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PETITIONER: CALTEX INDIA LIMITED

       Vs.

RESPONDENT: PRESIDING OFFICER, LABOUR COURT, AND ORS.

DATE OF JUDGMENT: 23/02/1966

BENCH: WANCHOO, K.N. BENCH: WANCHOO, K.N. GAJENDRAGADKAR, P.B. (CJ) HIDAYATULLAH, M. SHAH, J.C. SIKRI, S.M.

CITATION:  1966 AIR 1729            1966 SCR  (3) 631

ACT: Bihar  Shops  and Establishment Act (8 of  1954),  s.  26(1) proviso  Power of States Government to prescribe what  kinds of  misconduct  could  be  punished  by  dismissal/discharge without notice under s. 26(1)Proviso whether ultra vires.

HEADNOTE: The appellant company held an enquiry into the misconduct of two,  of its permanent employees and dismissed one  of  them while discharging the other.  They made applications to  the Labour   Court   under  s.  26  of  the  Bihar   Shops   and Establishments  Act  8  of 1954.  The said  court  issued  a notice to the appellant asking it to show cause why the dis- missal/discharge  should  not be set aside.   The  appellant went  to the High Court under Art. 226 of  the  Constitution and, inter alia challenged the validity of s. 26.  The  High Court  having held that the section was valid the  appellant came to this Court by special leave.  It was contended  that the proviso to s. 26(1) was ultra vires because it  suffered from the vice of excessive delegation in as much as it  gave unguided  power  to the State Government to  prescribe  what kinds  of duct were punishable with discharge or-  dismissal without notice under s. 26(1). HELD; It is well known that in industrial law there are  two kinds  of  misconduct, namely, (i) major  misconducts  which justify  punishment  of dismissal/discharge and  (ii)  minor misconducts    which   do   not   justify   punishment    of dismissal/discharge  but  may call for  lesser  punishments. Therefore  when  the  legislature gave power  to  the  State Government under cl. (c) of s. 40 to specify which kinds  of misconduct  could be punished without notice under s.  26(1) it  clearly indicated to the State Government to include  in its  list  of  misconducts such of them  a,;  are  generally understood as major misconducts which justify the dismissal/ discharge  of an employee.  This was sufficient guidance  to the  State Government and it is difficult to see what  other guidance the legislature could have given to the rule-making authority in this behalf. [633 H634 C] Looking at the list of the several items of misconduct which

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were,  prescribed by the State Government under r. 20(1)  it was clear that the State Government properly understood  the guidance. In  the circumstances it could not be said that the  proviso to s. 26(1) was ultra vires because of the vice of excessive delegation. [634 H]

JUDGMENT: CIVIL  APPELLATE JURISDICTION : Civil Appeal No. 1006 of- 1964. Appeal  by special leave from the judgment and order  dated’ August 7, 1963 of the Patna High Court in Misc.  Judl.  Case No.343 of 1961. Niren  De, Additional Solicitor-General, A. N. Sinha and  D. N.   Gupta, for the appellants. 632 N. S. Bindra and R. N. Sachthey, for respondent No. 4. The Judgment of the Court was delivered by Wanchoo,  J.  The  main question raised in  this  appeal  by special  leave against the judgment of the Patna High  Court is  .the constitutionality of s. 26 of the Bihar  Shops  and Establishments Act, No. 8 of 1954, (hereinafter referred  to as  the  Act).   The  question  arises  in  this  way.   The appellant  is carrying on business in petroleum products  in the  Patna  district.   Habibur  Rahman  was  serving  as  a watchman and Abdul Rahim as a driver in the permanent employ of  the appellant at the Dinapore depot.  They were  charged with  gross  misconduct  and an enquiry  was  held  ,by  the appellant  in  that  connection.  Habibur  Rahman  was  dis- ,charged  on  May  5, 1960 and one month’s pay  in  lieu  of notice  was ,offered to him.  Abdul Rahim was  dismissed  on April  22,  1960.  ’These two  employees  made  applications under  s. 26 of the Act in December 1960 before  the  labour court.   These applications were -obviously barred by  time. The  labour  court  condoned the delay  without  giving  any notice to the appellant on the question and issued notice to show cause why the dismissal/discharge be not set aside.  On receipt  of this notice, the appellant learnt that delay  in making  the applications had been condoned  without  hearing it.   Consequently  the appellant moved the  High  Court  at Patna  under Art. 226 of the Constitution for  quashing  the order of the labour court condoning the delay on the  ground that  it  had  been passed without  hearing  the  appellant. Thereafter  in  March 1961 the appellant  moved  the  labour court for recalling the ex parts order of condonation.   The labour  court  heard  the appellant on March  27,  1961  and decided  on April 4, 1961 to condone the delay and  -confirm the ex parte order already passed.  Thereupon the  appellant filed  another writ petition in the High Court out of  which the  present appeal has arisen.  In this petition the  order dated  April  4,  1961  was  attacked  on  various  grounds. Besides the appellant also attacked the validity of s. 26 of the  Act.   It  may  be mentioned that  a  number  of  other petitions  had  also  been  filed  before  the  High   Court attacking  the  validity  of s. 26 of the  Act.   All  these petitions  were heard together and the High Court held  that ,S.  26 was constitutionally valid.  It also held  that  the order  of April 4, 1961 showed that delay had been  condoned after  hearing  the .appellant and therefore  there  was  no cause for interference with that order.  The appellant moved the  High Court for a certificate to appeal to  this  Court, which was refused.  It then applied for special leave, which was granted and that is how the matter has .come before us.

