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PETITIONER: MUNICIPAL CORPORATION OF GREATER BOMBAY

       Vs.

RESPONDENT: THE B.E.S.T. WORKERS’ UNION

DATE OF JUDGMENT12/01/1973

BENCH: VAIDYIALINGAM, C.A. BENCH: VAIDYIALINGAM, C.A. ALAGIRISWAMI, A. DUA, I.D.

CITATION:  1973 AIR  883            1973 SCR  (3) 285  1973 SCC  (3) 546  CITATOR INFO :  R          1983 SC 494  (8)

ACT: Bombay Industrial Relations Act, 1946, s.  78(1)(d)(i)-Scope of.

HEADNOTE: The appellant, the Municipal Corporation of Greater  Bombay, established   the  Bombay  Electric  Supply  and   Transport Undertaking for the purpose of providing and operating motor transport and supplying electricity to the consumers in  the city of Bombay. Workman  Shri  Naik,  employed as Assistant  Fitter  in  the Transportation  Engineering  Department at  the  Appellant’s Workshop  and another employee employed under the  Appellant as  a mechanic were found by the S.I. of Police  with  gunny bags  in  their  hands  and  each  bag  contained  22  brass bearings.   On investigation it was found that Naik  was  an employee under the Appellant and that the brass bearings had been  removed from the Appellant’s Workshops with  the  help and  cooperation  of  the mechanic.  A  complaint  of  theft against the two workmen was launched. An inquiry was held by an officer of the appellant and after evidence  by  the police officers and  others,  the  Enquiry Officer  found Shri Naik guilty and an order  of  dismissal was  passed on February 11, 1970.  Appeals to the  Executive Engineer and Assistant General Manager of the appellant were all dismissed. Naik and the mechanic thereafter, filed applications  before the  5th  Labour Court at Bombay challenging  the  order  of dismissal  on  various  grounds.  The  Labour  Court,  after considering  all  the facts and evidence held that  as  the orders of dismissal were not passed within six months of the misconduct  coming to the notice of the employer, they  were illegal and have to be set aside under s.78(1)(d)(i) of  the Act.  The Labour Court further ordered the appellant to  pay each  of  the  workmen  his back  wages  from  the  date  of dismissal  till the date, of order and also in  addition  to pay compensation of Rs. 15001-. The  main  point  that  arose  for  consideration  was   the interpretation  of the provisions of s.78(1)(d) of  the  Act

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etc. Held  :  (i)  The word "shall" in s.  78(1)  should  not  be strictly construed and when the relevant provisions are read in  the context in which they appear, it cannot  be  doubted that   the   Labour  Court  will  have   to   consider   the circumstances  of a particular case and the- nature  of  the misconduct  and  also  the nature of  contravention  of  any provisions of law or standing order.  The fact that s. 78(1) of the Act has conferred certain powers on the Labour  Court does  not  mean that the Labour Court must  necessarily  and under  all circumstances grant the reliefs which it has  the power to grant.  It is well established proposition that the power  to  grant  certain  reliefs  includes  the  power  of refusing  the relief.  If an employer in a  particular  case has  passed an order of punishment beyond the period of  six months  and  if  it is found that  he  has  no  satisfactory explanation for the delay. the Labour Court may be justified in straightaway setting aside the orders 286 on  the ground that they have been passed beyond the  period of  six  months.  If, on the other hand, as in  the  present case,   an   employer  has  been  vigilant   in   initiating disciplinary  proceedings and the Labour Court is  satisfied about  the  reasons for the delay in passing the  orders  of punishment,  the  Labour Court is not justified  in  setting aside the orders solely on the ground that the period of six months had expired. [296E-H; 297A-C, E-H] (ii)Provisions   contained   in   s.78(1)(d)(i)   are   not mandatory,    but    only   directory.     Therefore,    the interpretation based by the Labour Court on s.78(1)(d)(i) is erroneous.  Accordingly, the two orders granting reliefs  to the workmen are set aside. [298D-E; 302B] Raipur  Co-operative  Central Batik Ltd. and Anr.  v.  Stale industrial  Court, Indore & Ors., [1963] 1 L.L.J. 790,  M/s. Chotabhai  Jethabhai  Patel & Co. v.  The  industrial  Court Nagpur  & Ors., A.J.R. 1972 S.C. 1268, Ibrahim  Abbobaker  & Anr. v. Custodian-General of Evacuee Property, [1962] S.C.R. 696,  State  of  U.P. & Ors. v. Baburam  Upadhya,  [1961]  2 S.C.R.  679, Remington Rand of India Ltd.  V.  The  Workmen, [1968] 1 S.C.R. 164 and Drisroll v. Church Commissioner  for England, [1957] 1 Q.B. 330, referred to.-

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeals Nos.  1774  & 1775 of 1971. F.   S.  Nariman, Addl.  Solicitor-General of India,  Y.  S. Chitale,  D.  C. Shroff, O. C. Mathur, Bhuvanesh Kumari  and Ravinder Narain, for the appellant. S.V. Gupte, S. B. Naik and K. Rajendra Choudhury, for the respondent. The Judgment of the Court was delivered by VAIDIALINGAM, J.-In these two appeals, by special leave  the common question that arises for consideration is the  proper interpretation  to  be  placed on section  78(1)(D)  of  the Bombay  Industrial Relations Act 1946 (Bombay Act No. XI  of 1947) hereinafter referred to as the Act. The appellant in both the appeals, the Municipal Corporation of Greater Bombay, is a body corporate constituted under the Bombay Municipal Corporation Act 1888.  For the purposes  of providing  and operating motor transport and  for  supplying electricity  to  the consumers in the city  of  Bombay,  the appellant has established under the provisions of the Bombay Municipal Corporation Act, an undertaking called the  Bombay

