The Management of Ranipur Colliery vs Bhuban Singh and Others

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 768 of 1957

Decision Date: 21 April 1959

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

The case Management of Ranipur Colliery versus Bhuban Singh and others was decided on 21 April 1959 by the Supreme Court of India. The judgment was authored by Justice K.N. Wanchoo and was delivered by a bench consisting of Justices K.N. Wanchoo, Bhuvneshwar P. Sinha and P.B. Gajendragadkar. The petitioner was the Management of Ranipur Colliery and the respondents were Bhuban Singh and other workmen. The decision is reported in the All India Reporter at page 833 of the 1959 volume, in the Supreme Court Reporter (Supplement) at page 719 of the 1959 volume, and it also appears in the law reports as R 1959 SC 923, R 1959 SC 1342, RF 1963 SC 1756, and RF 1986 SC 1168. The principal issue concerned the interpretation of standing orders under the Industrial Disputes Act, 1947, particularly whether the term “pending enquiry” in clause 27 of the standing orders included proceedings before an Industrial Tribunal, and the scope of Sections 3 and 33A of the Act. The factual background was that the company, after conducting a regular enquiry and while awaiting permission from the Industrial Tribunal under Section 33 of the Act, suspended certain workmen without pay. The workmen thereafter filed applications under Section 33A before the Industrial Tribunal, contending that their suspension without pay for a period exceeding ten days violated the standing orders, which allowed suspension without pay for no more than ten days, whether as punishment or pending enquiry. The Tribunal dismissed the workmen’s applications and granted the company permission to dismiss the affected employees. The workmen appealed this decision. The Labour Appellate Tribunal upheld the permission to dismiss but held that the phrase “pending enquiry” in clause 27 of the standing orders also covered the proceedings before the Industrial Tribunal, thereby concluding that the standing orders had been breached. The Supreme Court held that an employer may apply under Section 33 of the Industrial Disputes Act for permission to dismiss an employee when a regular enquiry establishes that the employee’s misconduct is proved and dismissal is the appropriate punishment. The Court explained that the Industrial Tribunal is not required to examine the employee’s conduct or the merits of the dismissal; its duty is only to determine whether a prima facie case exists and whether the employer has conducted a fair enquiry. The time taken by the Tribunal to reach a decision is beyond the employer’s control. The Court further observed that standing orders regulate the relationship between employers and employees, not the procedures of the Tribunal. Consequently, in the present case, the words “pending enquiry” in clause 27 of the standing orders referred solely to the employer’s internal enquiry and not to the proceedings before the Tribunal. The Court also reiterated the principle from the Lakshmi Devi Sugar Mill case, stating that workmen are not entitled to wages for the entire period of suspension if the Tribunal has granted permission to dismiss, and that this principle applies only where a ban under Section 33 exists and the employer seeks to lift the ban after completing the enquiry.

In this appeal, the Court explained that the matter arose from a decision of the Labour Appellate Tribunal of India in an industrial dispute. The appellant, identified as Ranipur Colliery, operated a coal-mining business in Dishergarh, West Bengal. The respondents were six workmen employed by the company who, together with another individual, performed the duties of tub-checkers. It was established that these workmen had prepared false reports concerning both the quality and the quantity of coal, a task that formed part of their responsibilities, and that their actions caused financial loss to the company. Consequently, the company issued charge-sheets against them and conducted a regular enquiry on 13 April 1955. The workmen attended that enquiry, were given a full opportunity to state their explanations, to cross-examine witnesses and generally to contest the charges. After the hearing the company concluded that the workmen were guilty of the alleged misconduct and that dismissal was the appropriate punishment.

The Court noted that, because an industrial dispute between the company and its workmen was already pending before the Industrial Tribunal, the company sought permission to dismiss the workmen under section 33 of the Industrial Disputes Act. Five of the seven workmen filed two applications under section 33-A of the Act before the Industrial Tribunal, asserting that they had been suspended without pay from 4 May 1955, an action the workmen claimed violated the Standing Orders that regulated their terms of service. The Tribunal considered these three applications together, held that permission should be granted to the company to dismiss all seven workmen, and accordingly issued that permission. Following the grant of permission, the Tribunal dismissed the applications filed under section 33-A.

