Lakshmi Devi Sugar Mills Ltd vs Pt. Ram Sarup (And Connected Appeal)
Rewritten Version Notice: This is a rewritten version of the original judgment.
Court: supreme-court
Case Number: Civil Appeals Nos. 244 and 245 of 1954
Decision Date: 24 October 1956
Coram: Natwarlal H. Bhagwati, S.K. Das, P. Govinda Menon
In the matter of Lakshmi Devi Sugar Mills Ltd. versus Pt. Ram Sarup and the connected appeal, a judgment was delivered on 24 October 1956 by the Supreme Court of India. The bench comprised Justice Natwarlal H. Bhagwati, Justice S.K. Das and Justice P. Govinda Menon, and the decision was reported as 1957 AIR 82 and 1956 SCR 916. The case concerned an application under the Industrial Disputes (Appellate Tribunal) Act, 1950, seeking permission to dismiss workmen, and it involved questions of the Tribunal’s jurisdiction, the scope of an enquiry, the effect of an interim suspension ordered by the employer, and whether such suspension amounted to an illegal lock‑out or to punishment requiring prior permission of the Appellate Tribunal. The relevant statutory provisions cited were sections 22 and 23 of the 1950 Act, section 33(a) and (b) of the Industrial Disputes Act, 1947, and clause l 12 of the standing orders applicable to the undertaking.
The factual backdrop was that seventy‑six employees of the appellant sugar mill had undertaken a tools‑down strike in solidarity with a co‑worker who had earlier been dismissed. Management made repeated attempts to persuade the striking workers to return to work. When those efforts failed, the General Manager issued an order suspending the workers until further orders could be issued. After the mid‑day recess, the management attempted to bar the workers from re‑entering the mill, but the workers entered the premises forcefully, prompting the company to call the police to preserve peace. Subsequent to this incident, the management framed charges of misconduct and insubordination against the workers. The workers were then required to show cause before an open enquiry to be conducted by the General Manager, who also extended the suspension pending the outcome of that enquiry.
The workers adopted a stance of total non‑co‑operation, creating a tense atmosphere that prevented the enquiry from being concluded within the four‑day period prescribed by clause l 12 of the standing orders. Because the enquiry could not be completed in time, the management resolved to dismiss the workers. However, an appeal was pending before the Labour Appellate Tribunal, and the company therefore applied to that Tribunal under section 22 of the Industrial Disputes (Appellate Tribunal) Act, 1950, requesting permission to dismiss the employees. The company also extended the period of suspension while awaiting the Tribunal’s permission.
In response, the workmen filed an application under section 23 of the same Act, asking the Tribunal to direct appropriate action against the company for allegedly violating section 22(b) by effecting an illegal lock‑out and thereby punishing the workers without the required prior permission. The Appellate Tribunal examined the matter and held that the company had failed to conduct the enquiry within the time limit stipulated by clause l 12 of the standing orders. On that ground, the Tribunal dismissed the company’s application for permission to dismiss. It then allowed the workers’ application, concluding that the wholesale suspension of the employees and the prevention of their returning to work after the midday recess constituted an illegal lock‑out and a punitive measure by the company. The Tribunal found that this conduct contravened section 22(b) of the 1950 Act and consequently ordered that the dismissed workers be reinstated to their positions.
The company filed an appeal, asserting that it had neither breached element L 12 of the Standing Orders nor contravened section 22(b) of the Industrial Disputes Act.
The Court examined the submissions and concluded that the company's contentions were correct, consequently finding that the appeal should be allowed.
In assessing whether the company's conduct amounted to a lock‑out, the Court held that the conduct did not fall within the statutory definition of a lock‑out.
Even assuming a lock‑out had occurred, the Court observed that it resulted from an illegal strike by the workmen and therefore could not be deemed illegal under section 24(3) of the Industrial Disputes Act, 1947.
The Court further noted that, even if the company had declared an illegal lock‑out, the law did not require it to obtain prior permission from the Appellate Tribunal under section 22 of the Industrial Disputes (Appellate Tribunal) Act.
A lock‑out, the Court explained, is neither an alteration of conditions of service within the meaning of element (a) nor a discharge or punishment within the meaning of element (b) of section 33 of the Industrial Disputes Act, 1947, nor does it fall within section 22 of the 1950 Act; consequently, no prior permission was mandated.
If a lock‑out were illegal, the workmen would have a remedy under section 26 of the Industrial Disputes Act, and they would also retain the right to refer the dispute for adjudication, as affirmed in Jute Workers Federation, Calcutta v. Clive Jute Mills and Colliery Mazdoor Congress, Asansol v. New Beerbhoom Coal Co. Ltd.
The Court pointed out that the company had been declared a public‑utility concern, and under section 22(1) of the Industrial Disputes Act, 1947 the workers were required to give notice before striking; the tools‑down strike they resorted to was therefore illegal.
Accordingly, the Court held that the company was within its rights to suspend the workmen for participating in the unlawful strike.
The Court rejected the proposition that a failure to hold an enquiry within the four‑day period prescribed by element L 12 of the Standing Orders automatically defeats the company's position before the Appellate Tribunal.
