Mckenzie and Co. Ltd vs Its Workmen and Others

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 500 of 1957

Decision Date: 17 October 1958

Coram: J.L. Kapur, Syed Jaffer Imam, S.K. Das

The case titled Mckenzie & Co. Ltd. versus Its Workmen and Others was decided on 17 October 1958 by the Supreme Court of India. The judgment was delivered by Justice J. L. Kapur, with Justices Syed Jaffer Imam and S. K. Das forming the bench. The official citation of the decision is 1959 AIR 389 and it also appears in the Supreme Court Reports Supplement (1) 222, with subsequent citations including F 1960 SC 160, R 1961 SC 1158, and the Industrial Disputes Act (XIV of 1947), section 33.

During the pendency of an adjudication before an Industrial Tribunal, the workmen unlawfully confined the works manager and commenced an illegal strike. The company responded by issuing notices to the workmen demanding immediate resumption of work; the workmen refused. Consequently, the company declared a lock‑out, served charge‑sheets on the workmen, and invited them to submit explanations. No explanations were received, and the company proceeded to hold an enquiry, which concluded that the workmen were guilty of gross misconduct amounting to a major misdemeanor justifying dismissal. The company then applied to the Tribunal under section 33 of the Industrial Disputes Act for permission to dismiss the workmen. The Tribunal granted permission for three workmen but denied it for sixty‑one workmen, holding that reasonable doubt existed regarding their identity and participation in the incident. The Labour Appellate Tribunal upheld the Tribunal’s order.

Subsequently, the company instituted fresh proceedings against the sixty‑four workmen. It dispatched charge‑sheets by registered notices to the addresses the workmen had on record and also displayed notices on the company’s notice‑boards both inside the premises and at the entrance gate. The registered notices could not be served on workmen numbers 2 to 24 because those individuals could not be located at the supplied addresses. The company wrote to the Workers’ Union requesting the missing addresses but received no reply. The enquiry was conducted, and, since no other proceedings were pending under the Act at that time, the company terminated the services of the sixty‑four workmen. The Government made a reference concerning the termination of their services. Sixteen workmen voluntarily resigned, and one workman pleaded guilty. Regarding the remaining workmen, the Tribunal found that workmen numbers 2 to 24 had not been properly served; therefore, the termination orders concerning them were deemed invalid, while the termination orders concerning the other workmen were upheld. Both the company and the workmen appealed to the Labour Appellate Tribunal. The Appellate Tribunal dismissed the company’s appeal but allowed the workmen’s appeal, holding that the testimony of the works manager could not be accepted and that, apart from that testimony, no other evidence existed to identify which workmen had participated in the wrongful confinement of the works manager and the illegal strike.

In the proceedings, the Court observed that the record had to indicate which of the workmen took part in the wrongful confinement of the works manager and in the illegal strike. The Court held that the Labour Appellate Tribunal had erred in setting aside the order of termination of service on the ground that it could not accept the testimony of the works‑manager. The Court explained that it is the management’s responsibility to decide, under its standing orders, what constitutes a serious breach of discipline sufficient to justify dismissal of a workman. However, in making such a determination, management must rely on factual material that supports its conclusions, must act in good faith, and must refrain from arbitrary or discriminatory motives, vindictiveness, intimidation, unfair labour practices, or any violation of the accepted principles of natural justice. When management observes these standards, its judgment regarding dismissal is not open to judicial scrutiny. The Court further found that the Appellate Tribunal had proceeded as if it were hearing an appeal against the decisions of the managerial enquiry, a step that exceeded the Tribunal’s statutory powers. In reaching this conclusion, the Court followed the authority of Indian Iron and Steel Co. Ltd. v. Their Workmen (AIR 1958 SC 130), Lakshmi Devi Sugar Mills Ltd. v. Pt. Ram Sartip (AIR 1957 SC 82), and Hanuman Jute Mills v. Amin Das (AIR 1957 SC 194).

