Full Judgment Text
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PETITIONER:
MUNICIPAL CORPORATION OF GREATER BOMBAY
Vs.
RESPONDENT:
THE B.E.S.T. WORKERS’ UNION
DATE OF JUDGMENT12/01/1973
BENCH:
VAIDYIALINGAM, C.A.
BENCH:
VAIDYIALINGAM, C.A.
ALAGIRISWAMI, A.
DUA, I.D.
CITATION:
1973 AIR 883 1973 SCR (3) 285
1973 SCC (3) 546
CITATOR INFO :
R 1983 SC 494 (8)
ACT:
Bombay Industrial Relations Act, 1946, s. 78(1)(d)(i)-Scope
of.
HEADNOTE:
The appellant, the Municipal Corporation of Greater Bombay,
established the Bombay Electric Supply and Transport
Undertaking for the purpose of providing and operating motor
transport and supplying electricity to the consumers in the
city of Bombay.
Workman Shri Naik, employed as Assistant Fitter in the
Transportation Engineering Department at the Appellant’s
Workshop and another employee employed under the Appellant
as a mechanic were found by the S.I. of Police with gunny
bags in their hands and each bag contained 22 brass
bearings. On investigation it was found that Naik was an
employee under the Appellant and that the brass bearings had
been removed from the Appellant’s Workshops with the help
and cooperation of the mechanic. A complaint of theft
against the two workmen was launched.
An inquiry was held by an officer of the appellant and after
evidence by the police officers and others, the Enquiry
Officer found Shri Naik guilty and an order of dismissal
was passed on February 11, 1970. Appeals to the Executive
Engineer and Assistant General Manager of the appellant were
all dismissed.
Naik and the mechanic thereafter, filed applications before
the 5th Labour Court at Bombay challenging the order of
dismissal on various grounds. The Labour Court, after
considering all the facts and evidence held that as the
orders of dismissal were not passed within six months of the
misconduct coming to the notice of the employer, they were
illegal and have to be set aside under s.78(1)(d)(i) of the
Act. The Labour Court further ordered the appellant to pay
each of the workmen his back wages from the date of
dismissal till the date, of order and also in addition to
pay compensation of Rs. 15001-.
The main point that arose for consideration was the
interpretation of the provisions of s.78(1)(d) of the Act
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etc.
Held : (i) The word "shall" in s. 78(1) should not be
strictly construed and when the relevant provisions are read
in the context in which they appear, it cannot be doubted
that the Labour Court will have to consider the
circumstances of a particular case and the- nature of the
misconduct and also the nature of contravention of any
provisions of law or standing order. The fact that s. 78(1)
of the Act has conferred certain powers on the Labour Court
does not mean that the Labour Court must necessarily and
under all circumstances grant the reliefs which it has the
power to grant. It is well established proposition that the
power to grant certain reliefs includes the power of
refusing the relief. If an employer in a particular case
has passed an order of punishment beyond the period of six
months and if it is found that he has no satisfactory
explanation for the delay. the Labour Court may be justified
in straightaway setting aside the orders
286
on the ground that they have been passed beyond the period
of six months. If, on the other hand, as in the present
case, an employer has been vigilant in initiating
disciplinary proceedings and the Labour Court is satisfied
about the reasons for the delay in passing the orders of
punishment, the Labour Court is not justified in setting
aside the orders solely on the ground that the period of six
months had expired. [296E-H; 297A-C, E-H]
(ii)Provisions contained in s.78(1)(d)(i) are not
mandatory, but only directory. Therefore, the
interpretation based by the Labour Court on s.78(1)(d)(i) is
erroneous. Accordingly, the two orders granting reliefs to
the workmen are set aside. [298D-E; 302B]
Raipur Co-operative Central Batik Ltd. and Anr. v. Stale
industrial Court, Indore & Ors., [1963] 1 L.L.J. 790, M/s.
Chotabhai Jethabhai Patel & Co. v. The industrial Court
Nagpur & Ors., A.J.R. 1972 S.C. 1268, Ibrahim Abbobaker &
Anr. v. Custodian-General of Evacuee Property, [1962] S.C.R.
696, State of U.P. & Ors. v. Baburam Upadhya, [1961] 2
S.C.R. 679, Remington Rand of India Ltd. V. The Workmen,
[1968] 1 S.C.R. 164 and Drisroll v. Church Commissioner for
England, [1957] 1 Q.B. 330, referred to.-
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1774 &
1775 of 1971.
F. S. Nariman, Addl. Solicitor-General of India, Y. S.
Chitale, D. C. Shroff, O. C. Mathur, Bhuvanesh Kumari and
Ravinder Narain, for the appellant.
S.V. Gupte, S. B. Naik and K. Rajendra Choudhury, for the
respondent.
The Judgment of the Court was delivered by
VAIDIALINGAM, J.-In these two appeals, by special leave the
common question that arises for consideration is the proper
interpretation to be placed on section 78(1)(D) of the
Bombay Industrial Relations Act 1946 (Bombay Act No. XI of
1947) hereinafter referred to as the Act.
