Management Of Balipara Tea Estate vs Its Workmen on 30 April, 1959

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

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 30 April 1959

Coram: B.P. Sinha, P.B. Gajendragadkar, K.N. Wanchoo

This appeal, which was filed by way of special leave, required the Court to examine whether the award dated 31‑1‑1957 issued by the Industrial Tribunal of Assam was valid and correctly made. The award ordered that one Nandeswar Bora, who had been employed by the appellant company and who had been dismissed on the grounds of misconduct following a regular inquiry, should be reinstated together with all arrears of wages. The matter therefore turned on the legality of the award that directed his reinstatement and back‑wage entitlement.

The appellant in this case was a company that had been incorporated under the English Companies Act of 1927 and whose registered office was situated in London. The company owned the Balipara Tea Estate located in Assam, which the judgment refers to simply as “the Estate”. Until the year 1953 the Estate was managed by McLoed and Company Limited, which acted as the Managing Agent for the appellant. In 1953 the agency was transferred to Jardine Henderson Limited, which thereafter performed the managing‑agent functions. During the period in question, Nandeswar Bora was employed by the appellant as a Women Mohurir on the Estate. In that capacity his principal responsibilities involved the preparation and upkeep of two specific records: the Leaf Weighment Book and the Daily Wages Book, the latter also being known as the Hazri Book. These books related to the female labourers employed on the Estate who performed tea‑leaf plucking as well as other tasks on days when plucking was not required. The Leaf Weighment Book was intended to contain a detailed entry of the remuneration earned by each female labourer when she was engaged in leaf‑plucking activities. The Daily Wages Book, on the other hand, recorded the total amount payable to each labourer, reflecting not only the earnings from leaf‑plucking but also the wages for any other work performed by that labourer during the same week. Consequently, the Daily Wages Book served as a comprehensive summary of each worker’s weekly remuneration. Responsibility for compiling and maintaining both the Leaf Weighment Book and the Daily Wages Book lay with Nandeswar Bora, and the completed entries were required to be initialed by either the Manager or the Assistant Manager of the Estate as confirmation that they had examined the books. The payment of wages to the female labourers was made at the end of each week on the basis of the figures recorded in the Daily Wages Book.

Following the change of managing agency in 1953, the appellant’s internal auditor undertook a review of the Estate’s accounts, which included the books maintained by Nandeswar Bora. The auditor’s initial inspection identified certain discrepancies in the Leaf Weighment Book when it was compared with the Daily Wages Book for the year 1950. In the subsequent year, 1954, the same auditor performed a more thorough examination covering the Leaf Weighment Books and Daily Wages Books for the years 1950, 1951, 1952 and 1953. This detailed scrutiny revealed a number of irregularities and discrepancies in the records, prompting further investigation into the conduct of the employee responsible for their preparation.

In this matter, the internal auditor of the Company examined the leaf‑weighment books and the daily wages books for the years 1950 through 1953 and discovered that the entries made by the employee identified as Nandeswar Bora in the daily wages books showed amounts earned by certain female labourers that were greater than the amounts recorded in the corresponding leaf‑weighment books. The auditor calculated that the excess payments amounted to a loss of approximately Rs 467 to the Company. As a consequence of these findings, the Company determined that Nandeswar Bora was responsible for the irregularities and the resulting loss and therefore placed him under suspension effective 16‑12‑1954 pending further inquiry. On 18‑1‑1955, the Manager of the Estate issued a charge‑sheet to Nandeswar Bora stating that between June 1950 and August 1953 he had wilfully entered false figures in the daily wages book, which should have been based on the actual leaf‑weighment entries. The charge‑sheet named specific women workers, cited the wages indicated in the leaf‑weighment book, contrasted them with the wages shown in the daily wages book for particular weeks, and asserted that a total of Rs 467 odd had been paid in excess. The employee was summoned to explain the circumstances set out in the charge‑sheet and was required to show cause why he should not be dismissed for misconduct under Clause 10(a) of the Certified Standing Orders. Nandeswar Bora replied by a letter dated 21‑1‑1955, stating that after a lapse of about four years he was unable to reconcile the discrepancies and that any errors might have resulted from miscalculations or from entries relating to work other than leaf‑plucking, which he could no longer recall. He did not claim that such other work had been recorded in any separate books. He protested his innocence, affirmed that he had performed his duties honestly throughout his service, and expressed willingness to correct any mistakes, offering an apology. He further pleaded that, if any errors had occurred, they might be overlooked, that he be granted pardon as a first‑offender, and that the suspension order be revoked. Subsequently, on 22‑1‑1955, the Manager wrote to Nandeswar Bora informing him that a regular inquiry into the charges would be held in his presence on 24‑1‑1955 at 3 p.m., and that he would be afforded every opportunity to explain the circumstances alleged against him in the charge‑sheet.

