Case: The Tata Oil Mills Co., Ltd Vs. Workmen & Anr

Gajendragadkar, J.1. Mr. R. K. Banerjee had been employed by the appellant, the Tata Oil Mills Co. Ltd. as a salesman on the 3rd April, 1956, as a probationer and he was confirmed on the 5th November, 1956. On the 5th of December 1959, his services were terminated and he was informed that the appellant had lost confidence in him, and so, it has decided to discharge him. Accordingly, in lieu of notice, he was paid a months salary and was told that he ceased to be the employee of the appellant as from the date next (after he received the order from the appellant). The discharge of Mr. Banerjee was resented by the Union of which he belonged and the Union took up his case. Since the dispute could not be settled amicably, the Union succeeded in persuading the Government of West Bengal to refer the dispute for adjudication to the second Labour Court on the ground that the said discharge was not justified. That is how the discharge of Mr. Banerjee became an industrial dispute between the appellant and the respondents, its workmen represented by their Union. The Labour Court which tried the dispute came to the conclusion that the appellant had failed to justify the discharge of Mr. Bajerjee and so, it has directed the appellant to reinstate him and pay him full emoluments from the date of his discharge up to the date of his reinstatement. It is this order which is challenged by the appellant by its present appeal brought to this Court by special leave.2. The material facts leading to the termination of Mr. Banerjees services lie within a very narrow compass. In November, 1959 Mr. Banerjee was working in the Assam area and as such, had to work as a Salesman at Dhubri, Bongaigoan, Rangia and Tejpur. The appellant expected that as its Salesman Mr. Banerjee should visit dealers in his area and carry on intelligent and intensive propaganda to popularise the state of the appellants products. The appellant has a Sales Office in Calcutta and the manager of the said office visits the areas within his jurisdiction to inspect the work of Salesman. Accordingly, Mr. Gupta who was then the manager of the Calcutta Office visited the area assigned to Mr. Banerjee, in the last week of October. He found that Mr. Banerjee was not working satisfactorily as a salesman. In particular, he noticed that whereas Mr. Banerkee had reported to the Office that the Bongaigoan Stockists had 20 boxes of dried up and deshaped 501 Special Soap which could not be distributed in the market, he had in fact not opened a single box and had not cared to satisfy himself that the soap had either dried up or had been deshaped. In fact, Mr. Gupta found that the boxes were intact and he opened them and discovered that five boxes contained soap which had dried up and had become deshaped, whereas the 15 other boxes were in good condition. Thereupon, Mr. Gupta made a report to the zonal Manager on the 2nd November, 1959 adversely commenting on Mr. Banerjees work. The said report was in due course forwarded to the Head Office in Bombay. The Head Office then instructed the Calcutta Sales Office by telephone to send for Mr. Banerjee and call for his explanation. Accordingly, Mr. Banerjee was sent for and his explanation taken; Mr. Gupta then made another report expressing his dissatisfaction with the explanation given by Mr. Banerjee. The report was sent on the 24th November, 1959. The Head Office accepted this report and on the 5th December, 1959, issued to Mr. Banerjee the order terminating his services. That, in brief, is the case set out by the appellant in support of the action taken by it against Mr. Banerjee.3. The appellant had alleged that the termination of Mr. Banerjees services was not dismissal but was a discharge simpliciter, and according to it, this discharge was justified by the terms of contract between the appellant and Mr. Banerjee as embodied in R. 40 (1) to the Service Rules of the appellant. The appellant, therefore, urged that the Labour Court had no jurisdiction to consider the propriety of the appellants action in discharging Mr. Banerjee.4. The respondents, on the other hand, contended that the discharge was not discharge simpliciter but was, in substance, dismissal, and so, it was urged that the Labour Court was entitled to consider the propriety of the appellants action. Basing themselves on the plea that the discharge amounted to dismissal, the respondents pleaded that the failure of the appellant to hold an enquiry against Mr. Banerjee introduced a serious infirmity in the order passed against him; and they argued that the conduct of the appellant was mala fide and the dismissal of Mr. Banerjee amounted to victimisation.5. The labour Court has found that according to the terms of contract under which Mr. Banerjee was employed by the appellant, the appellant was entitled to discharge Mr. Banerjee from its employment under R. 40 (1) of the Service Rules; but it held that merely because the order served on Mr. Banerjee purported to be