' These are 81 connected appeals (listed as above), under section 37(3) of the Industrial Relations Ordinance, 1969, against common decision, dated 17-8-1999, passed by the learned Presiding Officer, Si.Ndh Labour Court No,3, Karachi, involving questions of common facts and law, on application under section 25A, I.R.O., 1969, dismissing the grievance petitions of the appellants.
2. I have heard, at great length, the appellant's representative Mr. Saleem Raza and Mr. Ch. Muhammad Ashraf Khan, Advocate for the respondent and have perused the record and proceedings of the case in the lower Court with their assistance.
3. The facts, briefly stated are, that the appellants were permanent workers of the respondents' factory since different dates, as per list at page 245 of the R&P (Exh.R.W.2), giving the initial date of appointment in various capacities and departments.
4. The respondents, on 30-12-1996, had retrenched 56 workers on the ground that the respondent establishment was constantly suffering from losses and was thus, constrained to make retrenchment. However, on 15-4-1997, they were taken back in employment under a written agreement (pages 329(R)/11). This agreement has been referred to me by both the parties and read out in detail. It, therefore, seems necessary to reproduce some portions of it, which read as under:-- "Preamble: ' The extremely poor prevailing economic conditions over the last two years resulted in large scale curtailment of business and manufacturing activity in the country, coupled with this due to the severe financial and liquidity problems being faced by the main customers of the Company.
WAPDA and KESC, the sales of the Company had drastically dropped. The situation further deteriorated because of the inability of the Company and also being unable to place new orders because of shortage of funds.
' In view of the above situation the Company which was suffering losses and was working at very low production capacity had no alternative but to reorganize its factory, so as to save the factory from closure, therefore, had to retrench 56 workers of the Company with effect from January 1, 1997.
This extreme step was taken for the first time in the 48 years' history of the Company.
' The C.B.A. While acknowledging the very difficult circumstances the Company was facing because of the above circumstances, approached the Chairman of the Company to save the jobs of the retrenched workers on humanitarian grounds.
' The Chairman having consideration for the 56 retrenched workers, proposed that an effort and plan be made to try and get sales orders from the private sector and the export market, however, this could only be done by bringing down the cost of the company's products by better productivity to improve the competitiveness of the products against competition and to achieve higher sales and profit.
' The C.B.A. Fully backed the Chairman's suggestion and agreed that unless conditions improve both inside and outside the factory it will be difficult for the company by survive. The C.B.A. Further agreed that there was room for increasing productivity and pledged to give more production and fully support the efforts of the company to become more competitive and viable. Now therefore, this agreement witnessed as follows:--
1. Whereas the Company cannot guarantee the success of increasing sales inputs from the private sector and the export market, but pledges to make full efforts. The C.B.A. Agrees that God forbid in case the efforts do not realize good results and the Company is not in a position to continue operating the factory, in that case the Company shall be at liberty to take any action or decision it deems necessary according to its best judgment, such decisions or actions of the Company shall not be disputed by the C.B.A.
2. .
3.
4. The Company proposes to introduce new machines with effect from April 15, 1997. Immediately on introduction of these machines the production units will further be reduced by 10% from the figures as given in "Annexure A".
5. However, the respondent establishment, on 5-5-1998, resorted to retrench 82 employees. It seems pertinent to reproduce the letter, dated 5-5-1998, in order to ascertain the reasons for such retrenchment, which reads as under:-- "You will recall that due to economic crisis extreme financial liquidity problems of our buyers WAPDA and KESC and reduced orders, the Company was constrained to effect retrenchment of a number of workers from their services on 30th of December, 1996. However, on humanitarian grounds and other understandings arrived at between the C.B.A. And the Company by settlement, dated 18th March, 1997. 55 workers were taken back in the employment.
' Thereafter, although the management made all possible efforts to run the company profitably including cutting down of costs, downsizing the management cadre, the company continued to suffer huge losses, rendering the Company in no position to operate at present level of overhead and expenses with little business opportunities; very low productivity and critical financial problems faced by the Company.
' The Company at present is finding it difficult to arrange finances to complete the orders in hand, which have already been delayed and are liable to massive penalties.
' Consequently, the company has reached at the brink of disaster with no alternative except to reorganize and reduce its structure and it, therefore, constrained to declare your post in the Company as being surplus to its requirements.
' We would like to mention here that the constraints which have forced us to take this painful decision, have also been considered and accepted by the HonOurable N.I.R.C. In Case No,4A(O1/4 98K).
' Your services, therefore, are hereby terminated with close of May 5, 1998. You will, however, be paid one month's salary in lieu of notice in addition to all other legal dues admissible under the law.
' As per law, the Company has taken the steps of terminating the junior most employees in your category, in case you have any grievance in this regard, you may point out the same to the management for consideration.
' You may collect your dues from the accounts department from 25th May onwards between 3 p.m.
