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The Buckingham and Carnatic Co.Ltd. Vs. Venkatiah and anr. - Court Judgment

LegalCrystal Citation
SubjectMedia and Communication;Labour and Industrial
CourtSupreme Court of India
Decided On
Reported inAIR1964SC1272; [1963(7)FLR343]; (1963)IILLJ638SC; [1964]4SCR265
ActsLabour Law; Employees' State Insurance Act, 1948 - Sections 73(1), 73(2) and 85
AppellantThe Buckingham and Carnatic Co.Ltd.
RespondentVenkatiah and anr.
.....debated on scope and effect of the phrase 'employer not to dismiss or punish employee during the period of sickness' with respect to the employees' state insurance act, 1948 in relevance to termination of service by standing orders - it was held that the standing order 8(ii) was applicable and the fact that the same conduct was dealt with in two different standing orders, could not affect the applicability of standing order 8(ii) to the matter - [a.k. sarkar,; k. subba rao and; s.k. das, jj.] the respondent, proprietor of ramnagar estate, filed a suit against the appellant, proprietor of ganeshpur estate, for the recovery of certain properties. the appellant filed a cross-suit against the respondent. during the pendency of the suits the appellant was declared to be a person of..........provides for the persons competent toissue medical certificate and regulation 55 required that the medicalcertificate should be filled in the prescribed form. regulation 57 deals withthe medical certificate on first examination and regulation 58 refers to thefinal medical certificate. regulation 63 prescribes the form of claim forsickness or temporary disablement. an insured person intending to claimsickness benefit has to submit the said form to the appropriate local office bypost or otherwise. regulation 64 lays down that if such a claimant fails tosubmit to, the appropriate local office by post or otherwise the first medicalcertificate or any subsequent medical certificate within the period thereinprescribed, he shall not be eligible for that benefit in respect of the periodindicated.....

Gajendragadkar, J.

1. The principal question which arises in this appeal relates to the truescope and effect of the provisions contained in s. 73 of the Employees' StateInsurance Act, 1948 (hereinafter called the Act). The appellant, the Buckingham& Carnatic Co. Ltd., is a company registered under the Indian Companies Actand its registered office is at Madras. It has a Textile Mill in Madras Citywhich employs 14,000 workmen. On January 10, 1957, the respondent Venkatiahwhose case is sponsored by the respondent Union, the Madras Labour Union, hadgone on leave for six days. Taking into account the intervening holidays, thesaid leave expired on January 18, 1957. He, however, did not join duty on the19th January as he should have, but remained absent without leave withoutsending to the appellant any communication for extending his leave. On the 11thMarch 1957 he sent a letter to the appellant stating that sometime afterreaching his village near Kanigiri he suffered from fever and dysentery and wastreated by the Civil Assistant Surgeon, Kanigiri. This letter was accompaniedby a certificate issued by the said Civil Assistant Surgeon. In thiscertificate it was stated that Venkatiah suffered from chronic malaria anddysentery from January 15 to March 7, 1957. When he appeared before the Managerof the Company, he was asked to go to the Senior Medical Officer of theappellant for examination. The said Officer examined him and was unable toconfirm that he had been ailing for a period of nearly two months. Acting onthat opinion, the appellant refused to take back Venkatiah and when Venkatiahpressed to be taken back, the appellant informed him on March 23, 1957 that hecould not be reinstated as his explanation for his absence was unsatisfactory.The case of Venkatiah was treated by the appellant under Standing Order No.8(ii) of the Standing Orders of the appellant.

2. Meanwhile, Venkatiah had applied to the Employees' State InsuranceCorporation and on or about the 15th June 1957 he obtained cash sicknessbenefit for the period covered by the medical certificate issued by the Civil AssistantSurgeon, Kanigiri. The Regional Director to whom Venkatiah had applied for thesaid assistance accepted the said certificate as alternative evidence anddirected that payment may be made to him to the extent permissible under theAct. Accordingly, Rs. 82-14-00 were paid to him.