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The  attack of the appellant is on the proviso to s. 26  (1) of ,,the Act, and the only ground that has been urged before us on its ,behalf is that that proviso suffers from the vice of excessive delega- 633 tion and should therefore be struck down.  The relevant part of s. 26 is in these terms : "26.  Notice of dismissal or discharge-(I) No employer shall dismiss  or discharge from his employment any  employee  who has been in such employment continuously for a period of not less  than  six months except for a.  reasonable  cause  and without giving such employee at least one month’s notice  or one month’s wages in lieu. of such notice : Provided  that such notice shall not be necessary where  the services of such employee are dispensed with on a charge  of such   misconduct  as  may  be  prescribed  by   the   State Government,  supported by satisfactory evidence recorded  at an inquiry held for the purpose." It is not necessary to set out the rest of s. 26 for that is not under, attack. The contention on behalf of the appellant is that when  the, proviso lays down that no such notice would be necessary  as is mentioned in the main part of s. 26(1) where services are dispensed  with  on the charge of misconduct and  the  State Government is given full power to specify the nature of  the misconduct which would eliminate the necessity of a  notice, there  is  excessive  delegation of  its  authority  by  the legislature  in the matter of specifying the nature of  such misconduct.  It is urged that as the proviso stands it gives arbitrary and naked power to the State Government to specify any  misconduct on proof of which notice could be  dispensed with. We are of opinion that there is no substance in this conten- tion.  Under s. 40 of the Act, the State Government has been given  the power to make rules to carry out the purposes  of the Act.  Clause (c) of s. 40 (2) specifically empowers  the State Government to frame rules to provide for the nature of misconduct  of  an employee for which his  services  may  be dispensed with without notice.  By virtue of that power, the State Government framed r. 20(1) which specifies as many  as II  acts which are to be treated as misconduct on  proof  of which no notice as required by s. 26 (1) would be necessary. We are of opinion that there is guidance in the words of the section  itself  in the matter of specifying  misconduct  on Proof  of  which no notice would be necessary.  It  is  well known-  that  in  industrial  law there  are  two  kinds  of misconduct,  namely,  (i) major  misconducts  which  justify punishment   of   dismissal/discharge,   and   (ii)    minor misconducts   which  do  not  justify  punishment  of   dis- missal/discharge  but  may  call  for  lesser   punishments. Therefore 634 when  the  legislature indicated that the  State  Government will prescribe the kinds of misconduct on proof of which  no notice  will be required and services of an employee can  be dispensed  with  it  was clearly  indicating  to  the  State Government  to  include in its list of misconducts  such  of them as are generally understood as major misconducts  which justify  the dismissal/discharge of an -employee.   This  in our opinion is sufficient guidance to the State  -Government to  specify  in  the  rule it  was  expected  to  make  such misconduct  as is generally understood in industrial law  to call  for  the  punishment of  discharge/dismissal.   It  is difficult to see what .other guidance the legislature  could have  given  to the rule making .authority in  this  behalf.

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The only other way in which the legislature could have acted would be to indicate the list of several items of misconduct in  the  section  itself;  but  apparently  the  legislature thought that by delegating authority to the State Government the  matter of what misconduct should be sufficient to  dis- pense  with  notice  would remain  flexible  and  the  State Government would from time to time look into the matter  and see  what misconduct should be prescribed for this  purpose. The  authority was being delegated to the  State  Government and  that  is also la consideration  which  the  legislature might have kept in its mind when it gave this flexible power to  the State Government.  The legislature must  have  known that in industrial law misconduct is generally of two  kinds (namely,  (i)  major  misconduct  justifying  punishment  of discharge/dismissal,  and (ii) minor  misconduct  justifying lesser punishment), and that appears to have been thought by the  legislature  to be sufficient -guidance  to  the  State Government to prescribe by rule such misconduct as is  major in nature and deserves punishment of discharge or dismissal. Looking  at  the list of several items of  misconduct  which have  been  prescribed  by the State  Government  under.  r. 20(1), we are of the opinion that the State Government  also properly understood the guidance which was contained in  the words of s. 26(1) and its proviso and has prescribed a  list of  what are clearly major misconducts for the  purpose  and has also included therein by the last clause "breach of  the provisions   of  the  Standing  Orders  applicable  to   the establishment and certified under the Industrial  Employment (Standing  Orders) Act, 1946".  The last clause  would  thus include  all other major misconducts which would justify  an order  of  dismissal/discharge.  Therefore as  we  read  the words  of  s. 26(1) and its proviso, we have no  doubt  that there is sufficient guidance there for the State  Government to  define misconduct on proof of which no notice  would  be necessary.  Further if we look at what the State  Government has done by r. 20 (1), it is clear that the State Government also rightly understood the guidance contained in the  words of   the  section  and  has  acted  accordingly.    In   the circumstances we are of opinion that the proviso to S. 26(1) is  not  ultra  vires  because  of  the  vice  of  excessive delegation. 635 Learned  counsel for the appellant also wanted to urge  that the  order of the labour court condoning delay was bad.   We have not allowed him to pursue this point.  It is true  that the first order condoning delay made in December 1950 was ex parte;  but after the writ petition was filed  against  that order  by the appellant in the High Court, the labour  court gave  an opportunity to the appellant and heard it on  March 27,1961.   After  hearing  both parties,  the  labour  court confirmed  the  order condoning delay which it  had  already made.   It cannot therefore be said now that the  order  was made  without hearing both the parties.  The High Court  has not thought fit to interfere with the order condoning  delay after hearing both parties made on April 4, 1961.  We cannot see how the appellant can ask us to interfere in the  matter in an appeal by special leave. The  appeal  therefore fails and is  hereby  dismissed  with costs to respondent No. 4, namely, the State of Bihar. Appeal dismissed. 636