Sur Enamel And Stampingworks (P) Ltd vs Their Workmen on 7 May, 1963

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 681 of 1962

Decision Date: 07/05/1963

Coram: K.C. Das Gupta, P.B. Gajendragadkar, K.N. Wanchoo

In this case the Supreme Court of India heard an appeal brought by Sur Enamel and Stampingworks (P) Ltd against its workmen. The judgment was delivered on 7 May 1963 by a bench consisting of Justice K C Das Gupta, Justice P B Gajendragadkar and Justice K N Wanchoo. The petition was filed by the company identified as the petitioner and the respondents were the workmen employed by the company. The case was reported in the 1963 All India Reports at page 1914 and also in the 1964 Supplementary Civil Reports (third series) at page 616. The matters discussed involved provisions of the Industrial Disputes Act, 1947, particularly sections 2(eee), 25B and 25F, and concerned the dismissal of an employee without a proper departmental enquiry and the question of whether a domestic tribunal’s findings could be reviewed by an industrial tribunal. The factual background concerned a workman, referred to as D, who received a notice on 23 October 1959 alleging that several articles had been spoiled through his fault and inviting him to show cause why disciplinary action should not be taken. The subsequent enquiry examined only D himself and did not call any other witnesses to prove the charge. D was presented with reports prepared by his superior and other persons without being allowed to cross‑examine them, and he was simply asked why these persons would have made false reports against him. On 11 November 1959 the management dismissed D on the ground of wilful insubordination or disobedience, either alone or in concert with others, in violation of a superior’s orders. The dispute was referred to an industrial tribunal, which held that the domestic enquiry had not complied with the rules of natural justice. After reviewing the evidence, the tribunal concluded that there was insufficient material to establish D’s guilt of insubordination or any damage to the company’s property. Consequently, the tribunal set aside the dismissal order and directed that D be reinstated. The company challenged the tribunal’s order, arguing, among other points, that the tribunal should not have gone beyond the findings of the domestic tribunal.

The Court held that when an industrial employee’s services are terminated after a domestic enquiry that has been properly conducted in accordance with the principles of natural justice and whose conclusions are not perverse, an industrial tribunal does not have the authority to question the propriety or correctness of those conclusions. However, in the present case, because the domestic enquiry was not properly conducted, the tribunal was justified in disregarding the domestic tribunal’s findings. The Court explained that an enquiry can be considered properly held only if several conditions are satisfied: the employee must be clearly informed of the specific charges against him; the witnesses must be examined, ordinarily in the employee’s presence, with respect to those charges; the employee must be given a fair opportunity to cross‑examine the witnesses; the employee must be allowed a fair chance to examine any witnesses, including himself, on any relevant matter he wishes to raise; and finally, the officer conducting the enquiry must record his findings with reasons in a written report. The judgment also noted that two other workmen who had been appointed on 10 March 1959 had their services terminated on 15 January 1960. Under section 25F of the Industrial Disputes Act, a workman who has been in continuous service for not less than one year is entitled to certain benefits, and under section 25B a workman who has worked for at least 240 days within a twelve‑month calendar period is deemed to have completed one year of service. It was found that these two workmen had each worked for more than 240 days during their employment, even though the total period of their service was less than twelve calendar months, thereby qualifying them for the benefits contemplated in the Act.

In order for an enquiry into an employee’s conduct to be considered proper, the Court required that several conditions be satisfied. First, the employee must be clearly informed of the charges that are being pressed against him. Second, the witnesses who are expected to testify about the charges must be examined, ordinarily in the presence of the employee. Third, the employee must be given a fair opportunity to cross‑examine those witnesses. Fourth, the employee must also be allowed, if he wishes, to call and examine his own witnesses, including himself, on any matter that is relevant to his defence. Fifth, the officer who conducts the enquiry must record his findings in a report and must set out the reasons that support those findings. Two workmen who were employed by the appellant company were appointed on 10 March 1959, but their employment was terminated on 15 January 1960. Under section 25F of the Industrial Disputes Act, 1947, a workman who has been in continuous service for not less than one year is entitled to certain benefits. Section 25B provides that a workman who, during a period of twelve calendar months, has actually worked in an industry for not less than 240 days, shall be deemed to have completed one year of service in that industry. It was established that the two workmen had been employed for a period of less than twelve calendar months, although during that period they had worked for more than 240 days. The Court held that because the period of actual employment was shorter than twelve months, the two workmen could not be said to have completed one year of continuous service and therefore were not entitled to the benefits specified in section 25F. The Court explained that to prove one year of continuous service, it must first be shown that the employee was employed for at least twelve calendar months, and secondly that during those twelve months the employee worked for at least 240 days. The requirement of section 25B cannot be satisfied solely by the fact that the number of days worked reaches 240 if the twelve‑month employment condition is not met.

