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Blue Star Limited Vs. N.R. Sharma and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtDelhi High Court
Decided On
Case NumberCivil Writ Petition Appeal No. 939 of 1975
Judge
Reported in13(1977)DLT216; [1975(31)FLR102]; 1977LabIC328; (1975)IILLJ300Del
ActsIndustrial Disputes Act, 1947; Constitution of India - Article 226
AppellantBlue Star Limited
RespondentN.R. Sharma and ors.
Advocates: N.N. Goswami,; G.B. Pai,; R.C. Wadhwani,;
Excerpt:
.....be liable to be set aside. it is well settled that in case an action is challenged as being mala fide the question has to be determined not merely with reference to the form that the action has taken or its ostensible purpose, nor can the inquiry be confined to the examination of the order incorporating the action, in such a case it would be open to the tribunal, as indeed this court, to go behind the order or the action to see the real foundation of the order and even the motivation for it. if an older of discharge simplicities or of punitive action based on good material, whether produced in the domestic inquiry or on a trial of a reference before the tribunal, is found to have been conceived in the intention to victimise the workman on account of his trade union activity or..........of all the circumstances including the timing of the action, it is evident that it was not a bona fide management action to discharge a workman, who had lost their confidence, or to merely punish a workman for misconduct, but had its genesis in the rather militant attitude that the workman took along with the other representatives of the staff of the management in the matter of their demand for enhanced bonus. it is significant that the complaints about the condut of the workman were made between april, 1967 and march, 1968. but the ultimate action was taken only in october, 1968, unfortunately for the management, coinciding with the day and the time when a long drawn negotiation for the settlement of the question of bonus proved abortive in a meeting that admittedly lasted many hours......
Judgment:

H.L. Anand, J.

(1) By this petition under Articles 226 and 227 of the Constitution of India, the petitioner, an employer, challenges an Award of the Labour Court, Delhi, in a dispute with regard to the validity of the termination of the services of its workman, respondent No. 1, by which the Labour Court has directed the reinstatement of the workman with full back wages and all benefits including continuity of service subject to certain deductions and adjustments. The petition was filed in the following circumstances.

(2) Respondent No. 1, the workman concerned, was appointed by the petitioner a joint stock company dealing in. air-conditioning and refrigeration, as a mechanic in May 1954 initially on aprobation for 6 months on asalary of Rs. 140.00 per month, inter alias on the condition that after confirmation the 'appointment can be terminated at any time without assigning any reason thereof, by one calendar month's notice on either side'. in 1962 the staff of the petitioner formed a trade union of which the workman was an office bearer. In 1964 the workman was awarded a medal for his efficient work and earned special increments and was eventually promoted in 1965 as a supervisor. On the material date the total emoluments of the workman were of the order of Rs. 750.00 per month. In April 1967, when the workman was in charge of the air-conditioning plant of the Punjab National Bank, Parliament Street, for which the petitioner had a maintenance contract, the management of the Bank made a complaint by its letter of April 12, 1967 (M-70/Annexure C-6) to the effect that the workman had been guilty of misbehavior, was non-cooperative and arrogant. This was followed by a reminder (M-69/Annexure C-5). As no steps had apparently been taken by the petitioner in spite of an alleged assurance the management of the Bank sought the transfer of the workman from their establishment by their letter of May 15, 1967 (M-72/Annexure C-8) in which the allegations that the workman was 'non-cooperative and arrogant' were reiterated. There was yet another protest by the Bank by its letter of June 7, 1967 (M-71/Annexure C-7). By its letter of March 27 1968 (M38/Annexure C), the management of the Bank reiterated the allegations, complained of further instances of rude and threatening behavior of the workman and alleged that the workman has offered to undertake the maintenance of the plant for a lesser amount than had been agreed to by the petitioner. An allegation was made that the workman was running some sort of a parallel undertaking and attributed the rather frequent reports of break-down by him to such business and thereforee, insisted on the workman being replaced. According to the petitioner, the workman was verbally warned and a copy of this latter bears endorsement to that effect. The management of the Bank, however still persisted in demanding action against the workman by their letters of July 16, 1968 (M-43/Annexure C-4), of August 13, 1968 (M-42/Annexure C-3). The last communication from the Bank in this connection is its letter of September 27, 1968 (M-44/ Annexure C-2), a copy of which was sent to the Bombay office of the petitioner. It is the case of the petitioner that the Managing Director of the petitioner decided on October 3, 1968 that since the previous warnings to the workman had been of no avail and since they could not afford to ignore the complaints from an important customer like the Bank it was not possible to retain the workman any longer in service. An endorsement to this effect is claimed to have been made by the Managing Director (M-79) on the foot of the Bank's letter of September 27, 1968. This is how the endorsement purports to run :