The Court also held that both the Industrial Tribunal and the Appellate Tribunal were incorrect in concluding that proper notices had not been served on workmen numbered 2 to 24. The standing order required that a notice to a workman could be given either orally to the employee or by fixing it on the company’s notice board. The Company had complied with this requirement by affixing the relevant notices on its notice board. Moreover, the Court ruled that the second enquiry conducted by the Company was not barred by the doctrine of res judicata on account of the earlier findings of the Tribunal in the application under section 33 of the Industrial Disputes Act. Section 33 merely confers a power to grant or withhold permission and does not adjudicate an industrial dispute; consequently, any finding made under that section cannot operate as res judicata to preclude the raising of a new industrial dispute. There was nothing in section 33 or in the Tribunal’s findings under that provision that prevented the Company from holding a second enquiry and dismissing the workmen. The judgment then set out the civil appellate jurisdiction, noting that this was Civil Appeal No. 500 of 1957, filed by special leave against the judgment and order dated 11 September 1956, as altered on 28 September 1956 by the Labour Appellate Tribunal of India, Calcutta, in Appeals Nos. Cal. 208 and 223 of 1956, arising from the award of 7 June 1956 of the Sixth Industrial Tribunal, Calcutta, in Case No. VIII‑233 of 1955. The parties were represented by counsel for the appellants and respondents, and the judgment was delivered on 17 October 1958 by Justice Kapur, who noted that the present filing constituted an appeal by special leave against the earlier order of the Labour Appellate Tribunal.

The matter before the Court concerned an order issued by the Labour Appellate Tribunal and the central issue for determination was whether certain workmen could be lawfully dismissed. The appellant in these proceedings was the employer, namely the company that employed the workmen. The respondents comprised a group of forty‑seven workmen who could be divided into two distinct categories: the first category consisted of workmen numbered 2 through 24, and the second category comprised those numbered 25 through 48. Within the second category, workman number 26 was deceased at the time of the appeal.

The factual background leading to the present appeal began on 3 August 1953, when the Government of West Bengal, invoking section 10 of the Industrial Disputes Act (hereinafter referred to as “the Act”), referred an industrial dispute between the appellant and its workmen to the second Industrial Tribunal. While this reference was pending, a serious breach of discipline occurred. The workmen, acting with wilful insubordination and defiance, formed a cordon around Mr E. L. D‑Cruz, who was the Works Manager of the company, and illegally confined him in a small space on the factory premises. This confinement lasted from approximately 9 a.m. 15 minutes to 2 p.m. 15 minutes, and the workmen held him there until the police intervened and rescued him.

The workmen’s motivation for this action was reported to be a dispute concerning the payment of the Puja bonus for the year 1953. On that same day, at 9 a.m. 15 minutes, the workmen commenced a strike. Mr D‑Cruz appealed to them to resume work, but they refused. In response, the appellant company issued two notices, the first at 9 a.m. 45 minutes and the second at 10 a.m. 45 minutes, demanding that the workmen return to work immediately. The workmen ignored both notices. Subsequently, after police arrived on the scene, the appellant declared a lock‑out of the factory. During the lock‑out, several workmen were arrested.

Following these events, the appellant served charge‑sheets on the workmen and required them to furnish explanations within twenty‑four hours. The workmen failed to submit any explanations. An inquiry was then conducted, and the workmen were found guilty of gross misconduct amounting to a major misdemeanor that warranted dismissal. Consequently, the company sought to dismiss the implicated workmen.

To obtain legal authority for the dismissals, the appellant filed three applications—Causal Numbers 518, 519 and 557 of 1953—on 31 October 1953, requesting permission under section 33 of the Act to dismiss a total of one hundred and seventy workmen, with effect retroactive to 6 October 1953. As the proceedings advanced, the appellant withdrew its case against a large number of the workmen, and the Tribunal’s consideration was ultimately narrowed to sixty‑seven workmen. Of these, one workman died and two resigned, leaving sixty‑four workmen against whom the proceedings continued.

The workmen, in their defence, denied committing any offence and also claimed that they had not received the charge‑sheets. They asserted that no proper enquiry had been held, that the lock‑out was unlawful, and that the appellant had violated the principles of natural justice. The three applications were heard together and disposed of by a single order. The Tribunal concluded that a prima facie case existed for granting permission to dismiss those workmen who were directly involved in the incident and found that the appellant company had acted in good faith.

