Labour Commissioner, Madhya Pradesh vs Burhanpur Tapti Mills And Others

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

Court: supreme-court

Case Number: Civil Appeal No. 529 of 1963

Decision Date: 25 March 1964

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

In this matter the Labour Commissioner of Madhya Pradesh had instituted a petition against Burhanpur Tapti Mills and other respondents. The petition was decided on 25 March 1964 by a bench comprising Justice K. C. Das Gupta, Chief Justice P. B. Gajendragadkar and Justice K. N. Wanchoo. The case was reported as 1964 AIR 1687 and 1964 SCR (7) 484. The dispute arose under the Central Provinces and Berar Industrial Disputes and Settlement Act, 1947, particularly sections 16, 41 and 42(1)(g). An employee of the respondent mill was summarily dismissed after an enquiry that alleged he had encouraged workers to embark on an illegal strike. The employee filed an application under section 16 of the Act to the Labour Commissioner, seeking restoration. The Commissioner held that the authority to determine the legality of a strike was vested, under section 41, in the State Industrial Court or the District Industrial Court. Consequently, the Commissioner asserted that the employer could not dismiss the workman on the basis of its own view that the strike was illegal until a court had formally declared the strike illegal, and ordered the employee’s reinstatement with full back wages. The respondent appealed this order to the State Industrial Court, but the Court dismissed the revision, agreeing with the Labour Commissioner that the employer must await a judicial declaration of illegality. The employer then approached the Madhya Pradesh High Court under Article 226 of the Constitution. The High Court held that, although the Labour Commissioner did not possess jurisdiction to decide the legality of a strike generally, it could address the question incidentally when raised in an enquiry under section 16, and therefore set aside both the Commissioner’s and the State Industrial Court’s orders. The Labour Commissioner appealed this judgment to the Supreme Court of India.

The Supreme Court affirmed that the employer was entitled to act against an employee as soon as it believed the strike to which the employee participated fell within the scope of section 40 of the Act. The Court explained that the expression “rendered illegal” in section 42(1)(g) was intentionally chosen to differ from the phrase “held illegal” used in sections 43, 44 and 45. It observed that it would be unreasonable for management to be required to wait for a declaration by a State or District Industrial Court after a strike had begun or notice of a strike had been given, when the employer considered the strike illegal under section 40. The Court further noted that the mandatory word “shall” in section 41, concerning actions on a reference by the State Government, and the permissive word “may” concerning actions on applications by others, indicated that a court could decline to act on an application by anyone other than the State Government. Finally, the Court held that for the purpose of performing its functions under section 16(3) of the Act, the Labour Commissioner possessed jurisdiction to decide the legality or illegality of a strike when that issue was raised before it.

In this matter the Court observed that the wording of section 41 uses the term “shall” when the State Government refers a question, but uses the term “may” when any other person makes an application. This contrast leads to the logical conclusion that, where an application is made by a person other than the State Government, the State Industrial Court or a District Industrial Court is also permitted to decline to act on the application. Accordingly, the Court held that the Labour Commissioner, when performing functions under section 16(3) of the Industrial Disputes Act, possessed the authority to determine whether a strike was legal or illegal whenever that issue was raised before him.

The appeal, numbered Civil Appeal No 529 of 1963, was filed by special leave against a judgment and order dated 24 September 1958 of the Madhya Pradesh High Court in Miscellaneous Petition No 82 of 1958. The judgment was delivered on 25 March 1964 by Justice Das Gupta. The Court identified two principal questions for determination. The first question concerned whether section 42(1)(g) of the Central Provinces and Berar Industrial Disputes and Settlement Act, 1947 barred an employer from disciplining a workman for taking part in an illegal strike before such a strike had been declared illegal under section 41 of the Act. The second question examined whether, under an application made pursuant to section 16(3) of the Act, the Labour Commissioner could decide the legality or illegality of the strike. The factual backdrop involved the first respondent, Burhanpur Tapti Mills Ltd., which on 21 September 1956 served a charge‑sheet on the second respondent, Sulemankhan Mullaji, alleging that he had encouraged workers in the Weaving Department to commence an illegal strike on that day. After conducting an inquiry, the Manager concluded that the charge was proved and that the conduct amounted to misconduct under clause 25(b) of the Standing Orders. The Manager therefore ordered the immediate dismissal of Sulemankhan without notice and without any compensation in lieu of notice. Sulemankhan filed an application against the dismissal with the Labour Commissioner of Madhya Pradesh under section 16 of the Central Provinces and Berar Industrial Disputes Settlement Act, 1947. The Labour Commissioner expressed the view that the power to determine the legality of a strike was conferred by section 41 upon the State Industrial Court or the District Industrial Court. He further held that, until either of those courts declared a strike to be illegal, the employer could not take disciplinary action on the basis of its own opinion that the strike was illegal. Additionally, the Labour Commissioner found that there was no legal evidence to substantiate the allegations against Sulemankhan and consequently ruled in his favour.

