Patna Electric Supply Co., Ltd., Patna vs Bali Rai and Another

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: supreme-court

Case Number: Civil Appeal No. 142 of 1956

Decision Date: 05/11/1957

Coram: Natwarlal H. Bhagwati, Bhuvneshwar P. Sinha, Syed Jaffer Imam, J.L. Kapur, P.B. Gajendragadkar

In this matter the Supreme Court of India heard an appeal brought by Patna Electric Supply Co., Ltd., Patna against Bali Rai and another. The appeal, numbered Civil Appeal No. 142 of 1956, was decided on 5 November 1957. The bench that delivered the judgment comprised Justices Natwarlal H. Bhagwati, Bhuvneshwar P. Sinha, Syed Jaffer Imam, J. L. Kapur and P. B. Gajendragadkar. The case is reported in the 1958 volume of the All India Reporter at page 204 and in the Supreme Court Reports at page 871. The dispute concerned the application of the Industrial Disputes (Appellate) Tribunal Act, 1950 and the Industrial Disputes Act, 1947, particularly sections 33 of the 1947 Act and section 7 of the 1950 Act.

The petitioner, Patna Electric Supply Co., Ltd., filed an application before the Industrial Tribunal of Bihar under section 33 of the Industrial Disputes Act, 1947 seeking permission to dismiss the respondents, who were its employees, on the ground of misconduct alleged under clause 17(b)(viii) of the employer’s Standing Orders. After reconsidering the facts, the petitioner withdrew the misconduct allegation and instead applied for permission to discharge the respondents under clause 14(a) of the Standing Orders. The Industrial Tribunal found that the second application was made in good faith, with an honest intention to exercise the employer’s right to discharge the employees rather than imposing a penalty of dismissal. Accordingly, the Tribunal granted permission to the petitioner to terminate the respondents’ employment by providing one month’s salary in lieu of notice. The Labour Appellate Tribunal, on appeal, held that once misconduct had been alleged the employer could not subsequently resort to a fresh application to terminate employment by giving notice, and after examining whether the employer had established a case under clause 17(b)(viii) concluded that the respondents had not committed any misconduct. The appellate tribunal therefore determined that the Industrial Tribunal had erred in granting the discharge permission. When the matter reached the Supreme Court, the Court observed that in an application under section 33 of the 1947 Act the essential consideration is whether the employer has engaged in any unfair labour practice or victimisation. The Court held that unless the Tribunal reaches a conclusion adverse to the applicant, it lacks jurisdiction to refuse the permission sought to discharge an employee. Since the Industrial Tribunal had found the application to be made bona‑fide, the Supreme Court concluded that no legal question arose from the Tribunal’s order and that the Labour Appellate Tribunal had erred in entertaining the appeal. The judgment was delivered in civil appellate jurisdiction, with counsel for the petitioner and counsel for the respondents appearing before the Court.

Counsel N. Andley and Rameshwar Nath appeared for the appellants, while counsel P. K. Chatterjee represented the respondents. The judgment dated 5 November 1957 was delivered by Justice Bhagwati. This appeal, granted special leave, originated from an application that the appellant had filed with the Industrial Tribunal of Bihar under section 33 of the Industrial Disputes Act, 1947, herein referred to as “the Act,” requesting permission to discharge the respondents from their employment.

The respondents were employees of the appellant and were residing in a two‑storeyed house located in Patna. The house had been rented by the appellant for the purpose of accommodating its workmen. On 20 November 1952 an incident occurred in that house in which the respondents were involved. Written reports of the incident were transmitted on 21 November 1952 to the appellant’s Chief Engineer, and on the same day the respondents were placed under suspension.

At the time the incident occurred, an industrial dispute between the appellant and its workmen was pending before the Industrial Tribunal of Bihar. In that context the appellant submitted an application to the Tribunal under section 33 of the Act, seeking permission to dismiss the respondents on the ground of misconduct, invoking clause 17(b)(viii) of the appellant’s Standing Orders.

Subsequently, on 27 November 1952, the respondents filed their own application before the same Tribunal under section 33A of the Act, contending that their suspension had breached the provisions of section 33.

