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Travancore Electro-chemical Industries Limited Vs. Harindranath - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtKerala High Court
Decided On
Judge
Reported in(1976)ILLJ366Ker
AppellantTravancore Electro-chemical Industries Limited
RespondentHarindranath
Cases ReferredRidgway v. Hungerford Market Co
Excerpt:
- - it is alleged that in september, 1967, the plaintiff required time till december 21, 1967. on january 4, 1968 it is pointed out in the written statement that the plaintiff was again informed that his post was going to be abolished when plaintiff pleaded for time till january 31. what he then did was to join the staff association which was clearly in breach of his contract of service as it rendered his post as an industrial relations officer unreliable for the company; according to him at best it could only be said on behalf of the plaintiff that his service was of indefinite duration. the absence of any term fixed in the order of appointment or the term prescribed by any rules or bye-laws detailing the conditions of service of employees of the company like the appellant it might be.....t. chandrasekhara menon, j.1. first defendant in the suit is the appellant. the appeal is from a decree awarding compensation to the plaintiff to the tune of rs. 6,750.75 with future interest at 6 % with half cost of the suit, for alleged wrongful termination of the plaintiff's services with the appellant-company (hereinafter called the company) .2. the plaintiff was in kerala government service in the department of industries and commerce. while he was working on deputation, as a district officer under the khadi and village industries board on a salary of rs. 450 per month he came into contact with the technical director of the company. the plaintiff alleges that he was persuaded to join the service of the company after resigning from the government service. according to the plaintiff it.....
Judgment:

T. Chandrasekhara Menon, J.

1. First defendant in the suit is the appellant. The appeal is from a decree awarding compensation to the plaintiff to the tune of Rs. 6,750.75 with future interest at 6 % with half cost of the suit, for alleged wrongful termination of the plaintiff's services with the appellant-company (hereinafter called the company) .

2. The plaintiff was in Kerala Government service in the Department of Industries and Commerce. While he was working on deputation, as a District Officer under the Khadi and Village Industries Board on a salary of Rs. 450 per month he came into contact with the technical director of the company. The plaintiff alleges that he was persuaded to join the service of the company after resigning from the Government service. According to the plaintiff it was on a definite understanding and assurance that his services under the company will be a permanent one with bright future prospects that he was induced to resign from Government service. He joined the company as the Industrial Relations Officer on a permanent appointment (as alleged by the plaintiff) in the scale of Rs. 500-50-750 on September 11, 1964. At that time the plaintiff had completed 7 1/2 years of continuous service under the State.

3. The plaintiff further alleges that though he was entitled to his third annual increment as per the terms of his appointment on September 11, 1967 this was not sanctioned in time nor was he given the dearness allowance which was introduced into the company from February 1, 1965. The plaintiff had hence to make representations in the matter personally and through the staff association of the company. The staff association raised a dispute on this question along with the claims of other members which was pending conciliation before the District Labour Officer, Kottayam.

4. The plaintiff's further case is that on January 29, 1968 by Ext. P16 memo, his services were abruptly terminated without assigning any reason whatsoever. However, the company within a few hours of the service of this memo issued another memo Ext. P17, dated January 30, 1968 withdrawing the earlier memo also without giving any reason. The plaintiff proceeds further with the allegation that while again he was thus continuing in service the company again terminated his services with effect from March 21, 1968 by order of the same date Ext. P20 which it is asserted WES served on the plaintiff while he was on leave at Trivandrum. On the basis that this termination, without notice and for no reason whatsoever, is illegal and wrongful, the plaintiff in the plaint claimed reinstatement in service or in the alternative prayed for recovery of an amount of Rs. 15,104 made up of Rs. 12,000 compensation for wrongful dismissal. Rs. 2,480 arrears of salary legally due to plaintiff from September 11, 1964 to March 31, 1968 and Rs. 624 leave salary for 29 days.

