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PETITIONER: MANAGEMENT OF PANITOLE TEA ESTATE

       Vs.

RESPONDENT: THE WORKMEN

DATE OF JUDGMENT18/02/1971

BENCH: DUA, I.D. BENCH: DUA, I.D. SHELAT, J.M.

CITATION:  1971 AIR 2171            1971 SCR  (3) 774  1971 SCC  (1) 742

ACT: Industrial    Dispute-Dismissal    of    workmen-Order    of reinstatement by Labour Court-Reinstatement of compensation- Circumstances   justifying  reinstatement-Constitlution   of India-, Art. 136-Interference by Supreme Court.

HEADNOTE: In the course of a domestic enquiry on a charge of pilferage against B a’ part time clerk who was incharge of a godown of the appellant a chit was produced suggesting collusion  with him  of  H  another  workman,  The  appellant  instituted  a domestic  enquiry against the workman and he was  dismissed. On  a reference of the Industrial Dispute the  Labour  Court held  that the contents of the chit were too vague and  were procured  only  to harass the workman for no fault  of  his, that the domestic enquiry was violative of the principle  of natural  justice, and its findings perverse and without  any evidence  to support them.  Consequently it ordered the  re- instatement  of the workman’ The management appealed to  his Court  contending that instead of reinstatement the  workman should  be paid compensation.  It also raised the plea  that it had lost confidence in the workman. HELD : The present case is not one in which this Court would be justified in interfering, on appeal under Art. 136 of the Constitution, with the order of the tribunal.  The  question whether on setting aside the wrongful dismissal of a workman he should be reinstated or directed to be paid  compensation is  a  matter within the Judicial discretion of  the  Labour Court or the Tribunal, dealing with the industrial  dispute, the general rule in the absence of any special circumstances being of reinstatement.  In exercising this discretion, fair play  towards the employee on the one hand and  interest  of the employer, including considerations of discipline in  the establishment, on the other, require to be duly safeguarded. This is necessary in the interest both of security of tenure of  the employee and of smooth and harmonious working  ’  of the  establishment.   Legitimate interests of both  of  them have to be kept in view if the order is expected to  promote the  desired  objective  of  industrial  peace  and  maximum possible  production.  The past record of the employee,  the nature  of  the alleged conduction which the  order  of  the employer is set aside, the nature of the duties performed by

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the  employee  concerned and the nature  of  the  industrial establishment  are some of the broad relevant factors  which require  to be taken into consideration.  These factors  are merely illustrative.  Each case has to be decided on its own facts  and  no  hard and fast rule can said  down  to  cover generally all conceivable contingencies.  Proper balance has to  be  maintained  between the conflicting  claims  of  the employer  and the employee without jeopardising  the  larger interests of industrial peace and progress. [780 D] There  was no evidence to conclude that the management  lost confidence in the workman.  If the workman is entitled as  a general  rule to be reinstated after his wrongful  dismissal is  set  aside and on the facts it is not possible  to  find cogent material on which the establishment can genuinely  be considered  to have lost confidence in the integrity of  the workman, he 775 is  entitled to be reinstated.  The suggestion  that  having regard to the nature of the proceedings against the  workman the management has lost confidence was acceptable. [782 F] If’ the workman’s dismissal was wrongful then merely because proceedings for adjudication of the industrial dispute  have taken a long time (10 years) was by itself no reason for not directing  his reinstatement if it was  otherwise  justified being in accordance with the normal rule. [782 G]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION   Civil Appeal  No.  1137  of 1970. Appeal  by  special leave from the award dated  October  30, 1969  of  the  Labour  Court  of  Assam  and  Dibrugarh   in Reference, No. 20 of 1964. M.   C. Chagla and R. Gopalakrishnan, for the appellant. K.   P. Gupta, for the respondents. The Judgment of the Court was delivered by Dun,  J.  In this appeal special leave was  limited  to  the question  whether relief by way of payment  of  compensation should’  not  be  substituted  for  the  relief  by  way  of reinstatement granted by the Labour Court to the workman, H. P. Bhagavati, Store, Clerk. The  Panitole  Tea Estate belongs to the Jokai  (Assam)  Tea Co., Ltd., Panitole.  Depot Line was one of the Out  Gardens under this Tea Estate and it had a separate godown.  One  B. K.  Borgohain,  a  part-time clerk was  in  charge  of  this godown.   Ammonia  sulphate fertiliser was  stored  in  this godown, 970 bags having been received there between December 12,  1960  and January 5, 1961.  Pursuant to receipt  of  an anonymous letter that there was pilferage of these bags  the stock  was checked and 89 bags were found missing.   In  the course of the domestic enquiry against Borgohain a chit (Ex. 12)  was produced by him which suggested H.  P.  Bhagavati’s collusion  with  Borgohain in this  affair.   Bhagavati  was accordingly  also charge sheeted and after domestic  enquiry he  was  dismissed with effect from March  23,  1961.   This order  of dismissal of Bhagavati gave rise to an  industrial dispute which was duly referred to the Labour Court of Assam at  Dibrugarh.  The Labour Court by its award dated  October 30, 1969 held that the contents of Ex. 12 were too vague  to connect  Bhagavati with the offence charged.   According  to the  Labour Court the management had procured  this  exhibit only to harass Bhagavati for no fault of his.  The  domestic enquiry  was also found to be violative of the principle  of natural’