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Electric  Supply and Transport Undertaking.  The affairs  of the  said Undertaking are managed by a committee called  the Bombay  Electric Supply and Transport Committee, as per  the provisions  of  the Bombay Municipal Corporation  Act.   The workman,  Shri U. R. Naik, was employed as assistant  fitter in  the  Transportation  Engineering  Department  at   Dadar workshop  of the appellant.  Similarly, Shri E. Menezes  was employed under the appellant as Line Mechanic.  It is common ground that on July 18, 1969, when the sub-inspector  287 of  police attached to the V.P. Road Police Station, was  on petrol  duty  with his other staff, at about 9.30  P.M.,  he came  across  Shri  U.R. Naik  along  with  another  person, Kundaikar,  and found each of them carrying a gunny  bag  in their hands.  As the bags appeared to be rather very  heavy, the movement of the said persons arose the suspicion of  the police officials, who stopped the said persons and  searched the  bags.  On a search of the bags, it was found that  each bag  contained 22 ’brass bearings.  As Shri U. R.  Naik  and his  companion,  Kundaikar,  were  not  able  to  offer  any satisfactory  explanation  as  to how they  came  to  be  in possession  of  the articles found in the bags,_  they  were taken  into custody.  On further investigation and from  the statement  given by Shri Naik, it was found that the  latter was an employee under the appellant as Assistant Fitter  and that  the  brass bearings found in his possession  had  been removed  from the appellant’s workshop with the active  help and cooperation of another employee, E. Menezes, who was  at the  material  time employed under the appellant as  a  Line Mechanic.  In consequence, Shri E. Menezes was also arrested shortly  thereafter.   After further  enquiries,  the  brass bearings  were  identified  by  the  concerned  officers  as properties  belonging to the appellant.  Ultimately on  July 20, 1969, the appellant lodged a complained of theft against the two workmen, U. R. Naik and E. Menezes. The  appellant also charge-sheeted the two workmen  on  18/’ 19th August, 1969.  Shri U. R Naik was charge-sheeted  under Standing Order 20(C) for ’fraud or dishonesty in  connection with the business of the Undertaking’.  Shri E. Menezes  was charge sheeted under Standing Order 20(C) and Standing Order 20(1)   for   having  committed  an   act   ’subversive   of discipline’.   An  enquiry was conducted  by  Shri  Talpade, Assistant Labour Officer (Transportation) of the  appellant. At first it was a common enquiry against both the workmen in which  the  evidence  of the  police  officers  and  certain officers  of  the appellant were examined.   Later  on,  the enquiry  was  separated against each  employee  and  further witnesses,  both on behalf of the appellant as well  as  the workmen concerned, were examined.  The Enquiry Officer found Shri  Naik guilty of the offence with which he was  charged; and  it  was  found that the  offence  proved  against  this workman was, of a very grave and serious nature and as  such the workman was not a fit person ’to be retained in service. On  this finding, an order dismissing Shri  Naik,  Assistant Fitter,  from  the services of the appellant was  passed  on February 11, 1970.  An appeal by Shri Naik to the  Executive Engineer  and  a  further appeal to  the  Assistant  General Manager were all dismissed.  Similarly, Shri E. Menezes  was also  ,found  guilty  of  the offences  with  which  he  was charged.   It was further found that as the offences  proved against  the workman were of a grave and serious nature,  he was not a fit person to be retained 288 in  the  service  of the appellant.  Accordingly,  an  order dismissing Shri E. Menezcs from service was passed on  March

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18,  1970.   The  appeals  filed-by  this  workman  to   the Executive Engineer and the Assistant General Manager  proved of no avail. Shri  Naik  sent  to the appellant an  approach  notice,  as required by the Act, on June 6, 1970, but without any avail. Similarly, Shri Menezes also sent an approach notice on July 31,   1970,  but  without  any  avail.   Shri   Naik   filed application No. 553 of 1970 before the Fifth Labour Court at Bombay challenging the order of the appellant dismissing him from  service  on various grounds.  He  attacked also  the Domestic Enquiry that was held, as illegal and improper  and the  finding  recorded therein as perverse.  He  prayed  for setting  aside  the order dated February 11, 1970,  and  for being  reinstated in service with full back wages.  Shri  E. Menezes  filed application No. 554 of 1970 before  the  same court praying for similar reliefs in respect of the order of dismissal  passed  against him on March 18, 1970.   He  also attacked  the  order  and the  enquiry  proceedings  on  the grounds relied on by Shri Naik-.  The two applications  were filed under section 78 and 79 of the Act. Both  the  applications were heard together  by  the  Labour Court.    Evidence  also  was  adduced  by   the   appellant justifying the action taken against the two workmen.  One of the  grounds of attack against the orders of  dismissal  was that  they were illegal and void. as they have  been  passed for  fault or misconduct committed by the  employees,  which came  to  the notice of the employer more  than  six  months prior  to the date of the orders.  To meet this  contention, the  appellant  adduced  evidence before  the  Labour  Court explaining  the  circumstances that lead to  the  orders  of dismissal being passed beyond the period of six months.  The evidence   was  to  the  effect  that  though  the   enquiry proceedings had commenced within a short time,  nevertheless they had to be postponed from time to time because the Union representing  the workmen was not ready on certain days  and also  because of the postponement of the enquiry due to  the sickness  of the employees concerned. ’Another reason  given by  the appellant was that the enquiry had to  be  postponed from  time  to  time as the  sub-inspector  of  police,  who investigated  the complaint of theft, was not available  for giving evidence. The  Labour  Court rejected almost all  the  contentions  on facts  raised  by  the workmen regarding  the  legality  and propriety  of the enquiry proceedings.  The findings of  the Labour Court in this regard are               That  the  enquiry has been  conducted  by  ’a               compepetent  authority  and that  the  workmen               were given full               289               and  adequate  opportunity  to  place,   their               evidence  and  to examine witnesses  on  their               behalf.   The  Enquiry Officer  was  justified               from  the evidence on record in coming to  the               conclusion that the workmen are guilty of mis-               conduct  under Standing Order No. 20(c).   The               findings recorded by the domestic tribunal are               based  on the evidence on record and that  the               conclusions  arrived  at are just,  legal  and               proper.   The criticism of the Union that  the               finding  arrived at by the  Domestic  Tribunal               was  perverse  has to be  rejected.   The  two               workmen  have  failed to  establish  any  case               under section 7 8 (1 ) (A) (a) (i) of the Act, Regarding  the contention raised by the Union on  behalf  of the  workmen  that the orders of dismissal are  illegal,  as

