1. This judgment will dispose of both the petitions.
2. The petitioner in Special Civil Application NO. 1106 is the Maharashtra State Road Transport Corporation, while the petitioner in Special Civil Application No. 1169 of 1966 is Madhukar Narayanrao Lanjewar, who was an employee of the Maharashtra State Road Transport Corporation. For the sake of brevity, the petitioner-Corporation will hereafter be referred to as the Maharashtra State Road Transport Corporation.
3. Prior to the first reorganization of States in 1956, there was in operation in Vidarbha a Government undertaking called the Provincial Transport Services under Government ownership. As a result of the reorganization of States, the Provincial Transport Services operating in the Vidarbha region which became a part, firstly of the new State of Bombay, and then of the State of Maharashtra, continued to be operation by the same organization. Corresponding to these services there were in operation transport services firstly under the Government of Bombay and later under the Bombay State Road Transport Corporation. The transport business run by the Provincial Transport Services in Vidarbha and by an analogous organization in Marathwada region which was allocated to the Bombay State and the Bombay State Road Transport Corporation were amalgamated by an order of the Government of India in the Ministry of Transport and Communications dated 27 May 1961 passed in exercise of the powers conferred by S. 47A of the Road Transport Corporations Act, 1950. The order was called the Bombay State Road Transport Corporation (Reorganization) and the Provincial Transport Services, Nagpur, and the State Transport (Marathwada) (Amalgamation) Order, 1961. The order was to come into force from 1 July 1961, By Clause (c) of Para. 2 of that order, 'Provincial Transport Services (under Government ownership)' were defined as meaning the commercial undertaking of the State Government operating immediately before the appointed day in the Vidarbha region of the State. Form the appointed day, the Provincial Transport Services (under Government ownership) cased to function separately and was to be deemed to be amalgamated wit the existing Corporation which was to be known by the name of the Maharashtra State Road Transport Corporation, and the area of operation of the Maharashtra State Road Transport Corporation was extended throughout the State of Maharashtra. Paragraph 9 of the order made provision relating to the employees of the Provincial Transport Services (under Government ownership) and the State Transport (Marathwada). Under that paragraph an option was given to a person holding a post which was abolished either of taking terminal benefits and compensation or of continuing as from the appointed day in the service of the Maharashtra State Road Transport Corporation. Under Sub para. (2) of Para. 9, every person who was continued in the service of the Maharashtra State Road Transport Corporation was to be entitled to be employed by the Corporation on the same terms and conditions, including pay, as were applicable to him immediately before the appointed day, and also to count his service under the Provincial Transport Services (under Government ownership) for all purposes while in the employment of the said Corporation. A rider was added that the conditions of service applicable immediately before the appointed day to any such person shall not be varied to his disadvantage except with the previous approval of the Central Government. Thus, as a result of this order of amalgamation, the employees of the Provincial Transport Services in this region became the employees of the Maharashtra State Road Transport Corporation if they preferred to continue in service. The respondent, Lanjewar, who was appointed as a clerk in the Provincial Transport Services on 10 July 1958 continued as an employee after amalgamation and thus became an employee of the Maharashtra State Road Transport Corporation.
4. The administrative affairs of the Provincial Transport Services in the Vidarbha region were managed by an officer called the General Manager. Sri I. S. Nanjiani was holding the post of the General Manager at the time of the amalgamation and also for some years before it. After the amalgamation, the post of the General Manager was abolished and the designation of that post was changed to that of 'Officer on special duty.' According to the petitioner-Corporation of the post held by Sri Nanjiani, he continued to exercise the same powers and do the same work and exercise the same authority as he had in respect of the employees of the Provincial Transport Services in this region, who became employees of the Maharashtra State Road Transport Corporation after the amalgamation. The employees of the Provincial Transport Services were governed by the service conditions and the standing orders framed on 23 May 1956 under the Central Provinces and Berar Industrial Disputes Settlement Act, 1947, which was in force on the date of the reorganization and also thereafter. Thus, on and from the appointed day when the Provincial Transport Services were amalgamated with the Maharashtra State Road Transport Corporation, those employees who continued as employees of the Maharashtra State Road Transport Corporation were governed by the conditions of service as reflected in the standing orders.
5. According to the petitioner-Corporation, it came to their notice that the respondent Lanjewar was involved in activates which were detrimental to the interests of the Corporation and that he was suspected to have committed some fraud in connexion with the property of the Corporation. It was found that he had on 24 October 1962 taken delivery of empty drums from the stores on the gate passes which were not issued to him were meant for another employee of the Corporation.
6. On 11 March, 1963 the Officer on special duty issued a chargesheet to the respondent Lanjewar charging him with fraud in connexion with the property of the Corporation; along with the chargesheet, a summary of facts leading to the charge was also given. He was charged with having taken delivery of two empty drums of 45 gallons on 24 October, 1962 from the stores and taking them out with the help of Ramteke, helper, on gate passes Nos. 7275 and 7276 issued by Rakhade, the drums being taken by respondent 1 on the authority of the original applications of Ramteke and Raghoo Goma, helpers, without their written authority. The notice required respondent 1 to give his explanation by 15 March, 1963. On 12 March, 1963 respondent 1 asked for a week's time to submit his reply by addressing a letter as per annexure 2 to the petition, to the Officer on special duty. Accordingly he was informed that he should submit his explanation by 22 March, 1963. Respondent 1 did submit his explanation in writing on 22 March, 1963. He has admitted in this explanation that he had taken delivery of two empty drums on 24 October, 1962, but his case was that he had paid for the cost of the two drums to Rakhade and Rakhade was expected to deposit the cost with the assistant cashier. He also admitted that he had previously taken delivery of two empty drums on 18 October, 1962 for which he had already paid and that he had not taken authority in writing from Kamble and Dange as he considered it was not necessary. He denied that he was guilty of any fraudulent act in taking delivery of the drums.
