Hind Construction and Engineering Co. Ltd vs Their Workmen

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 970 of 1963

Decision Date: 09 November 1964

Coram: M. Hidayatullah, P.B. Gajendragadkar, K.N. Wanchoo

The case was titled Hind Construction & Engineering Co. Ltd versus Their Workmen and was decided on 9 November 1964 by the Supreme Court of India. The judgment was authored by Justice M. Hidayatullah, with Justices P. B. Gajendragadkar and K. N. Wanchoo sitting on the bench. The petitioner was Hind Construction & Engineering Co. Ltd and the respondents were the workmen employed by the company. The decision is reported in 1965 AIR 917 and 1965 SCR (2) 85, and it has been cited in several subsequent Supreme Court reports, including R 1972 SC 763, R 1975 SC 1892, R 1978 SC 1044, R 1984 SC 914, and RF 1988 SC 328. The dispute concerned the dismissal of workmen under the Industrial Dispute Act, specifically the question of whether a tribunal could treat certain workmen as dismissed when they failed to re‑join after being ordered to do so, and whether the tribunal possessed the power to intervene when a punishment amounted to victimisation or an unfair labour practice.

According to the factual record, the appellant company employed a total of thirty workmen in its store yard, of whom eleven were permanent employees and the remaining were temporary. The company’s customary practice provided fourteen holidays each year, including 1 January, and whenever a holiday coincided with a Sunday, the following Monday was also observed as a holiday. On 1 January 1961, which fell on a Sunday, the eleven permanent workmen did not report for work on 2 January, treating that day as a holiday, despite having been instructed that, due to workload, 2 January would be a working day with a compensatory holiday to be granted later. Their absence resulted in the issuance of charge sheets and, after an internal enquiry, the workmen were ordered to be dismissed. When the matter was referred to the industrial tribunal, the tribunal found that the workmen had gone on a one‑day strike, which was not illegal, but held that dismissing them for a single‑day strike was excessively harsh and amounted to victimisation; consequently, the tribunal ordered their reinstatement. The appellant contended that, following the enquiry, three of the eleven workmen were excused and directed to resume duties, so the tribunal’s reference to all eleven as dismissed was erroneous, and further argued that the tribunal should not have examined the finding or the severity of the punishment, asserting that it lacked authority to interfere with a dismissal even where the strike was lawful. The Court held that all eleven workmen had been charged together and had raised essentially the same defences, although three had raised additional defences; despite the order for those three to re‑join, they could not have done so because the dispute had been taken over by the Union, and they would have been treated in the same manner as the others unless they broke away from the Union’s position. Accordingly, the Government was entitled to regard the dispute involving all the workmen as a single, undivided matter and refer it to the tribunal as such.

The Court observed that the dispute concerning all of the workmen was a single, undivided matter and therefore could be referred to the Tribunal in that form. It reiterated that a settled rule of labour law holds that the award of punishment for misconduct belongs to management, and that the Tribunal should not intervene where the punishment is justified. However, the Court added that if the punishment is so disproportionate that no reasonable employer would impose it under similar circumstances, the Tribunal may view the punishment as evidence of victimisation or an unfair labour practice. The Court cited the principle that a reasonable employer would not dismiss its entire permanent workforce for the conduct in question. It found that the dismissal of all permanent workmen was excessively severe and out of proportion to the alleged fault. Consequently, the Court concluded that the Tribunal’s interference with the dismissal was warranted. The Court supported this conclusion with references to earlier authorities, indicating that the Tribunal’s power to set aside a dismissal arises when the punishment is manifestly excessive. The judgment therefore affirmed that the Tribunal was justified in treating the dismissal as unjustified and ordering reinstatement.