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having  been  passed after six months from the date  of  the notice  of  the misconduct, the Labour Court held  that  the provisions of section 78 (1) (D) are mandatory and that  the time  limit of six- months specified in section 7 8 (1)  (D) (i) of the Act cannot ’be enlarged by the Labour Court.  The Labour  Court  found support for this view in  the  Division Bench  judgment of the Madhya Pradesh High Court  in  Raipur Cooperative  Central  Bank,  Ltd.,  and  another  v.   State Industrial  Court, Indore and others(1).  It was pressed  by the  appellant  before the Labour Court that  the  delay  in passing  the  orders  of dismissal was  caused  due  to  the adjournments  being  granted  to the Union  because  of  the illness  of the workmen concerned or due to  the  inability, for  other reasons, of the workmen to be  present.   Another reason given by the appellant Was that the sub-inspector  of police,  who  investigated  the offence of  theft,  was  not available for some time to give evidence before the  Enquiry Officer.   In view of these circumstances, the plea  of  the appellant was, that the relevant provisions will have to  be construed  not  as  mandatory  but  as  only  enabling   and discretionary  powers of the Labour Court which have  to  be exercised   having   due  regard  to   all   the   attendant circumstances.  The Labour Court in considering this plea of the appellant held that the delay in passing the orders  was caused  in  view  of  the circumstances  relied  on  by  the management; and as the delay had been caused due to circums- tances  beyond the control of the appellant, this was a  fit case  for  condoning the delay if in law the court  had  the power  to do so.  The Labour Court, however, held  that  the relevant provisions are mandatory and it hence has no  power to   condone  the  delay,  even  though  the   circumstances warranted such condonation in this case.  In this view,  the Labour  Court held that as the orders of dismissal have  not been passed within six months of the misconduct coming (1)[1963] (1) L. L.J. 790. 290 to the notice of the employer, they are illegal and have  to be set ,aside under section 7 8 (1) (D) (i) of the Act. The Labour Court then considered the relief to be granted to the two workmen.  It held that as the offence for which  the two  workmen  were dismissed, was of a very  serious  nature entailing  loss  of  confidence of  the,  employer  in,  the employee,  reinstatement should not be ordered.  The  Labour Court, therefore, directed the appellant to pay each of  the workmen  his back wages from the date of dismissal till  the date of the order and also, in addition. to pay compensation in   the  sum  of  Rs.  1,500/-  In  the  result,  the   two applications filed by the workmen were ordered granting them relief  of  back wages and compensation.  Civil  Appeal  No. 1774 of 1971 is against the, order passed in application No. 553 of 1970 and Civil Appeal No. 1775 of 1971 is against the order passed in application No. 554 of 1970. The  learned  Additional Solicitor  General  very  strenuous attacked the reasoning of the Labour Court when it held that the  provisions of section 7 8 (1) (D) are  mandatory.   His contentions in this regard are as follows - The  subject  matter and the extent of jurisdiction  of  the Labour  ’court are provided for under section 78(1)  (A)  of the  Act.   Section  78  (1) (D) of  the  Act  merely  makes provisions  regarding  the powers which a Labour  Court  may exercise in determining the propriety or legality of  orders under  section  78(1)  (A) of the Act.   The  provisions  of section  7 8 (1) (D) are only enabling or discretionary;  in that  the Labour Court is not bound to exercise  the  powers contained  in  that section.  They do not  compel  a  Labour

