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PETITIONER: MUNICIPAL CORPORATION OF GREATER BOMBAY

       Vs.

RESPONDENT: P.   S. MALVENKAR AND ORS.

DATE OF JUDGMENT05/05/1978

BENCH: SINGH, JASWANT BENCH: SINGH, JASWANT BHAGWATI, P.N.

CITATION:  1978 AIR 1380            1978 SCR  (3)1000  1978 SCC  (3)  78  CITATOR INFO :  RF         1980 SC1893  (172)  D          1991 SC 101  (17,166,226,278)

ACT: Termination of service-Competent authority puts the initials in  the  draft  order  and the  order  communicated  by  his Executive Assistant, whether valid. Industrial  Employment  (Standing  Orders)  Order,  1946  S. 21(2), 23 and 26, scope of.

HEADNOTE: The  services of Respondent No. 2, a permanent clerk in  the Bombay  Electric Supply and Transport Undertaking, which  is run by the appellant Were terminated from the close of  work on   January  23,  1968  as  her  record  of   service   was unsatisfactory.   The communication dated January  20,  1968 was from the Executive Assistant to the General Manager  and it also stated that she should be paid one month’s wages  in lieu  of  notice  and would also be  eligible  for  all  the benefits  as might be admissible under the  Standing  Orders and  Service  Regulations of the  Undertaking.   The  appeal preferred by her    against  this  order  to  the  Assistant General  Manager having remained unsuccessful, she  made  an application  before the Labour Court under Section  42  (4) of  the Bombay Industrial Relations Act contending that  the order  terminating her services was invalid, as it  was  not passed  by  the  competent authority  as  envisaged  by  the Standing Order and that the so called Executive Assistant to the  General  Manager  had no  authority  to  terminate  her services  because  no  validity  sanctioned  post  of   that designation existed on 20th or 23rd.  January, 1968.  It was also  contended that the aforesaid order besides being  mala fide, was violative of the principles of natural justice  in as  much  as  the  same was     passed  without  holding any enquiry.   The Labour Court dismissed the application.   The respondent, s appeal before the President of the  Industrial Court  was however allowed.  The Industrial Court held  that the  impugned orders bore only the initials of  the  General Manager  and therefore it was passed by an  authority  which was      lacking     in     authority,      the      wording "unsatisfactory  service  record"  cast  a  stigma  and  was patently  punitive attracting the nonobservance of  Standing

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Order  No. 26 which did not create an absolute right in  the management  to  terminate the services of  an  employee  for misconduct  without holding an enquiry or giving her a  fair opportunity of being heard.  A Writ application filed by the appellant  was  dismissed holding inter alia that  the  fact that  Standing Order 26 required reasons to be mentioned  in the  order terminating the services of an employee  did  not mean that an order of dismissal on the ground of  misconduct could be converted into an order of discharge simpliciter by mentioning therein the nature of misconduct. Allowing the appeal by special leave, the Court HELD  :  1. Whether a written document or order  bears  full signatures or only initials of the competent authority  does not, make any significant difference nor does the affixation of signature by initials on a document or order detract from its    authenticity   unless   the   law   or    the    rule specifically  requires full signature to be affixed  thereto to make it authentic. [1005 E1F] In the instant case : (a) the impunged order terminating the respondent’s  services was in fact and in reality passed  by the General Manager himself who was the competent  authority as defined by clause (e) of Standing Order 3 and was  merely communicated  by his Executive Assistant to the  respondent; (b) since it is established on the record that the  impugned order 1001 was  in fact and in reality made by the General Manager  and there  is  nothing to indicate that it was  not  consciously made  by him, it could not have been ,quashed on the  ground that it was passed by an incompetent authority. [1005 C,  6- H] 2.   The question whether a particular order terminating the service of an employee is by way of punishment or not has to be  determined on the facts and circumstances of  each  case and  the  form of the order is not decisive of  the  matter. [1006 B] Under   Standing  Orders,  two  powers  are  given  to   the management;  one  is  the power  to  impose  punishment  for misconduct after a disciplinary inquiry under clause (2)  of the  Standing Order 21 read with Standing Order 23 and  the other  is the power to terminate the service of an  employee by  one  calendar  month’s written notice  or  pay  in  lieu thereof under Standing Order 26. The question is as to which power has been exercised by the Management in ,a  particular case  and this question has to be determined _having  regard to  the substance of the matter and not its form.  Now,  one thing must be borne in mind that these are two distinct  and independent powers and as far as possible, neither should be construed  so  as to emasculate the other or  to  render  it ineffective.   One  is the power to punish an  employee  for misconduct  while  the  other  is  the  power  to  terminate simpliciter  the  service of an employee without  any  other adverse consequences. [1006 B-D] 3.   Proviso (i) to clause (1) of Standing Order 26 requires that the reason for termination of the employment should  be given  in writing to the employee when exercising the  power ,of  termination of service of the employee  under  Standing Order  26.   Therefore, when the service of an  employee  is terminated  simpliciter under Standing Order 26, the  reason for  such  termination has to be given to the  employee  and this  provision has been made in the Standing Order  with  a view  to  ensuring that the Management does not  act  in  an arbitrary  manner’ The management is required to  articulate the  reason  which operated on its mind in  terminating  the service of the employee.  But merely because the reason  for

