Associated Cement Companies Ltd vs P. N. Sharma and Another
Rewritten Version Notice: This is a rewritten version of the original judgment.
Court: Supreme Court of India
Case Number: Civil Appeal No. 44 of 1964
Decision Date: 9 December, 1964
Coram: P.B. Gajendragadkar, J.R. Mudholkar, J.C. Shah, S.M. Sikri, R.S. Bachawat
In the matter titled Associated Cement Companies Ltd versus P. N. Sharma and another, the Supreme Court delivered its judgment on 9 December 1964. The judgment was authored by Chief Justice P. B. Gajendragadkar and was pronounced by a bench comprising Justices J. R. Mudholkar, J. C. Shah, S. M. Sikri, and R. S. Bachawat. The citation for this decision appears in the 1965 All India Reporter at page 1595 and in the 1965 Supreme Court Reporter (Second Series) at page 366, among other references. The factual background is that the appellant, Associated Cement Companies Ltd, appointed the first respondent as a Welfare Officer in accordance with the Factories Act, 1948 and the Punjab Welfare Officers Recruitment and Conditions of Service Rules, 1952. The letter of appointment stipulated that the officer could be transferred from one unit of the company to another and that his services could be terminated by the company upon provision of one month’s notice or by payment of one month’s salary in lieu of such notice. When the first respondent refused to report to a new location to which he had been transferred, the appellant exercised its contractual right and terminated his employment, paying him one month’s salary as prescribed. The first respondent then filed an appeal before the second respondent, the State of Punjab, which acted as the appellate authority under rule 6(6) of the 1952 Rules. The State ordered the reinstatement of the first respondent, holding that the prior concurrence of the Labour Commissioner, required under rule 6(3) proviso 2, had not been obtained. In the appeal before this Court, the appellant contended two principal points: first, that the rule obligating the Labour Commissioner’s concurrence was beyond the scope of the rule‑making power granted to the State Government by section 49(2) of the Factories Act and therefore invalid; second, that the reinstatement order issued by the State was invalid because the first respondent’s appeal to the State was incompetent. Additionally, the first respondent raised a preliminary objection asserting that the State of Punjab, in its appellate capacity, was not a tribunal within the meaning of article 136(1) of the Constitution, and consequently the appeal to this Court was incompetent. The Court held that the State of Punjab, exercising the powers conferred by rules 6(5) and 6(6), qualified as a tribunal under article 136(1). The Court emphasized that determining whether a body is a tribunal does not depend solely on the presence of formal court‑like trappings; rather, the decisive inquiry is whether the adjudicative authority exercised by the body emanates from a statutory provision and constitutes a component of the State’s inherent judicial power. Applying this test, the Court concluded that the State’s authority under the specified rules represented a statutory grant of judicial power for resolving disputes between management and welfare officers, thereby satisfying the criteria for a tribunal within the constitutional sense.
The Court explained that while the existence of certain court‑like trappings may help in deciding whether an authority is exercising judicial power, those trappings are not decisive. The essential test, the Court said, is to determine whether the adjudicating power exercised by the authority has been granted to it by a statute and whether that power forms part of the State’s inherent power used in performing its judicial function. Applying this test, the Court found no doubt that the power exercised by the second respondent under rules 6(5) and 6(6) of the Rules constitutes a portion of the State’s judicial power. That power was conferred on the second respondent by a statutory rule and may be exercised in disputes that arise between the management and its welfare officers. The dispute, the Court noted, involves a claim asserted by one party and denied by the other, and therefore necessarily concerns the rights and obligations of the parties. The order finally issued by the second respondent is described as its decision, which is final and binding, and it is an order rendered on appeal. In reaching a fair and objective determination of the dispute presented to it in its appellate jurisdiction, the State Government may devise its own procedure and may use any incidental or subsidiary powers required to deal effectively with the matter [386 F‑H; 387 A‑B, E].
Per Justice Bachawat, the basic criterion for identifying a tribunal within the meaning of Article 136 is that the body must be an adjudicating authority other than a court that is vested with the judicial power of the State. In India the State possesses inherent judicial functions, and courts as well as other authorities entrusted by the State with judicial functions are considered delegates of the State’s judicial power. The courts alone do not have a monopoly of judicial power. Consequently, any authority that is not a court but is vested with the State’s judicial power qualifies as a tribunal under the article. The presence of court‑like trappings is not an essential characteristic of a tribunal. The broad residuary appellate power under Article 136 includes all adjudicating authorities that possess the State’s judicial power, irrespective of whether they display the formal trappings of a court. For an entity to be a tribunal, it is essential that its adjudicatory power originates from a statute or a statutory rule. The appellate function and the authority to make a conclusive determination of the civil rights of the parties regarding the matters in controversy indicate that the second respondent is obliged to act judicially, to decide the dispute solely by ascertaining the facts presented and by applying the relevant law to the issue. The rule, the Court observed, does not prescribe any specific procedure for hearing the appeal, allowing the second respondent to devise an appropriate procedure consistent with its judicial duty.
For the purpose of hearing the appeal, the second respondent was held to be free to adopt any procedure it deemed appropriate, provided that the procedure remained consistent with the respondent’s judicial duty. The Court referred to several authorities supporting this view, citing the passages marked at pages 392 D‑F, 393 E and H, 394 A‑C and D‑E, and 396 C‑E.
The Court examined the expression “conditions of service” as it appears in section 49(2) and concluded that the phrase is sufficiently broad to encompass the proviso (2) to rule 6(3). The term “conditions of service” was interpreted to include both the termination of services and the specific conditions that may give rise to such termination. Accordingly, a statutory rule that imposes an obligation on management, as prescribed by the second proviso to rule 6(3), falls within the ambit of section 49(2) and therefore cannot be declared invalid. This reasoning was supported by the citations at pages 388 C‑E and G.
By a full court decision, it was held that the appeal filed by the first respondent to the second respondent was incompetent. The Court explained that the scheme of the applicable rules provides that when management seeks the concurrence of the Labour Commissioner and such concurrence is denied, management may appeal under rule 6(5). Conversely, if the Labour Commissioner’s concurrence is obtained, or if a welfare officer’s services are terminated without first seeking concurrence, the officer may appeal under rule 6(6). However, for an appeal under rule 6(6) to be competent, the termination must be of a punitive character. In the present case, the termination was merely a discharge made in accordance with the conditions of service and did not constitute a punishment; consequently, it fell outside the scope of rule 6(3). The Court observed that the formal wording of the order does not by itself determine the nature of the termination. The order of discharge in this case was a genuine discharge, issued by the employer without any intention to stigmatize the employee, even though the employer deemed the termination necessary. These points were supported by the references at pages 388 H, 389 A‑B and H, and 390 C and F.
The matter before the Court arose in Civil Appeal No. 44 of 1964, which was filed by special leave against an order dated 4 July 1962 issued by the Government of Punjab, Labour Department, exercising the powers conferred by sub‑rule 6 of the Punjab Welfare Officers (Recruitment and Service Conditions) Rules, 1952. Counsel for the appellants included M. C. Setalvad, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, while counsel for respondent No. 1 was J. P. Goyal and counsel for respondent No. 2 comprised Gopal Singh and R. N. Sachthey. The judgment was delivered by Chief Justice Gajendragadkar together with Justices M. Hidayatullah, Shah and Sikri, with Justice Bacha wat delivering a separate opinion. The principal question of law addressed by the Court was whether respondent No. 2, the State of Punjab, exercising appellate jurisdiction under rule 6(6) of the Punjab Welfare Officers Recruitment and Conditions of Service Rules, 1952, qualifies as a tribunal within the meaning of article 136(1) of the Constitution.
In this case the appellant, Associated Cement Companies Ltd., which operates the Bhupendra Cement Works at Surajpur, contested the legality of an appellate order issued on 4 July 1962 by respondent No. 2 under the relevant rule of the Punjab Welfare Officers Recruitment and Conditions of Service Rules, 1952. The order had directed that the appellant reinstate its Welfare Officer, P. N. Sharma, who was respondent No. 1. During the hearing of the appeal, counsel for respondent No. 1 raised a preliminary objection, arguing that special leave should not have been granted because the appeal was incompetent. The objection was based on the claim that respondent No. 2, whose appellate decision was being challenged, was not a tribunal within the meaning of Article 136(1) of the Constitution. The court indicated that if this preliminary objection were to be dismissed, it would then be necessary to examine the appellant’s substantive claim that the appellate order was invalid, erroneous, and therefore ought to be set aside.
