The Supreme Court on August 12, 2022 in the case of Armed Forces Ex Officers Multi Services Cooperative Society Ltd v. Rashtriya Mazdoor Sangh (INTUC) observes that continuity of service can be directed in cases where, the retrenchment was not bona fide.

In the instant matter, Armed Forces Ex Officers Multi Services Cooperative Society Ltd retrenched the services of fifty-five employees, on the grounds that it had closed its business. Retrenchment compensation as per Section 25F of the Industrial Disputes Act, 1947, was also offered. Before the Industrial Tribunal, Pune, the Government referred the dispute regarding a demand of the workmen for reinstatement of fifty-five drivers with continuity of service and full back wages. 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 also upheld this order of the Tribunal.

Regarding the submission that the management has a right to organize its business based on economic considerations, the Apex Court observed that:

“There is also no quarrel with the principle of Parry & Co. Ltd. v. P.C. Pal , which laid down the proposition that a bona fide policy decision for reorganizing the business based on economic considerations is within an enterprise’s proprietary decision and retrenchment in this context must be accepted as an inevitable consequence. The answer is here itself, and pertains to the material requirement of bona fide of the decision. In the present case, the Tribunal has come to the conclusion that the entirety of business is not lost due to the strike and the retrenchment seems to have been imposed as retribution against the workmen for going on a strike. It is for this reason that the decision of this Court in the case of Parry Company (supra) will not apply to the facts of the present case.”

While dismissing the appeal, the Apex Court refused to interfere with the direction of the Tribunal to award 75% back wages.