Skip to content


Premier Tyres Limited Vs. V.A. Abraham - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtKerala High Court
Decided On
Judge
Reported in(1976)ILLJ161Ker
AppellantPremier Tyres Limited
RespondentV.A. Abraham
Cases ReferredSamnuggar Jute Factory Co. Ltd. v. Their Workmen
Excerpt:
- - he was also said to be not able to improve the standards, better house-keeping, gardening and plantation in the factory. it is as follows :we regret to inform you that your services will not be required from 23-34970. your services are being terminated because of inefficiency and we are convinced that you are incapable of performing your duties efficiently. if the industrial court is satisfied that the order of discharge is punitive, that it is mala fide, or that it amounts to victimization or unfair labour practice, it is competent to the industrial court to set aside the order and, in a proper case direct the reinstatement of the employee. 374. therefore, if in a case the industrial court is satisfied that the order of discharge is punitive, the court can set aside the order and.....t. chandrasekhara menon, j.1. an award of the industrial tribunal, calicut in respect of the dispute between the management of the premier tyres limited, kalamasseri and their workman shri v.a. abraham has given rise to these two original petitions. by the said award marked as ext. p1 in both the petitions, the tribunal found that the service of the workman concerned has been terminated by the management illegally and improperly. the tribunal held that though ordinarily the workman would have been entitled to reinstatement, in consideration of the fact that the person concerned worked as the head of the security department and as the management's contentions would indicate that the relationship between the management and the workman had become strained, the tribunal thought it was just.....
Judgment:

T. Chandrasekhara Menon, J.

1. An award of the Industrial Tribunal, Calicut in respect of the dispute between the Management of the Premier Tyres Limited, Kalamasseri and their workman Shri V.A. Abraham has given rise to these two original petitions. By the said award marked as Ext. P1 in both the petitions, the Tribunal found that the service of the workman concerned has been terminated by the management illegally and improperly. The Tribunal held that though ordinarily the workman would have been entitled to reinstatement, in consideration of the fact that the person concerned worked as the head of the security department and as the management's contentions would indicate that the relationship between the management and the workman had become strained, the Tribunal thought it was just and proper in this case to order the management only to pay two months wages for each completed year of service or any part thereof in excess of six months. This was by way of substantial compensation in lieu of reinstatement. As the Tribunal had held that the termination was affected illegally and improperly the workman was held entitled to wages from date of termination till the date of the award. He was also held entitled to gratuity taking his whole service as ending with the date of the award.

2. Questioning this award, the management has filed O.P. 1652 of 1973 while the workman concerned has come up to this Court in O.P. 1971 of 1973 impugning the award in so far as it refuses him the relief of reinstatement in service.

3. The industrial dispute arose in the following circumstances. The management of the Premier Tyres Ltd. (hereinafter called the petitioner on the basis of the array of parties in O.P. 1652 of 1973) appointed Shri V.A. Abraham (hereinafter referred to as the first respondent) as Security Inspector by order, dated 18-8-1964. The appointment was for a period of six months originally. The appointment was termed a trial appointment, the petitioner reserving to themselves the right to terminate the first respondent's appointment at any time forthwith, on payment to him of any salary/wages accrued to the date of termination. They were not bound to give him notices of termination of service or any salary in lieu, of such notice. After the trial period of six months, if the first respondent's work and conduct during the period was found to be satisfactory, his appointment was to be confirmed. As per the conditions of his service after confirmation also, for infringement of any rule or any misconduct, negligence or disobedience of orders of his superiors he was liable to instant and summary dismissal without any notice or salary in lieu of notice. It was also provided that even otherwise the petitioner shall have the right to dispense with his services, at any time without assigning any reason or giving a month's notice in writing or salary in lieu of such notice. The first respondent's designation was changed as security officer with effect from 31-1-1968.