It observed that where the delay in conducting the enquiry was caused by the conduct of the workmen themselves, such delay was sufficiently explained and did not prejudice the company's case.
Where the workmen were given full and free opportunity to attend a duly notified enquiry, to be present and to defend themselves, and they nevertheless failed to appear, the management was entitled to draw its own conclusions on guilt and to determine any consequent disciplinary action.
The Court emphasized that the workmen could not later claim that the enquiry had been unfair, violated natural‑justice principles, or was otherwise invalid.
Finally, the Court stated that no punishment can arise where no offence exists, and that any employer action detrimental to the workers’ interests does not, by itself, constitute punishment under the applicable statutes.
The Court observed that when a worker is subject to an interim order of suspension while an enquiry is pending, or while the Appellate Tribunal’s permission is being considered, the issue of payment for the period of suspension depends upon whether the permission is ultimately granted. Such a suspension, even if it continues for an indefinite period and thereby falls within the operation of section 22 of the Industrial Disputes (Appellate Tribunal) Act, 1950, does not constitute punishment. The Court relied upon the authorities in Champdany Jute Mills and Certain Workmen (1952 1 L.L.J. 554), Joint Steamer Companies and Their Workmen (1954 II L.L.J. 221), Assam Oil Co. Ltd. v. Appalswami (1954 11 L.L.J. 328), and Standard Vacuum Oil Co. v. Gunaseelan, M. G. (1954 II L.L.J. 656) to support this principle.
Under section 22, the Tribunal’s sole function is to determine whether the employer has established a prima‑facie case for removing the ban imposed by the statute. The Tribunal must be satisfied, on the record before it, that a fair enquiry was held in the circumstances, and that the management, acting in good faith, concluded that the worker was guilty of the alleged misconduct and that retaining him would be detrimental to discipline and dangerous to the interests of the company. If these conditions are met, a prima‑facie case is deemed to exist and the Tribunal is bound to permit the employer to impose punishment. The Tribunal is not required to assess whether the punishment is harsh or excessive, except insofar as such assessment might affect the good faith of the management. Its role is limited to granting or refusing the permission sought. Any question regarding the propriety of the punishment itself must be decided by the appropriate industrial tribunal designated by the Government to adjudicate the dispute that arises from the management’s action. The Court further cited Atherton West & Co. Ltd. v. Suti Mills Mazdoor Union and Others (1953 S.C.R. 780), The Automobile Products of India Ltd. v. Bukmaji Bala & Others (1955 1 S.C.R. 1241), Champdany Jute Mills and Shri Alijan (1952 II L.L.J. 629), R.B.S. Lachmandas Mohan Lal & Sons Ltd. and Chini Hill Karmachari Union (1952 II L.L.J. 787) and the Assam Oil Companies’ case (1954 L.A.C. 78) in support of this approach.
The judgment pertains to Civil Appeals Nos. 244 and 245 of 1954, which arise by special leave from the order dated 19 August 1952 of the Labour Appellate Tribunal of India (Calcutta) at Allahabad in Miscellaneous Cases C‑91 and 93 of 1952. Counsel for the appellant included N. C. Chatterji, H. J. Umrigar, J. B. Dadachanji, S. N. Andley and Rameshwar Nath. For the respondents the representatives were Purshottam Tricumdas, R. Ganapathy Iyer and B. P. Maheshwari. The intervenor was represented by M. C. Setalvad, Attorney‑General for India, together with Porus A. Mehta and R. H. Dheber. The judgment was delivered on 24 October 1956 by Justice Bhagwati, addressing the two appeals that arise out of the earlier order of the Labour Appellate Tribunal.
The Labour Appellate Tribunal of India, Lucknow Bench, issued an order in which it rejected the appellant’s application under section 22 of the Industrial Disputes (Appellate Tribunal) Act, 1950, for permission to dismiss the respondents, and it allowed the respondents’ application under section 23 of the same Act for reinstatement. The respondents comprised seventy‑six employees of the appellant, a limited company operating sugar mills at the village of Chitauni in the district of Deoria. These employees were engaged in the engineering department of the mills, working in the mill house, boiling‑house and workshop sections. A dispute existed between the appellant and its workmen, and on the date relevant to the proceedings, namely 27 May 1952, an appeal was pending before the Labour Appellate Tribunal and was recorded under the reference Cal‑ 101/51. It emerged that an employee named Motilal Singh had been dismissed by the appellant some time before that date. After his dismissal, Motilal Singh had been encouraging the other workmen to join him in a common cause, and at a meeting held on the night prior, the workmen had apparently decided to take some form of action. On the morning of 27 May 1952, when the workmen entered the mills, the seventy‑six workers, although they reported to their respective sections of the engineering department, did not begin work at the scheduled start time of 7 a.m. The engineers in charge of each section asked the workmen why they were not commencing work and became aware that the workmen intended to stage a tools‑down strike. The engineers reported this information to the Chief Engineer, who then sent a slip to the General Manager stating that the workers had gone on a tools‑down strike. The General Manager personally proceeded to the workshop, mill house and boiling‑house and urged the workmen not to continue with the strike, but the workmen ignored his request. Subsequently, the General Manager instructed the Chief Engineer to persuade the workmen to resume work and to allow them a period of roughly two hours, until 10:30 a.m., after which the Chief Engineer was to report whether the workmen had still failed to resume work. The efforts of both the Chief Engineer and the sectional engineers proved ineffective, and the seventy‑six workmen persisted in refusing to work. As a result, the sectional engineers prepared reports, transmitted through the Chief Engineer, naming the workmen in each section who had remained on strike from 7 a.m. that day. These reports were signed by the Chief Engineer and forwarded to the General Manager, who, in turn, issued an order at about 10:30 a.m. suspending the seventy‑six workmen until further notice. The suspension order was communicated to the workmen through their sectional heads and was also posted on the notice board of the mills. A recess took place between 11 a.m. and 1 p.m., and when the gates reopened...
