JUDGMENT
Sudhir Narain, J.
1. This writ petition is directed against the order dated 17.1.1983 passed by the Divisional Manager (Staff and Industrial Relation) Bank of Maharashtra. respondent No. 1 whereby the services of the petitioner have been terminated.
2. The Bank of Maharashtra is a Public Sector Undertaking being one of the nationalised Scheduled Bank under the Banking Companies (Acquisition and Transfer of Undertakings) Act (Act XXII of 1969). The petitioner was appointed as Sub-Staff in the Bank of Maharashtra, Meerut Branch, Meerut on 27.9.1979. He was confirmed and made permanent on the expiry of the period of probation of six months from the date of his appointment.
3. The version of the petitioner is that there were complaints against the Branch Manager, respondent No. 2 regarding advancing of loan and one complaint was made by Liberty Dry Cleaners of Meerut regarding non-payment of charges of washing of clothes by respondent No. 2. Respondent No. 2 suspected that in such complaint, the petitioner had a hand. He was called by respondent No. 2 and was seriously scolded. Later on, the petitioner received order dated January 17, 1983 whereby his services were terminated by respondent No. 2 under para 522 (1) of the Sastry Award which reads as under :
“In cases not Involving disciplinary action for misconduct and subject to clause (6) below, the employment of a permanent employee may be terminated by 3 months notice or on payment of 3 months pay and allowances in lieu of notice. The services of the probationer may be terminated by one month’s notice or on payment of one month’s pay and allowances in lieu of notice.”
4. Dr. R. G. Padia, learned counsel for the petitioner contended that sub-para (1) of para 522 of the Sastry Award is unreasonable and hit by Article 14 of the Constitution as the services of permanent employee can be terminated. under this para without any Justification. He has relied upon various decisions in support of his contention.
5. In Moti Ram Deka v. North East Frontier Railway, AIR 1964 SC 600, Rules 148 (3) and 149 (3) of Railway Station Establishment Code provided that the services of permanent employees can be terminated by giving them notice for the specified period or paying them salary for the said period in lieu of notice. The Supreme Court held that the said Rule was vlolatlve of Article 311(2) and further of Article 14 of the Constitution as it leaves ungulded discretion on the Railway Administration to terminate the services of the employees.
6. In West Bengal Electricity Board and others v. Desh Bandhu Ghosh, AIR 1985 SC 722, the Board was conferred the power under Regulation 34 of West Bengal Electricity Boards Regulation enabling the Board to terminate the services of permanent employee by giving three month’s notice or salary in lieu thereof. The Court struck down the first paragraph of Regulations 34 as it offended Article 14 of the Constitution. The Regulation was found to be totally arbitrary conferring power on the Board which was capable of vicious discrimination. It was treated as a naked ‘hire and fire’ Rule.
7. In Central Inland Water Transport Corporation Ltd. and another v. Brajo Nath Ganguli and another, AIR 1986 SC 1571, the validity of Rule 9 (i) of
the Central Inland Water Transport Corporation Ltd. Service Discipline and Appeal Rules, 1979 was considered which provided that the services of permanent employee can be terminated on giving three month’s notice or salary in lieu thereof. Rule 36 provided for different penalties which could be Imposed on an employee for his misconduct. Rule 38 provided the procedure for Imposing the major penalty and set out in detail as to how the disciplinary enquiry is to be held. The Supreme Court held that such power is arbitrary and there is no guideline which enabled the corporation to discriminate between one employee and another employee. It can pick up an employee and apply to him clause (i) of Rule 9 and it can pick up another employee and apply to him clause (ii) of Rule 9. It can pick up yet another employee and apply to him clause (iv) sub-clause (6) of Rule 36 read with Rule 38 and to yet another employee it can apply Rule 37. The Court observed a clause such as Rule 9 (i) in contract of employment affecting large sections of public is harmful and Injurious for public interest for it Intends to create a sense of insecurity in the minds of those to whom it applies and consequently it is against public good. Such a clause, therefore, is opposed to public policy and being opposed to public policy it is void under Section 23 of the Indian Contract Act. Rule 9 (i) was held arbitrary and unconscionable and as it wholly ignores the audi alteram partem rule, therefore, violative of Article 14 of the Constitution.