4. It is stated by the petitioner that Security and Vigilance Department and House-keeping, Gardening and Plantation Department were under the management and supervision of the first respondent. It is alleged by the petitioner that many cases of theft of tyres occurred in the factory which the first respondent was not able to detect. It is also alleged that when it was reported that the stolen tyres were found at the residence of an employee, the first respondent did not even care to pursue the matter by going to the employee's house. Another allegation made is that in the course of 1967. 1968 and 1969, there was a big fraud in the supply of furnace oil to the factory which the first respondent was not able to detect. He was also said to be not able to improve the standards, better house-keeping, gardening and plantation in the factory. Therefore, it is said the petitioner decided to discharge the first respondent from service in accordance with his contract of service and his services were terminated by giving him a month's salary in lieu of notice. Exhibit P1 in O.P. 1652 of 1973 is the cony of the order of such termination. It is as follows :

We regret to inform you that your services will not be required from 23-34970.

Your services are being terminated because of inefficiency and we are convinced that you are incapable of performing your duties efficiently. Besides, we have lost confidence in you and we are not prepared to hand over the running of the Security Department to you.

You will be getting a month's salary as notice pay. This along with all other dues can be collected from the Accounts Department at any time convenient to you.

The first respondent raised an industrial dispute regarding this termination of service. The Government referred the matter for adjudication by the Industrial Tribunal which as stated earlier passed the award Ext. P1.

5. On the basis of the oral and documentary evidence before him the Industrial Tribunal held (1) that the first respondent is a workman; (2) Ext. P4 order of termination casts a stigma on the competency of the first respondent to discharge his duties. The order of termination of service is not a mere innocent order issued on the basis of conditions of service. No employer will take him in view of the recitals in Ext. P4 which condemns him as incapable of discharging his duties with any amount of competency or efficiency. The Tribunal said that termination is effected illegally and improperly as the management terminated the service of the worker on the basis of allegations against him in respect of which he was not given an opportunity to meet the same. The petitioner terminated the services of the first respondent without giving a show-cause notice and conducting an enquiry. On the basis of the evidence before the Tribunal, it held that the allegations against the first respondent are not substantiated. On these findings the Tribunal passed the impugned order.

6. Though the management had taken up a contention that Section 2A of the Industrial Disputes Act is unconstitutional and violative of Articles 14 and 19 of the Constitution of India that was not pressed at the time of argument.

7. The main contention that was urged by Mr. K.A. Nair learned Counsel for the petitioner was that the petitioner having a right to dispense with the service of the first respondent on giving one month's notice in writing or salary in lieu of such notice as per the conditions of service of the first respondent, such termination can be for misconduct too. He relied on a decision of this Court in Kannan Devan Hills Produce Co. v. Its Workmen 1969-I L.L.J. 483 and of the Supreme Court in Tata Engineering & Locomotive Co. v. Prasad 1969-II L.L.J. 799. In [1969-I L.L.J. 483], Justice P.T. Raman Nayar, as he then was. held that if something that falls short of misconduct can be reasonable cause for termination simpliciter as, ex-hypothesis it can, one fails to see any logic in saying that something more serious, namely, misconduct cannot furnish a reasonable cause and that termination for misconduct must be secured by dismissal by way of punishment for which far more severe action it can furnish reasonable cause. Mis-conduct, the learned Judge said, seemed to him as a fortiorari case and the utmost that can be said in a case of discharge simpliciter for misconduct is that the Tribunal would, in the words of Gajendragadkar, J. (as he then was) in Assam Oil Co. v. Its Workmen 1960-I L.L.J. 587, 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. His Lordship said that what the authority has to show and what an Industrial Tribunal has to consider and decide is whether there was reasonable cause, irrespective of whether or not that cause amounts to misconduct. In this connection the following observations appearing in Tata Engineering & Locomotive Co. v. Prasad 1969-II L.L.J. 799 at page 808, is also pertinent:

The company had the alternatives, either to act under Standing Order 47. or to take disciplinary action and hold a domestic enqiry. But the latter course should have meant that the company would have to launch into an enquiry almost Parallel to the one which was going on before the Committing Magistrate. If the company, in these circumstances preferred the former, it would not be reasonable to say, as the Tribunal did. that the company should have charged the workman with misconduct and held an enquiry.

