The Management of U.B. Dutt & Co.
Vs. Workmen of U.B. Dutt & Co  INSC 28 (29 January 1962)
29/01/1962 WANCHOO, K.N.
CITATION: 1963 AIR 411 1962 SCR Supl. (2) 822
APL 1965 SC1496 (5) R 1966 SC1672 (6) D 1972
SC1343 (16) R 1973 SC2634 (6) RF 1976 SC 661 (14) RF 1980 SC1896 (55)
Industrial Dispute-Termination of service of
employee in terms of counteract-Dropping of proposed departmental enpuiry-If
colourable exercise of power-If can be questioned before
industrial-tribunal-Prinacipale terminating Government Service-If applies to
S, employed by the appellant as a cross
cutter in the saw mill was asked to show cause why his services should not be
terminated on account of grave indiscipline and misconduct and he denied the
allegations of fact. He was thereafter informed about a department enquiry to
be held against him and was suspended pending enquiry.
Purporting to act under r. 18(a) of the
Standing Orders, the appellant terminated the services of S, without holding
any departmental enquiry. The industrial tribunal to which the dispute was
referred held, that action taken, after dropping the proposed departmental
proceedings was not bonafide and was a colourable exercise of the power conferred
under r. 18(a) of the Standing order and since no attempt was made before it to
defend such action by proving the alleged misconduct, it passed an order for
reinstatement of S, The appellant contended that as the termination was
strictly in accordance with the terms of contract under r. 18(a) of the
Standing Orders, it was entitled to dispense 823 with the service of an
employee at any time by first giving 14 days notice or, paying 12 days wages.
^ Held, that the employer's decision to
discharge the employee under r. 18(a) of the Standing Orders after dropping the
enquiry intended to be held for misconduct was clearly a colourable exercise of
the power, and an employer could not press his right purely on contract and say
that under the contract he has unfettered right "to hire and fire"
his employees, right was subject to industrial adjudication and even a power
like that granted by r. 18(a) of the Standing orders in this case was subject
to the scrutiny of industrial courts. Even in a case of this kind the
requirement of bona fides was essential and if the termination of service was a
colourable exercise of power, or was a result of victimisation or unfair labour
practice, the tribunal had jurisdiction to intervene and set aside such
Buckingham and Carnatic Co. Ltd. v. Workers
of the Company,  L. A.C. 490, referred to.
The Chartered Bank Bombay v. The Chartered
Bank Employees Union.  3 S.C.R. 441 and Assam Oil Company v. Its Workmen,
 3 S.C.R.
Held, further, that the principle relating to
termination of Government service stands on an entirely different footing as
compared to industrial employees and the same principle could not be applied to
Parshotaa Lal Dhingra v. Union of India,
 S.C.R. 828, distinguished.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 50 of 1961.
Appeal by special leave from the Award dated
March 10, 1959, of the Industrial Tribunal.
Kozhikode, in I.D. No. 89 of 1958.
A. V. Viswanatha Sastri and T. V. R.
Tatachari, for the appellant, Janardan
Sharma, for the resondents.
1962. January 29. The Judgment of the Court
was delivered by WANCHOO.J.-This is an appeal by special leave in an industrial
matter. The brief facts necessary for present purposes are these. The appellant
in a saw-mill carrying on business in Kozihkode in 824 the State of Kerala. One
Sankaran was in the employ of the appellant as a crosscutter. It is said that
on June 21, 1958, Sankaran came drunk to the mill and abused the Engineer, the
Secretary and others and threatened them with physical violence. He was caught
hold off by other workmen and taken outside. It is said that he came again a
short time later at 4-30 p.m. and abused the same persons again. Thereupon the
appellant served a charge-sheet on Sankaran on June 24, 1958 acting out the
above facts and asked him to show cause why his services should not be
terminated on account of his grave indiscipline and misconduct.
Sankaran gave an explanation the same day
denying the allegations of fact made against him, though he admitted that he
had come to the mill at the relevant time for taking his wages for that week.
On June 25, 1958 Sankaran was informed that
in view of his denial, a departmental inquiry would be held and he was also
placed under suspension pending inquiry. The same day Sankaran protested
against his suspension and requested that in any case the departmental inquiry
should be expedited.