At one o’clock in the afternoon the same seventy‑six workmen, ignoring the cautions issued by the gatekeepers and the Jemadar, forced their way back into the mill premises. They entered the individual sections to which they were assigned and adopted a threatening stance. The engineers responsible for each section immediately reported this development to the General Manager; these reports were subsequently signed by the Chief Engineer and forwarded to the General Manager. The manner in which the workmen entered their sections and continued to threaten violence created a highly volatile situation. In order to prevent any outbreak of violence or damage to the mill property, the management decided to summon the police. The police arrived at five o’clock in the evening and were able to restore order. Although no disorder actually occurred on that day, the management regarded the incident with seriousness. Consequently, the following day the General Manager sought counsel from the Regional Conciliation Officer concerning the possible dismissal of the workmen. The Regional Conciliation Officer informed the General Manager that, because an appeal was pending before the Labour Appellate Tribunal, he lacked the authority to consider any application for permission to dismiss the workmen and directed the General Manager to approach the Labour Appellate Tribunal for any such action.
Subsequently, the workmen received a letter dated 28 May 1952 from the General Secretary of the Chini Mill Mazdoor Sangh. The letter stated that the workmen had arrived at the mill gates at the usual time of seven a.m. on the day in question, but were denied entry to the premises. The letter accused the management of intending to victimise the workmen on the ground of an alleged tools‑down strike, and asserted that the workmen had neither participated in nor intended to participate in any such strike. The letter further advised the workmen to return to their quarters in order to preserve peace. In its concluding paragraph, the letter warned the General Manager that if he failed to correct what was described as an illegal mistake and to restore the workmen to their duties, he would bear responsibility for any breach of peace that might follow. After receiving this communication, the management judged that the workmen might resort to violent measures and that a breach of peace was likely. Accordingly, the management maintained police precautions and, after a period of waiting, the General Manager issued a charge‑sheet to the seventy‑six workmen on 2 June 1952. The charge‑sheet alleged that the workmen had committed misconduct as defined in clauses L.I (a) and (b) and had shown willful insubordination as defined in clauses L.I (a), (b) and (w) of the Standing Orders. The General Manager summoned the workmen to show cause within twenty‑four hours of receiving the charge‑sheet why disciplinary action should not be taken against them, and informed them that an open enquiry would be held at eight o’clock in the morning on 6 June 1952. He also indicated that, should the workmen or their union give notice to appear earlier, the enquiry could be conducted at an earlier date, but that the workmen would remain suspended until the enquiry was concluded.
On 6 June 1952, the General Manager announced that a disciplinary enquiry would commence at eight a.m. He further informed the workmen that, should they collectively agree to appear before that date, the enquiry could be advanced to an earlier time, provided that either the workers themselves or their union sent a prior notification of such a request. Until the conclusion of the enquiry, the workers were to remain suspended from duties. In response, the workmen sent uniform letters to the General Manager in which they denied the occurrence of any tools‑down strike on 27 May 1952. They alleged that the sectional heads and the Chief Engineer had conspired together “under some mysterious preconceived plans.” The letters also asserted that holding an enquiry on the eleventh day of their suspension would serve no useful purpose. Moreover, the workmen contended that an indefinite suspension while an appeal was pending before the Labour Appellate Tribunal and the Reconciliation Board was illegal, unjustified, and in clear violation of the Standing Orders. By a further letter dated 5 June 1952, addressed again to the General Manager, the workmen expressed their belief that an enquiry conducted by management would not yield justice. They consequently requested that an impartial tribunal be appointed to investigate the matter. Despite these objections, the management proceeded with the enquiry at the scheduled time of eight a.m. on 6 June 1952. The workmen failed to cooperate and did not appear before the enquiry. The General Manager then issued an immediate letter to the workmen, recording that, in spite of the earlier instructions, the workmen had disobeyed the order and had not presented themselves at the designated time and place for the enquiry into the alleged tools‑down strike. He warned that such non‑appearance rendered them liable to dismissal for insubordination and informed them that the management was applying to the appropriate authorities for permission to dismiss them; until such permission was received, the workmen would continue to be suspended. The workmen received this letter at nine a.m. on the same day and, through the General Secretary of the Chini Mill Mazdoor Sangh, replied that they had previously demanded an investigation by an impartial tribunal. As no such tribunal had been appointed, they stated that they were unwilling to present themselves or submit a defence at an enquiry conducted solely by management. Subsequently, the appellant filed an application under section 22 of the Industrial Disputes Act before the Labour Appellate Tribunal of India, Lucknow Bench, seeking permission to dismiss the 76 workmen. In an affidavit supporting this application, the appellant set out in full the facts previously mentioned. The affidavit emphasised that the management had considered the workmen’s explanations, had afforded every possible opportunity for them to explain their conduct, and, nevertheless, due to the unreasonable attitude adopted by the workmen, had found them guilty of misconduct under clauses L.I(a), (b) and (w) of the Standing Orders, concluding that any further employment of the workmen would be untenable.