As apparently these observations in this decision seem to support Mr. K.A. Nair's contentions, it seems necessary to deal deep into the question and find out the correct position on the problem as revealed by the various Supreme Court decisions and also of our Court. Both Mr. K.A. Nair and Mr. M.P. Menon, appearing for the workman have brought to my notice most of the relevant decisions on the matter.

8. The first case that I would consider is the one reported in Utkal Machinery Ltd. v. Santi Patnaick [1966-I L.L.J. 398], which was a case decided by a Constitution Bench of the Supreme Court consisting of five Judges. The facts of the case were these. One Miss Santi Patnaik who had taken her degree in Master of Arts (Political Science) in 1961, was appointed as Secretary to the General Manager of Utkal Machinery Ltd.. on a salary of Rs. 400 per month on the recommendation of the then Chief Minister of Orissa Shri B. Patnaik. She was thereafter transferred to the Personnel Department of the company as an Assistant. Sri A.L. Sarin joined as Personnel Officer on 30th April, 19631. Miss Patnaik alleged that on 30th April, 1962 she was given notice for termination of her service. On her representation she was informed on 30th May, 1962 that the decision of the Management to dispense with her service was final. The allegation of Miss Patnaik was that taking advantage of her subordinate position Shri Sarin misbehaved with her to which she offered resistance. She asserted that the termination of her service was improper, mala fide and an act of victimisation. Her case was taken up by the Utkal Machinery Mazdoor Sangh and the Government referred the dispute for adjudication to the Labour Court. The management alleged that the service of the respondent was terminated during the probation period because of her unsatisfactory work and there was no question of victimisation or mala fide motive in the termination of her service. The management contended that it had absolute discretion to assess the work of the person concerned during the period of probation and to terminate her services on the ground of unsatisfactory work. The Industrial Court did not accept the contention of the management and held that there was no probationary period fixed for Miss Patnaik and the termination of her services was mala fide and illegal and directed the management to pay her Rs. 9,600 as compensation.

9. In this case the Supreme Court proceeded with the case assuming in favour of the management that Miss Patnaik was appointed! on probation on a period of six months from 9th December, 1961 and that it was stipulated in the contract that during the probationary period her services could be terminated without notice and without assigning any reason. On that assumption the Court said:

The Argument was stressed on behalf of the appellant that there was no dismissal of the respondent for misconduct but she was only discharged in terms of the contract and the order of the management cannot be treated as an order of dismissal of the respondent for misconduct. The Labour Court has examined the evidence on this aspect of the case and has reached the finding that the order of the management discharging the respondent, dated 30th April. 1962 was nunitive in character and it should be taken as a punishment for the alleged misconduct of the respondent. The Labour Court has referred to the fact that there is no standing order of Utkal Machinery, Ltd., with regard to punishment for misconduct. In the absence of any standing order the unsatisfactory work of an employee may be treated as misconduct and when the respondent was discharged according to the management for unsatisfactory work it should be taken that her discharge was tantamount to punishment for alleged misconduct. If this conclusion is correct, the management was not justified in discharging the respondent from service without holding a proper enquiry. Even before the Labour Court there was no evidence adduced on behalf of the management to show that the work of the respondent was unsatisfactory. Two witnesses were examined on behalf of the management but neither uttered a word about it. Neither the deputy general manager nor the joint, general manager was examined in support of the allegation. There was also no document produced on behalf of the management to illustrate the unsatisfactory work of the respondent. In her statement before the Labour Court the respondent said that she was not told in writing, till 30th April, 1962, that her work! was not satisfactory. Sri Sarin was her superior officer but he never expressed any disapprobation of her work or told her that her work was not satisfactory. The Labour Court accordingly found that there was no proof of the alleged misconduct on the part of the respondent and there was no justification for terminating her services and in the face of complete absence of evidence in regard to unsatisfactory work of the respondent the discharge of the respondent from service was mala fide. We hold that the view taken by the Labour Court is correct.