As no inquiry was held till July 2, 1958, Sankaran
again wrote to the appellant to hold the inquiry as early as possible. On July
8, 1958, the appellant terminated the services of Sankaran under r. 18 (a) of
the Standing Orders without holding any departmental inquiry and the order was
communicated to Sankaran the same day. In that order the appellant informed
Sankaran that the proposed inquiry, if conducted, would lead to further
friction and deterioration in the rank and file of the employees in general and
also that maintenance of discipline in the undertaking would be prejudiced if
he was retained in the service of the appellant, and therefore it considered
that no inquiry should be held. A dispute was then raised by the union which
was referred to the industrial tribunal for adjudication by the Government of
Kerala in October 1958. The tribunal held that 825 something seemed to have
happened on the afternoon of June 21, 1958 but there was no evidence to prove
what had actually happened. It further held that the appellant had intended to
take disciplinary action against the workman but subsequently departmental
proceedings were dropped and action was taken under r. 18(a) of the Standing
orders. The tribunal was of the view that this was a colourable exercise of the
power given under r. 18(a) to the appellant and therefore its action could not
be upheld as a bona fide exercise of the power conferred. The tribunal also
pointed out that no attempt was made before it to defend the action taken under
r. 18 (a) by proving the alleged misconduct. Two witnesses were produced before
the tribunal in connection with the alleged misconduct, but the tribunal did
not rely on them on the ground that the important witnesses, namely, the
Engineer, the Secretary and other members of the staff whose evidence would have
been of more value had not been produced and no explanation had been given why
they were not produced. The tribunal therefore held that on the facts it could
not come to the conclusion that Sankaran had come drunk to the mill and abused
or attempted to assault either the Engineer or the Secretary or other officers.
In the result the order of discharge was set aside and Sankaran was ordered to
be reinstated. The appellant thereupon applied for special leave which was
granted; and that is how the matter has come up before us.
The main contention of the appellant is that
it is entitled under r. 18 (a) of the Standing Orders to dispense with the
service of any employee after complying with its terms. Rule 18 (a) is in these
terms:- "When the management desires to determine the services of any
permanent workmen 826 receiving 12 as. or more as daily wages, otherwise than
under rule 21, he shall be given 14 days notice or be paid 12 days wages."
It may be mentioned that r. 21 deals with case of misconduct and provides for
dismissal or suspension for misconduct and in such a case the workman so
suspended is not entitled to any wages during the period of suspension. The
claim thus put forward on behalf of the appellant is that it is entitled under
r. 18(a) of the Standing orders which is a term of contract between the
appellant and its employees to dispense with the service of any employee at any
time by just giving 14 days notice or paying 12 days wages.
We are of opinion that this claim of the
appellant cannot be accepted, and it is too late in the day for an employer to
raise such a claim for it amounts to a claim "to hire and fire" an
employee as the employer pleases and thus completely negatives security of
service which has been secured to industrial employees through industrial
adjudication for over a long period of time now. As far back as 1952, the
Labour Appellate Tribunal had occasion to consider this matter relating to
discharge by notice or in lieu thereof by payment of wages for a certain period
without assigning any reason: (see Buckingham and Carnatic Co. Ltd. Etg. v.
Workers of the Company.
etc.) (1). It was of opinion that even in a
case of this kind the requirement of bona fides is essential and if the
terminataton of service is a colourable exercise of the power or as a result of
victimisation or unfair labour praction the industrial tribunal would have the
jurisdiction to intervene and set aside such termination. Further it held that
where the termination of service is capricious, arbitrary or unnecessarily
harsh on the part of the employer judged by normal standards of a reasonable
man that may be cogent evidence of victimisation or unfair labour practice.
These observations 827 of the Labour Appellate Tribunal were approved by this
Court in The Chartered Bank, Bombay v. The Chartered Bank Employees' Union (1).
and Assam Oil Company v. Its Workmen (2). Therefore if as in this case the
employer wanted to take action for misconduct and then suddenly dropped the
departmental proceedings which were intended to be held and decided to
discharge the employee under r. 18 (a) of the Standing orders, it was clearly a
colourable exercise of the power under that rule in as much as that rule was
used to get rid of an employee instead of following the course of holding an
inquiry for misconduct, notice for which had been given to the employee and for
which a departmental inquiry was intended to be held.