7. The inquiry was conducted by an inquiry officer, Sri B. K. Chatterjee, who was then the depot manager at Nagpur. The inquiry officer has recorded the statement of the respondent Lanjewar in the form of questions and answers in detail. Witnesses were examined at this inquiry and the inquiry officer submitted his findings to the Officer on special duty. The inquiry officer observed that on many occasions Lanjewar had taken drums with the help of Rakhade and that he was convinced that Lanjewar was in league with Rakhade. But the inquiry officer took the view that all powers were used by petty clerks, who thus took advantage to from a ring to indulge in nefarious activities in gay abandon.
8. On receipt of the report of the inquiry officer, the Officer on special duty considered all the matters and came to the conclusion that Lanjewar was in league with Rakhade and was thus an abettor of the offences committed by Rakhade, and that the payment to Rakhade as alleged by Lanjewar was quite illegal as Rakhade or any individual employee was not authorized to accept money unless he was specifically appointed for the purpose. In Para. 2 of his order dated 23 April, 1963 the Officer on special duty observed as follows :
'Even only on the basis of these admissions it was possible for the undersigned to pass the final order of punishment, but the enquiry was ordered to be held in your own interest. During the enquiry also you have repeatedly taken drums which were sanctioned to other employees.'
9. He further observed :
'The acts of misconduct which you have committed are of very grave nature and the evidence thoroughly proves that the misconducts are established against you.
You deserve to be dismissed. No doubt there was delay in holding the enquiry due to unavoidable circumstances and further due to the fact that you had guarded the secret of your own misconduct very carefully. The enquiry was, however, thoroughly made and you were given full opportunity to examine the witnesses and defend your case.'
10. In the last but one paragraph, the Officer on special duty stated :
'We are, however, taking a lenient view of the whole matter. Though, therefore, we had earlier proposed to dismiss you, we are not taking that action advisedly against you. Your contract of service is hereby terminated with effect from 23 April, 1963 afternoon by giving you one month's salary in lieu of notice in view of the fact that in the circumstances narrated above it is impossible for us to retain any confidence in you.'
11. In the last paragraph he stated :
'You are required to note that this is a pure and simple termination of contract of employment as said in the paragraph above and you shall be free any time within the reasonable time from today to appear before us and convince us of your being innocent. In such an eventuality and other things being equal, you may also be considered fit for employment. This order of termination shall be operative from the date mentioned above.'
12. The respondent Lanjewar challenged this order before the Assistant Commissioner of Labour under S. 16 of the Central Provinces and Berar Industrial Disputes Settlement Act, 1947. According to him, the order was in fact and in law an order for dismissal of respondent 1. It is admitted in the application that on 19 April, 1963 the Officer on special duty had sent him a notice to show cause, holding that the charges were proved, why he should not be dismissed as it was proposed by the Officer on special duty on the finding of proved misconduct. Respondent 1 gave a reply to this notice on 22 April, 1963 asserting his innocence and that his previous record was very good. And yet the order of dismissal was passed on 23 April, 1963 by giving one month's salary in lieu of notice. Respondent 1 alleged in this application that though the order is termed as termination order, it is a camouflaged order. It is an order of dismissal in fact and is passed in this fashion in order to avoid and circumvent the provisions of law and standing orders. He also made a vague statement that non-applicant 2, the Officer on special duty had no power to pass such an order.
13. The Maharashtra State Road Transport Corporation as well as respondent 2, namely, the Officer on special duty, filed a detailed written statement denying the allegation that the order of termination was in fact or in law an order of dismissal. It was also denied that the Officer on special duty had no power to pass the order in question. During the inquiry Lanjewar examined himself as his only witness. On behalf of the Maharashtra State Road Transport Corporation, the Officer on special duty, Sri Nanjiani, was also examined and so was the inquiry officer Sri Chatterjee.
14. The Assistant Commissioner of Labour came to the conclusion that Lanjewar was discharged by way of punishment for his conduct and he could not be said to be removed by a competent authority. He also held that the Officer on special duty had not the requisite authority or the power to dismiss or terminate the services of Lanjewar. Though no specific issue was framed by the Assistant Commissioner of Labour, it seems to have been argued before him that the Officer on special duty could terminate the services of Lanjewar in his capacity as the agent of the employer. This contention was not accepted by the Assistant Commissioner of Labour.
15. The Assistant Commissioner of Labour, however, did not direct reinstatement of respondent 1. The reason given in Para. 10 of the order by the Assistant Commissioner was that in the instant case there was material to show that Lanjewar had taken some twelve empty drums of the Corporation from the Rakhade, though on payment, without making any application for sanction of the said drums, and therefore it was not advisable to order reinstatement of respondent 1. The Assistant Commissioner set aside the order of termination which was treated as an order of dismissal and he further ordered that Lanjewar should be paid wages from the date of removal or discharge to the date of order of Rs. 600 by way of compensation for loss of his employment and the possibilities of getting alternate employment.