8. In O. P. Bhandari v. Indian Tourism Development Corporation Ltd. and others. AIR 1987 SC 111. the Supreme Court considered the validity of Rule 31 (v) of Indian Tourism Development Corporation (Conduct. Discipline and Appeal) Rule, 1978 which provided for termination of the services of the employees of the Corporation simply by giving 90 days notice or by payment of salary for the notice period in lieu of such notice was held vlolative of Articles 14 and 16 of the Constitution. It was observed as under :
“This rule cannot co-exist with the Articles 14 and 16(I) of the Constitution of India. The said rule must therefore die, so that the fundamental rights guaranteed by the aforesaid constitutional provisions remain alive. For, otherwise, the guarantee enshrined in Articles 14 and 16 of the Constitution can be set at naught simply by framing a rule authorising termination of an employee by merely giving a notice. In order to uphold the validity of the rule in question it will have to be held that the tenure of service of a citizen who takes up employment with the State will depend on the pleasure or whim of the competent authority ungulded by any principle or policy. And that the service of an employee can be terminated even though there is no rational ground for doing so, even arbitrarily or capriciously. To uphold this right is to accord a “magna carta” to the authorities Invested with these powers to practise uncontrolled discrimination at their pleasure and caprice on consideration not necessarily based on the welfare of the organisation but possibly based on personal likes and dislikes, personal preferences and prejudice. An employee may be retained solely on the ground that he is a sycophant and Indulges in flattery, whereas the services of one who is meritorious (but who is wanting in the art of sycophancy and temperamentally incapable of Indulging in flattery) may be terminated. The power may be exercised even on the unartlclutated ground that the former belongs to the same religious faith or is the disciple of the same religious teacher or holds opinions congenial to him. The power may be exercised depending on whether or not the concerned employee belongs to the same region, (religion) or to the same caste as that of the authority exercising the power, of course without saying so. Such power may be exercised even in order to make way for another employee who is a favourite of the concerned authority. Provincialism, castelsm, nepotism, religious fanatlsm, and several other obnoxious factors may in that case freely operate on the mind of the competent authority in deciding whom to retain and whom to get rid of.”
Similar provision was considered by the Supreme Court in Delhi Transport Corporation v. D.T.C. Mazdoor Congress and others, AIR 1991 SC 101, wherein the Regulation 9 (b) of Delhi Road Transport Authority (Conditions of Appointment and Service Regulations), 1995 conferred the power on the appointing authority to terminate the services of permanent employee by giving him three months notice or salary in lieu thereof, it was held that such provision was arbitrary and hit by Article 14 of the Constitution of India. The earlier view expressed by the Supreme Court in Delhi Transport Undertaking v. Balbir Saran Goel, AIR 1971 SC 836, which had upheld the validity of this Rule was distinguished on the ground that the case was decided on facts and the validity of such rule was not considered keeping in view Article 14 of the Constitution.
9. In all these cases, referred to above, the Supreme Court repeatedly held that those Rules which provide for termination of the service of permanent employee are hit by Article 14 of the Constitution Inasmuch as they conferred arbitrary power on the authorities concerned with the result that the services of permanent employees can be terminated without any Justification and with ulterior motive. Secondly, there is no line of demarcation, guidance when the disciplinary authority can terminate the services only by giving three months’ notice while in the case of some of the employees it can take disciplinary proceedings and thereafter dismiss the employees from service.
10. Shri Ravi Kant, learned counsel for the respondents contended that the Sastrl Award was made considering all the aspects of labour problems and the right was given to the Management to terminate the services of its employees when it finds that the employee is not functioning properly or there are other. valid reasons to terminate his services. The award amounts to Standing Order and such Standing Order cannot be challenged on the ground that it is violative of Article 14 of the Constitution.