This decision, therefore, indicates that the power to terminate service on one month's notice or a month's salary in lieu of notice cannot be used for termination of service for alleged misconduct.

10. The Court in this case earlier said basing on the previous decision of the Supreme Court in Assam Oil Company, Ltd v. Its Workmen 1960-I L.L.J. 687:

But if the validity of the termination is challenged in an industrial adjudication, it would be competent to the Industrial Tribunal to enquire whether the order of termination has been effected in the bona fide exercise of its power conferred by the contract. If the discharge of the employee has been ordered by the management in bona fide exercise of the power, the Industrial Tribunal will not interfere with it, but it is open to the Industrial Tribunal to consider whether the order of termination is mala fide or whether it amounts to victimization of the employee or an unfair labour practice or is so capricious or unreasonable as would lead to the inference that it has been passed for ulterior motive and not in bona fide exercise of the power arising out of the contract. In such a case it is open to the Industrial Tribunal to interfere with the order of the management and to afford proper relief to the employee.

11. I would also refer to the decision of the Supreme Court in Tata Oil Mills Co. v. Their Workmen 1966-II L.L.J. 602. There at pages 605 and 606, Justice Gajendragadkar said:

The true legal position about the Industrial Court's jurisdiction and authority in dealing with cases of this kind is no longer in doubt. It is true that in several cases contracts of employment or provisions in standing orders authorize an industrial employer to terminate the services of his employees after giving notice for one month or paying salary for one month in lieu of notice, and normally, an employer may, in a proper case, be entitled to exercise the said power. But. where an order of discharge passed by an employer gives rise to an industrial dispute, the form of the order by which the employee's services are terminated, would not be decisive; industrial adjudication would be entitled to examine the substance of the matter and decide whether the termination is in fact discharge simpliciter or it amounts to dismissal which has put on the cloak of a discharge simpliciter. If the Industrial Court is satisfied that the order of discharge is punitive, that it is mala fide, or that it amounts to victimization or unfair labour practice, it is competent to the Industrial Court to set aside the order and, in a proper case direct the reinstatement of the employee. In some cases, the termination of the employee's services may appear to the Industrial Court to be capricious or so unreasonably severe that an inference may legitimately and reasonably be drawn that in terminating the services, the employer was not acting bona fide. The test always has to be whether the act of the employer is bona fide or not. If the act is mala fide, or appears to be a colourable exercise of the powers conferred on the employer either by the terms of contract or by the standing orders, then, notwithstanding the form of the order, industrial adjudication would examine the substance and would direct re-instatement in a fit case. This position was recognized by the Labour Appellate Tribunal as early as 1951 in Buckingham and Carnatic Company, Ltd. v. Their Workmen 1951 II L.L.J. 314 and since then it has been consistently followed-vide Charter-ed Bank, Bombay v. Chartered Bank Employees' Union and Anr. 1960-II L.L.J. 222 and U.B. Dutt & Co. (Private) Ltd. v. Their Workmen 1962-I L.L.J. 374.

Therefore, if in a case the Industrial Court is satisfied that the order of discharge is punitive, the Court can set aside the order and in a proper case direct the reinstatement of the employee.

12. It is well-settled that before the action of discharge or dismissal by way of punishment for a misconduct can be taken against a workman the employer is bound to draw up a regular proceedings against him on the principles of natural justice apart from the provision in the standing orders. In the context of industrial adjudication the theory of employer's freedom of contract cannot have application as such. Justice Gajendragadkar speaking for the majority said in Rai Bahadur Diwan Badri Das v. Industrial Tribunal 1962-II L.L.J. 366, said at page 370 :

The doctrine of absolute freedom of contract has thus to yield to the higher claims of social justice ... the right to dismiss an employee is also controlled subject to well recognized limits in order to guarantee security of tenure to industrial employees.

