Strawboard Manufacturing Co vs Gobind

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 387 of 1961

Decision Date: 6 March 1962

Coram: K.N. Wanchoo, P.B. Gajendragadkar, A.K. Sarkar

In this case the Supreme Court of India examined a dispute between Strawboard Manufacturing Co., the petitioner, and Gobind, the respondent, concerning the termination of the respondent’s employment. The judgment was rendered on 6 March 1962 by a bench composed of Justices K.N. Wanchoo, P.B. Gajendragadkar and A.K. Sarkar. The decision was reported in 1962 AIR 1500 and 1962 SCR Supplement (3) 618, among other citations.

The factual record showed that Gobind was employed by Strawboard Manufacturing Co. He repeatedly refused to obey orders that were issued by various officers of the company at different times. Because of his refusal, the company first suspended him and subsequently charge‑sheeted him. An enquiry was then held to examine the charge‑sheet. After the enquiry concluded, the company referred the matter to the Labour Commissioner for a decision, without first reaching its own final conclusion. The Labour Commissioner declined to pass any order and instead directed the company to take whatever action it thought fit. Acting on that direction the company dismissed Gobind.

At the time of the dismissal two industrial disputes involving the company and its workmen were pending, one before a tribunal at Allahabad and another before a Labour Court at Meerut. On the same day the company sent applications by post to both authorities seeking approval of the dismissal. The Allahabad tribunal approved the action, whereas the Meerut Labour Court refused approval. The Labour Court, however, observed that the dismissal was not motivated by victimisation and that a prima facie case existed to justify the dismissal. The Court explained that its refusal was based on the procedural ground that the application for approval had been filed after the dismissal had taken place, whereas the statute required the application to be made before dismissal.

The Court held that an employer is permitted to dismiss an employee before obtaining the approval of the relevant tribunal or Labour Court. It reasoned that the word “approval” in the statutory provision indicates that the employer has already taken the action and is now seeking the authority’s endorsement. If the legislature had intended to make approval a condition precedent to dismissal, the language would have been expressed differently. Accordingly, the legislature intended to give the employer the right to issue a dismissal order subject to two conditions: the payment of wages for one month and the filing of an application to the appropriate authority for approval of the action taken. The Court further explained that if the tribunal does not approve the employer’s action, the effect is that the dismissal is treated as having never occurred and the employee is deemed to remain in service.

The Court explained that if an employer fails to obtain the approval of the Tribunal or Labour Court after dismissing a workman, the dismissal is treated as having never occurred and the employee remains in the service of the employer. Consequently, the dismissal or discharge, the payment of wages for a period of one month, and the filing of an application for approval must be carried out together and constitute a single transaction. When an employer dismisses or discharges an employee, the employer must at once pay the employee or offer to pay wages for one month and must also submit an application to the Tribunal for approval at the same time. Although it may be impossible to execute these three steps in a literal, instantaneous manner, the employer’s conduct must demonstrate that the dismissal, the wage payment, and the application were intended to form part of the same overall transaction. The Court noted that the decision in Metal Press Works Ltd. v. Deb (H. R.) and Others, reported in 1962 I. L. L. J. 75, was in agreement with this view, whereas the decisions in The Premier Automobiles Ltd. v. Ramchandra Bhimayya (I. L. R. 1950 Bom. 280) and Indian Extractions Private Ltd. v. A. V. Vyas (Conciliation Officer, A. 1. R. 1961 Guj. 22) were not. The Court further observed that it is contrary to the rules of statutory interpretation to insert additional wording into a provision when the provision, as written, already provides a reasonable meaning that carries out the legislature’s intention.

