PUNJAB SMALL INDUSTRIES CORPORATION Versus PUNJAB LABOUR APPELLATE TRIBUNAL, LAHORE

1. SHAFIUR RAHMAN, J. ‑‑Leave to appeal was granted in five matters to examine a question of law arising therein. namely, whether A the respondents‑employees were at all governed by the provisions of Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 (hereinafter referred to as the Ordinance).

2. By Punjab Small Industries Corporation Act (Act No. XV of 1973), Punjab Small Industries Corporation was established as a body corporate with perpetual succession. Section 36 of this Act provided that officers and other employees of the defunct West Pakistan Small Industries Corporation shall be transferred to the Punjab Province in pursuance of the provisions of section 5 of the West Pakistan Small Industries Corporation (Dissolution) Ordinance, 1972 and required to serve on such terms and conditions as may be determined by the Government. Three of the respondents, namely, Abdul Waheed, Sarfraz Ahmed and Abdul Hamid, were transferred to the Corporation under this provision while the two others were recruited subsequently.

3. An order was handed down to each of the respondents which is dated 9‑8‑1980 and has the following form:‑---

4. "Consequent upon the abolition of the post of Skilled worker as a result of PSIC Board of Members' decision and Provincial Government approval the services of Mr.------------Skilled worker are hereby terminated with immediate effect being no longer required However, one month pay in lieu of one month notice period will be paid."

5. Each of the respondents whose services were terminated by such an order approached the Labour Court under section 25‑A of the Industrial Relations Ordinance. By its decision dated 22‑2‑1982, the Labour Court rejected their claim holding as follows:‑

6. "In the evidence the petitioner examined himself and deposed that he was a skilled worker and had been working in the Footwear section of the Institute of Leather Technology, Gujranwala and that it had now been given on lease by the respondent. In rebuttal the respondent produced Ghulam Hussain (RW‑1) who deposed that the Shoe Section was lying closed and that it had not yet been given on lease to anybody although the Government of the Punjab was willing to let it. This is admitted that the Shoe Section of the Institute of Leather Technology is not now being run by the respondent. The petitioner deposed that in his place a new person had been recruited by the contractor. He however neither gave the name of that person nor he mentioned the name of contractor. Because of the closure of the Shoe Section the petitioner cannot even insist on his re‑appointment under the lessee, if any.

7. It has been argued by the learned counsel for the respondent that under Rule 13.2 of the Punjab Small Industries Corporation Service and Recruitment Rules, 1976 read with the proviso to section 1(4)(c) of the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 the petitioner cannot seek his reinstatement through the Labour Court. Against this the learned counsel for the petitioner referred to 1978 P L C 436 and has urged that the Punjab Small Industries Corporation is a body corporate and is not a department of the Government and so this Court is competent to adjudicate in the matter. Because of closure of the Shoe Section the petitioner's service cannot be availed by the respondent in any other section and so he cannot take exception to the impugned order."

8. Appeals were preferred to the Appellate Tribunal and the Tribunal reversed the decision of the Labour Court in a consolidated judgment rendered in all the five appeals filed before it, holding as hereunder:‑

9. "In the termination orders the ground given is 'no longer required' and abolition of posts as a result of P.S.I.C. Board of Members' decision approved by the Provincial Government. On 13‑8‑1980 by means of a Press publication issued in Pakistan Times sealed tenders were invited for taking the Shoe Section on lease. From the publication Ex.P.3 this is evident that for giving the Shoe Section on lease the services of the appellants were terminated. Leasing out the Show Section is not a valid ground for the abolition of the posts and termination of the services of the appellants. Leasing out the Section does not amount to closure of the business. By leasing out the Section only the management will be changed. The appellants are entitled to work under the new management, unless they themselves are interested in leaving the service. It is not mentioned either in EX.P.1 or Ex.P.2 that the Board and the Government decided that the services of the appellants be terminated, nor they could legally make such a decision. For running the business of shoe making the services of workers are required and manifestly some other persons will be employed for the purpose, then why the appellants should not work when the business of shoe‑making is to continue?

10. It has been argued by the learned counsel for the respondent that Shoe Section has been closed. Neither such a position was taken in the written statement, nor RW‑1 stated so. To P.W.1 it was suggested in cross‑examination but he did not admit it. If Shoe Section was desired to be closed, in the termination orders this plea would have been taken and tenders for leasing out section would not have been called. No device to terminate the services of the workers can be allowed, unless it is legal. The orders of termination of the services of the appellants, therefore, ere not legal and sustainable.