And 5 p.m. On any working day after' obtaining clearance from your departmental head for any tools or company property in your possession.
' Your faithfully.
(Sd.)
' Shehryar Saeed, ' General Manager (Prod. & I.R.)"
(Pages 19-21)
6. Being aggrieved with the said letter, the appellants gave individual grievance notices to the respondents on or about 30-7-1998, which was replied by the respondent establishment by their letter, dated 12-8-1998. Having felt dissatisfied with the reply, the appellants filed grievance application before the learned Third Sindh Labour Court. Each of the appellants filed their affidavits-in-evidence separately and Riaz Ahmed. General Secretary of the union appeared as sole witness for all the appellants, who was cross-examined. On behalf of the respondent one Riaz Muhammad Khan filed his affidavit-in-evidence as Manager (Industrial Relations) and Notified Factory Manager, who was cross-examined by the other side. The parties, then, closed their evidence. The learned Presiding Officer, then, framed the following issues:-- "(1) Whether the respondents have followed the laws regarding retrenchment and had legally applied the same?
(2) Whether the termination of the services of the applicants by way of retrenchment is legal?
(3) What should the order be ?"
' And after hearing the arguments, he dismissed the said grievance petitions by his decision, dated 17-8-1999, against which, the above appeals have been filed.
7. Mr. Saleem Raza, representative of the appellants (appearing for appellants in Appeals Nos,K 170 to 249) raised the following contentions:--
(1) The reply statement is signed by one Riaz Muhammad Khan, who is Manager (Industrial Relations) and, as such, he is not competent to sign the reply statement on behalf of the respondent. In consequence, the reply statement has no value according to law and cannot be taken into consideration.
(2) The termination letter, dated 5-5-1999 is signed by the General Manager (Prod. And I.R.), who is neither the Factory Manager nor the owner/attorney. He was, therefore, not competent to sign the termination letter.
(3) The reasons, given in termination letters, are not true. They are mala fide.
(4) The principle of "last come first out" has not been followed.
(5) The respondents have retrenched more than 50% of the total number of workmen without seeking permission from the Labour Court as required under Standing Order 11-A of the Standing Orders Ordinance, 1968.
(6) At the time of retrenchment i,e, 5-5-1998, conciliation proceedings were pending before the area conciliator and no permission was sought from the area conciliator.
8. As regards the first contention, Mr. Saleem Raza, referred to reply statement filed by the respondents on 21-11-1998 (page 35). Letter of authority (R/2, page 283) in favour of Mr. Riaz Muhammad Khan. Reference was also made by him to the appellant's affidavit-in-evidence (page 43) filed on 5-1-1999. In para. 3 whereof, this plea was specifically taken. Lastly, reference was made by him to Annexure S/I (page 51) dated 5-1-1999 which is a letter, issued by the Assistant Director Labour (Inspection II), West Division, Karachi addressed to the Union. In reply to the above submission Mr. Ashraf Khan, learned Advocate for the respondent referred to notice of occupation, dated 27-9-1998 with Form A, submitted to the Inspector of Factories by the respondent under Rule 3 of the Factories Act (page 281). Column 8 whereof notifies Mr. Riaz Muhammad Khan to be the Manager for the purpose of Factories Act. Whereas column 1 shows Mr. Azizur Rehman as Occupier.
This form is signed by Occupier and the Manager both and is, dated 24-9-1998 (R/1). This document (page 279) appears to have been received by the office of the Director Labour. West Division, Karachi on 25-9-1998. On perusal of the said document, the seal of office of the Director Labour was not ligible as it was a photo copy. I expressed my doubt about it whereupon Mr. Ashraf Khan produced the original letter, which bears full seal and signature (seen and returned).
9. Mr. Ashraf also referred to reply statement, dated 21-11-1998 (page 35). The said reply statement., at (page 41) bear the signature of Riaz Muhammad Khan stating, inter alia, as competent and authorised to depose on behalf of the respondent.
10. Reference was also made by the learned counsel to the affidavit-in-evidence of Mr. Riaz Muhammad Khan (page 161). In para. 1 thereof, he states that:" I am Manager, Industrial Relations and Notified Factory Manager and Authorised Officer to represent the respondent and as well conversant with the facts of the case". In cross-examination by Mr. Saleem, Raza, on behalf of the appellants, he also reiterated the same thing (page 169).
11. Learned counsel for the respondent also referred to a notice issued by the Court of SDM, S.1.T.E., District West by one Mr. Ahmed Ali Lakho, Labour Officer and Inspector' of Factories, West Division, issued against Sheharyar A. Saeed, the Occupier and Riaz Muhammad Khan, the Manager, to appear in his Court on 30-4-1999.