Subsequently, six of the workmen appealed to the Labour Appellate Tribunal, challenging both the grant of permission to dismiss and the dismissal of their applications under section 33-A. Their contentions were twofold: first, that the Tribunal should not have granted permission to dismiss; and second, that five of the workmen had been placed under indefinite suspension without wages, contrary to the explicit provisions of the Standing Orders, and that therefore they were entitled to relief. The Labour Appellate Tribunal rejected the appeal with respect to the permission to dismiss, but the Court recorded that the Tribunal found a breach of clause 27 of the Standing Orders and consequently allowed the appeal of the five workmen (excluding Akhey Roy), ordering that they be paid their wages from the date of suspension without pay up to the date of the Tribunal’s order, after deducting ten days as prescribed in clause 27. The company then applied for special leave to appeal to this Court, which was granted, bringing the matter before the present Court. The Court also observed that the inclusion of Akhey Roy as a respondent appeared unnecessary, because the Appellate Tribunal’s order did not grant any relief to him and his appeal was effectively dismissed. The sole issue remaining for determination was whether suspension without pay pending the Industrial Tribunal’s permission under section 33 of the Act constituted a breach of clause 27 of the Standing Orders.

The Appellate Tribunal rejected the application for permission to dismiss, yet it concluded that there had been a violation of clause 27 of the Standing Orders. Accordingly, the Tribunal permitted the appeal of five workmen – excluding Akhey Roy – who had filed applications under section 33-A, and it ordered that these workmen be paid their wages from the date of their suspension without pay up to the date of the Industrial Tribunal’s order, reduced by ten days as prescribed in clause 27 of the Standing Orders. After this order, the company applied to this Court for special leave, which was granted, bringing the present matter before the Court. It appears that Akhey Roy was joined as a respondent without necessity, because the Appellate Tribunal’s order does not indicate that any relief was granted to him and his appeal to that Tribunal must be deemed dismissed. Consequently, the sole issue for determination is whether suspension without pay pending a decision of the Industrial Tribunal under section 33 of the Act constitutes a breach of clause 27 of the Standing Orders. The essential facts are as follows: seven workmen were served with charge-sheets on 1 April 1955; after their replies were received, an enquiry was held on 13 April 1955, where they were found guilty of misconduct; the employer then decided to seek permission for their dismissal under section 33 of the Act, and the application was filed with the Industrial Tribunal on 29 April 1955. The workmen were subsequently suspended without pay on 4 May 1955 while awaiting the Tribunal’s orders. Clause 27 of the Standing Orders, which is relied upon, provides: “An employee may be suspended, fined or dismissed without notice or any compensation in lieu of notice if he is found to be guilty of misconduct, provided suspension without pay, whether as a punishment or pending enquiry, shall not exceed ten days.” The workmen argue that the phrase “pending enquiry” in this clause embraces the enquiry conducted under section 33 of the Act before the Industrial Tribunal; therefore, if the Tribunal takes more than ten days to decide, the continued suspension without pay would breach clause 27. The company contends that “pending enquiry” refers solely to the employer’s internal enquiry and does not include the proceedings before the Industrial Tribunal under section 33. The Appellate Tribunal adopted the workmen’s view, holding that “pending enquiry” includes the Tribunal’s proceedings, and consequently, any suspension without pay extending beyond ten days – even while awaiting the Tribunal’s orders under section 33 – would violate clause 27 of the Standing Orders.