To accept the claim of the employer to terminate the service of his workmen under the contract of employment or in the standing orders by giving him notice or by paying him wages in lieu of such notice without scrutinising the underlying motive behind such termination would be to set at naught the right to security of service which the industrial employees have got through industrial adjudication and the process of collective bargaining. The Court cannot ignore the rights the industrial employees have secured through long drawn out and bitter struggles and apply the common law principles of master-servant relationship. In the words of Justice Gajendragadkar the wide scope of the jurisdiction of the Industrial Tribunals is now well established. As early as 1949 it was held by the Federal Court in Western. India Automobile Association v. Industrial Tribunal, Bombay 1949-I L.L.J. 245; that the argument based upon the sanctity and validity of contracts between the employer and employees ' overlooks the fact; that when a dispute arises about the employment of a person at the instance of a trade union or a trade union objects to the employment of a certain person, the definition of industrial dispute would cover both the cases. In each of those cases, although the employer may be unwilling to do. there will be jurisdiction in the Tribunal to direct the employment or non-employment of the person by the employer. This is the same thing as making a contract of employment when the employer is unwilling to enter into such a contract with on unwilling person.' That being the nature - and extent of the jurisdiction of the Industrial Tribunal, it is too late now to contend that the contracted power of the employer to discharge his employee under the terms of the contract cannot be questioned in any case 1960-I L.LJ. 587.

13. In the case of Assam Oil Company Ltd. v. Its Workmen 1960-I L.LJ. 587, the Supreme Court observed :

If the contract gives the employer the power to terminate the services of his employee after a month's notice or subject to some other condition, it would be open to him to take recourse to the said term or condition and terminate the services of his employee; but when the validity of such termination is challenged in industrial adjudication it would be competent to the industrial tribunal to enquire 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 and decide whether the discharge is a discharge simpliciter or not. If it appears that the purported exercise of the power to terminate the service 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 Tribunals can justly hold that the discharge is unjustified and has been 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 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 connection, 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 Company Ltd. v. Worker of the Company 1951-II L.L.J. 314.

This principle was restated with equal force in Chartered Bank v. Its Employees' Union 1960-II L.L.J. 222, by Justice Wanchoo at page 226 :

There is no doubt that an employer cannot dispense with the services of a permanent employee by mere notice and claim that the Industrial Tribunal has no jurisdiction to inquire into the circumstances in which such termination of service simpliciter took place. Many standing orders have provisions similar to para 522(1) of the Bank award, and the scope of the power of the employer to act under such provisions has come up for consideration before labour Tribunals many a time. In Buckingham and Carnatic Company, Ltd., etc. v. Workers of the Company, etc. 1951-II L.L.J. 314, the Labour Appellate Tribunal had occasion to consider this matter relating to discharge by notice or in lieu thereof by payment of wages for a certain period without assigning any reason. It was of opinion that even in a case of this kind the requirement of bona fides is essential and if the termination of service is a colouarable exercise of the power or as a result of victimization or unfair labour practice the Industrial Tribunal would have the jurisdiction to intervene and set aside such termination. Further it held that where the termination of service is capricious, arbitrary or unnecessarily harsh on the part of the employer judged by normal standards of a reasonable man, that may be cognet evidence of victimization or unfair labour practice. We are of opinion that this correctly lays down. the scope of the power of the Tribunal to interfere where service is terminated simpliclter under the provisions of a contract or of , standing orders or of some award like the Bank award. In order to judge this, the Tribunal will have to go into all the circumstances which led to the termination simpliciter and an employer cannot say that it is not bound to disclose the circumstances before the Tribunal. The form of the order of termination is not conclusive of the true nature of the order, for it is possible that the form may be merely a camouflage for an order of dismissal for misconduct. It is, therefore, always open to the Tribunal to go behind the form and look at the substance; and if it comes to the conclusion, for example, that though in form the order amounts to termination simpliciter it in reality cloaks a dismissal for misconduct, it will be open to it to set it aside as a colourable exercise of the power.