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Court  to pass an order in terms of section 7 8 (1) (D)  (a) or (b), even though the _Labour Court is convinced that  the reasons for the delay in passing the order of dismissal  are entirely  beyond the control of an employers Inasmuch as  in this  case the Labour Court has accepted the  reasons  given for  the  delay, the decision of the  Labour  Court  setting aside  the order of dismissal is illegal and not  justified. The  object of section 7 8 (1) (D) (i) is only to  emphasise that an employer should act diligently and with all possible speed and without laches in the matter of taking action  for misconduct against an employee and passing suitable orders. Mr. S. V. Gupte, learned counsel for the Union supported the view of the Labour Court and urged that the words of section 7  8  (1 ) (D) (i) are clear and specific.   The  said  sub- clause  leaves no room for doubt.  The sub-clause  is  quite clear that once it is found that the orders are passed by  a management more than six months from the date when the fault or  misconduct committed by an employee came to its  notice, the  action  of the employer is illegal.   Without  anything more, the counsel urged when once it  291 is found, as in this case, that the orders of dismissal were passed after six months, as provided in the said sub-clause, there,is  no other alternative for the Labour Court  but  to set  aside the orders of dismissal.  He further pointed  out that  the legislature has left no discretion in  the  Labour Court to embark upon an enquiry whether the management in  a particular  case  had sufficient reasons for  not  complying with  the mandatory period of six months as provided in  the said  sub-clause.   The only discretion left to  the  Labour Court  is regarding the nature of the relief to  be  granted either under (a) or (b) of section 78 (1) (D), In  order to appreciate the contentions of counsel  on  both sides,  it is necessary to refer to the material  provisions of  the  Act.   The Act, as its  preamble  shows,  has  been enacted  to provide for the regulation of the  relations  of employers  and employees in certain matters, to  consolidate and  amend the law relating to the settlement of  industrial disputes and to provide for certain other purposes.  Chapter XII,  in which the group of sections 77 to 86  occur,  deals with  Labour Courts, their territorial  jurisdiction,  their powers, commencement of proceedings before the said  Courts, etc.   Though  we are concerned with the  interpretation  of section 7 8 (1) (D), III order to appreciate the context  in which  it  occurs, it is necessary to refer  to  the  entire section.  Section 78 runs as follows :               78  (1)  A. Labour Court shall have  power  to               decide-               (a)   disputes regarding-               (i)   the  propriety or legality of  an  order               passed  by an employer acting or purpoting  to               act under the standing orders;               (ii)the  application and  interpretation  of               standing orders;               (iii)any  change  made  by  an  employer   or               desired  by  an  employee  in  respect  of  an               industrial  matter specified in  Schedule  III               (except  item (5) thereof and matters  arising               out of such change;               (b)   industrial disputes-               (i)   referred to it under section 71 or 72;               (ii)in  respect of which it is appointed  as               the arbitrator by a submission;               (c)   whether  a  strike,  lock-out,  closure,               stoppage  or any change is illegal under  this

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             Act;               B.    try  offences punishable under this  Act               and  where  the  payment  of  compensation  on               conviction  for  an offence is  provided  for,               determine  the  compensation  and  order   its               payment;               292               C. require any employer to-               (a)   withdraw any change which is held by  it               to  be  illegal, or withdraw  temporarily  any               change  the legality of which is a  matter  of               issue   in   any  proceeding   pending   final               decision, or               (b)   carry  out  any  change  provided   such               change is a matter in issue in any  proceeding               before it under this Act.               D.    require  an  employer, where it  finds               that  the  order,  of  dismissal,   discharge,               removal, retrenchment, termination of  service               or  suspension  of  an employee  made  by  the               employer,-               (i)   was for fault or misconduct committed by               the employee which came to the notice of,  the               employer  more  than six months prior  to  the               date of such order or               (ii)was  in  contravention  of  any  of  the               provisions  of  any law, or  of  any  standing               order in force applicable to such employee, or               (iii)was otherwise improper or illegal,               (a)   to  reinstate the employee forthwith  or               by  a date specified by it in this behalf  and               pay  him wages for the period of beginning  on               the  date  of such order  of  dismissal.  dis-               charge, removal, retrenchment, termination  of               service or suspension, as the case may be  and               ending  on the date on which the Labour  Court               orders his reinstatement or on the date of the               reinstatement, which ever is later, or               (b)   to  pay to the employee in  addition  to               wages being wages for the period commencing on               the date of his dismissal, discharge, removal,               retrenchment  or  termination of  service  and               ending  on the date on which the Labour  Court               orders  such payment, such sum  not  exceeding               four thousand rupees ’by way of  compensation,               regard  being  had to loss of  employment  and               possibility  of  getting  suitable  employment               thereafter.               (2)Every offence punishable under this  Act               shall be tried by the Labour Court within  the               local  limits  of whose  jurisdiction  it  was               committed.               293               Explanation:-A  dispute falling  under  clause               (a)  of paragraph A of sub-section (1).  shall               be deemed to have arisen if within the  period               prescribed  under the proviso  to  sub-section               (4) of section 42, no agreement is arrived  at               in  respect  of  an order,  matter  or  change               referred to in the said proviso. Clause  (D)  of section 78(1) was introduced in the  Act  of Maharashtra by Act 22 of 1965.  The said amending Act intro- duced  not  only  clause  (D)  but  also  made  changes   in paragraphs,  (A)  and (C) of section 78.  The  statement  of objects  and  reasons  to the amending Act  shows  that  the

