The Supreme Court in Armed Forces Ex Officers Multi Services Cooperative Society Ltd vs Rashtriya Mazdoor Sangh (INTUC) observed that continuity of service can be directed in cases where the retrenchment was not bona fide.
Brief facts of the case are that Fifty-five drivers who are members of the Respondent Union were employed by the Appellant from 1998 through a settlement for pay and allowances. As the settlement expired on 30.06.2004, fresh negotiations between the employer and the employees commenced but did not result in any easy settlement due to claims for pay hike and demands for permanency of casual employees. The orders of termination were set aside by the Tribunal and the workmen were directed to be reinstated with continuity of service and 75% back wages, save eight employees who admitted to gainful employment post retrenchment. The Bombay High Court upheld this order of the Tribunal.
The Court observed, "that this is not at all a case of closure but a simple case of retrenchment, the Tribunal as well as the High Court have held that the method and manner by which the workmen were retrenched clearly demonstrates that it is virtually a closure. We have no hesitation in confirming these findings of fact. The act of terminating the services of all the drivers at the same time, coupled with the statement of the Appellant that the entire business is closed down, was sufficient to convey to the workers and the Union that the transport business had come to a standstill and that there was no scope of continuing the business any further. Further, we also concur with the findings of fact about the lack of bona fide in the Appellant’s offers of re-employment on new terms and conditions, and without continuity of service. It is for these reasons that the Tribunal and the High Court held that it was virtually a case of closure and correctly so.”
The Court stated that even though the principle of law that re-employment of retrenched workmen doesn’t entitle re-employment to them as per Cement Corpn. of India Ltd. v. Presiding Officer Industrial Tribunal-cum-Labour Court and Anr., and as well as in Maruti Udyog Ltd v. Ram Lal and Ors.
However, the Court observed that the principle laid down in these judgments will only apply to cases where the retrenchment is bona fide. The Tribunal has held that the retrenchment of all the drivers followed by an offer of re-employment on new terms and conditions is not bona fide. Once the orders of retrenchment are set aside, the workmen will naturally be entitled to continuity of service with order of back wages as determined by a Tribunal or a Court of law.