Case: Management Utkal Machinery Ltd Vs. Workmen, Miss Shanti Patnaik

Ramaswami, J. 1. This appeal is brought, by special leave, against the award of the Labour Court, Orissa, dated May 24, 1963, in Industrial Dispute No. 5 of 1962, published in the Orissa Gazette, dated June 14, 1963. 2. The respondent - Miss Santi Patnaik - took her degree in Master of Arts (Political Science) in 1961. At that time, Major General Pratap Narain was the General Manager of Utkal Machinery Ltd. (hereinafter referred to as the Management). On December 9, 1961, Major General Pratap Narain appointed the respondent as his Secretary on a monthly salary of Rs. 400. She was thereafter transferred to the Personnel Department of the Company as an Assistant. It appears that Shri A. L. Sarin joined as Personnel Officer on January 2, 1962. The respondent alleges that on April 30, 1962, she was given notice for termination of her service. On her representation she was informed on May 30, 1962 that the decision of the management to dispense with her service was final. The allegation of the respondent is that taking advantage of her subordinate official position Mr. Sarin misbehaved with her to which she offered resistance. The respondent asserted that the termination of her service was improper, mala fide and an act of victimisation. The respondent prayed that the order of termination should be set aside and she should be reinstated with full arrears of pay. The case of the respondent was taken up by the Utkal Machinery Mazdoor Sangha and on December 18, 1962, the Government of Orissa referred the following dispute for adjudication to the Labour Court:"Whether the termination of services of Miss S. Patnaik by the management of Messrs Utkal Machinery Limited, Kansabahal is legal and justified? If not, what relief she is entitled to?" 3. The case of the management before the Labour Court was that Miss Patnaik was appointed on probation for a period of 6 months on a salary of Rs. 400 p.m. on the recommendation of the then Chief Minister of Orissa, Sri B. Patnaik who suggested to the management that the respondent may be put "in the staff with a start of Rs. 350 or Rs. 400 with living accommodation." The management alleged that the service of the respondent was terminated during the probation period because of her unsatisfactory work and there was no question of victimisation or mala fide motive in the termination of the respondents service. The management contended that it had absolute discretion to assess the work of the respondent during the period of probation and to terminate her services on the ground of unsatisfactory work. The Labour Court did not accept the contention of the management and held that there was no probationary period fixed for the respondent and the termination of her services by the management was mala fide, illegal and unjustified and the management should pay to the respondent a sum of Rs. 9,600 as compensation in lien of her reinstatement. 4. The first question pressed on behalf of the appellant is that the Labour Court was wrong in rejecting the contention of the management that the respondent was appointed to serve for a period of 6 months on probation upto June 9, 1962. Learned counsel on behalf of the appellant pointed out that there was an endorsement at the bottom of the application by the respondent, dated January 9, 1962 to the effect that she was appointed on a salary of Rs. 400 p.m. on probation for 6 months. The endorsement is in the handwriting of Major General Pratap Narain and both he and Vogel-another General Manager - have signed it. The Labour Court has examined the evidence on this point and found that no communication was sent to the respondent on the basis of the endorsement - Ex. A-1. The management relied on a letter - Ex. G - dated January 17, 1962 alleged to have been sent to the respondent. This letter states that the appointment was on probation for 6 months which may be extended at the discretion of the management and "during probationary period the services of the respondent may be terminated without any notice and without the management being bound to assign any reason therefor." The respondent however, denied that she received any such letter from the management. The Labour Court has accepted her case and has reached the conclusion that there is no proof that the respondent was employed by the management on probation for a period of 6 months with effect from December 9, 1961. We are unable to accept the argument on behalf of the appellant that the finding of the Labour Court on this point is not supported by proper evidence or that the finding is vitiated by any error of law. 5. We shall, however, assume in favour of the appellant that the respondent was appointed on December 9, 1961, on probation for a period of 6 months and it was stipulated in the contract that during the probationary period the services of the respondent could be terminated without notice and without assigning any reason. In other words, the management had the contractual right to terminate the services of the respondent without assigning any reason therefor. But if the validity of the termination is challenged in an industrial adjudication it would be competent to the Industrial Tribunal to enquire whether the order of termination has been effected in the bona fide exercise of its power conferred by the contract. If the discharge of the employee has been ordered by the management in bona fide exercise of its power, the Industrial Tribunal will not interfere with it, but it is open to the Industrial Tribunal to consider whether the order of termination is mala fide or whether it amounts to victimisation of the employee or an unfair labour practice or is so capricious or unreasonable as would lead to the inference that it has been passed for ulterior motives and not in bona fide exercise of the power arising out of the contract. In such a case it is open to the Industrial Tribunal to interfere with the order of the management and to afford proper relief to the employee. This view is borne out by the decision of this Court in Assam Oil Co. Ltd. v. Its Workmen, (1960) 1 Lab LJ 587; (AIR 1960 SC 1264 ) 6. The argument was stressed on behalf of the appellant that there was no dismissal of the respondent for misconduct but she was only discharged in terms of the contract and the order of the management cannot be treated as an order of dismissal of the respondent for misconduct. The Labour Court has examined the evidence on this aspect of the case and has reached the finding that the order of the management discharging the respondent, dated April 30, 1962, was punitive in character and it should be taken as a punishment for the alleged misconduct of the respondent. The Labour Court has referred to the fact that there is no Standing Order of Utkal Machinery Ltd. with regard to punishment for misconduct. In the absence of any Standing Order the unsatisfactory work of an employee may be treated as misconduct and when the respondent was discharged according to the management for unsatisfactory work it should be taken that her discharge was tantamount to punishment for an alleged misconduct. 7. If this conclusion is correct the management was not justified in discharging the respondent form service without holding a proper enquiry. Even before the Labour Court there was no evidence adduced on behalf of the management to show that the work of the respondent was unsatisfactory. Two witnesses were examined on behalf of the management but neither uttered a word about it. Neither the Deputy Central Manger nor the Joint General Manager was examined in support of the allegation. There was also no document produced on behalf of the management to illustrate the unsatisfactory work of the respondent. In her statement before the Labour Court the respondent said that she was not told in writing till April 30, 1962, that her work was not satisfactory. Mr. Sarin was her superior officer but he never expressed any disapprobation of her work or told her that her work was not satisfactory. The Labour Court accordingly found that there was no proof of the alleged misconduct on the part of the respondent and there was no justification for terminating her services and in the face of complete absence of evidence in regard to unsatisfactory work of the respondent the discharge of the respondent from service was mala fide. We hold that the view taken by the Labour Court is correct. 8. It was next submitted on behalf of the appellant that the amount of compensation awarded to the respondent was exorbitant. It was pointed out that the respondent had worked for an actual period of less than 5 months but she had been awarded compensation of two years salary. We think there is some substance in this criticism. The Labour Court has relied upon the decision of this Court in (1960) 1 Lab LJ 587; (AIR 1960 SC 1264 ), but the material facts of that case were different from those in the present case. In that case the aggrieved employee. Miss Scott was in the employment of the Assam Oil Co. Ltd. for about two years before the termination of her services. It also appears that Miss Scott was in the service of Burmah-Shell as a lady Secretary before she entered the service of Assam Oil Co. in October, 1954. It is also important to notice that the amount of compensation in that case was fixed on a concession of the Solicitor-General who appeared on behalf of the Assam Oil Co. 9. In the present case, the respondent did not give up any previous job in order to take service under the appellant. She had worked for a period of about 5 months with the appellant. Her appointment with the appellant also was somewhat unusual because it was made on the recommendation of Sri B. Patnaik, the then Chief Minister of Orissa. There are no special circumstances for awarding compensation equal to two years salary.

Decision reasoning: 1[ds]The endorsement is in the handwriting of Major General Pratap Narain and both he and Vogel-another General Manager - have signed it. The Labour Court has examined the evidence on this point and found that no communication was sent to the respondent on the basis of the endorsement - Ex. A-1. The management relied on a letter - Ex. G - dated January 17, 1962 alleged to have been sent to the respondent. This letter states that the appointment was on probation for 6 months which may be extended at the discretion of the management and "during probationary period the services of the respondent may be terminated without any notice and without the management being bound to assign any reason therefor." The respondent however, denied that she received any such letter from the management. The Labour Court has accepted her case and has reached the conclusion that there is no proof that the respondent was employed by the management on probation for a period of 6 months with effect from December 9, 1961. We are unable to accept the argument on behalf of the appellant that the finding of the Labour Court on this point is not supported by proper evidence or that the finding is vitiated by any error of lawThe Labour Court has referred to the fact that there is no Standing Order of Utkal Machinery Ltd. with regard to punishment for misconduct. In the absence of any Standing Order the unsatisfactory work of an employee may be treated as misconduct and when the respondent was discharged according to the management for unsatisfactory work it should be taken that her discharge was tantamount to punishment for an allegedmisconduct.If this conclusion is correct the management was not justified in discharging the respondent form service without holding a proper enquiry. Even before the Labour Court there was no evidence adduced on behalf of the management to show that the work of the respondent was unsatisfactory. Two witnesses were examined on behalf of the management but neither uttered a word about it. Neither the Deputy Central Manger nor the Joint General Manager was examined in support of the allegation. There was also no document produced on behalf of the management to illustrate the unsatisfactory work of the respondent. In her statement before the Labour Court the respondent said that she was not told in writing till April 30, 1962, that her work was not satisfactory. Mr. Sarin was her superior officer but he never expressed any disapprobation of her work or told her that her work was not satisfactory. The Labour Court accordingly found that there was no proof of the alleged misconduct on the part of the respondent and there was no justification for terminating her services and in the face of complete absence of evidence in regard to unsatisfactory work of the respondent the discharge of the respondent from service was mala fide. We hold that the view taken by the Labour Court is correctIn the present case, the respondent did not give up any previous job in order to take service under the appellant. She had worked for a period of about 5 months with the appellant. Her appointment with the appellant also was somewhat unusual because it was made on the recommendation of Sri B. Patnaik, the then Chief Minister of Orissa. There are no special circumstances for awarding compensation equal to two years salary.