5. The company in their written statement denied that the plaintiff was persuaded to join their service after resigning from Government service. He resigned from Government service because he had no prospects there and he was taken into the company as an Industrial Relations Officer on the pressure exerted by a close relative of the plaintiff who was a top officer in their service. The appointment was not a permanent one. The appointment was on a monthly basis with no definite period of employment laid down in the order of appointment. There was no assurance given by the company of permanent service or brighter prospects. No legally due increments had been denied to plaintiff. Really the plaintiff was being paid more than what had been agreed upon at the time of appointment. The company alleges that when the company went into production it was found that the post of the Industrial Relations Officer had become surplus but the plaintiff was allowed to continue in service in the belief that some of the projects of expansion of the company might provide avenues for future utilisation of his services. But, the company contends, this did not materialise and the plaintiff was informed as early as June, 1967 that his services would not be required by the company as they wanted to abolish that post. It is stated that there was no work for such an officer in the establishment. His services were not terminated immediately as he wanted tune to seek employment elsewhere. It is alleged that in September, 1967, the plaintiff required time till December 21, 1967. On January 4, 1968 it is pointed out in the written statement that the plaintiff was again informed that his post was going to be abolished when plaintiff pleaded for time till January 31. What he then did was to join the Staff Association which was clearly in breach of his contract of service as it rendered his post as an Industrial Relations Officer unreliable for the company; when the company found that the plaintiff had no intention to resign, his service was terminated by Ext. P16 memo. The company further alleges that on January 30, 1968, plaintiff and other employees of the company at about 4 p.m. gheraoed three senior officers of the company who under duress were forced to withdraw the order of termination of service. It is further alleged that the plaintiff was fully aware of the fact that the company had no intention to continue him in service and that on March 18 of the same year, the General Manager discussed with him the terms for termination of his service and offered to pay him an additional one month's salary in addition to one month's notice pay if he resigned without further delay. As he did not give his decision on the matter as promised, but absented himself, the management was forced to terminate the service of the plaintiff by its letter of March 21, 1968. It would be useful in this connection to quote in ex-tenso what the defendant states in the written statement in justification of the termination of service of the petitioner:

The service of the plaintiff was terminated because the post of Industrial Relations Officer was to act as a liaison between the management and the workmen, and hence it is a highly confidential managerial job. The person acting as the Industrial Relations Officer must be a person in whom the management is able to place its absolute confidence. Once the defendant joined the staff association (T.E.C. I Staff Association) he became aligned to the employees and became practically one among them and his capacity to act as Industrial Relations Officer was completely lost and there was no purpose in allowing him to continue in service.

The defendant has absolute right to terminate the services of the plaintiff who was employed with the defendant as a monthly paid managerial staff without assigning any reason by giving one month's notice. In this case the plaintiff was fully aware ever since June, 1967 that his services are superfluous so far as the defendant-company is concerned and that the post of Industrial Relations Officer was going to be abolished. It is an implied term in the case of appointments of monthly paid managerial staff that their services are terminable by giving one month's notice and the plaintiff in joining the service as a monthly paid managerial staff took the risk of termination of service with one month's notice.

Defendants did not give any assurance of permanancy of service or security of the job to the plaintiff and the defendant is not aware of the date of resignation of the plaintiff from Government service.

Without prejudice to the contentions raised above it is submitted that even if the plaintiff had any right to continue in service or to claim compensation, that was completely lost by his taking part in the wrongful confinement of the executive officers of the defendant-company on January 30, 1968. The plaintiff's taking part in the wrongful confinement and coercing the defendant's executive officers to withdraw the order of termination by force is a serious act of misconduct and the defendant is entitled to terminate even without notice the services of an employee who has partaken in a criminal act against the management. There was no purpose in continuing the services of such a person in the managerial or supervisory cadre of the defendant-company. Therefore, the defendant was absolutely justified in terminating the services of the plaintiff by its order, dated March 21, 1968. Even if the plaintiff had any right to continue in service he has forfeited that by taking part in the wrongful confinement of the executive officers of the defendant-company on January 30, 1968.

