19 February 1970
Supreme Court


Bench: SHELAT,J.M.
Case number: Appeal Civil 1065 of 1966






DATE OF JUDGMENT: 19/02/1970


CITATION:  1970 AIR 1217            1970 SCR  (3) 708  1970 SCC  (1) 490  CITATOR INFO :  RF         1975 SC 661  (15)  R          1978 SC 979  (4)

ACT:     Industrial    Dispute--Termination   of   service    for misconduct--Principles  of natural justice--Duty to  conform to--Corporation taking over employees "on the rolls" of  the departmental  undertaking--Includes those who are deemed  to be  in  service--Taking over power and functions  of  under- taking  includes  regulation  of conditions  of  service  of employees and disciplinary action-Labour Court--Jurisdiction to  go behind language of order  of  termination-Certiorari- Finding  of Labour Court that order of termination  punitive neither  unreasonable  or perverse--High Court will  not  be justified in interfering.

HEADNOTE:      The  third  respondent was a Head Clerk  in  the  Rajya Transport  Authority,  a  departmental  undertaking  of  the respondent State Government.  His appointment was  temporary terminable without notice and without assigning any  reason. By  an order dated February 18, 1959 he was discharged  from service.   On  April  20, 1959,  the  State  Government,  in exercise  of  the power conferred under the  Road  Transport Corporation Act. 1950, set up the appellant corporation  and under the notification the corporation was to "exercise  all the  powers  and  perform  all  the  functions"  till   then exercised  and performed by the Rajya  Transport  Authority. In February 1961 the State Government referred the  question of  termination  of the third respondent’s services  to  the Labour Court.  The Labour Court held that he was a  workman, that  the termination of service was punitive in  nature  in view   of   the  Corporation’s  letter  addressed   to   the Conciliation  Officer  that  the  third  respondent  -   had committed  various  irregularities in the discharge  of  his duties, and that the appellant Corporation was the successor in  title  to  the Rajya Transport  Authority.   The  Labour Court, therefore, held the termination illegal and  directed the  Corporation  to reinstate the third respondent  in  its service  A Writ petition in the High Court for quashing  the award  was dismissed.  In the appeal to this Court,  it  was



contended that (1) the third respondent was not a workman as defined in s. 2(s) of the industrial Disputes Act; (ii)  the order  terminating his service was an order  of  termination simpliciter  and (iii) even assuming the order  was  illegal his remedy was against the State Government and not  against the Corporation.  Dismissing the appeal.     HELD : (i) Prima, facie the third respondent was neither an  officer  nor  a  member  of  the  office  staff  in  the administrative  offices.   The standing  orders,  therefore, were  applicable  to him.  The definition of workman  in  s. 2(s)  of the Industrial Disputes Act being  a  comprehensive one,  the  third  respondent must be held to  be  a  workman within  the meaning of S. 2(s) whose conditions  of  service were governed by the standing orders,[7l2 B]     (ii)  The  standing orders do not provide any  precedure for dealing with an employee guilty of misconduct enumerated therein,  but  it is well established  that  termination  of service  on the ground of misconduct could only be  done  in conformity  with  the principles of natural  justice.   Even though  the order of termination may be couched in terms  of an  order  of termination simpliciter the  Labour  Court  is entitled to go behind the 709 apparent  language  of the order and  consider  whether  the order  is  termination simpliciter or is imposed by  way  of punishment.   The  conclusion of the Labour Court  that  the termination  of  service  of respondent 3  was  not  one  of termination  simpliciter  but  was by  way  of  penalty  for irregularities  committed  in the discharge  of  duties  was neither unreasonable nor perverse and the High Court rightly refused  to  Interfere  with such a finding  in  a  writ  of certiorari. [712F-713C]      (iii)   Employment  of  staff  and   regulating   their condition  of  service, including disciplinary  action,  was clearly  one  of  the  powers and  functions  of  the  Rajya Transport  Authority and this was also to be  exercised  and performed   by   the   appellant   corporation   under   the notification.   The averment of the Corporation that it  had taken  over such employees of the Rajya Transport  Authority as  were  "on the rolls" of the Authority only  meant  those employees  who were in the service of the Authority and  be- cause  that termination of service of the  third  respondent was  held to be ,illegal he was deemed to be  continuing  in the  service of the Authority and hence on its  rolls.   The appellant corporation must therefore be deemed to have taken over the services of respondent 3. [713 H-714 E]

JUDGMENT:      CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1065 of 1966.      Appeal  by  special leave from the judgment  and  order dated  September 17, 1965 of the Patna High Court  in  Misc. Judicial Case No. 217 of 1962.      Sarjoo Prasad, R. P. Srivastava, Saranjit Singh  Jauhar and K. K. Sinha, for the appellant.      D. Goburdhun, for respondent No. 1.      The Judgment of the Court was delivered by      Shelat J. This appeal, by special leave, is against the order of the High Court of Patna dismissing a writ  petition under Arts. 226 and 227 of the Constitution challenging  the award passed by the Labour Court on a reference to it of  an industrial dispute under s. 10(1) of the Industrial Disputes Act, 1947.