In this case the Court observed that the Manager, when imposing the punishment of dismissal, had failed to give due regard to sub‑clause 4 of clause 26 of the Standing Orders. Consequently, the Manager’s order of dismissal was set aside and the Court directed that Sulemankhan be reinstated with full wages for the period from the date of dismissal up to the date of reinstatement. The first respondent, who was the employer, filed a revision application against that order, but the application was not successful.

The State Industrial Court, which functions as the revisional authority, rejected the Labour Court’s view that an employer could not take any disciplinary action before a decision from either the State Industrial Court or the District Industrial Court declaring the strike illegal had been obtained. However, the State Industrial Court held that the inquiry conducted by the Manager had not complied with the requirements of clause 26(2) of the Standing Orders and that, in imposing the punishment, the Manager had not taken into account the matters specified in clause 26(4). On that basis, the Court concluded that the Labour Commissioner was justified in examining the evidence himself. The Court further held that the factual findings made by the Labour Commissioner could not be challenged in a revision proceeding. Accordingly, the State Industrial Court affirmed that the reinstatement order issued by the Labour Commissioner was fully justified.

Unsatisfied with that conclusion, the employer appealed to the High Court of Madhya Pradesh under Article 226 of the Constitution. The High Court expressed the view that, although the Labour Commissioner might not have jurisdiction to decide directly on the legality of a strike, the Commissioner could consider that question incidentally for the purposes specified in section 16 of the Industrial Disputes Settlement Act when an enquiry under that section raised the issue of wrongful dismissal on the ground that there was no incitement of an illegal strike under clause 25(b) of the Standing Orders. After stating this position, the High Court added that the matter need not be examined further because the strike in question had not been held to be a legal strike. The High Court also held that the Industrial Court had erred in deeming the charge‑sheet served on the workman to be defective. Moreover, the High Court found that neither the Labour Commissioner nor the State Industrial Court possessed the jurisdiction to review the findings of the domestic tribunal as an appellate body and to reach a contrary conclusion based on the same evidence. Consequently, the High Court set aside the orders of both the Labour Commissioner and the State Industrial Court.

The present appeal has been filed by the Labour Commissioner, Madhya Pradesh, and no appeal has been filed by the workman himself. Accordingly, the Court found it unnecessary to examine the correctness of the High Court’s decision on the merits of the case. The issue before the Court was limited to determining whether section 42 of the Central Provinces and Berar Industrial Disputes Settlement Act, 1947, barred the employer from taking action against a workman for participating in an illegal strike before the strike had been declared illegal under section 41, and whether, in the absence of such a declaration, the Labour Commissioner had the jurisdiction to decide the legality or illegality of the strike in an application filed under section 16 of the Act.

In this matter, the Court considered two principal questions. First, it examined whether an employer was prohibited from disciplining a workman when the strike in which the workman participated had not been declared illegal under section 41 of the Act. Second, the Court evaluated whether, in the absence of any declaration under section 41, the Labour Commissioner possessed the authority to determine the legality or illegality of the strike when an application was made to him pursuant to section 16 of the Act. To resolve the first question, the Court turned to the language of section 42, which provides that “No employer shall dismiss, discharge, suspend or reduce any employee or punish him in any other manner solely by reason of the circumstance that the employee has participated in a strike which is not ‘rendered illegal’ under any provision of this Act.” The Act specifies the circumstances that render a strike illegal in section 40. On its face, the provision appears to bar an employer from taking any punitive action only when the strike in question does not fall within any of the categories listed in section 40. Accordingly, the prohibition would apply only where a strike is not “rendered illegal” by the terms of the statute. The respondent‑employer submitted that this wording simply meant that the prohibition operated only when the strike was not illegal as defined in section 40. The appellant, however, argued that the phrase “rendered illegal” in subsection 1(g) of section 42 should be interpreted as “held illegal.”

To assess the appellant’s contention, the Court noted that section 41 establishes a procedure whereby the State Government, any employer, or any employee may approach a State Industrial Court or a District Industrial Court to obtain a decision on whether a strike or lockout, for which notice has been given or which has already occurred, is illegal. The appellant maintained that an employer could act against a workman only after the appropriate industrial court, on an application made under section 41, had pronounced the strike illegal. The Court found no justification for adopting that construction. It observed that the legislature deliberately used the expression “rendered illegal” in section 42(1)(g) in contrast to the phrase “held illegal” employed in sections 43, 44 and 45. Section 43 imposes a penalty on an employer who declares a lockout “held… to be illegal” by the State or District Industrial Court. Section 44 penalises an employee who joins a strike “held… to be illegal” by those courts. Section 45 provides a penalty for instigation, incitement, participation or furtherance of a strike or lockout “which is held to be illegal” by the State or District Industrial Court. The deliberate distinction in terminology suggested that the Parliament intended “rendered illegal” to have a meaning different from “held illegal.”

