ABBAS ALI Versus EXECUTIVE ENGINEER (E), WAPDA, LAHORE

MAMOON KAZI, J.‑‑‑ The undisputed facts of the case are that the services of the petitioners were terminated by respondent No. 3 as the said respondent decided to close down the mill where the petitioners had been employed. The said respondent filed an application before the learned Labour Court under Standing Order 11‑A of the Standing Orders Ordinance seeking permission to close down the establishment but during the pendency of such application the said respondent ran into acute financial difficulties and being unable to suffer any further losses in the business it first retrenched 14 workers on 3‑2‑1985 and subsequently on 7‑2‑1985 it closed down the entire establishment by terminating the services of all its workmen. It is pertinent to point out that the learned Labour Court before which the respondent's application under Standing Order 11‑A was pending did finally grant the same vide order dated 21‑5‑1986, however, the same was much after the impugned action had already been taken by respondent No. 3.

2. The petitioners thereafter filed their application under section 25‑A of the I.R.O. before the learned Third Labour Court which granted the application and ordered reinstatement of the petitioners in service. However, on an appeal being filed by the said respondent before the learned Labour Appellate Tribunal, the order passed by the learned Labour Court was reversed. The said respondent was nevertheless directed to pay all the legal dues of the petitioners and settle their accounts. Reliance was placed by the learned Labour Appellate Tribunal on the case of South British Insurance Employees' Union v. The Sindh Labour Court No. 4 (1975 SCMR 49) and a judgment of this Court given by one of us (Mamoon Kazi, J.) in the case of Nazeer Ahmed v. Presiding Officer and 5 others (1986 PLC 1052). The reasons which appeared to have weighed with the learned Appellate Tribunal are summed up in the decision which are reproduced as follows:‑

"In a case South British Insurance Employees Union v. The Sindh Labour Court No. 4 and others reported in 1975 SCMR at page 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 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. In the present case, the appellant management has also obtained permission from the Sindh 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:

3. We have heard Mr. Mirza Muhammad Kazim, learned counsel for the petitioners and Mr. M.L. Shahani, learned counsel for respondent No. 3.

4. Standing Order 11.‑A around which the entire controversy in the case revolves is as follows:‑

"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.

Explanation ‑‑‑`Close down' in this Standing Order includes lay off of workmen beyond fourteen days where such lay‑off results in closure of an establishment but does not include lock‑out declared, commenced or contained in accordance with the provisions of the Industrial Relations Ordinance, 1969 (XXIII of 1969)."

The Supreme Court in the case just referred to by us in this judgment while referring to the provisions of the said Standing Order has observed as follows:‑

"It will be seen that the Standing Order 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 us to spell out any sequence in which the various steps for closing down an establishment have to be taken by an employer, and, therefore, no question arises of the respondent having committed any illegality in this behalf."

It is pertinent to point out that Standing Order 11‑A as it stood at the time of the passing of the judgment by the Hon'ble Supreme Court did not include the words "terminate the employment of more than fifty per cent of the workmen" which were inserted subsequently in the said Standing Order by an amendment introduced by Act XI of 1976. The provisions of the said Standing Order were examined in the case of Nazeer Ahmed reference to which has also been made in this judgment, although the point in issue before the Court was not the same. It was, however, observed in this case that: "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."

5. The main contention of Mr. Mirza Muhammad Kazim before us has been that after the said amendment introduced in Standing Order 11‑A, the two situations viz., where the employer closes down the whole of the establishment or where he terminates the employment of more than fifty per cent of the workmen employed in such establishment have been brought at par with each other and in both the eventualities services of workmen cannot be terminated by the employer without prior permission of the Labour Court, except for the cases expressly excluded therefrom. After giving the matter our anxious consideration, we are inclined to agree with Mr. Mirza Muhammad Kazim on this point. The language used by the legislature is plain enough to indicate that as in the case of closure of the whole of the establishment, an obligation has been imposed upon the employer to seek prior permission of the Labour Court where the employer intends to terminate the services of more than 50% of the workmen employed by him. Consequently, in the present case, the respondent No. 3 by terminating the services of all his workmen before such permission had been granted by the Labour Court, had clearly violated the provisions of Standing Order 11‑A, although technically, because the case of the respondent is that it was compelled to close down its entire establishment on account of the financial difficulties faced by it and we are conscious of the fact that such an action was taken by the said respondent when his application before the Labour Court under Standing Order 11‑A was already pending disposal. The basic question that requires determination under the circumstances, therefore, is that notwithstanding the fact that its establishment was closed by the said respondent before an order as required by Standing Order 11‑A could be obtained by it from the Labour Court, whether the petitioners would be entitled to reinstatement in service. The fact that the entire establishment of respondent No. 3 has remained closed there‑since is not in controversy before us. Mr. M.L. Shahani has argued that under such circumstances the only remedy which Standing Orders Ordinance itself provides in this regard is embodied in section 7 thereof which provides for a penalty by punishment of the employer for any violation of the Standing Orders and consequently, the workmen retrenched by the employer cannot seek their reinstatement for such reasons. Although Mr. Mirza Muhammad Kazim has sought support from an unreported judgment of this Court in C.P. No. D‑332/90 (M/s. Metal Container (Pvt.) Limited v. The Chairman, Sindh Labour Appellate Tribunal) which was decided on 13‑6‑1991 wherein the provisions of Standing Order 11‑A were noticed by the learned Judges of this Court who decided the said case and the decision of the learned Labour Appellate Tribunal reinstating the workmen in service was upheld and Mr. Mirza Muhammad Kazim has also invited our attention to another unreported judgment of the Supreme Court C.P.LA. No. 342‑K of 1991 whereby leave to appeal against the said judgment was declined by the Supreme Court but with utmost respect, we would like to point out that the question requiring determination in the resent case was not directly in issue in the said cases. First of all nothing as been brought before us from which it can be spelled out that the action taken by respondent No. 3 resulting in the closure of its establishment or retrenchment of its workmen was mala fide. No doubt, the said respondent did not wait for passing of the orders by the Labour Court on its application filed under Standing Order 11‑A but the reasons for the same have been stated by the respondent reference to which has already been made in this judgment. Consequently, as we have already pointed out above, apart from the fact that the action taken by respondent No. 3 amounted to technical violation of Standing Order 11‑A, there is nothing placed before us to suggest that the action taken by the said respondent was otherwise unjustified. Furthermore, admittedly, the respondent has completely closed its establishment and even if the petitioners are ordered to be reinstated in service no effect can be given by the respondent to such directions on account of the closure of the establishment. The entire scheme of the legislation appears to be that the question of violation of Standing Order 11‑A is to be considered separately by the Court and if a case against the employer in respect of contravention of the said provisions is established the employer can be punished under section 7(2) of the Standing Orders Ordinance. However, if the action taken by the employer is found to be mala fide or otherwise unjustified by the Court then further suitable relief may be provided the workmen by ordering their reinstatement in service. However, in the present case, no such case has been made out before us as pointed out earlier.

6. In the result, although we may not fully agree with the view taken by the learned Appellate Tribunal in its decision dated 26‑8‑1986, but we nevertheless dismiss this petition for the reasons stated by us in our judgment. The parties are left to bear their own costs.

H.B.T./A‑1291 / K Petition dismissed.