The appellant in both the appeals, the Municipal Corporation
of Greater Bombay, is a body corporate constituted under the
Bombay Municipal Corporation Act 1888. For the purposes of
providing and operating motor transport and for supplying
electricity to the consumers in the city of Bombay, the
appellant has established under the provisions of the Bombay
Municipal Corporation Act, an undertaking called the Bombay
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Electric Supply and Transport Undertaking. The affairs of
the said Undertaking are managed by a committee called the
Bombay Electric Supply and Transport Committee, as per the
provisions of the Bombay Municipal Corporation Act. The
workman, Shri U. R. Naik, was employed as assistant fitter
in the Transportation Engineering Department at Dadar
workshop of the appellant. Similarly, Shri E. Menezes was
employed under the appellant as Line Mechanic. It is common
ground that on July 18, 1969, when the sub-inspector
287
of police attached to the V.P. Road Police Station, was on
petrol duty with his other staff, at about 9.30 P.M., he
came across Shri U.R. Naik along with another person,
Kundaikar, and found each of them carrying a gunny bag in
their hands. As the bags appeared to be rather very heavy,
the movement of the said persons arose the suspicion of the
police officials, who stopped the said persons and searched
the bags. On a search of the bags, it was found that each
bag contained 22 ’brass bearings. As Shri U. R. Naik and
his companion, Kundaikar, were not able to offer any
satisfactory explanation as to how they came to be in
possession of the articles found in the bags,_ they were
taken into custody. On further investigation and from the
statement given by Shri Naik, it was found that the latter
was an employee under the appellant as Assistant Fitter and
that the brass bearings found in his possession had been
removed from the appellant’s workshop with the active help
and cooperation of another employee, E. Menezes, who was at
the material time employed under the appellant as a Line
Mechanic. In consequence, Shri E. Menezes was also arrested
shortly thereafter. After further enquiries, the brass
bearings were identified by the concerned officers as
properties belonging to the appellant. Ultimately on July
20, 1969, the appellant lodged a complained of theft against
the two workmen, U. R. Naik and E. Menezes.
The appellant also charge-sheeted the two workmen on 18/’
19th August, 1969. Shri U. R Naik was charge-sheeted under
Standing Order 20(C) for ’fraud or dishonesty in connection
with the business of the Undertaking’. Shri E. Menezes was
charge sheeted under Standing Order 20(C) and Standing Order
20(1) for having committed an act ’subversive of
discipline’. An enquiry was conducted by Shri Talpade,
Assistant Labour Officer (Transportation) of the appellant.
At first it was a common enquiry against both the workmen in
which the evidence of the police officers and certain
officers of the appellant were examined. Later on, the
enquiry was separated against each employee and further
witnesses, both on behalf of the appellant as well as the
workmen concerned, were examined. The Enquiry Officer found
Shri Naik guilty of the offence with which he was charged;
and it was found that the offence proved against this
workman was, of a very grave and serious nature and as such
the workman was not a fit person ’to be retained in service.
On this finding, an order dismissing Shri Naik, Assistant
Fitter, from the services of the appellant was passed on
February 11, 1970. An appeal by Shri Naik to the Executive
Engineer and a further appeal to the Assistant General
Manager were all dismissed. Similarly, Shri E. Menezes was
also ,found guilty of the offences with which he was
charged. It was further found that as the offences proved
against the workman were of a grave and serious nature, he
was not a fit person to be retained
288
in the service of the appellant. Accordingly, an order
dismissing Shri E. Menezcs from service was passed on March
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18, 1970. The appeals filed-by this workman to the
Executive Engineer and the Assistant General Manager proved
of no avail.
Shri Naik sent to the appellant an approach notice, as
required by the Act, on June 6, 1970, but without any avail.
Similarly, Shri Menezes also sent an approach notice on July
31, 1970, but without any avail. Shri Naik filed
application No. 553 of 1970 before the Fifth Labour Court at
Bombay challenging the order of the appellant dismissing him
from service on various grounds. He attacked also the
Domestic Enquiry that was held, as illegal and improper and
the finding recorded therein as perverse. He prayed for
setting aside the order dated February 11, 1970, and for
being reinstated in service with full back wages. Shri E.
Menezes filed application No. 554 of 1970 before the same
court praying for similar reliefs in respect of the order of
dismissal passed against him on March 18, 1970. He also
attacked the order and the enquiry proceedings on the
grounds relied on by Shri Naik-. The two applications were
filed under section 78 and 79 of the Act.