'Iwarned him personally during my last visit to Delhi. Evidently it had no effect. I feel that he is not fit to be retained in service any longer you have perhaps no choice but to terminate his services. We cannot affored to ignore complaints from important customers such as the Bank. Sd..00 3/10 .'

THISwas followed by the order of October 9.1968 (M-81) purporting terminate the service of the workman on the ground that they were 'no longer required' because of 'reasons already explained' to the workman 'personally'. The letter further states that 'the accounts department will pay you all your dues including bonus for 1967 plus one month's pay in lieu of notice in full and final settlement.' It was not disputed that while these developments were allegedly taking place, a demand for enhanced bonus had been made on behalf, of the workmen of the petitioner employed all over the country and negotiations in that behalf were in progress. It is also not disputed that the workman con- cerned was during the relevant period, taking a leading part in supporting the demand and was conducting negotiations on behalf of the workman and the representatives of the workmen, including the workman concerned, had a fairly long meeting with the Managing Director of the petitioner on October 9, itself where the attempt at an amicable settlement of the question of bonus apparently failed. It is also the common case of the parties that neither the workman was given a month's noticeanor was any enquiry held into the charges purporting to form a basis for the order. It is not in dispute that the workman did not get his dues when the order was received by him and it is the contention of the petitioner that & draft for the amount due on account of salary and amount in lieu of notice was sent to the workman concerned by post because he declined to accept it and that the postal communication was also refused by him. It is, however, the case of the workman that the payment was neither tendered at the time the services were terminated nor was it even sent subsequent thereto. The question as to the validity of the termination of the services of the workman was eventually referred to the Labour Court, by an order of reference under sections 10(1)(e) and 12(5) of the Industrial Disputes Act. A preliminary point was raised before the Labour Court that the reference was incompetent inasmuch as the workman concerned was not a 'workman' within the meaning of section 2(s) of the Industrial Disputes Act, inasmuch as he was working in a supervisory capacity and was drawing Rs. 750.00 per month. The contention was repelled and it was held by an interim award that the workman concerned was a 'workman' within the aforesaid Act and the reference was, thereforee, competent. The interim award has since been confirmed by this Court (Deshpande, J.) in independent proceeding's under Articles 226/227 of the Constitution of India.

(3) At the trial of the reference on the merits the termination of the services of the workmen was sought to be justified on behalf of the management on the ground that it was an order of discharge simplicities bona fide made by the management in accordance with the terms of the contract of service and the Rules of service because the workman was holding a position of confidence and had betrayed the confidence reposed in him. Either because the order of termination was made on the assumption that the workman was outside the purview of the Industrial Disputes Act or because it purported to be a case of discharge simplicities carrying no stigma, no domestic enquiry was held by the management. The management, thereforee, in the alternative led some evidence in support of the fact of rudeness, non-cooperative attitude and infidelity. The validity of the termination was assailed on of the workman on the ground that, assuming that it was a case of discharge simpliciter, it was nevertheless invalid, because neither the workman was given one month's notice nor paid in lieu thereof. The order of termination was, however, characterised as being an act of victimisation of the workman on account of his trade union activities which were not relished by the management. The allegations of misconduct were denied and the evidence produced on behalf of the management in support of it was characterised as being the result of fabrication. The order of termination was attributed to the dislike by the management of the militant attitude taken by the workman in leading the demand for enhanced bonus.

(4) By its Award of May 6, 1975, which is sought to be challenged in the present proceedings, the Labour Court answered the reference in favor of the workman and held that the termination of the services of the workman was illegal and mala fide, an instance of colourable exercise of power and of victimisation, which entitled the workman to be reinstated. The workman was, thereforee, directed to be reinstated with full back wages and continunity of service subject to certain adjustment with regard to payments which the workman had earned during part of the period. On a consideration of the evidence produced by the management the Labour Court came to the conclusion that none of the charges had been established. The contention of the management that it was a case of discharge simplicities in accordance with the contract of service and the rules of service, and, thereforee, within the rule laid down in the case of Johnson Pumps, 1975 L & IC 399 was repelled on the ground that the circumstances in which the order was made left no manner of doubt that it was not a bona fide act of the management but was an act of victimisation on account of the trade union activities of the workman and on a trumpeted charge. The Labour Court further held that the purported termination of the services of the workman was invalid as neither the workman was given one month's notice nor paid in lieu thereof at the time of termination.