an order of discharge, that would not exclude the jurisdiction of the Labour court to examine the substance of the matter. In fact, Mr. Joshi who appeared for the appellant conceded before the Labour Court that an adjudicating Court can look into the reasons behind the discharge of an employee. That is why evidence was led by both the parties before the Labour Court. Having considered that evidence, the Labour Court has found that the respondents plea about the mala fides of the appellant was not proved and it held the termination of Mr. Banerjees services could not be said to amount to an act of victimisation or an unfair labour practice. Even so, it held that the discharge was not justified, and so, it has directed the appellant to reinstate Mr. Banerjee. It is the validity of this order that is challenged before us by Mr. Setalvad on behalf of the appellant.6. The true legal position about the Industrial Courts jurisdiction and authority in dealing with cases of this kind is no longer in doubt. It is true that in several cases, contracts of employment or provisions in Standing Orders authorise an industrial employer to terminate the services of his employees after giving notice for one month or paying salary for one month in lieu of notice, and normally, an employer may, in a proper case, be entitled to exercise the said power. But where an order of discharge passed by an employer gives rise to an industrial dispute, the form of the order by which the employees services are terminated, would not be decisive; industrial adjudication would be entitled to examine the substance of the matter and decide whether the termination is in fact discharge simpliciter or it amounts to dismissal which has put on the cloak of a discharge simpliciter. If the Industrial Court is satisfied that the order of discharge is punitive, that it is mala fide, or that it amounts to victimisation or unfair labour practice, it is competent to the Industrial Court to set aside the order and in a proper case, direct the reinstatement of the employee. In some cases, the termination of the employees services may appear to the Industrial Court to be capricious or so unreasonably severe that an inference may legitimately and reasonably be drawn that in terminating the services, the employer was not acting bona fide. The test always has to be whether the act of the employer is bona fide or not. If the act is mala fide, or appears to be a colourable exercise of the powers conferred on the employer either by the terms of contract or by the standing orders, then notwithstanding the form of the order, industrial adjudication would examine the substance and would direct reinstatement in a fit case. This position was recognised by the Labour Appellate Tribunal as early as 1951 in Bucking hum and Carnatic Co. Ltd., etc. v. Workers of the Company, etc., 1951-2 Lab LJ 314: (LATI-Cal) and since then, it has been consistently followed vide Chartered Bank, Bombay v. Chartered Bank Employees Union, 1960-2 Lab LJ 222: (AIR 1960 SC 919 ) and U. B. Dutt and Co. (Private) Ltd. v. Its Workmen, (1962-1 Lab LJ 374: (AIR 1963 SC 411 ).7. In the present case, the Labour Court has made a definite finding in favour of the appellant that its action in terminating the services of Mr. Banerjee was not mala fide and did not amount to victimisation. Even so, it proceeded to examine the propriety of the said action and came to the conclusion that Mr. Banerjees discharge from employment did not appear to it to be justified. In coming to this conclusion, the Labour Court has given some reasons which are clearly unsupportable. It has observed, for instance, that the appellant has not produced any documentary evidence in support of its allegation against the efficiency of Mr. Banerjee. This is clearly wrong because the two reports made by Mr. Gupta in respect of Mr. Banerjees conduct do amount to documentary evidence which cannot be lightly brushed aside. It has then commented on the fact that the allegations made by Mr. Gupta against Mr. Banerjee on six counts are of a general character. This comment again cannot be justified because Mr. Gupta stated in clear terms the defects in Mr. Banerjees work which had come to his notice. These defects are specific and it is idle to refuse to give importance to this evidence merely on the ground that no specific instances had been cited. In regard to the question at to whether the 20 boxes had been opened by Mr. Banerjee before he made his report to the Zonal Office, the Labour Court has observed that on this point, there is the evidence of Mr. Banerjee against that of Mr. Gupta and there was no particular reason to believe one in preference to the other. Now, it is clear that such an observation is hardly of any help because it was necessary for the Labour Court to express its conclusion on this point; it might have believed either Mr. Banerjee or Mr. Gupta, but by saying that there is no reason why one should be believed rather than the other, the Labour Court left this part of