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terminating  the service of the employee is required  to  be given-and  the  reason  must  obviously  not  be  arbitrary, capricious  or irrelevant-it would not necessarily in  every case make the order of termination punitive in character  so as to require compliance with the requirement of clause  (2) of   Standing  Order  21  read  with  Standing   Order   23. Otherwise,  the  power  of  termination  of  service  of  an employee   under  Standing  Order  26  would   be   rendered meaningless and futile, for in no case it would be  possible lo  exercise it.  Of course, if misconduct of  the  employee constitutes the foundation for terminating his service, then even  if  the order of termination is purported to  be  made under Standing Order 26, it may be liable to be regarded  as punitive  in  character and hence  attracting  procedure  of clause (2) of Standing Order 21 read with Standing Order 23, though  even  in  such  a case it may  be  argued  that  the management  has  not punished the employee  but  has  merely terminated ’his service under Standing Order 26. [1006 D-H] In  the  present case, the order of  termination  cannot  be regarded  as  punitive  in character so as  to  invoke  the, applicability  of  clause (2) of Standing  Order  read  with Standing  Order 23 reason given for terminating the  service of the respondent was unsatisfactory record of service.   No misconduct  was alleged against the respondent. nor was  any misconduct  made  the foundation for  passing  the  impugned order of termination.  The order of termination was  clearly not  passed  by  way of punishing  the  respondent  for  Any misconduct.  The view that the service of the respondent was not satisfactory was undoubtedly based on past incidents set out in the record but for each of these incidents punishment in  one form or another had’ already been meted out  to  her and it was not by of punishment for any of these  incidents, but because as gathered from these incidents her recorded of service   was unsatisfactory that her service was terminated by the management under standing order 26. 26 [1006 H,  1007 A-B] 13 -329 SCI/78 1002 Even  if  the  view were taken that the  impugned  order  of termination  of  service of the respondent was  punitive  in character and could not have been.      passed   save    and except as a result of a disciplinary inquiry    heldunder clause (2) of Standing Order 21 read with Standing Order 23, theimpugned  order  cannot be struck down as  invalid  the ground of non-compliancewith   the   requirement   of   the Standing  Orders,  since  respondent no. 2  availed  of  the opportunity  open  to her before the Labour Court  when  the appellant  adduced.’  sufficient  evidence  justifying   the action  taken  by the management.   The  appellant  produced satisfactory  evidence  to  show  that  the  impugned  order terminating the service of the respondent was justified  and hence  the  impugned  order must be  sustained  despite  its having  been passed without complying with the  requirements of clause (2) of Standing Order 21 read with Standing  Order 23.   No  distinction can be made between  cases  where  the domestic enquiry is invalid   or  defective and those  where no enquiry has in fact been held as required by    the relevant  Standing Orders and in either case it is open   to the employer tojustify  his  action before  the  Labour Tribunal by adducing all        relevant evidence before it. [1007 C-E] The Punjab National Bank Ltd.v.   Its  Workmen,  [1960]   1 S.C.R.  806,  Management  of Ritz Theatre (P)  Ltd.  v.  Its Workmen,  [1963]  3  S.C,R. 461, Workmen  of  Motipur  Sugar Factory P. Ltd. v. Motipur Sugar Factory, [1965]’, 3  S.C.R.