3. When the appellant refused to take back Venkatiah in its employment, therespondent Union took up his case and it was referred for adjudication to theLabour Court at Madras as an industrial dispute (S.P.O. No. A-5411 of 1958).Before the Labour Court the appellant urged that the reference made was invalidand it also contended that the termination of Venkatiah's services wasjustified. The Labour Court rejected the appellants preliminary objection aboutthe invalidity of the reference. It held that if the matter had to beconsidered solely by reference to the Standing Orders, the appellant wasentitled to succeed, because it was justified in acting upon the opinion givenby its Medical Officer in regard to the alleged illness of Venkatiah. When thesaid opinion was attacked before the Labour Court, it observed that it was easyto make such an attack and it held that 'he was not inclined to accept thecorrectness of the criticism in the absence of any strong evidence to show thatthe Medical Officer was prejudiced against the worker and was motivated withthe idea of victimisation'. The respondent, however, succeeded before theLabour Court primarily on the ground that the decision of the appellant not totake back Venkatiah was inconsistent with the provisions of s. 73 of the Act.That is why the Labour Court directed the management of the appellant toreinstate Venkatiah within two weeks after its award came into force withoutliability to pay back-wages, but with continuity of service.

4. After this award was pronounced by the Labour Court, the appellant movedthe Madras High Court by a writ petition and prayed that the said award bequashed (W.P. No. 716 of 1958). This writ petition was allowed by Mr. JusticeBalkrishna Ayyar. The learned Judge held that s. 73 of the Act was inapplicableto the present case and found that, in substance, the labour court had made itsaward on grounds of sympathy for Venkatiah rather than on the merits of thecase. In the result, the said award was set aside by the learned Judge. Therespondent challenged the correctness of this decision by a Letters PatentAppeal before a Division Bench of the Madras High Court (No. LPA 82 of 1959).The respondent's appeal was allowed by the Division Bench and in consequence,the award passed by the Labour Court has been restored. The Division Bench hasheld that s. 73 applied to the present case and that made the refusal of theappellant to take back Venkatiah in its employment illegal. It has also observedthat in refusing to take back Venkatiah the appellant had not properlydischarged its obligation of examining Venkatiah's explanation reasonably andthat introduced an infirmity in its decision not to take him back. In otherwords, according to the Division Bench, the action of the management amountedto contravention of the provisions of s. 73 of the Act and was otherwise notfair. It is against this decision that the appellant has come to this Courtwith a certificate issued by the Madras High Court under Art. 133(1)(c) of theConstitution.

5. Mr. Sastri for the appellant contends that the case of Venkatiah fallssquarely within the provisions of Standing Order 8(ii) and the High Court wasin error in holding that the decision of the appellant in refusing to condonethe absence of Venkatiah was either unfair or improper, or that it contravenedthe provisions of s. 73 of the Act. Let us first examine Standing Order No.8(ii) before proceeding any further. The said Standing Order reads thus :

'Absent without Leave : Anyemployee who absents himself for eight consecutive working days without Leaveshall be deemed to have left the Company's service without notice therebyterminating his contract of service. If he gives an explanation to thesatisfaction of the management, the absence shall be converted into leavewithout pay or dearness allowance.

Any employee leaving theCompany's service in this manner shall have no claim for re-employment in theMills.

But if the absence is proved tothe satisfaction of the Management to be one due to sickness, then such absenceshall be converted into medical leave for such period as the employee iseligible with the permissible allowances.'

6. This Standing Order is a part of the certified Standing Orders which hadbeen revised by an arbitration award between the parties in 1957. The relevantclause clearly means that if an employee falls within the mischief of its firstpart, it follows that the defaulting employee has terminated his contract ofservice. The first provisions in clause (ii) proceeds on the basis that absencefor eight consecutive days without leave will lead to the inference that theabsentee workman intended to terminate his contract of service. The certifiedStanding Orders represent the relevant terms and conditions of service in astatutory form and they are binding on the parties at least as much, if notmore, as private contracts embodying similar terms and conditions of service.It is true that under common law an inference that an employee has abandoned orrelinquished service is not easily drawn unless from the length of absence andfrom other surrounding circumstances an inference to that effect can belegitimately drawn and it can be assumed that the employee intended to abandonservice. Abandonment or relinquishment of service is always a question ofintention, and normally, such an intention cannot be attributed to an employeewithout adequate evidence in that behalf. But where parties agree upon theterms & conditions of service and they are included in certified StandingOrders, the doctrines of common law or consideration of equity would not berelevant. It is then a matter of construing the relevant term itself.Therefore, the first part of Standing Order 8(ii) inevitably leads to theconclusion that if an employee is absent for eight consecutive days withoutleave, he is deemed to have terminated his contract of service and thusrelinquished or abandoned his employment.