The appellant is a company whose registered head office is located in Bombay. It operates fourteen cement factories, two coal mines, and one fire‑brick works across eight States of the Union of India. One of these cement factories, the Bhupendra Cement Works at Surajpur, falls within the territorial jurisdiction of respondent No. 2. Under the Factories Act, 1948, read together with the Punjab Welfare Officers Rules, the appellant was required to appoint a Welfare Officer for each factory and to notify the appointment and the officer’s qualifications to the Chief Inspector of Factories. Accordingly, the appellant appointed P. N. Sharma as its Welfare Officer.
The letter of appointment dated 2 March 1956 stated that the officer could be transferred from one unit of the appellant to another and that his services could be terminated by the appellant upon one month’s notice or by payment in lieu of such notice. Initially, the officer was posted to the Lakheri Cement Works in Lakheri, Rajasthan, where he commenced duty on 14 March 1956. Subsequent to that posting, he was transferred to various locations in accordance with the operational needs of the appellant’s factories. On 26 June 1960, he was posted to the Bhupendra Cement Works, Surajpur, and he continued to work there until 26 September 1961, when his services were terminated.
According to the appellant’s records, the officer was transferred from the Bhupendra Cement Works to the Kymore Works near Katni in Madhya Pradesh. The officer, however, indicated that he was unwilling to report to Kymore. After an extended period of correspondence between the parties, the appellant sent a communication on 26 September 1961 stating that, because the officer had not complied with the transfer order, his employment with the appellant had ceased and his name had been removed from the company’s payroll.
In response to this termination, the officer filed an appeal before respondent No. 2, which acted as the appellate authority under Rule 6(6) of the Rules. Upon receipt of notice of the appeal, the appellant submitted a written statement disputing the validity of the officer’s grievance concerning the termination of his services. It was on this procedural backdrop that respondent No. 2 later issued the impugned order on 4 July 1962, an order that the appellant now challenges as unlawful.
The appellate authority issued the contested order on 4 July 1962. The order was made in the name of the Governor of Punjab, exercising the authority granted by Rule 6(6) of the Rules, and it instructed that the Governor of Punjab should be pleased to reinstate respondent No. 1 as Labour Welfare Officer in the appellant’s service. However, the order also stated that nothing in the order should be interpreted as preventing the management from taking action against Mr P N Sharma in accordance with the provisions of the Rules for any acts or commissions of his that may have come to the management’s attention. The appellant challenged the validity of this order before the Court. Before addressing the preliminary objection raised by the appellant, the Court found it appropriate to set out the pertinent provisions of the Factories Act and the Rules made under it. The Factories Act, enacted in 1948, was intended to consolidate and amend the law regulating labour in factories, and in keeping with that purpose it contains several beneficial provisions for industrial workers employed in factories to which the Act applies. Section 49 of the Act deals with the appointment of Welfare Officers. Sub‑section (1) provides that in every factory where five hundred or more workers are ordinarily employed, the occupier shall employ such number of Welfare Officers as may be prescribed. It was established as a matter of common ground that the appellant falls within the scope of Section 49(1) and consequently it has been appointing Welfare Officers in its factories; respondent No. 1 was one of the Welfare Officers thus appointed by the appellant. Sub‑section (2) of Section 49 authorises the State Government to prescribe the duties, qualifications and conditions of service of officers appointed under sub‑section (1). It is under this authority that respondent No. 2, the State Government, framed the Rules. The Rules were framed by respondent No. 2 in 1952, were published in the Punjab Government Gazette on 26 March 1952 and became effective on 30 September 1952. Rule 4 specifies the qualifications required for appointment as a Welfare Officer. Rule 5 sets out the procedure to be followed in appointing Welfare Officers. Rule 6 outlines the conditions of service of Welfare Officers and Rule 7 delineates their duties. Rule 8 confers on the State Government the power to exempt any factory or class or description of factories from the operation of all or any of these Rules, provided that an alternative arrangement approved by the State Government is complied with. In the present appeal the Court’s attention was directed to Rule 6. Rule 6 reads as follows: “(1) A Welfare Officer shall be given appropriate status corresponding to the status of the other executive heads of the factory. (2) The conditions of service of a Welfare Officer shall be the same as of other members of the staff of corresponding status in the factory. (3) Notwithstanding anything contained in sub‑rule (2) the management may impose any one or more of the following punishments …” The Court noted that the remainder of Rule 6, which enumerates the categories of punishment that may be imposed and the procedural safeguards required, would be considered in the subsequent analysis.
In this case, the regulation set out that punishments that may be imposed on Welfare Officers include censure, withholding of increments including stoppage at an efficiency bar, reduction to a lower stage in a time scale, suspension, and dismissal or termination of service in any other manner. However, the regulation also requires that no order of punishment may be passed against a Welfare Officer unless the officer has been informed of the grounds on which the proposed action is based and has been given a reasonable opportunity to defend himself against the proposed action. Furthermore, the regulation provides that the management may impose any punishment other than censure only after obtaining the prior concurrence of the Labour Commissioner of Punjab. The regulation further mandates that before the Labour Commissioner of Punjab passes any order on a reference made under the second proviso to sub‑rule (3), the Commissioner must give the Welfare Officer an opportunity to show cause against the proposed action, and, if necessary, may hear the parties in person. If the Labour Commissioner, on a reference made to him under the second proviso to sub‑rule (3) of rule 6, refuses to give his concurrence, the regulation allows the management to appeal to the State Government within thirty days from the date of receipt of such refusal, and the decision of the State Government is final and binding. The regulation also provides that a Welfare Officer who is subjected to the punishment of dismissal or termination as mentioned in clause (v) of sub‑rule (3) may appeal to the State Government against the order of punishment within thirty days from the date of receipt of the order, and the State Government’s decision on such appeal is likewise final and binding. In addition, the regulation permits the State Government to issue any interim order that may be necessary while an appeal under sub‑rule (5) or sub‑rule (6) is pending.
The factual dispute in the present appeal arises because an order under rule 6(6) was passed by respondent No. 2, and the appellant seeks to challenge that order before this Court. The first question that the Court must consider is whether respondent No. 2 can be classified as a tribunal within the meaning of Article 136(1) of the Constitution, so that the appellant may bring the appellate decision of respondent No. 2 before the Supreme Court by way of a special leave petition. Article 136(1) provides: “Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any court or tribunal in the territory of India.” Counsel for the appellant, Mr. Goyal, contends that respondent No. 2 is not a tribunal within the meaning of Article 136(1) and therefore the impugned appellate order cannot be challenged by a special leave petition under that article. The Court notes that Article 136(1) distinguishes a tribunal from a court, and that the term “court” in this context refers to a tribunal constituted by the State as part of the ordinary hierarchy of courts endowed with the State’s inherent judicial powers.
In this case, the Court explained that a sovereign State performed legislative, executive and judicial functions and could legitimately claim powers described as legislative, executive and judicial powers. Under the Constitution, the judicial functions and powers of the State were mainly given to the ordinary courts that had been created by the relevant constitutional provisions. The Constitution established a hierarchy of courts, and these courts were normally entrusted with adjudicating all disputes between private individuals as well as between individuals and the State. Such courts could be described as ordinary courts of civil judicature. They operated under prescribed rules of procedure and addressed questions of fact and law that were presented to them, following a process known as the judicial process. The powers exercised by these courts were judicial powers, the functions they performed were judicial functions, and the outcomes they issued were judicial decisions. In every State, there existed administrative bodies or authorities that were required to handle matters within their jurisdiction in an administrative manner, and the outcomes of their actions were called administrative decisions. In forming administrative decisions, such bodies could, and often did, consider matters of policy. While these bodies were expected to act fairly, objectively, and sometimes to follow principles of natural justice, the authority to make decisions that they possessed was clearly distinct from the judicial power given to courts, and the decisions they rendered were distinct in character from judicial decisions issued by courts. Tribunals that fell within the meaning of Article 136(1) occupied a special position in the constitutional scheme. Special matters and questions were assigned to them for resolution, and in that respect they shared a common characteristic with courts: both courts and tribunals were constituted by the State and invested with judicial, rather than purely administrative or executive, functions, as noted in Durga Shankar Mehta v. Thakur Raghuraj Singh and Others. Both were adjudicating bodies that finally determined disputes placed within their jurisdiction. The procedure followed by courts was regularly prescribed, and courts had to conform to that procedure when exercising their powers. The procedure applicable to tribunals might not always have been as strictly prescribed, but the overall approach of courts and tribunals was substantially the same, and there was no essential difference between the functions they performed. As with courts, tribunals exercised the State’s inherent judicial power, and therefore discharged the State’s judicial functions. Judicial functions and judicial powers constituted essential attributes of a sovereign State.
