PETITIONER: MANAGEMENT OF PANITOLE TEA ESTATE Vs. RESPONDENT: THE WORKMEN DATE OF JUDGMENT18/02/1971 BENCH: DUA, I.D. BENCH: DUA, I.D. SHELAT, J.M. CITATION: 1971 AIR 2171 1971 SCR (3) 774 1971 SCC (1) 742 ACT: Industrial Dispute-Dismissal of workmen-Order of reinstatement by Labour Court-Reinstatement of compensation- Circumstances justifying reinstatement-Constitlution of India-, Art. 136-Interference by Supreme Court. HEADNOTE: In the course of a domestic enquiry on a charge of pilferage against B a' part time clerk who was incharge of a godown of the appellant a chit was produced suggesting collusion with him of H another workman, The appellant instituted a domestic enquiry against the workman and he was dismissed. On a reference of the Industrial Dispute the Labour Court held that the contents of the chit were too vague and were procured only to harass the workman for no fault of his, that the domestic enquiry was violative of the principle of natural justice, and its findings perverse and without any evidence to support them. Consequently it ordered the re- instatement of the workman' The management appealed to his Court contending that instead of reinstatement the workman should be paid compensation. It also raised the plea that it had lost confidence in the workman. HELD : The present case is not one in which this Court would be justified in interfering, on appeal under Art. 136 of the Constitution, with the order of the tribunal. The question whether on setting aside the wrongful dismissal of a workman he should be reinstated or directed to be paid compensation is a matter within the Judicial discretion of the Labour Court or the Tribunal, dealing with the industrial dispute, the general rule in the absence of any special circumstances being of reinstatement. In exercising this discretion, fair play towards the employee on the one hand and interest of the employer, including considerations of discipline in the establishment, on the other, require to be duly safeguarded. This is necessary in the interest both of security of tenure of the employee and of smooth and harmonious working ' of the establishment. Legitimate interests of both of them have to be kept in view if the order is expected to promote the desired objective of industrial peace and maximum possible production. The past record of the employee, the nature of the alleged conduction which the order of the employer is set aside, the nature of the duties performed by the employee concerned and the nature of the industrial establishment are some of the broad relevant factors which require to be taken into consideration. These factors are merely illustrative. Each case has to be decided on its own facts and no hard and fast rule can said down to cover generally all conceivable contingencies. Proper balance has to be maintained between the conflicting claims of the employer and the employee without jeopardising the larger interests of industrial peace and progress. [780 D] There was no evidence to conclude that the management lost confidence in the workman. If the workman is entitled as a general rule to be reinstated after his wrongful dismissal is set aside and on the facts it is not possible to find cogent material on which the establishment can genuinely be considered to have lost confidence in the integrity of the workman, he 775 is entitled to be reinstated. The suggestion that having regard to the nature of the proceedings against the workman the management has lost confidence was acceptable. [782 F] If' the workman's dismissal was wrongful then merely because proceedings for adjudication of the industrial dispute have taken a long time (10 years) was by itself no reason for not directing his reinstatement if it was otherwise justified being in accordance with the normal rule. [782 G] JUDGMENT:
CIVIL APPELLATE JURISDICTION Civil Appeal No. 1137 of
1970.
Appeal by special leave from the award dated October 30,
1969 of the Labour Court of Assam and Dibrugarh in
Reference, No. 20 of 1964.
M. C. Chagla and R. Gopalakrishnan, for the appellant.
K. P. Gupta, for the respondents.
The Judgment of the Court was delivered by
Dun, J. In this appeal special leave was limited to the
question whether relief by way of payment of compensation
should’ not be substituted for the relief by way of
reinstatement granted by the Labour Court to the workman, H.
P. Bhagavati, Store, Clerk.
The Panitole Tea Estate belongs to the Jokai (Assam) Tea
Co., Ltd., Panitole. Depot Line was one of the Out Gardens
under this Tea Estate and it had a separate godown. One B.
K. Borgohain, a part-time clerk was in charge of this
godown. Ammonia sulphate fertiliser was stored in this
godown, 970 bags having been received there between December
12, 1960 and January 5, 1961. Pursuant to receipt of an
anonymous letter that there was pilferage of these bags the
stock was checked and 89 bags were found missing. In the
course of the domestic enquiry against Borgohain a chit (Ex.
