Caltex (India) Ltd. vs Their Workmen

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

Court: supreme-court

Case Number: Not extracted

Decision Date: 11 February, 1960

Coram: P.B. Gajendragadkar, K. Subba Rao

In this case, the appellant, M/s Caltex (India) Ltd., filed an appeal by special leave under Section 33 of the Industrial Disputes Act, 1947, seeking the dismissal of twenty‑three workmen who were represented by the Madras Kerosene Oil Workers’ Union. The background of the dispute began when the Government of Madras referred a controversy involving three oil companies—the Burmah‑Shell Oil Storage and Distribution Co. Ltd., the Standard Vacuum Oil Co. Ltd., and the appellant—regarding the payment of bonus for the fiscal year 1951‑52. The workmen applied to the tribunal for interim relief; the tribunal granted such relief to the workmen of the first two companies but declined to grant it to the respondents. After the Labour Commissioner intervened and the respondents made additional representations, the appellant consented to a full and final settlement of the 1951 bonus by paying an extra three months’ basic wages in addition to the one month’s basic wage that had already been paid. The agreed additional amount was actually disbursed to the workmen on 25 March 1954.

Subsequently, on 9 April 1954, the workmen demanded an advance of Rs 5 to Rs 7 for the upcoming Tamil New Year Festival, which was to be observed on 13 April 1954. The appellant rejected this demand, observing that it had already paid the extra bonus and that the March wages had been credited to the workmen on 6 April 1954. The refusal gave rise to tension between the parties. On Monday, 12 April 1954, the workmen reported for duty as usual but then staged a stay‑in‑strike, refusing to obey reasonable orders from the management to either resume work or vacate the premises in order to safeguard the installation that stored and distributed inflammable products. This conduct was characterised as wilful insubordination and disobedience, conduct that was punishable with dismissal under the appellant’s standing orders. Although the management repeatedly demanded that the workmen either leave the premises or recommence work, the workmen persisted in remaining inside the installation until the close of the day. As a result, the management declared a lockout in the afternoon of 12 April 1954 and it was made clear that

The management announced that the workmen would remain locked out until they gave an assurance that they would work peacefully and would resort only to constitutional methods for the redress of their grievance. In consequence of the alleged insubordinate conduct, the appellant framed charge‑sheets against twenty‑three workmen who were said to have committed specific acts of insubordination and other misconduct. A regular and full‑fledged enquiry into those charges was conducted by Mr Wallace, the newly appointed Terminal Superintendent at Ton‑Diarpet. The enquiry report recorded that of the twenty‑three charge‑sheeted workmen, two were exonerated and were taken back to work, while another who was found guilty of minor offences was also reinstated. However, the appellant sought to suspend that workman for four days under Order 24 of its standing orders. By way of an application under Section 33, the appellant then asked for permission to suspend one workman for four days and to dismiss the remaining twenty‑one workmen. During the pendency of the proceedings, one of the workmen died. The above summary describes the factual backdrop from which the present appeal arose. The Industrial Tribunal held that the strike was illegal and that the lock‑out declared by the appellant was legal and justified. Nevertheless, the tribunal refused permission to the appellant to dismiss nineteen workmen and to suspend one. The tribunal did allow the dismissal of one workman on the ground that he had committed overt acts of misdemeanour during the strike period. On appeal, the Labour Appellate Tribunal affirmed the findings and conclusions of the original tribunal. It reiterated that the strike was illegal and the lock‑out lawful, but it held that the punishment sought to be meted out to the workmen was unduly severe, and therefore it declined to grant the appellant the relief it had sought. The appellant’s present appeal challenges the correctness and propriety of the final order passed by the tribunals below. It is true that the appellant’s refusal to give the usual advance of rupees five to seven to its workmen on Tamil New Year’s Day was tactless and reflected a lack of human and sympathetic approach; however, the tribunals correctly held that the strike was illegal and that the respondents’ refusal to obey the reasonable and legal orders issued by the appellant’s officers amounted to insubordination and misconduct under the appellant’s standing orders, which have been duly certified and are binding between the parties. The tribunals also found that a proper enquiry had been held, that the charges framed against the respondents were duly proved in the opinion of the enquiring officer, and that there was no suggestion of mala‑fide intent or victimisation. On these facts, the learned Attorney‑General relied in support of his argument that the tribunals below had acted within their jurisdiction.