In the present appeal, which was heard in the Civil Appellate Jurisdiction as Civil Appeal No. 387 of 1961, the appellant obtained special leave to challenge a judgment and order dated 29 April 1960 of the Labour Court at Meerut in case No. 1 of 1960. Counsel for the appellant was identified, as were the counsel representing the respondent. The judgment was delivered on 6 March 1962 by Justice Wanchoo. The appeal raised the issue of how to interpret section 6‑E, sub‑paragraph (2)(b) of the United Provinces Industrial Disputes Act, U.P. Act No. XXVIII of 1947, which mirrors the language of section 33, sub‑paragraph (2)(b) of the Industrial Disputes Act, No. XIV of 1947, as amended by Act 36 of 1956. The factual background was that the appellant was a strawboard mill and the respondent was employed by the mill. On 12 August 1959 the Technical Director of the mill gave certain orders to the respondent, which the respondent refused to obey. On the same day the respondent also declined to follow similar directions issued by the machine‑man. The following day, 13 August 1959, the respondent again refused to obey orders from the shift‑in‑charge, and on 14 August 1959 he likewise refused instructions from another shift‑in‑charge. In response, the employer served a notice on the respondent asking him to show cause why he should not be dealt with under clause 22(a) of the Standing Orders, which defines wilful insubordination or disobedience of lawful orders from a superior as misconduct. The respondent submitted an explanation to the notice. Subsequently the employer suspended the respondent and served a charge‑sheet on him on 16 August 1959. An inquiry into the alleged misconduct was then conducted, and after the inquiry the matter proceeded to the next stages of the proceedings.

In the present dispute, the employer referred the matter to the Labour Commissioner for a decision, without first rendering any decision of its own as required by clause 30 of the Standing Orders. The Labour Commissioner declined to issue a decision and advised the employer that it could exercise the authority afforded to it under the Standing Orders. The employer then approached the Commissioner again, requesting an order in accordance with clause 30, but the Commissioner again refused to make any order and directed the employer to act as it deemed appropriate and within its lawful power. Consequently, the employer dismissed the employee on 1 February 1960. At the time of the dismissal two industrial disputes were pending between the employer and its workmen: one before Industrial Tribunal No 3 at Allahabad and another before the Labour Court at Meerut. On the same day as the dismissal, the employer posted applications to both authorities seeking approval of the dismissal.

The Industrial Tribunal at Allahabad examined the application and granted approval of the dismissal on 22 March 1960. When the same matter was presented before the Labour Court at Meerut on 29 April 1960, the Court refused to approve the employer’s action, even though it had been informed of the Allahabad Tribunal’s order. The Meerut Labour Court observed that the employer was not acting out of victimisation and that the employer’s internal inquiry had established a prima facie case for dismissal. Nevertheless, the Court held that the application for approval was filed after the employee had already been dismissed, rendering the application not bona fide. Accordingly, the Court declined to grant the prayer for approval of the dismissal. The Court further reasoned that the proviso to section 6E(2)(b) required the employer to make the application for approval before dismissing the workman; failure to do so violated the statutory condition. On this narrow ground, the Court concluded that approval could not be accorded and therefore refused to endorse the dismissal.

Following the Labour Court’s refusal, the employer obtained special leave to appeal before this Court, and the matter now comes before us for determination. The central question raised by the employer concerns the proper construction of the terms of section 6E(2), which, as previously noted, correspond word for word with the provisions of section 33(2) of the Act. Accordingly, we shall set out the language of section 33(2), which provides: “(2) During the pendency of any such proceeding in respect of an industrial dispute, the employer …” The present appeal is therefore concerned with the interpretation of the proviso to clause (b) of that provision, which stipulates that no workman shall be discharged or dismissed unless he has received wages for one month and the employer has made an application to the authority before which the proceeding is pending for approval of the employer’s action.

The statute provides that the employer may act “way, in accordance with the standing orders applicable to a workman concerned in such dispute‑ (a)… … … “. For any misconduct not connected with the dispute, the employer may discharge or punish that workman, whether by dismissal or otherwise; however, the provision adds a condition that no workman shall be dismissed unless he has received one month’s wages. In addition, the employer must make an application to the authority where the dispute is pending, seeking approval of the action taken. The appeal before this Court concerned the meaning of this proviso to clause (b). The Court observed that it was unnecessary to decide whether, when several disputes are pending before different tribunals, the employer must submit applications to each tribunal. Equally, the Court found it unnecessary to consider whether an application to only one tribunal would be adequate. In the facts of the present case, two industrial disputes were pending before two separate authorities. The employer filed applications with both authorities, seeking approval of the dismissal. One tribunal granted approval while the other refused, resulting in an unfavorable outcome for the appellant. Thus the appellant argued that the approval from one authority should be sufficient to satisfy the statutory condition. The respondent contended that the lack of approval from the second authority rendered the dismissal unlawful under the proviso.