11. The brief history leading to the framing of Sastry Award is that in June, 1949, the Central Government referred for adjudication number of disputes between the Banking Companies in the country and their employees to All India Industrial Tribunal known as the Sen Tribunal. The Tribunal gave its award in July, 1950 but it was set aside by the Supreme Court in April, 1991. The matter was subsequently referred to All India Industrial Tribunal known as Sastry Tribunal in January, 1952. This Tribunal gave its award in April, 1953. On appeal, the Labour Appellate Tribunal made certain alterations in the award. The decision of the Labour Appellate Tribunal was modified by the Government in certain respects in August, 1954. In making the modification, the Government was necessarily guided by the material available at that time. It was considered desirable to collect more complete data and to have the matter Investigated further in the light of those data. The Government, therefore, appointed a single member inquiry known as ‘Bank Award Punishment consisting of a Judge of the Bombay High Court. The Commissionwas requested to conduct a fact finding Inquiry and make recommendations as regards further modifications, if any, necessary in the decisions of the Labour Appellate Tribunal, as adopted by the Government Modification Order. The Commission submitted the recommendation towards the end of July 1955. The Supreme Court in its decision Canara Banking Corporation Ltd. v.Vittal. 1964 (3) SCR 26. held that Sastry Award amounts to Standing Order. In South Indian Bank Ltd. v. A. R. Chacko, AIR 1964 SC 1522, it has been held that even after the expiry of aforesaid period, the award will assume the shape of contract. It will continue to bind the parties in accordance with Section 19(6) of the Industrial Disputes Act, 1947. It was given statutory force by the Industrial Disputes (Banking Companies) Decision Act, 1955. If a workman is aggrieved against any clause in the Standing Order, he can apply for modification of such Standing Order before the appropriate authority. In Management Shahdara (Delhi) Saharanpur Light Railway Company Ltd. v. S. S. Railway, Workers’ Union. AIR 1969 SC 513, the Court considering the provisions of Section 10(2)
of Industrial Employment (Standing Orders) Act, 1946, held that the modification in the Standing Orders is permissible and even a workman has a right to contest the draft Standing Orders submitted by the employer for certification on the ground that they are not fair or reasonable and more important still, the right to apply for their modification despite the finality of the order of the Appellate Authority under Section 6 of the Act. In this case, the application was submitted for modification of the Standing Order which provided for the termination of the services of a permanent workman on giving him one month’s notice in writing or one month’s pay in lieu thereof. The Labour Union filed application for modification. The Chief Labour Commissioner modified it by providing in the Standing Order that it will assign the reason for termination of the service. This was upheld by the Apex Court in this decision. The Court rejected the contention on behalf of the employer that an employer has under the law of master and servant the right to terminate the services of his employees by discharge slmpllclter after giving a month’s notice or a month’s pay in lieu thereof and is not required to give reasons for such an order. The Court repelled this contention and observed as follows :
“It must, however, be borne in mind that the right to contract in Industrial matters is no longer an absolute right and Statutes dealing with Industrial matters abound with restrictions on absolute right to contract. The doctrine of hire and fire, for Instance, is now completely abrogated both by statutes and by Industrial adjudication and even where the services of an employee are terminated by an order of discharge slmpllclter, the legality and propriety of such an order can be challenged in Industrial Tribunals. These restrictions on the absolute right to contract are Imposed evidently because security of employment is more and more regarded as one of the necessities for Industrial peace and harmony and the contentment it brings about a prerequisite of social justice.”
12. The difference between the Industrial law and the rules and regulations framed under an Act governing the conditions of service of an employee was considered in L. Michael and another v. M/s. Johnson Pumps Ltd., AIR 1975 SC 661, wherein the services of a workman were terminated by the management and on the matter being referred to the Labour Court, it upheld the order of termination on the finding that the termination order was slmpllclter discharge from service, Hon’ble Justice Krishna Aiyer, as he then was, held that the Labour Court was entitled to examine as to whether the order of termination was slmpllclter discharge or it was passed by way of victimisation. The Court distinguished the case of Delhi Transport Undertaking v. B. S. Gael, AIR 1971 SC 836, on the ground that the decision turned on Regulations framed under the Delhi Road Transport Authority Act, 1950, and not on pure Industrial Law or construction of Standing Order. It was held that the Tribunal has the power and duty to X-ray the order and discover Its true nature. If the object in effect, if the attending circumstances and the ulterior purpose be to dismiss the employee because he is an evil to be eliminated. But if the Management to cover up the Inability to establish by an enquiry. Illegitimately but ingeniously pass an innocent looking order of termination slmpllclter, such action is bad and is liable to be set aside.
13. The Supreme Court considering Rule 40 (1) of the Service Rule framed by Tata Oil Mills Co. Ltd. for its employees providing termination of service of permanent employee on giving a notice, the Supreme Court in Tata Mills Co. Ltd. v. Workman, AIR 1966 SC 1672, held that the Labour Court was entitled to examine as to whether the order was slmpllclter discharge by an employer or it amounts to dismissal which has put on the cloak of a discharge simplicities it further held as under :
“If the Industrial Court decides that the order of discharge is punitive, that it is mala fide, or that it amounts to victimisation for unfair labour practice it is competent to the Industrial Court to set aside the order in a proper course direct the reinstatement of the employee. In some cases the
termination of employees services may appear to the Industrial Court to be capricious also reasonably severe that an inference may legitimately and reasonably drawn that in terminating the services, the employer was not acting bona fide. The test always has been put whether the act of the employer is bona fide or not.”
