M/S. OM OIL & OILSEEDS EXCHANGE LTD., DELHI versus THEIR WORKMEN

Citation: [1966] SUPP. 1 S.C.R. 74 · Decided: 28-03-1966 · Supreme Court of India · Bench: K.N. WANCHOO · Disposal: Appeal(s) allowed

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Judgment (excerpt)

74 
MIS. OM OIL & OILSEEDS EXCHANGE LTD., DELHI 
v. 
TIIEIR WORKMEN 
March 28, 1966 
[ K. N. W ANCllOO, J. C. SHAH A!>'D S. M. SIKRI, JJ. J 
Industrial Law-Retrenchment-Rule of "first come last 
oo". 
When can be departed frcmi-Empl.oyees properly retrenched-Ccmi· 
pensation payable. 
The respondents (workmen of the appellant) raised on indus-
trial dispute and pleaded before the Labour Court that the appellant's 
action in retrenching some of its employees was mala fide, as the 
appellant did not follow the "first come, last go" rule. The appellant 
justified its action on the ground that the appellant had recorded 
valid reasons for departing from the rule. The reasons were that, 
one of the employees retained was the only pers0n capable of look-
ing after the appellant's share work and court work, another was 
the only typ!st with the appellant, a third was the record keeper 
who alone knevl where the different types of records were kept, 
and the other two were peons who were retained as chowkidars be-
cause, there was no other person who could do that work. The La-
bour Court accepted the respondents' contention, ordered the rein-
statement of those employees who were affected by the departure 
from the rule, and directed that thooe employees who were proper-
ly retrenched should be paid in additi0n to the retrenchment com-
pensation under s. 25F of the Industrial Disputes Act, l!M7, which 
had been paid by the r.ppellant 50'1. of their wages as 
compensa-
tion till the date when the award became enforceable. 
In appeal to this Court. 
HELD: (i) The Labour Court was in error in inferring mala 
fl.des merely because the management departed from the rule of 
"firgt come, last go," 
Where other things are equal, the ordinary industrial rule has 
to be followed by the employer, but the rule is not immutable. It 
is for the management to ascertain who, on retrenchment, should 
be retained in the interests of the business, and the industrial tri-
bunal will not interfere with the decision of the management, un-
less preferential treatment L' actuated by mala fides. 
Preference 
given to the retained employees on the ground of mere experience 
may justify an inference of mala tides; but in the present case. the 
employees retained had, beside experience. special skill. or aptitude 
In the particular branch of the business of the appellant they were 
attending to, and the management had retained them because of 
that skill, or aptitude. [76 E-Fl 79B-E). 
S1oadesamitran Ltd. v. Their Workmen, [1960] 3 S.C.R. 144 and 
J.K. Iron and Steel Company Ltd. v. Its Workmen. [1960} 2 LL.J. 
64, referred to. 
(ii) Where retrenchment has been properly made and that order 
has not been set aside, there is no justification for directing oay-
ment oJ compensation to emp~oyees properly retrenched in addition 
to the retrenchment compens&tion statutorily payable. 
[80 E]. 
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OM OIL 
v.a. WORKl!EN (Shah, J.}LT 
76 
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CIVIL APPELLATE JURISDICITON: Civil Appeal No. 131of1966. 
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Appeal by special 1leave from the Award dated the Sep-
tember 10, 1965 of the Labour Court, Delhi, in I.D. No. 23 of 
1965 . 
M. C. Setavad, B. P. Maheshwari and M. S. Narasimhan, for 
the appellant.. 
Madan Mohan, for the respondents. 
The Judgment of the Court was delivered by 
Shah, J. 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 For-
ward Contract 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 ap-
pellant Exchange. On July 17, 1965 the appellant served notices 
of retrenchment upon 30 out of its 37 employees and paid thew 
salary for the period of notice and retrenchment compensuuon 
under s. 25F of the Industrial Disputes Act 14 of 1947. The work-
men 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 work-
men pleaded that retrenchment "on the ground of the ban imposed 
on forward trading in groundnut oil and mustard-seed was mala 
fide" and that in retaining seven workmen the 

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