    The reference arose from the following facts : Prior to April  20,  1959  the Government  of  Bihar  was  conducting through  one of its departments, called the Rajya  Transport Authority,  an undertaking of road transport in  the  State. The said Authority appointed respondent 3 as a Head Clerk in the  office  of  the Divisional  Manager,  Rajya  Transport, Bhagalpur, as from July 27, 1956   The order appointing  him stated  that  the appointment was purely temporary  and  was terminable without notice and without assigning any reasons. By  an  order dated February 18, 1959, issued by  the  State Transport  Commissioner, Rajya Transport, he was  discharged from service with immediate effect.  On April 2.0, 1959, the State Government, in exercise of the power conferred by S. 3 of the Road Transport Corporation Act, 64 of 710 1950, set up as from May 1, 1959, the appellant corporation. The  notification issued under s. 3 inter alia  stated  that "The said Corporation shall, with effect from the said date, exercise all the powers and perform all the functions  which are  at present being exercised and performed by  the  Rajya Transport,  Bihar".   In the meantime the  question  of  the termination  of  services of respondent 3  was  espoused  by respondent 4 before the Assistant Labour Commissioner.   The conciliation proceedings having failed, the State Government referred  the dispute to the Labour Court by an order  dated February 24, 1961,      The  Labour Court found : (a) That respondent 3  was  a workman within the definition of that term in the Industrial Disputes Act and the Standing Orders governing the appellant corporation, and that though appointed a head clerk,,  there was  no evidence to show that his, work as such  head  clerk was  managerial  or supervisory, (b) That  the  order  dated February  18, 1959 terminating the services of respondent  3 was not termination of service simpliciter, but was punitive in  nature.   The  Labour Court ,relied on  a  letter  dated January 30, 1960 addressed by the appellant corporation,  to the   said  conciliation  officer  that  the   services   of respondent  3 had been terminated because "in the course  of certain  enquiries the Rajya Transport Department had  found that  Shri  Sheo Prasad Sinha had  committed  various  irre- gularities  of  the various nature in the discharge  of  his duties".   The  Labour  Court held  that  the  said  alleged irregularities amounted to misconduct as defined by the said standing  orders,  and  that  therefore,  the  services   of respondent 3 could not be terminated on the ground of  those irregularities  without holding a disciplinary  enquiry  and giving  to,  respondent 3 therein an  opportunity  of  being heard.   No, such enquiry having admittedly been  held,  the Labour Court held that the said order’-was -not justified as it  was not in bona fide exercise of the power to  terminate the  services  of respondent 3. No evidence was led  by  the appellant  corporation  before the Labour  Court  either  to prove the said irregularities or to establish that the  said order  was  justified.  The Labour Court  consequently  held that   the   said  order  being  invalid,   and   therefore, inoperative, respondent 3 would be deemed to have  continued to  be  in  service.  It further  held  that  the  appellant corporation  was  the successor-in-title of the  said  Rajya Transport  and having taken over the erstwhile employees  of the   Rajya  Transport,  respondent  3  was  deemed  to   be continuing  in  service of the  appellant  corporation.   On these  findings,  the Labour Court concluded that  the  said order  of  termination was invalid, that  respondent  3  was deemed  to have continued in the service of Rajya  Transport and  thereafter  of the appellant corporation,  and  on  the