On 6 December 1952 the appellant filed a further application before the Tribunal. In that filing the appellant stated that, upon reconsideration of the facts, it was no longer pressing its original prayer for permission to dismiss the respondents. Instead, the appellant argued that, for the ends of justice, it would be sufficient to obtain permission to discharge the respondents under clause 14(a) of its Standing Orders, rather than under the original clause 17(b)(viii) relating to dismissal for misconduct. The respondents opposed this amendment.

Despite the opposition, the Industrial Tribunal entertained the amendment request. After hearing both parties, the Tribunal rendered its award on 14 May 1953. The award dismissed the respondents’ application under section 33A and granted the appellant permission to discharge the respondents from employment, effective from the date of the order. The Tribunal also directed that the appellant pay the respondents one month’s salary in lieu of notice, to be paid within fifteen days of the order.

The respondents appealed this award before the Labour Appellate Tribunal of India, Calcutta. Before the Labour Appellate Tribunal, the appellant raised a preliminary objection, asserting that the appeal did not involve any substantial question of law and therefore should be deemed non‑maintainable. The Labour Appellate Tribunal, however, held that the appellant had alleged misconduct against the respondents and could not be permitted to terminate their services merely by giving notice or payment in lieu of notice. Accordingly, the Tribunal concluded that the Industrial Tribunal should not have entertained the amendment of the original prayer and that this issue raised a substantial question of law, leading it to admit the appeal for further consideration.

The Labour Appellate Tribunal held that the Industrial Tribunal should not have entertained the amendment of the original prayer, which sought dismissal of the respondents on the ground of misconduct, by allowing payment of salary in lieu of notice. The Tribunal considered this issue to involve a substantial question of law, and therefore it admitted the appeal. After reviewing the matter, the Tribunal examined whether the appellant had established a case under clause 17(b)(viii) of the Standing Orders. It concluded that the respondents had not committed any misconduct within the meaning of that clause. Accordingly, the Tribunal found that the order of the Industrial Tribunal, which had granted the appellant permission to terminate the respondents’ services, ought to be set aside. However, the Tribunal observed that after obtaining the permission, the appellant had already served notice of discharge to the respondents. Because of this, the Tribunal said it could not grant any effective relief to the respondents, either by reinstating them or by awarding compensation.

The appellant then appealed this order before the Supreme Court. Counsel for the appellant argued that, under section 7 of the Industrial Disputes (Appellate Tribunal) Act, 1950, the order of the Industrial Tribunal did not constitute a “decision” and therefore could not be the subject of an appeal to the Labour Appellate Tribunal. Even assuming the order qualified as a decision, the appellant’s counsel maintained that the appeal raised no substantial question of law and did not involve any of the matters listed in sub‑section (1)(b) of that provision. Counsel for the respondents countered that the appellant’s action in terminating the respondents was punitive in nature. He asserted that the discharge sought by the appellant was a punitive dismissal based on alleged misconduct that fell under clause 17(b)(viii) of the Standing Orders, not under clause 14(a). The counsel further emphasized that the core legal issue was whether the appellant could bypass the requirement of issuing a charge‑sheet and conducting a proper enquiry, and instead rely on giving notice or paying salary in lieu of notice under clause 14(a). Finally, the respondents’ counsel submitted that, according to the definition of “retrenchment” in section 2(oo) of the Act, the dismissal effected by the appellant amounted to retrenchment, a matter that falls within the scope of the appellate provisions.

In this case, the Court noted that the dispute fell within the matters specified in sub‑section (1)(b) of section 7 of the Industrial Disputes (Appellate Tribunal) Act, 1950, and accordingly, the respondents possessed a right of appeal to the Labour Appellate Tribunal under the provisions of the Act. The Court then examined what the appellant intended to achieve by filing an application before the Industrial Tribunal on 6 December 1952. The Labour Appellate Tribunal described that filing as an amendment of the original petition dated 21 November 1952, in which the appellant sought permission to dismiss the respondents under element 17(b)(viii) of the Standing Orders. The Court observed, however, that the effect of the 6 December filing was to replace the earlier request with a new request for permission to discharge the respondents under element 14(a) of the Standing Orders. In doing so, the appellant abandoned the relief it had sought in the original petition and pursued a different statutory ground. The Court held that the 6 December filing was, in substance, a fresh application to the Industrial Tribunal for relief. It relied on the facts set out in the original petition but asked for permission to discharge the respondents under clause 14(a) rather than to dismiss them under clause 17(b)(viii). The Court found no reason to hold that the Industrial Tribunal was powerless to entertain such a change. Even if the appellant had been motivated by an intention to avoid the procedural requirements attached to a dismissal, such as issuing a charge‑sheet and conducting a proper enquiry, the criticism was understandable. The Industrial Tribunal expressly recorded that the request for leave to discharge the respondents was made in good faith. It further held that the appellant’s 6 December application was driven by an honest desire to exercise its right to discharge under clause 14(a) rather than to impose the harsher penalty of dismissal under clause 17(b)(viii). The Court emphasized that the discharge was a simple discharge exercised under the employer’s statutory right under clause 14(a) and not a punitive discharge contemplated by clause 17(b)(viii). Because the discharge was merely a discharge simpliciter, no objection could be taken, provided that the action was not arbitrary, capricious, or executed in bad faith. Consequently, the only issue for the Industrial Tribunal to consider was whether the appellant, in taking this step, had committed any unfair labour practice or victimisation. The Court concluded that, as long as the Tribunal did not reach an adverse finding on those points, it possessed the jurisdiction to grant the appellant’s permission.

