PETITIONER: THE TATA OIL MILLS CO., LTD. Vs. RESPONDENT: WORKMEN & ANR. DATE OF JUDGMENT: 15/02/1963 BENCH: GAJENDRAGADKAR, P.B. BENCH: GAJENDRAGADKAR, P.B. HIDAYATULLAH, M. SHAH, J.C. CITATION: 1966 AIR 1672 1964 SCR (2) 125 CITATOR INFO : R 1972 SC 136 (22) D 1991 SC 101 (15,156,179,225) ACT: Industrial Dispute--Termination of service of an employee on payment of one month's salary in lieu of notice--order of termination purported to be discharge under R. 40 (1) of Service Rules--Jurisdiction of the Tribunal to examine whether it amounts to a discharge or dismissal. HEADNOTE: Mr. Banerjee was an employee of the appellant. His services were terminated on the ground that the appellant had lost confidence in him and in lieu of notice he was paid one month's salary. The union to which Mr. Banerjee belonged took up his cause and on the failure of the parties to reach a settlement the matter was referred to the Industrial Tribunal by the Government. The appellant contended before the Tribunal that the order of termination of service of Mr. Banerjee was an order of discharge which it was competent to make under R., 40 (1) 126 of the Service Rules. it was contended by the respondent that the termination was not a discharge simpliciter but was in substance dismissal and that the Tribunal was entitled to consider the propriety of the appellant's action. The Tribunal held that it had jurisdiction to look into the reasons behind the discharge of an employee. On the exa- mination of the evidence the Tribunal found that no malafides on the part of the employer had been proved and that the termination of service did not amount to victimisation or unfair labour practice. Even so it held that the discharge was not justified and directed the reinstatement of Mr. Banerjee. The present appeal is by way of special leave. Before this Court, in addition to the above contention the appellants contented that in the light of the evidence before the Tribunal its finding that the discharge was not justified, was wrong. Held, that in the matter of an order of discharge of an employee the form of the order is not decisive. An Industrial Tribunal has jurisdiction 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 discharge simpliciter. The test always has to be whether the act of the employer is bona fide or whether it is a malafide and colourable exercise of the powers conferred by the terms of contract or by the standing orders. Buckingham & Carnatic Co. Ltd. v. Workmen of the Company 95 (1951) II L. L. J. 314, chartered Bank, Bombay v. Chartered Bank Employees Union (1960) II L. L..T. 222 and U. B. Dutt & Co. (Private) Ltd. v. Its Workmen, (1962) II L.L.J. 374, referred to. Since the reasons given by the Tribunal in support of its conclusion were wholly unsatisfactory its order must be set aside. JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 322 of 1962.
Appeal by special leave from the Award dated September 13,
1961, of the Second Labour Court, West Bengal, in Case No.
VIII-C-40 of 1960.
M .C Setalvad, J. B. Dadachanji, O. C.
Mathur and Ravinder Narain, for the appellant.
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C. K. Daphtary, Solicitor General of India and Janardhan
Sharma, for the respondent No. 1
1963. February 15. The judgment of the Court was delivered
by
GAJENDRAGADKAR J.–Mr. R. K. Banerjee had been employed by
the appellant, the Tata Oil Mills Co. Ltd.as a Salesman on
April 3, 1956, as a probationer and he was confirmed on
November 5, 1956. On December 5, 1959, his services were
terminated and he was informed that the appellant had lost
confidence in him, and so, it bad decided to discharge him.
Accordingly, in lieu of notice, he was paid a month’s salary
and was told that he ceased to be the employee of the appe-
llant as from the date next after he received the order from
the appellant. The discharge of Mr. Banerjee was resented
by the Union to which he belonged and the Union took up his
case. Since the dispute could not be settled amicably, the
Union succeeded in persuading the Government of West Bengal
to refer the dispute for adjudication to the Second Labour
Court on the ground that the said discharge was not
justified. That is how the discharge of Mr. Banerjee became
an industrial dispute between the appellant and the
respondents, its workmen represented by their Union. The
Labour Court which tried the dispute came to the conclusion
that the appellant had failed to justify the discharge of
Mr. Banerjee and so, it has directed the appellant to
reinstate him and pay him full emoluments from the date of
his discharge up to the date of his reinstatement. It is
this order which is challenged by the appellant by its
present appeal brought to this Court by special leave.