7. The latter part of this clause, however, provides that the employee canoffer an explanation as to his absence and if his explanation is found to besatisfactory by the management, his absence will be converted into leavewithout pay or dearness allowance. Now this clause is in substance a proviso toits first part. Before effect is given to the inference of relinquishment ofservice which arises from the first part of the clause, an opportunity is givento the employee to offer an explanation and if the said explanation is treatedas satisfactory by the management, the inference of termination of contract ofservice is rebutted and the leave in question is treated as leave without payor dearness allowance. This latter clause obviously postulates that if theexplanation offered by the employee is not found to be satisfactory by themanagement, the inference arising from the first part prevails and the employeeshall be deemed to have terminated his contract of service with the result thatthe relationship of master and servant between the parties would be held tohave come to an end. With the remaining part of the said Standing Order we arenot concerned in this appeal.

8. It is true that absence without leave for eight consecutive days is alsotreated as misconduct under clause 13(f) of the Standing Orders. The saidclause refers to the said absence and habitual absence without leave. In otherwords, the position under the Standing Orders appears to be that absencewithout leave for more than eight consecutive days can give rise to thetermination of the contract of service either under Standing Order 8(ii) or maylead to the penalties awardable for misconduct after due enquiry is held asrequired by the relevant Standing Order. The fact that the same conduct isdealt with in two different Standing Orders cannot affect the applicability ofS.O. 8(ii) to the present case. It is not as if the appellant is bound to treatVenkatiah's absence as constituting misconduct under S.O. 13(f) and proceed tohold an enquiry against him before terminating his services. Dismissal formisconduct as defined under S.O. 13 may perhaps have different and more seriousconsequences from the termination of service resulting from S.O. 8(ii). Howeverthat may be, if S.O. 8(ii) is applicable, it would be no answer to theappellant's case under S.O. 8(ii) to say that S.O. 13(f) is attracted. Thisposition is not seriously in dispute.

9. The High Court appears to have taken the view that the appellant did notact fairly in rejecting Venkatiah's case that he was ill and in refusing to actupon the certificate produced by him in support of his case. It is necessary,in the first instance, to examine the correctness of this conclusion. As wehave already indicated, the Civil Assistant Surgeon no doubt certified on March7, 1957 that Venkatiah had suffered from chronic dysentery from January 15 toMarch 7, 1957, and he added that he was then completely free from the ailmentsand was in a fit state of health to join duty on the 9th March 1957.Incidentally, the certificate has been granted at the end of the treatment andspecifically avers that he was fit enough to join on March 9, 1957. WhenVenkatiah was examined by the Medical Officer of the appellant on the 22ndMarch 1957, the Medical Officer was unable to confirm that he was ill for aperiod of nearly two months. The High Court has criticised this certificate asbeing vague. In our opinion, by this certificate the Medical Officer politelysuggests that having regard to the opinion which he formed on examiningVenkatiah on March 22, he was unable to confirm the certificate issued by theCivil Assistant Surgeon. What struck the High Court as vague in the certificateis obviously the result of the desire of the appellant's Medical Officer toobserve professional courtesy in dealing with the certificate on which Venkatiahrelied. Apart from this aspect, however, we do not see how it was open to theHigh Court to consider the propriety of the conclusion reached by the LabourCourt on this point. We have already noticed that the Labour Court hasspecifically repelled the criticism made by the respondent against the conductof the appellant's Medical Officer and has held that if the matter had fallento be considered only in the light of Standing Order 8(ii), the appellant wouldhave succeeded. That being so, it is not easy to see how the respondent'sgrievance against the said finding of the Labour Court could have been properlyupheld by the High Court in exercising its writ jurisdiction under Art. 226 ofthe Constitution. Whether or not the appellant should have accepted thecertificate of the Civil Assistant Surgeon was primarily for the appellant toconsider. It is significant that there is no allegation about malafides in thiscase, and so, we do not think that the High Court was justified in making afinding against the appellant on the ground that the appellant had notdischarged its obligation under the Standing Orders of properly considering theexplanation of Venkatiah in regard to his absence. The High Court wasapparently aware of this position and so, it has stated in the course of itsjudgment that it would rest its decision on what it regarded to be the effectof s. 73 'even assuming that the discharge of the worker in the instantcase was automatic by virtue of the operation of Standing Order 8(ii),'and so, it is to this part of the case that we must now turn.