In another decision of the Supreme Court Murugan Mills Ltd. v. Industrial Tribunal, Madras and Anr. 1965-I L.L.J. 422, Justice Wanchoo speaking for the Court (consisting of himself, Chief Justice Gajendragadkar and Justice Hidayatullah) said at pages 424 and 425:

The right of the employer to terminate the services of his workman under a standing order, like Clause 17(a) in the present case, which amounts to a claim ' to hire and fire ' an employee as the employer pleases and thus completely negatives security of service which has been secured to industrial employees through industrial adjudication, came up for consideration before the Labour Appellate Tribunal in Buckingham and Carnaitic Company, Ltd. v. Workers of the Company 1951-II L.L.J. 314.

The matter then came up before this Court also in the Chartered Bank v. Chartered Bank Employees' Union 1960-II L.L.J. 822 and U.B. Dutt & Co. v. Workers of V.B. Dutt & Co. 1962-I L.L.J. 374, wherein the view taken by the Labour Appellate Tribunal was approved and it was held that even in a case like the present the requirement of bona fides was essential and if the termination of service was a colourable exercise of the power or as a result of victimization or unfair labour practice the Industrial Tribunal would have the jurisdiction to intervene and set aside such a case is not conclusive and the Tribunal can go behind the order to find the reasons which led to the order and then consider for itself whether the termination was a colourable exercise of the power or was a result of victimization or unfair labour practice. If it came to the conclusion that the termination was a colourable exercise of the power or was a result of victimization or unfair labour practice it would have the jurisdiction to intervene and set aside such termination.

The form, therefore, used in the present case for terminating respondent's services under Clause 17(a) is not conclusive and the Tribunal was justified in enquiring into the reasons which led to such termination; even the standing orders provide that an employee can ask for reasons in such a case. Those reasons were given before the Tribunal by the appellant, viz., the respondent's services were terminated because he deliberately adopted go-slow and was negligent in the discharge of his duty. His services were, therefore, terminated for dereliction of duty and go-slow in his work. This clearly amounted to punishment for misconduct and, therefore, to pass an, order under Clause 17(a) of the standing orders in such circumstances was clearly a colourable exercise of the power to terminate the services of a workman under the provision of the standing orders. In those circumstances the Tribunal would be justified in, behind the order and deciding for itself whether the termination of the respondent's services could, be sustained. In the present case, evidence was led before the Tribunal in support of the appellant's case that the respondent was guilty of dereliction of duty and go-slow in his work. The Tribunal has found that this has not been proved. In these circumstances the case was clearly covered by Clause (b) of Section 33(2) of the Act as the services of the respondent were dispensed with during the pendency of a dispute by meeting out the punishment, of discharge to him, for misconduct. As this was done without complying with the proviso, the termination of the service was rightly set aside.

14. In the well-known case of Buckinqham and Carnatic Mills. Ltd. v. Their Workmen 1951-II L.L.J. 314, the Labour Appellate Tribunal of India said that the principles namely, (i) that an industrial worker must be placed in such a position that the security of his service may not depend upon the caprice or arbitrary will of the employer, (ii) that the industrial peace should be maintained, and (iii) that industry should be efficiently managed are fundamental as far as industrial adjudication is concerned. In the same case their Lordships said at page 317:

In cases where the ground alleged by the employer is misconduct, rules of procedure to be followed before the order of dismissal is passed are also laid down in the standing orders. In our opinion these three types have to be considered separately. In all these types, the requirement of bona fides is essential. The termination of service in colourable exercise of the power or as a result of victimisation or unfair labour practice or of caprice, should be prevented, as otherwise some of the fundamental rights and principles which we have noticed above would be violated. Arbitrary conduct or necessary harshness on the part of the employer, judged by the normal standard of a reasonable man, may be cogent evidence of victimisation or unfair labour practice.