(5) Shorn of the ornamentation and embellishment provided by learned counsel for the parties to the respective contentions of the parties and their reinforcement by principles and a large number of precedents, and apart from perhaps a slightly different emphasis on certain facts of the question in controversy, the course of arguments on behalf of the parties at the hearing of the petition, by and large, followed the pattern adopted on their behalf before the Labour Court.

(6) Whether the impugned termination of the services of the workman was a bona fide discharge simplicities in terms of the contract of service and of the rules of service so as to be within the rule laid down in the case of Johnson Pump's (supra) or was a colourable exercise of the power of management in an innocuous garb intended to victimise the workman or was otherwise punitive being founded on a charge of misconduct, are the principal questions that fall for consideration.

(7) In the case of Johnson Pumps (supra), Supreme Court laid down the rule with regard to discharge simplicities in these words :

'ANemployer who believes or suspects that his employees, particularly one holding a position of confidence, has betrayed that confidence can if the conditions and terms of employment permit, terminate his employment and discharge him without any stigma attaching to the discharge. But such belief or suspicion of the employer should not be a mere whim or fancy. It should be bona fide and reasonable. It must rest on some tangible basis and the power has to be exercised by the employer objectively, in good faith, which means honestly with due cars and prduence. If the exercise of such power is challenged on the ground of being colourable or malafide or an act of victimisation or unfair labour practice the employer must disclose to the Court the grounds of his impugned action so that the same may be tested judicially.'

IT is not in dispute that according to the contract of service the services of the workman could be terminated 'at any time without assigning any reason'. It was also not disputed that in terms of rule 21 (a) of the Rules and Regulations, which were applicable during the material period, 'the employment of a permanent employee may be terminated by 30 days notice or payment of 30 days salary in lieu of notice' unless there was a stipulation in the letter of appointment to the contrary. If the service of the workman were bona fide terminated because he had betrayed the confidence of the management, while holding a position of confidence and the management had come to that conclusion in exercise of the management's function on the basis of some material the management was entitled to do so in view of the conditions of service. In other words, it would not be open to the management, notwithstanding the condition of service to get rid of an employee on the ground of lack of confidence if there was either no material to support it or the act of the management was mala fide, intended to victimise the workman or to otherwise punish him for an act of misconduct.

(8) As for misconduct, it is well settled that if an order of termination is based on misconduct it would be invalid if it had been made without affording a reasonable opportunity to the workman of being heard in an appropriate domestic enquiry. In such a case the management is, however, entitled to justify the impugned order at the trial of the reference on the basis of adequate material which could support it. It is equally well-settled that either way if the impugned order, whether purporting to be based on misconduct or otherwise, is in fact founded on or motivated by an act of victimisation, it would be liable to be set aside.

(9) Mr. Pai, who appeared for the management was, thereforee, right when he urged, in his usual quiet manner, that the basic question that this Court must pose and answer is, if the act of the management whether of discharge simplicities or punitive based on misconduct, was bona fide and not intended to victimise the workman.

(10) When can an action be said to be lacking in bona fide or, to put it differently, is mala fide. An action of the management of which the ostensible purpose is not the real purpose and which, though purporting to carry out one object is, in fact, intended to achieve another, would be lacking in bona fide and be treated as mala fide. It is well settled that in case an action is challenged as being mala fide the question has to be determined not merely with reference to the form that the action has taken or its ostensible purpose, nor can the inquiry be confined to the examination of the order incorporating the action, in such a case it would be open to the tribunal, as indeed this Court, to go behind the order or the action to see the real foundation of the order and even the motivation for it. In such a case the management action has to be viewed in the context of the entire back ground in which the action was taken, the circumstances preceding it, attending on it and those that follow it. The action of the management in short has to be assessed in such a case in the totality of all the circumstances. Where, thereforee, a seemingly innocuous order is made by the management, or a a workman is sought to be punished on the basis of charges of misconduct it would be open to the Tribunal, as indeed necessary for it, to examine not only the foundation of the order but the real motivation of it. If an Older of discharge simplicities or of punitive action based on good material, whether produced in the domestic inquiry or on a trial of a reference before the Tribunal, is found to have been conceived in the intention to victimise the workman on account of his trade union activity or otherwise by way of unfair labour practice such an action would be mala fide and would be liable to be struck down even though it would otherwise be justified on the basis of the contract of service and the rules of service, in the case of discharge simpliciter, or by material in support of the charge, in the case of misconduct. In other words, a management action, which is mala fide, could not be validated merely because it may be justified either with reference to the contract of service or on the basis of the material relevant to the charge of misconduct. This exposition of law does not appear to me to admit of any controversy, and J do not consider it necessary to buttress it with unnecessary references to precedents.