12. Taking up the plea, on legal plain, learned counsel referred to section 2(viii)(c) and (e) of the I.R.O., 1969, wherein the definition of "employer" has been given. Sub-clause (e) seems to be relevant which, for the sake of convenience, is reproduced as under:-- "(e) in relation to any other establishment, the proprietor of such establishment and every director, manager, Secretary, agent or officer or person concerned with the management of the affairs thereof; "
' Reference was also made to section 2(c)(i) of Standing Orders Ordinance, 1968, defining the "employer" as under:- "(c) employer means the owner of an industrial or commercial establishment to which this Ordinance for the time being applies, and includes --
(i) in a factory, any person named under clause (e) of subsection (1) of section 9 of the Factories Act, 1934 (XXV of 1934), as Manager of the factory; "
' Learned counsel further placed his reliance on an unreported judgment, dated 5-10-1999, passed in Appeals Nos,KAR-46 to 75 of 1999 by this Tribunal (M/s. Johnson and Philips (Pakistan) Ltd. v.
Muhammad Akram and others), referring to portion appearing at page 14 of the said judgment, wherein the same point appears to have been taken as to the competency of Mr. Riaz Muhamamd Khan which, in the circumstances of the case, was repelled by me. By this discussion, it seems apparent that the contention, raised by the representative of the appellants, is, not tenable.
13. Taking up the second plea, Mr. Saleem Raza submitted that Mr. Shahryar Saeed, who issued the termination letter, was not a Notified Manager, as stated by one of the appellants in his affidavit- in-evidence (page 43, para. 7). He referred to Annexure S/1 (page 51) wherein the name of Occupier and Factory Manager of the respondent is stated to be Mr. Bilal Qureshi as per register of Factory, Form B maintained for the purpose. Learned counsel for the respondent to R/3 (page 285), which is a notice of acceptance of Form 'A', dated 2-1-1998 addressed to Joint Director Labour, West Division, showing the name of the Occupier as Azizur Rehman, Director and Mr. Shahryar Saeed as Manager for the purpose of Factories Act, column 8. He also referred to cross-examination of appellant A. Kaleem Qureshi by Mr. Ashraf Khan (at page 55) (adopted by consent for all the appellants), wherein it was admitted that, "Mr. Shahryar A. Saeed is Manager (also since last one year). It is correct that at the time of retrenchment he was Factory Manager" Reliance was again placed on section 2 (viii)(c) and (e) of the I.R.O., 1969, which refers to Manager/Notified Manager both as Occupier and also section_ 2(c)(i) of Standing Orders Ordinance, 1968. In view of this documentary evidence, which has come on record from the respondent's side, the contention, raised by the appellants that Mr. Shehryar A. Saeed had no Authority to issue termination letter, falls flat.
14. As regards the third contention that the reasons in the termination letter are not true. They are mala fide, admittedly the agreement, dated 15-4-1997 supports the plea of the respondent that the respondent had lost two main clients WAPDA and K.E.S.C.
15. It is pertinent to note that the Union had taken up the matter to the N.I.R.C. Against the apprehended action of retrenchment. This application was filed on 1-1-1998 and N.I.R.C., after hearing the parties, passed its order, dated 31-3-1998, accepted the plea of the respondent that it was running in losses and due to financial exigency it was essential to retrench the employees. It will be beneficial to reproduce below the relevant portion from the said order:--
7. It is admitted position that the respondents' management had retrenched 56 workers and then reinstated them in pursuance of the agreement signed by applicant CBA and the management, which as it appears from the record was done by the respondents, management to run the business with co-ordination with applicant CBA and not to deprive any worker of his employment.
There appears so far no material on the record to show that the respondents management at any occasion had victimised any of the office-bearers of applicant union CBA or its member due to their trade union activities. According to the respondents, they have no orders from WAPDA and K.E.S.C., who were their main customers as such now they are going through financial crises and their share has also fallen down in the Stock Exchange from Rs,100 to Rs,10. There appears no any substantial material from applicant union to doubt this version of the respondents. It is right of the respondents employer to run the business in a manner to fetch profit from it and not to have losses, as such if the respondents' employer is facing financial constraint, he has, therefore, statutory right re-organise his establishment in the way best suited to him."
' Learned counsel for the respondent further submitted that this order was passed by the single Member, N.I.R.C. Had the union been dissatisfied with the said order, it had a right to file appeal before the Full Bench, which.Was not done and, therefore, this order has become final. He also referred to pages 329 to 337, which are the accounts of the company. A perusal of the said accounts, placed on record, is enough to show that the company has been constantly running in losses for the three consecutive years.
16. It is not disputed that the respondent company did not pay the shares of the workers in the workers participation fund as it was not in a position to pay the same due to losses for the last three years constantly.