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77 6 justice and it conclusions perverse, there being no evidence to support them.  Bhagavati was accordingly held entitled to reinstatement  with  all the back wages and  benefits.   The present  appeal  is  directed against  this  order  and,  as observed  earlier,  the only question we have to  decide  is whether Bhagavati should be reinstated or he should be  paid compensation  instead  of reinstatement.  The  dismissal  of Borgohain, it may be pointed out, was not challenged by  him and  that  order became final.  In this appeal  we  are  not concerned with his dismissal. On  appeal in this Court Shri Chagla has submitted that  the management has lost confidence in Bhagavati and it would  be unjust  and improper to force his reinstatement as  a  store clerk  ,on the management after a lapse of ten  years.   The learned counsel offered to pay to the workman any reasonable compensation  as may be ordered by this Court.  Reliance  in support   of   this   submission  against   the   order   of reinstatement  was  placed on two recent  decision  of  this Court  Ruby  General Insurance Co. Ltd.  v.  Chiopra(1)  and Hindustan  Steel Ltd. v. A. K. Roy (2).  In the  first  case special leave granted by this Court was also limited only to the  question  whether  the relief granted  to  the  workman concerned  should have been reinstatement  or  compensation. On  a consideration of the facts and circumstances  of  that case this Court had set aside the order of reinstatement and directed  the  company to pay compensation  to  the  workman concerned.  ,Our  attention has been drawn to  some  of  the observations made in that case.  This Court said there :               "In  the present case we are of the view  that               reinstatement  directed  by the  tribunal  was               inexpedient.   The respondent had  served  the               company in all for a period of twelve  months.               It  was not as if he had been induced to  give               up  any  employment  he  was  engaged  in  for               joining the service of the  appellant-company.               The  company’s  establishment  in  Delhi   was               comparatively  a small  establishment.   There               can  be  no  doubt  that  the  position  of  a               stenographer in such an establishment would be               one  of  confidence and trust as he  would  be               taking down dictation and typing out all kinds               of  matters including  sometimes  confidential               and  even  secret  matters.   For  example,  a               report  of the working of this branch  to  the               company’s headquarters by the branch  manager,               or  a report as regards the working  of  other               rival insurance companies in Delhi area, or  a               report  regarding promotion and even  demotion               of  some  of the members of the staff  of  the               branch office, and such other matters would be               of a highly confidential (1) [1970] 1 L.L.J. 63. (2) [1970] 1 L.L.J.228.               nature.   If the branch manager were,  for  cm               reason  or  the other to lose  confidence  and               trust  in stenographer working under  him,  it               would obviously be unpossible for him to  give               dictation   on   such  matters   to   such   a               stenographer.   On  the  assumption  that  the               respondent was made to take dictation and type               out  letters in connexion with other  concerns               in which the appellant company was  interested               and  the  respondent was not  paid  any  extra               remuneration  for  such work,  the  respondent