15. In this connection I would refer to one more decision-a Pull Bench decision of the Kerala High Court in Fernandez v. Giovanola Binny Co. Ltd. (1971) K.L.T 471. There it. was held it is a well established proposition in industrial law that even if the management has power under the contract of employment or under the standing orders to terminate the services of a worker that power can be exericised only for the purpose for which it was conferred. The power cannot be exercised for a collateral purpose to victimise the workman. In other words, bona fides in the exercise of the power is absolutely essential, even if the power is unfettered by the terms of the contract. The form of the order in such a case is not conclusive and the Tribunal can go behind the order to find the reasons which led to the order and then consider for itself whether the termination was a colourable exercise of the power. The following significant observations are worth quoting from that decision:

The power can be exercised only for the purpose for which it was intended. You cannot exercise a power granted for one purpose, for a different purpose and seek refuge under a provision which gives you a privilege not to disclose the reason for exercising the power. In industrial law the motive for the exercise of a contractual power can be inquired into notwithstanding the fact that the power under the contract is untrammelled.

16. Therefore, an analysis of all these decisions of the Supreme Court, of the Labour Appellate Tribunal and of the Full Bench of this Court cannot but lead to the conclusion that if an order of termination simpliciter of the service of an employee under the terms of contract of service or standing orders has its basis in alleged misconduct, it is really illegal. The real intention in such cases being to penalise the workman, it is a colourable exercise of power and the Industrial Tribunal would have jurisdiction to intervene and set aside the termination. The form of the order in which the order is couched is never conclusive and the Tribunal can always enquire into the reasons which lead to the termination. These principles seem to be well-established and the observations apparently contradictory to this appearing in two or three decisions are to be understood on the facts of those cases and restricted to those cases,

17. Reading the order Ext. P4 in a reasonable way no one could come but to the conclusion that the employee was found to be undesirable which must necessarily impart an element of punishment which is the basis of the order and is its integral part. It is not a simple order of discharge without casting any aspersion against the first respondent or attaching any stigma to his character. As soon as it is shown that the order purports to cast an aspersion on the employee it would be idle to suggest that the order is a simple order of discharge. As the Supreme Court has said in other contexts -

The test in; such cases must be-Does the order cast aspersion or attach stigma to the officer when it purports to discharge him If the answer to this question is in the affirmative, then notwithstanding the form of the order, the termination of service must be held, in substance, to amount to dismissal.

See Jagadish Mitter v. Union of India 1964-I L.L.J. 418. State of Uttar Pradesh v. Madan Mohan Nagar 1967-II L.L.J. 63, No doubt the above two cases were cases of civil servants, one termination of service of a temporary servant and the other compulsory retirement of a Government servant on the ground that he had outlived his utility. However, the observations there are rightly opposite in this case also.

18. On the principles laid down in the Supreme Court cases referred to above and the Full Bench decision in Fernatndez v. Giovanola, Binny Co. Ltd. (1971) K.L.T, 471, I have no hesitation in holding that the Tribunal has correctly found that the orders of termination of the petitioner's service is illegal. Even on the basis of Mr. Justice Raman Nayar's decision in a case of discharge simpliciter for misconduct the employer has to show and the Industrial Tribunal has to consider and decide whether there was reasonable cause irrespective of whether or not that cause amounts to misconduct. The employer could defend his action by leading evidence before the Tribunal to show that there was in fact misconduct and, therefore, the action taken was bona fide and was not a colourable exercise of the power under the Rule. In this case the Tribunal has held that the management's case that he is incompetent, inefficient and that he is a person who is not fit to repose any confidence has not been proved. Nothing has been placed before me to show that in coming to this conclusion the Tribunal has committed any error as such.