6. The Court below after a detailed discussion on the various issues involved in the case found :

(1) That the plaintiff's appointment in the defendant-company was of a permanent nature;

(2) The termination of his services was a wrongful one ;

(3) The plaintiff is entitled to compensation for this wrongful dismissal to a sum equivalent to the plaintiff's salary for 8 months 20 days. In fixing the period of 8 months 20 days, the Court took into account the fact that the plaintiff got an appointment in the FACT with effect from December 13, 1968. The plaintiff was found entitled to this compensation over and above the salary for 24 days in the month of March, 1969 (Rs. 502.44) and the leave salary (Rs. 624) which the defendant have offered to plaintiff; and

(4) That the plaintiff is not entitled to claim the amount of Rs. 2,480 on the ground of the alleged difference in the pay which he should have got in terms of his appointment order and the amounts actually paid.

7. The defendant-company has come up in appeal. The plaintiff has filed a memorandum of cross objections with regard to the denial of his claim for Rs. 2,480.

8. Sri S. Narayanan Poti, learned Counsel for the appellant contended before us that the Court below erred in finding that the plaintiff's service was a permanent one. According to him at best it could only be said on behalf of the plaintiff that his service was of indefinite duration. Such service could be terminated by a reasonable notice in the absence of stipulation. What would amount to reasonable notice in any one case depends upon a consideration of all the surrounding circumstances. According to Mr. Poti, in this case termination of appointment giving a month's pay in lieu of notice is a proper termination. One month's notice is reasonable in the circumstances. He also said that the termination was fully justified in more than one way, firstly, because his post had become superfluous on account of the inability of the company to put through the expansion scheme in its contemplation and secondly, the plaintiff by enrolling himself as a member of the Company's Staff Association forfeited the confidence, the management has to repose on its Industrial Relations Officer. He pointed out that the plaintiff joining hands with other members of the staff association in unlawfully confining or restraining the senior officers of the company by means of gherao intending to bring pressure to withdraw the termination notice fully justified the action of the company in terminating the plaintiff's service. On the basis of authorities he contended that the defendant-company could justify the dismissal on other grounds than that pointed out in the notice of termination of service. Justification of dismissal, it was urged, can be shown by proof of facts on grounds different from those alleged at the time or even by proof of facts, ascertained subsequently to the dismissal. In regard to these questions Sri M. Krishnan Nair strongly contended for in support of the trial Court's findings.

9. In regard to the trial Court's findings that the plaintiff's appointment was in the nature of permanent one, it would appear that the Court below has used the word permanent in the sense to distinguish it from acting or purely temporary service. In fact, the Court below states in para 9 of the judgment.

In contract of service the word ' permanent' is used only to distinguish it from ' temporary' employment. It is indicative of the nature of the employment rather than the duration. Permanent service has to be distinguished from acting or purely temporary service.

In so describing the appointment as permanent the Court below may not be wrong. It is said in Gidigu Venkita Sri-pati v. Krishna C.G.N. Deo A.I.R. 1942 Pat. 176, that the word permanent in the contract of service in suit was used only to distinguish what was offered from merely temporary employment; it was more descriptive of the nature and character of the employment than indicative of its duration. In. the absence of any term fixed in the order of appointment or the term prescribed by any rules or bye-laws detailing the conditions of service of employees of the company like the appellant it might be more correct to describe the appointment as one of indefinite duration. In the absence of any stipulation in the contract of service (any rules or bye-laws made by the company existing at the time of appointment could certainly be taken to form part of the contract of service) regarding notice required for terminating a contract of service where the appointment is one for indefinite duration, the law will imply a term that such notice must be reasonable. What would amount to reasonable notice in any one case depends upon a consideration of all the surrounding circumstances - see Barwell and Kar. The Law Relating to Service in India. Vol. I-Master and Servant, page 113. This doctrine, long settled in England has been restated in a number of modern cases. This rule has been treated as good law in India also.

10. In the law of England a servant is regarded as 'hired.' And that word was originally used not only of persons employed on the land-in ' husbandry ' to use another old word-but was also applied to contracts of domestic service as well as to those which concerned occupations clerical in character. By the Common Law of England where, in the relative contract-be it by parol or in writing-no particular duration is provided, the hiring will be considered a ' general ' hiring and as ' for a year ' and so from year to year; and thus is spoken of as a ' yearly hiring.' The presumption is in recognition of an age-long custom. There is no such presumption in the Law of India-see Harwell and Kar-The Law Relating to Service in India-Master and Servant Vol. I, pp. 69-70.