12) was produced by him which suggested H. P. Bhagavati’s
collusion with Borgohain in this affair. Bhagavati was
accordingly also charge sheeted and after domestic enquiry
he was dismissed with effect from March 23, 1961. This
order of dismissal of Bhagavati gave rise to an industrial
dispute which was duly referred to the Labour Court of Assam
at Dibrugarh. The Labour Court by its award dated October
30, 1969 held that the contents of Ex. 12 were too vague to
connect Bhagavati with the offence charged. According to
the Labour Court the management had procured this exhibit
only to harass Bhagavati for no fault of his. The domestic
enquiry was also found to be violative of the principle of
natural’
77 6
justice and it conclusions perverse, there being no evidence
to support them. Bhagavati was accordingly held entitled to
reinstatement with all the back wages and benefits. The
present appeal is directed against this order and, as
observed earlier, the only question we have to decide is
whether Bhagavati should be reinstated or he should be paid
compensation instead of reinstatement. The dismissal of
Borgohain, it may be pointed out, was not challenged by him
and that order became final. In this appeal we are not
concerned with his dismissal.
On appeal in this Court Shri Chagla has submitted that the
management has lost confidence in Bhagavati and it would be
unjust and improper to force his reinstatement as a store
clerk ,on the management after a lapse of ten years. The
learned counsel offered to pay to the workman any reasonable
compensation as may be ordered by this Court. Reliance in
support of this submission against the order of
reinstatement was placed on two recent decision of this
Court Ruby General Insurance Co. Ltd. v. Chiopra(1) and
Hindustan Steel Ltd. v. A. K. Roy (2). In the first case
special leave granted by this Court was also limited only to
the question whether the relief granted to the workman
concerned should have been reinstatement or compensation.
On a consideration of the facts and circumstances of that
case this Court had set aside the order of reinstatement and
directed the company to pay compensation to the workman
concerned. ,Our attention has been drawn to some of the
observations made in that case. This Court said there :
“In the present case we are of the view that
reinstatement directed by the tribunal was
inexpedient. The respondent had served the
company in all for a period of twelve months.
It was not as if he had been induced to give
up any employment he was engaged in for
joining the service of the appellant-company.
The company’s establishment in Delhi was
comparatively a small establishment. There
can be no doubt that the position of a
stenographer in such an establishment would be
one of confidence and trust as he would be
taking down dictation and typing out all kinds
of matters including sometimes confidential
and even secret matters. For example, a
report of the working of this branch to the
company’s headquarters by the branch manager,
or a report as regards the working of other
rival insurance companies in Delhi area, or a
report regarding promotion and even demotion
of some of the members of the staff of the
branch office, and such other matters would be
of a highly confidential
(1) [1970] 1 L.L.J. 63.
(2) [1970] 1 L.L.J.228.
nature. If the branch manager were, for cm
reason or the other to lose confidence and
trust in stenographer working under him, it
would obviously be unpossible for him to give
dictation on such matters to such a
stenographer. On the assumption that the
respondent was made to take dictation and type
out letters in connexion with other concerns
in which the appellant company was interested
and the respondent was not paid any extra
remuneration for such work, the respondent
was, on his ‘admission retaining with him
surreptitiously copies of those
communications. As the tribunal has remarked,
the respondent did so in order to preserve
evidence, that he was made to take down
letters relating to concerns other t
han the
appellant-company. Whether in terms of his
employment as a stenographer the regional
manager could take such work or not is a
matter in which we need not go, but he did
admittedly retain with him copies of as many
as 32 such communications which he exhibited
as Exs. W. 10 to W. 42. These copies were
clearly the property of the company which the
respondent in no event could retain in his
possession without the consent of his
employers. If the regional manager were to
entertain a feeling that, if reinstated, the
respondent would in future also retain with
him copies of documents of a confidential
nature whenever the respondent felt that such
retention would be of use or advantage to him,
such a feeling on the part of the regional
manager that he can no longer trust the
respondent with any confidential matter cannot
be regarded as altogether unjustified. The
regional manager might well feel that if the
respondent was capable of collecting evidence
against the company, he might in future
collect perhaps evidence of a more dangerous,
and harmful nature. Obviously, if he cannot
repose confidence in the respondent, if
reinstated, he cannot make any use of his
services, as a stenographer. In the
circumstances, we think that the tribunal
ought not to have directed his reinstatement
despite its conclusion that the termination of
his services was wrongly made, but ought to
have awarded suitable compensation instead.”
in the second case this Court observed
The question, however, still is whether the
tribunal was, in the circumstances of the
case, justified in directing reinstatement.