On the appointed date the Manager conducted an inquiry in the presence of Nandeswar Bora, informing him that he would be given every opportunity to explain the circumstances that appeared against him concerning the entries referred to in the charge‑sheet. During the inquiry the Manager read out the details set out in the charge‑sheet and asked Bora to respond. Bora stated that he had read and understood the charge‑sheet and that he had nothing further to say. When the Manager pressed him for any explanation, Bora replied that he had no explanation to give, although he admitted that he had made the entries and that it was his duty to maintain the books. On being asked specifically whether those entries had caused excess amounts to be drawn and paid to certain labourers, Bora answered affirmatively, saying, “Yes, I admit that these entries have caused excess amounts to be drawn and paid to the Labour.” It was noted that at this stage Bora did not raise any argument that the alleged excess wage payments could be accounted for by reference to books other than the Leaf Weighment Books, nor did he suggest that the excess amounts might have corresponded to work of a different nature performed by the labourers. By a letter dated 10‑2‑1955 the Manager dismissed Nandeswar Bora, with effect from 18‑1‑1955. Following the dismissal the workmen of the tea estates, represented by their trade union, raised an industrial dispute against the appellant company. Conciliation proceedings were held in April 1955 in the presence of the Manager and the union representatives, but no settlement was reached. Consequently, the Government of Assam issued a notification on 20‑5‑1956 and a further notification on 7‑7‑1956 referring the dispute to Shri R. Hazarika, Additional District and Sessions Judge, with the questions for adjudication being: (1) whether the dismissal of Sri N. Bora, Women Mohurer of Balipara Tea Estate, by the management of the estate was justified; and (2) if not, whether he was entitled to reinstatement or any other relief in lieu thereof. Before the Industrial Tribunal the appellant filed a written statement recapitulating the circumstances that had led to the dismissal, asserting that the dismissal orders were passed by the Manager after a bona‑fide inquiry which found the workman guilty of gross misconduct affecting the company’s funds, and rejecting the suggestion that the dismissal was based merely on suspicion or any ulterior motive. Nandeswar Bora filed his own written statement, contending that he could not be expected to reconcile the discrepancies after a lapse of four years and that there might have been erroneous calculations and entries for work items other than leaf weighment for which wages had been paid, thereby repeating his earlier contentions.

In his statement before the Manager, the workman explained that payments might have been made for other items of work that he could not recollect at the time of the inquiry. He did not specifically allege that such payments could relate to work that was recorded in a book other than the Leaf Weighment Book; rather, he merely requested that any mistakes he might have committed be excused and offered a sincere apology for them. He repeated his earlier plea before the Manager, saying, “Finally I beg most respectfully to overlook the discrepancies if any and grant me pardon as the first offence with the lifting of the suspension order.” This request for leniency formed part of his oral defence during the inquiry.

When the matter proceeded before the Industrial Tribunal, the appellant company presented both oral testimony and documentary material to support the charge of over‑payment against the workman. Among the documents was a chart indicating that certain women workers had received excess wages. The workman, Nandeswar Bora, gave evidence in support of his own case. In his examination‑in‑chief, he described the routine of leaf collection by the women labourers, who worked in two shifts, one in the morning and one in the afternoon. He stated that the weighments of the leaves were recorded by him while the Manager or the Assistant Manager was present. He further explained that entries were subsequently made in the Wages Book, and that on the following morning those entries were checked by the Jamadar or the Assistant Manager. Payment of wages, he said, was made according to the amounts shown in the Wages Book. He acknowledged that a regular inquiry had been held by the Manager and that he had provided an explanation in answer to the charge‑sheet prepared against him. During cross‑examination, he admitted that he had not asked to see any books before submitting his explanation, nor had he requested the production of the Field Book on the day he was examined before the Tribunal. He also accepted that the Daily Wages Book was a copy of the Field Book and that wages for work other than leaf plucking were shown in the Wages Book. The Manager, identified as N. H. Archer, was examined as a witness for the company. He confirmed that he had conducted the inquiry. In cross‑examination, he admitted that the Field Book was not produced because it was deemed unnecessary, and he further admitted that the Field Book had not been shown to the workmen either at the time of the inquiry or at any other time before or after the inquiry.

The Industrial Tribunal rendered its Award on 31 January 1957, directing that Nandeswar Bora be reinstated and be paid all back wages from the date of his dismissal. In reaching this decision, the Tribunal observed that the Daily Wages Book had been prepared on the basis of the Field Book, and because the Field Book had not been produced, it could not be conclusively shown that any discrepancy existed between the work actually performed and the wages that had been paid. The Tribunal also noted that the women labourers, who were alleged to have received excess wages, should have been called as witnesses by the Management. It further held that, based on the books that had been filed, it could not be said that falsification of the accounts had been definitively proved. While agreeing with the Management that falsification of accounts would amount to gross misconduct, the Tribunal concluded that the charge had not been conclusively proved against the workman. The Tribunal made a significant observation that “the degree of proof is always the same in a departmental enquiry as in the common law court.” Consequently, the Tribunal directed the reinstatement of the workman, as set out in its Award. The appellant subsequently sought and obtained special leave to appeal this Award before this Court.