The Court examined the orders and relied on its earlier decision in Rampalat Chamar v The Assam Oil Co., Ltd., where the expression “pending full enquiry” was used. In that decision the Court expressed the view that there was no real distinction between the phrases “pending enquiry” and “pending full enquiry” and that the phrase covered proceedings before the Industrial Tribunal under section 33 of the Act. The present Court agrees that the wording “pending enquiry” appearing in clause 27 of the Standing Orders is not materially different from the wording “pending full enquiry” that featured in the Assam Oil Company case. However, this Court is of the opinion that the view adopted by the Labour Appellate Tribunal both in that earlier case and in the present matter is erroneous. In The Automobile Products of India Ltd. v. Rukamji Bala, this Court held that section 33 imposes a ban on an employer from dismissing a workman and empowers the Industrial Tribunal, upon an application, to either grant or withhold permission to dismiss, thereby lifting or maintaining the statutory ban. For the employer, the enquiry is considered concluded – or at least should be concluded – when the employer determines that the allegations against the employee are proved and that dismissal is the appropriate punishment. Only after reaching that conclusion does the employer make an application under section 33 for permission to dismiss. The proceedings before the Tribunal under section 33 are not an enquiry by the Tribunal into the merits of the dismissal; the Tribunal’s role is limited to ascertaining whether a prima facie case exists for lifting the ban and whether the employer has conducted a fair enquiry that led to a bona-fide finding of misconduct. Once the Tribunal is satisfied that these conditions are met, it is bound to grant the permission sought by the employer. Consequently, as noted in Lakshmi Devi Sugar Mills Ltd. v. Pt. Ram Sarup, the proceedings before the Industrial Tribunal cannot be characterised as an enquiry into the employee’s conduct. By contrast, clause 27 envisions an enquiry into the conduct of the employee, and such an enquiry can only be carried out by the employer. Therefore, when clause 27 uses the expression “pending enquiry”, the reference can only be to the employer’s own enquiry into the employee’s conduct, and it is entirely unnecessary that the words “pending enquiry” should have been qualified by the

In this case, the Court observed that the phrase “by the employer” must be read before the words can be understood as referring to an enquiry conducted by the employer. The Court noted that Standing Orders deal with the relationship between employers and employees and do not address tribunals. Consequently, when clause 27 mentions an enquiry, the reference can only be to an enquiry carried out by the employer and not to a proceeding under section 33 before the tribunal. The Court therefore held that, in the context of clause 27, the words denote an employer-initiated enquiry and are not to be read as relating to tribunal proceedings under section 33 of the Act. The Court further explained that the purpose and structure of section 33 support this interpretation. Section 33, as previously explained, places a prohibition on the employer, preventing dismissal of an employee until the tribunal grants permission. The Court pointed out that, absent this prohibition, the employer would have been free to dismiss the employee immediately after completing his own enquiry and concluding that the employee had committed misconduct. If section 33 had not existed, the employment contract would have ended at the moment of dismissal following the enquiry, and the employee would not have been entitled to any further wages. Instead, section 33 intervenes, stops the employer from dismissing the employee at once on the basis of the enquiry’s result, and obliges the employer to obtain the tribunal’s permission when an industrial dispute is pending between the employer and his workers. Thus, the Court concluded that the phrase in clause 27 cannot be stretched to include tribunal actions, because doing so would distort the intention of the standing orders and of the statutory scheme.

The Court reasoned that, for the employer, all steps necessary to terminate the employment relationship had already been taken once the enquiry was completed. To require the employer to continue paying wages after he had decided that the employee was guilty of misconduct and should be dismissed, the Court considered unfair, because the only reason for the delay was the existence of a pending industrial dispute that forced the employer to seek tribunal approval. Accordingly, the Court concluded that the employer would be justified in placing the employee on suspension without pay after he had formed a proper conclusion from his enquiry and while he applied to the tribunal for permission to dismiss. The Court warned that, if this were not allowed, the employer would be forced to keep paying an employee who was not performing any work, and the duration of that payment would depend on the arbitrary length of time the tribunal took to complete the section 33 proceedings. In the present matter, the Court noted that the employer filed the application for permission on 29 April 1955 and that the tribunal rendered its award on 10 March 1956, a period of more than ten months. Therefore, if the appellate tribunal’s view were accepted, the employer would be required to pay the employee for the entire ten-month interval, even though the employer had already finished his enquiry and was prepared to dismiss the employee long before the tribunal’s decision. The Court emphasized that the employer’s liability for wages should not extend beyond the point at which the employer has lawfully concluded the internal enquiry, given that the statutory restriction is solely to obtain tribunal sanction, not to create a prolonged period of unpaid suspension.