17. Mr. Saleem Raza, however, took a plea that the accounts of the company were not correct and did not exhibit the correct position. The plea is unfounded. If the union was dissatisfied with the accounts, it could ask the Government for re-audit as provided under section 23B(10) of the I.R.O., 1969, which appears to have not been done and so document has been placed on record to this effect. It is noticeable that the office-bearers of the appellant's union are represented on the Board of Workers' Participation Fund. Had there been profit, they would have certainly raised an objection in the meeting. So, it was in the knowledge of the appellants themselves that the respondent was running into losses. In fact, Mr. Riaz Ahmed Khan, who appeared as a witness on behalf of the appellants and enjoy the position of General Secretary of the Union, has admitted in Court in his statement that there are losses. In cross-examination, it was also admitted by the appellants that no workers' participation fund to the companys' profit was paid to the workers in general for the last three years, evidentially there being no profits. Mr. Saleem Raza, however, urged that the union had moved an application for reaudit of the account to the Government, but I regret to accept this plea in view of my ruling reported as Sher Bahadur and others v. M/s. Subcos II (Pvt.) Ltd. (1999 PLC 447). The onus was on the appellants to prove that they had applied for the re-audit, which the appellants failed to discharge.
18. Mr. Saleem Raza also took a plea of mala fide that it was only the workers, who were retrenched and no officer was turned out. This objection stands repelled by the affidavit-in-evidence of Riaz Muhammad Khan (163, page 4) wherein it has been stated by him on oath that, "over 30 members of the Management were also terminated, removed and/or severed from the employment after 5- 5-1998 and a number of facilities, given to the officers, were either withdrawn or curtailed to economise the expenditure of the company". This goes further to show that there is no mala fides against the workers.
19. As regards the fourth contention of Mr. Saleem Raza that the principle of "last come first out" has not been followed. It was submitted by Mr. Ashraf that it was fully observed by the Company while retrenching the workers. Reference was made by him to the letter of termination (page 19). On perusal of the letter of termination, at page 21, last part of its states that, "the basis of termination has been last come first out". It is further stated in the aforesaid letter of termination that, "in case you have any grievance in this regard, you may point out the same to the management for consideration". There is nothing on record to show that the union or any individual appellant ever pointed out such a mistake. In fact, the management, of its own, found three such cases who were senior and were retrenched wrongly. Their letters of termination were, therefore, withdrawn on 9-6- 1999 and were reinstated in the employment. These three letters were produced by Mr. Ashraf which were taken on record with express consent of Mr. Saleem Raza.
20. Mr. Saleem Raza next contended that the principle of last come first .Out should have been on the basis of the entire respondent establishment and from the date of initial appointment and not categorywise.
21. Let me, first of all, reproduce the relevant provision of law i,e, Standing Order 13, which deals with the retrenchment and read as under:-- "13. Procedure for retrenchment.----Where any workman is to be retrenched and he belongs to a particular category of workmen, the employer shall retrench the workman who is the last person employed in that category."
22. Learned counsel for the respondent, repelling the said contention, submitted that the question of seniority and juniority has always been accepted by the Courts to be categorywise and not on the basis of the whole establishment. Reliance has been placed by him on the following authorities:---
(i) R.C.D. Ball Bearing Ltd. Employees' Union v. R.C.D. Ball Bearing Ltd., Karachi (1992 PLC 1236);
(ii) Messers Bayar Pharma Ltd. v: Mirza Hussain Akhtar (1981 PLC 24);
(iii) Messers National Tyre and Rubber Co., Karachi v. Subedar Fazal Rehman and 2 others (PLD 1977 Kar. 33);
(iv) Utility Stores Corporation of Pakistan Limited v. Punjab Labour Appellate Tribunal and others (PLD 1987 SC 447);
(v) Shamas Textile Mills and others v. Muhammad Sharif Zahid and others (1994 PLC 594);
(vi) Unreported judgment, passed on 11-5-1999 in Appeals Nos,K-383, 384, 386, 387 and 388 of 1998.
(M/s. Epla Laboratories (Pvt.) Ltd. v. Muhammad Afsar and 4 others)
23. In the first-named case, it was held that: "It appears that the respondent-company was undergoing serious losses from 1985 to 1991. There are the reports of the auditors to that effect that had not been seriously challenged by the applicadt union. There is no law to compel a party that lack finances to keep the industry going."
' In the second-named case, it was, inter alia, observed that:- "6. In order to appreciate whether the reduction in the quantum of work in the Analytical Department justified reduction in staff. I would briefly discuss what constitutes retrenchment and when it is permissible and when it can be considered to be invalid. It is well-established proposition that it is within the discretion of an employer to organize and arrange his business in the manner he considers best. The law, however, requires that in effecting retrenchment for any reason whatsoever, the employer must be acting bona fide and not for purposes of victimising his employees or as a cloak to get rid of the services of any particular employee. Justification for the retrenchment has, however, to be assessed by the reasonableness of a decision taken by the Management in a particular situation of actual or threatened losses or actual or expected reduction in the quantum of work."
