ORDER
R.J. Kochar, J.
1. The Maharashtra State Textile Corporation Limited, a State owned Corporation, has been making efforts to improve the economic viability of its Textile Unit at Mumbai, which was nationalised and entrusted to the said State Corporation to run it better than the erstwhile owners of the said Mills viz. Western India Spinning and Manufacturing Mills.
2. It appears that the efforts of the Corporation have not met with expected success in recovering the Unit from its chronic sickness. In the revival efforts on the part of the State Corporation there are number of hurdles to be crossed requiring masterly skill in field of business and management acumen. Very often the bureaucratic character of the functioning of such Corporation makes it impossible to achieve its business aim. In the present case I may mention that the Respondent No. 3 a representative and approved Union for the Textile Industry in the local area of Greater Mumbai, under the provisions of the BIR Act 1946 is also within its own limits trying to co-operate with the Petitioners-Management. The said Union has gone to the extent of entering into an agreement dated August 10, 1998 which is duly registered under the provisions of the Act to agree to reduce the sanctioned complement of the posts by 174, even by stopping the third shift working. It is an admitted position that there was a surplus work force in the mills which required to be reduced to ease the economic burden of the sick textile mill. The Petitioners, therefore, applied on January 29, 1999 to the appropriate authority under Section 25-N of the Industrial Disputes Act seeking permission to retrench 49 of the surplus employees. Out of the total number of 729 employees the Petitioners proposed retrenchment of 49 employees. The surplus labour force admitted by the Respondent No. 3 Union under the registered agreement appear to be 174. In its application in the prescribed form under Section 25-N of the Industrial Disputes Act the Petitioners have pointed out, inter alia, the factors and conditions which have compelled them to seek permission for retrenchment of only 49 employees out of 729. All the required information and data were given by the Petitioners in the prescribed forms including the profit and loss accounts and balancesheet etc. The Petitioners have also annexed a list of the employees proposed to be retrenched in accordance with their seniority. I am not able to reconcile the figures of the proposed retrenchment of the employees in the covering letter dated January 29, 1999 and the number of proposed retrenchment of 49 workmen while the list of the proposed retrenchment is of 89 operatives and 71 clerical staff. I am however, confining myself to the figure of 49 which has appeared in the impugned order passed by the appropriate authority as well as in the Award of the Industrial Tribunal. However, though there was no attempt on the part of the learned advocate for the Petitioners to reconcile and explain the variance in the different figures, one fact is certain and beyond doubt that under the registered agreement both the parties have agreed that there was a surplus labour force requiring removal in accordance with law. The surplus labour force has been located and identified department/occupation/post wise. It is also clear that the petitioners have proposed to retrench only 49 of the total surplus labour force. In the registered agreement the Respondent No. 3 Union has agreed that the surplus workers would be retired under the Voluntary Retirement Scheme or by natural separation or would be provided alternative suitable work in any departments of the mills by protecting their present wages in consultation with R.M.M.S. Payment of ex gratia amounts are also laid down in the agreement. There are other conditions mentioned in the said agreement with which we are not presently concerned.
3. The competent authority, the Labour Commissioner, heard the parties and by its Order dated March 30, 1999 rejected the Petitioner’s application seeking permission to retrench 49 employees. It appears from the order of the competent authority that the permission to retrench was rejected solely on the ground that the management could not answer the question of filling up of the vacant posts after the proposed reduction in the labour complement. He has also observed that the management had pleaded for inclusion of young blood for improving efficiency of the mill. He has further opined that if the management was contemplating to fill up the vacant posts in that case the very purpose of reduction in the labour complement would be defeated. On these grounds the competent authority has concluded that there was no justification for the proposed retrenchment.
