Shah, J. - (1.) The appellant is engaged in carrying on the business of regulating forward trade in groundnut oil and mustard seed, and is recognised as an Exchange under the provisions of the Forward Contracts Act, 1952. On June 1, 1964 the Government of India issued an order prohibiting trading in diverse commodities including groundnut oil and mustard-seed, and in consequence thereof no further business could be carried on through the appellant Exchange. On July 17, 1965 the appellant served notices of retrenchment upon 30 out of its 37 employees and paid them salary for the period of notice and retrenchment compensation under S. 25F of the Industrial Disputes Act, 14 of 1947. The Workmen then raised an industrial dispute. Conciliation proceedings to solve the dispute having failed, the Delhi Administration referred to the Labour Court the dispute whether retrenchment of the workmen by the appellant was unjustified and illegal. The workmen pleaded that retrenchment "on the ground of the ban imposed on forward trading in groundnut oil and mustard-seed was male fide" and that in retaining seven workmen the appellant did not follow, without any adequate ground, "the first come last go" rule, and on that account all the workmen were entitled to be reinstated with full wages from the date of determination of employment and with continuity of service. The appellant denied that in retrenching the workmen the management had acted mala fide, or that retrenchment amounted to an unfair labour practice. The appellant further submitted that retrenchment of the workmen was not liable to be challenged, because some junior members of the staff were retained, since the Company had recorded in the resolution its reasons for departing from the rule "first come, last go", and had "adhered to the principles contained in S. 25F of the Industrial Disputes Act as far as possible".
(2.) At the hearing of the reference before the Labour Court, Delhi, counsel for the workmen conceded that the appellant was justified in retrenching its employees and that the number of employees required to carry on the work after the imposition of a ban against the business of the appellant could not exceed the number retained by the appellant. Counsel, however, contended that since the appellant failed in effecting retrenchment of the workmen to observe the principle of "first come, last go", the order in its entirety was illegal. The Labour Court accepted the contention of the workmen and held that departure from a principle which was part of the law relating to industrial employment rendered the retrenchment of all workmen unjustified and improper and on that account retrenchment of clerks and peons who were affected by the departure from the rule was "illegal and mala fide". In the view of the Labour Court, workmen Nos. 1 to 14 and 16 to 23 in Ex. W-1-the List of Seniority-were so affected. The Labour Court ordered that as the appellant required only four clerks including the Accountant R. N. Seth, the Accountant and three senior clerks Shiv Das Sharma, Kishan Lal Grover and Surinder Singh be retained, and that the senior clerks named be reinstated with full 'back wages", subject as to adjustment of compensation money paid to them against their salary. The Court also directed that clerks Nos. 4 to 14 be paid, in addition to the retrenchment compensation received by them 50 per cent of the wages "as compensation for the period they remained in unemployment uptil the date when the award became enforceable", but they may not be reinstated, and the peons Tara Shankar and Om Prakash be reinstated with full wages and peons Nos. 18 to 23 in Ex. W-1 be paid in addition to the retrenchment compensation, "50 per cent of the wages they would have been entitled to". With special leave, the Company has appealed to this Court.
(3.) It is an accepted principle of industrial law that in ordering retrenchment ordinarily the management should commence with the latest recruit, and progressively retrench employees higher up in the list of seniority. But the rule is not immutable, and for valid reasons may be departed from. It was observed by this Court in Swadesamitran Ltd., Madras vs. Their Workmen, 1960-1 Lab LJ 504, that if a case for retrenchment is made out, it would normally be for the employer to decide which of the employees should be retrenched; but there can be no doubt that the ordinary industrial rule of retrenchment is "first come, last go", and where other things are equal, this rule has to be followed by the employer in effecting retrenchment.;