In its award, the Tribunal observed that it could not demonstrate any discrepancy between the work that had actually been done and the wages that had been paid. It further noted that the women labourers who were alleged to have received excess wages should have been summoned as witnesses by the Management, and that, based on the books that had been filed, it could not be said that falsification of the accounts had been definitively proved. While the Tribunal agreed with the Management that falsification of accounts constituted gross misconduct, it held that the charge had not been conclusively established against the workman concerned. The Tribunal made a noteworthy remark, stating that “the degree of proof is always the same in a department enquiry as in the common law court.” Consequently, the Tribunal directed that the workman be reinstated, together with back wages, as previously indicated. The appellant challenged this award and obtained special leave to appeal before this Court.

The appellant contended, and the Court agreed, that the Tribunal had misdirected itself by re‑examining the case against the workman on its merits as if it were a criminal trial for falsification of accounts and misappropriation of funds. In doing so, the Tribunal acted not only as a Court of Appeal reviewing the dismissal order passed by the Management, despite finding no bad faith, malice, or procedural irregularity on the part of the Management, but also adopted an erroneous approach to the case. The Tribunal erred in insisting that the Management produce conclusive proof of guilt during the inquiry. Established law requires a Tribunal merely to determine whether the Management was justified in dismissing an employee and whether misconduct was proven at the inquiry, not to demand absolute proof of guilt. Moreover, the Tribunal misdirected itself by basing its award on the absence of the Field Book. It should be noted that, before the Tribunal’s inquiry began, the respondents requested certain documents from the Management, but the Field Book was not among them. Even at the time the respondents’ evidence was recorded, the workman admitted in cross‑examination that the Field Book had not been called for. The appellant argued that the Field Books were wholly irrelevant because the respondents never claimed that entries in the Field Book could explain any discrepancy between the work recorded in the Leaf Weighment Book and the Daily Wages Book. At no stage of the inquiry, whether by the Management or before the Tribunal, was the Field Book produced or examined.

In the proceedings before the Tribunal, the Field Book was never produced. The Manager, when examined on behalf of the Management, stated in his cross‑examination that the Field Book had not been called for and that it was not produced because it was considered unnecessary, apparently because there were no relevant entries within it. Consequently, the Tribunal could not justifiably draw any inference against the Management on the ground of the non‑production of the Field Book; the Tribunal itself recognised that the absent book had no bearing on the case against the workman. The entries that were relevant to the dispute were found in the Leaf Weighment Book and the Daily Wages Book. Those entries showed that on the specific dates for which the charge was levelled, the women labourers were engaged in leaf collection both in the mornings and in the evenings, and that no other work was performed on those dates. The workman concerned was fully aware of the circumstances of the case and of the procedure used in maintaining the various account books. The workman would have been the first person to point out any explanation from the Field Book at the earliest opportunity, had it contained any explanation for the alleged discrepancies. As already indicated, at no stage of the inquiry, either before the Manager or before the Tribunal, did the workman claim that there were no discrepancies or that the discrepancies could be explained by entries in the Field Book. If the Tribunal had any genuine doubt about the bona fides of the Management – a point that was not mentioned in the Award – the simplest course would have been to require the Management to produce the Field Book, if it contained any relevant entries. Such a step was not taken. It was therefore clear that the Tribunal misdirected itself by basing its conclusion on the absence of a document that neither party nor the Tribunal regarded as relevant during the inquiry. In the opinion of this Court, the record did not provide any justification for the reason given in the Award for holding that the charge against the workman was not well founded. The Award suffered from an inherent weakness in the approach adopted by the Tribunal in determining the controversy. The Tribunal had not decided for itself whether the charge framed against the workman had been established to its satisfaction; instead it only needed to be satisfied that the Management was justified in concluding that the charge was well founded. Had the Tribunal found that the Management was motivated by any sinister motive, had indulged in unfair labour practice, or had victimised the workman for any trade‑union‑related activities, it might have been justified in criticizing the Management’s inquiry. However, such findings were absent from the Award.

In this case the Court observed that, although the workman’s participation in the trade union could have given him a reason to be critical of the inquiry conducted by Management, the Award itself contained no finding that such criticism existed. The record of the Award made no reference to any influence of the workman’s union activities on his attitude toward the Management inquiry, and therefore no inference of bias or hostility could be drawn from the Award’s facts. After reviewing the entire material before it, the Court concluded that the Award was legally defective because it was invalid and suffered from an inherent infirmity. The Court explained that the Tribunal’s reasoning was unsound because it rested on a premise that had not been established by the evidence, namely that the workman’s union involvement justified any adverse conclusion against him. Consequently the Court allowed the appeal and ordered that the Award be set aside in its entirety. Because the appellant chose not to ask that costs be awarded against the respondents, the Court directed that each party should bear its own costs, both in these appellate proceedings and in the earlier tribunal proceedings, thereby leaving the parties to meet their own expenses.