' It was further observed that:-- "8. So far as the law in Pakistan is concerned, retrenchment would be permissible as long as it does not infringe the provisions of. The Standing Orders, particularly Standing Order 12, and other Labour.
Laws. If, the services of any workman are retrenched for any reason, including on the plea of retrenchment, he is entitled to file a grievance petition under section 25-A, I.R.O., as has been done by the respondent-workman, and thereupon the Labour Court is entitled to go into all the facts of the case, as provided in subsection (5) of the said section. It is thus the duty of the Labour Court to see that retrenchment has not been resorted to as a cloak to get rid of a workman who is found inconvenient for any reason or for any extraneous reason I have already shown, on the basis of the annual report, that there was substantial reduction in the work in the Analytical Department though some item of work undoubtedly showed an increase."
' It was, thus, held that:- "The upshot of the above discussion is that there appears to have been bona 'fides retrenchment in the Analytical Department of the appellant company in consequence of reduction of work and hence no fault can be found with the order terminating the services of the respondent workman on that ground."
' In the third-named case, it was, inter alia, observed that:- ' This Standing Order envisages different categories of workers within one single establishment. This is for obvious reasons, specially when workers are required to have specialised knowledge in a particular field, or to have a certain skill for performance of their jobs. In such cases, the wisdom of overriding the principle of 'last come first go' in terms of categories is quite extraneous. This is because if an establishment employs fitter and latheman and due to some reasons retrenchment is to be effected as far as fitters are concerned, it cannot be required to retrench a latheman only because he was the junior to be employed in that establishment. In such a situation the employer would be acting perfectly within the bonds of law if he retrenches a fitter who was the junior most in the category of fitters".
' In the fourth named case. It was, inter alia, observed that: ' Ordinarily the word 'lien' means that right of an officer to resume, on return to duty, a substantive or acting appoint from which he was relieved. Fundamental Rule 13 (Government of Pakistan "Completion of the Fundamental Rules and Supplementary Rules, Volume 1) lays down that a Government servant holding substantively a permanent post retains a lien on that post while performing the duties of that post or while on foreign service, or holding a temporary post, or officiating in another post. Such right is neither secured nor guaranteed to the respondents by or under any law. The learned counsel also was unable to point out to us any provision by which he could press the rule of lien to the rescue of the respondents. In that event, the respondents cannot have a grievance over their retrenchment which was on the principle 'last in first out' as contained in Standing Order No,13 of the West Pakistan Industrial and Commercial . Employment (Standing Orders) Ordinance, 1968."
' In the fifth-named case, the same view has been taken, as in the fourth-named case reproduced above.
' In the sixth-named unreported case, it was held by me that: "15. It has also come on record that services of the other workers, without any discrimination, were terminated by way of retrenchment. The principle of retrenchment 'last come first go' will be applicable not to the company as a whole but to the Department/Section, as envisaged in Standing Order 13 of the Standing Orders Ordinance, 1968, which provides that: '13. Procedure for retrenchment.---Where any workman is to be retrenched and he belongs to a particular category of workman, the employer shall retrench the workman who is the last person employed in that category' ."
24. I may also add to more cases on the point of retrenchment by Mr. Justice (Retd.) Z.A. Channa, the then Chairman of this Tribunal. The first case being Textile Corporation of Pakistan v. Bar Ali and others (1982 PLC 391), wherein it was observed that the management has inherent right to curtail expenses by effecting retrenchment and to re-organise mechanise or for effecting recovery or cutting losses to retrench surplus staff provided retrenchment is bona fide. The other case being Mahtoon Maula Bux and 34 others v. Messrs G.M. Fisheries Ltd. (1982 PLC 978) by the same learned Chairman, wherein it was observed that: "Company running in losses for three years clearly substantiates the stand of the respondent-Company that the retrenchment was necessary as well as bona fide".
25. Learned counsel for the respondent also referred to 1994 PLC 594 (Shamas Textile Mills and others v. Muhammad Sharif Zahid and others), which is also on the same point, as above.
26. Mr. Saleem Raza, also filed a detailed list of promoted employees and submitted that if a promoted employee was to be retrenched, then he should have been given, first, opportunity to accept the lower grade job from which he was promoted. Learned counsel for the respondent, in this respect, placed his reliance on PLD 1987 SC 447 (Utility Stores Corporation of Pakistan Limited v.
Punjab Labour Appellate Tribunal and others) and submitted that the employees, promotees from salesmen to supervisors, cannot claim, on retrenchment, right of reversion back to their earlier posts on principle of lien. After a close study of the case-law, on the subject. I am of the view that there has been consistent view of the superior judiciary that retrenchment has been accepted to be category-wise. The contention of the representative of the appellants, therefore, is, held to be without any force.