11. Also see paras 923 to 926 at pages 480-482 Halsbury's Laws of England, 3rd Edn., Vol. 25.

12. However, the later English decisions have taken the view that there is no inflexible rule that a general hiring is a hiring for a year. Each particular case must depend upon its own circumstances. It is an implied term of the agreement that a reasonable notice to terminate it should be given by either party-see De Stempel v. Dunkels [l938] 1 All E.R. 238, Adams v. Union Cinemas Ltd. [1939] 3 All E.R. 136 and Richardson v. Keeford [1969] 1 W.L.R. 1812 (C.A.). In the last mentioned case Lord Denning said at page 1816 :

The Judge held that there is still a presumption that a general hiring is a hiring for a year at least and that the presumption applies unless it is rebutted. He is supported in that view by a passage in Halsbury's Laws of England, 3rd Edn., Vol. 25 (1958) pp. 480, 481. In olden times, when England was an agricultural community, there was such a presumption; but there is no such presumption today. It has ceased to be valid in our modern industrial society. In De Stempel v. Dunkels (supra) Greer, L.J. said at p. 246 : ' I also think that it is no longer the rule applicable to all cases that an indefinite hiring is a hiring for a year only.' Scott, L.J. at p. 261, expressed his entire agreement with him. Those views followed by Branson, J., in Fisher v. W.B. Lick and Co. Ltd. [1938] 4 All E.R. 467 and by Atkinson, J., in Adams v. Union Cinemas Ltd. (supra). I prefer them to the contrary view of Slesser, L. J.- De Stempel v. Dunkels (supra). The time has now come to state explicitly that there is no presumption of a yearly hiring. In the absence of express stipulation, the rule is that every contract of service is determinable by reasonable notice. The length of notice depends on the circumstances of the case. There are many cases in the books showing what has been held reasonable for various employments. They are conveniently set out in Halsbury's Laws of England, 3rd Edn., Vol. 25, p. 490.

13. A large number of English and Indian decisions as to what would constitute reasonable notice in particular circumstances are catalogued at Barwell and Kar : Law Relating to Services in India-Master and Servant, Vol. I at pages 113 and 114. We need not refer to all those decisions here because as the learned authors state, depending as they do upon the circumstances surrounding the particular contract, they are of no more than relative value and do not afford any standard test.

14. What would be reasonable notice in the instant case if the plaintiff is being sent out for no fault of his ' The trend of modern decisions as to contract of service has been markedly in the direction of developing and applying a certain doctrine which might conveniently be styled the doctrine of implied terms..., under the general law of contract purely circumstantial evidence may be sufficient from which to infer a contract as subsisting between the alleged parties. And the Court may further consider what by necessary implication, the terms agreed upon must have been. By ' necessity' in such a context is meant that without which there could be no efficacy in the agreement come to. Naturally, then, the doctrine may be equally availed of where a contract is evidenced by writing if, upon the above principle, a term need to be implied because the writing itself in regard to the particular matter is silent.'-see Barwell and Kar: The Law Relating to Service in India, Master and Servant, Vol. I, pp. 74 and 75. It is only this principle that where a contract of service is silent on the subject of a notice by which such a contract may be determined, the law implies a term that such notices must be reasonable. Therefore, what the Court has to consider is as Sri Narayanan Poti correctly stressed before us, what would have the parties considered to be a reasonable notice for termination of the contract at the time when they entered into the agreement. However, we cannot agree with Mr. Poti when he says that the parties would have deemed a month's notice a reasonable one in the circumstances of the case. In the case concerned one has to take into account the fact that at the time when the plaintiff joined the defendant's service he was in a fairly comfortable government job with security of tenure. He would have opted for service under the defendant because of better pay and brighter prospects. He would have looked for some sort of security also in his new job. The correspondence between the parties at the relevant time Exts. P1 and D1 would certainly indicate that the defendant-company was also desirous of getting the plaintiff into its service. If the company were to terminate the service of the plaintiff (as it actually happened in this case) it would not be easy for the plaintiff to find a new job. Therefore, in this case it would only be reasonable to assume that both parties would have considered at least a six months' notice as a reasonable one at the time of the inception of the contract, Hence, we are of the view that if the plaintiff's services were terminated for no fault of his, he should be held entitled to get six months' notice in the matter and consequently for salary for the said period in lieu of such notice. This is by way of damages or compensation for wrongful termination of service. The principle for payment of compensation in case of wrongful termination of service is stated in the following terms by the Supreme Court in S.S. Shetty v. Bharat Nidhi : (1957)IILLJ696SC :

The position as it obtains in the ordinary law of master and servant is quite clear. The master who wrongfully dismisses his servant is bound to pay him such damages as will compensate him for the wrong that he has sustained.

