THE MANAGEMENT OF U.B. DUTT & CO. versus WORKMEN OF U.B. DUTT & CO

WANCHOO. J.-This is an appeal by special leave iu an industrial matter. The brief faets nflcessary for present purposes are these. The appellant in a saw-mill carrying on business in Kozihkode in the State of Kerala. One Sankaran was in the employ of the appellant ae a crosscutter. It is said that on June 21, l\l58, Sankaran came drunk to thEI mill and abused the Engineer, the Secretary and others and threatene<l them with physical violence. He was caught hold of by other workmen and taken outaido. It i8 said that he came again a short tiroe later at 4-30 p.m. and abused the same perBons again. Tbereu pon tbe appellant served a charge.sheet on Sankaran on June 24, l\1511 acting out the above facts and asked him to show cause why his services should not bu terminated on account of his grave indiscipline and misconduct. Sankaran gave an explanation the same day denying the allegations of fact made against him, though be admitted that he had come to tho mill at the relevant time for taking bis wages for that week. On June 25, 1958 Sankaran wllll informed that in view of his denial, a departmental inquiry would be held and ho 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, l!J58, Sankaran again wrote to the appellant to hold the inquiry early as p088ible. On July 8, l!l58, the appellant terminated the servioes 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 prejudioed 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 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 r0ly on them on the ground that the important witnesses, namely, the Engineer, the Secretary awl other members of the staff whose evidence would have been of more value had not been prnduced and no explanation had been given why they were not produced. The tribunal therefore hold that on the facts it could not come to the conclusion that Sankaran had come drunk to the mill and a bused 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.

pp. 823–825

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 (a) is in these terms:-

p. 825, margin C

''When the management desires to determine the services of any permanent workmen receiving I:! or more as daily wagos, otherwi;;c, than undn rule 21. ho shall be given l4

pp. 825–826, margin C

days notice• c,r be paid 12 days wages." ft may Le mention<'d that r. :! I dPals with cases of miscond11ct and providPs for dismissu.! or suspension for misconduct and in sud1 a C'Mle the workman eo s11spc11d1·d is nut entitled to any wages during the period of MUspensiou. The claim thus put forward on behalf of the aµpellant tbat it is entitl«;d undt.>r r. IS(a) of tho ~tanding Orders which is a turm of contmct 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.

p. 826

·we are of opinion that thi8 claim of the appellant cannot accepted, and it too late in the day for an employer to raise such a ch\im for it amounts to a claim "to hire am! firo" an Prnployee a.s tho employer plcascg and thus <'flmpl!'tdy m·gative~ scrnritv of SN\'i~c· which has been seemed to ir.dustrial enipl0yccs Ii rough industrial adjudication for over a long pc>riutl of tinw now. As far back as 195~, the Labc.ur Appellutt• Tribunal had occasion to consider this matter relating to discharge by notice or in lieu thereof by paymcnt of wages for a certain period without assigning any reRHon: (.1ee Buckingham and Carnaiic Co. Ltd. EU;. v. W orkei·s of the Company. de.) ('). It was of opinion that even in a case of this kind the n·quiremont of bona /ides is essential and if the termination of service is a colourable exercise of the powc·r or as a result of victimisation or unfair labour practice the iadustrial tribunal would hav" the jurisdiction to intervtne Rncl set a.~ide such termination. Furthc•r it held that where the termination of sen·ico is capricious, arbitrary or unm·ecssarily harsh on the part of the C'lllployer juclgccl by n01mal standards uf a reasonable man that may be cogent evidence of victimisation or unfair labour practice. These observations of the Labour Appellate Tribunal were approved by this Court in 'l'he Chartered Banlc, Bombay v. The Chartered Bank Employees' Union('). and Assam Oil Company v. It~ Workmen('). 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 t.he employee and for which a departmental inquiry was intended to be held. The reason given by the appellant in tho order terminating the services of Sankaran of July 8, 1958, namely, thah-the proposed inquiry, if conducted, would lead to further friction and deterioration in the rank a11d 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 he accepted at its face v11lue; so that the necessity for an inquiry intended to he held for misconduct actually charged might he done away with. In any case oven 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 faet 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 it.self 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 who were produced it cannot be said to have gone wrong.

pp. 826–828

L·arned 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 Par8holam Lal Dhingru v. Union of India.(') That was however a ease of a. public servant and the considerations thai a1,ply to such a case are in our opinion entirely different. Stress was laid by the learned counsel on the obsNvations at p. 862 where it was ob:;erved as follows :-

p. 828

"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 rules, to terminate the service, the motive operating on the mind of the Government is, as Ohagla C. J. has said in Srinivas Ganesh v. Union of

p. 828

India l') (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 s~ds on ~ entirely different footing as compared to mdust~1al employees. Articles 310 and 311 of the Constitution apply to government servants and it is in the (19~) 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 euch constitutional provisions have to be considered when one is dealing with industrial employees. Further an employer cannot nowpress 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 thie case, is subject to the scrutiny of industrial courts in the manner indicated above. The appellant therefore cannot rest its case merely on r. rs (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 tl'ibunal held that the exercise of power was colourable and it cannot be said that that view is incorrect, The appellant failed to rntisfy 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 reated upon its right that no such justification was required and therefore having failed to justify its action must suffer the consequences.

pp. 828–829

Learned counsel for the appellant also drew our attention to another decision of this Court in The Pat1U1 El.utrk Supply Co. Ltd. Patna v. Bali Rai ('). That Ctl8e in our opinion has no applicu.tion to the facts of this case because that oaee dealt with an application under 33 of the Industrial Di~putes Act while the present proceedings are under s. IO of thfl Act and the considerations which apply under s. 33 are different in many respects from those which apply to an adjudication under IO.

pp. 829–830

The appeal therefore fails and is hereby dismissed with costs.

p. 830

Appeal dismissed. "CDAI BHAN

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v.

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THE STATE OF UTTAR PRADESH (J. L. and JJ.)

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