Both the applications were heard together by the Labour
Court. Evidence also was adduced by the appellant
justifying the action taken against the two workmen. One of
the grounds of attack against the orders of dismissal was
that they were illegal and void. as they have been passed
for fault or misconduct committed by the employees, which
came to the notice of the employer more than six months
prior to the date of the orders. To meet this contention,
the appellant adduced evidence before the Labour Court
explaining the circumstances that lead to the orders of
dismissal being passed beyond the period of six months. The
evidence was to the effect that though the enquiry
proceedings had commenced within a short time, nevertheless
they had to be postponed from time to time because the Union
representing the workmen was not ready on certain days and
also because of the postponement of the enquiry due to the
sickness of the employees concerned. ’Another reason given
by the appellant was that the enquiry had to be postponed
from time to time as the sub-inspector of police, who
investigated the complaint of theft, was not available for
giving evidence.
The Labour Court rejected almost all the contentions on
facts raised by the workmen regarding the legality and
propriety of the enquiry proceedings. The findings of the
Labour Court in this regard are
That the enquiry has been conducted by ’a
compepetent authority and that the workmen
were given full
289
and adequate opportunity to place, their
evidence and to examine witnesses on their
behalf. The Enquiry Officer was justified
from the evidence on record in coming to the
conclusion that the workmen are guilty of mis-
conduct under Standing Order No. 20(c). The
findings recorded by the domestic tribunal are
based on the evidence on record and that the
conclusions arrived at are just, legal and
proper. The criticism of the Union that the
finding arrived at by the Domestic Tribunal
was perverse has to be rejected. The two
workmen have failed to establish any case
under section 7 8 (1 ) (A) (a) (i) of the Act,
Regarding the contention raised by the Union on behalf of
the workmen that the orders of dismissal are illegal, as
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having been passed after six months from the date of the
notice of the misconduct, the Labour Court held that the
provisions of section 78 (1) (D) are mandatory and that the
time limit of six- months specified in section 7 8 (1) (D)
(i) of the Act cannot ’be enlarged by the Labour Court. The
Labour Court found support for this view in the Division
Bench judgment of the Madhya Pradesh High Court in Raipur
Cooperative Central Bank, Ltd., and another v. State
Industrial Court, Indore and others(1). It was pressed by
the appellant before the Labour Court that the delay in
passing the orders of dismissal was caused due to the
adjournments being granted to the Union because of the
illness of the workmen concerned or due to the inability,
for other reasons, of the workmen to be present. Another
reason given by the appellant Was that the sub-inspector of
police, who investigated the offence of theft, was not
available for some time to give evidence before the Enquiry
Officer. In view of these circumstances, the plea of the
appellant was, that the relevant provisions will have to be
construed not as mandatory but as only enabling and
discretionary powers of the Labour Court which have to be
exercised having due regard to all the attendant
circumstances. The Labour Court in considering this plea of
the appellant held that the delay in passing the orders was
caused in view of the circumstances relied on by the
management; and as the delay had been caused due to circums-
tances beyond the control of the appellant, this was a fit
case for condoning the delay if in law the court had the
power to do so. The Labour Court, however, held that the
relevant provisions are mandatory and it hence has no power
to condone the delay, even though the circumstances
warranted such condonation in this case. In this view, the
Labour Court held that as the orders of dismissal have not
been passed within six months of the misconduct coming
(1)[1963] (1) L. L.J. 790.
290
to the notice of the employer, they are illegal and have to
be set ,aside under section 7 8 (1) (D) (i) of the Act.
The Labour Court then considered the relief to be granted to
the two workmen. It held that as the offence for which the
two workmen were dismissed, was of a very serious nature
entailing loss of confidence of the, employer in, the
employee, reinstatement should not be ordered. The Labour
Court, therefore, directed the appellant to pay each of the
workmen his back wages from the date of dismissal till the
date of the order and also, in addition. to pay compensation
in the sum of Rs. 1,500/- In the result, the two
applications filed by the workmen were ordered granting them
relief of back wages and compensation. Civil Appeal No.
1774 of 1971 is against the, order passed in application No.
553 of 1970 and Civil Appeal No. 1775 of 1971 is against the
order passed in application No. 554 of 1970.
The learned Additional Solicitor General very strenuous
attacked the reasoning of the Labour Court when it held that
the provisions of section 7 8 (1) (D) are mandatory. His
contentions in this regard are as follows -
The subject matter and the extent of jurisdiction of the
Labour ’court are provided for under section 78(1) (A) of
the Act. Section 78 (1) (D) of the Act merely makes
provisions regarding the powers which a Labour Court may
exercise in determining the propriety or legality of orders
under section 78(1) (A) of the Act. The provisions of
section 7 8 (1) (D) are only enabling or discretionary; in
that the Labour Court is not bound to exercise the powers
contained in that section. They do not compel a Labour
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Court to pass an order in terms of section 7 8 (1) (D) (a)
or (b), even though the _Labour Court is convinced that the
reasons for the delay in passing the order of dismissal are
entirely beyond the control of an employers Inasmuch as in
this case the Labour Court has accepted the reasons given
for the delay, the decision of the Labour Court setting
aside the order of dismissal is illegal and not justified.
The object of section 7 8 (1) (D) (i) is only to emphasise
that an employer should act diligently and with all possible
speed and without laches in the matter of taking action for
misconduct against an employee and passing suitable orders.