(11) The question that, thereforee, requires consideration is whether on an application of the aforesaid principles it could be said that the management action was mala fide.

(12) Whether an action is bona fide or mala-fide is essentially a question of fact to be determined by the Tribunal on an examination of the material placed before it including an assessment of the totality of circumstances in which it was taken. If in arriving at such a conclusion of fact the Tribunal has considered the material placed before it, as indeed relevant circumstances, and its conclusion, one, way or the other, on the question could be supported on that material on one reckoning, it would not be open to this Court under Article 226 of the Constitution of India to re-assess the material and to come to a different conclusion because the material and the circumstances could possibly justify such a different conclusion on another reckoning of the material and the circumstances.

(13) What then is the material and the circumstances available on the record, and if on that material the finding of mala fide could not be returned is the next question that must be considered.

(14) It is not disputed that the workman joined the service of the management in May 1954, and, if one were to ignore the objectionable attitude and conduct attributed to him by the management of the Punjab National Bank between April, 1967 to March 1968, had a meritorious record of service, had been given not only promotions, was the recipient of commendation certificates and encouragement, but was also considered among the most competent hands of the management. It is equally undisputed that since the formation of a trade union by the workmen of the management in 1962, the workman concerned had been an active trade union worker. The allegations that between April 1967, and March 1968 the workman had given cause for complaint to the management of the Punjab National Bank and they had made persistent complaints of his non-cooperative attitude, rudeness and had even made suggestions that he was trying to undercut his employer were denied on his behalf and the Labour Court has repelled the contention of the managment that the allegation of non-cooperative attitude, rudeness and infidelity had been established at the trial notwithstanding a number of written complaints from the management of the Punjab National Bank, referred to above. There is considerable force in contention of the management that in the face of overwhelming evidence constituted by numerous letters from the Bank in which complaints were made about the conduct of the workman and his transfer was sought the Labour Court was not justified in rejecting the contention of the management that the workman had been guilty of rudeness and misbehavior in his dealing with an important customer of the management. There is also considerable force in the contention of the management that on the material on record the allegation made by the Bank that the workman had even offered to undertake the maintenance at a lower cost and had in fact been running some sort of a parallel business implying there by that the work-man's repeated reported failures of the plaint were the result of this business and he was apparently not faithful to the management should have been held as duly substantiated. If the matter had rested there, I would, perhaps, have been justified in holding that the conclusion of the Labour Court on these charges was almost perverse. There is, however, a serious impediment which the management was unable, in spite of a valiant attempt by Mr. Pai, to remove if it were to succeed. This is the finding returned by the Labour Court that when the management action is viewed in the context of the totality of all the circumstances including the timing of the action, it is evident that it was not a bona fide management action to discharge a workman, who had lost their confidence, or to merely punish a workman for misconduct, but had its genesis in the rather militant attitude that the workman took along with the other representatives of the staff of the management in the matter of their demand for enhanced bonus. It is significant that the complaints about the condut of the workman were made between April, 1967 and March, 1968. But the ultimate action was taken only in October, 1968, unfortunately for the management, coinciding with the day and the time when a long drawn negotiation for the settlement of the question of bonus proved abortive in a meeting that admittedly lasted many hours. The rejection of the demand for bonus and the discharge of the workman were almost simultaneous. No doubt, there is some force in the contention of Mr. Pai that when complaints had been made against the workman by the management of the Bank the management obviously could not have rushed to an action against the workman obviously because he had by then put in almost 14 years of service and was their best hand. Unfortunately, for the management, however, in the totality of circumstances and having regard to the timing of the management action the conclusion that the action had its motivation in the militant role played by the workman in the dispute regarding bonus and the failure of the staff to come to an amicable settlement on that question cannot altogether be ruled out and is a possible conclusion on the material and the circumstances of the case. It is true that, if I was free to assess the material and the circumstances to arrive at a conclusion on the question one way or the other, I may, perhaps, have been pursuaded to return a finding favorable to the management because the material and the circumstances touching the real intention of the management action constitute a rather border line case on which two opposite conclusions are quite possible and could be legitimately based. That being so, it would not be proper for me in the present proceedings to ignore the conclusion of the Labour Court that the action of the management, whether by way of discharge simpliciter, based on the conditions of service and rules of service, or by way of punitive action for misconduct, could not be said to be bona fide, or be substitute my own conclusion for that of the Labour Court, even though I am inclined to hold that, independently of the question of bona fide, the action taken by the management against the workman could have been justified on ground of misconduct on the basis of the material available. As I have pointed out above a mala fide action does .not get sublimated and be galvanised into bona fide valid action merely because it could be justified either with reference to the contract of service, rules of service or on the basis of a charge of misconduct by the material available either in the domestic inquiry or at the trial of the reference.