10. Before doing so, however, we may refer to the argument urged before usby Mr. Dolia for the respondent that it would be anomalous if it is open to theappellant to reject Venkatiah's case that he was ill during the relevant periodwhen the said case had been accepted by the Corporation when it gave him reliefunder s. 73 and the regulations framed under the Act. Mr. Dolia relies on thefact that Venkatiah satisfied the relevant authorities administering theprovisions of the Act that he was ill during the relevant period, and had, infact, been given assistance on that basis, so that for the purposes of the Acthe is held to be ill during that period, and yet the appellant for the purposeof Standing Order 8(ii) holds that Venkatiah was not ill during the sameperiod. It could not be the intention of the legislature to allow such aglaring anomaly to prevail, says Mr. Dolia, and so, he suggested that theappellant was bound to hold that Venkatiah was ill during the relevant period,having regard to the fact that his illness had been accepted by the relevantauthorities under the Act. This argument is no doubt, prima facie, attractive,but before accepting it, it would be necessary to find out whether there is anyspecific provision in the Act which compels the appellant to accept the viewtaken by the relevant authority under the Act when it decided to giveassistance to Venkatiah.

11. Section 73 of the Act reads as under :

Employer not to dismiss or punishemployee during period of sickness, etc. -

(1) No employer shall dismiss,discharge, or reduce or otherwise punish an employee during the period theemployee is in receipt of sickness benefit or maternity benefit, nor shall he,except as provided under the regulations, dismiss, discharge or reduce orotherwise punish an employee during the period he is in receipt of disablementbenefit for temporary disablement or is under medical treatment for sickness oris absent from work as a result of illness duly certified in accordance withthe regulations to arise out of the pregnancy or confinement rendering theemployee unfit for work.

(2) No notice of dismissal ordischarge or reduction given to an employee during the period specified insub-section (1) shall be valid or operative.'

12. Mr. Dolia contends that since this Act has been passed for conferringcertain benefits on employees in case of sickness, maternity and employmentinjury, it is necessary that the operative provisions of the Act should receivea liberal and beneficent construction from the court. It is a piece of sociallegislation intended to confer specified benefits on workmen to whom itapplies, and so, it would be inappropriate to attempt to construe the relevantprovisions in a technical or a narrow sense. This position cannot be disputed.But in dealing with the plea raised by Mr. Dolia that the section should be liberallyconstrued, we cannot overlook the fact that the liberal construction mustultimately flow from the words used in the section. If the words used in thesection are capable of two constructions one of which is shown patently toassist the achievement of the object of the Act, courts would be justified inpreferring that construction to the other which may not be able to further theobject of the Act. But, on the other hand, if the words used in the section arereasonably capable of only one construction and are clearly intractable inregard to the construction for which Mr. Dolia contends, the doctrine ofliberal construction can be of no assistance.

13. Mr. Dolia's suggestion is that the general policy of s. 73 is to preventdismissal, discharge, reduction or other punishment being imposed on anemployee who is ill if it is shown that he has received sickness benefit. Thereare other cases mentioned in this section to which it is not necessary to referfor the purpose of dealing with Mr. Dolia's argument. According to Mr. Dolia,the operation of s. 73 is confined to cases of illness for instance, and itprohibits the imposition of any penalty wherever it is shown that in respect ofthe illness in question, the employee has received sickness benefit. In thepresent case, the employee has received sickness benefit, and so, for the saidsickness, no penalty can be imposed on him. That, in brief, is the contentionwhich Mr. Dolia has pressed before us.

14. On the other hand, Mr. Sastri argues that the words used in the sectionare capable of only one construction. The section merely prohibits any punitiveaction being taken against the employee during the period of his illness, andhe urges that the prohibition is not confined to punitive action in respect ofillness alone but extends to punitive action in respect of all kinds ofmisconduct whatever. What the section says is, during the period that theemployee is ill, no action can be taken against him whatever may be the causefor the said action.