4. This order of the competent authority was challenged by the Petitioners before this Court under Article 226 of the Constitution of India by filing a Writ Petition No. 1720 of 1999. The said Petition was disposed of at the very threshold on the ground of availability of an alternative equally efficacious remedy of seeking review and/or reference to the Industrial Tribunal under Section 25-N(6) of the Industrial Disputes Act. This objection raised on behalf of Respondent No. 3 Union was accepted by the Division Bench and permitted the Petitioners to avail of the alternative remedy. It appears that the Petitioners approached the State Government for review of its earlier order rejecting the permission to retrench 49 employees. The State Government considering the matter afresh referred the matter to the Respondent No. 1 Industrial Tribunal for adjudication. After hearing the parties and on the basis of the material before him the learned Member of the Industrial Tribunal by his order dated June 30, 2000 rejected the reference and answered the reference in negative. The Tribunal has observed that the Petitioner had failed to justify and prove its demand for retrenchment of 49 employees. The learned Member of the Tribunal has placed certain interpretation on the two Standing Orders applicable to the operatives (20-A) and clerical staff (11-A) and has held that under the said Standing Orders the operatives or clerical staff who continue to be efficient even after the prescribed age of retirement are entitled to be continued up to the age of 63 years and they cannot be retrenched as proposed by the Petitioners. The second ground on which the Tribunal has rejected the reference is that the management has not clarified whether after retrenching 49 employees it would recruit fresh hands in the place of the retrenched employees.
5. Shri Saiyed, the learned advocate for the Petitioners has submitted that the proposed 49 employees to be retrenched have attained the age of superannuation of 60 years and under the Standing Orders the petitioners are entitled to retrench them before any one else can be retrenched. According to him, under the Standing Orders 20-A and 11-A respectively all those employees who reached the age of superannuation can be retired at that age when retrenchment becomes necessary. I will advert to this point little later. As far as second point of fresh recruitment is concerned Shri Saiyed has made a statement after instructions that the Petitioners will not recruit fresh persons as the Mill is already on the verge of closure and there is no question of increasing the economic burden which has already become unbearable.
6. Shri Saiyed has drawn my attention to the Standing Orders 20-A and 11-A respectively. Both these Standing Orders are similarly worded. They are reproduced hereinbelow:
“20-A “An operative shall retire from service on attaining the age of 60 years, but a male operative shall be retained in service, if he continues to be efficient, upto the age of 63 years, provided that when retrenchment becomes necessary, a person who has completed the age of 60 years may be retired in preference to younger men.”
11-A. Any employee shall retire from service on attaining the age of 60 years, but a male employee shall be retained in service, if he continues to be efficient up to the age of 63 years, provided that when retrenchment becomes necessary, an employee who has completed the age of 60 may be retired in preference to younger men.”
According to Shri Saiyed, the Petitioners can legally and validly retire those who have reached the age of 60 years under the given circumstances necessitating retrenchment in preference to those who are juniors in service. On the other hand Ms. Buch, for the Respondent No. 3 Union, has contested the said proposition of law and has placed heavy reliance on the following three judgments of this Court:
(a) Maharashtra State Textile Corporation Ltd. v. Vasudeo Vinayak Joshi and Ors. 1991-II-LLJ-457 (Bom) (Ms. Justice SUJATA V. MANOHAR)
(b) Tata Textile Mills (U.C.) and Ors. v. Munnilal Nanhoo Yadav and Ors.1994-III-LLJ (Supp)-476 (Bom-DB) (Mr. Justice S.K. DESAI & Mr. Justice P. KENIA)
(c) National Textile Corporation (Mah. North Ltd.) and Ors. v. S.M. Tambe and Anr. 2000 Lab IC 931 (Mr. Justice H.L. GOKHALE)
Ms. Buch has submitted that under the Standing Orders if a male operative continues to be efficient he is entitled to be continued upto the age of 63 years, and he cannot be discontinued or retired at the age of 60 years, as contended by Shri Saiyed.
7. The Standing Order 20-A reveals the following three ingredients :-
(a) age of retirement of an operative (male or female) is 60 years;
(b) a male operative shall be retained in service, if he continues to be efficient, upto to the age of 63 years;
(c) provided that when retrenchment becomes necessary a person who has completed the age of 60 years may be retired in preference to younger men.