The workmen, on 9 June 1952, submitted an application under section 23 of the Industrial Disputes Act seeking appropriate relief against the appellant. In that application they alleged that the appellant had violated section 22(b) of the Act by imposing a punishment that amounted to harassment. They claimed that the appellant had placed the workmen on an illegal lookout for an indefinite period starting on 27 May 1952, without first obtaining the required permission from the Labour Appellate Tribunal, and that this conduct was contrary to law and was undertaken in bad faith, thereby breaching the Standing Orders and furthering the management’s anti‑trade union activities. Both the workmen and the management filed counter‑affidavits in response to the respective applications. The Labour Appellate Tribunal examined the matter and concluded that the appellant had failed to comply strictly with clause L.12 of the Standing Orders; consequently the appellant was not entitled to seek permission to dismiss the 76 workmen and the Tribunal dismissed the appellant’s application under section 22. Regarding the workmen’s application under section 23, the Tribunal held that the complete suspension of the 76 workmen and the prevention of their return to work after 1 p.m. following the lunch break constituted a lockout. The Tribunal further observed that this action amounted to punishment of the workers, whether by dismissal or otherwise, and therefore violated section 22(b) of the Act. As a result, the Tribunal ordered that the workmen be reinstated provided they reported to the General Manager’s office during regular office hours on any day within fifteen days of the order. In addition, the Tribunal directed that the appellant pay the workmen half of their salary and allowances for the period from the date of their suspension until the date they were reinstated.
Counsel for the appellant, Shri N. C. Chatterjee, vigorously argued before the Court that the workmen had initiated a tools‑down strike, which he characterized as an illegal strike, and that the appellant was therefore justified in suspending the pending enquiry and the application for permission to dismiss the workmen pending before the Labour Appellate Tribunal. He contended that even if the appellant’s actions were deemed a lockout, such a lockout was a direct consequence of the illegal strike undertaken by the workmen and could not be considered illegal in itself. Counsel further submitted that the management had conducted an enquiry into the illegal strike and, upon its conclusion, found the workmen guilty of misconduct and insubordination as defined in clause L.I (a), (b) and (w) of the Standing Orders. On that basis, the appellant had reasonably concluded that retaining the workmen in employment would be extremely detrimental to discipline and dangerous to the interests of the industry. Additionally, counsel asserted that the delay in holding the enquiry was not unreasonable; the suspension of the workmen for more than four days was necessitated by the hostile atmosphere created by the workers’ non‑cooperation, which made it impossible to conduct the enquiry within the four‑day period.
The appellant argued that the delay in holding an enquiry was not unreasonable. It maintained that suspending the workmen for more than four days was justified because the workers’ refusal to cooperate had created an atmosphere so tense that an enquiry could not be conducted within that short period. Accordingly, the appellant contended that there was no violation of clause L.12 of the Standing Orders and that the Labour Appellate Tribunal erred in refusing to grant the application filed under section 22 of the Act. The appellant further submitted that Civil Appeal No. 245 of 1954, which challenged the order of the Labour Appellate Tribunal made under section 23 of the Act, could be disposed of immediately.
The Labour Appellate Tribunal had held that the appellant’s action in preventing the workmen from resuming work after 1 p.m. on 27 May 1952 fell within the statutory definition of a lockout. Because the workmen were employed in a public‑utility concern, the Tribunal concluded that such a lockout would be illegal without the requisite notice and that the conduct amounted to punishment of the workers, thereby contravening section 22(b) of the Act. The Court, however, found that the Tribunal’s conclusion was based on a fundamental misapprehension of the entire situation. The Tribunal itself had recorded that, “as a matter of fact the management never thought of a lockout. Their idea was to suspend the suspected persons pending enquiry for which they gave a notice.” If that statement accurately described the management’s intention, then deeming the conduct a lockout was wholly untenable. Moreover, the Tribunal admitted its inability to reach a definite finding about the circumstances on 27 May 1952, observing, “We have got a number of affidavits in support of the parties’ case and there is oath against oath. We do not find ourselves in a position to hold definitely as to what was the exact situation. But it does appear to us that a mountain has been made of a mole hill and conclusions have been arrived at without going deep into the matter.” The Court emphasized that it was the Tribunal’s duty to record a factual finding concerning the situation on that day, a duty it had neglected. Consequently, the Tribunal’s final conclusion that the management’s conduct amounted to a lockout contradicted its earlier acknowledgment that no lockout had been contemplated. The Court noted that it had been taken through the entire evidence by counsel for the appellant.