15. Mr. Sastri also contended that the clause 'during the period theemployee is in receipt of sickness benefit' can cover the period duringwhich the sickness benefit is actually received by him, and so, he suggeststhat since during the period of Venkatiah's illness itself no sickness benefithad been received by him, s. 73(i) is wholly inapplicable. We are not impressedby this argument. In our opinion, the clause 'during the period theemployee is in receipt of sickness benefit' refers to the period of hisactual illness and requires that for the said period of illness, sicknessbenefit should have been received by him. It is quite clear that in a largemajority of cases, sickness benefit would be applied for and received by theemployee after his sickness is over, and so, to hold that the period therereferred to is the period during which the employee must be ill and must alsoreceive sickness benefit, would make the section wholly unworkable. That is whywe do not think that the limitation which Mr. Sastri seeks to introduce bysuggesting that sickness benefit must be paid during the course of illnessitself, can be read into the section.

16. Even so, what is the effect of s. 73(1) In considering this question,it would be useful to take into account the provisions of sub-s (2). Thissub-section provides that no notice given to an employee during the periodspecified in sub-s. (i) shall be valid or operative. Thus, it is clear that thegiving of the notice during the specified period makes it invalid, and it isremarkable that the notice is not in regard to dismissal, discharge orreduction in respect of sickness alone, but it includes all such noticesissued, whatever may be the misconduct justifying them. Thus, there can be nodoubt that the punitive action which is prohibited by s. 73(1) is not confirmedto punitive action proceeding on the basis of absence owing to sickness; it ispunitive action proceeding on the basis of all kinds of misconduct whichjustifies the imposition of the penalty in question. What s. 73(1) prohibits issuch punitive action and it limits the extent of the said prohibition to theperiod during which the employee is ill. We are free to confess that the clauseis not very happily worded, but it seems to us that the plain object of theclause is to put a sort of a moratorium against all punitive actions during thependency of the employee's illness. If the employee is ill and if it appearsthat he has received sickness benefit for such illness, during that period ofillness no punitive action can be taken against him. That appears to us to bethe effect of that part of s. 73(1) with which we are concerned in the presentappeal. If that be so, it is difficult to invoke s. 73 against the appellant,because the termination of Venkatiah's services has not taken place during theperiod of his illness for which he received sickness benefit.

17. There is another aspect of this question to which it is necessary torefer. Section 73(1) prohibits the employer from dismissing, discharging,reducing or otherwise punishing an employee. This seems to suggest that what isprohibited is some positive act on the part of the employer, such as an orderpassed by him either dismissing, discharging or reducing or punishing theemployee. Where termination of the employee's services follows automaticallyeither from a contract or from a Standing Order by virtue of the employee'sabsence without leave for the specified period, such termination is not theresult of any positive act or order on the part of the employer, and so to sucha termination the prohibition contained in s. 73(1) would be inapplicable. Mr.Dolia no doubt contended that the word 'discharge' occurring in s. 73(1) shouldbe liberally construed and he argued that termination of service even underStanding Order 8(ii) should be held to be a discharge under s. 73(1). We arenot prepared to accept this argument. In considering the question about thetrue denotation of the word 'discharge' in s. 73(1), it is relevantto bear in mind the provisions of s. 85(d) of the Act. Section 85(d) providesthat if any person in contravention of s. 73 or any regulation, dismisses,discharges, reduces or otherwise punishes an employee, he shall be punishablewith imprisonment which may extend to three months or with fine which mayextend to five hundred rupees, or with both. In other words, the contraventionof s. 73(1) is made penal by s. 85(d), and so, it would not be reasonable toput the widest possible denotation on the word 'discharge' in s.73(1). The word 'discharge' in s. 73(1) must, therefore, in thecontext, be taken to be a discharge which is the result of a decision of theemployer embodied in an order passed by him. It may conceivably also includethe case of a discharge where discharge is provided for by a Standing Order. Insuch a case, it may be said that the discharge flowing from the Standing Orderis, in substance, discharge brought about by the employer with the assistanceof the Standing Order. Even so, it cannot cover the case of abandonment of serviceby the employee which is inferred under Standing Order 8(ii). Therefore, we donot think the High Court was justified in taking the view that the terminationof Venkatiah's services under S.O. 8(ii) to which the appellant has giveneffect by refusing to take him back, contravenes the provisions of s. 73(1).