As far as the first two ingredients are concerned there is no dispute and there cannot be any difference of opinion in the interpretation of that part of the Standing Orders. There is also no dispute that the aforesaid Standing Orders are of mandatory nature. If a male operative continues to be efficient his entitlement to continue in employment upto the age of 63 years is made dependent on a contingency of an occasion of necessity of retrenchment in the industrial establishment. As and when the employer in its management of the affairs finds it necessary to effect retrenchment, at such juncture this standing order intercepts and grants discretion to the employers to retire such an operative who has reached the age of 60 years. A choice of discretion is given to the management to prefer an employee of 60 years to get rid of and to retain a younger employee. The right of the efficient operative to continue upto the age of 63 years, after 60 years, is curtailed by the proviso which provides for a contingency of retrenchment. It means that if there is occasion for the employer to effect retrenchment in that case he need not follow the rule of last come first go, but he can legitimately require all such employees, who have reached the age of 60 years under the Standing Orders 20-A and 11-A respectively to leave the employment. This is an exception carved out to the ordinary rule of last come first go as provided under Section 25-G read with Rules 80 and 81 framed thereunder. Even Section 25-G of the Industrial Disputes Act has permitted retrenchment of a workman who is not junior in the category of the proposed retrenchment. In case there are 10 workmen in the seniority list the law has permitted the employer to retrench even the seniormost workman for the reasons to be recorded by the employer. It is possible that the seniormost workman might be totally inefficient or might be very old to be able to cope with the work in comparison with the younger workman, who might be efficient and competent and very useful for the establishment. To curtail any arbitrariness, the law has mandated that the employer must record reasons for departing from the ordinary rule of “last come first go”. It is, therefore, clear that even the legislative mandate to follow the golden principal of last come first go in the matter of retrenchment has been relaxed and the employer is given discretion to choose a senior workman to a junior one provided reasons are recorded for such decision. Under the present Standing Orders 20-A and 11-A such reason is already recorded by mutual agreement which has received the sanction of the Industrial Court in framing the Standing Orders under the provisions of the BIR Act, 1946. As and when any occasion to retrench employees arises and in the seniority list prepared under Section 25-G read with rules if the employer finds that there are employees who have reached the age of 60 years in that case the employer can prefer all such employees to be retired first to those who are younger in age. It is not a sacrosanct and rigid provision that for all the times to come the employer must remove by way of retrenchment even the most efficient, competent and useful employees only because they happened to be junior in service and it is also not in the interest of the undertaking and the industry to continue all such employees howsoever useless, incompetent or inefficient they should be continued till after the age of 60 years. The provisions to continue an efficient operative or a clerk upto the age of 63 years, after 60 years, is therefore not an absolute rule. By the very mandatory Standing Order the employer is given an option to prefer younger men to old operatives who have reached the age of 60 years. The continuance of the male operatives upto the age of 63 years is therefore made dependent on three conditions viz. (a) they should continue to be efficient (b) there should be no occasion of retrenchment and (c) in case of retrenchment the employer can always retire them in preference to those who are younger.
8. There are two registered agreements which are legal and valid and which must be given its legitimate effect. The agreement dated June 16, 1997 relates to reduction in sanctioned complements of Spinning Department. By the said agreement the representative Union and the Petitioners had agreed to rationalise and had further agreed to reduce the spindles and revise the sanctioned strength of the operative of the spinning, boiler and mechanic department, in accordance with the annexures showing further details. It is further agreed between the parties that surplus posts which would result from the agreement will be abolished from the sanctioned complements/strength immediately and the sanctioned complement will be reduced by that number as shown in the annexure. It was further agreed that the surplus operatives would be paid ex gratia amount in accordance with the Voluntary Retirement Scheme.