The record contained clear documentary evidence that seventy‑six workmen had initiated a tools‑down strike at seven o’clock in the morning on 27 May 1952. The reports prepared by the section engineers and forwarded to the General Manager through the Chief Engineer expressly stated that the workmen in question had indeed resorted to a tools‑down strike, and the General Manager compiled the list of the seventy‑six workmen for suspension on the basis of those reports. Further reports were sent by the same section engineers to the General Manager via the Chief Engineer in the afternoon of the same day, and these reports likewise asserted that the workmen had been instructed not to enter the workshop, the boiling house and the mill house after one p.m., yet they entered those areas while threatening violence. An attempt was made to accuse the section engineers and the Chief Engineer of conspiring “under some mysterious preconceived plans,” but that accusation rested solely on a bare allegation and was not supported by any tangible evidence. Although there was some inconsistency in the evidence regarding the exact time the General Manager gave the notice of suspension to the workmen and the time that notice was displayed on the appellant’s notice‑board, the documentary material referred to above makes it abundantly clear that the seventy‑six workmen began a tools‑down strike at seven a.m. on 27 May 1952, that they were suspended pending further orders immediately after the General Manager received the first set of engineers’ reports, and that they were barred from entering the premises at one p.m. yet entered nevertheless while threatening violence. If these factual findings are correct, it follows that the appellant did not declare a lockout, and consequently no illegal lockout can be said to have occurred. The workmen had, in fact, engaged in an illegal strike, and the General Manager correctly ordered their suspension pending further orders, which meant pending an enquiry into their conduct and, if the management deemed fit, the permission to dismiss them as a result of that enquiry. Because no illegal lockout existed, the conclusion reached by the Labour Appellate Tribunal to that effect was wholly unjustified. Even assuming, for the sake of argument, that a lockout had been declared as the Tribunal concluded, that lockout would have arisen as a consequence of the illegal strike and, under section 24(3) of the Industrial Disputes Act, 1947, could not be characterised as an illegal lockout. Moreover, a more fundamental objection arises: even if the appellant were held responsible for declaring an illegal lockout, such a lockout would not fall within the prohibition of section 22 of the Act. The Labour Appellate Tribunal had before it an earlier decision of its own.
In the earlier decision of the Labour Appellate Tribunal in Jute Workers Federation, Calcutta v. Clive Jute Mills[1951] II L.L.J. 344, the Tribunal examined a similar issue concerning the effect of a lockout on the application of section 33 of the Industrial Disputes Act, 1947. That case involved a lockout that affected four thousand workers of the appellant company, and the employer initially contended that the lockout did not violate the provisions of section 33. The Tribunal was required to consider three distinct questions: first, whether the lockout actually altered the conditions of service of the workmen to their detriment; second, whether the lockout operated as a discharge of the workmen; and third, whether the lockout amounted to a punishment of the workmen. After careful analysis, the Tribunal concluded that a lockout could not be said to discharge the employees because a lockout does not automatically terminate their employment. Likewise, the Tribunal held that a lockout did not constitute a punishment, since punishment presupposes an offence or misconduct on the part of the employee. The Tribunal further observed that a lockout is generally employed as a security measure by the employer and, in certain circumstances, may be used as a response to a strike, but such use does not, by itself, bring the employer within the prohibition of clause 33(b) of the Act.
Turning to the question of whether a lockout triggers the operation of section 33(a), the Tribunal reasoned that the mere existence of a lockout does not automatically result in the termination of the employees’ services. The critical issue, therefore, was whether the lockout altered any condition of service to the workers’ prejudice. The trade union argued that the conditions of service were indeed altered because the workers did not receive their wages during the period of the lockout and faced the possibility of losing those wages. The Tribunal rejected this contention, holding that while the loss of wages could represent an alteration of service conditions, the question of whether the workers would be entitled to payment during the lockout could not be answered with certainty. The Tribunal explained that such entitlement would depend on a variety of considerations that could not be predetermined. Consequently, the Tribunal stated that for an employer’s act to fall within section 33(a), the act must directly and factually alter the conditions of service to the prejudice of the workmen at the moment the lockout is declared. Because the possibility of receiving pay remained uncertain, the lockout might or might not prejudice the workers, and therefore the mere declaration of a lockout does not attract section 33(a). In sum, the Tribunal concluded that neither clause 33(a) nor clause 33(b) was violated by the employer’s declaration of the lockout. This reasoning was subsequently followed in the case of Colliery Mazdoor Congress, Asansol v. New Beerbhoom Coal Co. Ltd.[1952] L.A.C. 219, where the Tribunal similarly held that a lockout did not fall within the ambit of section 33, and consequently no permission under that section was required for the employer to declare a lockout.
In the earlier decisions of Beerbhoom Coal Co. Ltd. (1) and the Labour Appellate Tribunal reported in 11952 L A.C. 219, the Tribunal held that a lockout did not fall within the scope of section 33, and consequently, no permission under that provision was required to declare a lockout. The Court agreed with the reasoning employed in those cases and expressed the view that a lockout does not constitute an alteration to the workmen’s conditions of service that would prejudice them within the meaning of clause (a), nor does it amount to a discharge or punishment, whether by dismissal or otherwise, within the meaning of clause (b) of section 33 of the Industrial Disputes Act 1947. The same conclusion applied to section 22 of the Industrial Disputes (Appellate Tribunal) Act 1950. Accordingly, the Court held that no prior permission from the Conciliation Officer, Board or Tribunal, as the situation demanded, was necessary before a lockout could be declared.
