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Judgment
P.K. Misra, J.—Both these writ appeals, first one by workman and the other one by the management of M/s. Sundaram Motors, a private
limited company, are directed against the common order passed in W.P. Nos. 14608/2006 and 16417 of 2006, dated 27.09.2006 and they were
heard together and therefore dealt with by this common judgment.
The facts in brief are as follows:
The appellant in W.A. No. 1419/2006, hereinafter referred to as ""the workman"", was working under M/s. Sundaram Motors, hereinafter referred
to as ""the management"". A disciplinary proceeding was initiated against the workman and the charge memo dated 11.10.1989 was served on him.
In such charge memo, it was indicated that some employees of the Bangalore Branch have organised and conducted Service Campaign and
indulged in anti-company activities. It is further stated that the delinquent workman had also participated and he was
...found instigating and inciting other workmen/persons in the group, and had taken active part in the said campaign.
The said allegation, if proved would constitute misconducts falling within the following provisions of the certified Standing Orders of our Company.
(i) Wilful disobedience of lawful instructions of the Supervisors vide Clause 18 Sub-clause (1).
(ii) an act of subversive of discipline of the Company vide Clause 18 Sub-clause XI(b).
(iii) an act amounting to breach of trust vide Clause 18 Sub-Clause III(a).
(iv) an act to bring down the image of the Company vide Clause VII(b) and (d).
(b) Deliberately making false, vicious or malicious statements, public or otherwise, against the company or any Officer or employee of the
Company.
(d) Issuing public statements, giving interviews, publishing articles, speaking at public gatherings, etc. Criticising the affairs of the Company which is
likely to bring down the image of the Company.
(v) an act to engage in other employment while in the service of company - vide Clause 18, Sub Clause V(b).
(vi) an act of distributing the notice and pamphlets to the employees without the permission of the Management vide Clause 18 Sub Clause V(e).
(vii) Deliberate Violation of the provisions of the Standing Orders - Clause 18 X....
On the basis of the aforesaid charge memo, the workman was required to furnish his explanation. The workman furnished the following
explanation dated 17.10.1989.
I hereby deny the allegations in your aforesaid Show Cause Memo. I submit that the decision to conduct a Free Service Campaign was taken by
the Sundaram Motors Employees Union as a campaign to focus the public''s attention to the Unfair Labour Practices of your Management and
also to help a pollution free atmosphere.
Conducting a Free Service Campaign by the Sundaram Motors Employees Union on a holiday and participation in such Free Service Campaign is
not a misconduct as per the Standing Orders. It is for this reason you had not proceeded with the earlier Show Cause Memo issued on the same
subject. I deny the allegation that I organised, incited or intimated or instigated the Co-Workers to participate in the Free Service Campaign. This
allegation devoid of any factual particulars is vague and untrue. I have not violated any of the Standing Orders nor have I committed any
misconduct. Hence, kindly do not indulge in abuse of disciplinary powers for extraneous considerations viz. My membership of Sundaram Motors
Employees Union and drop all further action as you did before.
Thereafter, without holding any further enquiry, the management passed a detailed order dated 04.11.1989 dismissing the workman from
service with immediate effect. The workman filed a petition before the Joint Commissioner for Labour regarding conciliation and a reply was given
by the management and the Joint Commissioner of Labour submitted a failure report. Thereafter, the workman initiated an industrial dispute in I.D.
No. 1029/1990 by filing claim statement u/s 2(A)(2) of the Industrial Disputes Act before the Labour Court, Madras. Among other things, it was
contended that the order of dismissal was invalid as no enquiry had been conducted and 22 workmen, including the present workman, had been
dismissed by adopting unfair labour practice within the meaning of Item 5(a), 5(b), 5(d) and 5(f) of V-Schedule to the Industrial Disputes Act,
1947. It was also contended that the order of dismissal was grossly disproportionate to the alleged misconduct.
A counter was filed by the management, wherein it was indicated that there was no necessity to hold a formal enquiry inasmuch as the workman
had admitted his guilt by admitting that he had participated in the Free Service Campaign which was against the interest of the employer
management. It was further indicated that the workman and others had deliberately and wilfully indulged in serious acts of misconduct and they had
threatened to continue the Free Service Campaign which would be against the business interest of the company and since such workman had
admitted the acts of misconduct it was decided to terminate his service as it would not be in the business interest of the company or in the interest
of discipline to retain him in service any longer.