According to the judgment, the State, guided by policy considerations, ordinarily confers its judicial functions and powers upon the courts that are created by the Constitution; however, this practice does not deprive the State of the authority, when appropriate, to delegate a portion of those judicial powers and functions to tribunals by assigning them the responsibility of adjudicating special matters and disputes that arise between parties. The Court observed that it is neither feasible nor worthwhile to attempt an exhaustive description of every characteristic that tribunals share with courts, nor to catalogue every feature that distinguishes one from the other. What the Court emphasised as the essential and fundamental similarity is that both courts and tribunals perform judicial functions and exercise judicial powers that inherently belong to a sovereign State. The Court further noted that this issue has been examined by it on numerous occasions, and that judicial precedents reveal that the question presents itself in two distinct ways. In some instances, the matter before the Court concerns whether a decision rendered by an authority or a body may be set aside by a writ of certiorari issued by a High Court exercising its jurisdiction under Article 226, and, in order to resolve that issue, the Court must determine whether the challenged decision is judicial or quasi‑judicial and whether the authority that made it was required to adopt a judicial approach and to adhere to the principles of natural justice as articulated in the earlier decision reported in (1) [1955] 1 S.C.R. 267 at page 272. The Court then indicated that it would briefly illustrate how it has addressed this question by referencing a number of important decisions. In the case of Province of Bombay v. Kusaldas S. Advani and Others (1), the Court was called upon to decide whether the powers granted to the Provincial Government by sections 10 and 12 of the Bombay Land Requisition Ordinance (V of 1947) compelled the Government, when exercising those powers, to act in a judicial manner while making an order of requisition under section 3. The majority held that the statutory powers and the overall scheme of the Ordinance did not obligate the State Government to act judicially in the exercise of its powers under section 3. While examining this issue, the then‑Judge Das extracted two principles from a detailed review of the authorities cited before the Court. The first principle stated that when a statute empowers an entity that is not a court in the ordinary sense to resolve disputes arising from a claim made by one party under the statute, which claim is contested by another party, and to determine the respective rights of the opposing parties, a cause of action arises prima facie, and, absent any contrary provision in the statute, the authority is required to act judicially, making its decision a quasi‑judicial act. The second principle articulated by the Judge was that if a statutory body possesses the power to perform any act that will prejudicially affect the subject, even though the contest may be between the authority proposing the act and the individual opposing it, the final determination by the authority still constitutes a quasi‑judicial act provided that the statute mandates the authority to act judicially.
The Court explained that when an authority intends to carry out an act which would prejudice a particular subject, the situation does not involve two distinct parties separate from the authority. Instead, the dispute is between the authority, which proposes to execute the act, and the subject, which objects to it. The Court further held that, if the statute governing the authority expressly requires the authority to act in a judicial manner, the authority’s ultimate decision remains a quasi‑judicial act even though only the authority and the subject are involved. This principle was summarized on page 725 of the judgment. In contrast, Chief Justice Kania observed that the essential position is that whenever the law under which the authority makes a decision mandates a judicial approach, the resulting decision is by definition a quasi‑judicial decision. He emphasized that prescribed forms are not indispensable for a judicial inquiry, provided that the decision is reached by following well‑recognised principles of judicial approach, as noted on page 633.
The Court then turned to a recent House of Lords decision, Ridge v Baldwin and Others, to illustrate the application of this principle. In that appeal, the House of Lords examined whether a borough watch committee, exercising powers under section 191 of the Municipal Corporations Act 1882, was required to act judicially. The factual background involved the dismissal of the appellant, Mr Ridge, who had been appointed chief constable of a borough police force in 1956. On 28 October 1957, the watch committee suspended Mr Ridge from duty. Subsequently, on 28 February 1958, a jury acquitted him of criminal charges. On 6 March 1958, during a corruption trial, Mr Donovan J, who presided over the case, commented that the police force needed a new leader who would provide a different influence and set a new example. After his acquittal, Mr Ridge sought reinstatement, but on 7 March 1958 the watch committee convened and concluded that he had been negligent in performing his duties as chief constable. Invoking the powers conferred by section 191(4) of the 1882 Act, the committee dismissed him from office. No specific charge was formulated against him prior to the dismissal; instead, the committee relied, inter alia, on Mr Ridge’s own statements given as evidence and on the observations made by Donovan J during the trial. Mr Ridge subsequently appealed to the Home Secretary, whose refusal to overturn the dismissal prompted Mr Ridge to initiate legal proceedings seeking a declaration that the dismissal was illegal, ultra vires and void, together with a claim for salary or, alternatively, pension and damages. The appellant’s appeal thus raised the central question of whether the watch committee’s exercise of its statutory power required a judicial approach.
In this case the Court examined whether the watch committee, exercising the power granted by section 191(4), was required to act judicially. The majority concluded that the committee indeed had to observe judicial procedure, and because it dismissed the constable without furnishing a specific charge, the dismissal was declared a nullity. To address the appellant’s contention that the committee must act judicially, Lord Reid surveyed the relevant judicial decisions in detail. He first referred to the observation of Atkin L.J. in Rex v. Electricity Commissioners, Exparte London Electricity, Joint Committee Co. (1920) Ltd. & Others, which stated that any body possessing legal authority to determine questions affecting individuals’ rights and bearing a duty to act judicially becomes subject to the jurisdiction of the King’s Bench Division when it exceeds its legal authority. Lord Hewart, C.J., later interpreted this passage in Rex v. Legislative Committee of the Church Assembly, Exparte Havens Smith, to mean that before any authority’s decision may be subject to a writ, it must be established that the body possessed the legal power to decide such questions and that it was required to act judicially; the duty to act judicially is an essential ingredient of the test. The Privy Council, in Nakkuda Ali v. Jayaratne, adopted the same approach. In that case the Council considered an order issued by the Controller of Textiles in Ceylon under a Defence Regulation that allowed cancellation of a licence where the controller reasonably believed the dealer was unfit. The Council held that the wording of the Regulation did not impose a judicial‑like duty on the controller; it warned that assuming such a duty merely because a person must have reasonable grounds for belief was a “long step” and that, absent a judicial duty, the controller’s decision would not be reviewable by certiorari. After outlining these authorities, Lord Reid expressed his disagreement with the interpretation advanced by Lord Hewart in the Church Assembly case and with the Privy Council’s view in Nakkuda Ali, maintaining that the power of dismissal under section 191(4) could not be exercised until the constable was informed of the grounds and given a proper opportunity to defend himself.
In this case, the Court observed that Ali (1) had held that the power of dismissal granted to the watch committee by section 191(4) could not be exercised, and could not be exercised thereafter, until the watch committee had informed the constable of the specific grounds on which they intended to proceed and had afforded him a proper opportunity to present his defence. The Court explained that, according to Lord Reid’s judgment, the requirement to follow judicial procedure and to observe the principles of natural justice arises from the very nature of the decision that the watch committee was authorised to make under section 191(4). Consequently, the Court said that the sphere in which natural‑justice principles must be observed and a judicial approach must be adopted has expanded, and, as a result, the horizon of writ jurisdiction has been correspondingly broadened. The Court cited the authorities (2) (1928] 1 K.B.D. 411, (1) [1951] A.C. 66, 77, and (3) [1924] 1 K.B.D. 411 in support of this proposition. The Court further noted that, when dealing with the question of whether any impugned order could be subject to revision under article 226 of the Constitution, the test articulated by Lord Reid in his judgment provides considerable assistance. The Court then referred to the decision in Nagendra Nath Bora & Another v. The Commissioner of Hills Division and Appeals, Assam & Ors. (1), where the Court had to examine whether the High Court’s jurisdiction under articles 226 and 227 could be invoked against a decision of the appellate authority created under the Eastern Bengal and Assam Excise Act, 1910 (E.B. & Assam Act 1 of 1910). The Court explained that the Act established a regular hierarchy of authorities, each possessing the right to hear appeals or revisions. Although the Act did not expressly require reasoned orders, the Court held that, given the subject‑matter of the rules, it was the duty of the appellate authority to hear matters judicially—that is, in an objective, impartial manner and after providing the parties a reasonable opportunity to present their cases. On that basis, the Court concluded that the appellate authority’s decision was, in principle, subject to the High Court’s jurisdiction under article 226 to issue a writ of certiorari. The Court also referred to Shivji Nathubhai v. The Union of India & Others (2), where it was held that the Central Government, while exercising its power of review under rule 54 of the Mineral Concessions Rules, 1949, acted judicially rather than administratively, making its decision open to challenge under article 226. The Court clarified that the question of whether the State Government, in granting a mining lease, acted solely administratively was not addressed in that case, because the appeal could be decided solely on the basis that the powers in question were not purely administrative.
