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PETITIONER: THE MANAGEMENT OF U.B. DUTT & CO.

       Vs.

RESPONDENT: WORKMEN OF U.B. DUTT & CO.

DATE OF JUDGMENT: 29/01/1962

BENCH: WANCHOO, K.N. BENCH: WANCHOO, K.N. GAJENDRAGADKAR, P.B. SARKAR, A.K.

CITATION:  1963 AIR  411            1962 SCR  Supl. (2) 822  CITATOR INFO :  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)

ACT:      Industrial Dispute-Termination  of service of employee  in   terms  of   conteract-Dropping   of proposed   departmental    enpuiry-If   colourable exercise of  power-If  can  be  questioned  before industrial-tribunal-Prinacipale        terminating Government  Service-If   applies   to   industrial employees.

HEADNOTE:      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 powerconferred 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

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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 termination.      Buckingham and  Carnatic Co.  Ltd. v. Workers of the Company, [1952] L. A.C. 490, referred to.      The Chartered  Bank Bombay  v. The  Chartered Bank Employees  Union. [1960]  3  S.C.R.  441  and Assam Oil  Company v. Its Workmen, [1960] 3 S.C.R. 457, followed.      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 industrial adjudication.      Parshotaa Lal  Dhingra  v.  Union  of  India, [1958] S.C.R. 828, distinguished.

JUDGMENT:      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 they mill  and abused  the Engineer, the Secretary and  others  and  threatened  them  with  physical violence. He  was caught  hold of 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

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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

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(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,

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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

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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.                                  Appeal dismissed.