The appeal arose under civil appellate jurisdiction as Civil Appeal No 970 of 1963, filed by special leave against the award dated 4 May 1962 of the Second Industrial Tribunal, West Bengal, in Case No VIII146 of 1961. The appellant company, engaged in engineering and contracting across West Bengal, operated a store yard at Sukchar where it employed thirty workers, of whom eleven were permanent and the remainder temporary. The dispute centered on the dismissal of the eleven permanent workers on 2 January 1961. The company’s holiday policy granted fourteen holidays each year, including 1 January, and whenever a holiday fell on a Sunday the following day was treated as a holiday. Because 1 January 1961 was a Sunday, the company considered 2 January a working day, offering a substitute holiday on another date. The union contended that the workers treated 2 January as a holiday and therefore did not attend work. The company asserted that it had explicitly instructed the workers that 2 January was a working day due to work pressure and that a later holiday would be provided. Following their absence, the workers received charge‑sheets and, after an enquiry, were ordered dismissed. Prior to the enquiry they were suspended, and the union sought conciliation through the Labour Officer. Conciliation failed because the company did not appear, leading the Government of West Bengal to refer the matter to the Labour Tribunal on 21 April 1961. The Tribunal’s award set aside the dismissals and ordered reinstatement with back wages, except for wages for 2 January 1961. The appeal challenged that award, arguing that the Tribunal exceeded its authority and that the dismissals were justified.

In 1961 the Labour Tribunal was asked to consider whether the dismissal of eleven workmen was justified and, if so, what relief they might be entitled to. The Tribunal’s award held that the employer had neither instituted a lock‑out nor a lay‑off, as had been alleged by the Union. It further observed that the workmen had indeed gone on strike, but that the strike was not illegal. Consequently, the Tribunal concluded that dismissing the workmen for participation in that one‑day strike amounted to victimisation and was disproportionate both in severity and in relation to the conduct involved. The Tribunal therefore set aside the dismissals and ordered that the workmen be reinstated.

The Enquiry Officer who had investigated the matter had recommended dismissal only of eight of the eleven workmen. For the remaining three, the Officer exercised the benefit of doubt and offered separate explanations for their absence. The first of these was a man named Quigly, who was identified as a Christian. He received a warning and a deduction of wages for 2 January because he had informed the Works Manager that he would be unable to attend work on that day. The second was J. C. Bose, who had joined the company on 31 December and therefore was not aware that 2 January was not declared a holiday. He was warned and his absence was charged against his leave balance. The third was A. K. Sarkar, who had been on leave until 31 December; he was excused on the basis that Quigly had told him that 2 January would be a holiday. He also received a warning and his absence was recorded as leave, payable or otherwise according to the leave he had accrued.

All three of these workmen were ordered to resume duty, but they did not comply. The Union asserted that the original dispute remained pending conciliation and that, until that dispute was resolved, the workmen could not be required to report for work. The appellant Company argued that the reference to the eleven workmen as “dismissed” was inaccurate because only eight had actually been dismissed. While that observation was technically correct, the Tribunal declined to interfere with the award on that ground alone, noting that the workmen had been charged jointly and their common defence was that the day following 1 January should have been a holiday in accordance with established practice. The three individuals had raised additional, separate defences only when they were asked to file separate statements.

The Tribunal observed that it was evident the three workmen could not re‑join when the dispute was taken over by the Union, and that even if they had been offered employment they would have been treated in the same manner as the others unless they withdrew from the Union or acted against its wishes. In these circumstances, the Government was entitled to treat the dispute as a single, undivided matter and to refer the cases of all workmen who were absent on 2 January on the ground that they claimed the day to be a holiday. Accordingly, the Tribunal found no reason to interfere with the award on the basis of the erroneous description of the eleven workmen as dismissed.