In its findings, the Tribunal concluded that the company had acted in good faith and that it was not guilty of discrimination, vindictiveness or any arbitrary conduct. The Tribunal observed that although the company originally instituted proceedings against one hundred and seventy workmen, it later withdrew its case against the majority of those individuals after they expressed regret. Consequently, the Tribunal granted permission for the dismissal of only three workmen, namely Subbas Roy, Madhusudhan Rout and Bimal Kumar Ghose, while refusing permission for the remaining workmen on the ground that there remained reasonable doubt concerning their identity and their possible involvement in the incident. On 8 January 1954 the workmen filed an application under section 33A of the Industrial Disputes Act, seeking relief, and this application was allowed on 2 July 1954. Following that decision, three separate appeals were lodged: two appeals were filed by the appellant company challenging the orders made under section 33, a third appeal was filed under section 33A, and a fourth appeal was filed by the workmen contesting the dismissal of the three named workmen. On 29 March 1955 the appellate authority dismissed the company’s appeal relating to the application under section 33 and also dismissed the workmen’s appeal, thereby upholding the order that dismissed only the three workmen. The employers contended that because the strike had been illegal the management possessed the right to terminate the services of the workmen, and that the Tribunal was bound to sanction the management’s action. However, the Labour Appellate Tribunal did not address this contention because the issue had not been raised at any earlier stage of the proceedings. On the same day, the Labour Appellate Tribunal set aside the order that had been made under section 33A, holding that the application under that provision was misconceived and that the Tribunal’s order was beyond its jurisdiction.

Subsequent to those decisions, on 20 April 1955 the management of the appellant company initiated fresh proceedings against the remaining sixty‑four workmen. In order to serve charge‑sheets on them, the company sent registered notices to the addresses it had on record and also displayed notices on the company’s notice‑boards both inside the premises and on the gate outside the premises; these notices remained in place from 20 April 1955 until 9 June 1955. The registered notices could not be served on workmen numbered two through twenty‑four; those notices were returned to the sender with a remark that the addressees had either left the locality or that their addresses were unknown. On 28 April 1955 the appellant company wrote to the Labour Commissioner, informing him of the offences it alleged the workmen had committed and of the action it intended to take against them. Later, on 20 May 1955, the company sent a letter to the secretary of the Workers’ Union requesting the addresses of the workmen for whom service of notice had failed, but the secretary did not reply. The enquiry undertaken by the company's management concluded on 9 June 1955, and at that time no proceedings were pending under the Act. Consequently, the appellant company terminated the services of all sixty‑four workmen on 22 June 1955, thereby ending their employment.

In this case the termination of the sixty‑four workmen gave rise to an industrial dispute, and the Government of West Bengal referred the matter for adjudication on August 8 1955. The reference presented three specific questions for consideration. First, it asked whether the dismissal of the sixty‑four workmen listed in the annexed schedule was justified, whether the company ought to reinstate them, and what compensation, if any, should be paid for the action taken against them. Second, it inquired what compensation should be awarded for the period of enforced idleness beginning on 6 October 1953, especially for the time during which the workmen were denied permission to resume work even after the Tribunal had disposed of their cases. Third, it sought to determine whether the awards made by the Tribunal concerning the sixty‑four workmen had been properly implemented and, if not, what compensation the company should pay for the failure to implement the award correctly.