16. Both sides filed revision application before the State Industrial court under S. 16(5) of the Central Provinces and Berar Industrial Disputes Settlement Act. Lanjewar was dis-satisfied because there was no order of reinstatement, and the Maharashtra State Road Transport Corporation challenged the finding of the Assistant Commissioner of Labour that Lanjewar was in fact and in law dismissed and that dismissal was not proper, and further they challenged the finding that the Officer on special duty had no power to pass the order. Both the revisions applications were dismissed by a common order. The State industrial court has given a finding as to the merits of the conduct of Lanjewar in the following terms :
'It was then argued that the lower Court has observed that the non-applicant was guilty of misconduct and once this was proved, the discharge order has got to be upheld. This argument was based on the observations made by the lower Court according to which the non-applicant had taken away twelve drums and thus it was not desirable to reinstate him. However, the non-applicant argued that there was no misconduct as such and this could be borne out from the observations made by the enquiring officer which have been already referred to. But, on the admission of the non-applicant, it is clear that he had taken the drums on the passes which were issued on the applications made by different persons who had not authorized him to receive the drums. Apart from this, money was also not paid as required but was handed over to Rakhade as alleged by the non-applicant. Consequently there was enough scope for suspicion and finding that he was mixed up with Rakhade and both of them conspired to defraud the applicant. Consequently, the finding of the enquiry officer and so also of the lower Court was correct and he rightly held that there was sufficient evidence of misconduct.'
17. But the State industrial court agreed with the view taken by the Assistant Commissioner of Labour that the order of termination amounted to an order of dismissal as it had punitive consequences and that could not be passed following the provisions of the standing orders in respect of dismissal for misconduct. The State industrial court also held that the Officer on special duty had no power to dismiss respondent 1.
18. Both parties again challenged the orders of the subordinate industrial authorities in the two special civil applications filed by each of them. These petitions were argued at some length and thereafter the Maharashtra State Road Transport Corporation was permitted to file some documents in support of its contention that the Officer on special duty had been delegated some powers and could be considered agent of the employer. A grievance at that time was made on behalf of Lanjewar that he had no opportunity to state or challenge the effect of these documents and the case was remitted to the Assistant Commissioner of Labour to record a finding on this aspect of the controversy. Witnesses were further examined after remand and some documents seem to have been filed. On a consideration of the material before him, the Assistant Commissioner of Labour has returned a finding that the Officer on special duty could not be treated as agent of the employer. This finding is again challenged before us in its petition by the Maharashtra State Road Transport Corporation.
19. Before considering in detail the contentions on either side, it will be useful to see what the relevant standing orders in this connexion are. Under Clause (c) of standing order 1, 'Manger' is defined as meaning the General Manager, assistant manger, works manager, depot manager or the office representative for the time being in charge of the particular place. Standing order 9 makes provision for termination of employment, and the notice thereof to be given by employer and workers. That order is as follows :
'For terminating employment of a permanent worker notice of one month in writing shall be given either by employer or the worker, or one month's salary in lieu of notice shall be paid or deposited as the case may be. Reasons for termination of services shall be recorded in writing and shall be communicated to the worker if he so desires at the time of his termination or within one week thereof.
The wages due to such worker shall, if possible, be paid on the day notice expires or in any case with two working days after the termination of employment. * * *'
20. Standing order 10 defines what acts constitute misconduct. Standing order 11 provides for punishment or punishments for misconduct. The order is divided into four parts and is as under :
'11. Punishment or punishments for misconduct. - (i) A worker, may be suspended for a period not exceeding fifteen days for enabling the holding of enquiry where enquiries may be necessary. Such suspension shall not be by way of punishment. A worker will be paid an allowance equal to 50 per cent. of his salary and allowances during such suspension period. If, on enquiry, it is found that the worker is not guilty, the period of suspension will be treated as on duty and he shall be paid the balance amount for the period. If, however, he is found guilty, he well be dismissed from the date of suspension and the worker shall be liable to return the allowance paid to him by way of suspension allowance.
(ii) A worker may be given punishment or punishments as stated below :
Fine, put-off duty, demotion, discharge, termination, removal and/or dismissal.
(iii) No worker shall be dismissed, fined, removed, terminated, put off duty, demounted or discharged unless the worker concerned is informed in writing of the alleged misconduct and is given an opportunity to explain in writing the circumstances alleged against him provided that this clause shall not be applicable to any case of termination of services.
(iv) In awarding punishment under this standing order the Manager shall take into account the gravity of the misconduct, the previous record of three years and any other information in possession of the undertaking, if any, of the worker and any other extenuating or aggravating circumstances that may exist, provided that for misconduct stated in Cls. 8, 16, 17, 18, 30, 33, 34 and 35 at the first instance, the worker may be fined in accordance with the provisions of the Payment of Wages Act or may be alternatively given a censure or warning notice, but the offence if repeated twice the Manager may dismiss the worker for such offence and repetition thereof.'
21. We have to consider in this case three question agitated between the parties :
(i) Whether the order date 23 April, 1963 terminating the employment of Lanjewar was in fact and in law an order dismissing him from service for misconduct
(ii) Whether Sri Nanjiani, Officer on special duty, could terminate the services for misconduct or pass an order dismissing Lanjewar for misconduct
(iii) If the order dated 23 April, 1963 is illegal and inoperative for any reasons, was Lanjewar entitled to be reinstated instead of being paid compensation for loss of employment as ordered by the Assistant Commissioner of Labour
22. The main contention of respondent 1, Lanjewar, regarding the order dated 23 April, 1963 is that even though the order is couched in terms of an order of termination, the termination follows a finding of misconduct of the employee and must be treated in law as well as in fact as dismissal of the employee for misconduct. If the order is in law an order of dismissal, then under Clause (iv) of standing order 11, the authority awarding this punishment under this order was bound to take into account the gravity of the misconduct, the previous record of three years and any other information in possession of the undertaking, if any, of the worker and nay other extenuating or aggravating circumstances that may exist; and obviously this has not been taken into account when the order terminating the services was passed. In fact, the argument went to the length of claiming that whenever there is a charge of misconduct and a finding of misconduct, the order that follows such a findings whether termed as an order of dismissal or not, must be interpreted as an order of dismissal for misconduct in all cases. The order is also said to have penal consequences because the order itself states that the employee has been found guilt of misconduct and the order has the effect of depraving the employee of his employment and thus has penal consequences, inasmuch as he loses employment.