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additional provisions, which were sought to be  incorporated in  the Act, were made to enlarge the powers of  the  Labour Courts  under  section  78.  It is  further  seen  from  the statement  of objects and reasons that the Labour Court  was being  empowered  ’to require an employer  to  reinstate  an employee with full back wages and compensation not exceeding Rs.  2,500/..... if the employee was dismissed,  discharged, etc.’. It may be noted that in the amendment, as now finally made,  under  clause (b) the maximum compensation  has  been fixed at Rs. 4,000/-.  The statement of objects and  reasons amply demonstrates that and by introducing paragraph (D)  in section  78(1) the legislature was only seeking to  arm  the Labour Court with further and more effective powers to grant suitable relief. A reading of section 78 as a whole leaves the impression  in our minds that the legislature wanted the provisions to be a comprehensive one.  It contains all the powers of the Labour Court in the matter of all disputes mentioned therein and it also gives jurisdiction to punish certain offences under the Act.   The  scheme  of section 78(1) appears to  be  that  a Labour Court has power to decide all the disputes covered by paragraph  (A).  Paragraph (B) gives the Labour Court  power to  try offences punishable under the Act and cognizance  of such offences can only be taken under section 82.  Paragraph (C)  and  (D)  set out what reliefs the  Labour  Courts  are empowered  to  give  including directions as  may  be  found necessary  in that behalf.  Another provision, which has  to be  taken  note of, is section 73 of the  Employees’  State- Insurance Act, 1948, which is as follows               Employer  not to dismiss or  punish  employee,               during   period  of  sickness,   etc.-(1)   No               employer  shall dismiss, discharge, or  reduce               or  otherwise  punish an employee  during  the               period the employee is in receipt of  sickness               benefit  or maternity benefit, nor  shall  he,               except  as  provided  under  the  regulations,               dismiss,  discharge  or  reduce  or  otherwise               punish an employee during the period he. is in               receipt  of disablement benefit for  temporary               disable-               294               ment   or  is  under  medical  treatment   for               sickness or is absent from work as a result of               illness duly certified in accordance with  the               regulations  to arise out of the pregnancy  or               confinement  rendering the employee unfit  for               work.               (2)No  notice of dismissal or discharge  or               reduction  given  to an  employee  during  the               period  specified in subsection (1)  shall               be valid or operative. This provision clearly places an embargo, upon the powers of an  employer  to dismiss, discharge or otherwise  punish  an employee  in  the  circumstances  mentioned  therein.    For example,  if  an  employee is under  medical  treatment  for sickness  or is in receipt of sickness benefit or  maternity benefit,  no order of dismissal or punishment can be  passed against such an employee.  That mean.,, even if an  employer intends  to take disciplinary action for any misconduct,  he cannot  pass  any orders of punishment during  the  ,periods menti oned  in  the section.  For instance,  if  an  enquiry regarding  the misconduct of an employee had been  conducted and  he had been found guilty even within the period of  six months,  ,as contemplated under section 78 (1) (D) (i),  and if.  the employee ,comes under the protection of section  73

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of  Employees’ State Insurance Act, 1948, the  employer  can pass no orders of punishment.  That means the employer  will be placed in a dilemma.  If he passes an order of  dismissal in  the  circumstances  mentioned under section  73  of  the Employees’  State Insurance Act, that order is  invalid  and inoperative.  But if he postpones as he is bound to do under section 73, and passes the order, after the employee  ceases to  be under any of the disabilities mentioned in  the  said section,  six months from the date of the misconduct  coming to the notice of the employer would have elapsed.  In  such a case. the order will be struck down under section 7 8 (1)  (D) ( i) if the interpretation contended for by the  Union is   accepted.   Therefore.  it  is  necessary  that   these provisions will have to be read harmoniously so as to  avoid a conflict between the two enactments. There can be no controversy that an employee is entitled  to a fair and reasonable opportunity of pleading to the  charge for which he may be tried by the Domestic Tribunal.  He must have a right to cross-examine the witnesses produced for the management  and also to adduce evidence on his  behalf.   It may be that on ,certain occasions, the employee himself  may seek  an adjournment or postponement of the enquiry,  either on the ground of his personal inconvenience due to  sickness or otherwise or due to the inability of his witnesses to  be present.  If the employer without any justification  refuses such  a  reasonable request and proceeds with  the  enquiry, those proceedings will have to be set’ aside by  295 the Labour Court or the Industrial Tribunal concerned on the ground that there has been a violation of the principles  of natural  justice;  in  that the workman  bad  no  reasonable opportunity  to,  defend  the charge against  him.   If  the employer,  as  he  is  bound  to  do,  grants  a  reasonable adjournment  to  enable  the workman to  be  present  or  to produce  his witnesses, it may be that in certain cases,  at least by the time the enquiry is complete and orders passed, the  period of six months would have elapsed.  Does it  mean that when orders of punishment for misconduct are passed  by an  employer after holding a proper and fair enquiry,  those orders will have to be set aside, only on the ground that on the day when they were passed, the period of six months  had already  expired  ?  If  the view of  the  Labour  Court  is correct, the position will ’be that even though very serious misconduct  is held to be proved against an employee and  he does  not de-serve to be retained service, nevertheless  the order  of  all will be straightaway Set aside  on  the  sole ground  that  the  period of six months  has  expired.   The employee  will  then straightaway bet  black  into  service, howsoever undesirable he may be.  Again an employee, knowing well  that  once orders are passed after the expiry  of  six months,  they will be straightaway set aside by  the  Labour Court,  will attempt to protract the proceedings before  the Enquiry  Officer  on  some ground or other.   Do  all  these things  conduce to the maintaining of a proper  relationship between  an employer and an employee, as is envisaged  under the  Act ? We have indicated broadly several  aspects  which have to be ’borne in mind in considering the question.  None of these matters have been either adverted to or taken  into consideration by the Lablour Court in the present case. The  scheme of the Act has been considered by this Court  in another context in M/s.  Chhotabhai Jethabhai Patel and Co., v.  The Industrial Court Maharashtra, Nagpur  Bench,  Nagpur and’  others (1) and we do not propose to cover  the  ground over  again.  But it is to be emphasised that, as  mentioned by us earlier, the scheme of section 78 (1) is that a Labour