In the present case, the Court observed that if the Industrial Tribunal had concluded that the application dated 6 December 1952 and the consequent discharge of the respondents were undertaken in the honest exercise of the appellant’s statutory rights, then no question of law, let alone a substantial question of law, could arise for consideration on the respondents’ appeal against the Tribunal’s decision. Accordingly, the Labour Appellate Tribunal was in error when it entertained that appeal. The Court therefore declined to address the contention that the order issued by the Industrial Tribunal under section 33 of the Act did not constitute a “decision” as defined in section 7 of the Industrial Disputes (Appellate Tribunal) Act, 1950. Similarly, the argument that the discharge, although plainly a discharge simpliciter, amounted in substance to retrenchment within the meaning of section 2(oo) of the Act was found untenable. The term “retrenchment” had been first defined by an Ordinance of October 1953, which was subsequently incorporated in Act 43 of 1953 and published in the Gazette of India on 23 December 1953. Since the Industrial Tribunal had granted permission under section 33 of the Act on 14 May 1953—well before the aforementioned definition came into force—the definition could not be applied to the facts of this case. Consequently, at the relevant time the discharge simpliciter could not be classified as retrenchment of the respondents, and the Tribunal’s order could not be said to fall within any of the matters enumerated in sub‑section (1)(b) of section 7 of the Industrial Disputes (Appellate Tribunal) Act, 1950. In view of this, no appeal lay from the Industrial Tribunal’s decision to the Labour Appellate Tribunal. The Court noted that neither of these two points had been raised by the respondents in the proceedings before either the Industrial Tribunal or the Labour Appellate Tribunal, nor were they mentioned in the respondents’ statement of case filed in this Court. They were first advanced by the counsel for the respondents before this Court. Nevertheless, the Court considered them in order not to deprive the respondents of any argument that might be advanced on their behalf. Accordingly, the Court held that no appeal could be taken from the Industrial Tribunal’s decision to the Labour Appellate Tribunal, that the Labour Appellate Tribunal lacked jurisdiction to interfere with the order granting the appellant permission to discharge the respondents under section 33 of the Act, and that the decision of the Labour Appellate Tribunal must be set aside.

The Court found that the order issued by the Labour Appellate Tribunal was not legally sustainable and therefore required annulment. Consequently, the Court granted the relief sought in the petition and set aside the judgment of the Labour Appellate Tribunal. In addition, the Court reinstated the original order that had been issued by the Industrial Tribunal of Bihar on the fourteenth day of May in the year nineteen fifty‑three. The Court further directed that the party who had initiated the present appeal, identified as the appellant, should recover from the respondents the costs incurred in pursuing this appeal. Accordingly, the appeal was affirmed, and consequently the order of the Labour Appellate Tribunal was declared void and ineffective. By restoring the order of the Industrial Tribunal, the Court made that earlier order again effective and binding on both parties. The award of costs was directed against the respondents, indicating that they must pay the expenses incurred by the appellant in bringing this appeal. Accordingly, the appeal was dismissed in favor of the appellant and the decision of the Labour Appellate Tribunal was declared void. The judgment was pronounced after careful consideration of the submissions presented by counsel for both the appellant and the respondents. The final order of the Court comprised setting aside the appellate tribunal's decision, reinstating the industrial tribunal's decree, and directing cost payment.