11. It was directed that the respondents shall be reinstated in service and paid back benefits.

12. The Corporation filed five separate Constitutional Petitions challenging the orders of the Appellate Tribunal on various grounds. During the pendency of these Constitutional Petitions in the High Court, the statement of Mr. Muhammad Noman Usmani, Supervisor, was recorded on 24‑11‑1985 in the following words:‑

13. "He states that the Shoe Section is closed since 1980 and machinery worth rupees 19 lacs is lying idle and that his services have been retained in order to look after the machinery. He is drawing the salary against the post of Instructor of Shoe Section."

14. An Application (C.M.No.851 of 1987) was filed by the appellant in the High Court which was taken note of in the order dated 29th of ,March, 1987 and on 8th of April, 1987 was ordered to come up along with the main case. In this application, the follow in facts were brought to the notice of the Court:‑

15. "That during the pendency of Writ Petition No. 1912 of. 1983 the Ministry of Industries, Government of Pakistan wrote a letter dated 18‑7‑1982 to the Applicant prohibiting the Corporation to sublet/lease the machinery installed in the premises. The reason for prohibition as given in the letter was that the leasing out or transfer of the equipment shall be in contravention of the agreement executed between the Government of Pakistan and the Federal Republic of Germany who has gifted this machinery to the Government of Pakistan.

16. That in view of the letter the position has been fundamentally changed and now even if the Corporation wants to sublet the machinery the Corporation shall not be able to do by virtue of this letter dated 18‑7‑1982.

17. That the Corporation could not place this letter before the Punjab Labour Court No.7 and Punjab Labour Appellate Tribunal because the letter was not in existence at the time of recording the evidence in trial Court nor it was in the knowledge of the Applicant/ Petitioner at the time of appeal and now it is in the interest of justice that the letter dated 18‑7‑1982 as annexed be considered as part of the record while adjudicating upon the writ petition."

18. A new legal jurisdictional ground was taken up in the following words:‑---

19. "The following Respondents were the ex‑transferred employees of the Corporation:‑--

(i) W.P. No.1912 of 1983 Mr. Abdul Waheed joined on 25‑1‑1960.

(ii) W.P.No.1915 of 1983 Mr.Abdul Hameed joined on 21‑9‑1967.

(iii) W.P.No.1916 of 1983 Mr. Mohammad Sarfraz Ahmad joined on 23‑ 7‑1966.

20. They were transferred to the petitioner Corporation by virtue of the West Pakistan Small Industries Corporation (Dissolution) Ordinance, 1972. Section 5 of the said Ordinance transferred these employees to the petitioner Corporation and the Presidential Ordinance No. XLI of 1981, West Pakistan Small Industries Corporation (Dissolution) (Amendment) Ordinance, 1981 protected the actions taken by the petitioner Corporation from 1972 to 1981. The protection to the Corporation was given retrospectively and the impugned order is dated 11‑8‑1980 while the protection to the Corporation has been extended from 9 th October, 1972 to 1981. It is also important for this Honorable Court to know that 8th Amendment has protected decisions 'taken under the Presidential Ordinance, 1981 irrespective of any judgment of any Court. Section 270‑A of Constitutional 8 th Amendment Act 1985 is very clear on the point. It says that the Presidential Ordinances and all other laws made between the 5th day of July, 1977 and the date on which this Article comes into force are hereby affirmed, adopted and declared, notwithstanding any judgment of any Court, to have been validly made by competent authority and, notwithstanding anything contained in the Constitution shall not be called in question in any Court on any ground whatsoever. It means any decision taken within the ambit of President Order, 1987 is protected irrespective of any decision by any Court or Tribunal."

21. The High Court decided these Constitutional Petitions holding as follows:

(i) "I have come to the conclusion that the Shoe Section of the institute has not at all been closed. To begin with, the learned Punjab Labour Appellate Tribunal after considering the entire evidence on record gave a clear finding of fact that Shoe Section has not been closed. The learned Tribunal has placed reliance on the written statement as well as the statement of Ghulam Hussain (R.W.1) to say that the Shoe Section has not been closed. The learned Tribunal has also come to the conclusion that steps had been taken for leasing out the Shoe Section and tenders for that purpose have been invited. The learned Tribunal has concluded by saying that services of the workmen could not be terminated by adopting such a device. The finding of fact arrived at by the Punjab Labour Appellate Tribunal coupled with the affidavit of Mr. Zafar Saleem Advocate, Gujranwala. I have come to the conclusion that the Shoe Section was not closed at the relevant time."

(ii) "Additionally it is clear from the orders dated 9‑8‑1980, whereby the services of the respondents were terminated on the ground of abolition of posts. In these orders there is no mention that the Shoe, Section has been closed."