Mr. S. V. Gupte, learned counsel for the Union supported the
view of the Labour Court and urged that the words of section
7 8 (1 ) (D) (i) are clear and specific. The said sub-
clause leaves no room for doubt. The sub-clause is quite
clear that once it is found that the orders are passed by a
management more than six months from the date when the fault
or misconduct committed by an employee came to its notice,
the action of the employer is illegal. Without anything
more, the counsel urged when once it
291
is found, as in this case, that the orders of dismissal were
passed after six months, as provided in the said sub-clause,
there,is no other alternative for the Labour Court but to
set aside the orders of dismissal. He further pointed out
that the legislature has left no discretion in the Labour
Court to embark upon an enquiry whether the management in a
particular case had sufficient reasons for not complying
with the mandatory period of six months as provided in the
said sub-clause. The only discretion left to the Labour
Court is regarding the nature of the relief to be granted
either under (a) or (b) of section 78 (1) (D),
In order to appreciate the contentions of counsel on both
sides, it is necessary to refer to the material provisions
of the Act. The Act, as its preamble shows, has been
enacted to provide for the regulation of the relations of
employers and employees in certain matters, to consolidate
and amend the law relating to the settlement of industrial
disputes and to provide for certain other purposes. Chapter
XII, in which the group of sections 77 to 86 occur, deals
with Labour Courts, their territorial jurisdiction, their
powers, commencement of proceedings before the said Courts,
etc. Though we are concerned with the interpretation of
section 7 8 (1) (D), III order to appreciate the context in
which it occurs, it is necessary to refer to the entire
section. Section 78 runs as follows :
78 (1) A. Labour Court shall have power to
decide-
(a) disputes regarding-
(i) the propriety or legality of an order
passed by an employer acting or purpoting to
act under the standing orders;
(ii)the application and interpretation of
standing orders;
(iii)any change made by an employer or
desired by an employee in respect of an
industrial matter specified in Schedule III
(except item (5) thereof and matters arising
out of such change;
(b) industrial disputes-
(i) referred to it under section 71 or 72;
(ii)in respect of which it is appointed as
the arbitrator by a submission;
(c) whether a strike, lock-out, closure,
stoppage or any change is illegal under this
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Act;
B. try offences punishable under this Act
and where the payment of compensation on
conviction for an offence is provided for,
determine the compensation and order its
payment;
292
C. require any employer to-
(a) withdraw any change which is held by it
to be illegal, or withdraw temporarily any
change the legality of which is a matter of
issue in any proceeding pending final
decision, or
(b) carry out any change provided such
change is a matter in issue in any proceeding
before it under this Act.
D. require an employer, where it finds
that the order, of dismissal, discharge,
removal, retrenchment, termination of service
or suspension of an employee made by the
employer,-
(i) was for fault or misconduct committed by
the employee which came to the notice of, the
employer more than six months prior to the
date of such order or
(ii)was in contravention of any of the
provisions of any law, or of any standing
order in force applicable to such employee, or
(iii)was otherwise improper or illegal,
(a) to reinstate the employee forthwith or
by a date specified by it in this behalf and
pay him wages for the period of beginning on
the date of such order of dismissal. dis-
charge, removal, retrenchment, termination of
service or suspension, as the case may be and
ending on the date on which the Labour Court
orders his reinstatement or on the date of the
reinstatement, which ever is later, or
(b) to pay to the employee in addition to
wages being wages for the period commencing on
the date of his dismissal, discharge, removal,
retrenchment or termination of service and
ending on the date on which the Labour Court
orders such payment, such sum not exceeding
four thousand rupees ’by way of compensation,
regard being had to loss of employment and
possibility of getting suitable employment
thereafter.
(2)Every offence punishable under this Act
shall be tried by the Labour Court within the
local limits of whose jurisdiction it was
committed.
293
Explanation:-A dispute falling under clause
(a) of paragraph A of sub-section (1). shall
be deemed to have arisen if within the period
prescribed under the proviso to sub-section
(4) of section 42, no agreement is arrived at
in respect of an order, matter or change
referred to in the said proviso.
Clause (D) of section 78(1) was introduced in the Act of
Maharashtra by Act 22 of 1965. The said amending Act intro-
duced not only clause (D) but also made changes in
paragraphs, (A) and (C) of section 78. The statement of
objects and reasons to the amending Act shows that the
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additional provisions, which were sought to be incorporated
in the Act, were made to enlarge the powers of the Labour
Courts under section 78. It is further seen from the
statement of objects and reasons that the Labour Court was
being empowered ’to require an employer to reinstate an
employee with full back wages and compensation not exceeding
Rs. 2,500/..... if the employee was dismissed, discharged,
etc.’. It may be noted that in the amendment, as now finally
made, under clause (b) the maximum compensation has been
fixed at Rs. 4,000/-. The statement of objects and reasons
amply demonstrates that and by introducing paragraph (D) in
section 78(1) the legislature was only seeking to arm the
Labour Court with further and more effective powers to grant
suitable relief.
