India Marine Service Private Ltd vs Their Workmen

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 202 of 1962

Decision Date: 08/08/1962

Coram: J.R. Mudholkar, P.B. Gajendragadkar, S.K. Das

In the matter titled India Marine Service Private Ltd versus Their Workmen, the Supreme Court rendered its judgment on 8 August 1962. The case was heard by a bench comprising Justice J. R. Mudholkar, Justice P. B. Gajendragadkar and Justice S. K. Das, and it is reported in the 1963 AIR 528 as well as in the 1963 Supplementary Court Reports (3) 575. The petitioner was India Marine Service Private Limited and the respondents were identified as “their workmen.” The central issues involved the dismissal of an employee on grounds of alleged insubordination, the powers of the industrial tribunal to order reinstatement, and the legality of a lock‑out that followed a strike by the workmen.

According to the factual narrative, a clerk, referred to as B, was observed shouting and behaving in a rude and insolent manner toward his superior officer. As a result, the employer issued a charge‑sheet and required B to explain both his conduct and certain purchases he had made on behalf of the company. An enquiry was subsequently conducted by the Managing Director, who concluded that two charges were proved and dismissed B from his position. The Managing Director communicated this decision in a letter dated 29 October 1953, stating that, after careful consideration, it was decided that, in the interest of discipline and business, B should be dismissed immediately, and that his past record was “very much against” him. The industrial tribunal later held that the enquiry was vitiated because it was based not only on the charges specified in the charge‑sheet but also on additional charges for which B was not given an opportunity to explain. Consequently, the tribunal found the allegation of insubordination unproved and ordered B’s reinstatement. The Supreme Court held that the tribunal’s order was contrary to law because the Managing Director’s letter itself demonstrated that a decisive conclusion to terminate B’s services had already been reached in the interest of discipline. The Court further held that the tribunal was not empowered to disregard the Managing Director’s finding and to independently assess the evidence presented before him.

The judgment also addressed a separate incident in which a sudden strike was launched by the workmen on 13 November 1958. In response, the company declared a lock‑out, which persisted until 5 January 1959, when the works were reopened. The tribunal examined the legality of both the strike and the lock‑out, concluding that while the strike was unjustifiable and the lock‑out initially ordered on 13 November 1958 was justified, the continuation of the lock‑out for fifty‑three days was wholly unreasonable and therefore unjustified. The Court held, that where a strike

When a strike is held to be without legal justification and it is subsequently followed by a lock‑out that endures for a lengthy period, the appropriate response of an industrial tribunal is to allocate responsibility between the parties and to order payment of wages only for the portion of the lock‑out that may be deemed unjustified. In such circumstances the tribunal must determine the relative blame and limit the wage liability accordingly. Conversely, if the strike itself lacks justification but the lock‑out was lawfully imposed, the workers are not entitled to any wages for the duration of either the strike or the lock‑out. However, in the alternate situation where the strike is justified according to legal standards but the employer’s response in the form of a lock‑out is not justified, the employees become entitled to the full wages for the entire period covering both the strike and the lock‑out. This principle guides the tribunal in balancing the rights and obligations of both employers and workmen when assessing wage liabilities arising from industrial disputes.

The civil appeal under consideration, identified as Civil Appeal No. 202 of 1962, was filed by special leave against an award dated 31 January 1961 rendered by the Third Industrial Tribunal, West Bengal, in case No. VIII‑28 of 1960. The appeal was argued on behalf of the appellant by counsel and on behalf of the respondents by another counsel. The judgment was pronounced on 8 August 1962 and delivered by Justice Mudholkar. The appeal presented two distinct questions for determination. The first question concerned whether the dismissal of Mr. Robin Bose, who held the position of Purchaser within the appellant company, was legally justified. The second question related to whether the employees of the appellant were entitled to any wages for the period spanning 13 November 1958 to 4 January 1959, a timeframe during which a lock‑out had been in force. Although the questions were separate, the court first addressed the factual background pertinent to the issue of Mr. Bose’s dismissal before considering the wage claim.