The Court observed that the tribunals below had acted illegally and without jurisdiction in refusing to grant permission to the appellant, and that this contention was well‑founded and therefore had to be upheld. The Court then turned to the question of the limits of the jurisdiction of an industrial tribunal when dealing with applications made under Section 33 of the Act, a question that the Court has examined on several occasions. It has been consistently held that, in exercising its jurisdiction under Section 33, the tribunal must first determine whether the employer has made out a prima facie case for the dismissal of the employee concerned. If the employer has conducted a proper enquiry into the alleged misconduct and if the proposed dismissal does not appear to be an act of victimisation or an unfair labour practice, the tribunal’s inquiry must be confined solely to the issue of whether a prima facie case exists. In such proceedings the tribunal is not authorised to substitute its own judgment for that of the employer with respect to the appropriate punishment. For example, the tribunal cannot inquire whether the dismissal sought is unduly severe, as explained in Punjab National Bank Ltd. v. All India Punjab National Bank Employees’ Federation, C. A. Nos. 519, 520 and 521 of 1958, DA 24‑9‑1959, and in Automobile Products of India, Ltd. v. Rukmaji Bala. Moreover, even where an industrial dispute is raised on the ground of dismissal and is referred to the tribunal for adjudication, there are clear limitations on the tribunal’s jurisdiction, a principle affirmed in Indian Iron and and Steel Co. Ltd. v. Their Workmen. This limitation was expressly conceded by Mr Sharma, who appeared for the respondents. The Court further noted that the Labour Appellate Tribunal appeared to have been influenced by the consideration that mere participation in an illegal strike does not inevitably merit dismissal. While that observation is correct, the Court held that it has little relevance when the tribunal is considering an application under Section 33. In the present case the appellant had filed a detailed statement setting out numerous acts of misconduct alleged and proved against each of the workmen whose dismissal was sought. The Court observed that no complaint had been made concerning the regularity or validity of the enquiry proceedings or the conclusions reached therein. Consequently, if the enquiry, to the satisfaction of the inquiring officer, established that the workmen were guilty not only of participating in an illegal strike but also of several other acts of gross indiscipline for which dismissal is prescribed under the standing orders, it is difficult to conceive how an industrial tribunal could lawfully refuse to grant the application made by the appellant under Section 33. The Court therefore concluded that the view taken by the tribunals below must be reversed and that it must be held that the appellant has made out a

The Court observed that the appellant had established a sufficient case for receiving permission to dismiss twenty workmen and to suspend one workman, as described in the appellant’s application. Nevertheless, the Court noted that during the hearing of the appeal the appellant displayed a notably fair and conciliatory attitude toward the matters before the tribunal. The Court was informed that all of the workmen who were the subject of the dismissal and suspension proceedings remained employed by the appellant and had not been terminated. Furthermore, the appellant indicated its willingness to retain those employees in its service provided that it was permitted to impose a three‑day suspension without wages as a token or symbolic punishment. In addition, the appellant expressly agreed that the illegal strike would not be treated as a break in service for the sole purpose of calculating gratuity or retrenchment compensation, whichever was applicable. The Court recorded that these concessions were offered on the condition that the Union would refrain from initiating any industrial dispute concerning matters other than those presently before the tribunal. The terms of this agreement were signed by the counsel representing both the appellant and the respondents and were subsequently filed in the record of this case. Accordingly, the Court proposed to issue a single order granting the appellant permission to suspend the concerned respondents for three days without pay, characterizing the suspension as a token or symbolic punishment, and stipulating that the suspension shall not constitute a break in service for the calculation of gratuity or retrenchment compensation, as appropriate. The Court further ordered that, given the circumstances of this case, no costs would be awarded to either party.