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Court is to have power to decide all the disputes covered by paragraph  (A).   Paragraph (B), as pointed out,  gives  the Labour Court the power to try offences punishable under  the Act.   Paragraphs (C) and (D) set out the nature of  reliefs which  the  Labour Courts are empowered to  grant  including directions,  as may be found necessary in that behalf.   The material  part  of  section 78 (1) (D) is  to  be  read  as, follows :-               "A Labour Court shall have power to require an               employer,  there it finds that the  orders  of               dismissal,  discharge, removal,  retrenchment,               termination  of  service or suspension  of  an               employee made by the employer, was (1)  A.I.R.1972 S.C. 1268. 296               for  fault  or misconduct  committed  by the               employee  which  came  to the  notice  of  the               employer  more than six months prior  to the               date of such order;........               (a)   to  reinstate the employee forthwith  or               by a date specified by it in. this behalf  and               pay him wages for the period beginning on  the               date  of  such order of  dismissal  discharge,               removal, retrenchment, termination of  service               or suspension, as the case may be, and  ending               on  the date on which the Labour Court  orders               his  reinstatement;  or: on the  date  of  his               reinstatement, which ever is later, or               (b)   to  pay to the employee in  addition  to               wages being wages for the period commencing on               the date of his dismissal, discharge, removal,               retrenchment  or termination of  service  land               ending  on the date on which the Labour  Court               orders  such payment, such sum  not  exceeding               four  thousand rupees by way  of  compensation               regard  being  had to loss of  employment  and               possibility  of ’getting  suitable  employment               thereafter". Much emphasis has been laid by Mr.Gupte that the  expression used in the opening words of section 7 8 (1) is ’shall’  and that there is no indication in sub-clause (i) of clause  (D) enabling  a  Labour  Court to take into  account  any  other extraneous  matters.  According to the learned  counsel  the use of the expression ’shall’ coupled with the clear wording of  sub-clause  (i) of Clause (D), clearly shows  that  the, provisions  are  mandatory and not directory.   It  must  be stated that a very superficial reading of sub-clause (i)  of clause  (D) may support the contention of Mr. Gupte. ,  But, in our opinion, that is not the way to interpret a provision in the statute.  On the other hand, the relevant  provisions will  have  to  be construed in-the context  in  which  they appear and having due regard to the objects which are sought to  be served by the Act in question.  It cannot be  doubted that for the purpose of deciding whether reinstatement  with back  wages  has  to  be  ordered  or  whether  payment   of compensation,   in   addition   to   back   wages,   without reinstatement has to be ordered, the Labour Court will  have to  consider the circumstances of a particular case and  the nature of the misconduct alleged on the part of the employee as also the nature of contravention of any provision of  law or  ,standing order.  If the Labour Court Was bound to  take into account all these circumstances, to consider what  type of  relief has to be granted, we fail to see why the  Labour Court is not  297

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entitled  to  consider  the  circumstances  which  led   the management  to  the,  passing of the orders  more  than  six months  prior to the misconduct coming to the notice  of  an employer.   In our opinion, it cannot be the object  of  the Act  that notwithstanding the fact that the,  workman,:  who has  been  found  guilty in a proper  domestic  enquiry  and punished,  for,  such  misconduct, has to  be  given  relief either   by  way  of  reinstatement  with  back   wages   or compensation and back wages without reinstatement, when once he,.  has  shown  that the order of  punishment  was  passed beyond  the  period  of six months referred  to  in  section 78(1)(D)(i).  Such  a  position, is  not.,warranted  by  the statute.   Nor will it be conducive to industrial peace  and the  cordial  relationship  that  should  exist  between  an employer and an employee. It should not be missed that the opening words of section 78 (1) are ’A Labour Court shall have power’.  We have  already pointed  out  that the effect of section 78(1) is  that  the Labour  Court  shall have the power to decide the  types  of disputes  mentioned  therein and it has also  the  power  to grant  the  reliefs referred to in paragraphs (C)  and  (D). That  does  not mean that when once the Labour  Court  finds that  an  order  of punishment has been  passed  beyond  the period of six months, it has to straightaway set aside  that order irrespective of the reasons which caused the delay  in passing  those  orders.   The  fact  that  the  section  has conferred  certain  powers, does not mean  that  the  Labour Court  must of necessity and under all  circumstances  grant the  reliefs which it has the power to grant.  It is a  well established  proposition that the. power to grant a  certain relief includes obviously the power of refusing that relief. Authority  for  this proposition is to be found  in  Ebrahim Abbobakar  and Another v. Custodian General of  Property(1). It  may  be  that  if an employer has  passed  an  order  of punishment  beyond  the period of six months and  if  it  is found that he has no satisfactory explanation for the  delay or  if  he has not been vigilant and  active  in  initiating disciplinary action and passing suitable orders, the  Labour Court  may be justified in straightaway quashing the  orders on  the ground that they have been passed beyond the  period of six months.  If, on the other hand, as in the case before us, an employer has been vigilant in initiating disciplinary proceedings  and  has satisfied the Labour Court  about  the reasons  for the delay in passing the orders of  punishment, the  Labour  Court  is not justified in  setting  aside  the orders  solely on the ground that the period of  six  months has expired. There  is a very elaborate discussion by this Court  in  The State  of  Uttar Pradesh and Others v. Babu  Ram  Upadhya(2) regarding  the various principles that have to be  borne  in mind in decid- (1) [1952] S.CR. 696. (2) [1961] 2 S.C.R. 679. 298 ing  whether the use of the word ’shall’ in a statute  makes the   provision  mandatory  or  directory.   It   has   been emphasised  that for ascertaining the real intention of  the legislature the court, among other things, may consider  the nature  and the design of the statue the consequences  which would follow from construing it one way or other and whether the object of the legislation will be defeated or  furthered by a particular construction.  The question whether to award of an Industrial Tribunal ceases to be effective due to  the non-publication  of the same by the  appropriate  Government within a period of thirty days from the date of its  receipt