It is true that some of the decisions of this
Court have laid down that where the discharge
or dismissal of a workman is not legal or
778
justified, the relief which would ordinarily
follow would be reinstatement. The Tribunal,
however, has the discretion to award
compensation instead of reinstatement if the
circumstances of a particular case are unusual
or exceptional so as to make reinstatement
inexpedient or improper. The Tribunal has,
therefore, to exercise its discretion
judicially and in accordance with well recog-
nised principles in that regard and has to
examine carefully the circumstances of each
case and decide whether such a case is one of
those exceptions to the general rule. If the
Tribunal were to exercise its discretion in
disregard of such circumstances or the
principles laid down by this Court it would be
a case either of no exercise of discretion or
of one not legally exercised In either case
the High Court in exercise of its writ
jurisdiction can interfere and cannot be
content by simply saying that since the
Tribunal has exercised its discretion it will
not examine the circumstances of the case to
ascertain whether or not such exercise was
properly and in accordance with the well-
settled principles made. If the High Court
were to do so, it would be a refusal on its
part to exercise jurisdiction.”,
And again:
“The Tribunal no doubt felt that it was not
established whether the investigation and the
report following it were properly done and
made, that the company ought to have disclosed
it to the workman and given him an opportunity
to vindicate himself and that the non-
disclosure of the report made the termination
illegal and unjustified. That may or may not
be right. But what was relevant, at the stage
when the Tribunal came to decide what relief
the workman was entitled to, was the question
whether the management genuinely apprehended
as a result of the report that, it would be
risky to retain the workman in the company
service They may have gone wrong in the manner
of terminating the workman’s service as held
by the Tribunal. But, if the management truly
believed that it was not possible to retain
the workman in the company’s service on
grounds of security and consequently could not
place confidence in him any longer, the
present case, would be one of those
exceptional cases where the general rule as to
reinstatement could not properly be applied.
This of course does not mean that in every
case where the employer says that he has lost
confidence in the workman, and, therefore, has
terminated his service that reinstatement
cannot be granted and the
779
Tribunal has to award compensation. On the
other hand, if on an examination of all the
circumstances of the case, the Tribunal comes
to the conclusion that the apprehensions of
the employer were genuine and the employer
truly felt that it was hazardous or
prejudicial to the interests of the industry
to retain the workman in his service on
grounds of security, the case would be
properly one where compensation would meet the
ends of. justice.
On a consideration of all the circumstances,
the present case, in our’ view, was, one such
‘case., The Tribunal exercised its discretion
mechanically without weighing the
circumstances of the case. That was no
exercise of discretion at all. There is ample
authority, to the effect that if a statutory
tribunal exercises its discretion on the basis
of irrelevant considerations or without regard
to relevant considerations, certiorari may
properly issue to quash its order. (See S. A.
de Smith, Judicial Review of Administrative
Action (2nd ed) pp. 324-325. One such
relevant consideration, the disregard of which
would render its order amenable to
interference, would be the well-settled
principles laid down in decisions binding on
the Tribunal to whom the discretion is
entrusted. The refusal by the High Court to
interfere was equally mechanical and amounted
to refusal to exercise its jurisdiction. Its
order, therefore, becomes liable to
interference.”
Shri Chagla has argued that in the present case there was
exercise of judicial discretion by the Labour, Court and
impugned order was made mechanically without considering the
relevant circumstances and applying its mind to the question
as to which of the two reliefs was more appropriate.
On behalf of the respondents it is submitted that Bhagavati,
the workman concerned in this case, is innocent and the
management was found by the Labour Court on evidence to have
resorted to unfair labour practice. The chit, Ex. 12, was
also held not to be in the handwriting of Bhagavati. It is
further emphasised that criminal proceedings ‘Were also
started against Bhagavati but he was discharged in the
criminal case for want of evidence implicating him. The
respondent’s learned counsel has, in support of his
submission,, drawn our attention to The Punjab National Bank
Ltd. v. Its Workmen(1), M. L. Bose & Co. (P) Ltd. v. Its
Employees(1) and Workmen of United Bleachers (P) Ltd., v.