Before addressing the interpretation of the proviso, the Court reviewed the circumstances that led to the enactment of section 33(2). Originally the Act did not contain a provision corresponding to section 33(2); the only relevant provision was what is now section 33(1). The purpose of the original section 33, before its amendment in 1956, was to allow industrial proceedings to continue before the prescribed authority in a calm and peaceful atmosphere. It was intended to keep the dispute free from disturbance by any other industrial dispute. The plain object was to preserve the status quo as far as possible during the pendency of any industrial dispute before a tribunal. However, the Court noted that the pre‑1956 version of section 33 was considered overly stringent because it completely removed the employer’s right to alter conditions of service. It also barred the employer from dismissing a workman even when the dismissal was unrelated to the dispute before the industrial authority. Consequently, it was felt that the rigidity should be softened so that an employer could make changes in service conditions that were not connected with the pending dispute. For the same reason, the legislature intended that the employer’s authority to dismiss or discharge a workman should not be entirely removed when the dismissal arose from matters unrelated to the dispute.

In the legislation, the power of an employer to dismiss a workman was removed where the dismissal depended on matters that were not related to the industrial dispute pending before any tribunal. At the same time, the law sought to provide certain safeguards for a workman who might be discharged during the pendency of a dispute on account of a reason that was unrelated to that dispute. For that reason section 33 was completely rewritten in 1956 and its scope was considerably broadened. The new provision now consists of five sub‑sections, whereas before 1956 it was essentially limited to what is now sub‑section (1). The present scheme of section 33 can therefore be described as follows. Sub‑section (1) deals with matters that are connected with a dispute that may be pending before a tribunal. It prohibits any alteration to the conditions of service that would prejudice the workmen involved in such a dispute, and it also forbids the employer from discharging or punishing any workman, whether by dismissal or otherwise, in connection with any matter that is related to the dispute. If the employer wishes to alter any condition of service, or to punish or dismiss a workman on a matter that is linked to the dispute, the employer must present the proposal to the tribunal and obtain its explicit written permission before carrying out the proposed change or disciplinary action. Sub‑section (2)(a), on the other hand, grants the employer the authority to alter any condition of service that is not connected with the dispute, and it permits the employer to discharge or punish a workman on grounds that are unrelated to the dispute pending before the tribunal. However, the power to dismiss or discharge under this sub‑section is subject to a proviso that imposes certain conditions on such action. The purpose of introducing sub‑section (2) was to relieve the employer from the stringent restrictions that existed under the pre‑1956 version of section 33 for actions that were unrelated to a pending dispute. Consequently, where the question concerns conditions of service that are unrelated to the dispute, the employer may change them freely. In contrast, where the question concerns the dismissal or discharge of a workman, the employer does have the power to act, but that power is not absolute; it may be exercised only in compliance with the conditions laid down in the proviso. Even those conditions in the proviso cannot be interpreted to require the employer to obtain prior approval from the tribunal before ordering a discharge, because such an interpretation would eliminate any distinction between sub‑section (1)(b) and sub‑section (2)(b) and would defeat the purpose of the 1956 amendment.

In analysing the proviso, the Court held that the language could not be read, unless it were unmistakably clear, as obligating the employer to obtain the tribunal’s approval before issuing a discharge or dismissal order against a workman. Interpreting the proviso in that manner would make section 33(1)(b) and section 33(2)(b) identical and would defeat the purpose of the 1956 amendment. The Court then turned to sub‑section (3), which expressly provides that, notwithstanding anything in sub‑section (2), a class of workers described as “protected workmen” may be dealt with only after obtaining written permission from the authority before which the proceeding is pending. This provision therefore curtails the freedom granted to the employer under sub‑section (2) with respect to service conditions and to the discharge or punishment of workers on grounds unrelated to the dispute, but it does so only for the limited group of protected workmen, even when the employer’s action is unrelated to any matter before the tribunal. The explanation to sub‑section (3) defines who qualifies as protected workmen, and sub‑section (4) makes consequential provisions applicable to them. Finally, sub‑section (5) stipulates that when an employer seeks approval under the proviso to sub‑section (2), the concerned authority must hear the application without delay and, as expeditiously as possible, pass an order it deems appropriate.