The matter before the Court was a civil appeal filed under the appellate jurisdiction of the Supreme Court, identified as Civil Appeal No 681 of 1962. The appeal was taken by special leave from an award dated 13 March 1961 rendered by the Fifth Industrial Tribunal of West Bengal in case number VIII‑167 of 1960. Counsel for the appellant and for the respondents were instructed respectively, without naming the individual lawyers, and the judgment was delivered on 7 May 1963 by Justice DAS GUPTA. The appeal arose out of an industrial dispute between the appellant company and its workmen concerning the dismissal of eleven workmen. The Fifth Industrial Tribunal had originally adjudicated the dispute, and the company was granted special leave to appeal the Tribunal’s award with respect to three of those workmen, namely Manik Chandra Das, Nagen Bora, and Monoharan. The Court first examined the case of Manik Chandra Das. According to the record, on 23 October 1959 the workman received a notice in which the company alleged that a number of articles had been spoiled as a result of his negligence. The notice required him to show cause within forty‑eight hours of receipt as to why disciplinary action should not be taken against him. In his response dated 25 October, the workman denied any responsibility for the alleged spoilage and stated that he had earlier reported the condition of the articles to his supervisor and senior workers, and that, following their advice, he had painted the borders of the articles. This response formed the basis of the subsequent proceedings that led to an enquiry and ultimately to his dismissal, which became the subject of the industrial tribunal’s examination.

Manik Chandra Das testified that he had informed the supervisor and the sardars about the defective articles before they were painted, and that, following the advice he received, he painted only the borders of the articles. The management, however, reported that an enquiry was conducted against Manik on 29 October 1959. According to the report prepared by the Works Manager, who acted as the enquiry officer, the company dismissed Manik, and a formal order of dismissal was issued on 11 November 1959. The dismissal order stated that Manik was being removed from service “for causing wilful insubordination or disobedience, whether alone or in combination with others, of any orders of the superior or of the management.” Before the industrial tribunal, evidence was presented intended to show that Manik had caused damage to the company’s property. The tribunal held that the domestic tribunal had failed to observe the rules of natural justice. After examining the testimony offered by witnesses on behalf of the management, the tribunal concluded that there was insufficient material to prove that Manik was guilty of the alleged insubordination or disobedience that formed the basis of the dismissal. The tribunal also found that the evidence concerning the purported damage to the company’s property was inadequate to sustain any charge that might justify dismissal. Accordingly, the tribunal set aside the company’s dismissal order and directed that Manik be reinstated. In support of the appeal against this reinstatement order, counsel for the company argued that the industrial tribunal was not empowered to go behind the findings of the domestic tribunal and contended that the tribunal was wrong to conclude that the rules of natural justice had been breached. The record shows that a joint enquiry was held against Manik and another employee, Birinchi. No other persons were examined to substantiate the charges; only Manik and Birinchi were questioned. They were presented with reports prepared by the supervisor and other individuals behind their backs and were asked to explain why those persons would have made false reports. It is unclear whether the answers given by Manik and Birinchi were recorded. The inquiring authority reported that the two were “unable to explain as to why these persons would be making the reports against them falsely.” The Court observed that it would be a misuse of terminology to describe such a proceeding as a proper enquiry. The Court has consistently held, in a series of decisions, that when an industrial employee’s services are terminated after a domestic enquiry that complies with the principles of natural justice and whose conclusions are not perverse, the industrial tribunal is not entitled to question the propriety or correctness of those conclusions. The Court further noted that some employers have misinterpreted these decisions, believing that merely conducting an enquiry in form satisfies the requirements of industrial law and shields disciplinary actions from challenge.

The Court observed that the view that merely conducting a formal enquiry would satisfy the requirements of industrial law and would shield a disciplinary action from challenge was wholly mistaken. According to the Court, an enquiry can be regarded as properly held only when the following conditions are fulfilled: first, the employee against whom action is contemplated must be clearly informed of the specific charges that are being levelled; second, the witnesses who are to give evidence must be examined, ordinarily in the presence of the employee and with regard to the charges; third, the employee must be afforded a fair opportunity to cross‑examine those witnesses; fourth, the employee must be allowed a fair chance to examine any witnesses, including himself, on any matter that is relevant to his defence, should he wish to do so; and fifth, the enquiry officer must record his findings in a report and must set out the reasons for those findings.