In this case, the Court observed that the reference to the day of 2 January as a holiday did not merit interference with the award, and therefore the award stood on that ground. The Court then examined whether the Tribunal was justified in interfering with the dismissal punishment after it had concluded that the workmen had gone on strike, even though the strike was not illegal. The judgment referred to several authorities in which this Court has laid down principles to guide Tribunals on such matters. It stated that settled law holds that a Tribunal may not revisit the finding or the extent of punishment because the entire controversy is not fully before the Tribunal as it would be before a normal appellate court. The Court explained that this Court, in many decisions, has described the limited powers of a Tribunal and has ruled that a Tribunal may intervene only when the employer’s conduct demonstrates lack of good faith, victimisation of an employee or employees, or an unfair labour practice. The Court added that a Tribunal may, in a strong case, interfere with a basic error of fact or a perverse finding, but it may not replace its own assessment of the evidence for that of the officer who conducted the domestic enquiry, although it may intervene where natural‑justice principles or fair‑play have been ignored or where the enquiry was so defective that it amounted to no enquiry at all. Regarding punishment, the Court noted that it has been held that the imposition of punishment for misconduct under the Standing Orders, if any, is a matter for management, and that the Tribunal should not interfere where the punishment is justified. The Court further clarified that the Tribunal is not required to evaluate whether the punishment is proper, adequate, excessive, or too severe. However, the Court warned that where the punishment is shockingly disproportionate, taking into account the specific conduct and past record, or is of a kind that no reasonable employer would impose in similar circumstances, the Tribunal may deem such punishment to indicate victimisation or an unfair labour practice. The Court indicated that these principles can be gathered from several earlier decisions, including Bengal Bhatdee Coal Co. Ltd. v. Ram Probesh Singh & Ors., Buckingham & Carnatic Co. Ltd. v. Workers, the 1964 case reported in 1 S.C.R. 709, the 1952 case reported in L.A.C. 490, Ghar Paper Mills Co. Ltd. v. Ram Naresh Kumar, Doom Dooma Tea Co. Ltd. v. Assam Chah Karamchari Sangh, Punjab National Bank Ltd. v. Workmen, and Chartered Bank Bombay v. Chartered Bank Employees Union. In the present matter, the dispute centred on whether the punishment amounted to victimisation or an unfair labour practice. The Court noted that counsel for the petitioner, Mr Sen Gupta, referred to various portions of the enquiry record to demonstrate that the workmen’s conduct was treated as collective, described as a strike, portrayed as the result of a conspiracy, and that a demand had been made.

The petitioner’s counsel maintained that the factual matrix required the matter to be characterised as victimisation because the disciplinary action was directed exclusively at the permanent employees. He further suggested that the employer’s decision to dismiss these permanent workers and to substitute their labour with temporary hands was motivated by an intention to weaken the Union, and that the subsequent re‑engagement of three workmen, who were apparently essential to the employer, was undertaken for the same ulterior purpose. In contrast, the respondent’s counsel contended that the record did not reveal any indication of victimisation. He pointed out that the individuals concerned had been found guilty both at the enquiry and by the Tribunal, and that the only remaining issue was the appropriate quantum of punishment, a matter which lay wholly within the employer’s competence. The Court observed that the case fell within the category of situations where the penalty imposed could be described as one that no reasonable employer would have meted out under similar circumstances unless it served some other objective. It was noted that the appellant company had, for many years, followed a practice of substituting a holiday that fell on a Sunday with the following clay day. In the year under consideration, 2 January would also have been a holiday, but management decided otherwise. The record did not show any special circumstance that demanded work on that day. Nonetheless, the absence of eleven workmen on 2 January could have attracted a less severe sanction such as leave without pay, a warning, or a monetary fine, rather than dismissal.

The Court further reasoned that it was inconceivable that any reasonable employer would have dismissed the entire permanent staff in the manner adopted. Even assuming, for the sake of argument, that three (1)[1961] 1 L.L.J. 511. (2)[1960] 2 L.L.J. 56. (3)[1959] 11 L.L.J. 666. (4)[1960] 11 L.L.J. 222. Sup.165‑7 workmen had been warned and reinstated, the employer was aware that the workers could not resume duties because of Union intervention. While acknowledging that tribunals ordinarily should not interfere with the type or severity of punishment except in extraordinary situations, the Court concluded that interference was warranted here because the punishment was not only excessively harsh and disproportionate to the misconduct, but also one that no reasonable employer would have imposed. Consequently, the appeal was dismissed with costs, and the order of dismissal was affirmed.