United Bleachers (P) Ltd . (3), (a decision High Court).
In the Punjab
(1)[1960] 1 S.C.R 806. (2) [1961] 11 L.L.J. 107 (S.C.)
(3)[1968] 1 L.L.J 529
780
National Bank case(1) it was observed that the propriety of
reinstatement in a case of wrongful or illegal dismissal-is’
normally a question of fact and where the industrial
tribunal on a proper consideration of the relevant factors
refuses to pass such an order the Supreme Court would be
reluctant in the absence of any general or substantial
question of law to interfere under Art. 136 of the
Constitution. According to the counsel where reinstatement
has been ordered by the court or tribunal in an industrial
dispute arising out of dismissal of a workman this Court
should, in ‘the absence of special circumstances, decline to
interfere with that order on special leave appeal. Support
from the case of M. L. Bose & Co. (P) Ltd. (2) is sought for
the contention that reinstatement is the normal rule when
dismissal is held to be wrongful and it is immaterial that
the employer has since employed other workmen. The case of
United Bleachers(,) follows the observations of this Court
in the case of Punjab National Bank Ltd. (1), M. L. Bose &
Co. (P) Ltd. (2) and Swadesamitran Ltd. v. Their Workmen(4).
In our opinion the present case is not one in which we would
be justified in interfering on appeal under Art. 136 of the
Constitution with the, order of the Tribunal. The question
whether on setting aside the wrongful dismissal of a workman
he should be reinstated or directed to. be paid compensation
is a matter within the Judicial discretion of the Labour
Court or the Tribunal, dealing with the industrial dispute,
the general rule in the absence of any special circumstances
being of reinstatement. In exercising this discretion,
fairplay towards the employee on the one hand and interest
of the employer, including considerations of discipline in
the establishment, on the other, require to be duly
safeguarded. This is necessary in the interest both of
security of tenure of the employee and of smooth and
harmonious working of the establishment. Legitimate
interests of both of them have to be kept in view it the
order is expected to promote the desired objective of
industrial peace and maximum possible production. The past
record of the employee, the nature of the alleged conduct
for which action was taken against him, the grounds on which
the order of the employer is set aside, the nature of the
duties performed by the employee concerned and the nature of
the industrial establishment are some of the broad relevant
factors which require to be taken into consideration. The
factors just stated are merely illustrative and it ‘is not
possible to exhaustively enumerate them. Each case has to
be decided on its own facts and no hard and fast rule can be
laid down to cover generally all conceivable contingencies.
Proper balance has to be maintained between the conflicting
claims of the employer and the employee
(1) [1960] 1 S.C.R.806. (3) [1968] 1 L.L.J. 529.
(2) [1961] 2 L.L.J.107 (S.C.). (4) [1960] 1 L.L.J.504.
78 1
without jeopardising the larger interests of industrial
peace and progress. In Hindustan Steel Ltd.’s case(1) this
Court substituted the order of reinstatement by an order of
payment of compensation on the ground that the police report
and the security officer’s recommendation to the Company
showed that it was not desirable for reasons of security to
reinstate the employee., In that case it was observed :
“As exceptions to the general rule of
reinstatement, there have been cases where
reinstatement has not been considered as
either desirable or expedient. These were the
cases where there had been strained relations
between the employer and the employee, where
the post held by the aggrieved employee had
been one of trust and confidence or where,
though dismissal or discharge was
unsustainable owing to some infirmity in the
impugned order, the employee was, found to
have been guilty of an activity subversive of
or prejudicial to the interests of the
industry. These cases are to be found in
Assam Oil Co. Ltd. v. Workmen(1); Workmen of
Charottar Gramodhar Sahakari Mandali Ltd. v.-
Charottar Gramodhar Sahakari Mandali Ltd.(3);
Doomur Dulung Tea Estate v. Workmen(4)) and
Ruby General Insurance Co. Ltd. v. P. P.
Chopra(5). These are however, illustrative
case,% where an exception was made to the
general rule. No hard and fast rule as to
which circumstances would in a given case
constitute an exception to the general rule
can possibly be laid down as the Tribunal in
each case keeping the objectives of industrial
adjudication in mind, must in a spirit of
fairness and justice confront the question
whether the circumstances of the case require
that an exception should be made and
compensation would meet the ends of justice.”