basis directed the appellant 711 corporation to reinstate respondent 3 in its service and pay compensation for the period from February to September 1959.      The  appellant  corporation  thereupon  filed  a   writ petition in the High Court for quashing the said award.   In support  of the writ petition three questions.  were  raised before the High Court : (1) That the services of  respondent 3  were terminated before the appellant corporation was  set up, and consequently, the remedy of respondent 3 was against the  State Government and not against the corporation.   The Labour Court had, therefore, no, jurisdiction to direct  the corporation  to  reinstate him or to pay  compensation,  (2) That  respondent  3 was engaged hi clerical  work  and  was, therefore, not a workman as defined by the Act, (3) That the termination  of  the,  services  of  respondent  3  was   in conformity  with the terms of the contract of  service,  and there  was,  therefore,  no question of  the  principles  of natural  justice being applicable to such termination.   The High  Court rejected all the three contentions,  refused  to quash  the order of the Labour Court and dismissed the  writ petition  holding that the appellant corporation had  failed to establish that there was any error of law apparent on the face of the record.      Counsel  for the appellant corporation urged before  us (a) that the respondent was, a temporary employee engaged as a head clerk and was, therefore, not a workman as defined by S.  2(s) of the Industrial Disputes Act, (b) that the  order terminating  his  services  was  an  order  of   termination simpliciter  and  the  Labour  Court  was,  therefore,   not entitled  to interfere with or set aside such an order,  and (c) that the order having been passed by the Rajya Transport Authority long before the corporation came into being,  even assuming  that  the said order was illegal,  the  remedy  of respondent  3  was  against the  State  Government  and  not against the corporation.      There  can  be  no  doubt  that  the  Rajya   Transport Authority,   prior  to  the  seting  up  of  the   appellant corporation,  was carrying on the undertaking  of  transport had standing orders regulating the conditions of service  of its employees.  The Rajya Transport, having been  Sanctioned by the Government on a temporary basis, as is apparent  from standing  order 3, its employees fell into  two  categories, namely,  temporary and casual.  Standing order 2(d)  defined an  "employee’  to  mean any person employed  by  the  Rajya Transport  Authority to do any skilled or unskilled,  manual or  clerical labour on hire or for reward.  There can be  no doubt  that  respondent  3  was an  employee  of  the  Rajya Transport Authority.  Standing order 1, 712 however,  provides  that the said standing, orders  were  to apply  only  to workmen of the Rajya  Transport  other  than officers  and  office staff employed in  the  administrative offices  and  sections.  The order appointing  respondent  3 shows  that  he was posted at the office of  the  Divisional Manager at Bhagalpur.  Prima facie, respondent 3 was neither an  officer  nor  a  member of  the  office  ,staff  in  the administrative  offices or sections.  The  standing  orders, therefore,  were applicable to him.  No evidence was led  by the  corporation  that respondent 3, as a  head  clerk,  was concerned  with or doing managerial or  supervisory  duties. The definition of a ’workman’ in s. 2 (s) of the  Industrial Dispute Act being a comprehensive one, respondent- 3 must be held  to be a workman within the meaning of s.  2(s),  whose conditions  of service were ,governed by the  said  standing



orders.    Standing  order  17  deals  with  the  power   of termination  of employment of the Rajya  TransportAuthority. That  standing order provides that the Authority  ’Port  has under  the  terms of employment the right to  terminate  the services  of an employee with 15 days’ notice or payment  of 15  4  days’  wages in lieu of such notice  subject  to  the provisions of the Industrial Disputes (Amendment) Act, 1953. It further provides that the employment of such employees as are  found  guilty  of  misconduct  may  be  terminated   in accordance  with  the provisions of  the  relevant  standing orders.   The relevant standing order is ,standing order  18 which  lays down certain acts or omissions is :amounting  to misconduct.   Cls.  (j)  and (1),  thereof,  lay  down  that habitual  or  gross  neglect of work or  habitual  or  gross negligence or neglect of duty resulting in loss to the Rajya Transport  would be misconduct.  But the standing orders  do not  provide  any  procedure for dealing  with  an  employee guilty  of such misconduct.  It is well established that  if the Rajya Transport Authority were to terminate the services of an employee on-the ground of any misconduct enumerated in standing  order 18, it could do so only in  conformity  with the principles of natural justice.  The Authority in such  a case  would  have, therefore, to furnish  to  the  concerned employee  charges  alleged  against him and  would  have  to afford to him an opportunity to be heard.  The letter of the General  Manager of the appellant corporation dated  January 30,  1960 earlier referred to make it clear that the  reason for  terminating the services of respondent 3 was,  that  he had been found to have committed irregularities of a serious nature  in the discharge of his duties.  That being so,  the termination  of services of respondent 3 was on  account  of the aforesaid irregularities in the discharge of his  duties and prima facie was by way of punishment and not termination simpliciter.  As is well established, even though the  order of  termination  may  be couched in terms  of  an  Order  Of termination  simpliciter,  a Labour Court to  which  an  in- dustrial dispute is referred to for adjudication is entitled to go 713 behind  the apparent language of the order in  question  and consider whether the order is termination simpliciter or  is imposed by way of punishment.  The Labour Court, with  which also the High Court agreed, came to the conclusion that  the order  was not one of termination of  services  simpliciter, but was by way of penalty imposed upon respondent 3 for  the aforesaid irregularities.  There is nothing to show that the said  conclusion was either unreasonable or  -perverse,  and consequently,  the  High  Court would  not  be  entitled  to interfere  with such a finding in a writ  for  certiorari... The  High  Court  was,  therefore,  right  in  refusing   to interfere with. the finding of the Labour Court in  exercise of its prerogative jurisdiction.     It  is  quite clear from the record that  the  cause  of respondent  3 was taken over and espoused by the  respondent union   before  the  conciliation  officer.   The   dispute, therefore,  was  an industrial dispute  referable  under  s. 10(1)  of the Industrial Disputes Act by the  Government  of Bihar and the reference was a competent one.     The  next question is whether the appellant  corporation was  the  successor-in-title  of the  said  Rajya  Transport Authority, and therefore, the obligations and liabilities of the  said Authority devolved on the  appellant  corporation. The contention was that it was not such a successor-in-title and that once the Rajya Transport Authority ceased to  carry on  the  said undertaking, the relationship  of  master  and