The material facts leading to the termination of Mr.
Banerjee’s services lie within a very narrow compass. in
November, 1959 Mr. Banerjee was working in the Assam area
and as such, had to work
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as a Salesman at Dhubri, Bongaigoan, Rangia and Tejpur. The
appellant expected that as its Salesman Mr. Banerjee should
visit dealers in his area and carry on intelligent and
intensive propaganda to popularise the sale of the
appellant’s products. The appellant has a Sales ice in
Calcutta and the manager of the said ice visits the areas
within his jurisdiction to inspect the work of Salesmen.
Accordingly Mr. Gupta who was then the manager of the
Calcutta ice visited the area assigned to Mr. Banerjee, in
the last week of October. He found that Mr. Banerjee was
networking satisfactorily as a Salesman. In particular, he
noticed that whereas Mr. Banerjee had reported to the ice
that the Bongaigoan Stockists had 20 boxes of dried up and
deshaped 501 Special Soap which could not be distributed in
the market he had in fact not opened a single box and had
not cared to satisfy himself that the soaps had either dried
up or had been deshaped. In fact, Mr. Gupta found that the
boxes were intact and he opened them and discovered that
five boxes contained soap which had dried up and had become
deshaped, whereas the 15 other boxes were in good condition.
Thereupon, Mr. Gupta made a report to the zonal Manager on
November 2, 1959, adversely commenting on Mr. Banerjee’s
work. The said report was in due course forwarded to the
Head ice in Bombay. The Head ice then instructed the
Calcutta Sales ice by telephone to send for Mr. Banerjee and
call for his explanation. Accordingly, Mr. Banerjee was
sent for and his explanation taken; Mr. Gupta then made
another report expressing his dissatisfaction with the
explanation given by Mr. Banerjee. This report was sent on
November 24, 1959. The Head ice accepted this report and on
December 5, 1959, issued to Mr, Banerjee the order
terminating his services. That, in brief, is the case set
out by the appellant in support of the action taken by it
against Mr. Banerjee.
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The appellant had alleged that the termination of Mr.
Banerjee’s services was not dismissal but was a discharge
simpliciter, and according to it, the discharge was
justified by the terms of contract between the appellant and
Mr. Banerjee as embodied in Rule 40 (1) of the Service Rules
of -the appellant. The appellant, therefore, urged that the
Labour Court had no jurisdiction to consider the propriety
of the appellant’s action in discharging Mr. Banerjee.
The respondents, on the other hand, contended that the
discharge was not discharge simpliciter but was, in
substance, dismissal, and so, it was urged that the Labour
Court was entitled to consider the propriety of the
appellant’s action. Basing themselves on the plea that the
discharge amounted to dismissal, the respondents pleaded
that the failure of the appellant to hold an enquiry against
Mr. Banerjee introduced a serious infirmity in the order
passed against him; and they argued that the conduct of the
appellant was malafide and the dismissal of Mr. Banerjee
amounted to victimisation.
The Labour Court has found that according to the terms of
contract under which Mr. Banerjee was employed by the
appellant, the appellant was entitled to discharge Mr.