In this case, the Court observed that the use of different wording – specifically the phrase “rendered illegal” in Section 42(1)(g) – could only have been intentional. The Court explained that the reason for this deliberate choice was not difficult to ascertain. It noted that if an employer wishes to obtain a declaration on the legality of a strike, the State Industrial Court or the District Industrial Court may be approached under Section 41, but such a decision would inevitably require a considerable amount of time. Consequently, the Court held that it would be unreasonable to require an employer, who has given notice of a strike or faced a strike that he believes to be illegal under Section 40, to suspend his actions and wait for a declaration from the Court. The Court further pointed out that the authorities are not obligated to decide every application filed by an employer.

The Court then recited the language of Section 41, which states that the Court shall decide, on a reference made by the State Government, whether any strike, lockout, or any change of which notice has been given or which has taken place, is illegal. The provision adds that the Court may also decide the question on an application made by any employer, any employee, a representative of the employees, or the Labour Officer. The Court emphasized that while the word “shall” is used for a reference by the State Government, the word “may” is used for an application by other parties. This contrast, the Court said, leads to the logical conclusion that, on an application by anyone other than the State Government, the Court may decline to act.

Accordingly, the Court warned that interpreting “rendered illegal” to mean “held illegal” would produce an absurd result: even if a strike is illegal under Section 40, no action could ever be taken against an employee for participating in it. The Court therefore concluded that the expression “rendered illegal” does not mean “held illegal.” As a result, an employer is free to take disciplinary action against an employee as soon as the employer believes the strike falls within the scope of Section 40. The Court explained that when an employer dismisses, discharges, removes, or suspends an employee on that basis, the employee may file an application with the Labour Commissioner seeking reinstatement and compensation for loss of wages, as provided in Section 16(2) of the Act. Section 16(3) further provides that, upon receiving such an application, the Labour Commissioner shall conduct a prescribed enquiry and, if it is found that the dismissal, discharge, removal, or suspension was contrary to the provisions of the Act or a Standing Order, or was based on misconduct more than six months prior, the Commissioner may order the employee’s reinstatement or grant other relief.

The Court explained that where a dismissal, discharge, removal or suspension of an employee was effected in violation of any provision of the Industrial Disputes Act, or in breach of a Standing Order that had been made or sanctioned under that Act, or where such disciplinary action was based on a fault or misconduct that the employee had committed more than six months before the date on which the dismissal, discharge, removal or suspension was effected, the Labour Commissioner was empowered under section 16(3) to direct that the employee be reinstated to his former position or to grant any other relief that the Commissioner deemed appropriate. The Court then turned to the question that had been raised before it, namely whether, in a case where the order of dismissal, discharge, removal or suspension was said to have been made because the employee had participated in or had instigated an illegal strike, the Labour Commissioner could decide for himself the question of whether the strike was illegal. Counsel for the appellant argued that exclusive jurisdiction to determine the legality or illegality of a strike was vested by the Act in two specific bodies, namely the State Industrial Court and the District Industrial Court, as authorized by section 41. The Court noted that the wording of section 41, as set out earlier, clearly confers upon the State Industrial Court or the District Industrial Court the power to decide the question of the legality of a strike when a reference is made by the Government, or when an application is filed by an employer, an employee or any other person specified in that section. The appellant’s counsel, identified as Mr Shroff, further contended that it could not have been the intention of the legislature to create a situation in which two parallel agencies – the Labour Commissioner and the State or District Industrial Court – possessed overlapping jurisdiction to determine the same issue. He warned that, under such a dual‑jurisdiction scheme, it might happen that the Labour Commissioner, acting under an application filed under section 16(3), would hold that the strike was not illegal, while the State Industrial Court or the District Industrial Court, hearing a reference under section 41, could reach the opposite conclusion, or vice versa. This line of argument, the Court observed, appeared plausible at first glance.

Nevertheless, the Court identified a substantial difficulty in accepting the proposition that exclusive jurisdiction rested solely with the courts mentioned in section 41. It pointed out that those courts were not obliged to render any decision on an application made by any party other than the State Government; consequently, there were circumstances in which the State Industrial Court or the District Industrial Court might decline to entertain an application seeking a determination of the strike’s legality or illegality. Because the statute permitted those courts to refuse to decide the matter, the Court concluded that it could not be said that exclusive jurisdiction over the question of a strike’s legality was conferred upon them by section 41. Accordingly, for the purpose of carrying out the functions assigned to it under section 16(3) of the Act, the Labour Commissioner retained the authority to decide the question of whether a strike was legal or illegal whenever that issue was raised before him. In light of this reasoning, the Court dismissed the appeal, made no order as to costs, and recorded that the appeal was dismissed.