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588,  Delhi  Cloth and General Mills Co. Ltd. v.  Ludh  Budh Singh,  [1972] 1 LLJ 180, State Bank of India v. R. K.  Jain and Ors. [1972] 1 S.C.R. 755, Workmen of M/s Firestone’ Tyre and Rubber Company of India (P) Ltd. v. Management and  Ors. [1973] 3 S.C.R. 587 and Cooper Engineering Ltd v.Shri P.  P. Mundhe [1976] 1 S.C.R. 361 followed.

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  2161  of 1977. Appeal by Special Leave from the Judgment and Order dated 5- 7-1977 of the Bombay High Court in Special Civil Application No. 614/72. K.   K.  Singhvi, P. H. Parekh, D. C. Shroff, C.  B.  Singh, Kailash, Basudev and Mrs. Manju Sharma for the Appellant. K.   Rajendra   Choudhary   and  Mrs.  V.  D.   Khanna   for RespondentNo. 2. The Judgment of the Court was delivered by JASWANT  SINGH,  J. This appeal by special  leave  which  is directed  against the judgment and order dated July 5,  1977 of the Bombay High Court dismissing the appellant’s  special civil application No. 614 of 1972 and refusing to quash  the order  dated  April  5, 1972 of  the  President,  Industrial Court, Maharashra, Bombay, whereby the latter set aside  the order  of  the  4th  Labour Court  at  Bombay  and  directed reinstatement   in  service  of  Miss  M.   P.   Padgaonkar, respondent   No.   2  (hereinafter  referred  to   as   ’the respondent’)  with  full back wages on the ground  that  her termination of service was bad in law raises the:  following questions :-               "whether  the  termination  of  service  of  a               permanent  employee  of  the  Bombay  Electric               Supply and Transport Undertaking on account of                             his  unsatisfactory record of service  can  be               regarded  as  punitive  so as  to  compel  the               employer to hold a disciplinary enquiry?                1003               whether  such termination can be  effected  by               giving   in  writing  to  the   employee   the               aforesaid  reason  for  termination  and   one               calendar   month’s  written  notice   or   pay               including   allowances  admissible   in   lieu               thereof ? For a proper determination of the abovementioned  questions, it  is  desirable, to state the,  circumstances  which  have given  rise to the appeal.  The respondent who  was  working since  February  4, 1959 as a clerk in grade  A/G-V  in  the Consumers   Department  (North)  of  the  B.E.S.T.   (Bombay Electric Supply & Transport) Undertaking (hereinafter refer- red  to for the sake of brevity as ’the Undertaking’)  which is  run  by  the appellant was  informed  by  the  Executive Assistant  to  the General Manager of the  Undertaking  vide communication  dated  January 20, 1968,  that  her  services would stand terminated from the close of work on January 23, 1968, as her record of service was unsatisfactory.  It  was, however  stated in the communication that she would be  paid one,  months  wages  in lieu of notice  and  would  also  be eligible  for all the benefits as might be admissible  under the   Standing  Orders  and  Service:  Regulations  of   the Undertaking.  The appeal preferred by her against this order to  the  Assistant General Manager  having  remained  unsuc- cessful,  the  respondent  made an  application  before  the Labour  Court under section 42(4) of the  Bombay  Industrial