Mr. Robin Bose was employed as a clerk and was designated as Purchaser by the appellant. On 13 September 1958 at approximately ten o’clock in the morning, Mr. R. N. Chatterjee, the officer supervising Bose’s work, removed from Bose’s desk the purchase‑estimate book that Bose maintained, in order to verify a purchase entry dated 18 August 1958. Shortly after this, Bose approached Chatterjee to request the immediate return of the book. Chatterjee replied that the book would be retained for a short period and would be returned once he had completed his examination of it. Bose became irritated by this response, raised his voice, and began to use abusive and objectionable language in the presence of the entire office staff. Despite a reminder from Chatterjee emphasizing the necessity of maintaining discipline within the office, Bose ignored the admonition and replied in a loud and threatening tone, “Do not teach me office discipline. I have worked in larger offices; you shall have to bear the consequences if you do not return the book right now.” Chatterjee then pointed out that, as the person in charge of purchases, he possessed the authority to inspect the registers kept by the purchase department. This clarification further enraged Bose, who responded, “I shall see you; I will teach you a good lesson,” and subsequently left Chatterjee’s table. Soon after, the Managing Director entered the scene, and Chatterjee reported the incident to him. The Managing Director then summoned Bose to his office and asked him to provide an explanation for his shouting and his disrespectful conduct toward his superior.

In the matter before the Tribunal, the events began when Mr Bose spoke to his superior, Mr R N Chatterjee, in a rude manner. After leaving the Managing Director’s office, Mr Bose again behaved aggressively toward Mr Chatterjee, raising his voice and saying, “If you do not arrange to return the book at once I will teach you a good lesson on the road.” The Managing Director then emerged from his room and, after some difficulty, succeeded in quieting Mr Bose. Following this incident the company issued a charge‑sheet to Mr Bose and required him to submit a written explanation for his rude and insolent conduct toward his superior officer. The charge‑sheet also asked him to explain why he had failed to inform Mr Chatterjee that, on 18 August 1958, he had purchased copper sheets at a rate of Rs 3‑1‑0 per pound from Messrs Joydeb Nityalal Paramanick, and why, when he was instructed to purchase the same material again on 21 August 1958, he bought it at the higher rate of Rs 3‑4‑0 per pound. In his reply dated 20 September 1958, Mr Bose contended that the statements in the charge‑sheet distorted the facts and he said that, during the enquiry, he would present all the relevant facts to the enquiry officer. Nevertheless, he denied the allegations of misconduct. The company responded that his explanation was vague and, in the interest of both Mr Bose and of justice, he should provide a precise account. Mr Bose thereafter replied that he had nothing further to add. Subsequent correspondence between Mr Bose and the company continued, and as a result of one of his letters the company served him with a second charge‑sheet. Eventually the Managing Director conducted an enquiry and found that the two charges set out in the first charge‑sheet were substantiated. On the basis of those findings the company dismissed Mr Bose from his position. No separate enquiry report was prepared by the Managing Director, who conducted the enquiry, but all material matters were incorporated in a letter dated 29 October 1958 addressed to Mr Bose. The Tribunal observed that no enquiry had been held with respect to the second charge‑sheet; consequently, that charge‑sheet should be excluded from consideration. Moreover, the Tribunal held that the dismissal was based not only on the charges in the first charge‑sheet but also on additional matters to which Mr Bose had not been given an opportunity to respond, thereby rendering the enquiry vitiated and the dismissal unsustainable. After evaluating the evidence presented before the domestic Tribunal, the Tribunal concluded that the allegation of insubordination against Mr Bose had not been proved by convincing evidence. Accordingly, the Tribunal ordered that Mr Bose be reinstated with full back wages and allowances from the date of his dismissal up to the date of reinstatement. It is undisputed that no enquiry was conducted on the charges contained in the second charge‑sheet, and therefore that charge‑sheet was rightly excluded from consideration.