Banerjee from its employment under Rule 40 (1) of the
Service Rules; but it held that merely because the order
served on Mr. Banerjee purported to be an order of
discharge, that would not exclude the jurisdiction of the
Labour Court to examine the substance of the matter. In
fact, Mr. joshi who appeared for the appellant conceded
before the Labour Court that an adjudicating Court can look
into the reasons behind the discharge of an employee. That
is why evidence was led by- both the parties before the
Labour Court. Having considered that evidence, the Labour
Court has found that the respondents’ plea about the mala
fides of the
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appellant was not proved and it held that the termination of
Mr. Banerjee’s services could not be said to amount to an
act of victimisation or an unfair labour practice. Even so,
it held that the discharge was not justified, and so, it,has
directed the appellant to reinstate Mr. Banerjee. It is the
validity of this order that is challenged before us by Mi.
Setalvad on behalf of the appellant.
The true legal position about the Industrial Courts
jurisdiction and authority in dealing with cases of this
kind is no longer in doubt. It is true that in several
cases, contract of employment or provisions in Standing
Orders authorise an industrial employer to terminate the
service, 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 simpli-
citer 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 malafide, or that it amounts to victimisation 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 inherence may legitimately and reasonably be drawn
that in terminating the services, the employer was not
acting bonafide. The test always has to be whether the act
of the employer is bonafide or not. If the act is malafide,
or appears to be a colourable
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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
reinstatement in a fit case. This position was recognised
by the Labour Appellate Tribunal as early as 1951 in
Buckingham and Carnatic Co. Ltd., v. Workers of the Company,
(1), and since then, it has been consistently followed vide
Chartered Bank, Bombay, v. Chartered Bank Employee’s Union
(2) , and U. B. Dutt & Co. (Private) Ltd. v. Its Workmen
(3).
In the present case, the Labour Court has made a definite
finding in favour of -the appellant that its action in
terminating the services of Mr. Banerjee was not malafide
and did not amount to victimisation. Even so, it proceeded
to examine the propriety of the said action and came to the
conclusion that Mr. Banerjee’s discharge from employment did
not appear to it to be justified. In coming to this
conclusion, the Labour Court has given some reasons which
are clearly unsupportable. It has observed, for instance,
that the appellant has not produced any documentary evidence
in support of its allegation against the efficiency of Mr.
Banerjee. This is clearly wrong because the two reports
made by Mr. Gupta in respect of Mr. Banerjee’s conduct do
amount to documentary evidence which cannot be lightly
brushed aside. It has then commented on the fact that the
allegations made by Mr. Gupta against Mr. Banerjee on six
counts are of a general character. This comment again
cannot be justified because Mr. Gupta stated in clear terms
the defects in Mr. Banerjee’s work which had come to his
notice. These defects are specific and it is idle to refuse
to give importance to this evidence merely on the ground
that no specific instances had been cited. In regard .to
the question as to whether the 20 boxes had been opened by
Mr. Banerjee before he made his report
(1) (1951) 11 L.L J. 314. (2) (1960) 11 L.L.J. 221.
(3) (1962)1 L.L J. 374.
132
to the Zonal ice, the Labour Court has observed that on this
point.. there is the evidence of Mr. Banerjee against that
of Mr. Gupta and there was no particular reason to believe
one in preference to the other. Now, it is clear that such
an -observation is hardly of any help because it was
necessary for the Labour Court to express its conclusion on
this point ; it might have believed either Mr. Banerjee or
Mr. Gupta, but by saying that there is no reason why one
should be believed rather than the other, the Labour Court
left this part of the dispute entirely undecided.
Similarly, the Labour Court has accepted the fact that Mr.
Gupta that called for and received Mr. Banerjee’s
explanation and to that extent it has rejected Mr. Banerjee’
suggestion that he had not given any explanation a all ; but
even so, the Labour Court has not considered the effect of
this conclusion on the main controversy between the parties.
In our opinion, therefore, the-reasons given by the Labour
Court in support of its conclusion that the discharge of Mr.
Banerjee was not justified are wholly unsatisfactory and so,
it has become necessary for us to examine the evidence
ourselves.