27. In the aforesaid unreported judgment (Epla's case), reliance was placed by me on Ejaz Hussain alias Ejaz Ahmed and another v. Messers Hotel Jabees Ltd. And another (1990 PLC 643) a Divisional Bench case of the High Court of Sindh in respect of retrenchment under Standing Order 13. The relevant portion from the said judgment is reproduced below:-- "6. According to the Standing Order 13 whereby workman is to be retrench and he belongs to a particular category of workman, the employer shall retrench the workman who is the last person employed in that category. In this way all workers of a particular category in an establishment are to form one body out of whom the junior most would go first, if there is retrenchment. It was argued on behalf of the respondent No,1 that the petitioners being room-bearers did not come in the category of waiters, bearers and table boys in his cross-examination, the respondent's witness Syed Wali Ahmed admitted in both the cases that the respondent No,1 establishment consisted of Hotel Jabees Funland at Clifton. Playland and Kababish Restaurant, and that the room-bearers, waiters and bearers belonged to the same category and they can be transferred to Kababish Restaurant also, as the nature of their service was the same. In view of these admissions it is clear that the petitioners and the bearers, the table boys, the waiters etc. Working at Funland. Playland and Kababish Restaurant belonged to the same category of workman for the purposes of Standing Order 13. As such the respondent No,1 while terminating services of the petitioners should have, for the purposes of the Standing Order 13 considered all the waiters, bearers, table boys and room- bearers employed by him to be belonging to one category. In other words, if any water-bearer or table boy working in Hotel Jabees or in Funland at Clifton or Playland or in Kababish Restaurant was junior to the petitioners then he should have been retrenched first before retrenchment of any of the petitioners."
28. Dealing with the fifth contention that Standing Order 11-A requires permission to be sought in case retrenchment termination is more than 50% of the workers. In the instant case, Mr. Ashraf Khan submits that, it is 49% only. List of workers, produced during the arguments by Mr. Saleem Raza, shows that the total number of workers are 181. It was argued by the parties that this list was also submitted before the N.I.R.C. In fact, the order, passed, by the N.I.R.C., mentions this number. So, there can be no cavil on it and that is why I accepted the list, submitted by the appellant's representative, at the appellate stage. Mr. Saleem Raza also invites my attention to another list of 18 workers, appearing at page 147 of R&B. But it is to be read alongwith the statement of the contractor, they were the employees of the contractor and not of the respondent-Company.
Admittedly, none of them is the appellant before me nor included in the list, submitted to N.I.R.C.
29. Mr. Ashraf Khan submits that the aforesaid 18 workers have no connection with the company.
They generally belong to the Department of the cleanliness which was given on contract. Mr. Saleem Raza did not admit this position and contended that they were- the employees of the respondent- Company inasmuch as the social security contribution and EOBI contribution was made by the respondent on behalf of these 18 employees. Mr. Ashraf Khan, on the other hand, raised two-fold contentions in this respect, firstly, that if these 18 persons are taken to be, for the sake of arguments, the workers of the respondent, the list of 181, which does not find mention in the list, submitted before the N.I.R.C., and the Labour Court as-well as in this Tribunal, the number will then be raised to 199 and the percentage will be even less than 49%. His second contention was that the payment of contribution to EOBI and Social Security Institution by the respondent- Company does not make them the employees of the respondent. The contribution was made by the respondent-Company under the terms of contract (page 145) so the respondent was obliged to make such payment to EOBI and Social Security Institution. This fact alone will not make those eighteen persons to be the employees of the respondent. In my view, it will, therefore, be unfair on my part to make any observation and include them as retrenched employees of the respondent. In any case, these 18 employees have, first to be included in the list of employees i,e, 181+18=199 and then to be treated as retrenched, but the position of proportion will remain the same.
30. Now, dealing with the last contention that no retrenchment could be effected by the respondent, pending conciliation proceedings, as provided under section 47 of the I.R.O., which read as under:- "47. Conditions of service to remain unchanged. While proceeding pending.---(1) No employer shall, while any conciliation proceedings or proceedings before an Arbitrator, a Labour Court or Tribunal in respect of an industrial dispute are pending, alter to the disadvantage of any workman concerned in such dispute, the conditions of service applicable to him before the commencement of the conciliation proceedings or of the proceedings before the Arbitrator, the Labour Court or Tribunal, as the case may be, nor shall be--
(a) save with the permission of the conciliator, while any conciliation proceedings are pending, or
(b) save with the permission of the Arbitrator, the Labour Court or Tribunal, while any proceedings before the Arbitrator, Labour Court or Tribunal are pending, discharge, dismiss or otherwise punish any workman except for misconduct not connected with such dispute.
(2) Notwithstanding anything contained in subsection (1) an officer of registered trade union shall not, during the pendency of any proceedings referred to in subsection (1) be discharged, dismissed or otherwise punished for misconduct, except with the previous permission of the Labour Court."