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Relations  Act  contending that the  order  terminating  her services  was invalid as it was not passed by the  competent authority as envisaged by the Standing Order and that the so called  Executive  Assistant to the General Manager  had  no authority to terminate her services because no validly sanc- tioned  post  of that designation existed on  20th  or  23rd January, 1968.  It was also contended by the respondent that the aforesaid order ter  Manating her services besides being mala fide was violative of the principles of natural justice inasmuch as the same was passed without holding any  etquiry or giving her a reasonable opportunity of defending  herself against  the vague and general allegations which formed  the basis  of  the  order.   The  Labour  Court  dismissed   the application  observing  that though the  post  of  Executive Assistant   did  not  exist  at  the  relevant   time,   the termination  did not suffer from the vice of mala fides  nor could  it be said to be invalid as it was actually  effected by  the General Manager and was merely communicated  by  his Executive  Assistant.   The Labour Court further  held  that despite  the fact that unsatisfactory record of service  was mentioned  as  the reason for termination, it could  not  be said to be punitive.  Aggrieved by this order of the  Labour Court,  the respondent filed an appeal to the  President  of the Industrial Court which was allowed by him vide his order dated April 5, 1972 on the findings that J. P. Fernandes who used  the  appellation  of the Executive  Assistant  to  the General Manager was not competent or authorised to terminate the  service of the respondent; that the, conclusion of  the Labour Court that the impugned order was made by the General Manager himself was not warranted by the facts and  conduct. of the parties; that the law required the authority invested with the power of terminating the services of an employee to exercise  that power in a conscious manner reflecting,  ’due ’care ’and 1004 attention and the draft order (Exhibit 41) which merely bore the initials of the General Manager could not be regarded as a valid substitute for the conscious exercise of the  power; that  the  order which expressly stated  the  unsatisfactory record  of  service  as  the  reason  for terminating  the respondent’s  services  and thus cast a stigma  on  her  was patently punitive and that Standing Order 26 did not  create an  absolute  right  in  the  management  to  terminate  the services  of an employee for misconduct without  holding  an enquiry  or  giving him a fair opportunity of  being  heard. Accordingly,  the  Industrial Court held that  the  impugned order was bad in law on both the counts viz. (i) that it was passed  by  an  authority which was  absolutely  lacking  in competence and (ii) that despite its punitive character,  it was  passed without holding a domestic enquiry or giving  an opportunity  to show cause thereby violating the  principles of  natural  justice.   The  appellant  thereupon  made   an application  to  the  High Court under Article  226  of  the Constitution  challenging the order of the President of  the Industrial  Court.   The High Court dismissed  the  petition holding  inter  alia that the fact that  Standing  Order  26 required  reasons to be mentioned in the  order  terminating the  services of an employee did not mean that an  order  of dismissal  on  the ground of misconduct could  be  converted into an order of discharge simpliciter by mentioning therein the  nature of misconduct.  It is against this judgment  and order of the High Court that the present appeal is directed. Appearing  for the appellant, Mr. K. K. Singhvi has, in  the first   instance  urged  that  the  order  terminating   the respondent’s services could not be held to have been  passed

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by  an authority which was lacking in competence as  it  was actually  made  by  the  General  Manager  and  was   merely communicated over the signatures of his Executive Assistant. Mr.  Singhvi  has alternatively urged that  the  Corporation having  accorded  sanction to the creation of  the  post  of Executive  Assistant on the Management Establishment  (which was from time to time included in the Establishment Schedule prepared  and sanctioned by the B.E.S.T. Committee) for  the period beginning from 25th July 1967 to- 30th September 1974 vide Resolution No. 1083 passed by it under section 460-R of the Bombay Municipal Corporation Act No. 111 of 1888 at  its meeting  held  on 16th December, 1974,  even  the  Executive Assistant bad plenary authority to take the impugned action. The  learned  counsel has next contended that  the  impugned order  was  one  of  discharge  or  termination  of  service simpliciter  and  could not be regarded as  punitive  regard being had to the fact that besides one month’s, pay in  lieu of  notice,  the  respondent  was  paid  all  the   benefits admissible  to  her under the Standing  Order,  and  Service Regulations; that it was only to satisfy the requirement  of proviso (1) to Standing Order 26 that unsatisfactory  record of  service  was mentioned in the order as  the  reason  for termination;  that Standing Orders gave two options  to  the appellant (1) to terminate the service of the respondent  in the  manner  it  had one, or (2) to impose  the  penalty  of dismissal as a result of a domestic enquiry.  He has further submitted  that  even if the order is  treated  as  punitive which  could  not have been  passed-without  the  prescribed enquiry,  it  could hot be hold to be bad In law as  it  was made  good by the appellant on merits by  adducing  evidence before the Labour Court.  1005 It has on the other hand, been argued by the learned counsel appearing  on  behalf  of  the  respondent  that  the  order suffered from an inherent infirmity in that it was passed by the Executive Assistant to the General Manager who did  not. have  de jure existence on the relevant date in view of  the fact that the duration of the post held by him had not  been validly  extended  by  the  Corporation.   He  has   further contended  that  as the impugned order  which  clearly  cast aspersion the respondent amounted to an order of  dismissal, it  could  not have been passed without complying  with  the formalities prescribed by the Standing Orders. All these rival contentions require careful examination. The  question as to whether the post of Executive  Assistant to the General Manager validly existed on the relevant  date or not does not require to be gone into as we are  satisfied that   the  impugned  order  terminating  the   respondent’s services  was in fact and in reality passed by  the  General Manager  himself who was the competent authority as  defined by   clause  (e)  of  Standing  Order  3  and   was   merely communicated  by his Executive Assistant to the  respondent. This is amply home out from, the material placed before  the Labour Court.  The I draft of the termination order (Exhibit 41)  which has been duly proved by Dandekar who was  working as  Personnel Officer on the relevant , date  clearly  shows that  it  was  put  up before the  General  Manager  by  the Superintendent  of  the Consumers Department  and  was  duly approved  and  initialled by the former.  In this  state  of affairs, we are unable to appreciate the observations of the Industrial  Court that since the decision to  terminate  the service  of  an  employee  is  an  act  consciously  to   be undertaken and performed by the concerned officer, the  mere initialling  of the draft order by the General  Manager  was not enough to make it an authenticated order of termination.