In the matter before the Court, it was observed that the powers of review were not administrative in nature, and therefore any exercise of those powers would be liable to scrutiny by the High Courts under article 226 of the Constitution. The Court noted that, in the earlier cases cited, it had not been required to determine whether the authorities whose decisions were subject to challenge under article 226 qualified as tribunals, because the statutory requirement that the impugned decision must originate from a tribunal prescribed by article 136(1) was not applicable to article 226 proceedings. Consequently, the only issue that required determination was whether the orders that were impugned constituted judicial or quasi‑judicial decisions that could be corrected by the issuance of a writ of certiorari under article 226, or whether they fell outside that category. The Court further explained that this question differed from the issue that needed resolution in the present case. To address the present problem, the Court turned to earlier decisions that had examined similar questions. The first decision examined in detail was the case of The Bharat Bank Ltd., Delhi v. Employees of the Bharat Bank Ltd. and the Bharat Bank Employees’ Union, Delhi, reported in (1) [1958] S.C.R. 1240 and (2) [1960] 2 S.C.R. 775. This precedent would guide the analysis of the present dispute.
In the Bharat Bank case, an award that had been made by an Industrial Tribunal under the Industrial Disputes Act, 1947, was brought before this Court on appeal by special leave pursuant to article 136(1). The respondents raised a preliminary objection asserting that the appeal was incompetent, thereby presenting the Court with the question of whether the Industrial Tribunal qualified as a “tribunal” within the meaning of article 136(1). The majority of the Court held affirmatively, concluding that the Industrial Tribunal was indeed a tribunal under article 136(1). Justice Mahajan, delivering the leading judgment in support of the majority view, observed that although industrial tribunals were not full‑fledged courts, they performed quasi‑judicial functions and therefore fell within the ambit of the term “tribunal” used in article 136 of the Constitution (p. 476). He further explained that the prerequisite for a body to be regarded as a tribunal under article 136 was that it must be constituted by the State. Conversely, a body would fall outside the scope of article 136 if it was not vested with any portion of the State’s judicial functions and performed purely administrative or executive duties (p. 478). Justice Mahajan added that tribunals that possessed certain judicial functions and bore some of the characteristics of a court would also be included within article 136, because the Constitution’s use of the word “tribunal” was intended to encompass bodies that resembled courts in form and function, even if they were not strictly courts (p. 474). The Court also noted that the enforceability of awards rendered by Industrial Tribunals under section 17A, subject to prescribed conditions, did not alter the conclusion that such tribunals qualified as tribunals within the meaning of article 136.
The Court observed that the fact that awards of Industrial Tribunals become enforceable under section 17A did not alter the legal position that such tribunals were tribunals within the meaning of Article 136 of the Constitution. The Court noted that the majority decision in the case of Bharat Bank, which had been referred to earlier, was adopted unanimously by the Court, and that the same principle was applied in the case of Durga Skankar Mehta. Speaking for the Court, Justice Mukherjea remarked that the majority decision in Bharat Bank had firmly established that the word “Tribunal” in Article 136 does not carry the same meaning as the word “Court.” Instead, “Tribunal” includes every adjudicating body that is created by the State and is invested with judicial, rather than purely administrative or executive, functions, subject to the specific exception contained in Article 136(2).
The Court then turned to the matter presented in Harinagar Sugar Mills Ltd. v. Shyam Sundar Jhunjhunwala and Others, where the question was whether the Central Government, while exercising its appellate power under section 111(3) of the Companies Act, 1956, qualified as a tribunal under Article 136(1). In addressing this question, the Court examined the scheme of the relevant statutory provisions and considered earlier decisions on the same point. It held that section 111(3) required the Central Government, when acting as an appellate authority, to act judicially and to exercise the State’s judicial powers to decide the rights of parties in civil matters where a dispute existed between them. Consequently, the Court concluded that the Central Government functions as a tribunal and not as an executive body. Justice Shah, speaking for the majority, observed that the proceedings before the Central Government possessed all the characteristics of a judicial tribunal, noting that pleadings had to be filed, evidence had to be presented, and disputes were to be decided according to law after hearing the parties’ representations. Justice Hidayatullah dissented on the final relief, holding that there was no justification for the Central Government’s impugned order and therefore directing that the order be set aside and the appeals be allowed with costs. On the preliminary issue of whether the appeals were competent, the learned judge agreed with the majority that the Central Government was a tribunal within the meaning of Article 136(1). In construing Article 136(1), the judge explained that both courts and tribunals exercise judicial functions in the two senses previously discussed, and that the term “Court” includes ordinary courts and the tribunals mentioned in the citations (1) [1955] 1 S.C.R. 257, (3) [1962] 2 S.C.R. 339, 352, (2) (1950].
In this case, the Court explained that permanent tribunals are regarded as part of the permanent judicial machinery, and that the term “tribunal” also embraces any other bodies that are not expressly included in that definition. The Court observed that the power to settle disputes between parties is undeniably one of the attributes of the State, and that this power is properly described as the judicial power of the State. The Court further noted that, in general, certain special matters are referred to tribunals, while the remaining matters are dealt with by the ordinary courts of civil jurisdiction. Although the procedural rules followed by tribunals and courts may differ, the Court emphasized that the essential function performed by both is substantially the same, as reflected in the discussion on pages 362‑63 of the earlier judgment. Accordingly, the Court recorded that all the judges hearing the matter agreed that the core authority exercised by both courts and tribunals is the judicial power of the State. The Court then referred to the earlier decision in Jaswant Sugar Mills Ltd., Meerut v. Lakshmichand and Others, where it had been held that a Conciliation Officer acting under clause 29 of the order issued in 1954 under the U.P. Industrial Disputes Act, 1947 must act in a judicial manner when granting or refusing permission to alter the terms of employment of workmen at the request of an employer. Nevertheless, the Court had held that the Conciliation Officer was not a tribunal because he did not possess the judicial power of the State; his role was limited to lifting a statutory ban on the employer’s rights and he was not authorised to render a final and binding decision in any dispute. Consequently, an appeal against the order of that Conciliation Officer was deemed incompetent under Article 136(1). The Court quoted Shah J., who speaking for the Court, stating that the condition precedent for bringing a body within the ambit of Article 136 is that the body must be constituted by the State. Shah J. added that a body that is not invested with any part of the State’s judicial functions but performs purely administrative or executive duties lies outside the scope of Article 136. After analysing the relevant provision, the Court observed that when determining whether an authority required to act judicially on matters affecting citizens’ rights may be regarded as a tribunal—though not a court—the key factor is the conferment of the “trappings of a court.” These trappings include the authority to decide matters in cases initiated by parties, to sit in public, to compel the attendance of witnesses, to examine witnesses on oath, and similar powers. The Court clarified that while not every such characteristic is indispensable, the presence of many of them ordinarily renders an authority that must act judicially a tribunal. Finally, the Court mentioned that, in the matter of Engineering Mazdoor Sabha representing workmen employed under Hind Cycles Ltd. & Anr. v. The Hind Cycles Ltd., Bombay, the question arose for determination as to whether an arbitrator appointed under section 10A of the Industrial Disputes Act, 1947 (No. 14 of 1947) could be considered a tribunal within the meaning of Article 136(1).