It was observed that the second charge‑sheet was properly excluded from consideration by both the Managing Director and the Tribunal. Although the Managing Director’s letter dated 29 October 1958 made reference to certain extraneous matters, a reading of the entire letter, especially its final paragraph, makes it clear that the Director’s decision to dismiss the employee rested solely on the charge of insubordination. The paragraph in question states: “After giving your matter our very careful consideration, we have, therefore, painfully come to the decision that in the interest of discipline and business you should be forthwith dismissed from our service. Accordingly your service will no longer be required by us from today. In taking this action against you we have also taken into consideration your past record which is very much against you.” While the last sentence acknowledges that the employee’s past record was noted, it does not imply that the record formed the effective ground for dismissal. The Director had already concluded that termination was necessary in the interest of discipline, and the additional remark merely served to reinforce that conclusion. Consequently, the Tribunal was not authorised to revisit the Director’s finding or to assess the evidence presented before the Director independently. The Tribunal’s order that set aside the dismissal and directed reinstatement was therefore held to be contrary to law and was set aside.

The matter then turned to the lock‑out imposed by the company. The lock‑out was clearly a response to a sudden strike, described as a token strike, initiated by the workmen. The strike appeared to be partial in nature, and the workers had given notice of the action on the preceding day. To understand the context of the dispute, several facts were outlined. Under an agreement dated 23 November 1956, the management agreed to pay a bonus of thirty‑seven days’ wages to its factory employees for the year 1955‑56, expressly stating that the bonus was not a condition of service. On 10 September 1958, the respondent union demanded an additional seven days’ bonus beyond the agreed thirty‑seven days. The company replied in a letter dated 11 October 1953, indicating that it did not accept the demand that the bonus be made a condition of service, but, as a gesture of goodwill, offered to pay the workmen fifteen days’ consolidated wages as a bonus, hoping the offer would be accepted. A further communication from the company on 13 October 1958 reiterated this position, pointing out that …

The management observed that the workmen had adopted a deliberate slowdown, which had seriously harmed the ship‑repairing operations of the company. Consequently the management proposed that both the management and the union should immediately approach the Labour Directorate to consider two matters: first, whether the workmen were justified in ceasing overtime work at their own discretion; and second, the problem of bonus payments. In order to facilitate a prompt resolution, the management suggested that it might be prepared to pay the workmen an advance sum of money, as recommended by the Conciliation Officer, on an advance‑account basis pending the Tribunal’s adjudication on the bonus issue. The management stressed that if the Tribunal were to rule against the payment of the bonus, or were to award a bonus amount less than the advance paid, the full advance or the excess would be recovered from the workmen’s wages in instalments as directed by the Tribunal.

The union responded to this proposal in a letter dated 15 October 1958, rejecting it in an emphatic manner. The union’s letter questioned the management’s “good sense” in seeking a tripartite conference, characterising the proposal as a delaying tactic, and asserted that the union already knew how to proceed when called to attend such a conference.

On 16 October 1958 the company addressed a letter to the Labour Commissioner of West Bengal, informing the Commissioner of the deteriorating situation in the factory and requesting his intervention. On the same day a company representative discussed the matter with Mr Basu, the Assistant Labour Commissioner. The following day the company sent another letter to Mr Basu, stating that although the company’s financial condition did not justify acceding to the bonus demand, it was willing to make an ex‑gratia bonus payment on the same terms as the previous year, provided three conditions were satisfied: (i) the union should condemn the workmen’s conduct of stopping overtime since 10 October 1958, which had caused considerable loss to the company; (ii) the union should undertake to ensure that the workmen would not stop working overtime in the future; and (iii) the bonus should not be treated as a condition of service.