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under  section 17(1) of the Industrial Disputes  Act,  1947, has  been considered by this Court in The Remington Rand  of India.   Ltd v. The workmen(1.  Section 17(1), omitting  the unnecessary parts. reads as follows               "........  every arbitration award  and  every               award of a Labour Court, Tribunal or  National               Tribunal shall, within a period of thirty days               from   the   date  of  its  receipt   by   the               appropriate  Government, be published in  such               manner  as the appropriate  Government  thinks               fit". It  may be noted that the expression used is  ’shall’.   The question that arose for consideration before this Court  was whether  the  above provision was  mandatory  or  directory. This  Court held that the provision as to time in the  above section is merely directory and not mandatory, and that  the limit  of  time  has been fixed only  as  showing  that  the publication  of the award ought not to be held up.   It  was further  held that the publication of the award  beyond  the time  mentioned  in the section does not  render  the  award invalid.  The learned Solicitor invited our attention to the decision  of  the  Court of  Appeal  in.Driscoll  v.  Church Commissioners  for England(2).  In that decision  the  Court had  to  construe section 84 of Law of  Property  Act  1925, which   provided  for  the  authority  concerned  on   being satisfied  about  the ’circumstances mentioned in  the  said section,  to  wholly or partially discharge  or  modify  any restriction.  The conferment of power on the authority was in these terms               "The  authority...... shall....... have  power               from  time to time on the application  of  any               person  interested ...... by order  wholly  or               particularly  to discharge,or modify any  such               restriction on being satisfied. . . .". Though it was contended that if the necessary  circumstances envisaged  by the section are established the authority  has no  alternative  but  to order modification,  the  Court  of Appeal  rejected that contention and held that  the  section does give a discretion to the Tribunal whether to modify the restriction at all.  This decision, in our opinion, is quite apposite to the matter on hand. (1) [1968] 1 S.C.R. 164.        (2) [1957] 1 RB.330  299 Having due regard to the various aspects discussed above, we are of the opinion that the provisions contained in  section 78(1)  (D)  (i) are not mandatory but only  directory.   The Labour Court will certainly have power to give relief to  an employee  if  an order of dismissal, etc. is passed  by  the employer  after the expiry of six months from the date  when the  misconduct came to the notice of the employer  provided the   employer   has  not  been   diligent   in   initiating disciplinary  proceedings  and if he is not  able  to  offer satisfactory  and adequate reasons for the delay in  passing the   orders  imposing  punishment.   The   provision   only emphasises  that  an employer should be vigilant  in  taking disciplinary action against an employee for misconduct, once the said misconduct has come to his notice and that, as  far as  possible,  the proceedings including  the  final  orders imposing punishment must all be completed within a period of six  months.   This  will  be  the  normal  rule.   Such  an interpretation does not impinge upon either the rights of an employer to initiate disciplinary action or the rights of an employee to have a proper and fair enquiry conducted against him.   If the employer is able to satisfy a  Tribunal  about the  reasons for not being able to pass the  order  imposing

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punishment within the period of six months, the Tribunal has no  power to set aside the order merely on the  ground  that the period of six months has elapsed. The  Labour Court, in the case before us, has  proceeded  on the basis that the provision in section 7 8 (1) (D) (i) is a period of limitation prescribed by the statute which  cannot be extended or enlarged by the Court.  This approach, in our opinion,  is erroneous.  There is no question of any  period of  limitation provided by the said provision; nor does  the question of extending or enlarging the period arises in this case.   The  whole question is whether the Labour  Court  on whom  certain  powers are conferred, should  exercise  those powers or not.  The power conferred on the Labour Court will have to be exercised having due regard to the various  other circumstances;  such  as  whether  the  employer  has  shown sufficient  cause  for  not passing the  orders  within  the period of six months.  It is significant to note that  there is no such provision in the Industrial Disputes Act.  We are also   informed  that  the  Act  applies  only  to   certain industries and all the other industries are governed by  the Industrial Disputes Act.  It will be anomalous to hold  that an  order  passed  under the Act beyond the  period  of  six months is illegal and a similar order passed. after a proper and  fair enquiry, though beyond six months, will  be  legal and  valid  under  the Industrial  Disputes  Act.   We  have already  referred  to  section 73 of  the  Employees’  State Insurance  Act  and the prohibition against an  employer  to pass orders of punishment under the circumstances  mentioned therein.   The interpretation placed by us on  the  relevant provision will steer clear of all anomalies and 796Sup.C.I./73 300 will  also be in accordance with the object and  purpose  of the  Act  which  is  to regulate  the  relationship  of  the employer  and the employee.  Before we close the  discussion on this aspect, it is necessary to refer to the decision  of the Madhya Pradesh High Court in Raipur Cooperative  Central Bank,  Ltd., and another v, State Industrial Court,  Indore, and  others(1).  We have already referred to the  fact  that the  Labour Court has relied on this decision as  supporting its  view.   The  said  High  Court  had  to  consider   the provisions  of sub-section (3) of section 16 of the  Central Provinces  and  Berar Industrial Disputes  Settlement  Act,. 1947,  hereinafter referred to as the Berar Act.   The  said Berar Act was enacted to make provision for the promotion of peaceful  and amicable settlement of industrial disputes  by conciliation and arbitration and for certain other purposes. Section  16  dealt  with Reference  of  disputes  to  Labour Commissioner.   Sub-section (1) provided that powers can  be conferred  on a Labour Commissioner by the State  Government by  notification  to decide an Industrial  dispute  etc.   A right  was  conferred  by sub-section  (2)  on  an  employee working  in an industry, to which the notification  applied, to  invoke ,the jurisdiction of the Labour Commissioner  for granting  reinstatement  and payment of  compensation.   The said  sub-section further provided that such an  application for  this purpose had to be made by an employee  within  six months  from the date of dismissal, etc.  The material  part of sub-section (3) was as follows :-               "On receipt of such application, if the Labour               commissioner  after  such enquiry  as  may  be               prescribed,   finds   that   the    dismissal,               discharge,   removal  or  suspension  was   in               contravention of any of the provisions of this               Act  or in contravention of a  standing  order