In deciding that the arbitrator appointed under section 10A of the Industrial Disputes Act, 1947 was not a tribunal, the Court explained that, besides the relevance of the trappings of a court, the fundamental condition that makes any authority a tribunal under article 136 of the Constitution is that the authority must be created by the State and must be vested with the State’s inherent judicial power. The judgment nevertheless referred to the court‑like trappings and observed that, on occasion, a rough test is employed to determine the status of an adjudicative body by asking whether that body is clothed with such trappings. The Court added that the mere presence of those trappings does not automatically convert a tribunal into a court. Because the arbitrator’s appointment was essentially based on the agreement of the parties, his position was likened to that of an arbitrator appointed by the parties themselves, and therefore he could not be regarded as a tribunal. The Court later examined the status of the Central Board of Revenue exercising appellate power under section 190 of the Sea Customs Act, 1878 and the Central Government exercising power under section 191 in the case of Indo‑China Steam Navigation Co. Ltd. v. Jasjit Singh. It was uncontested that a customs officer exercising authority under section 167 of the same Act was neither a court nor a tribunal. Nonetheless, the Court held that both the Central Board of Revenue and the Central Government, when acting under sections 190 and 191, qualified as tribunals under article 136 because they were invested with the State’s judicial power and were required to act judicially. In that discussion, the Court again referred to the court‑like trappings and noted that the existence of some of those trappings may assist in deciding whether the proceedings before an authority are judicial, but it emphasized that the basic test remains whether the authority was constituted by the State and given a portion of the State’s inherent judicial powers. Consequently, when examining whether respondent No. 2, while exercising its appellate power under rule 6(6), qualifies as a tribunal under article 136, the Court stated that it is necessary to inquire whether respondent No. 2 has been endowed with the State’s inherent judicial power to resolve disputes between parties and to determine those disputes on their merits in a fair and objective manner. That inquiry represents the consistent test applied by the Court in assessing the status of any body or authority as a tribunal under article 136.
In order to apply the established test to the question of whether respondent No. 2, while exercising the power granted under Rule 6(6), qualifies as a tribunal within the meaning of Article 136(1), the Court found it necessary to refer to a particular aspect of the matter that often generates confusion. The Court recalled that a sovereign State possesses three essential attributes, one of which is the legislative power and the legislative function of the State. In assessing the status of any authority that adjudicates disputes, the Court must examine whether the authority’s power originates from the State as judicial power conferred by a statute or a statutory rule.
The expression “judicial power” used in this context rests on the well‑recognised political‑science concept that a sovereign State vests legislative, executive and judicial powers within itself. In jurisdictions where a strict separation of powers is enforced by a written Constitution, the position differs markedly. For illustration, the Court referred to the Australian Constitution, where Section 71 of the Commonwealth of Australia Constitution Act (63 & 64 Vict. Chapter 12) provides that the judicial power of the Commonwealth is vested exclusively in a Federal Supreme Court called the High Court of Australia, and in such other federal courts as Parliament may create, as well as in courts invested with federal jurisdiction. The High Court must comprise a Chief Justice and at least two other Justices as prescribed by Parliament. The scheme embodied in Sections 71 to 80 of Chapter III demonstrates that, under that Constitution, judicial power may be conferred only upon courts that are recognised by the provisions of the Chapter.
Consequently, it is not within the competence of the Australian legislature to vest proper judicial power in any body or authority other than the courts identified in Chapter III. Hence, the use of the term “judicial power” in relation to tribunals that are not courts would be wholly inappropriate under the Australian Constitution. Where tribunals other than courts are created and empowered to consider and decide specific disputes, the power they exercise must be described as quasi‑judicial rather than judicial. This technical distinction, which arises in constitutions that enforce a rigid separation of powers, must not be overlooked when addressing the question posed under Article 136(1) of the Indian Constitution.
Under the Indian Constitution, however, there is no strict separation of powers comparable to that of the Australian Constitution. Therefore, it is not constitutionally improper to state that the judicial power of the State may be conferred both on the hierarchy of courts established by the Constitution and on tribunals that are not strictly courts. Indeed, the fact that Article 136(1)
In interpreting Article 136(1), the Court observed that the provision explicitly mentions both courts and tribunals and makes any determination, sentence or order issued by them subject to appeal to this Court by special leave. This language, the Court said, demonstrates that the Constitution presumes the State’s judicial power may be vested in and exercised by both courts and tribunals alike. The Court further noted that, although the substantive function performed by courts and tribunals under Article 136(1) is essentially the same, the kinds of questions they are authorised to consider, the procedural rules they must follow, and the breadth and character of the powers they possess may differ from one another.
The Court contrasted this Indian approach with the rigid separation of powers embodied in the Australian Constitution, explaining that Australian questions for judicial determination assume a very different form. To illustrate the contrast, the Court referred to the Privy Council decision in Shell Company of Australia Ltd v. Federal Commissioner of Taxation (1931 A.C. 275). In that case, the Privy Council was asked to decide whether the Board of Review created by section 41 of the Federal Income‑Tax Assessment Act, 1922‑1925, constituted a Court exercising Commonwealth judicial power within the meaning of section 71 of the Australian Constitution. Had the Board been deemed a Court, the amendment establishing it would have been invalid under section 71. The Privy Council examined the Board’s functions, powers and the legislative scheme, concluding that the Board was not a Court but rather occupied the same position as the Commissioner of Taxation. It observed that the Board’s orders were not conclusive for any purpose and that the Board’s decisions were treated as equivalent to the Commissioner’s decisions. The Court then cited Lord Sankey, L.C., who remarked that authorities clearly show tribunals may possess many “trappings” of a Court yet remain tribunals that do not exercise judicial power in the strict sense. Lord Sankey emphasized that the presence of such trappings does not transform a tribunal into a Court; the decisive test, he said, lies elsewhere, and the mere existence of court‑like features does not confer exclusive judicial authority on the tribunal.
The Court observed that the Australian Constitution permits judicial power to be vested solely in courts and expressly forbids its conferment on tribunals. In examining tribunals with reference to the issue raised by Article 13 6(1), the Court emphasized that it was essential to consider the context in which Lord Sankey discussed the so‑called “trappings” of courts. The Court added that before concluding its discussion, another relevant point required attention. In the case of Attorney‑General for Australia v. The Queen and the Boilermakers’ Society of Australia and Others (1), a notable question emerged concerning the authority of the Court under sections 29(1)(b) and (c) and 29‑A of the Commonwealth Conciliation and Arbitration Act, 1904‑1952. Those provisions attempted to assign judicial power—including the power to impose fines on individuals or to deprive a person of liberty—to the Court of Conciliation and Arbitration, an institution created by the Act that possessed administrative, arbitral and executive functions. The Court held that such provisions were invalid because the role of an industrial arbitrator lies wholly outside the sphere of judicial power and possesses a character distinct from judicial functions. This ruling rested upon the doctrine of a rigid and strict separation of powers that underpins the Australian Constitution. Viscount Simonds, delivering the judgment for the Court, referred to the constitutional structure and observed that Parliament could not, in matters of conferring judicial powers, bypass Chapter III and draw authority from any other source (p. 313). He further endorsed the observations of Griffith, C.J., in Waterside Workers’ Federation of Australia v. Alexander (J.W.) Ltd. (2), which held that the Constitution makes it impossible to assign judicial functions to any body other than a court, and that merely naming a body a court or labeling its functions differently does not overcome this limitation. In summary, any attempt to vest any portion of the Commonwealth’s judicial power in a non‑court entity is wholly ineffective. The Court explained that the two cited decisions were mentioned solely to illustrate that the technical constraints arising from a strict separation of powers do not apply to the issue concerning the status of respondent No. 2 under Article 136(1) of the Indian Constitution. The term “judicial power” in this context, the Court said, cannot be described as constitutionally impermissible or inappropriate, because the Indian Constitution does not contain a provision analogous to Chapter III of the Australian Constitution that restricts the conferment of judicial power exclusively to courts properly designated as such. Consequently, if such a restriction were applicable and material, it would be inappropriate to label authorities or bodies empowered to resolve disputes between parties and render final determinations as tribunals simply because they exercise the judicial power of the State.
In this case the Court observed that the statutory transfer of State power to certain bodies means that the powers they exercise are quasi‑judicial in nature, and that tribunals created under a strict separation‑of‑powers scheme cannot be said to perform the same judicial function as courts. The Court then explained that such considerations do not apply to the Indian Constitution, because although it embraces a broad separation of powers, it does not contain the rigidity or exclusivity found in section 71 and other provisions of Chapter III of the Australian Constitution. Accordingly, the Court held that the primary test for determining the status of any authority under Article 136(1) is whether the inherent judicial power of the State has been transferred to that authority. The Court proceeded to examine the relevant rules. Rule 6, as previously discussed, sets out the conditions of service for Welfare Officers. By reading together the second proviso to Rule 6(3) and Rule 6(4), the Court found that when management wishes to impose a punishment other than censure, it must first obtain the prior concurrence of the Labour Commissioner. The Labour Commissioner, upon receiving an application for such concurrence, is required to give the Welfare Officer an opportunity to show cause against the proposed action and, if necessary, to hear the parties in person. This provision therefore limits the management’s power to impose punishments on the Welfare Officer. The Court noted that the present appeal does not require a determination as to whether the Labour Commissioner, in exercising his power under Rule 6(4), is a tribunal; for the purposes of this appeal the Court assumed that he is not a tribunal within the meaning of Article 136(1). Rule 6(5) deals with the situation where the Labour Commissioner refuses to give his concurrence; in that event the rule confers on management a right to appeal to the State Government within a prescribed time, and provides that the State Government’s appellate decision is final and binding. Likewise, Rule 6(6) allows a Welfare Officer who has been punished under clause (v) of sub‑rule 3 without the Labour Commissioner’s concurrence to appeal to the State Government, with the State Government’s decision also being final and binding. The question before the Court was whether the State Government, when exercising authority under Rule 6(5) or Rule 6(6), should be regarded as a tribunal. The Court observed that no rules have been made prescribing the procedure the State Government must follow in hearing such appeals, and there is no statutory provision granting the State Government any of the specific powers generally associated with courts. Consequently, the Court concluded that the analysis must focus on whether the State Government’s appellate function under these rules constitutes the exercise of inherent judicial power transferred by statute, rather than on the presence or absence of procedural trappings of a court.