23. Under Clause (iii) of standing order 11, different kinds of punishment that can be given for misconduct include termination, and therefore, it is said that termination of service is also a punishment for misconduct and must be treated as having evil consequences. It may be noted here that under that very clause of standing order 11, it is provided that this clause shall not be applicable to any case of termination of service : we will have occasion to interpret the exact import of this standing order.
24. In support of the proposition that an order terminating the employment after holding inquiry should in all cases be interpreted or should be taken to have the effect as an order of dismissal, the learned counsel for the employee relied on decision of the Supreme Court in Assam Oil Company, Ltd. v. Its workmen : (1960)ILLJ587SC . In particular, our attention was invited to the following observations at pp. 590-591 :
'It the contract gives the employer the power to terminate the services of his employee after a month's notice or subject to some other conditions, it would be open to him to take recourse to the said term or condition and terminate the services of his employees; but when the validity of such termination is challenged in industrial adjudication, it would be competent to the industrial tribunal to enquiry whether the impugned discharge has been effected in the bona fide exercise of the power conferred by the contract. If the discharge has been ordered by the employer in bona fide exercise of his power, then the industrial tribunal may not interfere with it; but the words used in the order of discharge and the form which it may have taken are not conclusive in the matter and the industrial tribunal would be entitled to go behind the words and the form ad decide whether the discharge is a discharge simpliciter or not. If it appears that the purported exercise of the power to terminate the services of the employee was in fact the result of the misconduct alleged against him, then the tribunal will be justified in dealing with the dispute on the basis that despite its appearance to the contrary the order of discharge is in effect an order of dismissal. The exercise of the power in question to be valid must always be bona fide. If the bona fides of the said exercise of power are successfully challenged, then the industrial tribunal would be entitled to interfere with the order in question. It is in this context that the industrial tribunal must consider whether the discharge is mala fide or whether it amounts to victimization or an unfair labour practice, or is so capricious or unreasonable as would lead to the inference that it has been passed for ulterior motives and not in bona fide exercise of the power conferred by the contract. In some cases the employer may disapprove of the trade union activities of his employee and may purport to discharge his services under the terms of the contract. In such cases, if it appears that the real reason and motive for discharge is the trade union activities of the employee, that would be a case where the industrial tribunal can justly hold that the discharge is unjustified and has been made mala fide. It may also appear in some cases the though the order of discharge is couched in works which do not impute any misconduct to the employee, in substance it is based on misconduct of which, according to the employer, the employee has been guilty; and that would make the impugned discharge a punitive dismissal. In such a case fairplay and justice require that the employee should be given a chance to explain the allegation weighing in the mind of the employer and that would necessitate a proper enquiry. Whether or not the termination of services in a given case is the result of the bona fide exercise of the power conferred on the employer by the contract or whether in substance it is a punishment for alleged misconduct would always depend upon the facts and circumstances of each case. In this connexion, it is important to remember that just as the employer's right to exercise his option in terms of the contract has to be recognized so is the employee's right to expect security of tenure to be taken into account. These principles have been consistently followed by industrial tribunals and we think rightly. [Vide Buckingham and Carnatic Mills, Ltd. v. Their workers 1951 II L.L.J. 314. Therefore, we are not prepared to accede to the argument urged before us by the learned Additional Solicitor-General that whenever the employer purports to terminate the services of his employee by virtue of the power conferred on him by the terms of contract, industrial tribunals cannot question its validity, property or legality.'
25. In order to understand the import of these observations, it is necessary to point out the face which led to this decision. One Miss P. Scott was a stenographer with the Assam Oil Company and the workman under it. Miss Scott was originally in the employment of Burmah Shell, New delhi, as a lady-secretary. Her services were lent to the Delhi representative of the appellant-company, namely, the Assam Oil Company, in January 1954. In September 1954 the Assam Oil Company set up its own office at New Delhi and then offered Miss Scott direct employment on the same terms and conditions that governed her employment with Burmah-Shell. Miss Scott then resigned her service from Burmah-Shell and jointed the appellant as a regular employee in October 1954 and the appointment was confirmed later on. During the course of her employment, Miss Scott did not give satisfaction to the employer and on many occasions she was verbally warned to improve her work and not to repeat her lapses. On 26 February, 1957, Sri Gowan, the Delhi representative of the company, warned Miss Scott in writing about her lapses and added that he did not consider her work satisfactory. He told her to strive to improve her work and mend matters failing which he would have to consider whether she was suitable to continue in the company's employment. On 28 February, 1957 the services of Miss Scott were terminated by Sri Gowan and she was told that the faults pointed out to her had not been corrected and her performance during the service had not matched up to the standard required. Miss Scott was given one month's pay in lieu of notice and she accepted it.
26. It is in the background of these facts which clearly show that even though the employment was terminated for unsatisfactory service, there was neither a charge, nor an enquiry nor an opportunity to the employee. The learned counsel for the petitioner argues that the observation,
'If it appears that the purported exercise of the power to terminate the services of the employee was in fact the result of the misconduct alleged against him, then the tribunal will be justified in dealing with the dispute on the basis that despite its appearance to the contrary the order of discharge is in effect an order of dismissal'
27. must be interpreted to mean that whenever there is a discharge simpliciter preceded by a charge of misconduct, then the discharge must in all cases treated as dismissal. We are unable so to interpret these observations divorced from the context. The observations a little later in the same paragraph make this abundantly clear. The lordships observed at pp. 590-591 :
'... In some cases the employer may disapprove of the trade union activities of his employee and may purport to discharge his services under the terms of the contract. In such cases, if it appears that the real reason and motive for discharge is the trade union activities of the employee, that would be a case where the industrial tribunal can justly hold that to discharge is unjustified and has been made mala fide. It may also appear in some cases that though the order of discharge is couched in words which do not impute any misconduct to the employee, in substance it is based on misconduct of which, according to the employer, the employee has been guilty; and that would make the impugned discharge a punitive dismissal. In such a case fairplay and justice require that the employee should be given a chance to explain the allegation weighing in the mind of the employer and that would necessitate a proper inquiry ...'