The record shows that sixteen workmen resigned, and one workman, Haroo Haldar, pleaded guilty, leaving proceedings against only forty‑seven workmen. The Sixth Industrial Tribunal of West Bengal delivered its award on 7 June 1956. The Tribunal held that workmen numbered 2 to 24 had not been properly served with notice and ordered their reinstatement effective 1 April 1955, together with back wages, dearness allowance and other contingent benefits from that date. Conversely, the Tribunal upheld the dismissal of workmen numbered 25 to 48. It found sufficient evidence to identify the persons who participated in the strike and who had unlawfully confined D Cruz, and it concluded that no bias, ill‑will, or vindictive motive could be ascribed to the management. Accordingly, the Tribunal stated that, given the existence of evidence, it must accept the finding that the dismissal of those workers was justified. Regarding wages, the Tribunal determined that the strike of 6 October 1953 was illegal because a reference was pending before the Industrial Tribunal, and that the lock‑out was fully justified as the strikers adopted a belligerent stance and illegally confined the acting Works Manager until police intervened. Consequently, no compensation was payable for the period from 6 October 1953 up to the date on which the Labour Appellate Tribunal, on 29 March 1955, disposed of the proceedings under section 33. However, the workmen numbered 2 to 24, who were found to have been wrongfully dismissed and ordered reinstated but were not allowed to return, were entitled to wages only from 1 April 1955 until the date of reinstatement. On the third issue, concerning Subbash Roy, Madhusudan Rout and Bimal Kumar Ghosh, the permission for dismissal granted by the State Tribunal was affirmed on appeal, and no compensation was deemed appropriate in their cases. Both the Union and the appellant company subsequently filed appeals against the Tribunal’s order before the Labour Appellate Tribunal, with the Union’s appeal and the company’s appeal being listed for hearing on 11 September 1956.

In this case the Labour Appellate Tribunal rejected the appeal filed by the appellant company and upheld the appeal presented by the Union. The Tribunal examined the testimony of Mr E L D Cruz that had been recorded during the managerial enquiry conducted in May 1955 and concluded that such testimony could not be relied upon. The Tribunal explained that in June 1954 Mr D Cruz had been unable to give evidence against the appellants in Appeal No Cal 223 of 1956, yet in May 1955 he provided a statement linking the appellants to the alleged misconduct that had occurred on 6 October 1954. The Tribunal observed that the record contained no additional evidence indicating that the workmen involved had actually engaged in misconduct on that date, and therefore it was difficult to base any decision on the evidence offered by Mr D Cruz during the managerial enquiry. Referring to the legal principles articulated in the earlier decision of Buckingham and Carnatic Co Ltd. v. Its workmen, the Tribunal expressly excluded Mr D Cruz’s evidence and noted that, because there was no other proof of misconduct, the management’s original decision appeared perverse. Consequently, the Tribunal set aside the order of the Industrial Tribunal that had authorised the management to dismiss the appellants and also rescinded the order that had permitted the discharge of workmen numbered 25 to 48. Acting suo motu, the Tribunal amended its own order on 28 September 1956 and substituted a new order in place of the operative portion of the 11 September 1956 order. The revised order declared that the Industrial Tribunal’s decision supporting the management’s dismissal of the appellants was void, and that the award confirming the dismissal of twenty‑four workmen was likewise set aside, while all other parts of the award remained confirmed. The Tribunal further ordered that the twenty‑four dismissed workmen be reinstated and that they receive back wages for the period from 1 April 1955 until the date of their reinstatement. The appellant company challenged this order by filing an appeal by special leave, and the Attorney General, on its behalf, raised two questions: first, whether the appeal to the Labour Appellate Tribunal on the Union’s side was competent given the absence of a legal question; and second, whether the Tribunal possessed jurisdiction to hear an appeal against the managerial enquiry. The Court deemed it unnecessary to address the first question and found the second question to be well founded. The Court then recalled the principles governing an Industrial Tribunal’s power to intervene in an employer’s decision following an internal enquiry, as previously set out by this Court in Indian Iron and Steel Co Ltd. v. Their workmen, wherein Justice S K Das explained the limits of such judicial interference.