The Court observed that the procedural requirements and subsidiary powers that are characteristic of ordinary judicial trials are intended to assist a court in arriving at its decisions. Those procedural features, often described as the “trappings” of a court, include the formal rules of conduct in trials and the ancillary authority granted to courts to manage the cases before them. It was conceded that such trappings are not evident in the case of the State Government when it adjudicates appeals under Rules 6(5) and 6(6). Nevertheless, the Court emphasized that the mere presence or absence of all the traditional trappings is not the decisive factor in determining whether an authority is exercising judicial power of the State. While the existence of some trappings may be helpful in the analysis, the fundamental test is whether the adjudicatory power exercised by the authority has been conferred by a statute and can be characterized as part of the State’s inherent power to perform its judicial function. Applying that test, the Court concluded that there is no doubt that the power exercised by the State Government under Rules 6(5) and 6(6) is indeed a component of the State’s judicial power. This power is statutorily granted and is exercised in disputes between management and Welfare Officers, thereby creating a genuine controversy with an affirmation by one party and a denial by the other, involving rights and obligations of the parties. The final order issued by the State Government in such matters is a decision that is expressly made final and binding, and it is rendered on appeal. Considering these distinctive characteristics, the Court found no hesitation in holding that the State Government, when acting under Rules 6(5) and 6(6), constitutes a Tribunal within the meaning of Article 136(1). In support of this view, the Court recalled the observations of Lord Haldane in Local Government Board v. Arlidge, wherein he stated: “My Lords, when the duty of deciding an appeal is imposed, those whose duty it is to decide it must act judicially. They must deal with the question referred to them without bias, and they must give to each of the parties the opportunity of adequately presenting the case made. The decision must be come to in the spirit and with the sense of responsibility of a tribunal whose duty it is to mete out justice. But it does not follow that the procedure of every such tribunal must be the same.” Finally, the Court held that, given the nature of the power conferred, the State Government possesses the authority to design its own procedural rules and to exercise any incidental powers necessary to render a fair and objective decision in the disputes that come before it in its appellate jurisdiction.
The Court observed that the State Government is authorised to devise its own procedure and to exercise any incidental or subsidiary powers that may be required to resolve the dispute effectively. Consequently, the Court was satisfied that the State Government, while exercising its appellate jurisdiction under Rules 6(5) and 6(6), qualifies as a Tribunal within the meaning of Article 136(1). Accordingly, the appeal presented before the Court against the appellate order issued by respondent No 2 was deemed competent. The Court therefore rejected the preliminary objection raised by counsel for the respondent, finding that the objection failed and must be dismissed. Turning to the merits of the appealed order, counsel for the appellant advanced two principal arguments. First, he contended that the rule obligating the management to obtain the Labour Commissioner’s concurrence before dismissing or terminating a Welfare Officer was invalid because it exceeded the authority granted to the State Government by section 49(2) of the Act. Second, he maintained that the appeal lodged by respondent No 1 before respondent No 2 was incompetent under Rule 6(6). The Court first examined the claim that the rule itself was ultra‑vires. It noted that section 49(2) empowers the State Government to prescribe the duties, qualifications and conditions of service of officers appointed under subsection (1), and therefore there is no doubt that the State Government may promulgate rules governing the conditions of service of Welfare Officers. The issue, the Court held, was whether Rule 6, which seeks to prescribe such conditions of service, fell outside the scope of section 49(2) by imposing on the management the duty to secure the Labour Commissioner’s concurrence before imposing punishments referred to in the second proviso of Rule 6(3). In the Court’s opinion, the expression “conditions of service” in section 49(2) is sufficiently expansive to encompass the said proviso as well as sub‑rules 4, 5 and 6 of Rule 6. The circumstances under which an employee’s services may be terminated, and the conditions attached to such termination, are legitimate subjects of an employment contract; thus, conditions of service naturally include termination provisions and the attendant requirements. Accordingly, the Court saw no reason to regard a statutory rule that mandates management to obtain the Labour Commissioner’s concurrence as falling outside the ambit of section 49(2). Moreover, the purpose of conferring upon the State Government the power to frame such rules is evidently to provide special protection to Welfare Officers appointed under section 49(1). If respondent No 2 considered that requiring the Labour Commissioner’s consent was the most effective means of ensuring security of tenure for such officers, the Court found that this approach was justified by the authority conferred under section 49(2).
If a rule required that an employee could not be dismissed or otherwise punished without first obtaining the consent of the Labour Commissioner as mandated by the second proviso to Rule 6(3), then it would be difficult to conclude that a rule framed by respondent No 2 on that basis exceeds the authority granted to it by section 49(2). Consequently, the Court was not persuaded by the argument advanced by Mr Setalvad that the rule in question was ultra vires or invalid. Nevertheless, the Court agreed with Mr Setalvad that the appeal filed by respondent No 1 before respondent No 2 was not competent. Rule 6(6) clearly permits a Welfare Officer to make an appeal to the State Government if a punishment has been imposed on him in contravention of the requirements of the second proviso to Rule 6(3) and without the concurrence of the Labour Commissioner. The overall scheme of the relevant rules indicates that, where the management seeks the Labour Commissioner’s concurrence and such concurrence is denied, the management may pursue an appeal under Rule 6(5). Conversely, if the Labour Commissioner does give concurrence, or if a Welfare Officer is dismissed without the management having sought concurrence, the Welfare Officer may lodge an appeal under Rule 6(6). However, for an appeal under Rule 6(6) to be valid, it must be shown that the punishment referred to in clause (v) of sub‑rule 3 of Rule 6 has actually been imposed on the officer. In the present matter, the Court found it difficult to determine that any such punishment had been inflicted on respondent No 1. The only action taken by the appellant was to terminate the services of respondent No 1 pursuant to clause 4 of his terms of appointment. When respondent No 1 was appointed as a Welfare Officer, the appellant communicated the terms of his employment by a letter dated 2 March 1956. Clause 4 of that letter expressly stated that during the probationary period the appellant could terminate the officer’s services without notice, and that after the officer’s confirmation the termination could be effected by giving one month’s notice or by paying one month’s salary in lieu of notice. The termination order referred specifically to an earlier letter dated 23 September 1961, in which the appellant informed respondent No 1 that if he failed to proceed to Kymore Cement Works within the allotted time his services would be terminated effective 26 September 1961. The appellant further indicated that the officer would receive his salary up to 25 September 1961, together with one month’s salary in lieu of notice and any other dues according to the company’s rules. Accordingly, the termination of respondent No 1’s services was an exercise of the appellant’s contractual right to end the employment relationship by providing one month’s salary in lieu of notice. Such a termination cannot be characterized as a punishment; it was a discharge made strictly within the conditions of service that had been communicated to the employee. There is no doubt that when Rule 6(3) is considered, the termination described falls outside the scope of a punitive dismissal.