14. In Air India Corporation, Bombay v. A. Rebello and another, AIR 1972 SC 1343, the action taken by the employer under Regulation 48 of Air India Employees Services Regulations was challenged which provided for termination of its permanent employees simply by giving a notice for the required period or pay in lieu thereof. It was held that if the order of termination is not proved mala fide, the services can be terminated under the Regulations. Even the motive for order, if not mala Jlde, is not open to challenge. The employer can take action under Regulation 48 at Us sweet will without assigning any reason. The Court upheld the order of termination holding that the employer had lost confidence in the workman and this loss of confidence was due to a grave suspiction regarding the workman’s private conduct and behaviour with Air Hostess employed by the appellant therein. The case of Air India Corporation Ltd, (supra) was considered in the case of Municipal Corporation of Greater Bombay v, P. Malvenkar and others, AIR 1978 SC 1380. The Standing Order No. 26 of Bombay Electric Supply and Transport conferred the power to terminate the services of an employee by one calendar month’s written notice or pay in lieu thereof. Clause (2) of Standing Order 21 read with Standing Order 23 provided that the services cannot be terminated except after the disciplinary Inquiry. It was held that merely because the reason for terminating the services of the employee is required to be given does not make the order of termination punitive in character so as to require compliance with the requirement of clause 2 (2) of Standing Order 21 read With Standing Order 23, otherwise the power of termination of services of an employee under Standing Order 26 would be rendered meaningless and futile for in no case It. would be possible to-exerclse such power.
15. In State Bank of India v. Workmen, State Bank of India and another, AIR 1990 SC 2034, the Court considered paragraphs 521 (5) (e) and 521 (10) (c) of the Sastri Award of the All India Industrial Tribunal (Bank Disputes) and on facts it was held that the order was not a retrenchment but was passed by way of punishment and, therefore, the employee was not entitled to retrenchment compensation. In this case the validity of paragraph 522 (1) of Sastri Award conferring the power to terminate the services of permanent employee was not considered.
16. From the analysis of the various decisions, referred to above, it is clear that if there is rule providing termination of the service of permanent employee framed by the State or an authority as contemplated under Article 12 of the Constitution, the said rule can be held to be arbitrary, unreasonable, without any guidelines and vlolative of Articles 14 and 16 of the Constitution of India. But such rule is not invalid under the Industrial Law. The employer has been given a power to terminate the services of a permanent employee even if there is no charge of misconduct against the employee. His service can be terminated if it finds that the performance of the employee is such which does not advance the purpose for which he is employed, he makes himself unsuitable, he has lost the confidence of the employer in regard to performance of the work assigned to him or there are such other reasons which the employer thinks that such employee should not continue in its service in the Interest of the Company. The power of termination, however, is subject to the scrutiny by the Industrial Tribunal/Labour Court or such other appropriate authority which is to examine its effect and can find out as to whether the order of termination was slmpllclter discharge or it was by way of punishment. In this context , it is necessary to quote the observations made in Air India Corporation v. V. A. Rebello, AIR 1972 SC 1343, which is quoted below:–
“Regulation 48 which has been set out earlier as its plain language shows does not lay down or contemplate any defined essential pre-requisite for Invoking its operation. Action under this Regulation can be valldly taken by the employer at his sweet will without assigning any reason. He is not bound to disclose why he does not want to continue in service the employee concerned. It may be conceded that an employer must always have some reason for terminating the services of his employee. Such reasons apart from misconduct may, inter alia, by want of full satisfaction with his overall suitability in the Job assigned to the employee concerned. The fact that the employer is not fully satisfied with the overall result of the performance of his duties by his employee does not necessarily Imply misconduct on his part. The only thing that remains to be seen is if in this case the impugned order is mala fide. The record merely discloses that the appellant had suspicion about the complainant’s suitability for the Job in which he was employed and this led to loss of confidence in him with the result that his services were terminated under Regulation 48. In our view, loss of confidence in such circumstances cannot be considered to be mala Jlde. We are unable to conceive of any rational challenge to the bona fides of the employer in making the Impugned order in above background.”