19. Mr. M.P. Menon learned Counsel for the first respondent pointed out that Ex. P4 order is invalid on another ground also. The 'Tribunal has not accepted this plea which finding the first respondent questions in, his Original Petition O.P. 1971 of 1973. According to the first respondent he fell ill from 16-3-1970. The Medical Officer of E.S.I. Corporation had recommended leave from 16-3-1970 to 2-4-1970; and sickness benefit under E.S.I. Act and scheme was also given for the period from 18-3-1970 to 2-4-1970. It was while be was thus on leave the management terminated his services by Ext. P4, dated 21-3-1970 with effect from 23-3-1970. Section 73 of the Employees' State Insurance Act reads as follows :

73. Employer not to dismiss or punish employee during period of sickness, etc.- (1) No employer shall dismiss, discharge, or reduce or otherwise punish an employee during the period the employee is in receipt of sickness benefit or maternity benefit, nor shall he, except as provided under the regulations, dismiss, discharge or reduce or otherwise punish an employee during the period he is in receipt of disablement benefit for temporary disablement or is under medical treatment for sickness or is absent from work as a result of illness duly certified in accordance with the regulations to arise out of the pregnancy or confinement rendering the employee unfit for work.

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

Therefore, the service of no employee (covered by E.S.I. Scheme) could be terminated during the period he is in receipt of sickness benefit and that no order of termination issued during the period shall be valid and operative. The Tribunal has not accepted the plea on the ground that 'some chance has been given for doubt' on the ground that there is delay in getting the medical certificate PS it is sent to the management on or after he received the termination order. This approach, according to me is not correct. It has come out in evidence before the Tribunal that at the time when his services were terminated the first respondent was in receipt of sickness benefit. Then Section 73(2) is immediately attracted,

20. The question of reinstatement as such is raised by the first respondent in his original petition. No doubt reinstatement is the normal rule evolved by the decisions of the Labour Appellate Tribunal starting with Buckingham and Carnatic Mills case, but as stated by Gajendragadkar. J. in Punjab National Bank Ltd. v. The Workmen 1959-II L.L.J. 666-

It is obvious that no hard and fast rule can be laid down in dealing with this problem. Each case must be considered on its own merits and in reaching the final decision an attempt must be made to reconcile the conflicting claims made by the employee and the employer. The employee is entitled to security of service and should be protected against wrongful dismissals, and so the normal rule would be reinstatement in such cases.

The Supreme Court said in Assam Oil Company Ltd. v. Its Workmen 1960-I L.L.J. 587, at 591 -.but there can be cases where it would not be expedient to follow this normal rule and to direct reinstatement.

Again Gajendragadkar, J. observed in Samnuggar Jute Factory Co. Ltd. v. Their Workmen 1964-I L.L.J. 634 at 637 -

There may, however, be cases in which industrial adjudication may take the view that if the case presents certain unusual features, reinstatement may not be granted and compensation instead may meet the ends of justice.

The Tribunal in this case has refused reinstatement though it has found the order of discharge is arbitray or the ground that the employee who worked as head of the Security Department and the management have got their relations so strained on account of these proceedings and, therefore, it may not be proper to direct reinstatement. I do not think this calls for an interference. The reason given by the Tribunal is a valid one. In fact Mr. M.P. Menon, learned Counsel for the first respondent, did not and quite rightly too, seriously challenge this finding of the Tribunal.

21. Mr. K.A. Nair faintly argued that the first respondent cannot, challenge the validity of Ext. P4 in that he has accepted the same. This contention cannot be countenanced in view of the fact that such a point was not taken before the Tribunal.

22. Therefore, I hold that the Tribunal was quite right in holding that Ext. P4 is illegal and improper. The Tribunal has also correctly passed the reliefs it has granted to the first respondent.

23. Therefore I dismiss O.P. 1652 of 1963 with costs and O.P. 1971 of 1973 without costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //