Case: Indian Bank, Limited Vs. Ramanathan S. M

Shelat, J. 1. This appeal, by special leave, challenges the correctness of the orders dated August 1, 1963, May 4, 1964 and the final order dated June 3, 1964 of the Central Government, labour court, Delhi, passed in an application filed by the respondent under S.33C(2) of the Industrial Disputes Act, 4 of 1947. 2. The application was filed by the respondent against the two orders, Ex. M. 5, dated October 8, 1954, and Ex. M. 8, dated June 19, 1957, whereby in disciplinary action taken by the management against him for gross misconduct two increments in his salary for a period of two years each were stopped. It appears that on February 12, 1954 the board of directors of the appellant-bank passed a resolution, Ex. M. 16, which stated that there was trouble between the respondent and another employee, one Arunachalam, that the secretary of the bank, who is the executive head of the bank, had suggested disciplinary action against both the employees where-upon the board decided that the two employees should "be warned" and "their salaries be reduced by two increments and they should be transferred to different places." In pursuance of this resolution, the secretary passed the impugned order, Ex. M. 5, whereby he directed that "two increments have been stopped by the board in view of breach of discipline by him and his indecent behaviour at our Devakottai office. Accordingly he cannot draw any increment from 12 August, 1954 and for the next year." 3. In regard to this order the respondent raised two contentions : (1) that the boards resolution amounted to a reduction of salary by two increments, that it was invalid as such a punishment was not provided for in Sastri award either in respect of gross misconduct or a minor misconduct as defined therein, and(2) that whereas the boards resolution imposed reduction in salary, the secretarys order amounted to stoppage of increments, that these two orders were contradictory of each other and, therefore were incapable of implementation. 4. The labour court accepted both these contentions and held the order, Ex. M. 5, a nullity. In our view, the labour court was in error, because the order which was communicated to the respondent and actually implemented was the order, Ex. M. 5. As aforesaid, the secretary is the executive head of the bank and to whom the bank had delegated disciplinary powers. What the secretary did by passing order. Ex. M. 5, was to translate the action proposed by the board. There can be no doubt that the board had resolved to stop two increments. Though the word "reduced" was used in the resolution, it was used in the context of depriving the respondent of two increments. The stoppage of two increments would, in fact, reduce the salary which he would have drawn if the increments had not been stopped. The secretary by his order put into effect that which the board intended by its resolution. Even the respondent understood the resolution and the said order in this light, and therefore, took no action to have the order modified which he would have done if he seriously thought that the order was in any way inconsistent with the boards resolution. He took no such steps and did not during all these years even make any representation either to the board or to the secretary until he filed the present application. There was no dispute about the facts in respect of which the action was taken against him. There also could be no dispute that those facts amounted to gross misconduct for which under the said award one of the penalties would be stoppage of increments. That being the position, both the contentions were afterthoughts and it is somewhat surprising that they were considered as acceptable.Regarding the second order, Ex. M. 8, dated June 19, 1957, the contention urged before the labour court was that the office note, Ex. M. 7, on the report of the enquiry officer stated that recommendation should be made to the board that in view of the gross misconduct found by the enquiry officer against the respondent, he should be transferred and two increments should be withheld, that on June 19, 1957 the secretary himself made an endorsement on the said office-note, namely, "transfer him immediately and recommend punishment." The argument was that though the board was to be recommended to order punishment and that it was the board that was to pass the order, the secretary himself passed the order on that day. The order, Ex. M. 8, thus passed by the secretary was as follows : "With reference to the enquiry conducted by Sri G. S. Ardhanari, inspector of branches, in regard to the complaints made against you by the agent, Mayuram branch, and by Sri N. N. Vairavan, Shroff, Mayuram branch, we have to inform you that it has been decided to stop your increments for two years for the following reasons : (1) You did not behave properly at the counter. (2) You were insubordinate to the higher authorities. (3) You used vulgar language in office against the staff officer and against the other Shroff on 8 April 1957. You will not, therefore, draw your increments for the years 1958 and 1959." 