A reading of section 78 as a whole leaves the impression in
our minds that the legislature wanted the provisions to be a
comprehensive one. It contains all the powers of the Labour
Court in the matter of all disputes mentioned therein and it
also gives jurisdiction to punish certain offences under the
Act. The scheme of section 78(1) appears to be that a
Labour Court has power to decide all the disputes covered by
paragraph (A). Paragraph (B) gives the Labour Court power
to try offences punishable under the Act and cognizance of
such offences can only be taken under section 82. Paragraph
(C) and (D) set out what reliefs the Labour Courts are
empowered to give including directions as may be found
necessary in that behalf. Another provision, which has to
be taken note of, is section 73 of the Employees’ State-
Insurance Act, 1948, which is as follows
Employer not to dismiss or punish employee,
during period of sickness, etc.-(1) No
employer shall dismiss, discharge, or reduce
or otherwise punish an employee during the
period the employee is in receipt of sickness
benefit or maternity benefit, nor shall he,
except as provided under the regulations,
dismiss, discharge or reduce or otherwise
punish an employee during the period he. is in
receipt of disablement benefit for temporary
disable-
294
ment or is under medical treatment for
sickness or is absent from work as a result of
illness duly certified in accordance with the
regulations to arise out of the pregnancy or
confinement rendering the employee unfit for
work.
(2)No notice of dismissal or discharge or
reduction given to an employee during the
period specified in subsection (1) shall
be valid or operative.
This provision clearly places an embargo, upon the powers of
an employer to dismiss, discharge or otherwise punish an
employee in the circumstances mentioned therein. For
example, if an employee is under medical treatment for
sickness or is in receipt of sickness benefit or maternity
benefit, no order of dismissal or punishment can be passed
against such an employee. That mean.,, even if an employer
intends to take disciplinary action for any misconduct, he
cannot pass any orders of punishment during the ,periods menti
oned in the section. For instance, if an enquiry
regarding the misconduct of an employee had been conducted
and he had been found guilty even within the period of six
months, ,as contemplated under section 78 (1) (D) (i), and
if. the employee ,comes under the protection of section 73
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of Employees’ State Insurance Act, 1948, the employer can
pass no orders of punishment. That means the employer will
be placed in a dilemma. If he passes an order of dismissal
in the circumstances mentioned under section 73 of the
Employees’ State Insurance Act, that order is invalid and
inoperative. But if he postpones as he is bound to do under
section 73, and passes the order, after the employee ceases
to be under any of the disabilities mentioned in the said
section, six months from the date of the misconduct coming
to the notice of the employer would have elapsed. In such
a case. the order will be struck down under section 7 8 (1) (D) (
i) if the interpretation contended for by the Union
is accepted. Therefore. it is necessary that these
provisions will have to be read harmoniously so as to avoid
a conflict between the two enactments.
There can be no controversy that an employee is entitled to
a fair and reasonable opportunity of pleading to the charge
for which he may be tried by the Domestic Tribunal. He must
have a right to cross-examine the witnesses produced for the
management and also to adduce evidence on his behalf. It
may be that on ,certain occasions, the employee himself may
seek an adjournment or postponement of the enquiry, either
on the ground of his personal inconvenience due to sickness
or otherwise or due to the inability of his witnesses to be
present. If the employer without any justification refuses
such a reasonable request and proceeds with the enquiry,
those proceedings will have to be set’ aside by
295
the Labour Court or the Industrial Tribunal concerned on the
ground that there has been a violation of the principles of
natural justice; in that the workman bad no reasonable
opportunity to, defend the charge against him. If the
employer, as he is bound to do, grants a reasonable
adjournment to enable the workman to be present or to
produce his witnesses, it may be that in certain cases, at
least by the time the enquiry is complete and orders passed,
the period of six months would have elapsed. Does it mean
that when orders of punishment for misconduct are passed by
an employer after holding a proper and fair enquiry, those
orders will have to be set aside, only on the ground that on
the day when they were passed, the period of six months had
already expired ? If the view of the Labour Court is
correct, the position will ’be that even though very serious
misconduct is held to be proved against an employee and he
does not de-serve to be retained service, nevertheless the
order of all will be straightaway Set aside on the sole
ground that the period of six months has expired. The
employee will then straightaway bet black into service,
howsoever undesirable he may be. Again an employee, knowing
well that once orders are passed after the expiry of six
months, they will be straightaway set aside by the Labour
Court, will attempt to protract the proceedings before the
Enquiry Officer on some ground or other. Do all these
things conduce to the maintaining of a proper relationship
between an employer and an employee, as is envisaged under
the Act ? We have indicated broadly several aspects which
have to be ’borne in mind in considering the question. None
of these matters have been either adverted to or taken into
consideration by the Lablour Court in the present case.