28. Thus, the main feature of all those cases where the cessation of employment follows on an order in the form of termination of service is that no opportunity seems to be given to the employee and his conduct is adjudged without any such opportunity. Their lordships have pointed out that there cannot be a uniform or universal rule in treating every order of termination as an order of dismissal and whether or not the termination of services in a given case is the result of the bona fide exercise of the power conferred on the employer by the contract has to determined according to the facts and circumstances of each case. We are unable to interpret this decisions as laying down that in all cases where there is an order of termination preceded by a charge of misconduct, and even though an inquiry is held and the finding is recorded, the employer must follow the same by an order of dismissal, and if it is not so done, the fact that the actual order is one of termination of services has still to be interpreted as an order of dismissal.
29. The next case relied upon in support of this contention is U. B. Dutt & Co. (Private), Ltd. v. Its workmen : (1962)ILLJ374SC . Against the facts in this case are required to be noticed to understand the import of the observations on which reliance is placed. A worker by name Sankaran was alleged to have come drunk to the mill and abused the engineer, the secretary and others and threatened them with physical violence. He was caught hold of by other workmen and taken outside. He came again a short time later at 4.30 p.m., and abused the same persons again. Thereupon the company served a chargesheet on Sankaran setting out the above facts and asked him to show cause why his services should not be terminated on account of his grave indiscipline and misconduct. Sankaran gave an explanation the same day denying to allegations of fact made against him, though he admitted that he had come to the mill at the relevant time for taking his wages for that week. On the next day he was informed that in view of his denial, a departmental inquiry would be held and he was also placed under suspension pending inquiry. As no inquiry was held till about a week, Sankaran wrote to the company to hold the inquiry as early as possible. Without holding any inquiry, the company terminated the services of Sankaran under rule 18(a) of the standing order. Thus it will be clear the in this case there was an allegation of misconduct, a charge was framed but no inquiry was held though demanded by the employee and the employment was terminated by an order of termination. In justification of its order, the employer relied upon the provisions of the standing orders which permitted the determination of the services of any permanent workman receiving 12 ones or more as daily wages, otherwise than under rule 21, by fourteen days' notice or payment of twelve days' wages. This claim was repelled by the Court observing that it was too late in the day for an employer to raise a claim to terminate the services of his employee at any time by just giving a notice or paying wages in lieu of such notice, for it amounts to a claim 'to hire and fire' an employee as the employer please and thus completely negatives security of service which has been secured to industrial employees through industrial adjudication for over a long period of time. Reference was then made to the judgment of the Labour Appellate Tribunal in Buckingham and Carnatic Mills, Ltd. v. Their workers 1951 II L.L.J. 314 and also to Chartered Bank, Bombay v. Chartered Bank Employees' Union and another : (1960)IILLJ222SC and Assam Oil Company, Ltd. v. Its workmen : (1960)ILLJ587SC which we have referred to above. After referring to these decisions their lordships observed in : (1962)ILLJ374SC :
'... Therefore, if, as in this case, the employer wanted to take action of misconduct and then suddenly dropped the departmental proceedings which were intended to be held and decided to discharge the employee under rule 18(a) of the standing orders, it was clearly a colourable exercise of the power under that rule inasmuch as that rule was used to get rid of an employee instead of following the course of holding an inquiry for misconduct ...'
30. The Court did not accept the explanation of the employer, namely, that the proposed inquiry, if conducted, would lead to further friction and deterioration in the rank and file of the employees in general and also that maintenance of discipline in the undertaking would be prejudiced if Sankaran were retained in service. When the employee raised the dispute and it was referred to the industrial tribunal for adjudication, on the evidence led before it, the tribunal had come to the conclusion that there was some incident which had happened but there was no evidence to prove what had actually happened. Thus, even on merits, the employer was not able to prove the misconduct alleged against the employee before the tribunal in the adjudication proceedings.
31. However, as we understand it, the ratio of this decision must be found in these observations at p. 377 of the judgment :
'... In any case even if the inquiry was not held by the appellant and action was taken under rule 18(a), it is now well-settled, in view of the decision cited above, that the employer could defend the action under rule 18(a) by leading evidence before the tribunal to show that there was in fat misconduct and therefore the action taken under rule 18(a) was bona fide and was not colourable exercise of the power under that rule ...'
32. In our opinion, these observations run counter to the extreme claim made on behalf of respondent 1 in this case that in every case where a misconduct is alleged or proved, it must be followed by an order of dismissal and that any other order would be treated as an order of dismissal. If in Sankaran case : (1962)ILLJ374SC (vide supra) as observed by their lordships, it was permissible for the employer to defend its order of termination of service provided the misconduct was proved or established even in the adjudication proceedings, we fail to see why an employer who, in a domestic inquiry, after a fair opportunity is given to the employee to defend the charges against him, comes to the conclusion that the misconduct is proved, and yet decides to use his power of discretion to bring about the termination of the relationship of employer and employee by giving one month's notice or pay in lieu of that notice, could not defend his action. The extreme contention raised in the case of U.B. Dutt & Co. : (1962)ILLJ374SC (vide supra) on behalf on the employer was that the employer has a right to terminate the services under rule 18(a) of the standing orders whatever be the antecedent circumstances, and that the employer was not bound to hold any inquiry or give any chance to the employee. This contention in the extreme form in justification of the order of termination may not be sustained and was not in fact sustained in that case; but from this circumstance, it is hardly possible to accede to the contention, in a converse manner as it were, that wherever there is a charge, an inquiry and a finding of misconduct, it must necessarily be followed ny an order of dismissal and the employer cannot use his discretion in bringing about the termination of employment by any other order such as one of removal or discharge or termination of services.