Applying these principles to the facts of the present case, the Court found that the statements recorded by the enquiring authority were made behind the backs of the employees and that the persons who had prepared those statements were not made available for cross‑examination. Moreover, the Court noted that those witnesses did not appear to have been present at the enquiry at all, and there was no indication that the written reports had been provided to the employee before the enquiry was held. Even assuming, for the sake of argument, that the witnesses had been present and that the employee had been given a chance to cross‑examine them, the Court held that the circumstances would still not have amounted to a fair and sufficient opportunity. In reality, the evidence showed that the witnesses never attended the enquiry. Consequently, the Court concluded that no genuine enquiry had been conducted and that the domestic tribunal’s conclusions could be, and were, disregarded by the higher Tribunal.

The Court also pointed out a further anomaly in the dismissal of the employee identified as Manik. While the domestic tribunal had recommended dismissal on the ground that Manik had deliberately caused damage to raw materials, the management’s dismissal order cited a completely different charge. The order stated: “you are dismissed from the service of the company for causing wilful insubordination or disobedience whether alone or in combination with another or others, of any order of the superior or of the management...............” The Court observed that the charge‑sheet sent to Manik on 23 October 1959 did not mention any allegation of wilful insubordination or disobedience. It was therefore clear that the domestic tribunal had not found Manik guilty of any such misconduct. The Court found it difficult to understand how a charge concerning damage to property, which was the subject of the enquiry officer’s report, could give rise to a dismissal order framed on a different ground. That discrepancy alone provided sufficient basis to set aside the dismissal order. Even if, as argued by counsel, the real ground for dismissal had been the damage caused to property and the wording in the order was erroneous, the Court noted that the appellant’s case would still fail because no proper enquiry had been held in the first place.

The Court observed that, because the domestic tribunal had not established that the charge against the employee was true, the employer could not justify the dismissal merely by invoking the findings of that tribunal. The Tribunal was not satisfied that the charge was proved, and the Court indicated that it would not delve into the correctness of the Tribunal’s factual findings, since such findings are ordinarily not open to challenge on appeal under Article 136. Accordingly, the Court held that the Tribunal had correctly set aside the company’s order of dismissal and had rightfully ordered the reinstatement of the workman identified as Manik.

Turning to the matters of Nagen Bora and Monoharan, the Court noted that both individuals were temporary workmen. The Tribunal had determined that the termination of their services was invalid solely because the employer had failed to comply with the provisions of section 25F of the Industrial Disputes Act, and it had ordered that they receive compensation. Counsel for the appellant argued that, as temporary workmen, they were not entitled to the benefits of section 25F. The Court found it unnecessary to resolve that argument because, even if temporary workmen were deemed eligible for section 25F, neither Bora nor Monoharan satisfied the substantive conditions of that provision. Section 25F confers a benefit only on a workman who has completed at least one year of continuous service with the employer. The definition of “continuous service” in section 2(eee) includes uninterrupted service, allowing for interruptions due only to sickness, authorized leave, accident, a lawful strike, a lock‑out, or a work stoppage not caused by the employee. Section 25B further explains that a workman is deemed to have completed one year of continuous service when, during a period of twelve calendar months, he has actually worked for not less than 240 days in the industry. The factual record showed that both Bora and Monoharan were re‑appointed on 10 March 1959 and that their employment was terminated on 5 January 1960, giving them a total period of service of less than eleven months. It was undisputed that any prior service before the re‑appointment could not be counted, as the re‑appointment constituted a fresh appointment. Although they may have worked more than 240 days within those less‑than‑eleven months, the requirement of a minimum twelve‑month period was not met, and therefore the condition of section 25B was not satisfied.

In this case the Court observed that section 25B required fulfillment of two distinct conditions. First, the employee had to be employed for a continuous period of not less than twelve calendar months. Second, during those twelve months the employee must have worked for not less than two hundred and forty days. The Court noted that because the two workmen had not been employed for a period of twelve calendar months at all, it was unnecessary to investigate whether the actual number of days worked reached the two hundred and forty‑day threshold. Moreover, the Court explained that even if the total days worked had indeed been at least two hundred and forty, the statutory requirement would still remain unsatisfied, since the primary condition of a twelve‑month period of service had not been met. Consequently the Court concluded that the Tribunal had erred in holding that the two workmen were entitled to the benefit of section 25F. Accordingly the Court set aside the Tribunal’s direction ordering compensation to be paid to Nagen Bora and Monoharan. The appeal was dismissed with respect to Manik Chandra Das, but was allowed in respect of Nagen Bora and Monoharan. Counsel appearing for the appellant assured the Court that the appellant would make the payments directed by the Tribunal, deducting any amounts already paid in compliance with the Tribunal’s order. The Court expressed confidence that the appellant company would honour this assurance. No order as to costs was made. The appeal was therefore allowed in part.