dispute entirely undecided. Similarly, the Labour Court has accepted the fact that Mr. Gupta had called for and received Mr. Banerjees explanation and to that extent it has rejected Mr. Banerjees suggestion that he had not given any explanation at all; but even so, the Labour Court has not considered the effect of this conclusion on the main controversy between the parties. In our opinion, therefore, the reasons given by the Labour Court in support of its conclusion that the discharge of Mr. Banerjee was not justified are wholly unsatisfactory and so, it has become necessary for us to examine the evidence ourselves.8. The first report made by Mr. Gupta expressly states six grounds on which Mr. Banerjees work was found to be unsatisfactory. Mr. Gupta took the view that Mr. Banerjee was very slow in his work as a Salesman, that he was not able to judge the capacity of the dealers and to give them sufficient stocks in time, that he took no steps to put the products of the appellant on prominent view in the dealers shops that he was not looking after the pasting of the posters, in fact in one place the poster was pasted upside down, that he was not educating the stockists and dealers as he could have done and that he was reluctant to put hard and intelligent work It is remarkable that when Mr. Banerjee was asked about this report in cross-examination, be frankly stated that Mr. Gupta was not unfriendly towards him and he was really unable to say why Mr. Gupta should have made these adverse comments against his work. In fact, the Labour Court itself has found that the appellant was not actuated by any ulterior consideration in discharging Mr. Banerjee, This report was made by Mr. Gupta soon after he inspected Mr. Banerjees work and there is no reason whatever why the Labour Court should have been reluctant to accept this report.9. Confining ourselves to the main complaint against Mr. Banerjee that he had not examined even a single box before he reported that the contents of the said boxes were not marketable, Mr. Gupta expressly stated that he had seen the 20 boxes and found that none of them had been opened at all. They were intact in the companys packing with the straps on them. Mr. Gupta got them opened and found that the contents to the extent of 5 cases were really damaged and that the remaining contents were alright and could be marketed at the companys prices. Mr. Banerjee stated in his evidence that he had all the cases opened and he added, as he had to, that the said cases were repacked for avoiding further deterioration. When he was asked how that could be done he agreed that the metal straps had to be removed for opening of the boxes, but he added that he had arranged to have them restrapped and nailed. It is clear that the strapping is done in a factory by machines. Mr. Banerjee however, suggested that he could manage to get the straps put and nailed with hands. This evidence is patently unreliable. Besides, it is significant that when be gave his explanation to Mr. Gupta, Mr. Banerjee admitted that he had opened only 5 or 6 out of the 20 boxes in question, though his report suggested that he had opened all the 20 boxes. Therefore, there can be no doubt that Mr. Guptas statement is absolutely true and that Mr. Banerjee had made his report about the unsatisfactory condition of the contents of the 20 boxes without as much as opening any one of them. That being so, it is difficult to understand how the Labour Court could have come to the conclusion that the order of discharge was not justified.10. The learned Solicitor-General, however, attempted to argue that there was nothing on the record to show that the 20 boxs which Mr. Gupta, got opened were the same boxes in respect of which Mr. Banerjee had made his report. We do not think that having regard to the evidence given by Mr. Gupta and Mr. Banerjee and the explanation offered by the latter when he was called to Calcutta by Mr. Gupta, there is any room for such an ingenious suggestion. Both parties knew that they were talking about the same 20 boxes and so, it is futile now to suggest that the 20 boxes which Mr. Gupta examined were different from the boxes in respect of which Mr. Banerjee had made his report. It was also suggested on behalf of the respondents that Mr. Gupta did not admit that he had received some letters from Mr. Banerjee in which he had complained that owing to heavy rains, conditions were not favourable for effective work in the area entrusted to him. It is true that when Mr. Gupta was asked about these letters he said he did not remember if he had received them. We do not think that the answers given by Mr. Gupta in respect of these letters can be of any assistance to the respondents in discrediting Mr. Guptas evidence in any manner. On the whole, we have no hesitation in holding that the appellant acted bona fide in discharging Mr. Banerjees services when it accepted Mr. Guptas report and concurred with his conclusions that the explanation given by Mr. Banerjee was not satisfactory.