33. It is contended that the safeguards given, when the punishment is one of dismissal, are not available to the employee if as a result of misconduct, the employer decides to terminate the services instead of dismissing the employee. We are unable to appreciate this contention, An order of dismissal of an employee has undoubtedly evil consequence. Such an employee may find it difficult to get alternate employment. On the other hand, and order of termination of services which fully protects all the terminal benefits, cannot be said to have the same kind or similar kind of evil consequences at all. It is true that all termination of employment exposes the employee to the risk of losing his present employment, but that cannot be said to be an evil consequence in so far as it does not affect the prospects of employment of the employee whose services are terminated. If the order impugned in this case therefore cannot reasonably or legally be construed as an order of dismissal, we do not think that the further contention that the termination as a measure of punishment as referred to in Clause (ii) of standing order 11 has infringed Clause (iii) thereof, has any merit. In fact, we are unable to reconcile this contention with the part of Clause (iii) of standing order 11 which ignores altogether the provisions of this clause when there is termination of services as distinct from removal or dismissal.
34. Standing order 9 specifically gives the power to the employer to terminate the services of the employee on giving one month's notice or salary in lieu of notice. This standing order also requires that reasons for termination of services shall be recorded in writing and shall be communicated to the worker if he so desires at the time of his termination or within one week thereof. In our opinion, this is a very salutary provision which protects the employee against any arbitrary or mala fide orders of termination of services. When reasons are required to be recorded in writing, it necessarily postulates that the circumstances which induced the employer to terminate the services of the employee by using powers under standing order 9 are capable of objective assessment by a tribunal or by other authority. Thus, this requirement of recording reason in writing in our opinion, is an adequate safeguard against abuse of the power under standing order 9. At the same time, we are unable to see why before reasons are recorded, an employer who comes to a decision to terminate the services should be unable to come to such a decision after an inquiry is made into the charges against the employee and a finding adverse to the employee is reached. It is not in every case that an order of dismissal must necessarily follow in respect of an employee whose conduct comes in for investigation and inquiry. Dismissal from employment is an extreme punishment which can be given by an employer ad before resorting to this punishment, the employer may as well decide to terminate the relationship of employer and employee without prejudicing the prospects of the employee in any other employment. If such a view is taken in case of an employee, albeit after issuing a chargesheet, holding an enquiry and reaching a finding against the employee we do not see anything in standing order 9 or 11 which prevents the employer from using this discretion in having recourse to standing order 9. To accept the argument urged on behalf of respondent 1 in this case would lead to a result which we are clear could never have been intended by the farmers of the standing orders. If that is the correct interpretation of standing order 9 vis-a-vis standing order 11, then in every case where there is misconduct alleged and proved, the only course opened to the employer is to dismiss the employee which he may do after taking into account all the aggravating or extenuating circumstances. We do not think that that could be the intention of the standing orders which are meant to protect the interests of the employees. It may as well happen that even though the allegations made or the charge proved may be fairly serious, the employer may not take the extreme action of dismissal and would well be persuaded even by the employee himself to have his services terminated. If this course is opened in the interests of the employee, we are clear it is equally open to the employer to resort to it in proper circumstances. It is only when the order of termination could be successfully challenged as made in mala fide exercise of the power under standing order 9 that it could be said that the order of termination in fact and in law amounts to an order of dismissal. That was the type of order and the nature of challenge made to the orders in the two decisions of the Supreme Court where the termination orders followed without any inquiry and without any independent assessment of the charges made against the employee. Fairness demanded that if an employee was proved unsuitable for service, an opportunity ought to be given to such an employee to defend the charges against him. But that does not mean the merely because an opportunity has to be given, if a finding is ultimately reach that the charge is proved, the employer loses his rights under standing order 9 of terminating the services.
35. Differing from the two Courts below, therefore, we have come to the conclusion that the power of termination exercised by the Maharashtra Sate Road Transport Corporation in this case could be legally exercised by it under standing order 9, that it was not a mala fide exercise of power, and that that order cannot be interpreted as an order of dismissal.
36. The authorities below have treated the order bad because they treated it as an order of dismissal and then went on to say that the procedure required to be followed before passing an order of dismissal, namely, taking into consideration the aggravating or extenuating circumstances under Para. (iv) of standing order 11, has not been followed. If standing order 11 cannot be properly called in aid in this context, we fall to see why the order of termination is vulnerable on this ground.