The Court explained that while the management of a concern possessed the authority to direct its own internal administration and discipline, that authority was not unlimited. When a dispute arose concerning the termination of a workman, the Industrial Tribunal was empowered to examine whether the dismissal was justified and to grant appropriate relief. However, the Tribunal did not act as an appellate court that substituted its own judgment for that of the management in cases of dismissal or misconduct. The Tribunal would intervene only in limited circumstances, namely when there was a lack of good faith, when victimisation or unfair labour practice occurred, when the management committed a fundamental error or breached a principle of natural justice, or when the finding was wholly baseless or perverse. The Court then referred to the decision in Lakshmi Devi Sugar Mills Ltd. v. Pt. Ram Sarup, a case decided under section 22 of the Industrial Disputes (Appellate Tribunal) Act, 1950, which held that if it was established that the workmen had engaged in an illegal strike and that the management had conducted a fair enquiry into the alleged misconduct and insubordination without violating any principles of natural justice, and if the management, on the basis of that enquiry, found the workmen guilty and concluded that their continued employment was dangerous to the company, the Tribunal would not interfere with the managerial order. The Court also cited Hanuman Jute Mills v. Amin Das, in which it was held that no appeal lay against an Industrial Tribunal order when the Tribunal examined whether the employer’s discretion to dismiss was properly exercised, whether the employer acted bona fide, whether any unfair labour practice or victimisation occurred, and whether any improper motive was present. The Court emphasized that it was for the management to define what constituted major misconduct within its standing orders that justified dismissal, but such a determination required a factual basis and had to be made in good faith, without caprice, discrimination, vindictiveness, intimidation, or any unfair labour practice, and without violating accepted rules of natural justice, as reflected in the authorities A.I.R. 1957 S.C. 82 and A.I.R. 1957 S.C. 194. When the management possessed sufficient facts to support a finding of misconduct and observed the above principles, its judgment could not be questioned; conversely, in the absence of such facts or where the principles were breached, the management’s position became untenable. Finally, the Court observed that the Industrial Tribunal had acted on correct principles concerning the management’s enquiry, whereas the Labour Appellate Tribunal appeared to treat the matter as if it were hearing an appeal against the management’s decision, rather than correctly appreciating the limited jurisdiction of the Tribunal.

In this matter the Court observed that none of the established principles articulated by Labour Courts and by this Court concerning an enquiry carried out by management into alleged misconduct of workmen had been breached. Consequently, the Court held that the Labour Appellate Tribunal erred when it set aside the order of the Industrial Tribunal on the ground that it could not accept the testimony of D Cruz regarding the identity of the persons who had wrongfully confined him on the day of the illegal strike. The Tribunal appeared to act as though it were hearing an appeal against the management’s enquiry decision, and it was further influenced by a misunderstanding of the character of the proceedings before both the Industrial Tribunal and itself. Specifically, the Tribunal seemed to be under the mistaken impression that the appeal before it arose out of an application under section 33 of the Act and that the Industrial Tribunal had authorized the appellant company to dismiss its workmen. In its amended order, the Tribunal again mistakenly concluded that the proceedings were governed by section 33A of the Act. This erroneous view of the nature of the reference led the Tribunal to order the reinstatement of the dismissed workmen together with back wages calculated from 1 April 1955 to the date of reinstatement. Moreover, the Tribunal failed to recognise that the appeal actually stemmed from a reference made by the Government of West Bengal under section 10 of the Act. This misapprehension of the jurisdictional basis of the appeal vitiated the Tribunal’s order because it caused the Tribunal to misdirect itself concerning the scope of the powers that it could exercise, resulting in an erroneous decree. The Court then turned to the question of whether the managerial enquiry itself had been compromised by any violation of natural‑justice principles. According to the company’s standing orders, major misdemeanors were defined in clause 15, the relevant portion of which enumerated (a) willful insubordination or disobedience and (b) incitement to participate in, or participation in, an illegal strike, noting that any strike undertaken without the notice required by section 22 of the Industrial Disputes Act would be deemed illegal. The standing order also prescribed the method of serving notice: no dismissal order could be made unless the workman concerned was informed of the allegations and given an opportunity to explain, provided that the workman attended before management when directed to do so. Service of any notice or direction to attend could be effected either by oral communication to the workman or by affixing the notice on the company’s notice board. In the present case the management of the appellant company took the precaution of affixing the notice in accordance with these provisions.