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             was,  on  his ’admission  retaining  with  him               surreptitiously      copies      of      those               communications.  As the tribunal has remarked,               the  respondent  did so in order  to  preserve               evidence,  that  he  was  made  to  take  down                             letters  relating to concerns other  t han  the               appellant-company.   Whether in terms  of  his               employment  as  a  stenographer  the  regional               manager  could  take  such work or  not  is  a               matter  in  which we need not go, but  he  did               admittedly  retain with him copies of as  many               as  32 such communications which he  exhibited               as  Exs.  W. 10 to W. 42.  These  copies  were               clearly the property of the company which  the               respondent  in  no event could retain  in  his               possession   without   the  consent   of   his               employers.   If the regional manager  were  to               entertain  a feeling that, if reinstated,  the               respondent  would in future also  retain  with               him  copies  of documents  of  a  confidential               nature whenever the respondent felt that  such               retention would be of use or advantage to him,               such  a  feeling on the part of  the  regional               manager  that  he  can  no  longer  trust  the               respondent with any confidential matter cannot               be  regarded  as altogether  unjustified.  The               regional  manager might well feel that if  the               respondent was capable of collecting  evidence               against  the  company,  he  might  in   future               collect perhaps evidence of a more  dangerous,               and  harmful nature.  Obviously, if he  cannot               repose   confidence  in  the  respondent,   if               reinstated,  he  cannot make any  use  of  his               services,   as   a   stenographer.    In   the               circumstances,  we  think  that  the  tribunal               ought  not to have directed his  reinstatement               despite its conclusion that the termination of               his  services was wrongly made, but  ought  to               have awarded suitable compensation instead."               in the second case this Court observed               The  question, however, still is  whether  the               tribunal  was,  in the  circumstances  of  the               case,  justified in  directing  reinstatement.               It is true that some of the decisions of  this               Court have laid down that where the  discharge               or dismissal of a workman is not legal or               778               justified,  the relief which would  ordinarily               follow would be reinstatement.  The  Tribunal,               however,   has   the   discretion   to   award               compensation  instead of reinstatement if  the               circumstances of a particular case are unusual               or  exceptional  so as to  make  reinstatement               inexpedient  or improper.  The  Tribunal  has,               therefore,   to   exercise   its    discretion               judicially and in accordance with well  recog-               nised  principles  in that regard and  has  to               examine  carefully the circumstances  of  each               case and decide whether such a case is one  of               those exceptions to the general rule.  If  the               Tribunal  were to exercise its  discretion  in               disregard   of  such  circumstances   or   the               principles laid down by this Court it would be               a case either of no exercise of discretion  or