The reason given by the appellant in the
order terminating the services of Sankaran of July 8, 1958, namely, that the
proposed inquiry, if conducted, would lead to further friction and
deterioration in the rank and file of the employees in general and also that
maintenance of discipline in the undertaking would be prejudiced if Sankaran
were retained in service, cannot be accepted at its face value; so that the
necessity for an inquiry intended to be held for misconduct actually charged
might be done away with. In any case even if the inquiry was not held by the
appellant and action was taken under r. 18 (a) it is now well-settled, in view
of the decisions cited above, that the employer could defend the action under
r. 18(a) by leading evidence before the tribunal to show that there was in fact
misconduct and therefore the action taken under r.
18(a) was bona fide and was not colourable
exercise of the power under that rule. But the tribunal has pointed out that
the employer did not attempt to do so before it. It satisfied itself by
producing two witnesses but withholding the important witnesses on this
question. In the circumstances, if the tribunal did not accept the evidence of
the two witnesses 828 who were produced it cannot be said to have gone wrong.
Learned counsel for the appellant however
urges that the employer was empowered to take action under r. 18 (a) of the
Standing orders and having taken action under that rule, there was nothing for
it to justify before the tribunal. We have already said that this position
cannot be accepted in industrial adjudication relating to termination of
service of an employee and has not been accepted by industrial tribunals over a
long course of years now and the view taken by industrial tribunals has been
upheld by this Court in the two cases referred to above. Learned counsel for
the appellant, however, relies on the decision of this Court in Parshotam Lal
Dhingra v. Union of India. (1) That was however a case of a public servant and
the considerations that apply to such a case are in our opinion entirely
different. Stress was laid by the learned counsel on the observations at p. 862
where it was observed as follows:- "It is true that the misconduct,
negligence inefficiency or other disqualification may be the motive or inducing
factor which influences the Government to take action under the terms of the
contract of employment or the specific service rule, nevertheless, if a right
exists under the contract or the rule, to terminate the service, the motive
operating on the mind of the Government is, as Chagla C. J. has said in
Srinivas Ganesh v. Union of India (2) (supra), wholly irrelevant.
It is urged that the same principle should be
applied to industrial adjudication. It is enough to say that the position of
government servants stands on an entirely different footing as compared to
industrial employees. Articles 310 and 311 of the Constitution apply to
government servants and it is in the 829 light of those Articles read with the
Rules framed under Art. 309 that questions relating to termination of service
of government servants have to be considered. No such constitutional provisions
have to be considered when one is dealing with industrial employees. Further an
employer cannot now press his right purely on contract and say that under the
contract he has unfettered right "to hire and fire" his employees.
That right is now subject to industrial
adjudication and even a power like that granted by r. 18 (a) of the Standing
orders in this case, is subject to the scrutiny of industrial courts in the
manner indicated above. The appellant therefore cannot rest its case merely on
r. 18 (a) and say that having acted under that rule there is nothing more to be
said and that the industrial court cannot inquire into the causes that led to
the termination of service under r. 18 (a). The industrial court in our opinion
has the right to inquire into the causes that might have led to termination of
service even under a rule like 18(a) and if it is satisfied that the action
taken under such a rule was a colourable exercise of power and was not bona
fide or was a result of victimisation or unfair labour practice it would have
jurisdiction to intervene and set aside such termination. In this case the
tribunal held that the exercise of power was colourable and it cannot be said
that view is incorrect. The appellant failed to satisfy the tribunal when the
matter came before it for adjudication that the exercise of the power in this
case was bona fide and was not colourable. It could have easily done so by
producing satisfactory evidence; but it seems to have rested upon its right
that no such justification was required and therefore having failed to justify
its action must suffer the consequences.
Learned counsel for the appellant also drew
our attention to another decision of this Court in 830 The Patna Electric
Supply Co. Ltd. Patna v. Bali Rai (1). That case in our opinion has no
application to the facts of this case because that case dealt with an
application under s. 33 of the Industrial Disputes Act while the present
proceedings are under s. 10 of the Act and the considerations which apply under
s. 33 are different in many respects from those which apply to an adjudication
under s. 10.
The appeal therefore fails and is hereby
dismissed with costs.