The general rule of reinstatement in the absence of special
circumstances was also recognised in the case of Workmen of
Assam Match Co. Ltd. v. The Presiding Officer, Labour Court
A & anr. (6) and has again been affirmed recently in M/s.
Tulsidas Paul v. The Second Labour Court, W.B. & ors. (7).
In Messrs Tulsidas Paul(7) it has been emphasised that no
hard and fast rule as ‘to which circumstances would
establish an exception to the general rule could be laid
down and the Tribunal must In each case decide the question
in a spirit of fairness and justice in keeping with the
objectives of industrial adjudication.
(1) [1970] I.L.L.J. 288. (2) (1969) 3 S.C.R. 457.
(3) C.A. 382/66 d/14.-8-1967. (4) C.A. 5161-1966 d/26-10-
1967
(5) [1970] I.L.L.J.63. (6) C.As. 1070-1071/1963 d/27-10-64.
(7) C.A. 1607/1966 d/3-2-1971.
78 2
In the present case Shri Chagla has laid main stress on
the submission that the management has lost confidence in
Bhagavati’s integrity and it would be wholly improper to
force his rein.statement on the management. The store of
which this workman was in charge, according to the learned
counsel, contains ,goods worth lakhs of rupees and in the
absence of the requisite confidence in his integrity the
order of reinstatement is likely to harm the cause of
industrial peace in the appellant concern. The appellant
has expressed willingness to pay any reasonable, amount by
way of compensation. We have in support of the plea of want
of confidence been taken through the correspondence between
the management and Bhagavati. From that correspondence we
are unable to conclude that the management lost confidence
in Bhagavati because of the lapses mentioned therein. It
appears that it was only when the management suspected
Bhagavati’s collusion with Borgohain that the management
felt that his integrity was questionable. That chit having
been found not to be in Bhagavati’s handwriting and
Bhagavati’s dismissal having been held to be wrongful we are
unable to sustain the plea of want of confidence raised by
Shri Chagla. It is significant that no such plea was sought
to be substantiated before the Labour Court. It is
undoubtedly true that the store of the Tea Estate would
contain goods of substantial value and a person really
suspected of being untrustworthy may not justifiably be
forced on the unwilling employer, but that aspect requires
determination on facts which should have been properly
placed before the Labour Court and a finding secured after
appropriate trial. The suggestion that having regard to the
nature, of the proceedings against Bhagavati, the management
has lost confidence is unacceptable. A similar argument was
repelled in the case of Assam, Match Co.(1). If the workman
is entitled as a general rule to be reinstated after his
wrongful dismissal is set aside and ,on the facts it is not
possible to find cogent material on which the establishment
can genuinely be considered to have lost confidence in the
integrity of the workman he is entitled to be reinstated.
The next. argument that Bhagavati should not be forced on
the management after a lapse of ten years is equally
unacceptable because if his dismissal was wrongful then
merely because proceedings for adjudication of the
industrial dispute have taken a long time is by itself no
reason for not directing his reinstatement if it is other-
wise justified being in accordance with normal rule. A
similar contention was also repelled in the case of Assam
Match Co.(,) In Swadesamitrans case(1) also this Court
observed that in the ,case of wrongful dismissal, discharge
or retrenchment a claim for reinstatement cannot be defeated
merely because time has elapsed or that the employer has
engaged fresh hands. We are, therefore, unable on the
existing record to sustain the appellants sub-
(1) C.As. 1070-1071/1963d/27-10-64.
(2) [1960] I.L.L.J. 504
783
mission that the order of reinstatement made by the Labour
Court suffers from any legal infirmity justifying its
substitution by an order of payment of compensation to the
workman. A suggestion has been thrown by Shri Chagla that
in all probability the employee must have secured employment
elsewhere as he could not have remained idle all these years
an payment of compensation in place of reinstatement would,
therefore, cause him no prejudice. On behalf, of the
employee it is denied that he had been employed anywhere
else during this period. In our opinion, this matter being
controversial should have been raised before the Labour
Court and we are not in a position to express any opinion on
it in the present proceedings.
The appeal accordingly fails and is dismissed. In the cir-
cumstances of the case there will be no order as to costs in
this Court.
Y.P. Appeal dismissed.
L1100Sup.CI/71
784