Case Note & Summary
The litigation arose from the reorganisation of road transport undertakings following the States Reorganisation Act, 1956 and the Bombay Reorganisation Act, 1960. Three corporations established under the Road Transport Corporations Act, 1950 operated in Bombay, Madhya Pradesh and Hyderabad. The Provincial Transport Services operated in the Vidarbha area, which became part of Bombay and later Maharashtra. To address territorial changes, Parliament amended the 1950 Act by inserting Section 47-A, empowering the Central Government to approve schemes for reconstitution, reorganisation and dissolution of such corporations. On 27 May 1961, the Central Government made an order under Section 47-A approving a scheme that amalgamated the Provincial Transport Services and State Transport Marathewada with the Bombay State Road Transport Corporation, renamed Maharashtra State Road Transport Corporation. Clause 9(1) of the order abolished all posts in the two undertakings and discharged all persons holding those posts, but gave employees the option to continue in service with the Corporation on the same terms and conditions or to take terminal benefits. Notices terminating the services of employees of the Provincial Transport Services were issued. On 12 June 1961, two former employees and a workmen's union filed a writ petition in the Bombay High Court at Nagpur under Articles 226 and 227 of the Constitution, challenging the order and the notices on three grounds. They argued that the order violated Section 47-A, that a proviso to clause 9(3) conflicted with Section 77 of the Bombay Reorganisation Act, and that the action contravened Section 25F of the Industrial Disputes Act and Section 31 of the Central Provinces and Berar Industrial Disputes Settlement Act, 1947. The High Court rejected the challenges based on Section 47-A and Section 25F, but held the proviso to clause 9(3) invalid as conflicting with Section 77, though severable. The High Court accepted the contention that the abolition of posts and termination notices required compliance with Section 31, and accordingly quashed the Government resolution for abolition of posts and the termination notices, and directed the Corporation not to vary the service conditions of former employees to their disadvantage without prior approval. The State of Maharashtra, the Maharashtra State Road Transport Corporation and the Motor Transport Controller appealed to the Supreme Court. At the hearing, the respondents did not appear. The correctness of the High Court's decisions rejecting the Section 47-A and Section 25F contentions was not challenged, so the only issue before the Supreme Court was whether the High Court was right in holding that the Government had contravened Section 31. Section 31 requires an employer intending to effect a change in any standing order or in respect of any industrial matter mentioned in Schedule II to give fourteen days' notice to the representative of employees. Item 1 of Schedule II refers to reduction of the number of persons employed. The appellants argued that abolition of all posts of an establishment did not amount to reduction of posts, because reduction presupposed the continued existence of the establishment with a smaller number of posts. The Supreme Court accepted this reasoning, holding that total abolition of all posts was not a reduction within the meaning of Item 1 of Schedule II, and therefore the Government order and termination notices did not constitute a change under Section 31. Consequently, no notice was required. The appeal was allowed and the High Court's order was set aside in so far as it quashed the Government resolution and termination notices, and the Government was held not required to follow the Section 31 procedure.
Headnote
A) Industrial Dispute - Notice of Change - Section 31, Central Provinces and Berar Industrial Disputes Settlement Act, 1947, Item 1 of Schedule II - Abolition of all posts of an establishment did not amount to reduction of posts within the meaning of Item 1 of Schedule II; therefore, the Government order abolishing posts and terminating services did not constitute a change requiring fourteen days' notice under Section 31. The High Court erred in quashing the Government resolution and termination notices for non-compliance; the Supreme Court held that the Government was not required to follow the notice procedure and allowed the appeal. (Paras Not mentioned)
Issue of Consideration
Whether abolition of all posts of an establishment amounted to reduction of posts within the meaning of Item 1 of Schedule II of the Central Provinces and Berar Industrial Disputes Settlement Act, 1947, and consequently whether the Government order abolishing posts and terminating services constituted a change under Section 31 requiring notice.
Final Decision
Appeal allowed. The Supreme Court held that abolition of all posts of an establishment did not amount to reduction of posts under Item 1 of Schedule II of Central Provinces and Berar Industrial Disputes Settlement Act, 1947, and therefore the Government order and termination notices did not constitute a change requiring notice under Section 31. The High Court's order quashing the Government resolution and notices was set aside; the Government was not required to follow the Section 31 procedure.
Law Points
- Abolition of all posts is not reduction of posts
- reduction presupposes continuation of establishment with lesser posts
- no change under Section 31
- no notice required
- total abolition of establishment not a reduction within Item 1 of Schedule II