The appellant company displayed notices on its notice boards both inside the premises and on boards situated outside the factory, and documentary evidence demonstrated that these notices remained posted from 20 April 1955 until 9 June 1955, that is, up to the date when the enquiry was concluded. In addition, the company dispatched registered acknowledgement‑due notices to every workman. When a number of those notices were returned unserved, the management wrote to the secretary of the recognised union requesting the home addresses of the absent workmen; however, the union official failed to reply to that letter. The management also sent a communication to the Labour Commissioner indicating the disciplinary action it intended to take. The Industrial Tribunal subsequently ruled that workmen numbered 2 to 24 had not received proper notice and that merely affixing the notices on the company’s notice board was insufficient because, according to the Tribunal, the workmen could not enter the appellant’s premises owing to the lock‑out. The Tribunal, however, overlooked the fact that the same notices had also been posted on the board outside the gate, from which the lock‑out did not exclude the workmen, and that the workmen were free to approach that board and read the notices if they chose to do so. Moreover, the Tribunal expressed the opinion that the appellant might have sent the notices to the union secretary “for circulation to the absentees.” The Tribunal held that such a method was not a recognised mode of service and that, given the union official’s refusal to provide the required addresses, the company would have been justified in refraining from that method. Apart from strictly adhering to its standing orders, the appellant company had taken every reasonable step under the circumstances to serve the workmen with notice. In the Court’s view, no principle of natural justice had been violated, and the finding that the workmen had received no notice of the charges and consequently lacked an opportunity to meet the case against them could not be sustained. It could not be said that the workmen were deprived of a proper opportunity to answer the case. If the rule were applied as the Industrial Tribunal suggested, the workmen’s refusal to supply correct addresses or to inspect the notice boards—where notices were required to be posted by the standing orders—could render it impossible for an employer to lawfully impose disciplinary action when such action is necessary or justified. The Labour Appellate Tribunal had not considered or applied its mind to this aspect, having misunderstood the true nature of the proceedings. Counsel for the respondents subsequently raised four points: (1) that no proper notice had been served on workmen Nos 2 to 24 after the Industrial Tribunal’s decision refusing permission to dismiss the workmen under section 33 of the Act; (2) that no second …

In this case the counsel for the respondents advanced four separate contentions. First, they asserted that the workmen identified as numbers 2 to 24 had not been served with proper notice after the Industrial Tribunal had refused permission to dismiss them under section 33 of the Industrial Disputes Act. Second, they argued that a fresh enquiry could not be held because the earlier findings of the Tribunal on the application under section 33 were conclusive and therefore barred by the principle of res judicata. Third, they contended that the award of the Industrial Tribunal contained basic errors, errors that had been correctly corrected on appeal by the Labour Appellate Tribunal. Fourth, they maintained that the workmen were entitled to receive compensation. Regarding the issue of notice, the respondents submitted that the employer had failed to forward the notices to the Union for service on the workmen and, even if that had been done, the employer should also have advertised the case in Bengali‑language newspapers to ensure proper service. The Court had previously observed that, in the circumstances, the appellant company had taken all reasonable steps to serve the workmen, had complied with the standing orders, and had not been required to undertake any additional measures. Accordingly, the Court rejected the respondents’ allegation concerning the adequacy of the notice. On the question of res judicata, the respondents claimed that the findings of the State Industrial Tribunal in the proceedings under section 33, which were affirmed by the Labour Appellate Tribunal, prevented the management of the appellant company from initiating a new enquiry into the same incident that formed the subject of the earlier enquiry. The Court found no merit in that argument, explaining that it was based on a misunderstanding of the nature and scope of proceedings under section 33. That provision does not empower a Tribunal to adjudicate a dispute; rather, it authorises the Tribunal only to grant or withhold permission to the employer, during the pendency of an industrial dispute, to discharge or punish a workman involved in that dispute. In exercising this discretion, the Tribunal is not to act as a reviewing body on the employer’s decision but simply to ensure that the employer establishes a prima facie case before the ban on discharge or punishment is lifted. The purpose of section 33 is to safeguard workmen who are participating in a pending industrial dispute from intimidation or victimisation. The principles governing the grant of permission require that the employer act in good faith, refrain from any unfair labour practice, intimidation, or victimisation, and that there be no fundamental error or breach of natural‑justice principles. Consequently, when the Tribunal either grants or refuses permission, it is not adjudicating the underlying industrial dispute; its sole function is to prevent victimisation of the workman for having raised the dispute. Therefore, the nature and scope of proceedings under section 33 demonstrate that the removal or retention of the ban on dismissal or punishment does not preclude the raising of an industrial dispute, even if, as a result of the Tribunal’s permission, the employer later dismisses or punishes the workmen.