The Court explained that if a lockout is lawful, no further question arises. However, if a lockout is unlawful, the remedy is provided by section 26 of the Industrial Disputes Act 1947, and the workmen affected by the lockout remain entitled to refer the industrial dispute that has arisen between themselves and the employer to the appropriate adjudicating authority by following the prescribed procedure. The Court then observed that the Labour Appellate Tribunal had erred clearly when it concluded that the appellant’s conduct fell within the definition of a lockout and that such conduct amounted to punishment of the workmen, whether by dismissal or otherwise, thereby violating section 22(b) of the Act. Because of this error, the Court held that the respondents’ application under section 23 of the Act ought to have been dismissed by the Tribunal.
Consequently, the Court allowed Civil Appeal No. 245 of 1954, set aside the Tribunal’s order that had reinstated the respondents in the appellant’s service, and dismissed the application under section 23. Turning to Civil Appeal No. 244 of 1954, the Court identified the primary issue as whether the respondents had engaged in an illegal strike. The Court recalled that seventy‑six workmen had gone on a tools‑down strike beginning at 7 a.m. on 27 May 1952, and that the workmen persisted in their stance despite repeated appeals from the appellant’s Chief Engineer and General Manager. Since the appellant had been declared a public utility, the workmen were required to give notice of any strike in accordance with section 22(1) of the Industrial Disputes Act 1947. Their failure to do so rendered the tools‑down strike illegal. The Court further noted that the brief duration of the strike, which lasted only until 10:30 a.m., did not excuse the respondents from the consequences of having resorted to an illegal strike, given their expressed intention to continue the industrial action.
The striking workers had resolved not to resume work until the plan they had agreed upon at a meeting held the previous night was carried out. The strike that the workmen instituted was of an indefinite duration, and because management’s attempts to persuade the workmen to return to work had failed, management was well within its rights to suspend those workmen pending further orders. This principle was endorsed in the decision of Buckingham and Carnatic Co. Ltd. v. Workers of the Buckingham and Carnatic Co. Ltd. (1953) 219.
The Labour Appellate Tribunal, however, did not address the question of the management’s right to suspend the workmen. Instead, it confined its consideration to the alleged non‑compliance with clause L. 12 of the Standing Orders, treating that alleged breach as determinative of the entire enquiry. The Tribunal observed that although the delay in holding the enquiry was not unreasonable, the management had nevertheless violated the literal wording of the rule. It further held that there was no sufficient reason to extend the period of suspension beyond the four‑day limit provided in clause L. 12, because the tension created by the workers’ non‑co‑operation was not considered adequate to preclude the management from collecting the material required for the enquiry within those four days. This line of reasoning was found to be unsound.
Having already concluded that the delay was not unreasonable, the Tribunal could not logically also conclude that the tension created by the workers’ non‑co‑operation was insufficient to justify an extension of the suspension. The record showed that the workmen had forcibly entered the mill premises despite warnings from the watchmen and the Jemadar, and had entered the workshop, the boiling house and the mill house, where they remained and threatened violence. In a letter dated 3 June 1952, the workmen threatened the General Manager, stating that if he did not correct his alleged illegal mistakes and reinstate the workmen, the workmen would be responsible for any breach of peace. These facts demonstrated the hostile mentality of the workmen and gave the management a genuine apprehension of a breach of peace.
If the atmosphere of tension described above resulted from the workers’ refusal to cooperate, the management was fully justified in postponing the enquiry for a few days and keeping the workmen under suspension. The delay in preparing the charge‑sheets and issuing notice of the enquiry on 2 June 1952 was therefore adequately explained; the responsibility for that delay lay with the workmen, not with the management. Consequently, it was not proper for the workmen to protest the delay in the enquiry and to cite their suspension beyond the four‑day period as an excuse for not attending the enquiry. As a matter of fact, the management intimated to the workmen that – in spite of June
In this case the management indicated that, although the open enquiry had been scheduled for 6 June 1952, it would be prepared to commence the enquiry earlier if it received a request either from the workmen themselves or from their Union. Rather than responding to this offer, the workmen continued to demand an independent enquiry and refused to cooperate with the management’s proceedings, which were ultimately conducted as notified at eight o’clock in the morning on 6 June 1952. The Court was of the view that, given these circumstances, the appellant could not be said to have violated clause 12 of the Standing Orders, and that the Labour Appellate Tribunal erred in concluding otherwise and in dismissing the appellant’s application under section 22 without conducting any further inquiry into the facts of the case. It appeared that the Tribunal had been unable to determine with certainty what had actually occurred on 27 May 1952. The Court observed that, had the Tribunal examined the matter properly, it would have found that the respondents had, in fact, engaged in an illegal strike beginning at seven a.m. on 27 May 1952, and that no breach of clause 12 by the appellant had taken place. The next issue for determination was whether the enquiry held by the management on 6 June 1952 was a fair enquiry and whether the General Manager had observed the principles of natural justice in conducting that enquiry. The management had given the respondents proper notice of the enquiry by a letter dated 2 June 1952. Because the respondents did not take advantage of the opportunity to present themselves and defend their actions at the enquiry, the Court held that the blame lay with the respondents themselves. It was within the management’s authority to hold such an enquiry after giving adequate notice and to reach its own conclusion as to whether the respondents were guilty of the charges brought against them. If the respondents were afforded a full and free opportunity to appear and to defend themselves, the enquiry could not be said to be unfair. Accordingly, no principles of natural justice were violated, and the management was free to decide on the respondents’ culpability and to determine the appropriate punishment for the misconduct and insubordination established against them. The Court further noted that, but for the prohibition imposed by section 22 of the Act, the management would have been entitled to impose the punishment and dismiss the respondents without any further requirement, provided it honestly concluded that dismissal was the only suitable sanction in the circumstances.