Having set out the statutory framework, the Court examined the actual wording of the proviso. The proviso states that no workman shall be discharged or dismissed unless two conditions are satisfied: first, the workman must have been paid wages for one month; second, the employer must have made an application to the authority before which the proceedings are pending, seeking approval of the employer’s action. The Court observed that the proviso only governs the two forms of punishment—discharge and dismissal—and does not extend to any other type of disciplinary measure. The two stipulated conditions are therefore (i) the payment of one month’s wages and (ii) the filing of an application with the relevant authority for approval of the employer’s action. The Court noted that there is no dispute that the payment condition is fulfilled when the employer tenders the one month’s wages to the employee. If the employee refuses to accept the wages, the Court held, the employee cannot claim that the employer has failed to make the payment. Consequently, when section 33 refers to the payment of one month’s wages, it is satisfied by the employer’s tender of those wages, which constitutes payment for the purposes of the proviso.

In regard to the second condition concerning the making of an application, the proviso requires that the application be filed for approval of the action already taken by the employer. The respondent argued that the phrase “action taken” should be understood to refer to the action that the employer proposes to take, and therefore the employer could only make an application to the tribunal asking it to approve the contemplated action, with dismissal or discharge of the workman permitted only after such approval. The Court, however, held that interpreting the provision in that manner would render sub‑section (2) virtually identical to sub‑section (1) of section 33, thereby nullifying the purpose of the amendment made in 1956. Moreover, the Court emphasized that it is contrary to the principles of statutory construction to add words to a provision when the provision, as written, can be given a reasonable meaning that fulfills the legislature’s intention. On a plain reading, the proviso clearly empowers the employer to issue a discharge or dismissal order before seeking the tribunal’s approval, while simultaneously preserving the protective effect intended for the employee.

The Court therefore concluded that when the proviso mentions an application for approval of the “action taken,” it refers to the actual order of discharge or dismissal that the employer has already made, and the application seeks the tribunal’s endorsement of that order. This interpretation is supported by the existence of Form K under Rule 60 of the Rules made under the Act, which corresponds to Form XV under Rule 31 of the Uttar Pradesh Rules. The use of the word “approval” further indicates that the employer has already performed the act for which approval is now being sought. Had the legislature intended to prevent the employer from issuing a dismissal order until prior tribunal permission was obtained, the wording of the proviso would have mirrored that of sub‑sections (1) and (3), expressly stating that no workman may be discharged or dismissed without written permission of the authority. The alteration of the language in sub‑section 2(b) demonstrates that the legislature intended to allow the employer to pass a discharge or dismissal order subject to two conditions: (i) the tender of one month’s wages to the employee, and (ii) the filing of an application with the appropriate authority for approval of the action already taken. The continued emphasis on the term “approval” confirms that the approval sought pertains to an act already performed by the employer.

In this case, the Court observed that the term “approval” in the proviso refers to the sanction of an act that has already been carried out, although the law sometimes permits approval of a proposed act. The Court explained that if the legislature had intended approval of a future act, it could have used the wording “for approval of the action proposed to be taken,” which it did not. The Court further noted that sub‑section (5) reinforces this meaning because it speaks of “approval of the action taken,” indicating that some action has already occurred and the employer seeks the authority’s endorsement through his application. The Court contrasted sub‑section (1) with sub‑section (2): under sub‑section (1) the employer merely proposes what he intends to do and asks the authority for explicit permission before acting; under sub‑section (2) the employer first carries out the dismissal or discharge and then seeks the authority’s approval of that completed act. Consequently, the Court held that sub‑section (2)(b) together with the proviso allows the employer to issue an order of dismissal or discharge before obtaining the authority’s approval, provided that the employer simultaneously files an application for approval of the act already taken. The respondent argued that if the employer dismisses a workman, applies for approval, and the tribunal refuses that approval, the workman would have no remedy because section 33(2) contains no specific reinstatement provision. The Court rejected that concern. It explained that a refusal of approval by the tribunal nullifies the employer’s action, rendering the dismissal or discharge ineffective, so the workman is deemed never to have been dismissed and continues in the employer’s service. Thus, the order of dismissal or discharge does not become final and conclusive until the tribunal grants approval under section 33(2). The Court then turned to the question of timing for the employer’s application. Referring to section 33‑A, which permits an employer to seek redress when he contravenes section 33, the Court emphasized that the proviso to section 33(2)(b) must be interpreted in a manner that does not diminish the protection afforded by section 33‑A. In reading the proviso, the Court concluded that …