9. There is a second registered agreement dated August 10, 1998 relating to the working of looms. By agreement between the parties the looms of certain operations were to be stopped including the entire loom shed along with related machine shifts of weaving preparatory section and processing (sic) M/C shifts in the third shift. By this provision in the agreement it was further agreed that 158 posts will be abolished departmentwise and categorywise as set out in the annexure. It was further agreed that these posts will be reduced from the sanctioned complement and the muster strength. It was further agreed that the surplus workers would be retired under VRS or by natural separation or will be provided alternative suitable work in any departments of the mills by protecting their present wages in consultation with the R.M.M.S. Payment of ex gratia is also provided for those who offer to retire voluntarily. There are other details in both the agreements with which I am not presently concerned.
10. From both the agreements one thing is beyond shred of any doubt that both the parties have agreed that there was surplus labour force which has been identified and located departmentwise and categorywise. Both the parties have further agreed to abolish the surplus posts as a result of the agreements. Both these agreements have been arrived at by the parties under the mandatory provisions of the BIR Act after following the mandatory provisions laid down in the Act. All such agreements are required to be registered under Section 44 of the Act. Every registered agreement has binding effect on both the parties and any breach of a term of a registered agreement would attract the provisions of Section 46 of illegal change. A registered agreement therefore partakes the character of a statutory provision. Considering both the registered agreements wherein surplus labour force has been identified and located and abolition and reduction of posts has also been agreed upon, in my opinion, the only consequence appears to be that the petitioners have made out a very strong case for retrenchment under Section 25-N of the Act. It is rather immaterial and irrelevant whether in future the Petitioners would recruit new persons or not? In my opinion that is not a valid consideration to refuse permission to the petitioners to retrench 49 employees.
11. Even the Standing Orders which are framed under Chapter VII of the BIR Act have statutory force. They have been finally settled by an award of the Industrial Court. The Standing Orders have statutory force under the BIR Act and not merely a statutory flavour. The present Standing Orders are framed by the Industrial Court in a statutory appeal as provided under Section 36 of the Act.
Considering all these factors cumulatively I have no doubt in my mind that the Petitioners have proved a case for retrenchment which became necessary as a result of the aforesaid two registered agreements. It is not the subjective satisfaction of the Petitioners alone but it is as a result of bilateral agreement arrived at after following the statutory provisions from Sections 42 to 45 of the BIR Act. Even the Respondent Union which is a representative and approved Union for the Industry and a responsible Union in that sense, has agreed with the management that there was surplus labour force in the departments/shifts/ categories and it had consciously agreed to reduce the number of posts and to size down the complement after calculating the number of posts and persons, and the strength of the work force.
12. In these circumstances as far as the 49 employees who have reached the age of 60 years the Standing Orders 20-A and 11-A would come into operation and would effectively intercept in the process of reduction of the surplus labour force and reduction or abolition of the number of posts in the shifts/departments. Under the provisions of these Standing Orders the Petitioners are entitled to retire all the 49 employees who have reached the age of 60 years, and in my opinion while retiring them under the provisions of the Standing Orders it is not necessary for the petitioners to seek permission from the competent authority under Section 25-N of the Industrial Disputes Act, 1947. To retire an employee under the Standing Orders no permission of any authority is prescribed. There might be any number of employees who reached their prescribed age of superannuation and they can be sent out of employment whereby the number of persons employed is reduced under the Standing Orders the employer is not at all required to approach any authority under any law to seek permission to retire such employees who reached the age of superannuation. Similarly if any employee is to be dismissed under the Standing Orders no permission under Section 25-N of the Industrial Disputes Act is contemplated on the ground that there would be reduction in the number of persons employed. Similarly if the petitioners contemplate to retire 49 employees acting under the Standing Orders 20-A and 11-A no permission under Section 25-N of the Industrial Disputes Act is necessary. The observations made by the learned single Judge of this Court (Ms. V. SUJATA MANOHAR, J.) in the Judgment of Maharashtra State Textiles Corporation Ltd. v. Vasudeo