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             of  one not legally exercised In  either  case               the  High  Court  in  exercise  of  its   writ               jurisdiction  can  interfere  and  cannot   be               content  by  simply  saying  that  since   the               Tribunal has exercised its discretion it  will               not  examine the circumstances of the case  to               ascertain  whether  or not such  exercise  was               properly  and  in accordance  with  the  well-               settled  principles made.  If the  High  Court               were  to do so, it would be a refusal  on  its               part to exercise jurisdiction.",               And again:               "The  Tribunal no doubt felt that it  was  not               established whether the investigation and  the               report  following  it were properly  done  and               made, that the company ought to have disclosed               it to the workman and given him an opportunity               to   vindicate  himself  and  that  the   non-               disclosure of the report made the  termination               illegal and unjustified.  That may or may  not               be right.  But what was relevant, at the stage               when  the Tribunal came to decide what  relief               the workman was entitled to, was the  question               whether  the management genuinely  apprehended               as  a result of the report that, it  would  be               risky  to  retain the workman in  the  company               service They may have gone wrong in the manner               of  terminating the workman’s service as  held               by the Tribunal.  But, if the management truly               believed  that it was not possible  to  retain               the  workman  in  the  company’s  service   on               grounds of security and consequently could not               place  confidence  in  him  any  longer,   the               present   case,   would  be   one   of   those               exceptional cases where the general rule as to               reinstatement  could not properly be  applied.               This  of  course does not mean that  in  every               case where the employer says that he has  lost               confidence in the workman, and, therefore, has               terminated  his  service  that   reinstatement               cannot be granted and the               779               Tribunal  has to award compensation.   On  the               other  hand, if on an examination of  all  the               circumstances of the case, the Tribunal  comes               to  the conclusion that the  apprehensions  of               the  employer  were genuine and  the  employer               truly   felt   that  it   was   hazardous   or               prejudicial  to the interests of the  industry               to  retain  the  workman  in  his  service  on               grounds   of  security,  the  case  would   be               properly one where compensation would meet the               ends of. justice.               On  a consideration of all the  circumstances,               the present case, in our’ view, was, one  such               ’case., The Tribunal exercised its  discretion               mechanically     without     weighing      the               circumstances  of  the  case.   That  was   no               exercise of discretion at all.  There is ample               authority,  to the effect that if a  statutory               tribunal exercises its discretion on the basis               of irrelevant considerations or without regard               to  relevant  considerations,  certiorari  may               properly issue to quash its order. (See S.  A.               de  Smith, Judicial Review  of  Administrative

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             Action   (2nd  ed)  pp.  324-325.   One   such               relevant consideration, the disregard of which               would    render   its   order   amenable    to               interference,   would  be   the   well-settled               principles  laid down in decisions binding  on               the   Tribunal  to  whom  the  discretion   is               entrusted.   The refusal by the High Court  to               interfere was equally mechanical and  amounted               to refusal to exercise its jurisdiction.   Its               order,    therefore,   becomes    liable    to               interference." Shri  Chagla has argued that in the present case  there  was exercise   of judicial discretion by the Labour,  Court  and impugned order was made mechanically without considering the relevant circumstances and applying its mind to the question as to which of the two reliefs was more appropriate. On behalf of the respondents it is submitted that Bhagavati, the  workman  concerned in this case, is  innocent  and  the management was found by the Labour Court on evidence to have resorted  to unfair labour practice.  The chit, Ex. 12,  was also held not to be in the handwriting of Bhagavati.  It  is further  emphasised  that criminal  proceedings  ’Were  also started  against  Bhagavati  but he was  discharged  in  the criminal  case  for want of evidence implicating  him.   The respondent’s   learned  counsel  has,  in  support  of   his submission,, drawn our attention to The Punjab National Bank Ltd.  v.  Its Workmen(1), M. L. Bose & Co. (P) Ltd.  v.  Its Employees(1)  and Workmen of United Bleachers (P)  Ltd.,  v. United  Bleachers  (P) Ltd . (3), (a decision  High  Court). In the Punjab (1)[1960] 1 S.C.R 806. (2) [1961] 11 L.L.J. 107 (S.C.) (3)[1968] 1 L.L.J 529 780 National Bank case(1) it was observed that the propriety  of reinstatement in a case of wrongful or illegal dismissal-is’ normally  a  question  of  fact  and  where  the  industrial tribunal  on a proper consideration of the relevant  factors refuses  to  pass such an order the Supreme Court  would  be reluctant  in  the  absence of any  general  or  substantial question  of  law  to  interfere  under  Art.  136  of   the Constitution.  According to the counsel where  reinstatement has  been ordered by the court or tribunal in an  industrial dispute  arising  out of dismissal of a workman  this  Court should, in ’the absence of special circumstances, decline to interfere with that order on special leave appeal.   Support from the case of M. L. Bose & Co. (P) Ltd. (2) is sought for the  contention that reinstatement is the normal  rule  when dismissal  is held to be wrongful and it is immaterial  that the employer has since employed other workmen.  The case  of United  Bleachers(,) follows the observations of this  Court in  the case of Punjab National Bank Ltd. (1), M. L. Bose  & Co. (P) Ltd. (2) and Swadesamitran Ltd. v. Their Workmen(4). In our opinion the present case is not one in which we would be justified in interfering on appeal under Art. 136 of  the Constitution with the, order of the Tribunal.  The  question whether on setting aside the wrongful dismissal of a workman he should be reinstated or directed to. be paid compensation is  a  matter within the Judicial discretion of  the  Labour Court or the Tribunal, dealing with the industrial  dispute, the general rule in the absence of any special circumstances being  of  reinstatement.  In  exercising  this  discretion, fairplay  towards the employee on the one hand and  interest of  the employer, including considerations of discipline  in the  establishment,  on  the  other,  require  to  be   duly safeguarded.   This  is necessary in the  interest  both  of