The provision labelled (v) within rule six, paragraph three, speaks of dismissal or termination of service in any other manner, meaning a termination that is punitive in nature. Rule six, paragraph three, makes clear that sub‑clauses (i) through (v) enumerate punishments which the management may impose on welfare officers. Consequently, before sub‑clause (v) can be applied to respondent number one, it must first be shown that the termination of his services was punitive. The termination of respondent number one’s services, carried out under clause four of his conditions of service, was merely a discharge and therefore did not constitute a punishment. Because the discharge was not a punishment, it falls entirely outside the scope of rule six, paragraph three. For that reason the Court was satisfied that the appeal filed by respondent number one before respondent number two was not maintainable under rule six, paragraph six. Counsel for the appellant attempted to argue that, although the order terminating respondent number one’s services appeared in form to be a discharge under clause four, its substance was in fact a dismissal. To support that contention, counsel referred to an exchange of letters between the parties, indicating that the appellant had transferred respondent number one to Kymore and that he allegedly failed to obey the transfer order. The Court did not consider that correspondence necessary, because it was not possible to accept the contention that the discharge order in substance amounted to a dismissal. While the form of an order does not determine the character of the termination, a party could succeed if it proved that the order amounted to a punishment, which would have validated the appeal’s competence. The appellant, however, only made a vague allegation that the order was not issued bona fide and was motivated by an ulterior purpose, without offering any proof of improper motive. The record shows that when the appellant discovered respondent number one’s unwillingness to report to Kymore Cement Works, it deliberately chose to discharge him rather than to impose a punitive sanction. In such circumstances the Court may examine the substantive effect of the order rather than treating its form as conclusive. Nevertheless, there are situations where it is reasonable to deem a discharge order to be a bona fide exercise of the employer’s right, and the present case falls within that category. Accordingly, the Court was not persuaded by the argument that the impugned order fell within rule six, paragraph three, sub‑clause (v). Consequently, the appeal was allowed and the order of respondent number two was set aside for being without jurisdiction, with each party bearing its own costs.
It was held that the employer did not intend to insult its employee, even though it considered that terminating the employee’s services was necessary. The Court expressed the view that the present facts placed the case within that category of a bona‑fide discharge. Accordingly, the Court was not persuaded by the contention that the order being challenged amounted to a termination of service in any manner other than that envisaged by Rule 6(3)(v). On that basis the Court allowed the appeal, set aside the order made by respondent No. 2 on the ground that the order had been passed without jurisdiction, and ordered that each party should bear its own costs. The judgment then noted that Justice Bachawat agreed with the conclusions reached by the learned Chief Justice and with the order proposed by him, and he added a few observations of his own.
The Court observed that the preliminary objection concerning the maintainability of the appeal raised significant questions about the interpretation of Article 136 of the Constitution, specifically the meaning of the term “tribunal” used in that provision. The Court asked how the Constitution‑makers intended the word “tribunal” to be understood and what distinctive characteristic should be used to identify a tribunal. Citing the decision in Royal Acquarium and Summer and Winter‑Garden Society Ltd. v. Parkinson, the Court noted that, as observed by Justice Fry, the word “tribunal” does not possess, unlike the word “court,” a precise meaning in English law and cannot be given its popular sense of a court of justice, because the tribunal referred to in Article 136 is an authority other than a regular court. The Court explained that the context of Article 136 indicates that the term refers to an adjudicating authority other than a court that is vested with the judicial powers of the State. It further explained that Article 136 deals with the regulation of the State’s judicial power vested in courts and other authorities, and its primary purpose is to acknowledge that a single Supreme Court exercising the highest judicial power in the Republic will have appellate jurisdiction over all courts and adjudicating bodies that exercise the State’s judicial power throughout India, except those created under laws relating to the Armed Forces. In this setting, the Court stated that the basic test for a “tribunal” under Article 136 is that it must be an adjudicating authority, not a court, which is vested with the State’s judicial powers. The Court affirmed that decided cases have consistently applied this test. Referring to the unanimous judgment in Durga Shankar Mehta v. Thakur Raghurai Singh and others, the Court quoted Justice B. K. Mukherjea’s observation that the majority decision in Bharat Bank Ltd. v. Employees of the Bharat Bank Ltd. makes it clear that the expression “tribunal” in Article 136 does not mean the same as “court,” but includes all adjudicating bodies that are constituted by the State and invested with judicial, as opposed to purely administrative or executive, functions. Accordingly, the Court reiterated that, under this test, an adjudicating body must be created by the State and must possess judicial functions, a principle also echoed in other judgments where learned judges expressed a similar view in slightly different language.
In discussing the nature of a tribunal, the Court observed that various authorities have expressed the requirement that a body must be “invested with … part of the judicial functions of the State,” or described as “delegates of the judicial power of the State,” “invested with the State’s inherent judicial powers,” or “exercising judicial powers of the State.” Those expressions were cited in earlier authorities, namely (1) [1892] 1 C.B. 431, 446; (2) [1955] S.C.R. 267, 272; and (3) [1950] S.C.R. 459. The Court then noted that the phrase “judicial power of the State” does not appear in the Indian Constitution; it is a term borrowed from Australian law. Under Article 71 of the Australian Constitution, the “judicial power of the Commonwealth” is vested exclusively in the courts mentioned therein, and no other body or tribunal may exercise that power. Australian decisions, however, have attempted to temper the strictness of that rule by giving a narrow construction to the phrase “judicial power of the Commonwealth.” Those decisions hold that an arbitral power concerning industrial disputes, which determines and declares the rights and liabilities of the parties according to the arbitrator’s view, does not constitute the judicial power of the Commonwealth within Article 71. References were made to Waterside Workers Federation v. Alexander and Attorney‑General of Australia v. Reginam. The Court emphasized that Indian jurisprudence does not employ the expression “judicial power of the State” in the same narrow manner when formulating the test for a tribunal under Article 136 of the Constitution. Accordingly, the decision in Bharat Bank Ltd. v. Employees of Bharat Bank Ltd. held that an industrial tribunal is vested with the judicial functions of the State and therefore qualifies as a tribunal within Article 136. The Court explained that, in India, the term “State” is understood broadly to include the Union and its component states, which possess inherent judicial powers or functions. Both courts and other authorities that the State has empowered with judicial functions are regarded as delegates of the State’s judicial powers. Unlike the Australian position, Indian law permits the judicial power of the State to be vested not only in courts but also in other authorities; the courts do not enjoy an exclusive monopoly over that power. Consequently, any authority other than a court that is vested with the State’s judicial power, in this broader sense, is considered a tribunal under Article 136. The Court also referred to the Australian case Shell Co. of Australia v. Federal Commissioner of Taxation, wherein Lord Sankey, L.C., observed that “there are tribunals with many of the trappings of a court which, nevertheless, are not courts in the strict sense of exercising judicial power.” The observation was interpreted to mean that possessing some or many of the trappings of a court does not automatically make a body a court exercising the Commonwealth’s judicial power under Article 71, and similarly, such trappings are not a necessary condition for a body to be deemed a tribunal under Article 136 in India.
In discussing the nature of a tribunal contemplated by Article 136, the Court observed that the concept of a tribunal has been influenced by Lord Sankey’s description of a body possessing “the trappings of a Court.” The Court cited several Indian decisions to illustrate how this idea has been applied. In Bharat Bank Ltd. v. Employees of Bharat Bank Ltd. (1) Mahajan, J. held that Article 136 embraces “tribunals adorned with similar trappings as Court but strictly not coming within that definition.” In Jaswant Sugar Mills Ltd., Meerut v. Lakshmichand (2) Shah, J. stated that when deciding whether an authority is a tribunal, though not a Court, “the principal incident is the investiture of the ‘trappings of a court’.” Further, in Engineering Mazdoor Sabha v. Hind Cycles Ltd., Bombay ( ) Gajendragadkar, explained that a quick test for a tribunal is to ask whether the body is “clothed with the trappings of a court,” but he added that “apart from the trappings of a Court, the basic and essential condition which makes an authority or a body a tribunal under Article 136 is that it should be constituted by the State and should be invested with the State’s inherent judicial power.” The same learned Judge made similar observations in Indo‑China Steam Navigation Co. v. Jasjit Singh (4). The Court therefore concluded that, in determining whether a body falls within Article 136, it is natural to examine whether it possesses some of the court’s trappings; the presence of one or more such trappings may make it easier to label the body a tribunal. However, the Court warned that the presence of trappings is not an essential attribute. The fundamental test remains whether the body is vested with the State’s judicial power. Forgetting this basic principle could cause the “trappings of a Court” to become a trap for the unwary.
The Court further explained that the full meaning and limits of the word “tribunal” must be derived by considering Article 136 in its entirety, together with any assistance that may be drawn from other constitutional provisions. The context and constitutional background impose a limitation that a tribunal must be an adjudicating authority vested with the State’s judicial power. Subject to this limitation, the term should be given a wide and liberal construction. The basic principle underlying Article 136, the Court said, is that whenever a litigant feels aggrieved by a decision of a Court or any other body charged with the administration of justice, there exists a superior Court that the litigant may approach. That superior Court, at its discretion, may grant special leave to appeal so that justice can be done.