37. The alternative contention of respondent 1 was that under standing order 9, it was only the employer who was entitled to terminate the services of respondent 1 Lanjewar, whereas in this case, the order of termination was passed by the Officer on special duty. The Officer on special duty was not the employer of respondent 1, the Maharashtra State Road Transport Corporation being his employer. In this context, we have to find out what is the meaning of the word 'employer' used in standing order 9. The standing orders do not give any definition of 'employer.' These standing orders however have come to be framed as required by S. 30 of the Central Provinces and Berar Industrial Disputes Settlement Act, 1947. Under that section, every employer, in respect of any industry to which this Act has been made applicable under Sub-section (3) of S. 1, has to submit, within two months of the date of such notification, to the Labour Commissioner for approval, in such manner as may be prescribed, a copy of the standing orders. The standing orders in this case are accordingly made in exercise of this power for regulating the conditions of service of the employees. Under S. 16, a dispute can be entertained by the Labour Commissioner at the instance of an employee on the ground that his dismissal, discharge, removal or suspension was in contravention of nay of the provisions of that Act or in contravention of a standing order made or sanctioned under that Act. It is, therefore, legitimate in our opinion to understand in what sense the word 'employer' is understood under this Act (i.e., the Central Provinces and Berar Industrial Disputes Settlement Act). For that purpose a reference to the definition of 'employer' as given in S. 2(11) is pertinent. That definition is as follows :
''employer' includes -
(a) an association or a group of employers;
(b) any agent of an employer;
(c) where an industry is conducted or carried on by a department of the Provincial Government, the authority prescribed in that behalf and where no such authority has been prescribed, the head of such department;
(d) where an industry is conducted or carried on by or on behalf of a local authority, the Chief Executive Officer of such authority;
(e) where the owner of any industry in the course of or for the purpose of conducting such industry contract with any other person for the execution by or, under the control of such person of the whole or any part of any work which is ordinarily carried on by the said industry, the owner of such industry.'
38. It will be seen that the concept of employer has been extended to include a variety of authorities and in particular includes any agent of an employer. The principle idea of having an extensive definition of the word 'employer' is that an employer should not suffer on account of actions of subordinate agencies of the employer even though the impugned action may not have been taken by the person who could be said to be an employer, i.e., with whom the contract of service is enter into or who is entitled to control the action or acts of the employee. As the definition would show, the agent of the employer or the head of the department in which the employee is engaged, or the Chief Executive Officer of the local authority, or any other person who has control for the time being in carrying on the industry, are all included in the definition of employer. We have therefore to see in this case whether the person who passed the order terminating the services, namely, the Officer on special duty, Sri I. S. Nanjiani, could answer the description of the employer as defined in the Act.
39. It was contended that inasmuch as the standing orders in this case do not include a definition of employer, it is not permissible to have recourse to the definition of the word 'employer' as given in the Central Provinces and Berar Industrial Disputes Settlement Act. We are unable to accept this contention. What we have to interpret in this case and find out is the ambit of the rights and the obligations created under the standing orders as framed under the authority of the Central Provinces and Berar Industrial Disputes Settlement Act. Therefore, it is that Act and the definitions given in that Act which must govern the case where the standing orders are silent and omit to give their own definitions. In our opinion, the inclusive definition of the word 'employer' has been advisedly given in the Act and is probably for the benefit of the employees themselves. Even if the departmental head takes action, complaint can be made against such action as action of the employer. To that extent, the agent or the person for the time being in authority is clothed with the personality of the employer, so that he may be answerable. We have therefore no doubt that if it can be reasonably established that the Officer on special duty was an agent of the employer, in this case the Maharashtra State Road Transport Corporation, the order passed by him could be upheld.
40. The learned counsel for respondent 1 referred in the course of the arguments to the alterations made in the definition of 'Manager' in June 1963 as a result of negotiations and agreement in respect of the amendment necessary to be made in the standing orders governing the employees, and the former Provincial Transport Services. We are unable to appreciate how the fact that the Manager, within the meaning of Clause (c) of standing order 1, from 1 July, 1963 now includes the Officer on special duty or the Deputy General Manager, can have any relevance in determining whether Sri Nanjiani who was the Officer on special duty at the relevant time when he passed the order on 23 April, 1963, could be said to have acted as an agent of the employer. It is also urged that the concept of agency is foreign to industrial law or when the authority of an agent is to be enforced or implied in the case of statutory corporations which are governed by statutes. In this connexion, reliance was placed on the decision of the Supreme Court in State of Assam and others v. Kripananth Sharma and others : (1967)IILLJ576SC . That case arose out of the provisions of the Assam Elementary Education Act. But we are unable to find any principle to be deduced except with reference to the facts of that case and the provisions of he nature which was under examination. As a fact, it was found that the authority which issue the order of termination of the servant was not the authority which could issue such an order and it was found also as a further fact that the Board which could issue the order of termination could not be said to have delegated the power to the authority, firstly because the Board itself had ceased to be in existence before the order was passed and the order was passed by an authority which had come into existence as a result of stature. In fact, the resolution on which reliance was placed in argument was treated not as a resolution authorizing the termination of services at all of a particular teacher.
41. The next case relied upon is Hindustan Brown Boveri, Ltd. v. Their workmen and another 1968 I L.L.J. 571. In that case, the order of dismissal was passed by the Manager whereas under the relevant standing order, it was for the company to pass such orders and there was no power under the standing order to delegate this authority to any other officer. In the case before us, reliance is placed not on the provisions of the standing orders but on the provisions of the Act which defined the expression of 'employer' which, as we have held, must govern the interpretation of the standing orders under the Act. Thus, we do not see how either of these case met the contention of the petitioner that if they could prove that the Officer on special duty was a agent of the employer, the order dated 23 April, 1963 could be validly made by him.