' They are to be assessed by reference to the amount earned in the service wrongfully terminated and the time likely to elapse before the servant obtains another post for which he fitted. If the contract expressly provides that it is terminable upon, e.g., a month's notice the damages will ordinarily be a month's wages..... No compensation can be claimed in respect of the injury done to the servant's feelings by the circumstances of his dismissal, nor in respect of extra difficulty of finding work resulting from those circumstances, A servant who has been wrongfully dismissed must use diligence to seek another employment and the fact that he has been offered a suitable post may be taken into account in assessing the damages.' (Chitty Contracts, 21st Edn., Vol. 2, p, 559, para 1640).

' If the contract of employment is for a specific term, the servant would in the event be entitled to damages the amount of which would be measured prima facie and subject to the rule of mitigation in the salary of which the master had deprived him [vide Collier v. Sundary Referee Publishing Co. Ltd.

The servant would then be entitled to the whole of the salary, benefits, etc., which he would have earned had he continued in the employ of the master for the full term of the contract, subject of course to mitigation of damages by way of seeking alternative employment.

If the term is not specific or period of notice for termination is not mentioned in the contract of service we will have to imply ' reasonable notice' before such termination.

15. Hence the next question we have to consider is whether the termination of the plaintiff's service could be justified on account of any conduct on his part. Though the notice terminating plaintiff's service does not give any reason, the defendant is in law entitled to show to the Court which is considering the legality of the order of discharge that the plaintiff had conducted himself in such a fashion that the defendant could not have continued his services. In this context we do not think the Court below is correct in stating that Ext. p 20 is only a revival of Ext. P 16 order and, therefore it remains only to examine whether Ext. P 16 termination order was justifiable. Even though the defendant may have a case that Ext. P 16 order was withdrawn under duress, it is not disputed on either side that after Ext. P. 16 order, the plaintiff legally continued in service till he was served with Ext. P 20 order. What the Court has to consider is the legality of Ext. P20, order It might be that the defendant, after taking advantage of plaintiff's service for some time, wanted to send him out for no fault of his. However, if in his anxiety to avoid such a contingency of his being sent out the plaintiff behaved in such a manner which would compromise his position as an Industrial Relations Officer of the company, then in law the defendant can justify his order of termination of the plaintiff's service.

16. The law on the matter is clear and admits of no doubt. We might usefully quote here the following passge from Halsbury's Laws of England, 3rd Edn,, Vol. 25, paras 938 and 939 at pages 487 and 488 :

Conduct incompatible with duty or prejudicial to master's business. A servant, whose conduct is in-compatible with the faithful discharge of his duty to his master, may be dismissed, as where, unknown to his employer, he enters into transactions whereby his personal interests conflict with his duty as a servant in his particular capacity, or if he takes a secret commission, even though it be an isolated act, unless he is able to discharge the burden which lies upon him of proving that there is nothing improper in the transaction in question. Dismissal is also justified in the case of a servant who claims to be a partner: or if his conduct has been such that it would be injurious to the master's business to retain him.

Grounds for dismissal discovered subsequently. It is not necessary that the master, dismissing a servant for good cause, should state the ground for such dismissal; and provided good ground existed in fact, it is immaterial whether or not it was known to the employer at the time of the dismissal. Justification of dismissal can accordingly be shown by proof of facts ascertained subsequently to the dismissal or on grounds differing from those alleged at the time.