18. Mr. Dolia argued that on the appellant's construction s. 73(1) wouldafford very unsatisfactory and poor protection to the employees. If all that s.73(1) does is to prevent any punitive action being taken against the employeeduring the period that he is ill, there is not much of protection given to himat all, says Mr. Dolia. There is no doubt some force in this argument : but aswe have already observed, the words used in s. 73(1) read with sub-s. (2)cannot reasonably lead to the construction for which Mr. Dolia contends. Itwould, we think, be unreasonable, if not illegitimate, to construe the relevantsection merely on the hypothesis that the legislature intended to provide alarger protection to the employees when the said hypothesis cannot be workedout in the light of the words used by the statute.

19. By virtue of the power conferred on the State Government by s. 96 tomake rules, certain regulations had been framed under the Act in 1950. ChapterIII of these Regulations deals with the benefit claims. Regulations 53 to 86 inthis Chapter are concerned with the certification and claims for sickness andtemporary disablement. Regulation 54 provides for the persons competent toissue medical certificate and Regulation 55 required that the MedicalCertificate should be filled in the prescribed form. Regulation 57 deals withthe Medical Certificate on first examination and Regulation 58 refers to thefinal Medical Certificate. Regulation 63 prescribes the form of claim forsickness or temporary disablement. An insured person intending to claimsickness benefit has to submit the said form to the appropriate Local Office bypost or otherwise. Regulation 64 lays down that if such a claimant fails tosubmit to, the appropriate Local Office by post or otherwise the first medicalcertificate or any subsequent medical certificate within the period thereinprescribed, he shall not be eligible for that benefit in respect of the periodindicated thereunder. It is in the light of these regulations that Regulation53 has to be considered. This regulation provides that every insured personclaiming sickness benefit shall furnish evidence of sickness in respect of thedays of his sickness by means of a medical certificate given by an InsuranceMedical Officer in accordance with the Regulation in the appropriate form.There is, however, a proviso to Regulation 53 which says that the Corporationmay accept any other evidence of sickness or temporary disablement if in itsopinion the circumstances of any particular case so justify. In the presentcase, the Regional Director has accepted the Civil Assistant Surgeon'scertificate under the proviso to regulation 53 when he directed that cashbenefit may be paid to Venkatiah under s. 73(1). Having regard to theseRegulations, it is difficult to see how the view taken by the RegionalDirectors about the effect of the certificate issued by the Civil AssistantSurgeon can be said to be binding on the appellant. There is no provision inthe Act or the Regulations to which s. 73(1) refers by which it could becontended that once the illness of an insured employee is accepted by theappropriate authority under the Act, it must automatically be accepted by theemployer in dealing with the said employee's case under the Standing Orders.Therefore, the argument that inconsistent results may follow if two views areallowed to be taken about the illness of a given employee, does not help theappellant. Besides, as we have already indicated, this argument has hardly anyrelevance in view of the construction which we are inclined to put on s. 73(1)of the Act. In view of our construction of the said section, Mr. Dolia'sargument that there is inconsistency between the said section and StandingOrder 8(ii) also has no validity.

20. Before parting with this case, we ought to add that at the very outset,Mr. Sastri for the appellant made it clear to us that the appellant wasfighting this appeal not so much to resist the order of reinstatement passed infavour of Venkatiah as to get a decision from this Court about the true scopeand effect of s. 73(1) of the Act. In other words, he argued that this case wasfought as a test case on the question of the construction of the said section.Therefore, when we suggested to Mr. Sastri that the appellant who is a very bigprosperous employer should not resist the reinstatement of a single employeewhose case has been brought to this Court, he assured us that he wouldrecommend to the employer to take Venkatiah back on the terms prescribed by theLabour Court in the first instance in this case.

21. In the result, the appeal is allowed, the order passed by the DivisionBench of the Madras High Court is set aside and that of the Single Judgerestored. There would be no order as to costs.

22. Appeal allowed.

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