(iii) "On the request of the learned counsel for the Corporation, one Mr. Muhammad Nauman Usmani, Supervisor, was summoned in Court and he deposed that Shoe Section is closed since 1980 and‑ the machinery worth 19 (nineteen) lacs is lying idle and that his services have been retained in order to look after the said machinery. I am also of the view that this officer is the employee of the Corporation and he cannot go against his instructions. The mere fact that the machinery worth lacs of rupees is still installed at the spot and that. He was there as supervisor will Shoe that the section in question has not been closed."

(iv) "It is next argued by the learned counsel that the actions and orders of the Corporation stand validated by the validating Ordinance, 1972, and, therefore, if any irregularity has been committed by the Corporation, that stands validated. I am not persuaded to go into the validity or otherwise of the contention raised by the learned counsel for the Corporation because the same point is under consideration before the Full Bench of the Lahore High Court. Therefore, 1 do not enter into the discussion on the plea of the learned counsel."

22. On these findings the Constitutional Petitions were dismissed:

23. Mr. K. L.Kardar, Advocate, the learned counsel for the appellants has contended before us that as the appellant was a statutory Corporation and had framed statutory rules of service for its employees, the provisions of the Ordinance stood excluded on the strength of proviso to Standing Order No.1. On that reasoning it is contended that the jurisdiction assumed by the Labour Court and the appellate Tribunal was all without lawful authority. On merits it is contended that it was a case of abolition of the posts following the closure of the Section and there was no case for continuing the employment of the respondents and putting them on posts which did not at all exist. The fact that the posts stood abolished was established beyond any reasonable doubt. Finally it was contended that Ordinance No.41 of 1981 had the effect of validating all actions taken between First of July, 1972 and the commencement of Ordinance No.41 of 1981 in relation to any person whose services stood transferred under section 5 of the Dissolution Act of 1972. According to the learned counsel the three respondents namely, Abdul Waheed, Sarfraz Ahmed and Abdul Hameed fell within this category and the action taken against them was fully protected.

24. Mr. Nawaz Kasuri, Advocate, the learned counsel for the respondents has pleaded for the applicability of the Ordinance on the strength of decision given in National Shipping Corporation v. Sind Labour Appellate Tribunal and 2 others 1975 P L C 1. He has also contended that the finding of fact recorded by the Appellate Tribunal that Shoe Section had not been closed in fact was sacrosanct and not liable to interference in the Constitutional jurisdiction. According to him the statement of Mr. Usmani was rightly rejected.

25. Article 18 of the Constitution by its clause (c) envisages the carrying on by the Federal Government or a Provincial 'Government or by a Corporation controlled by any such Government, of any trade, business, industry or service to the exclusion, complete or partial, of other persons. This Article visualises the carrying on of the business by the Federal Government or a Provincial Governments or by a Corporation controlled by any such Government. In the proviso, excluding the operation of the Standing Orders Ordinance,; it is prescribed that "Provided that nothing in this Ordinance shall apply to industrial and commercial establishments carried on by or' under the authority of the Federal or any Provincial Government, where statutory rules of service, conduct or discipline are applicable) a to the workmen employed therein."

26. The Corporations have been omitted from the proviso and the requirement is of Provincial or Federal Government carrying on business under its authority and the existence of the statutory rules. In the case before us it is the common ground that the Provincial Government has set up a Corporation which is the appellant and which is running the establishment, of which the respondents were employees. It is clear, therefore, that on the words of the proviso, " Standing Orders do not become inapplicable and the decision in the case of National Shipping Corporation correctly lays down the law on the subject.

27. Assuming that the Standing Orders Ordinance is applicable, neither by the appellate Labour Tribunal nor in the impugned judgment of the High Court, the specific Standing Orders which have been, violated has been noticed or indicated. Standing Orders 12 and 11‑A alone appear to be attracted to the case. The first three relevant clauses of Standing Order Number 12, are reproduced hereunder:‑---

28. "12. Termination of employment.‑ (1) For terminating employment of a permanent workman, for any reason other than misconduct, one month's notice shall be given either by the employer or the workman. One month's wages calculated on the basis of average wages earned by the workman during the last three months shall be paid in lieu of notice.

(2) No temporary workman, whether monthly‑rated, weekly‑rated, daily‑rated or piece‑rated, and no probationer or bad shall be entitled to any notice if his services are terminated by the employer, nor shall any such workman be required to give any notice or pay any wages in lieu thereof to the employer if he leaves employment of his own accord.