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             made or sanctioned under this Act or was for a               fault or misconduct committed by the  employee               more than six months prior to the date of such               dismissal,  discharge, removal or  suspension,               he may direct...... ". The reliefs that could be granted were substantially in  the same  terms  as  in paragraph (D) of the Act,  but  in  sub- section  (3)  of  section 16 of the Berar Act  there  is  no provision  regarding the fault or misconduct coming  to  the notice of the employer, as in clause (i) of paragraph (D) of the  Act.   From  the judgment of the  Madhya  Pradesh  High Court,  we find that a workman was dismissed for  misconduct on  August 23, 1956.  The allegations of misconduct  related to  embezzlement of three sums of money.  The last  item  of embezzlement was on June 28, 1955.  The Labour Commissioner, whose jurisdiction was invoked by the workman, took the view that  the  employer came to know of the misconduct  only  on April  9,  1956 when the auditor’s report was  received  and hence the order of dismissal had been properly passed within six  301 months  from  the date of knowledge.  On  a  revision  being filed  by the workman, the State Industrial  Court  reversed the  decision of the Labour Commissioner and set  aside  the order  of dismissal holding that the question  of  knowledge does not come into the picture in view of the clear terms of sub-section  (3).   The employer  challenged  this  decision before  the  High Court under Articles 226 and 227  of-  the Constitution.   The only contention that was  raised  before the  High  Court,  as is seen from the  judgment,  was  that section 16(3) should be liberally construed by allowing ,the management to establish that they obtained knowledge of  the embezzlement  only  within a period of six months  prior  to passing  the  order of dismissal.  The High  Court  rejected this contention on the ground that the statute is clear  and that  an employer cannot be permitted to put  forward  their own inaction, in defence.  Another reason given by the  High Court for rejecting this contention was that the statute has prescribed  a  period  of  limitation  for  determining  the services of a delinquent employee as a measure of punishment and  that such a period of limitation cannot be enlarged  or extended  by a court.  The contention that has; been  placed before   us  on  behalf  of  the  appellant  regarding   the interpretation  to be placed on clause (i) of paragraph  (D) of  the Act, was not pleaded before the High Court.  In  the Act,  there  is a clear provision regarding  the  misconduct coming  to the notice of the employer.  A similar  provision was  not in the Berar Act.  The High Court  has  interpreted Section 16(3) in isolation without having due regard to  the scheme of the Act and the context in which the said  section occurs.    The   same  principles  laid  down  by   is   for interpreting section 78(1)(D)(i) of the Act should have been borne in mind in interpreting section 16(3) of the Berar Act also.   For instance, in a particular case, an employer  may be able to satisfy the Tribunal that he had been kept out of knowledge of the misconduct due to the fraud of the opposite party and, therefore, he came to know of the said misconduct only  within  a period of six months prior to  the  date  of passing the order.  Similarly, an employer may also be  able to  satisfy  the Tribunal about the reasons  for  the  delay caused   in   passing  the  orders.    These   and   similar circumstances  have not been considered by the  High  Court. The  view  of the High Court that the provision  in  section 16(3) is a period of limitation is erroneous.  As we are  of the  opinion  that the decision of the Madhya  Pradesh  High

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Court  is erroneous, the support sought by the Labour  Court on this decision is of no avail. As  pointed out by us earlier, the Labour Court  has  upheld all the contentions of the appellant on facts.  In fact,  as pointed  out already, it has also held that if it had  power to condone the delay for passing the orders of dismissal, it would  have unhesitatingly ordered the same.  The  appellant has properly explained the 302 delay  as having been caused beyond its control.   The  only ground  on which the two orders of dismissal were set  aside was  because of the fact that they have been passed  ’beyond the  period  of six months.  From what is stated  above,  it follows  that the interpretation Placed by the Labour  Court on section 78 (1) (D) (i) is erroneous.  Accordingly, We set aside  the  two  orders  granting  relief  to  the   workmen concerned.   The appeals are in consequence allowed.   There will be no order as to costs. S.N.C.                     Appeals allowed. 303