does not stipulate the grounds on which the learned Labour Court can allow the closure of the Establishment. It is left to the discretion of the learned Labour Court to allow permission if in its opinion the request of the Establishment is genuine and not mala fide.
8. The main argument of Mr. S.P. Lodhi, the learned Representative for the Union is that application was moved after the Establishment had closed the establishment and had terminated the services of all the workmen, therefore, the learned Labour Court could not have permitted the closure of the establishment which was already closed. He could not cite any case law or any Authority in support of his contention. However, as pointed out the application for closure was filed by the Establishment on 21-11-1987; whereas the work according to Mr. Shahid Ahmed with regard to production was stopped since 19-12-1987 and workers were retrenched on 17-12-1987. Obviously both these dates are after filing of the application for closure.
9. It has come in the cross-examination of Javed Yousaf, witness of the respondent No,2, that the machinery of the Establishment belongs to the respondent No,2 which has been taken back.
However, Shahid Ahmed had admitted that the Establishment had provided the Union with iron Almirah to keep the record which Almirah was still in the factory under lock and key which were in his possession. If all these admissions are taken into consideration, it would be clear that the production in the Establishment has been closed after filing of the application, and the workers have also been retrenched, but, the office of the Industry is probably being maintained where the Almirah containing the record of the Union is kept.
10. The learned Labour Court has relied upon the Decision of their Lordships of the Supreme Court of Pakistan in the case of South British Insurance Employees' Union v. Sindh Labour Court No,IV and others, reported in 1975 SCM R 49. Their Lordships have observed, as under:-- "The Standing Order 11-A does not stipulate that the application to the Labour Court for permission to close down should be the first step in the process. All that it prescribes is that no employer shall close down the whole of its establishment without prior permission of the Labour Court in this behalf. Thus the Labour Court's permission might indeed be the last step in the process of closing down, or an application in this behalf may be made by the employer simultaneously with any other step that he may have to take to wind up his business and close down his establishment. The Standing Order does not appear to spell out any sequence in which the various steps for closing down an establishment have to be taken by an employer."
11. It may be pointed that this Decision of the Hon'ble Supreme Court pertains to case before the amendment in the Standing Order 11-A by Act XXIII of 1973; whereby the words (terminate the employment of more than fifty per cent of the workmen or) were added. It may also be relevant to reproduce Standing Order 11-A after amendment. The amendment is shown in brackets. It now reads, as under:-- "Standing Order 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."
12. In the case of Dubai Bank Limited, Faisalabad v. Joint Director, Labour Welfare, Faisalabad and 9 others reported in 1990 PLC 501; the learned Labour Court had refused permission under Standing Order 11-A for the sole reason that after closing down the business and terminating the services of the employees, permission was sought; whereas, according to Standing Order 11-A, taking of prior permission was necessary. The learned Labour Appellate Tribunal, Punjab, however, set aside the order of the learned Labour Court and allowed the application under Standing Order 11-A for the closure of the establishment holding that during the course of doing acts towards closing down of establishment, if an application is made under Standing Order 11-A, it cannot be said that such an application was given not prior to closing down. It was further held that "the act of the petitioner in terminating the services of the employees without permission obtained under Standing Order 11-A may be wrong, but, it does not mean that the whole closing down of the bank had been done before moving the application ." The learned Labour Appellate Tribunal while coming to the above findings had relied upon the above decision of the Hon'ble Supreme Court.
13. In the case of Nazeer Ahmad and another v. Presiding Officer and 5 others, reported in 1986 PLC 1052; a learned Single Judge of Sindh High Court had observed:-- "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 others 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 wothout 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 South British Insurance Employees Union v.
The Sindh Labour Court No,IV and others 1975 SCM R 49, it was held by the Supreme Court that 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 last 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."
14. In the case of Karimi Label Mills v. Sindh Labour Appellate Tribunal and another reported in 1983 PLC 502; a learned Division Bench of Sindh High Court has held that "Standing Order 11-A does make incumbent upon the employer to file an application for permission to the Labour Court for closing down the establishment as first step and such application can be made at any stage in the process of closing down the establishment." In that case, the aforesaid decision of the Hon'ble Supreme Court was relied upon. In the said case, the employer had arrived at collective agreement with C.B.A. To close down the Mills and terminate the services of all workers after allowing full payment and the workers had received such payments, therefore, it was held that they could not assail the agreement or claim reinstatement on the ground that the closure of the establishment was made without permission of Labour Court in terms of the Standing Order 11-A.
15. In the case of Messrs Allied Synthetic Mills Karachi v. A. Razzaque Khan and 22 others, reported in 1987 PLC 34, this Tribunal has held that action of management for obtaining permission of Labour Court in closing down the establishment due to acute financial losses after terminating services of all workers was neither illegal nor incorrect, but, within its vested rights.
16. The fact is that partners of the establishment are either Partners in the Establishment of respondent No,2 or are the sons of the Partners of the Establishment of respondent No,
2. Under the circumstances, the possibility that this closure may be a result of collusion between the two Establishments cannot be ruled out. However, there can be no legal presumption about such collusion, but, it has to be proved which proof is lacking in the instant case.
17. It is settled Law that mala fides is to be specifically pleaded and proved and cannot be presumed on surmises and conjectures. There is no such proof in the instant case. Rather the evidence on the record shows that the factory of the establishment remained without work from 2- 11-1987 and for some time the establishment paid 'No work Allowance' to its workers. It has also come on record that in the year 1987-88 the establishment had run into losses. Under the circumstances, the order of the learned Labour Court allowing closure is un-exceptionable.
18. Mr. S.P. Lodhi has also raised the objection that at least prior permission of the Labour Court under Standing Order 11-A was required before terminating the services of all the workers. It may be pointed that in application under Standing Order 11-A, the establishment had not prayed for the permission to terminate the services of the workers. However, the individual workers have not filed any grievance petition. It was conceded by Mr. Lodhi that no relief could be granted to them in this revision application. If the establishment had committed any violation of Standing Order 11-A while terminating the services of all the workers without prior permission of the Labour Court as required under Standing Order 11-A, such workers or the Labour Department, if they so choose, can file complaint under section 7 of the Ordinance against the Establishment.
19. In view of the above discussion, the revision application is dismissed as there is no illegality in the impugned order to call for interference by this Tribunal in exercise of its revisional jurisdiction.