servant between that Authority and respondent 3 ceased,  and therefore, whatever remedy respondent 3 had would be against that Authority and not against the appellant corporation. It was also contended that under the terms of the  notification by   which  the  appellant  corporation  was  set   up   the corporation  took over only the powers and functions of  the said  Authority  and not its  obligations  and  liabilities. Consequently,  the order of reinstatement  and  compensation was contrary to law,     The  appellant corporation, as aforesaid, was set up  by means of the Notification dated April 20, 1959 issued  under s,  3 of the Road Transport Corporations Act,  1950.   Under cl.  2  of that notification the appellant  corporation  was empowered  to  exercise all the powers and perform  all  the functions  which were till then exercised and  performed  by the  Rajya  Transport Authority.  It is  manifest  that  the powers and, functions of the Rajya Transport Authority  were to carry on and conduct the transport undertaking.  For that purpose  its principal function would be the  administration and  management of that undertaking which would  necessitate the employment of an adequate staff of employees, Employment of such a staff and regulating their conditions of  service. including  disciplinary action, would clearly be one of  the powers 714 or functions of the, Rajya Transport Authority, which  power or  function was also to be exercised and performed  by  the appellant   corporation   under   the   said   notification. Furthermore,  in  para 5 of the writ petition filed  by  the appellant corporation in the High Court, the corporation  in clear  terms averred that it had taken over as from  May  1, 1959 such of the employees of the Rajya Transport  Authority into,  its  service  who  were on  the  rolls  of  the  said Authority  on the date it came into existence.   As  rightly observed by the High Court, on a proper construction of  the said  averment,  if  the  termination  of  the  services  of respondent  3  was invalid, it never  became  operative  and respondent 3, therefore, would be deemed to be continuing in the service of the Rajya Transport Authority on May 1, 1959, and  therefore, on its rolls.  In that view,  the  appellant corporation  must be deemed to have taken over the  services of  respondent 3. The -argument, however, was that the  true meaning  of  the said averment was that only those  of  the, employees.  of  the  Rajya  Transport  Authority  who   were actually on its rolls were taken over and not those who were deemed  to be on its rolls.  It is difficult  to  understand the distinction sought to be made between those whose  names were actually on the rolls and those whose names, though not physically  on  the rolls, were deemed in law to be  on  the rolls.   If  respondent  3 continued in law  to  be  in  the service,  it  makes  little  difference  whether  his   name actually  figured in the rolls or not.  The  expression  "on the  rolls" must mean those who were on May 1, 1959  in  the service of the Rajya Transport Authority.  By reason of  the order discharging him from service being illegal, respondent 3 was and must be regarded to be in the service of the  said Authority,  and  therefore, he would be one of  those  whose services were taken over by the appellant corporation.      Apart,  therefore, from the question of  the  appellant corporation   being  the  successor-in-title  of  the   said Authority,  respondent  3,  in  the  absence  of  any  valid termination  of his services, continued and still  continues to be in the service of the appellant corporation since  May 1, 1959, and therefore, the corporation was bound to pay his wages including all the emoluments to which be was  entitled



as from May 1, 1959.  For the period from February to  April the  Rajya Transport Authority was liable to pay  his  wages and  other  emoluments, if any, to, which he  was  entitled. The  corporation, as successor-in-title of the  said  Autho- rity,  became  liable to -pay the said wages for  ’the  said period  and not from February to September 1959 as  directed by the Labour Court.     The proper order, therefore. would, be that respondent 3 is deemed to be in the service of the appellant  corporation from 715 May 1, 1959, and therefore, the corporation is liable to pay his  wages  and  emoluments as from May  1,  1959.   As  the successor-in-title  of  the said Authority, it  became  also liable  to pay his wages and emoluments for the,  months  of February to April 1959.  Except for this modification of the Order  passed  by the Labour Court the  award  stands.   The appeal  fails and is dismissed with costs, such costs  being one hearing fee only. Y.P.                       Appeal dismissed. 716