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security  of  tenure  of  the employee  and  of  smooth  and harmonious   working  of  the   establishment.    Legitimate interests  of  both of them have to be kept in view  it  the order  is  expected  to promote  the  desired  objective  of industrial peace and maximum possible production.  The  past record  of the employee, the nature of the  alleged  conduct for which action was taken against him, the grounds on which the  order of the employer is set aside, the nature  of  the duties performed by the employee concerned and the nature of the industrial establishment are some of the broad  relevant factors  which require to be taken into consideration.   The factors  just stated are merely illustrative and it ’is  not possible  to exhaustively enumerate them.  Each case has  to be decided on its own facts and no hard and fast rule can be laid down to cover generally all conceivable  contingencies. Proper balance has to be maintained between the  conflicting claims of the employer and the employee (1)  [1960] 1 S.C.R.806. (3)  [1968] 1 L.L.J. 529. (2)  [1961] 2 L.L.J.107 (S.C.). (4)     [1960] 1 L.L.J.504. 78 1 without  jeopardising  the larger  interests  of  industrial peace and progress.  In Hindustan Steel Ltd.’s case(1)  this Court substituted the order of reinstatement by an order  of payment of compensation on the ground that the police report and  the  security officer’s recommendation to  the  Company showed that it was not desirable for reasons of security  to reinstate the employee., In that case it was observed :               "As   exceptions  to  the  general   rule   of               reinstatement,  there  have been  cases  where               reinstatement  has  not  been  considered   as               either desirable or expedient.  These were the               cases where there had been strained  relations               between  the employer and the employee,  where               the  post held by the aggrieved  employee  had               been  one  of trust and confidence  or  where,               though    dismissal    or    discharge     was               unsustainable  owing to some infirmity in  the               impugned  order,  the employee was,  found  to               have been guilty of an activity subversive  of               or   prejudicial  to  the  interests  of   the               industry.   These  cases are to  be  found  in               Assam  Oil Co. Ltd. v. Workmen(1); Workmen  of               Charottar Gramodhar Sahakari Mandali Ltd.  v.-               Charottar Gramodhar Sahakari Mandali  Ltd.(3);               Doomur  Dulung Tea Estate v.  Workmen(4))  and               Ruby  General  Insurance  Co. Ltd.  v.  P.  P.               Chopra(5).   These are  however,  illustrative               case,%  where  an exception was  made  to  the               general  rule.   No hard and fast rule  as  to               which  circumstances  would in  a  given  case               constitute  an exception to the  general  rule               can  possibly be laid down as the Tribunal  in               each case keeping the objectives of industrial               adjudication  in  mind, must in  a  spirit  of               fairness  and  justice confront  the  question               whether the circumstances of the case  require               that   an   exception  should  be   made   and               compensation would meet the ends of justice." The general rule of reinstatement in the absence of  special circumstances was also recognised in the case of Workmen  of Assam Match Co. Ltd. v. The Presiding Officer, Labour  Court A  & anr. (6) and has again been affirmed recently  in  M/s. Tulsidas  Paul v. The Second Labour Court, W.B. & ors.  (7). In  Messrs Tulsidas Paul(7) it has been emphasised  that  no hard  and  fast  rule  as  ’to  which  circumstances   would