Decision reasoning: 1[ds]6. The true legal position about the Industrial Courts jurisdiction and authority in dealing with cases of this kind is no longer in doubt.In the present case, the Labour Court has made a definite finding in favour of the appellant that its action in terminating the services of Mr. Banerjee was not mala fide and did not amount to victimisation. Even so, it proceeded to examine the propriety of the said action and came to the conclusion that Mr. Banerjees discharge from employment did not appear to it to be justified. In coming to this conclusion, the Labour Court has given some reasons which are clearly unsupportable. It has observed, for instance, that the appellant has not produced any documentary evidence in support of its allegation against the efficiency of Mr. Banerjee. This is clearly wrong because the two reports made by Mr. Gupta in respect of Mr. Banerjees conduct do amount to documentary evidence which cannot be lightly brushed aside. It has then commented on the fact that the allegations made by Mr. Gupta against Mr. Banerjee on six counts are of a general character. This comment again cannot be justified because Mr. Gupta stated in clear terms the defects in Mr. Banerjees work which had come to his notice. These defects are specific and it is idle to refuse to give importance to this evidence merely on the ground that no specific instances had been cited. In regard to the question at to whether the 20 boxes had been opened by Mr. Banerjee before he made his report to the Zonal Office, the Labour Court has observed that on this point, there is the evidence of Mr. Banerjee against that of Mr. Gupta and there was no particular reason to believe one in preference to the other. Now, it is clear that such an observation is hardly of any help because it was necessary for the Labour Court to express its conclusion on this point; it might have believed either Mr. Banerjee or Mr. Gupta, but by saying that there is no reason why one should be believed rather than the other, the Labour Court left this part of dispute entirely undecided. Similarly, the Labour Court has accepted the fact that Mr. Gupta had called for and received Mr. Banerjees explanation and to that extent it has rejected Mr. Banerjees suggestion that he had not given any explanation at all; but even so, the Labour Court has not considered the effect of this conclusion on the main controversy between the parties. In our opinion, therefore, the reasons given by the Labour Court in support of its conclusion that the discharge of Mr. Banerjee was not justified are wholly unsatisfactory and so, it has become necessary for us to examine the evidence ourselves.Confining ourselves to the main complaint against Mr. Banerjee that he had not examined even a single box before he reported that the contents of the said boxes were not marketable, Mr. Gupta expressly stated that he had seen the 20 boxes and found that none of them had been opened at all. They were intact in the companys packing with the straps on them. Mr. Gupta got them opened and found that the contents to the extent of 5 cases were really damaged and that the remaining contents were alright and could be marketed at the companys prices. Mr. Banerjee stated in his evidence that he had all the cases opened and he added, as he had to, that the said cases were repacked for avoiding further deterioration. When he was asked how that could be done he agreed that the metal straps had to be removed for opening of the boxes, but he added that he had arranged to have them restrapped and nailed. It is clear that the strapping is done in a factory by machines. Mr. Banerjee however, suggested that he could manage to get the straps put and nailed with hands. This evidence is patently unreliable. Besides, it is significant that when be gave his explanation to Mr. Gupta, Mr. Banerjee admitted that he had opened only 5 or 6 out of the 20 boxes in question, though his report suggested that he had opened all the 20 boxes. Therefore, there can be no doubt that Mr. Guptas statement is absolutely true and that Mr. Banerjee had made his report about the unsatisfactory condition of the contents of the 20 boxes without as much as opening any one of them. That being so, it is difficult to understand how the Labour Court could have come to the conclusion that the order of discharge was notdo not think that having regard to the evidence given by Mr. Gupta and Mr. Banerjee and the explanation offered by the latter when he was called to Calcutta by Mr. Gupta, there is any room for such an ingenious suggestion. Both parties knew that they were talking about the same 20 boxes and so, it is futile now to suggest that the 20 boxes which Mr. Gupta examined were different from the boxes in respect of which Mr. Banerjee had made his report. It was also suggested on behalf of the respondents that Mr. Gupta did not admit that he had received some letters from Mr. Banerjee in which he had complained that owing to heavy rains, conditions were not favourable for effective work in the area entrusted to him. It is true that when Mr. Gupta was asked about these letters he said he did not remember if he had received them. We do not think that the answers given by Mr. Gupta in respect of these letters can be of any assistance to the respondents in discrediting Mr. Guptas evidence in any manner. On the whole, we have no hesitation in holding that the appellant acted bona fide in discharging Mr. Banerjees services when it accepted Mr. Guptas report and concurred with his conclusions that the explanation given by Mr. Banerjee was not satisfactory.