In this case, the Court explained that the removal of a ban on the punishment or dismissal of workmen does not prevent the filing of an industrial dispute even when, after the Industrial Tribunal grants permission, the employer proceeds to dismiss or punish the workmen. The Court referred to earlier decisions, namely Atherton West and Co. Ltd. v. Suti Mill Mazdoor Union, Lakshmi Devi Sugar Mills v. Pt. Ram Sarup, and Automobile Products of India Ltd. v. Rukmaji Bala, where Justice Das observed that the purpose of section 33 of the Industrial Disputes Act and section 22 of the Industrial Disputes (Appellate Tribunal) Act is solely to decide whether permission should be granted or withheld. Because the purpose of section 33 is limited to granting or refusing permission and not to adjudicate the underlying industrial dispute, any finding made under that provision does not acquire the effect of res judicata. Consequently, such findings do not bar the raising of an industrial dispute, and nothing in the language of the section or in the findings of the Industrial Tribunal dated 6 June 1954, or of the Labour Appellate Tribunal dated 29 March 1955, would prevent the appellant company from conducting a second enquiry or from dismissing the workmen, provided the established principles are observed.

The Court then addressed the argument raised by counsel that a “basic error” existed, relying on the rule articulated by Justice S. K. Das in Indian Iron and Steel Co. Ltd. v. Their Workmen. Counsel claimed that the appellant’s witness, Sergeant Boards, testified that between one hundred and one hundred and thirty persons had surrounded D'Cruz, and that if one hundred and six of them were reinstated, it would be impossible for sixty‑seven workmen to remain subject to proceedings. The appellant had originally initiated proceedings against one hundred and seventy workmen, representing all its employees. After the reinstatement of a large number, only sixty‑seven were said to remain, and it was against these individuals that permission for dismissal under section 33 was sought. The Court observed that this alleged basic error had not been raised before either the Industrial Tribunal or the Labour Appellate Tribunal. Instead, the parties proceeded on the assumption that the number of workmen against whom the appellant pursued action was sixty‑seven, of whom sixty‑four remained after three were allowed to be dismissed. Of the balance, sixteen resigned, leaving only forty‑eight cases for adjudication by the Industrial Tribunal. Because the alleged error was never litigated before the tribunals and the factual record shows that the numbers align with the parties’ submissions, the Court found that no basic error was established.

In this matter the Court examined the period from the date the workmen were ordered to be reinstated, namely 1 April 1955, until the date their services were terminated on 6 June 1955, and held that any claim for compensation covering that interval could not be sustained. The Industrial Tribunal, in its order dated 26 June 1954, and the Labour Appellate Tribunal, in its order dated 29 March 1955, had both declared the strike to be illegal. Subsequently, the Judge of the Sixth Industrial Tribunal, S C Sen Gupta, delivered an award on 7 June 1956 in which he refused to grant any compensation to workmen numbered 25 to 48 because their dismissal had been upheld on the ground that the strike was illegal; this position was supported by the authority cited in A I R 1958 S C 130, which observed that the strikers had adopted a belligerent attitude and that the lock‑out was fully justified. By contrast, the Labour Appellate Tribunal awarded back wages to the twenty‑four workmen who had been reinstated by its amended order dated 28 September 1956. The back wages were to cover the period from 1 April 1956 to the date of reinstatement, and this award mirrored the relief that the Industrial Tribunal had granted to workmen numbered 2 to 24, who had also been ordered to be reinstated. After careful consideration, the Court concluded that the reinstatement orders – the order of the Industrial Tribunal for workmen 2 to 24 and the order of the Appellate Tribunal for workmen 25 to 48 – were erroneous. Accordingly, neither group of workmen could claim back wages as compensation. The Court therefore allowed the appeal, set aside the decision of the Labour Appellate Tribunal as to all the workmen and set aside the award of the Industrial Tribunal as to workmen 2 to 24, and disallowed the claim for compensation that had been argued before it. Since the workmen had been dismissed and no compensation was awarded, the proper order regarding costs was that each party should bear its own costs of this appeal. The appeal was thus allowed.