(15) That leaves for consideration the question if, having regard to the fact that the management action was mala fide and the purported termination of the services of the workman is liable to be set aside, should a direction for the reinstatement of the workman with back wages follows, or would the case justify the alternative relief of compensation.

(16) In the case of Krishan Murari Lal Kapur v.Presiding Officer, Additional Labour Court, Civil Writ No. 228 of 1974 .decided on April 26, 1976, I had occasion to consider the circumstances in which the normal relief of reinstatement would be denied to an aggrieved workman. This is how I had looked at the question : (C.W. No. 228 of 1974).

'IT is well settled and it is unnecessary to cite authorities in support of the proposition, that in case of wrongful dismissal reinstatement is the normal relief which should be granted to the aggrieved worker. It is equally well settled that though the matter of relief is essentially a discretionary matter the discretion has to be exercised according to well known principles and that the 'normal rule of reinstatement could be departed from only in extraordinary cases in which such a relief cannot be granted either because the establishment is closed down or the post has been abolished or because of bitterness between the parties and lack of confidence such a relief would not he appropriate. Such a relief may also be refused where a workman may be virtually on the verge of retirement or may be so old or infirm as to be incapable of discharging his duties. The relief of compansation being an exception to the rule, it would not be proper to unnecessary enlarge the scope of the exception and where reinstatement is refused on any of the grounds which may justify it, the conclusion mast be based on some material.'

(17) It is true that neither the allegations of misbehavior to the management's client nor the fact that the workman had militantly pursued the workman's demand for additional bonus nor the consequent unpleasantness between the management and the workman would justify the refusal of the normal relief of reinstatement . It is equally difficult to countenance the suggestion that the workman would be entitled to reinstatement even though the management had lost confidence in his probity because of definite allegations made by a responsible Banking institution in writing that the workman was virtually running a parallel business had resorted to frequent complaints of break down to feed it and had even made an attempt to undercut the management, even though in spite of this material the termination of the workman is invalid because it was vitiated on account of an element of victimisation notwithstanding that it could he justified with reference to the aforesaid material. The workman is a highly skilled worker with wide experience in the maintenance of air-conditioning plants. According to the Labour Court he was able to earn over Rs. 8,000.00 during the period January 1974 to August 1974, when he had an alternative employment and an adequate alternative employment would not, thereforee, be difficult for such a workman.

(18) That takes me to the question of quantify ing compensation. This question, to my mind, is but easy of determination for a variety of reasons, In the first instance, in the way the Labour Court looked at the controversy between the parties, the question of alternative relief of compensation and the ancillary question as to its qualification was neither canvassed before nor was considered by it. I do not, thereforee, have the benefit of the views of the Labour Court on the question. In the second instance, in this Court, as indeed before the Labour Court, the parties had pitched their respective claims to extreme positions. While the management denied that the workman was entitled to any relief whatsoever, no claim, which fall short of reinstatement with back wages, was acceptable to the workman. In the course of the hearing, it had made faint suggestions to learned counsel for the parties with a view to provoke them into taking up alternative or intermediate positions, but the parties struck to their extreme positions, probably under the impression that an


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