Vinayak Joshi and Ors. (supra) are in a general context that the necessity of retrenchment must be established in accordance with law. In the present case the two registered agreements have established beyond any doubt the objective circumstances of retrenchment. The ratio laid down by the learned single Judge and followed by another learned single Judge of this Court (H.L. GOKHALE, J.) in the case of National Textile Corporation (Mah. North Ltd.) and Ors. v. S.M. Tambe and Anr. (supra), would definitely apply in a case where the employer intends to retrench a large number of employees in the absence of any registered agreement with the Representative of employees. In such a situation both the learned single judges are right when they have held that in the case of retrenchment Section 25-N will have to be followed. In our case the petitioners have not applied for retrenchment of all 174 surplus employees. If they were to retrench all the 174 surplus employees in that case it was necessary for them to have sought permission under Section 25-N of the Industrial Disputes Act. After getting permission to retrench 174 employees the Petitioners could have still retired 49 employees who reached the age of 60 years. In such a situation the permission under Section 25-N of the Act was contemplated. However, in the present facts and circumstances the Petitioners have clearly and objectively established the necessity of retrenchment on arriving at the two registered agreements. According to me there was no necessity for the Petitioners to have approached under Section 25-N of the Act seeking permission to “retrench 49 employees” in the present case. It.was wholly misconceived and untenable application. According to me, after statutorily establishing the necessity of retrenchment based on the two registered agreements the mandatory provisions of the Standing Orders would instantaneously come into effect. The Petitioners could have straightaway passed orders of retirement of the 49 employees who had reached the age of 60 years acting under the respective Standing Orders 20-A and 11-A. These Standing Orders could not be and cannot be relegated in the backgrounds of redundancy under the following circumstances.
13. The Standing Orders for the Cotton Textiles Industry in the local area of Greater Bombay were finally settled under Chapter VII of the Act by the decision of the Industrial Court in Appeal under Section 86(3) of the Act against the decision of the Commissioner of Labour who had settled the Standing Orders in exercise of his powers under Section 35 of the Act. The appeal was decided by the Industrial Court under the powers vested in it under Section 87 read with Section 88 of the Act. And Section 94 makes all such orders, decisions, or awards passed by the Industrial Court binding on all parties to the industrial dispute. The Standing Orders so finally settled are mandated under Section 40 to be determinative of the relations between the employer and his employees in regard to all industrial matters specified in Schedule I of the Act. It would therefore, be crystal clear that the Standing Orders have a force of law between the parties. They are statutory and not merely having a “statutory flavour”. A decision of the Industrial Court has binding force of law. So has the force of law in Standing Orders 20-A and 11-A in question. Similarly a registered agreement has equally a binding force of law under Section 114(1) of the Act. In the search light of these provisions it is very clear that the Registered Agreement with which we are concerned have finally settled by elaborate consideration in accordance with the mandatory provisions of Chapter VIII the question of surplus work force in the various departments and occupations resulting in the consequence of retrenchment of surplus labour force or permanent reduction of posts/persons employed. It is not a “subjective satisfaction” but a very objective and calculatedly hard decision between the Petitioners and the Representative Union. It finally settles and crystallises the necessity of retrenchment. Nothing more is required to take step to reduce the posts /persons employed or in other words to effect retrenchment. At this crucial juncture the provisions of the Standing Orders 20-A and 11-A would intercept and come into operation entitling the Petitioners to exercise their right to retire all those 49 employees who had reached the age of 60 years. To interpret the provisions in any other manner would amount to reduce the proviso of the Standing Orders 20-A and 11-A to sheer redundancy and make it nugatory or non est. To read all the provisions of law harmoniously, at the best it can be said that the Petitioners were required to comply with Section 25-N of Industrial Disputes Act, formally to apply for permission to retrench the 49 employees and the Appropriate Authority ought to grant such permission instantaneously, such permission however, would be in effect to retire the 49 employees under Standing Orders 20-A and 11-A. The Petitioners would therefore be not liable to comply with Section 25-F of the Industrial Disputes Act. As a consequence the Petitioners would not be liable to comply with Section 25-G or 25-H of the Act. Ms. Buch has no doubt sought