In the present matter the Court observed that the employer had already completed his internal enquiry and had decided to dismiss the employee well before the prohibition created by section 33 was invoked. The Court explained that clause 27 of the standing orders provides a maximum period of ten days for suspension without pay while an enquiry is pending. That ten-day limit is intended to prevent the employer from misusing the suspension provision and unduly extending the period during which the employee remains unemployed without remuneration. The purpose, the Court said, is to compel the employer to conclude the enquiry promptly within the ten-day window if the suspension is to be without pay. However, the Court noted that it could not have been the intention that the Industrial Tribunal also be required to finish the proceedings under section 33 within the same ten-day period; if the tribunal failed to do so, it would not constitute a breach of clause 27. The Court emphasized that the duration of the tribunal’s proceedings under section 33 is beyond the employer’s control and that applying the provisions of clause 27 to those tribunal proceedings would be inappropriate and inapplicable. Consequently, the Court held that the expression “pending enquiry” in clause 27, when read in its proper context and in the interests of justice, refers solely to the employer’s own enquiry and not to the separate tribunal proceedings under section 33. This interpretation, the Court found, would not impose an undue hardship on the employee because, if the tribunal ultimately grants permission for dismissal, the employee would receive no wages from the date of his suspension without pay. Conversely, if the tribunal denies the permission, the employee would be entitled to back wages dating from the commencement of the suspension without pay. In support of this view, the Court referred to the earlier decision of Lakshmi Devi Sugar Mills Ltd. (1), where a similar issue was considered. In that case the standing orders allowed suspension without pay for only four days, and it was held that suspension without pay pending an enquiry, as well as pending tribunal permission, could not be regarded as a punishment. Such suspension was characterized as a temporary measure lasting only until the employer’s application for permission to dismiss the workman was made and the tribunal rendered its order. The Court further noted that the Lakshmi Devi ruling held that if the tribunal granted permission, the workman would not be entitled to any payment during the suspension, whereas if permission was refused, the workman would be entitled to wages for the entire period of suspension. The Court affirmed that the principle articulated in Lakshmi Devi applies equally to the present case, but it added that the principle is applicable only where a prohibition under section 33 exists and the employer must apply under that section to lift the ban after completing the enquiry. The Court indicated that a different analysis would be required where no application under section 33 is necessary and the matter is governed solely by the relevant standing orders.

The Court observed that an employer possessed the authority to terminate an employee’s employment immediately once the enquiry into the employee’s conduct had been concluded. The Court further explained that where the applicable Standing Orders stipulated that a suspension without pay could not exceed a specified number of days, the employer was required either to finish the enquiry within that prescribed period or, if the enquiry extended beyond that time and a suspension was still deemed necessary, the employer could not withhold the employee’s wages for a duration longer than that allowed by the Standing Orders. In the facts before the Court, the suspension without pay was imposed even after an application under section 33 had been filed and while permission under that provision was still pending. The Industrial Tribunal had, however, granted permission to dismiss the employees concerned, and the portion of the award that contained this permission had been affirmed by the Appellate Tribunal, as referenced in (1) [1956] S.C.R. 916. Consequently, the Court held that there was no entitlement for the employees to receive wages during the period of suspension without pay. Accordingly, the Court allowed the appeal, set aside the order issued by the Labour Appellate Tribunal, and restored the order of the Industrial Tribunal that dismissed the two applications filed under section 33-A. The Court made no order as to costs and recorded that the appeal was allowed.