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Whether a written document or order bears full signatures or only  initials of the competent authority does not,  in  our judgment,  make  any  significant difference  nor  does  the affixation of signature by initials on a document or,  order detract  from  its authenticity unless the law or  the  rule specifically  requires full signature to be affixed  thereto to Make it authentic.  In Volume 5 of Stroud’s Judicial Die- tionary-of Words and Phrases (Fourth Edition), it is  stated by reference to the decision in Re Wingrove 15 Jur. 91 that signature  by initials is good.  Again as stated in  Black’s Law  Dictionary  (1951 Edition) speaking  generally  when  a person attaches his signature to a written document he  does so  in  token of knowledge, approval  or  acceptance.   Then again according to Chambers New English Dictionary, the word sign’  means a mark with a meaning.  We are,  therefore,  of the opinion that since it is established on the record that Manager  and  there is othing to indicate that  it  was  not consciously  made by him, it could not have been quashed  on the ground that it was passed by an incompetent authority. 1006 Let  us now proceed to consider whether the  impugned  order was  covered  by  Standing Order 26 or it  was  punitive  in character and could not, therefore, be passed except after a disciplinary  inquiry under clause (2) of Standing Order  21 read with Standing Order 23, It is now well settled that the question whether a particular order terminating the  service of  an  employee is by way of punishment or not have  to  be determined  on the facts and circumstances of each case  and the form of the order is not decisive of the matter.   Here, under   Standing  Orders,  two  powers  are  given  to   the management  one  is  the  power  to  impose  punishment  for misconduct after a disciplinary inquiry under clause (2)  of Standing Order 21 read with Standing Order 23 and the  other is the power to terminate the service of an employee by  one calendar month’s written notice or pay in lieu thereof under Standing  Order 26.  The question is as to which  power  has been  exercised  by the management in the present  case  and this  question  has to be determined having  regard  to  the substance  of the matter and not its form.  Now,  one  thing must  be  home  in  mind that these  are  two  distinct  and independent powers and as far as possible, neither should be construed so as to emasculate the other or to render it  in- effective.   One  is  the power to punish  an  employee  for misconduct  while  the  other  is  the  power  to  terminate simpliciter  the  service of an employee without  any  other adverse  consequence.   Now, proviso (1) to  clause  (1)  of Standing  Order 26 requires that the reason for  termination of the employment should be given in writing to the employee when  exercising the power of termination of service of  the employee  under  Standing  Order 26.   Therefore,  when  the service  of  an  employee is  terminated  simpliciter  under Standing Order 26, the reason for such termination has to be given  to the employee and this provision has been  made  in the  Standing  Order  with  a  view  to  ensuring  that  the management  does  not  act  in  an  arbitrary  manner.   The management  is  required  to  articulate  the  reason  which operated  on  its  mind in terminating the  service  of  the employee.  But merely because the reason for terminating the service  of  the employee is required to  be  given-and  the reason  must  obviously  not  be  arbitrary,  capricious  or irrelevant-it  would not necessarily in every case make  the order of termination punitive in character so as to  require compliance  with the requirement of clause (2)  of  Standing Order 21 read with Standing Order 23.  Otherwise, the  power of  termination  of service of an  employee  under  Standing