In the Court’s view, the proviso mentioned in the statute is intended to cover three specific elements: first, the dismissal or discharge of the employee; second, the payment of wages to the employee; and third, the filing of an application for approval of the dismissal with the appropriate tribunal. The Court explained that these three elements must be treated as parts of a single transaction. Accordingly, when an employer exercises the power granted under section 33(2) by dismissing or discharging a worker, the employer is required to either pay the employee the wages for one month at that moment or to offer such payment, and to submit the application for tribunal approval without undue delay. The Court clarified that the requirement that the employer act “simultaneously or immediately” does not demand that the three steps be performed at the exact same instant, because it is practically impossible to accomplish three separate acts at one precise moment. Rather, the employer’s conduct must demonstrate that the dismissal, the wage payment, and the filing of the application are interconnected and form a single, cohesive transaction. If the employer’s actions satisfy this condition, the Court reasoned, there is no risk that the employee’s protection under section 33‑A will be compromised. Whether the application was lodged as part of the same transaction or at the same time as the dismissal is a question of fact that must be decided based on the specific circumstances of each case.

The Court then referred to the authorities that had been cited by the parties. The respondents’ counsel relied heavily on the decision in The Premier Automobiles Limited v. Ramchandra Bhimayya, in which the Bombay High Court held that the application for approval must be filed before the employer actually dismisses the employee and warned against interpreting the word “approval” in the proviso as indicating that the application could be submitted after the dismissal. The Bombay Court observed an apparent conflict between the opening and closing portions of the proviso and sought to reconcile them. A similar approach was later adopted, with some reservation, by the Gujarat High Court in Indian Extractions Private Limited v. A. V. Vyan, Conciliation Officer. The Court expressed the view that it is unnecessary to read the expression “action taken” in the proviso as synonymous with “action proposed to be taken,” as the Bombay Court had done. The two conflicting portions of the proviso can, in the Court’s opinion, be harmonised to permit the employer to dismiss the employee, to pay the requisite wages, and to file the application for approval as components of a single transaction. By contrast, the Calcutta High Court in Metal Press Works Limited v. Deb (H.R.) took the opposite position, holding that the wage payment and the filing of the application must occur simultaneously with the order of dismissal.

In this matter the Court observed that the payment of wages and the filing of the application for approval must be carried out simultaneously with the order of discharge or dismissal. It was further explained that the term “simultaneously” should be interpreted reasonably and must not be understood as requiring an infinitesimal split‑second timing; rather, the actions must be performed at once and without undue delay. The Court added that whether an application was made “at once” or “without delay” will depend on the particular facts of each case, and it considered this interpretation to be the correct approach.

The Court then examined the factual background of the present appeal. The appellant‑concern was located in Saharanpur, while the two labour tribunals concerned were seated at Meerut and at Allahabad. On 1 February 1960 the appellant issued an order of dismissal against the workman. On the same day it dispatched two separate applications by post, each addressed to one of the tribunals. The application sent to the Meerut tribunal was received on 3 February 1960, and the application sent to the Allahabad tribunal was received on 4 February 1960.

Considering these circumstances, the Court formed the opinion that the appellant had indeed made the applications to the tribunals simultaneously with, and without delay after, the dismissal order. Accordingly, the appellant’s conduct complied with the proviso to section 33(2)(b). The Court rejected the labour court’s view that the application must precede the dismissal, holding that the appellant had satisfied the statutory requirement by dismissing the workman, offering to pay the necessary wages, and sending the applications by post for tribunal approval at the same time.

Since the labour court had refused approval on this sole point, the Court concluded that the appeal must succeed. Accordingly, the appeal was allowed, the labour court’s order was set aside, and the appellant’s action was approved. No order as to costs was made.