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establish  an  exception to the general rule could  be  laid down and the Tribunal must In each case decide the  question in  a  spirit of fairness and justice in  keeping  with  the objectives of industrial adjudication. (1) [1970] I.L.L.J. 288. (2) (1969) 3 S.C.R. 457. (3)  C.A. 382/66 d/14.-8-1967. (4) C.A.  5161-1966  d/26-10- 1967 (5) [1970] I.L.L.J.63. (6) C.As. 1070-1071/1963 d/27-10-64. (7)  C.A. 1607/1966 d/3-2-1971. 78 2 In   the  present case Shri Chagla has laid main  stress  on the  submission that the management has lost  confidence  in Bhagavati’s  integrity  and it would be wholly  improper  to force  his rein.statement on the management.  The  store  of which  this workman was in charge, according to the  learned counsel,  contains ,goods worth lakhs of rupees and  in  the absence  of  the requisite confidence in his  integrity  the order  of  reinstatement  is likely to  harm  the  cause  of industrial  peace in the appellant concern.   The  appellant has  expressed willingness to pay any reasonable, amount  by way of compensation.  We have in support of the plea of want of confidence been taken through the correspondence  between the  management and Bhagavati.  From that correspondence  we are  unable to conclude that the management lost  confidence in  Bhagavati because of the lapses mentioned  therein.   It appears  that  it  was only when  the  management  suspected Bhagavati’s  collusion  with Borgohain that  the  management felt that his integrity was questionable.  That chit  having been  found  not  to  be  in  Bhagavati’s  handwriting   and Bhagavati’s dismissal having been held to be wrongful we are unable  to sustain the plea of want of confidence raised  by Shri Chagla.  It is significant that no such plea was sought to  be  substantiated  before  the  Labour  Court.   It   is undoubtedly  true  that the store of the  Tea  Estate  would contain  goods  of  substantial value and  a  person  really suspected  of  being untrustworthy may  not  justifiably  be forced  on the unwilling employer, but that aspect  requires determination  on  facts  which should  have  been  properly placed  before the Labour Court and a finding secured  after appropriate trial.  The suggestion that having regard to the nature, of the proceedings against Bhagavati, the management has lost confidence is unacceptable.  A similar argument was repelled in the case of Assam, Match Co.(1). If the  workman is  entitled  as a general rule to be reinstated  after  his wrongful dismissal is set aside and ,on the facts it is  not possible to find cogent material on which the  establishment can  genuinely be considered to have lost confidence in  the integrity  of the workman he is entitled to  be  reinstated. The  next. argument that Bhagavati should not be  forced  on the  management  after  a  lapse of  ten  years  is  equally unacceptable  because  if his dismissal  was  wrongful  then merely   because   proceedings  for  adjudication   of   the industrial  dispute have taken a long time is by  itself  no reason  for not directing his reinstatement if it is  other- wise  justified  being in accordance with  normal  rule.   A similar  contention was also repelled in the case  of  Assam Match  Co.(,)  In  Swadesamitrans case(1)  also  this  Court observed that in the ,case of wrongful dismissal,  discharge or retrenchment a claim for reinstatement cannot be defeated merely  because  time has elapsed or that the  employer  has engaged  fresh  hands.   We are, therefore,  unable  on  the existing record to sustain the appellants sub- (1) C.As. 1070-1071/1963d/27-10-64. (2) [1960] I.L.L.J. 504                             783

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mission  that the order of reinstatement made by the  Labour Court  suffers  from  any  legal  infirmity  justifying  its substitution  by an order of payment of compensation to  the workman.   A suggestion has been thrown by Shri Chagla  that in all probability the employee must have secured employment elsewhere as he could not have remained idle all these years an payment of compensation in place of reinstatement  would, therefore,  cause  him  no prejudice.   On  behalf,  of  the employee  it  is denied that he had been  employed  anywhere else during this period.  In our opinion, this matter  being controversial  should  have been raised  before  the  Labour Court and we are not in a position to express any opinion on it in the present proceedings. The appeal accordingly fails and is dismissed.  In the  cir- cumstances of the case there will be no order as to costs in this Court. Y.P.                       Appeal dismissed. L1100Sup.CI/71 784