Similarly industrial disputes had been raised by other dismissed workmen. Nine Industrial Disputes, including I.D. No. 1029/1990, had been
taken together and disposed of by the common award dated 24.04.1995 by the Principal Labour Court. During the proceedings, evidence had
been adduced on behalf of various workmen and similarly evidence was adduced on behalf of the management. The Labour Court, after referring
to the petition filed by the workman before the Joint Commissioner of Labour, came to the conclusion that the workmen, including the present
appellant in W.A. No. 1419/2006, had admitted their participation in the Free Service Campaign held on 30.40.1989 and on 01.10.1989. While
dealing with the case of the present workman, the labour court in paragraph 21 of the Common Award referred to the statement made by the
workman while being examined as W.W.3 and concluded that the workman had participated in the Free Service Campaign and the contention of
some of the workmen, including the present workman, that there was no evidence to prove their participation was negatived. The Labour Court
accepted the contention that there was no evidence on the side of the management to prove the allegation that the workman had instigated the
other workers to participate in the Free Service Campaign. Regarding the allegation relating to unfair labour practice, the Labour Court rejected
the contention of the workman and held that the workmen belonging to other Union affiliated to INTUC and the workman belonging to SMEU
were being treated equally and there was no truth in the allegation that the management was adopting unfair labour practice and victimising the
workers who were members of SMEU.
While dealing with the question of disproportionate punishment, the Labour Court concluded that by organising free service campaign the
workmen had jeopardised the fair name of the management and their participation in such free service campaign, inspite of notice by the
management warning them not to participate, amounted to misconduct and the order of dismissal was sustainable in law and the request of the
workman for reinstatement could not be granted. At the same time, the Labour Court however directed payment of compensation to different
workmen depending upon the number of years of service.So far as the present workman appellant is concerned, the Labour Court directed
payment of Rs. 1,25,000/- as compensation.
Against such an common award of the Labour Court, nine workmen had filed writ petitions, including the present workman. The present
workman had filed W.P. No. 14608/1995. The main contention in such writ petition is for reinstatement with backwages. The management also
filed W.P. No. 16417/1995. The main contention of the management in such writ petition was to the effect that having held that the workman had
committed misconduct and the termination order was justified, there was no scope for giving a direction for payment of compensation of Rs.
1,25,000/-.
The dispute raised in other writ petitions by other workmen had been settled by payment of fair higher compensation on the basis of mutual
arrangement. Both the writ petitions were disposed of by the learned Single Judge in the common order dated 27.09.2006. The learned single
Judge had held that the termination order was invalid as no enquiry had been held. Since the workman had reached the age of superannuation, the
learned single Judge observed that the workman was entitled to 50% of backwages from the date of dismissal till the date of superanuation and
other consequential terminal benefits as if he was in continuous service till the date of superannuation. Accordingly, the writ petition filed by the
workman was allowed to the extent indicated, whereas the writ petition No. 16417/1995 filed by the management was disposed of with the
observation that in view of the direction regarding payment of 50% of the entire backwages, there was no need to pay any compensation of Rs.
1,25,000/-.
The workman has filed W.A. No. 1419/2006 contending that in view of the conclusion of the learned Single Judge, there should have been a
direction for payment of the entire backwages. The management has filed W.A. No. 1488/2006 contending that the order of the learned single
Judge setting aside the award of the labour court, so far as the validity of termination is concerned, is not justified.
The learned Counsel appearing for the management has contended that inspite of the warning issued by the management, the workman
participated in the free service campaign which was against the interest of the company as found by the labour court and therefore the learned
single Judge, while deciding the writ petition under Article 226 of the Constitution, should not have re-appreciated the materials on record to come
to any contrary conclusion. It has been further contended that at any rate even assuming that the misconduct had not been proved, it is apparent
that the management had lost confidence in the workman on account of his conduct in participating in such free service campaign and by insisting
that he would also participate in any such campaign in future and therefore instead of deemed reinstatement and payment of terminal benefits, some
reasonable compensation could have been paid.