' According to Mr. Ashraf Khan, the controlling words in section 47, "discharged, dismissed or otherwise punish any workman except for misconduct not connected with such dispute" which is not by way of punishment. He, therefore, submitted that a retrenchment was not by way of punishment at all. In fact, the conciliation proceedings were started as long back as 13-1-1998 whereas the action of retrenchment was taken on 5-5-1998. A number of authorities were cited, in support of the said preposition reported as (1) Pakistan Tobacco Company Ltd. v. Full Bench of the National Industrial Relations Commission, Islamabad and 3 others (1985 PLC 884), (2) Zeal Pak Cement Factory Ltd., Hyderabad v. The Chairman, West Pakistan Industrial Court, Lahore and others (PLD 1965 Supreme Court 420), (3) Zahiruddin and another v. M/s. Adam Silk Mills Ltd. (1982 PLC 927), (4) M/s. Corning Glass Pakistan Ltd., Karachi v. Muhammad Hanif and another (1981 PLC 361) and (5) Syed Momin v. Rashid Textile Mills Ltd. And 3 others (1987 PLC 852).
31. In the first-named case, it was, inter alia, observed that: "In order to appreciate the contention we have referred to the various provisions of the Ordinance,.
Section 26 contemplates negotiations relating to differences and disputes. Under section 28 the period of notice of lock-out or strike given under subsection (3) of section 26 shall be fourteen days. Section 29 relates to the conciliation after notice of strike for lock-out. Section 30 speaks of proceedings before Conciliator. According to section 30(5) of the Ordinance if no settlement is arrived at within the period of the notice or strike or lock-out the conciliation proceedings may be continued for such further period as may be agreed upon by the parties. Under section 31(1) if the conciliation fails, the Conciliator shall try to persuade the parties to agree to refer the dispute to an Arbitrator. In case the parties agree, they shall make a joint request in writing for reference of dispute to an Arbitrator agreed upon by them. Under section 32 if no settlement is arrived at during the course of conciliation proceedings and the parties to the dispute do not agree to refer it to an Arbitrator under section 31 the workman may go on strike. Under subsection (2) of section 32 where a strike or lock-out lasts for more than 30 days the Federal Government if it relates to a dispute which the Commission is competent to adjudicate and determine, and the Provincial Government if it relates to any other dispute, may by order in writing, prohibit the strike or lockout. Provided that the Federal Government, with respect to a strike or lock-out relating to a dispute which the Commission is competent to adjudicate and determine by order in writing prohibit a strike or lock- out under subsection (3) in case the Federal Government or the Provincial Government prohibits a strike or lock-out it shall forthwith refer the dispute to the Commission or as the case may be to the Labour Court. Under section 33 of the Ordinance the Federal Government in the case of strike or lock-out relating to an industrial dispute of national importance or an industrial dispute in respect of any of the public utility services which the Commission is competent to adjudicate and determine, may by order, in writing prohibit a strike or lock-out at any time before or after the commencement of strike or lock-out. If such a action is taken by the Federal Government the provisions of subsections (3), (4) and (5) to section 32 shall also apply to an order made under subsection (1) above. The learned counsel for the respondents has referred to section 41 of the Ordinance which provides that the conciliation proceedings shall be deemed to be commenced on the date on which a notice of strike or lock-out is received by the conciliator under section 28.
Under subsection 2(b) of section 41 the conciliation shall be deemed to have concluded where no settlement is arrived on the date on which the period of notice of strike or lock-expires. The notice of strike is, dated 16th January, 1982. The period had expired on 31st January, 1982. Thus, there was no conciliation proceedings pending on that date and the irresistible conclusion would be that the conciliation had failed. The reference was made by the Federal Government on 17th July, 1982, therefore, cumulative effect of sections 32, 33 and 41 was that it was open to the union to go on strike and as there was an embargo under Martial Law Regulation No,23, dated 19th September, 1977 to go on strike the respondent No,3 could not go on strike. Though the parties mutually agreed to proceed with the conciliation proceedings but the consent of the parties cannot change the position of law. In para.3 of the Appeal filed by the petitioner before the Full Bench of the National Industrial Relations Commission, it has been stated that the parties agreed to meet for further negotiations before the conciliator on 30th June, 1982 when the conciliator had to declare the conciliation proceedings as closed because the Federal Government had already referred on 17th June, 1982 the industrial dispute between the parties for adjudication to the National Industrial Relations Commission. So also the petitioner moved legal objection on their behalf before the National Industrial Relations Commission wherein it is stated that the company already gives to its workmen wages and other benefits which in overall terms are much higher than those being paid by other employers and since the union failed to bring down its demands to reasonable or negotiable levels, the conciliation proceedings had to be continued over a long period, especially in view of the fact that the Company over the last several years has not been earning more than B- 6 per cent. Per annum on the average over the total capital employed during the relevant years.
These facts so clearly indicate that the conciliation before the conciliator had failed and that the Federal Government had exercised its powers under the Ordinance, which in the circumstances of the case had the authority. The question of issuance of a failure certificate does not arise."