17. Learned counsel for the respondents submitted that the petitioner has an alternative remedy to raise an Industrial Dispute and the writ petition is not maintainable when the petitioner has alternative remedy. He has placed reliance upon the decision State of U. P. and another v. Labh Chand, AIR 1994 SC 754, wherein it was held that if the Division Bench of the High Court had dismissed the writ petition on the ground not availing of alternative remedy, the second writ petition on the same cause of action was not maintainable. In Swetambar Sthanakwast Jain Samttt v. Alleged Committee of Management, 199G (3) SCC 11, the Court declined to entertain the writ petition when the petitioner had availed alternative remedy having filed the suit.
18. This writ petition was admitted on 20th April 1983 and about 15 years have elapsed. The petition can be disposed of on the undisputed facts and the averments made in the counter-affidavit. It is not a fit case for rejecting the writ petition on the ground of alternative remedy. In Hirday Narain v. I. T. Officer Bareilly, AIR 1971 SC 33, it was held that where the High Court has entertained the writ petition and heard the case on merits. It would not be appropriate to reject the writ petition on the ground that statutory remedy was not availed of.
19. Learned counsel for the respondents then urged that the terms of the award are binding between the parties and if any action has been taken in pursuance of the term of award, unless the petitioner establishes that it is vitiated by mala fide or the order has been passed on extraneous considerations, it is valid in law. It is for him to establish by raising an industrial Dispute and establish his case before the Labour Court.
20. The order of termination does not Indicate any reason for termination of the service. Respondent No. 2 has filed counter-affidavit. It is stated that at the time of seeking appointment, the petitioner represented that he had passed only 8th standard and that his date of birth was 10th January, 1957. In the year 1982, when respondent No. 2 came to know that the date of birth as mentioned by the petitioner was wrong and further he had actually passed 10th standard and not 8th standard, a show cause notice was given to him. The petitioner admitted that he had passed 10th standard and his date of birth was wrongly mentioned. He submitted an apology. In paragraph 10 of the counter-affidavit, it has been stated that on submitting apology by the petitioner, the proceedings were dropped against him.
21. The reason for terminating the services is contained in para 11 of the counter-affidavit it is stated that the petitioner manipulated a false complaint against respondent No. 2 making it to appear that the Liberty Dry Cleaners,
Meerut had complained to him of not having paid the charges of washing clothes. He made Inquiry from Liberty Dry Cleaners and stated that the complaint was not made by him nor it was in his handwriting. He consulted the handwriting experts who opined that the complaint did not contain the handwriting of Mr. Satish Kumar Gupta, the proprietor of Liberty Dry Cleaners. On the other hand, the handwriting and signatures in that complaint were Identical with those of the petitioner. Respondent No. 2 suspected that the petitioner had his hand in lodging the false complaint.
22. The respondent also filed an objection to the application filed by the petitioner for grant of Interim stay. In that objection, he has stated as under:–
“There were really no complaints against respondent No. 2 the Manger of Meerut Branch, where the petitioner was employed. The petitioner was suspected of having manipulated a false complaint against respondent No. 2 making it appear that the Liberty Dry Cleaners of Meerut had complained to the answering respondents about respondent No. 2 not paying them charges for washing clothes.”
The petitioner was suspected to have manipulated false complaint against respondent No. 2 making it to appear that the Liberty Dry Cleaners, Meerut had complained about respondent No. 2 for not paying them charges for washing of clothes.
23. The services of the petitioner were thus terminated on the suspicion that the petitioner had made a complaint that respondent No. 2 had not paid the charges for washing the clothes to the proprietor of the Liberty Dry Cleaners. The petitioner was not afforded any opportunity to show cause as to whether in fact, he had made the complaint against respondent No. 2 which was false to-his knowledge. The respondent resorted to paragraph No. 522 (1) of the Sastry Award wherein his services could be terminated only by giving three months noUce or salary in lieu thereof, the order making it to be a simpllclter order of termination of his service. In fact, it was not a simpliciter termination order but it was passed on the basis of suspected charges of which the petitioner was not given any show cause notice.
24. In view of the above, the writ petition is allowed. The order of termination of the service dated 17.1.1983 is hereby quashed. The petitioner shall be reinstated in service within one month from today.
25. The petitioner, shall, however, not be paid the back wages. The petitioner had worked for hardly four years in the Bank and further his conduct in obtaining the service of the Bank on giving false Information does not Justify his entitlement to back wages. Considering the entire facts and circumstances of the case, it is not a fit case for grant of back wages to the petitioner. He shall, however, be reinstated with continuity in service for all other purposes in the service matter.
26. The parties shall bear their own costs.