42. In this connexion, the petitioner-Corporation relies on a resolution of the Maharashtra State Road Transport Corporation which may now be considered. Immediately after the constitution of the Maharashtra State Road Transport Corporation by the amalgamation order, the Corporation wrote to the Government on 21 July, 1961 that the designation of the post held by Sri Nanjiani, i.e., the General Manager of the Provincial Transport Services, should be changed as Officer on special duty and the Corporation was informed that the Government agreed for re-designation of that post as Officer on special duty. Consistently with this decision, Sri Nanjiani was referred to as the Officer on special duty in subsequent correspondence and papers. In fact, that was the designation of the post held by him seems to be a well-known fact acted upon by subordinate officers. The petitioner has filed a copy of communication from respondent 1 himself to the Officer on special duty wherein he asked for permission to see him in connexion with a transfer order. This first show-cause notice was also issued by Sri Nanjiani as Officer on special duty and the order dated 23 April, 1963 has also been passed by him as Officer on special duty. On 30 November, 1962 the Corporation passed a resolution No. 5002 which dealt with the subject of the post held by Sri Nanjiani in the Provincial Transport Services administration. By this resolution, the post of the General Manager held by Sri Nanjiani was equated to the post of the Deputy General Manager in the Corporation and his pay and allowance were also fixed in the equated post. Action was taken in pursuance of this resolution by the Vice-Chairman of the Corporation by General Establishment Order No. 241/G-152 of 1963. That order clearly showed that Sri Nanjiani was described as the Deputy General Manger, and was to be in charge of Organization, Methods, Inspection and Training. He was also to be adviser for Nagpur affairs and was in addition to be given from time to time such matters as the General Manager may entrust to him. This order was communicated to the two principal officers who were at Nagpur, namely, Sri Nanjiani, Officer on special duty, and one Sri Bodhankar who was also in this office here. Sri Nanjiani has entered the witness-box twice in this adjudication and he has made a clear statement that there was no change in his powers of General Manager thought he was designated as Officer on special duty and he continued to hold the powers of the General Manger vis-a-vis the Provincial Transport Services till he was transferred to Bombay as Deputy General Manager in September 1963. There was a lengthy cross-examination of the witness but we do not find any cross-examination on this aspect of his claim that he continued to exercise the same powers vis-a-vis the employees of the Provincial Transport Services in this region. Sri Nanjiani was again examined after remand, and he had reiterated that the administrative set-up immediately prior to amalgamation in 1961 was retained even after amalgamation. He has also explained that there was no question of an appointment order being issued as he was already in service and that his post of Officer on special duty was merely equated to the post of Deputy General Manager.
43. The Secretary of the Corporation who is the authority to speck on behalf of the employer, i.e., the Maharashtra State Road Transport Corporation, has also gone into the witness-box an has stated on oath that Sri Nanjiani continued to exercise the powers which he had prior to merger and he exercised those powers in relation to the areas covered by the Provincial Transport Services prior to the merger. After merger he was re-designated as Officer on special duty as per the letter dated 21 July, 1961. This witness has formally proved the resolutions of the Corporation and has pointed out that under resolution No. 4686, dated 22 July, 1961, it was directed that the status quo should continue in both the units, that is, the Provincial Transport Service unit in the Vidarbha region, and the rest of the State of Maharashtra which was designated as two units. To a specific question whether Sri Nanjiani had the powers to dismiss or terminate employees in the region where the Provincial Transport Service was functioning, the witness categorically stated that Sri Nanjiani had these powers and he had these powers as Officer on special duty and as Deputy General Manager. We see no good reason why this testimony should be rejected when the question to be answered is whether the Officer on special duty, here Sri Nanjiani, could be considered to be the agent of the employer. In this case, respond 1 was appointed by the Officer on special duty, the enquiry was held at his instance, the finding was reached by him, and the order is passed by him as Officer on special duty. Neither elaborate arguments nor any specific order is necessary to find whether under these circumstances, Sri Nanjiani could properly be described as an agent of the employer. That he had these powers of taking disciplinary proceedings has been testified. We do not find any such complaint being made during the inquiry proceedings themselves that Sri Nanjiani had no such powers and that action should have been taken by some other authority. Only a vague statement was made in the application before the Assistant Commissioner of Labour the Sri Nanjiani did not have the power to terminate the services.
44. The Assistant Commissioner of Labour has taken the view that because Sri Nanjiani was appointed as Officer on special duty and the Officer on special duty was included within the definition of 'Manager' after the impugned order was passed, Sri Nanjiani could not be considered as an agent of the employer. We are unable to appreciate the correctness of this approach. What has to be established is the role and powers of the Officer on special duty so far as the administration of the Corporation's transport services in this region was concerned and it does appear from the material on record that Sri Nanjiani was the only officer entrusted with the overall supervision, administration and disciplinary action to be taken vis-a-vis the employee of the former Provincial Transport Services in this region who had become the employees of the Maharashtra State Road Transport Corporation. It must therefore be held that Sri Nanjiani could act as an employer within the definition of 'employer' under the Central Provinces and Berar Industrial Disputes Settlement Act and could pass an order of termination of services. That order would be a good order unless it is otherwise challengeable as a mala fide order. We are unable to hold that respondent 1 proved that the order was not bona fide. In fact, the occasion for passing the order was an inquiry in which it was found that respondent 1 was guilty of fraudulent conduct. That conduct has been described as such also in the industrial adjudication in the Court of the Assistant Commissioner of Labour and the State industrial court. This case therefore very much comes near the ratio laid down in U. B. Dutt & Co. (Private), Ltd. v. Its workmen : (1962)ILLJ374SC (vide supra) that the employer could justify the order of termination if he shows that there was an inquiry and an opportunity was given, but in his discretion the employer decided rather to terminate the services than to dismiss the employee to save him from evil consequences of an order of dismissal.
45. As we have come to the conclusion that the order was properly passed in terminating the services of respondent 1, there is no question of any order of reinstatement as desired by respondent 1.
46. The result is that the petition of the Maharashtra State Road Transport Corporation is allowed, and the petition filed by respondent 1 is dismissed. In the circumstances, however, there will be no order as to costs.