In a case where a clerk employed by a company to enter proceedings in their minute book entered on the margin of the minute book a protest in his own name against a summons for appointing a successor to himself, Lord Denman C.J., said in Ridgway v. Hungerford Market Co:

Now it is not necessary that a master, having a good ground of dismissal, should either state it to the servant, or act upon it. It is enough if it exists, and if there be improper conduct in fact. Suppose a servant had heard that his master intended to dismiss him without notice, and were to insult him in consequence ; it is clear that the insult would justify the master in dismissing the servant; and yet, if he intended to dismiss him independently of the insult, the motive for the dismissal would be different from such ground of justification. It is unnecessary to discuss how it would be, if the master, at the time of the dismissal had no knowledge of the fact which was to justify it; yet I think the justification would be good, even if the fact, existing at the time, were not known to the master.

We would also quote what the other learned Judges, who heard that case, say about this aspect. Littledale, J.-

The question was put to the jury, whether his making the entry of his protest was a sufficient ground of dismissal, and they found that it was. Then, there being a sufficient ground, the counsel for the plaintiff say that such a cause will not justify the dismissal, unless acted upon in fact. It seems to me that the law is otherwise. It is sufficient if the cause exist; the plaintiff is not entitled to object that that is not the cause for which he was dismissed.

Patterson., J.-

Neither the Court nor the jury can discuss the ultimate motive. If a justifying cause exist, the master may assign it whenever the action is brought; and whether any other cause exist, is not material. It may be that a master dislikes a servant, and chooses to take advantage of some improper act. It was put, at one time as if the cause arose after the dismissal; but that was not the fact. The plaintiff himself sends out the notice for the meeting of the 17th and he enters his protest, as clerk. He was, therefore, by his own showing, clerk on April 11. By his own act, he gives the defendants the power of displacing him, if they had it not before. If we were to hold that it was necessary to trace the dismissal to the act which is to justify it, it would follow that a master, who had made up his mind to dismiss a servant, would give the servant, if he discovered his master's intention, licence to act just as he pleased afterwards. We cannot dive into the meaning of parties. It the cause exists, and the master knows of it (for on this occasion we need go no further than that), it is a good ground for the dismissal.

Per Coleridge, J.-

As to the existence of a sufficient cause, the jury have found it; and they were right in so doing. The act of entering the protest on minute book was inconsistent with his service ; a servant of this kind, if allowed to do such acts would be useless. But then it is said that it should have been put to the jury, whether this cause was the operating motive for the dismissal. I own that I was impressed for a considerable time with the weight of this argument. But I think that when a master sued for wages, defends himself upon the ground that he had dismissed the servant, and that there was in fact something which justified the dismissal, that presents an intelligible issue to a jury : whereas if the inquiry were to be whether this justifying cause operated in the master's mind a jury, in the great majority of cases, could not pronounce a satisfactory verdict. I think it is enough to show a justification existing in point of fact.

17. We are of the view that if these had been any conduct on the part of the plaintiff which is incompatible with the discharge of his duty as an Industrial Relations Officer, then certainly the defendant can justify the order of termination and no question of reasonable notice will arise. On the facts of this case it can be stated that the plaintiff's conduct at least on January 30, 1968, when there was a gherao, who absolutely incompatible with his position as an officer of the company. The evidence in this case points to a reasonable inference that plaintiff joined hands with other members of the Staff Association in unlawfully confining the officers of the company by means of gherao. We are also of the view that in the nature of his functions and responsibility as an Industrial Relations Officer (we cannot accept Mr. Krishnan Nair's argument that in the nature of the work he was doing, he cannot be considered to be the Industrial Relations Officer because his appointment itself and the plaint also show that he was such an officer) he could not have made common cause with the members of the staff. Probably, it might be a case where the defendant-company unfairly sought to send away the plaintiff. But that cannot justify a conduct on the part of the plaintiff clearly irreconciliable with his position as the Industrial Relations Officer of the company. Therefore, we are of the view that the plaintiff's discharge from service as per Ext. P 20 is not wrongful. He has hence no cause of action in the matter. In the light of this conclusion it is not necessary to go into the merits of the cross-objections filed by the plaintiff,

18. The appeal is, therefore, allowed and the cross-objections dismissed, setting side the judgment and decree of the Court below. The suit will stand dismissed except to the extent of the amount which the defendants have agreed to pay the plaintiff as per their order of termination. In the circumstances of the case the parties will bear their costs throughout.


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