The learned Counsel appearing for the workman, on the other hand, has submitted that even assuming that the workman had participated in the
free service campaign conducted at Bangalore on a Sunday, which was a non-working day at Madras, it cannot be said that any misconduct had
been committed and the order of termination which passed without holding any enquiry cannot be sustained.
Hindustan Steels Ltd., Rourkela Vs. A.K. Roy and Others, , it was observed:
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''s 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, that present case would be one of those exceptional cases where the general rule
as to reinstatement could not properly be applied. Thus 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 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 circumstance, 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.) 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.
In I.T.C. Ltd., Monghyr, Bihar Vs. Presiding Officer, Labour Court, Patna (Bihar) and Others, , while considering the question whether the
reinstatement should be ordered or compensation should be paid, it was observed:
...the present case the service card of the employee shows that he had committed several faults in the past and was sometimes warned,
sometimes suspended and sometimes reprimanded for all those omissions and commissions. In the incident in question, he was clearly guilty of
neglect of duty in putting wrong slides, although they wee wrongly supplied to him, while packing the cigarettes on the packing machine. Even
shortly before the incident in question, as pointed out to the High Court on behalf of respondent No. 3 himself, he was once warned for absence
from proper place of work without permission and was suspended for three days for an act subversive of discipline before he was dismissed in
June, 1966. We were also informed by the management that respondent No. 3 has superannuated, according to them in December, 1972. The
fact that he has superannuated was not disputed by Mr. Santokh Singh. What was, however, asserted on his behalf was that he had superannuated
not in December, 1972, but about two years later. At the time of the hearing of the appeal, the management offered to pay a very reasonable
amount of compensation and all sums of money due to the workman on account of gratuity and provident fund. We think on the facts and in the
circumstances of this case it is not a fit case where the High Court ought to have sustained the order of reinstatement as passed by the Labour
Court....
In 1985 (II) LLN 181 Chandu Lal v. Management of Pan America World Airways Inc., the Supreme Court observed:
Ordinarily, when the order of termination is quashed a declaration follows that the workman continues to be in employment and is, therefore,
reinstated in service with full back wages as was held by this Court in Hindustan Tin Works Pvt. Ltd. Vs. The Employees of Hindustan Tin Works
Pvt. Ltd. and Others, . This Court held in Jitendra Singh Rathor Vs. Shri Baidyanath Ayurved Bhawan Ltd. and Another, , that u/s 11A of the Act
advisedly wide discretion has been vested in the Tribunal in the matter of awarding relief according to circumstances of the case. In Hindustan
Steels Ltd., Rourkela Vs. A.K. Roy and Others, this Court has held that the Labour Court has discretion to award compensation instead of
reinstatement if the circumstances of a particular case make reinstatement inexpedient or improper. In this case it has been the stand of the
respondent that the management had lost confidence in the appellant and there has been some pleading about the importance of the role of
confidence in the business set-up of the respondent. Without examining the tenability of the stand on loss of confidence as a defence to
reinstatement and accepting the allegations advanced by the respondent that there has been loss of confidence, we are of the view that while the
termination of service of the appellant is held to be bad, he may not be reinstated in service. On the other hand he should be adequately
compensated.
In O.P. Bhandari Vs. Indian Tourism Development Corpn. Ltd. and Others, ., it was observed:
It is in public interest that such undertakings or their Board of Directors are not compelled and obliged to entrust their managements to personnel
in whom, on reasonable grounds, they have no trust or faith and with whom they are in a bona fide manner unable to function harmoniously as a
team working arm-in-arm with success in the aforesaid three-dimensional sense as their common goal. These factors have to be taken into account
by the Court at the time of passing the consequential order, for the Court has full discretion in the matter of granting relief, and the Court can
sculpture the relief to suit the needs of the matter at hand. The Court, if satisfied that ends of justice so demand, can certainly direct that the
employer shall have the option not to reinstate provided the employer pays reasonable compensation as indicated by the Court.