The scheme of the Act has been considered by this Court in
another context in M/s. Chhotabhai Jethabhai Patel and Co.,
v. The Industrial Court Maharashtra, Nagpur Bench, Nagpur
and’ others (1) and we do not propose to cover the ground
over again. But it is to be emphasised that, as mentioned
by us earlier, the scheme of section 78 (1) is that a Labour
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Court is to have power to decide all the disputes covered by
paragraph (A). Paragraph (B), as pointed out, gives the
Labour Court the power to try offences punishable under the
Act. Paragraphs (C) and (D) set out the nature of reliefs
which the Labour Courts are empowered to grant including
directions, as may be found necessary in that behalf. The
material part of section 78 (1) (D) is to be read as,
follows :-
"A Labour Court shall have power to require an
employer, there it finds that the orders of
dismissal, discharge, removal, retrenchment,
termination of service or suspension of an
employee made by the employer, was
(1) A.I.R.1972 S.C. 1268.
296
for fault or misconduct committed by the
employee which came to the notice of the
employer more than six months prior to the
date of such order;........
(a) to reinstate the employee forthwith or
by a date specified by it in. this behalf and
pay him wages for the period beginning on the
date of such order of dismissal discharge,
removal, retrenchment, termination of service
or suspension, as the case may be, and ending
on the date on which the Labour Court orders
his reinstatement; or: on the date of his
reinstatement, which ever is later, or
(b) to pay to the employee in addition to
wages being wages for the period commencing on
the date of his dismissal, discharge, removal,
retrenchment or termination of service land
ending on the date on which the Labour Court
orders such payment, such sum not exceeding
four thousand rupees by way of compensation
regard being had to loss of employment and
possibility of ’getting suitable employment
thereafter".
Much emphasis has been laid by Mr.Gupte that the expression
used in the opening words of section 7 8 (1) is ’shall’ and
that there is no indication in sub-clause (i) of clause (D)
enabling a Labour Court to take into account any other
extraneous matters. According to the learned counsel the
use of the expression ’shall’ coupled with the clear wording
of sub-clause (i) of Clause (D), clearly shows that the,
provisions are mandatory and not directory. It must be
stated that a very superficial reading of sub-clause (i) of
clause (D) may support the contention of Mr. Gupte. , But,
in our opinion, that is not the way to interpret a provision
in the statute. On the other hand, the relevant provisions
will have to be construed in-the context in which they
appear and having due regard to the objects which are sought
to be served by the Act in question. It cannot be doubted
that for the purpose of deciding whether reinstatement with
back wages has to be ordered or whether payment of
compensation, in addition to back wages, without
reinstatement has to be ordered, the Labour Court will have
to consider the circumstances of a particular case and the
nature of the misconduct alleged on the part of the employee
as also the nature of contravention of any provision of law
or ,standing order. If the Labour Court Was bound to take
into account all these circumstances, to consider what type
of relief has to be granted, we fail to see why the Labour
Court is not
297
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entitled to consider the circumstances which led the
management to the, passing of the orders more than six
months prior to the misconduct coming to the notice of an
employer. In our opinion, it cannot be the object of the
Act that notwithstanding the fact that the, workman,: who
has been found guilty in a proper domestic enquiry and
punished, for, such misconduct, has to be given relief
either by way of reinstatement with back wages or
compensation and back wages without reinstatement, when once
he,. has shown that the order of punishment was passed
beyond the period of six months referred to in section
78(1)(D)(i). Such a position, is not.,warranted by the
statute. Nor will it be conducive to industrial peace and
the cordial relationship that should exist between an
employer and an employee.
It should not be missed that the opening words of section 78
(1) are ’A Labour Court shall have power’. We have already
pointed out that the effect of section 78(1) is that the
Labour Court shall have the power to decide the types of
disputes mentioned therein and it has also the power to
grant the reliefs referred to in paragraphs (C) and (D).
That does not mean that when once the Labour Court finds
that an order of punishment has been passed beyond the
period of six months, it has to straightaway set aside that
order irrespective of the reasons which caused the delay in
passing those orders. The fact that the section has
conferred certain powers, does not mean that the Labour
Court must of necessity and under all circumstances grant
the reliefs which it has the power to grant. It is a well
established proposition that the. power to grant a certain
relief includes obviously the power of refusing that relief.
Authority for this proposition is to be found in Ebrahim
Abbobakar and Another v. Custodian General of Property(1).
It may be that if an employer has passed an order of
punishment beyond the period of six months and if it is
found that he has no satisfactory explanation for the delay
or if he has not been vigilant and active in initiating
disciplinary action and passing suitable orders, the Labour
Court may be justified in straightaway quashing the orders
on the ground that they have been passed beyond the period
of six months. If, on the other hand, as in the case before
us, an employer has been vigilant in initiating disciplinary
proceedings and has satisfied the Labour Court about the
reasons for the delay in passing the orders of punishment,
the Labour Court is not justified in setting aside the
orders solely on the ground that the period of six months
has expired.