The first report made by Mr. Gupta expressly states six
grounds on which Mr. Banerjee’s work was found to be
unsatisfactory. Mr. Gupta took the view that Mr. Banerjee
was very slow in his work as a Salesman, that he was not
able to judge the capacity of the dealers and to give them
sufficient stocks in time, that he took no steps to put the
products of the appellant on prominent view in the dealers’
shops, that he wag not looking after the pasting of the
posters, in fact in one place the poster was pasted upside
down, that he was not educating the stockists and dealers as
he could have done and that he was reluctant to put hard and
intelligent work. It is remarkable that when Mr. Banerjee
was asked about this report in cross-examination, he frankly
stated that
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Mr. Gupta was not unfriendly towards him and he was really
unable to say why Mr. Gupta should have made these adverse
comments against his work. In fact, the Labour Court itself
has found that the appellant was not actuated by any
ulterior considerations in discharging Mr. Banerjee. This
report was made by Mr. Gupta soon after he inspected Mc.
Banerjee’s work and there is no reason, whatever, why the
Labour Court should have been reluctant to accept this
report.
Confining ourselves to the main complaint against Mr.
Banerjee that he had not examined even a single box before
he reported that the contents of the said boxes were not
marketable, Mr. Gupta expressly stated that he had seen the
20 boxes and found that none of them had been opened at all.
They were intact in the company’s packing with the straps on
them. Mr Gupta got them opened and found that the contents
to the extent of 5 cases were really damaged and that the
remaining contents were alright and could be marketed at the
company’s prices. Mr. Banerjee stated in his evidence that
he had all the cases opened and he added, as he. had to,
that the said cases were repacked for avoiding further
deterioration. When he was asked how that could be done, he
agreed that the metal straps had to be removed for opening
of the boxes, but he added that he had arranged to have them
restrapped and nailed. It is clear that the strapping is
done in a factory by machines. Mr. Banerjee, however,
suggested that he could manage to get the straps put and
nailed with hands. This evidence is patently unreliable.
Besides, it is significant that when he gave his explanation
to Mr. Gupta Mr. Banerjee admitted that he had opened only 5
or 6 out of the 20 boxes in question though his report
suggested that he had opened all the 20 boxes. Therefore,
there can be no doubt that Mr. Gupta’s statetment is
absolutely true and that Mr. Banerjee had made his report
about the
134
unsatisfactory condition of the contents of the 20 boxes
without as much as opening any one of them.’ That being so,
it is difficult to understand how the Labour Court could
-have come to the conclusion that the order of discharge was
not justified.
The learned Solicitor-General, however, attempted to
argue that there was nothing on the record to show that
the 20 boxes which Mr. Gupta got opened were the same boxes
in respect of which Mr. Banerjee had made his report. We do
not think that having regard to the evidence given by Mr.
Gupta and Mr. Banerjee and the explanation’ offered by the
latter when he was called to Calcutta by Mr. Gupta, there is
any room for such an ingenious suggestion. Both parties
knew that they were talking about the same 20 boxes and so,,
it is futile now to suggest that the 20 boxes which Mr.
Gupta examined were different from the boxes in respect of
which Mr. Banerjee had made his report. It was also
suggested on behalf of the respondents that Mr. Gupta did
not admit that he had received some letters from Mr.
Banerjee in which he had complained that owing to heavy
rains, conditions were not favourable for effective work in
the area entrusted to him. It is true that when Mr. Gupta
was asked about these letters, he said he did not remember
if he had received them. We do not think that the answers
given by Mr. Gupta in respect of these letters can be of any
assistance to the respondents in discrediting Mr. Gupta’s
evidence in any manner. On the whole, we have no hesitation
in holding that the appellant acted bonafide in discharging
Mr. Banerjee’s services when it accepted Mr. Gupta’s report
and concurred with his conclusions that the explanation
given by Mr. Banerjee was not satisfactory.
The result is, the appeal is allowed and the order passed by
the Labour Court directing the
135
appellant to reinstate Mr. Banerjee is set aside. In the
circumstances of the case, there would be no order as to
costs.
Appeal allowed.