support from the above mentioned three judgments of this Court, but the facts in the Petition are different. In all those matters individual employees were seeking continuation of employment after 60 years upto the age of 63 years under the second clause of the Standing Orders 20-A and 11-A on the ground that they continued to be efficient. There was no issue of retrenchment of surplus labour force on the basis of registered agreements. The Petitioners are seeking permission to reduce the surplus posts/persons after the registered agreements and in accordance with their rights under the Standing Orders. Even if the Petitioners are required to seek permission to retrench under Section 25-N of the Industrial Disputes Act, it would be a mere formality. When they are conferred an independent right under the Standing Orders, there is no valid reason to make them undergo the rigmarole of Section 25-N and delay the matter resulting into further loss and uncertainty to the already sick concern. Besides, in the present petition the most crucial and important aspect of legal efficacy of both the Standing Orders settled under the Chapter VII of the B.I.R. Act, 1946, by judicial decision of the Industrial Court and the registered agreements between the Petitioners-employers and the Representative Union under Chapter VIII of the said Act has pronouncedly arisen which had not arisen and was not considered in the aforesaid three judgments. Otherwise there is no quarrel at all with the ratio of the said judgments that a male employee if he continues to be efficient upto the age of 63 years, he should be continued till that age on bona fide and honest assessment of his efficiency every year. The third issue of retirement on the necessity of retrenchment had not arisen in any of the three cases though there are some observations on that point which may not form a binding ratio or a precedent, with respect.
14. Both these enactments have given prime importance to the interest of the general public and the community as a whole. It is very pertinent to note that the BIR Act provides for the foremost consideration of the interest of the community as a whole. The relevant part of the definition of “Industrial Matter” reads as under:
“3(18)(d) all questions of what is fair and right in relation to any industrial matter having regard to the interest of the person immediately concerned and of the community as a whole;”
Considering the interest of the whole community and considering the millions of young boys and girls who are yet to be employed and who are knocking the doors for employment it will not be in the interest of the society to add to the said unemployed lot by throwing out the presently employed young persons by interfering in the Standing Orders, in any other manner. Those young men and women who are presently in employment need the jobs more than those who have spent their whole life and, have discharged all their liabilities upto the age of 60 years. The young men and women have yet to live their lives and have yet to discharge their liabilities towards their parents and their children. The underlying principle and the spirit of the Standing Orders was to protect the employment of the young persons. I have interpreted the Standing Orders without forgetting the said underlying principle and spirit of the Standing Orders in the flood light of the language “interest of the community as a whole” ana” “interest of the general public.”
15. Both, the learned competent authority and also the learned Members of the Industrial Tribunal have not considered the point in proper and correct perspective, in the sense that the necessity of retrenchment was already established by the two registered agreements and nothing more was required. Section 25-N(3) of The Industrial Disputes Act requires the authority to consider the genuineness and adequacy of the reasons stated by the employer and also the interest of the general public and all other relevant factors while considering the case of permission to grant retrenchment. In view of the two registered agreements binding on both the parties the question of genuineness and adequacy of the reasons to retrench cannot be gone into by the competent authority nor by the Tribunal. Even the representative Union cannot go back on the said question of permission to retrench the employees who become surplus as a result of its own agreements. According to me, the Petitioners have made out a case for retrenchment following the two registered agreements. In my opinion the competent authority ought to have per se granted permission to the Petitioners to retrench the employees on the basis of the two registered agreements. In the aforesaid circumstances the application made by the Petitioners under Section 25-N of the Industrial Disputes Act has to be held to be not necessary. Both the impugned orders are therefore quashed and set aside. Rule is made absolute in terms of prayer (a) and (b). No order as to costs. The petitioners are permitted to retire the 49 employees in question under Standing Orders 20-A and 11-A. It is however, clarified that the 49 employees would be entitled to the benefits of the registered agreements.
16. Stay prayed for by Ms. Buch is refused. Certified copy is expedited.