' In the second-named case, it was held that: "In the present case, there is no manner of doubt there was a reorganization carried for a bona fide purpose of the industry, and the notice of discharge were given exclusively in relation to the redundancy which thus, resulted and without any taint of victimization. There was nothing in the nature of punishment or vindictiveness involved. We consider that the action of the Factory in respect of the employees retrenched in this case as surplus to requirements being bona fide, it did not attract the control of the Industrial Court under section 30 of the Ordinance, and we accordingly allow this appeal and set aside the order of the Chairman directing the reinstatement of these 19 workers. We make no order as to costs."
' In the third-named case, it was held that: "13. On a careful consideration of the circumstances, therefore, I am of the view that in the case of bona fide reorganization or retrenchment, it would be permissible for the employer to terminate the services of workmen whose services are no longer required even during the pendency of an industrial dispute and in such cases, permission from the Labour Court would not be necessary."
' In the fourth-named case, it was held that: " Although the provisions of section 47, I.R.O., are substantially different from those mentioned in section 33, Industrial Disputes Act, 1947, in that whereas the provision contains an absolute bar against alteration of the conditions of service of an employee to his prejudice, 'during the pendency of an industrial dispute concerning him, the latter specifically permits alteration of .Conditions of service in regard to a matter nor connected with such dispute. I am inclined to agree with the view taken by the Indian Courts that discharge or termination of services of an employee in accordance with the conditions of service applicable to him before the commencement of the industrial dispute would not be alternation of the conditions of service of such employee and hence would not be hit by section 47, I.R.O "
' In the fifth-named case, it was held that: "5. The first contention of Mr. Shafiq Qureshi is that leasing of Ring Department of the mill to the contractor tantamounts to contravention of the provisions of the first part.Of section 47(1) of Ordinance inasmuch as the same constitutes -alternation of the conditions of service of the petitioner. However, this argument appears to be fallacious. A close look at section 47 of the Ordinance, indicates that it consists of three parts. Firstly , it places embargo on the employer not to alter to the disadvantage of any workman concerned to an industrial dispute, his conditions of service, during the pendency of such dispute; secondly, it restricts the freedom of the employer to discharge, dismiss, or otherwise punish any workman during the pendency of such dispute save with the permission of the conciliator while any conciliation proceedings is pending or save with the permission of the Arbitrator, the Labour Court or Tribunal, while any proceeding is pending before either of them, barring cases of misconduct not connected with such industrial dispute; and lastly, it prohibits the employer to discharge, dismiss or otherwise punish any officer of a registered trade union, except with prior permission of the Labour, Court, during the pendency of any proceedings. The provisions of section 47, Industrial Relations Ordinance, clearly indicate that case of discharge or dismissal from service of a workman or an officer of a registered trade union are specifically covered either by the second part of section 47(1) or by section 47(2) of the Ordinance and not by the first part of sect ion 47(1). The first part of section 47(1) which deals with change or alteration of conditions of service of workmen concerned in an industrial dispute during the pendency of such dispute refers to persons who are still employed in service. In fact, the question of alteration of conditions of service of workmen can hardly arise in case of persons who have severed their connection with the establishment concerned after their discharge or dismissal from service. Moreover, mere leasing out of a department in the mill to be contractor cannot ipso facto attract the provisions of section 47(1) unless it is shown that conditions of service of workmen have been altered to their disadvantage during the pendency of an industrial dispute. The use of word 'disadvantage' in section 47(1) clearly contemplates imposition of conditions of service which are less favourable to the workmen concerned and admittedly no such allegations have been made by the petitioner in his complaint before the learned Labour Court. The first argument of Mr, Shafiq Qureshi, therefore, fails to impress."
32. On the other hand. Mr. Saleem Raza, placed his reliance on the following two cases:
(1) Unreported judgment, dated 4-5-1998 in the case of Muhammad Qasim v. M/s. Atlas Honda Limited Appeal No,KAR.336 of 1997.
(2) Okara Textile Ltd. v. Muhammad Yasin (1986 PLC 1093).
' Both the cases, cited by Mr. Saleem Raza, seem to be distinguishable inasmuch as in the first case, the employee was promoted and immediately, thereafter, he was retrenched from that post, whereas, according to Mr. Ashraf, in the instant case, there are as many as 82 workers having enjoyed a number of promotions during their long career of service. The last promotion was made to one of the worker as far back as February, 1995. The second case is also distinguishable because in the case, on facts shown on record, the lower grade post was in existence whereas in the instant case, the entire hierarchy of the workers employed by -the respondent has been effected due to retrenchment. The said ruling, therefore, does not seem to be applicable to the facts of the present case.
33. For the aforesaid discussions, although I have every sympathy for such a long list of eighty-one
(81) workers, but the legal position, as emerged out of full three days' arguments. I am constrained