In Workmen Vs. Bharat Fritz Werner (P) Ltd. and Another, , it was observed by the Supreme Court:
Ever since the decision of the Federal Court in Western India Automobile Association v. Industrial Tribunal, Bombay and Ors. 1949 F.C.R.
321 the settled position in law is that the industrial tribunal has the jurisdiction to direct reinstatement in appropriate cases. In a case of wrongful
dismissal the normal rule adopted in industrial adjudication is to order reinstatement. There are, however, exceptions to this rule and even when it is
found that the dismissal was wrongful the workman has been denied reinstatement for the reason that it would not be expedient to direct
reinstatement.
In The Punjab National Bank Ltd. Vs. Its Workmen, this Court has approved the following observations of the Full Bench of the Labour
Appellate Tribunal in Buckingham & Carnatic Mills Ltd. v. Their Workmen 1955 II LLJ 314:
But in so ordering the tribunal is expected to be inspired by a sense of fairplay towards the employee on the one hand and considerations of
discipline in the concern on the other. The past record of the employee the nature or his alleged present lapse and the ground on which the order of
the management is set aside are also relevant factors for consideration.
In that case this Court has laid down:
It is obvious that no hard and fast rule can be laid down in dealing with this problem. Each case must be considered on its own merits, and, in
reaching final decision an attempt must be made to reconcile the conflicting claims made by the employee and the employer. The employee is
entitled to security of service and would be protected against wrongful dismissals, and so the normal rule would be reinstatement in such cases.
Nevertheless in unusual or exceptional cases the tribunal may have to consider whether, in the interest of the industry itself, it would be desirable or
expedient not to direct reinstatement As in many other matters arising before the industrial court for their decision this question also has to be
decided after balancing the relevant factors and without adopting any legalistic or doctrinaire approach.
Coming now to the decisions of the Madras High Court as to the question as to whether reinstatement should be ordered or compensation
should be paid, in W.A. No. 909 of 1983, D. Seeralan v. Management of Facit Asia Ltd. and Anr., disposed on 08.09.1983, it was observed:
Then the question is: Should we order reinstatement of the appellant into the service of the first respondent? The impressions gathered by the first
respondent with regard to the discharge of the functions of the appellant, while he was in service, could not be stated to be a bona fide. That
impression appears to be a bona fide one. Here is a case where the first respondent seemed to have lost the confidence in the appellant''s services
to it and his honesty in the discharge of his duties. It would perpetuate the ruptured feeling between the parties, if we should order reinstatement.
There are other features which also dissuade us from ordering the normal relief of reinstatement.
In Writ Appeal No. 2311 of 1987 Engine Valves Ltd. v. Labour Court, Madras and Anr., disposed on 27.11.1990, the Division Bench
headed by Justice A.S. Anand (His Lordship as he then was) observed:
The decision of this Court in Madras Fertilisers case relied upon by the learned Counsel for the respondents only lays down that where the
Labour Court has not made a proper exercise of the discretion vested in it u/s 11(A) of the Act, this Court in the exercise of its powers under
Article 226 of the Constitution of India can certainly do what the Labour Court failed to do. Having regard to the principles referred to above, we
are of the view that the power and discretion conferred u/s 11(A) of the Act have to be exercised judicially and judiciously and that there should
be sufficient indication in the order itself of the fact that the Court exercising powers u/s 11(A) of the Act was aware of and alive to the norms and
requirements of Section 11(A) of the Act. The Court exercising powers u/s 11(A) of the Act after finding the misconduct to have been proved is
first obliged to advert itself to the question of necessity or desirability to interfere with the punishment imposed by the management and, if the
management could not justify the punishment imposed thereafter it must consider the question as to the relief that is to be granted to the employee.
In so considering the relief to be granted, the Court has an obligation to consider whether the punishment imposed is disproportionate or
shockingly sever to the charges held proved and if so whether a reinstatement has to be ordered or whether any other lesser punishment has to be
imposed. A specific finding must be recorded whether it was expedient and proper to reinstate the employee or whether award of compensation in
lieu of reinstatement will meet the requirements and ends of justice of the case concerned. Absence of reasons to invoke the power and interfere
under provision of Section 11(A) in a particular case would render the very exercise of powers arbitrary and perverse and the order consequently
would stand vitiated.