In this case the management reached the conclusion that dismissal of the workmen was the sole appropriate punishment under the circumstances. Had the dismissal been effected, the workmen would have been entitled to refer the resulting industrial dispute to the appropriate adjudicatory process prescribed in the Industrial Disputes Act, 1947. Accordingly, the Industrial Tribunal appointed by the Government would have examined all the facts and could have granted the workmen the relief to which they were lawfully entitled. However, this avenue was unavailable to the appellant because an appeal was already pending before the Labour Appellate Tribunal. Consequently, after completing its internal enquiry, the appellant was limited to seeking the Tribunal’s permission to dismiss the workmen under section 22 of the Act. The appellant submitted such an application on 8 June 1952.
The workmen could not at that stage, given their conduct throughout the enquiry, correctly argue that the enquiry itself had been unfair, biased, or that the principles of natural justice had been breached by the appellant’s General Manager. Nonetheless, on their behalf it was contended that the suspension imposed for an indefinite period—exceeding the four‑day limit specified in clause L.12 of the Standing Orders—constituted a punitive measure. The respondents asserted that the indefinite suspension, which entailed loss of wages and continual harassment, could not be characterized as anything other than punishment and that the appellant lacked authority to impose such punishment without the Tribunal’s permission.
The Court rejected this contention. It observed that the Labour Appellate Tribunal had correctly held that suspension without pay, pending both the enquiry and the Tribunal’s permission under the relevant statutory provision, does not amount to punishment. Such suspension is merely an interim measure that remains in force until the application for permission to impose a penalty is determined and the Tribunal issues its order. If the Tribunal grants permission, the workman continues to remain unpaid during the suspension; if permission is denied, the workman must be paid for the entire period of suspension. There is no concept of a “contingent punishment” for a workman, and therefore the suspension cannot be deemed a punishment at all.
The Court further explained that the suspension would necessarily be of indefinite duration because obtaining written permission from the Tribunal inevitably involves delay, and no Tribunal is likely to issue an order without first providing notice and hearing all parties concerned. Accordingly, orders of suspension are intended solely as security or precautionary measures, not as punishments in themselves.
The Court observed that safeguarding the interests of the industry and of its employees often required immediate protective measures, especially after an incident, because any delay, however brief, could frustrate the purpose of those measures. Accordingly, it was necessary to implement such measures promptly and to suspend the workman while the enquiry proceeded and while the employer sought the appropriate Tribunal’s permission to dismiss the workman if the enquiry concluded that dismissal was warranted. The Court emphasized that the suspension itself did not constitute a punishment. It explained that the ordinary dictionary meaning of the word “punish” is “to cause the offender to suffer for the offence” or “to inflict penalty on the offender” or “to inflict penalty for the offence,” as stated in the Concise Oxford Dictionary, fourth edition. The Court further noted another definition from the Law Lexicon by P.R. Aiyar, 1943 edition, describing punishment as a penalty for a transgression of law, and observing that the term “punish” implies that an offence has been committed by the person who is punished. Consequently, any employer’s action that adversely affected the workman’s interests would not be punish‑mental so long as no offence had been established against the workman. The Court therefore held that suspension under such circumstances could not be regarded as a punishment, even though the suspension might be of indefinite duration, and consequently it would not trigger the operation of section 22 of the Industrial Disputes Act. The Court rejected the contention that suspension without pay, even for an indefinite period pending an enquiry or pending the Tribunal’s permission to dismiss, amounted to a punishment requiring section 22 permission before being imposed on the workman. The Court supported this view by citing earlier decisions such as Champdany Jute Mills and Certain Workmen (1), Joint Steamer Companies and Their Workmen (2), Assam Oil Co. Ltd. v. Appalswami (3), and Standard Vacuum Oil Co. v. Gunaseelan, M. O. (4). The Court also referred to its own earlier rulings on the scope of the enquiry before the Labour Appellate Tribunal under section 22, namely Atherton West & Co. Ltd. v. Suti Mill Mazdoor Union and Others (5) and The Automobile Products of India Ltd. v. Rukmaji Bala & Others (6). The Court clarified that the Tribunal hearing an application under that section does not adjudicate any industrial dispute between the employer and the workman; rather, it merely considers whether the ban imposed on the employer—preventing alteration of employment conditions to the prejudice of the workman, or his discharge or punishment during the pendency of proceedings—should be lifted. The employer must first establish a prima facie case for lifting the ban, and the Tribunal’s limited jurisdiction extends only to granting or refusing permission provided the employer is not acting in bad faith or engaging in unfair practice or victimisation. The Court concluded that the Tribunal cannot impose any conditions on the employer before granting permission, nor can it substitute a different prayer for the one set out in the employer’s application.