(3) The services of a workman shall not be terminated, nor shall a workman be removed, retrenched, discharged or dismissed from service, except by an order in writing which shall explicitly state the reasons for the action taken. In case a workman is aggrieved by the termination of his services or removal, retrenchment, discharge or dismissal, he may take action in accordance with the provisions of section 25‑A of the Industrial Relations Ordinance, 1969 (XXIII of 1969) and thereupon the provisions of the said section shall apply as they apply to the redress of an individual grievance." Standing Order 11‑A provides as hereunder:‑‑

29. "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.

30. 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 continued in accordance with the provisions of the Industrial Relations Ordinance, 1969 (XXII1 of 1969).

31. The requirement of law that there shall be an order in writ in which shall explicitly state the reasons for the action taken and that a month's notice shall be given, were all satisfied in the cases in hand. Going behind the order of the Labour Court, the appellate Tribunal held that Shoe Section was not closed and the posts were not abolished, a finding which has been affirmed by the High Court. The two reasons given for it are that the termination order does not mention the closure of the Shoe Section and secondly that from the evidence it appeared that the Shoe Section was being leased out. None bothered to examine whether the leasing out of Shoe Section had in fact taken place or had been with its employees or was only of the machinery. What the respondents stated as a witness was not that the appellant had employed any one in the vacancy caused by, termination of their services but they stated that the contractor had employed someone else. No law has been pointed out to sustain the conclusion that the post could not be abolished before leasing out, the machines to contractors. Similarly, the reason of closure by itself. was meaningless unless it was coupled with the abolition of the post. The crucial determining factor was not the closure of the establishment' but the abolition of the post on which the respondents were employed. That had in fact taken place and it followed from the very statement of respondents that the appellant had not employed anyone on those posts. If at all there was a lessee or a contractor of the Shoe Section as held by the Labour Appellate Tribunal, who was obliged to keep the respondents on his Establishment then he should have been impleaded in the proceedings and given an opportunity of meeting the case set out by the respondents against him.

32. There was also an application (C.M.No.851 of 198?) which was not attended to at all by the High Court and the statement of Mr. Usmani was brushed aside on the ground that he was not expected to state against the employer or his instructions. This was palpably an untenable ground to reject a testimony.

33. The effect of a statutory instrument like Ordinance No.41 of 1981 should have been taken into consideration and could not be ignored for the simple reason that a Full Bench of the same Court; was seized of the question. Ordinance No.41 of 198I, has a limited E effect and does not affect the subordinate orders passed by the appellant with respect to the employees. It has a reference to section 5 of Act III of 1912 which provided as hereunder:

34. "5. Transfer of employees of Corporation.‑ Persons who were in the whole‑time employment o the Corporation immediately before the commencement of this Act shall be transferred to, and appointed by, the Provinces in accordance with the rules made by the President in this behalf:

35. Provided that the persons so transferred shall be appointed on such terms and conditions as the President may by order determine."

36. Instead of the President framing the rules or determining the terms and conditions of the service as required by section 5 reproduced above, the Provincial Government proceeded to discharge those functions of the President. It was obviously outside its competence and its powers. Validation of all such acts of the Provincial Government was achieved firstly by amending section 5 and proviso was substituted to the following effect by Ordinance No. XLI of 1981:‑

37. "Provided that the persons so transferred shall be appointed on such pay and other terms and conditions, which are not less favour able than those to which they were entitled immediately before their transfer, as the Government of the Province to which they have been transferred may by order determine."

38. Section 3 of the Ordinance No. XLI of 1981 validated the act in the following words:‑

39. "3. Validation.‑ Anything done, action taken or order passed, or purporting to have been done, taken or passed, on or after the first day of July, 1972, and before the commencement of this Ordinance, by the Provincial Government, Corporation or Board in relation to any persons referred to in section 5 of the West Pakistan Small Industries Corporation (Dissolution) Act, 1972 (III of 1972), who have been transferred to such Government, Corporation or Board shall be deemed to have been validly done, taken or passed and shall have and shall be deemed always to have had effect accordingly."

40. This validation has reference to and is cons fined to the lack of authority in view of section 5 of Act III of 1972. In the absence of sue validation it could be said that the Provincial Government or the Board had no authority to deal with at least three of the respondents/, employees who were received on transfer to the appellant corporation. That ground however, is not available in view of the validation.

41. From the material on record we conclude that the provision of the Standing Orders Ordinance were applicable to the respondents, that abolition of posts had in fact taken place and that the find in of the Appellate Tribunal is based on a misreading of evidence and misconception of law on the subject. The result is that all these' appeals are allowed. The judgments of the High Court and that of the Appellate Tribunal are set aside and that of the Labour Court is restored. No order as to costs.

42. M.B.A./P‑48/S Appeals allowed.