There is a very elaborate discussion by this Court in The
State of Uttar Pradesh and Others v. Babu Ram Upadhya(2)
regarding the various principles that have to be borne in
mind in decid-
(1) [1952] S.CR. 696.
(2) [1961] 2 S.C.R. 679.
298
ing whether the use of the word ’shall’ in a statute makes
the provision mandatory or directory. It has been
emphasised that for ascertaining the real intention of the
legislature the court, among other things, may consider the
nature and the design of the statue the consequences which
would follow from construing it one way or other and whether
the object of the legislation will be defeated or furthered
by a particular construction. The question whether to award
of an Industrial Tribunal ceases to be effective due to the
non-publication of the same by the appropriate Government
within a period of thirty days from the date of its receipt
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under section 17(1) of the Industrial Disputes Act, 1947,
has been considered by this Court in The Remington Rand of
India. Ltd v. The workmen(1. Section 17(1), omitting the
unnecessary parts. reads as follows
"........ every arbitration award and every
award of a Labour Court, Tribunal or National
Tribunal shall, within a period of thirty days
from the date of its receipt by the
appropriate Government, be published in such
manner as the appropriate Government thinks
fit".
It may be noted that the expression used is ’shall’. The
question that arose for consideration before this Court was
whether the above provision was mandatory or directory.
This Court held that the provision as to time in the above
section is merely directory and not mandatory, and that the
limit of time has been fixed only as showing that the
publication of the award ought not to be held up. It was
further held that the publication of the award beyond the
time mentioned in the section does not render the award
invalid. The learned Solicitor invited our attention to the
decision of the Court of Appeal in.Driscoll v. Church
Commissioners for England(2). In that decision the Court
had to construe section 84 of Law of Property Act 1925,
which provided for the authority concerned on being
satisfied about the ’circumstances mentioned in the said
section, to wholly or partially discharge or modify any
restriction. The conferment of power on the authority
was in these terms
"The authority...... shall....... have power
from time to time on the application of any
person interested ...... by order wholly or
particularly to discharge,or modify any such
restriction on being satisfied. . . .".
Though it was contended that if the necessary circumstances
envisaged by the section are established the authority has
no alternative but to order modification, the Court of
Appeal rejected that contention and held that the section
does give a discretion to the Tribunal whether to modify the
restriction at all. This decision, in our opinion, is quite
apposite to the matter on hand.
(1) [1968] 1 S.C.R. 164. (2) [1957] 1 RB.330
299
Having due regard to the various aspects discussed above, we
are of the opinion that the provisions contained in section
78(1) (D) (i) are not mandatory but only directory. The
Labour Court will certainly have power to give relief to an
employee if an order of dismissal, etc. is passed by the
employer after the expiry of six months from the date when
the misconduct came to the notice of the employer provided
the employer has not been diligent in initiating
disciplinary proceedings and if he is not able to offer
satisfactory and adequate reasons for the delay in passing
the orders imposing punishment. The provision only
emphasises that an employer should be vigilant in taking
disciplinary action against an employee for misconduct, once
the said misconduct has come to his notice and that, as far
as possible, the proceedings including the final orders
imposing punishment must all be completed within a period of
six months. This will be the normal rule. Such an
interpretation does not impinge upon either the rights of an
employer to initiate disciplinary action or the rights of an
employee to have a proper and fair enquiry conducted against
him. If the employer is able to satisfy a Tribunal about
the reasons for not being able to pass the order imposing
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punishment within the period of six months, the Tribunal has
no power to set aside the order merely on the ground that
the period of six months has elapsed.
The Labour Court, in the case before us, has proceeded on
the basis that the provision in section 7 8 (1) (D) (i) is a
period of limitation prescribed by the statute which cannot
be extended or enlarged by the Court. This approach, in our
opinion, is erroneous. There is no question of any period
of limitation provided by the said provision; nor does the
question of extending or enlarging the period arises in this
case. The whole question is whether the Labour Court on
whom certain powers are conferred, should exercise those
powers or not. The power conferred on the Labour Court will
have to be exercised having due regard to the various other
circumstances; such as whether the employer has shown
sufficient cause for not passing the orders within the
period of six months. It is significant to note that there
is no such provision in the Industrial Disputes Act. We are
also informed that the Act applies only to certain
industries and all the other industries are governed by the
Industrial Disputes Act. It will be anomalous to hold that
an order passed under the Act beyond the period of six
months is illegal and a similar order passed. after a proper
and fair enquiry, though beyond six months, will be legal
and valid under the Industrial Disputes Act. We have
already referred to section 73 of the Employees’ State
Insurance Act and the prohibition against an employer to
pass orders of punishment under the circumstances mentioned
therein. The interpretation placed by us on the relevant
provision will steer clear of all anomalies and
796Sup.C.I./73
300
will also be in accordance with the object and purpose of
the Act which is to regulate the relationship of the
employer and the employee. Before we close the discussion
on this aspect, it is necessary to refer to the decision of
the Madhya Pradesh High Court in Raipur Cooperative Central
Bank, Ltd., and another v, State Industrial Court, Indore,
and others(1). We have already referred to the fact that
the Labour Court has relied on this decision as supporting
its view. The said High Court had to consider the
provisions of sub-section (3) of section 16 of the Central
Provinces and Berar Industrial Disputes Settlement Act,.