Subsequently, on 5 November 1958 the union sent a letter to the company outlining ten separate demands. The first demand required that a bonus equivalent to thirty‑seven days’ wages be paid to all workmen at both the works and the head office. Following the issuance of these demands, the union initiated a partial strike on 13 November 1958. On the same day the company posted a lock‑out notice on its notice board and served a copy of the notice to the union. The notice read in part: “For some time now the workmen, by resorting to an organised slowdown, by refusing to work overtime and by keeping a strike notice, have to a great extent crippled our ship‑repairing business and have made it difficult for us to accept major ship repairs or large orders. Today the workmen have resorted to a strike when we have on our hands…”

On the day the company posted a notice on its notice board, it stated that a ship was in dry dock awaiting unlocking and another vessel was scheduled to sail in two days. The notice declared that the strike was “definitely illegal” and that, because of this illegal strike, the company had no alternative but to declare a lock‑out. The lock‑out remained in force until 5 January 1959, when the works were reopened. The termination of the lock‑out resulted from a settlement reached between the parties on 3 January 1959. Under the terms of that settlement the workmen were to receive a bonus equal to one per cent of the sale proceeds of the ship‑repairing section for the whole year, after deduction of sales tax, irrespective of the company’s profit or loss. In addition, the workmen were to be paid a “Puja bonus” of sixteen days’ wages each year, also irrespective of profit or loss. The Court noted that it was unnecessary to set out the remaining provisions of the agreement. The Court observed that the company’s stance appeared reasonable. The company had proposed, through the union, that work should continue, that the dispute be referred to the Conciliation Officer for settlement, and that interim relief be granted to the workmen during the pendency of the conciliation process. The union, however, rejected this proposal in a contemptuous manner and, in order to coerce the company, urged its members to commence work stoppage on 13 November 1958. While the union claimed that the strike was intended merely as a token demonstration, the Court held that the real purpose of the strike was to circumvent an amicable settlement that the company was prepared to accept. Consequently, the Court found the strike to be unjustified. In light of this finding, the Court evaluated the legality of the lock‑out. It held that although the strike was unjustifiable, the lock‑out that was ordered on 13 November 1958 was initially justified. Nevertheless, the Court considered that the lock‑out’s continuation for fifty‑three days was wholly unreasonable and therefore became unjustified.

The Court explained that where an unjustified strike is followed by a lock‑out that later becomes unjustified because of its excessive duration, it would be improper for an industrial tribunal to award the full wages for the entire period of the lock‑out. The Court clarified that when a strike is unjustified and the lock‑out is justified, the workmen are not entitled to any wages for the period of the lock‑out. Conversely, when a strike is justified but the lock‑out is unjustified, the workmen are entitled to the full wages for the combined period of the strike and the lock‑out. In the present case, however, the situation fell within the category where an unjustified strike was succeeded by a lock‑out that subsequently became unjustified, giving rise to a need for apportionment of liability. The Court therefore concluded that the blame for the circumstances that arose after the strike and the lock‑out should be divided roughly equally between the company and the workmen.

In the matter before the Court, the adjudicating authority observed that the responsibility for the industrial dispute was shared equally by the employer and the employees. Accordingly, the Court directed that each workman be paid only fifty percent of the wages that accrued for the period commencing on 14 November 1958 and ending on 3 January 1959, and that both the first and the last day were to be treated as days for which the reduced wages would apply. The Court further specified that the calculation of the reduced wages would include both the initial day of the dispute and the final day of the period, thereby ensuring that the workers received half pay for each day within the defined interval. The Court further held that the appeal filed by the parties was to be allowed in part, and that the award originally made by the industrial tribunal was to be altered to the extent necessary to give effect to the partial allowance of the appeal. No order was made regarding the costs of the proceedings, and the costs were left to be borne as the parties might agree, reflecting the principle that each party bears its own expenses unless directed otherwise. The final disposition of the appeal was therefore that it was allowed in part, resulting in a modification of the award in accordance with the partial success of the appellant.