On the basis of these observations, learned Counsel for the management has submitted that the fact that the workman had participated in the
free service campaign is not in dispute. It is also no longer in dispute that similar campaign had been held earlier and the workmen, both in
Bangalore as well as in Madras, threatened to continue such free service campaign. Obviously, in view of most of the customers availed such free
service were the customers of the company and by running such free service campaign obviously the economic interest of the company would be
hampered. Moreover, if the service rendered is not upto the expectation, the image of the company would otherwise be hampered. Thus, not only
there would be direct pecuniary loss, there would also be possibility of tarnishing the image of the company. In such a background, keeping in view
the fact that participation in the free service campaign was not denied and at any rate no longer in dispute. The order of termination need not have
been interfered with by the learned Single Judge by differing from the conclusion of the Labour Court. Learned Counsel had also submitted that
incase the compensation awarded by the Labour Court is found to be unsuitable, this Court may enhance such compensation by any reasonable
amount.
Counsel for the workman has submitted that mere participation in free service campaign cannot be considered as misconduct as it does not
come within any of the stated misconduct as per the Standing Orders. Moreover, since the gravaman of charge was the alleged instigation, in the
absence of any proof to prove such institution, it cannot be said that the other allegation was serious enough justifying any termination.
We have given our anxious consideration to the rival submissions made at the Bar.
A perusal of the judgment rendered by the learned Single Judge indicates that the learned single Judge has tried to re-appreciate the entire
matter as if he was exercising appellate jurisdiction about the findings of the Labour Court. It is no doubt true, as has been observed by the Labour
Court as well as the learned Single Judge, a formal enquiry had not been held and therefore, it can be concluded that there was no evidence in
support of the allegation that the workman had instigated other workmen to participate. However, the fact remains and there is no dispute that the
workman had participated in such free service campaign not only on 01.10.1989 but previously in April, 1989. Moreover, the finding of the
Labour Court that the management had issued instructions warning the workmen against undertaking such free service campaign has not been
quashed by the learned Single Judge. The undisputed fact therefore is that the workman had participated in the free service campaign raising
protest against the conduct of the management and had also participated in similar campaign on an earlier occasion. In view of such undisputed
facts, merely because no enquiry was held it cannot be said that the order of termination was invalid.
On the other hand, a perusal of the order of the Labour Court indicates that the Labour Court was very much conscious of the fact that in view
of the seriousness of the allegations relating to participation in the free service campaign, it would not be proper to direct any reinstatement in
service and compensation would be payable. This was essentially a discretionary order passed by the Labour Court and in the absence of any
cogent reason, the High Court while in exercising of jurisdiction under Article 226 of the Constitution of India should not have reviewed the matter
like an appeal court. Therefore, in our opinion, the learned Single Judge has exceeded the well defined and well recognised limitation of writ court
under Article 226 in reviewing the matter and directing that the workman was deemed to be in service till the date of superannuation and was
entitled to all other service benefits. Such direction of the learned Single Judge is required to be modified suitably.
In course of hearing, the counsel appearing for the management had produced before us a chart indicating that the compensation awarded to
the other workmen had been enhanced by the management. It s found from record that during pendency of the proceedings before the Labour
Court, direction had been issued regarding payment of last drawn wages to the workmen. Having regard to the years of service rendered by the
workman and his age at the time of the order of termination, we feel, interest of justice would be served by directing payment of Rs. 3,50,000/-
(Rupees three lakhs fifty thousand only) as compensation to the workman.
For the aforesaid reasons, the orders of learned single Judge and the Labour Court are modified and the appellant management is directed to
pay a sum of Rs. 3,50,000/- (Rupees three lakhs and fifty thousand only) to the appellant workman, which may be done within a period of six
weeks from the date of receipt of a copy of this order. Both the Writ Appeals are disposed of accordingly.