1947, hereinafter referred to as the Berar Act. The said
Berar Act was enacted to make provision for the promotion of
peaceful and amicable settlement of industrial disputes by
conciliation and arbitration and for certain other purposes.
Section 16 dealt with Reference of disputes to Labour
Commissioner. Sub-section (1) provided that powers can be
conferred on a Labour Commissioner by the State Government
by notification to decide an Industrial dispute etc. A
right was conferred by sub-section (2) on an employee
working in an industry, to which the notification applied,
to invoke ,the jurisdiction of the Labour Commissioner for
granting reinstatement and payment of compensation. The
said sub-section further provided that such an application
for this purpose had to be made by an employee within six
months from the date of dismissal, etc. The material part
of sub-section (3) was as follows :-
"On receipt of such application, if the Labour
commissioner after such enquiry as may be
prescribed, finds that the dismissal,
discharge, removal or suspension was in
contravention of any of the provisions of this
Act or in contravention of a standing order
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made or sanctioned under this Act or was for a
fault or misconduct committed by the employee
more than six months prior to the date of such
dismissal, discharge, removal or suspension,
he may direct...... ".
The reliefs that could be granted were substantially in the
same terms as in paragraph (D) of the Act, but in sub-
section (3) of section 16 of the Berar Act there is no
provision regarding the fault or misconduct coming to the
notice of the employer, as in clause (i) of paragraph (D) of
the Act. From the judgment of the Madhya Pradesh High
Court, we find that a workman was dismissed for misconduct
on August 23, 1956. The allegations of misconduct related
to embezzlement of three sums of money. The last item of
embezzlement was on June 28, 1955. The Labour Commissioner,
whose jurisdiction was invoked by the workman, took the view
that the employer came to know of the misconduct only on
April 9, 1956 when the auditor’s report was received and
hence the order of dismissal had been properly passed within
six
301
months from the date of knowledge. On a revision being
filed by the workman, the State Industrial Court reversed
the decision of the Labour Commissioner and set aside the
order of dismissal holding that the question of knowledge
does not come into the picture in view of the clear terms of
sub-section (3). The employer challenged this decision
before the High Court under Articles 226 and 227 of- the
Constitution. The only contention that was raised before
the High Court, as is seen from the judgment, was that
section 16(3) should be liberally construed by allowing ,the
management to establish that they obtained knowledge of the
embezzlement only within a period of six months prior to
passing the order of dismissal. The High Court rejected
this contention on the ground that the statute is clear and
that an employer cannot be permitted to put forward their
own inaction, in defence. Another reason given by the High
Court for rejecting this contention was that the statute has
prescribed a period of limitation for determining the
services of a delinquent employee as a measure of punishment
and that such a period of limitation cannot be enlarged or
extended by a court. The contention that has; been placed
before us on behalf of the appellant regarding the
interpretation to be placed on clause (i) of paragraph (D)
of the Act, was not pleaded before the High Court. In the
Act, there is a clear provision regarding the misconduct
coming to the notice of the employer. A similar provision
was not in the Berar Act. The High Court has interpreted
Section 16(3) in isolation without having due regard to the
scheme of the Act and the context in which the said section
occurs. The same principles laid down by is for
interpreting section 78(1)(D)(i) of the Act should have been
borne in mind in interpreting section 16(3) of the Berar Act
also. For instance, in a particular case, an employer may
be able to satisfy the Tribunal that he had been kept out of
knowledge of the misconduct due to the fraud of the opposite
party and, therefore, he came to know of the said misconduct
only within a period of six months prior to the date of
passing the order. Similarly, an employer may also be able
to satisfy the Tribunal about the reasons for the delay
caused in passing the orders. These and similar
circumstances have not been considered by the High Court.
The view of the High Court that the provision in section
16(3) is a period of limitation is erroneous. As we are of
the opinion that the decision of the Madhya Pradesh High
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Court is erroneous, the support sought by the Labour Court
on this decision is of no avail.
As pointed out by us earlier, the Labour Court has upheld
all the contentions of the appellant on facts. In fact, as
pointed out already, it has also held that if it had power
to condone the delay for passing the orders of dismissal, it
would have unhesitatingly ordered the same. The appellant
has properly explained the
302
delay as having been caused beyond its control. The only
ground on which the two orders of dismissal were set aside
was because of the fact that they have been passed ’beyond
the period of six months. From what is stated above, it
follows that the interpretation Placed by the Labour Court
on section 78 (1) (D) (i) is erroneous. Accordingly, We set
aside the two orders granting relief to the workmen
concerned. The appeals are in consequence allowed. There
will be no order as to costs.
S.N.C. Appeals allowed.
303