5. The labour court held that the fact that the order, Ex. M. 8, was passed by the secretary meant that the office suggestion in Ex. M. 7 was not followed and instead of the board passing a suitable order, it was the secretary who passed the order. The labour court observed that the said order was no doubt placed before the board, but that was not for confirmation by the board but only for its information. This conclusion is not borne out by the record. It appears that after the order, Ex. M. 8, was communicated to the respondent he made a representation, Ex. M. 10, dated July 1, 1957, to the secretary. In that representation he admitted that he had an altercation with the other employee in which he had used what he called "harsh words" but denied that he had said anything against any staff officer. He requested that in view of his long service in the bank "his misbehaviour" should be condoned. The endorsement made beneath his representation by the secretary shows that the order of transfer and stoppage of two increments passed against the respondent was placed before the board at its meeting on July 5, 1957 for confirmation. At that meeting, a note, Ex. M. 18, dated July 5, 1957, was also placed before the board informing the board of the facts on which disciplinary action was taken and the order passed against him by the secretary. It is thus clear that what was put upbefore the board for its information was this note. On the same day, presumably, after the directors meeting concluded the secretary noted that the action taken against the respondent could not be revised and directed that this decision should be communicated to the respondent. 6. As already stated, the bank had delegated the powers of disciplinary action to the secretary as the head of the executive, and therefore, whether action taken by him was placed for confirmation or for information of the board would make no difference as power to take disciplinary action vested in him. Even if the said action was placed before the board for information and not for confirmation, if the board did not approve of it, it could have rescinded it or modified it. The fact that no such thing was done shows that the board approved of it. It is thus difficult to appreciate how it can be said that the secretarys order was in any way incompetent. 7. Lastly, the construction placed by the Court on the order, Ex. M. 8, is not correct. The order in express words was "to stop your increments for two years." It seems that the learned Judge misunderstood the words "for two years" as meaning postponing the enjoyment of the benefit of the two increments for two years and restoring them at the end of two years. That is not so, because the order clearly was to stop two increments. This is clear from the last sentence in the order which expressly states that the respondent was not to draw increments for the years 1958 and 1959. If it was intended otherwise and the increments were only postponed and were to be restored at the end of that period, the order would have said so. That not having been done, the construction placed on the said order by the Court cannot be supported. The respondent also understood the order as having stopped and not as having postponed or delayed the two increments. That is manifest from the fact that after the expiry of the two years, i.e. 1958 and 1959, he did not ask for restoration of the two increments in his salary for 1960. It was only for the first time when he filed the present application in July 1962 that he challenged its validity. The construction placed on the order by the labour court was thus not correct. In this view it is not necessary to consider the question raised by Sri Sastri as to the non-applicability of S. 33C(2) to the facts of the case.

Decision:
1[ds]4. The labour court accepted both these contentions and held the order, Ex. M. 5, a nullity. In our view, the labour court was in error, because the order which was communicated to the respondent and actually implemented was the order, Ex. M. 5. As aforesaid, the secretary is the executive head of the bank and to whom the bank had delegated disciplinary powers. What the secretary did by passing order. Ex. M. 5, was to translate the action proposed by the board. There can be no doubt that the board had resolved to stop two increments. Though the word "reduced" was used in the resolution, it was used in the context of depriving the respondent of two increments. The stoppage of two increments would, in fact, reduce the salary which he would have drawn if the increments had not been stopped. The secretary by his order put into effect that which the board intended by its resolution7. Lastly, the construction placed by the Court on the order, Ex. M. 8, is not correct. The order in express words was "to stop your increments for two years." It seems that the learned Judge misunderstood the words "for two years" as meaning postponing the enjoyment of the benefit of the two increments for two years and restoring them at the end of two years. That is not so, because the order clearly was to stop two increments. This is clear from the last sentence in the order which expressly states that the respondent was not to draw increments for the years 1958 and 1959. If it was intended otherwise and the increments were only postponed and were to be restored at the end of that period, the order would have said so. That not having been done, the construction placed on the said order by the Court cannot be supported. The respondent also understood the order as having stopped and not as having postponed or delayed the two increments. That is manifest from the fact that after the expiry of the two years, i.e. 1958 and 1959, he did not ask for restoration of the two increments in his salary for 1960. It was only for the first time when he filed the present application in July 1962 that he challenged its validity. The construction placed on the order by the labour court was thus not correct. In this view it is not necessary to consider the question raised by Sri Sastri as to they of S. 33C(2) to the facts of the cas