The Tribunal could not impose any condition on the employer before granting permission, nor could it substitute a different prayer for the one set out in the employer’s application. If the Tribunal granted permission, the statutory ban would be lifted and the employer would be free, if he so chose, to impose the punishment on the workman. The authority for such punishment was supported by earlier decisions, namely (1) [1952] I L.L.J. 554, (2) [1954] II L.L.J. 328, (3) [1953] S.C.R. 780, (4) [1951] II L.L.J. 221, (5) [1954] II L.L.J. 656 and (6) [1965] 1 S.C.R. 1241. Once the employer acted upon the lifted ban, the workman would acquire the right to raise an industrial dispute. Such a dispute would have to be referred by the Government to the appropriate Tribunal for adjudication. When the dispute came before that Tribunal, the workman would be entitled to have all the surrounding circumstances examined and to obtain the relief deemed appropriate by the Tribunal. Conversely, if the Tribunal refused permission, the parties would remain in the status quo and the employer would be unable to impose the intended punishment. Even in that situation an industrial dispute might arise should the workman fail to receive his due wages or other benefits; that dispute would likewise be referred to the appropriate Tribunal, which would then determine the proper relief after considering the full facts of the case.
The Tribunal hearing an application for permission under section 22 of the Act was not empowered to pass judgment on the employer’s contemplated action once it was satisfied that a prima facie case existed for imposing the punishment. The Tribunal’s inquiry did not extend to measuring the punishment or assessing whether it was harsh, except to the extent that such considerations might reveal whether the management’s action was bona‑fide or motivated by victimisation. If, based on the material before it, the Tribunal concluded that the management had conducted a fair enquiry under the circumstances and had honestly determined that the workman was guilty of the alleged misconduct, then a prima facie case would be established and the Tribunal would be bound to grant the necessary permission for the employer to impose the punishment. However, if the proposed punishment were found to be unduly harsh, excessive, or otherwise inappropriate in view of all the circumstances, the Tribunal’s limited function would still be confined to either granting or refusing permission, without delving into the substantive merits of the punishment itself.
The Court explained that once permission under section 22 of the Industrial Disputes Act had been granted, any punishment imposed by the employer on the workman would become the subject of an industrial dispute that the workman could raise and that the Tribunal would then have to adjudicate. The Tribunal, however, possessed no authority to examine the substance of that punishment; its sole function under section 22 was to either grant the permission or to refuse it, as illustrated in the decisions of Champdani Jute Mills and Shri Alijan, R.B S Lachmandas Mohan Lal & Sons Ltd. and Chini Mill Karmachari Union, and the Assam Oil Companies case.
In the facts of the present matter, the appellant succeeded in proving several essential points. First, the workmen had engaged in an illegal strike beginning at seven o’clock in the morning on 27 May 1952. Second, the management had conducted a fair enquiry into the alleged misconduct and insubordination of the workmen, doing so without breaching any principles of natural justice. Third, as a result of that enquiry, the management had found the workmen guilty of the misconduct and insubordination with which they were charged. Fourth, the management had arrived at a bona‑fide conclusion that retaining the workmen in their employment would be detrimental to discipline and would pose a danger to the interests of the appellant. On the basis of these findings, the Labour Appellate Tribunal ought to have concluded that the appellant had established a prima facie case for the dismissal of the workmen and therefore should have granted the appellant permission to dismiss them.
The Court held that the Labour Appellate Tribunal had clearly erred in rejecting the appellant’s application under section 22 of the Act and in refusing to give permission to discharge the respondents. Consequently, Civil Appeal 244 of 1954 was allowed, and the order of the Labour Appellate Tribunal dismissing the application under section 22 was set aside. The appellant was therefore granted permission under section 22 to discharge the respondents from its employ. The Court noted that, pursuant to its order, the appellant had already paid one‑half of the respondents’ salaries from 27 May 1952 onward, and that, as a result of the present decision, the appellant would be entitled to recover that amount from the respondents.
However, counsel for the appellant, Shri N. C. Chatterjee, stated that the appellant would waive its right to recover the said amount and would keep the respondents on a reserve list for future employment in the mills whenever vacancies arose in the permanent cadre. The Court expressed hope that the respondents would accept this offer in the spirit in which it was made and would improve their conduct in the future. Shri N. C. Chatterjee also raised the issue of costs for both appeals, and the Court ordered that, considering all circumstances, the appropriate costs would be determined accordingly.
The Court observed that, given the circumstances of the case, it would be appropriate for each litigant to be responsible for and to pay the costs incurred by itself in connection with both of the appeals. Accordingly, the Court directed that the appellant and the respondents should each bear and discharge their own costs arising out of the two appeals. Having made this determination regarding the allocation of costs, the Court then proceeded to decide the substantive relief sought by the parties. In the final order, the Court allowed the appeals that had been brought before it, thereby granting the relief pleaded by the parties in their respective applications. The direction concerning costs and the allowance of the appeals together formed the concluding operative part of the judgment.