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Order 26 would be rendered meaningless and futile, for in no case  it  would be possible to exercise it.  Of  course,  if misconduct  of the employee constitutes the  foundation  for terminating   his  service,  then  even  if  the  order   of termination is purported to be made under Standing Order 26, it  may  he liable to be regarded as punitive  in  character attracting the procedure of clause (2) of Standing Order  21 read  with Standing Order 23, though even in such a case  it may  be  argued  that the management has  not  punished  the employee  but  has  merely  terminated  his  service   under Standing Order 26.  It is, however, not necessary for us  in the present case to pronounce on this controversy, since  we find  that  in  the  present  case  the  reason  given   for terminating the service of the respondent was unsatisfactory record of service.  No misconduct was alleged against the 1007 respondent  nor was any misconduct made the  foundation  for passing  the  impugned order of termination.  The  order  of termination  was clearly not passed by way of punishing  the respondent for any misconduct.  The view that the service of the respondent was not satisfactory was undoubtedly based on past  incidents set out in the record but for each of  these incidents punishment in one form or another bad already been meted out to her and it was not by way of punishment for any of these incidents, but because as gathered from these inci- dents.  her  record of service was unsatisfactory  that  her service,  was terminated by the management  under  Standing Order  26.  It is, therefore, not possible for us to  regard the  order of termination as punitive in character so as  to invite the applicability of clause (2) of Standing Order  21 read with Standing Order 23. But  even if the view were taken that the impugned order  of termination  of  service of the respondent was  punitive  in character and could not have been passed save and except  as a result of a disciplinary inquiry held under clause (2)  of Standing Order 21 read with Standing Order 23, the  impugned order cannot be struck down as invalid on the ground of  non compliance  with the requirement of these ’Standing  Orders, since the respondent No. 2 availed of the opportunity ,,open to  her before the Labour Court when the  appellant  adduced sufficient  evidence  justifying  the action  taken  by  the management.  The appellant produced satisfactory evidence to show that the impugned order terminating the service of  the respondent  was justified and hence the impugned order  must be   sustained  despite  its  having  been  passed   without complying  with the requirements of clause (2)  of  Standing Order  21 read with Standing Order 23.  We are fortified  in this  view by a catena of decisions of this Court  where  it has been consistently held that no distinction can be  made between  cases  where  the domestic enquiry  is  invalid  or defective  and those where no enquiry has in fact been  held as  required by the relevant Standing Orders in either  case it is open to the employer to justify his action before  the Labour Tribunal by adducing all relevant evidence before it. (See  The Punjab National Bank Ltd. v. Its Workmen (1960)  1 S.C.R.  806,  Management  of Ritz Theatre (P)  Ltd.  v.  Its Workmen  (1963)  3  S.C.R. 461,  Workmen  of  Motipur  Sugar Factory  (Private)  Ltd. v. Motipur Sugar Factory  (1965)  3 S.C.R.  588, Delhi Cloth and General Mills Co. Ltd. v.  Ludh Budh  Singh (1972) 1 LLJ 180, State Bank of India v.  R.  K. Jain  and  Ors.  (1972)  1 S.C.R.  755,  Workmen  of  Messrs Firestone  Tyre  &  Rubber  Company of  India  (P)  Ltd.  v. Management & Ors. (1973) 3 S.C.R. 587 and Cooper Engineering Limited v. Shri P. P. Mundhe (1976) 1 S.C.R. 361. For  the foregoing reasons, we allow the appeal,  set  aside

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the  judgment  and order of the High Court and,  uphold  the impugned  action of the appellant’s management.  In view  of the  Court’s order dated September 19, 1977,  the  appellant shall pay costs quantified at Rs. 1.500/- (One thousand  and five hundred) to respondent No. 2. This Judgment should not, however, stand in the way of respondent No. 2 being paid Rs. 15,000/- by the appellant which, in view of 1008 former’s  unfortunate  position,  the  appellant’s   learned counsel  was good enough on our suggestion to agree  to  pay her  as an ex-gratia payment.  This amount of  Rs.  15,0001- shall  be in addition to the amount of Rs. 1,500- which  the appellant  is required to pay to respondent No. 2 by way  of costs. s.R Appeal allowed. 1009