In this part of the judgment the Court explained that a litigant who believes that injustice has been visited upon him may apply for special leave to appeal so that justice may be achieved. The Court referred to the full breadth of the residuary appellate power and cited the authorities in (1) [1950] S.C.R. 459, (2) [1963] Supp. 1 S.C.R. 242‑260, (3) [1963] Supp. I S.C.R. 625 at pages 631, 633, 641, and (4) [1964] 6 S.C.R. 594. It then stated that Article 136 of the Constitution embraces within its ambit all adjudicating authorities that are vested with the judicial power of the State, irrespective of whether those authorities possess the outward form or “trappings” of a Court. The Court observed that a body other than a Court may, by virtue of a statute, be given judicial power in a wide variety of situations, and that it would be both impossible and unwise to try to enumerate every possible circumstance. Accordingly, the proper approach is to consider each situation as it arises and to determine whether the powers assigned to the authority can be truly described as judicial functions or as judicial powers of the State. For the purposes of the present case, the Court held that any external authority empowered by the State to resolve definitively the rights of two or more opposing parties concerning a matter in dispute satisfies the test of an authority vested with the judicial powers of the State and may therefore be regarded as a tribunal within the meaning of Article 136. Such adjudicatory power requires the authority to act in a judicial manner, to ascertain the relevant facts from the material before it, and to apply the appropriate law to those facts in order to settle the dispute. The Court further clarified that this test of a tribunal is not exhaustive; it is possible that other bodies which do not satisfy this particular test may also qualify as tribunals.
The Court continued by emphasizing that, to be considered a tribunal, the power of adjudication must stem from a statute or a statutory rule. It observed that a body whose adjudicatory power originates from an agreement between the parties—such as a private arbitrator—or a tribunal operating under section 10‑A of the Industrial Disputes Act, 1947, does not meet the test of a tribunal under Article 136. The Court noted that the mere presence of Court‑like features in such a body is of little consequence. For example, the Arbitration Act, 1940 confers some Court‑like characteristics on an arbitrator, and section 10‑A of the Industrial Disputes Act, 1947 gives many Court‑like attributes to an authority acting under that provision; nevertheless, these bodies are not tribunals for the purpose of Article 136. The Court also observed that the term “tribunal” appears in Article 227 of the Constitution and that, in that context as well, the word carries the same meaning as in Article 136. Turning to the matter before it, the Court posed the question of whether the State Government, when deciding an appeal under Rule 6(6) of the Punjab Welfare Officers Recruitment and Conditions of Service Rules, 1952 (referred to as the Service Rules), should be regarded as a tribunal within the meaning of Article 136 of the Constitution. The Court explained that the State Government framed the Service Rules while exercising its rule‑making authority under section 112 read with section 49(2) of the Factories Act, 1947. These Service Rules deal with the qualifications and
The Service Rules, which were made under the State Government’s rule‑making authority, deal with the qualifications and conditions of service applicable to a Welfare Officer employed in a factory, and these rules fall well within the exercise of that authority. Rule 6 of those Service Rules sets out in detail the conditions of service for a Welfare Officer. Sub‑rule (1) and sub‑rule (2) of Rule 6 stipulate that the Welfare Officer must be granted a status that corresponds to the status enjoyed by other executive heads of the factory, and that his conditions of service must be identical to those of other staff members who hold a comparable status in the same factory. Sub‑rule (3) authorises the management to impose on the Welfare Officer one or more punishments selected from the following list: (i) censure; (ii) withholding of increments, which may include a stoppage of any efficiency bar; (iii) reduction to a lower stage in a time‑scale; (iv) suspension; and (v) dismissal or termination of service in any other manner. The first proviso attached to sub‑rule (3) requires that no punitive order be passed against the Welfare Officer unless he has first been informed of the grounds on which the proposed action is based and he has been given a reasonable opportunity to defend himself against that proposed action. The second proviso to sub‑rule (3) adds an additional safeguard by providing that, except for the punishment of censure, the management may not impose any other punishment on the Welfare Officer without first obtaining the prior concurrence of the Labour Commissioner of Punjab. Sub‑rule (4) provides that, before any order is passed on a reference made under the last proviso, the Labour Commissioner must give the Welfare Officer a chance to show cause against the proposed action, and, if the circumstances require, the Commissioner may hear both parties in person. Sub‑rule (5) states that, where the Labour Commissioner refuses to give his concurrence, the management is entitled to appeal to the State Government within thirty days of receiving that refusal. Sub‑rule (6) provides that a Welfare Officer who has been subjected to the punishment of dismissal or termination of service may appeal that punitive order to the State Government within thirty days of receipt of the order. The decision rendered by the State Government on appeals made under both sub‑rule (5) and sub‑rule (6) is expressly declared to be final and binding. Sub‑rule (7) further empowers the State Government to issue any interim orders that may be necessary while the appeal under sub‑rule (5) or sub‑rule (6) is pending. If the management imposes a punishment without first referring the matter to the Labour Commissioner and without obtaining the required concurrence, such an order of punishment is treated as a nullity and may be set aside on that ground alone upon an appeal by the Welfare Officer under sub‑rule (6). Conversely, if the management’s action does not amount to a punishment, an appeal under sub‑rule (6) is legally incompetent and must be dismissed on that basis. Consequently, when an appeal is filed under sub‑rule (6), the central question for determination is whether the management’s action constitutes a punishment, and, if it does, whether that punishment should be imposed. The dispute therefore revolves around the civil rights of both the management and the Welfare Officer.
In this dispute the parties were the Welfare Officer and the management, and the State Government held the statutory authority to adjudicate the controversy between them. Because the State Government was empowered to render a decision, it could either confirm the punishment that had been alleged or set that punishment aside and issue consequential relief such as an order of reinstatement. In the present case the State Government exercised that power by issuing an order of reinstatement. Sub‑rule (6) of Rule 6 expressly provides that the decision of the State Government is final and binding on the parties. Consequently, the appellate decision fully determines the rights of the two contending parties with respect to the matter that was in dispute. The function of the appellate authority and its power to conclusively determine civil rights imply that the State Government must discharge a judicial duty, deciding the dispute solely by ascertaining the facts that are placed before it and by applying the relevant law to those facts. Since the rule does not prescribe a specific procedure for hearing such an appeal, the State Government is free to devise a procedure that is consistent with its judicial duty. In practice the State Government benefits from the fact‑finding that has already taken place at two earlier stages: first, an enquiry by the management under sub‑rule (3), and second, an enquiry by the Labour Commissioner under sub‑rule (4). At the appellate stage the State Government may also require the parties to submit written representations, and in the present case the parties were indeed invited to make such representations and they complied. After the relevant facts have been established, the State Government may decide, having regard to the applicable law – namely the ordinary master‑servant relationship as modified by industrial legislation – whether the management’s action constitutes a punishment and, if so, whether that punishment should be imposed. An examination of all these considerations leads to the conclusion that the State Government, in deciding an appeal under Rule 6(6) of the Service Rules, exercises the judicial powers of the State and satisfies the constitutional test of a tribunal contemplated by Article 136. Accordingly, the preliminary objection that an appeal under Article 136 was unavailable must be rejected. On the merits, the respondent had little to contend. The management did not attempt to impose any punishment on the Welfare Officer, nor did it conduct any enquiry into any charge against him. Under the conditions of service, the management was entitled to terminate the respondent’s employment by paying one month’s salary in lieu of notice, and it exercised that right. The termination was therefore not a punishment within the meaning of sub‑rule (3) of Rule 6, and the order of termination did not bring any adverse consequences upon the respondent; it did not deprive
The Court observed that the management’s decision to terminate the respondent’s employment did not deprive him of any right to which he was legally entitled, because the termination was carried out in accordance with the applicable conditions of service and therefore did not amount to a punitive sanction. Since the management’s action was not an order of punishment, the Court held that the respondent had no statutory right to challenge that action by filing an appeal before the State Government, and consequently the State Government possessed no authority to direct the respondent’s reinstatement. In view of this legal position, both the respondent’s appeal against the termination and the subsequent order issued by the State Government in response to that appeal were deemed to be fundamentally misconceived. The Court further concluded that the appellate order issued by the State Government was not only erroneous in its conclusions but also suffered from a complete lack of jurisdiction, rendering it invalid. Because the order was issued without jurisdiction and was based on a mistaken view of the law, the Court found that it must be set aside. Accordingly, the Court allowed the appeal filed by the respondent, thereby overturning the earlier appellate decision and refusing any reinstatement order.