Case: Jabalpur Electric Supply Co Vs. Sambhu Prasad Srivastava &amp; Others

writing of the misconduct alleged against him and that he shall be given an opportunity to produce evidence in his defence. Clause 20 does not deal with dismissal or suspension but provides that "the company has at all times a general right to discharge an employee from service not only for proved misconduct but also when the employer has lost confidence in the employee". Clause 21 provides for notice of censure to be given for certain acts or omissions.7. An examination of these provisions shows that for an order of dismissal under Cl. 19 to be made a special procedure is to be followed and when it is made the employee is not entitled to any compensation. Examining now the order made on January 16, 1958 we find that while Cl. 20 has not been mentioned it does not say that the employee has been found guilty of misconduct but merely states that "the Company does not find it possible to retain (this employees) services" and reference is made to the investigations in the case against him and to an interview he had with the Chief Engineer, Mr. J. W. Fawcett, on the morning of the 15th January, 1958.The only reasonable view to take of this order, in our opinion, is that this order was being made under Cl. 20 on the ground that the employer had lost confidence in the employee and was in fact and in law an order of discharge as distinct from an order of dismissal or suspension. It appears to us that while the Resident Engineer who held the enquiry may have been satisfied that an act of misconduct for which the employee was liable to dismissal had been proved he took a merciful view of his conduct in view of his previous clean record and proceeded accordingly to act under Cl. 20 of the Standing Orders instead of proceeding under Cl. 19. This is a case in which the employer has acted fairly and even generously in terminating the services of the employee under Cl. 20.8. The question remains whether the Resident Engineer could take action under Cl. 20. The employees argument, which found favour with the High Court was that it was the Company alone which could take action under Cl. 20 and the Resident Engineer in his capacity as the Resident Engineer apart from anything else, was not competent to take action under Cl. 20. For, Cl. 20 empowers the Company and not the Resident Engineer as such to discharge an employee on the ground that the employer had lost confidence in him. In the present case, however, it was not the Resident Engineer in his capacity as the Resident Engineer that made the order of discharge. Clearly, in making the order of discharge he was acting on the basis of the power of attorney executed in his favour on June 26, 1957. Under Cl. 10 of the power of attorney he had power "subject to the Standing Orders from time to time given by the Company to appoint, dismiss, suspend or terminate the services of any of the employees of the company at Jabalpur". The power of the Company under Cl. 19 of the Standing Orders to dismiss or suspend and its power under Cl. 20 to discharge an employee are both covered by Cl. 10 of the power of attorney. If there by nothing in law to prevent these powers being delegated to the Resident Engineer there could be no escape from the conclusion that the exercise of the power under Cl. 20 in the present case by the Resident Engineer amounted in law to an exercise of the power by the company itself. Is there anything in law which bars such delegation? We are unable to find any. It is obvious and admitted that when a company has to exercise its powers in connection with the management of its business it is not all the share-holders of the Company that have to meet to exercise the power. How the Company will regulate its business is prescribed in its Articles of Association. It is nobodys case that in the Articles of Association of the Jabalpur Electric Supply Co., there is anything barring the delegation of the disciplinary powers of the Company to any of its officers. In law therefore delegation of the functions of the Company may properly be made having regard to the exigencies of the business and the Articles of Association. It cannot be reasonably disputed that where the Head Office of the Company is at Calcutta and the main business is to be carried on at Jabalpur the exigencies of the business do require delegation of the Companys power to take disciplinary action against its employees to a responsible official like the Resident Engineer. But whether or not the Company might have done without such delegation is a matter which it is unnecessary for us to enquire into. The delegation was made and neither on principle nor on authority is it possible to say that the delegation was against the provisions of law.9. Nor can we see that the words "subject to the Standing Orders from time to time given by the Company" with which Cl. 10 of the power of attorney opens affects the delegation. On a proper interpretation of these words their only effect is that in exercising the power to appoint, dismiss, suspend or terminate the services of the employees at Jabalpur the delegate cannot do anything beyond what the Company itself can do under the Standing Orders. On no reasonable construction of the words can they mean that the delegate cannot exercise these powers at all, because under the Standing Orders the Company itself is given these powers. Whether it is the power to take action under Cl. 19 or under Cl. 20 of the Standing Orders the delegate can exercise these powers under Cl. 10 of the power of attorney in the same way as if the delegate was the Company itself.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]7. An examination of these provisions shows that for an order of dismissal under Cl. 19 to be made a special procedure is to be followed and when it is made the employee is not entitled to any compensation. Examining now the order made on January 16, 1958 we find that while Cl. 20 has not been mentioned it does not say that the employee has been found guilty of misconduct but merely states that "the Company does not find it possible to retain (this employees) services" and reference is made to the investigations in the case against him and to an interview he had with the Chief Engineer, Mr. J. W. Fawcett, on the morning of the 15th January, 1958.The only reasonable view to take of this order, in our opinion, is that this order was being made under Cl. 20 on the ground that the employer had lost confidence in the employee and was in fact and in law an order of discharge as distinct from an order of dismissal or suspension. It appears to us that while the Resident Engineer who held the enquiry may have been satisfied that an act of misconduct for which the employee was liable to dismissal had been proved he took a merciful view of his conduct in view of his previous clean record and proceeded accordingly to act under Cl. 20 of the Standing Orders instead of proceeding under Cl. 19. This is a case in which the employer has acted fairly and even generously in terminating the services of the employee under Cl.employees argument, which found favour with the High Court was that it was the Company alone which could take action under Cl. 20 and the Resident Engineer in his capacity as the Resident Engineer apart from anything else, was not competent to take action under Cl. 20. For, Cl. 20 empowers the Company and not the Resident Engineer as such to discharge an employee on the ground that the employer had lost confidence in him. In the present case, however, it was not the Resident Engineer in his capacity as the Resident Engineer that made the order of discharge. Clearly, in making the order of discharge he was acting on the basis of the power of attorney executed in his favour on June 26, 1957. Under Cl. 10 of the power of attorney he had power "subject to the Standing Orders from time to time given by the Company to appoint, dismiss, suspend or terminate the services of any of the employees of the company at Jabalpur". The power of the Company under Cl. 19 of the Standing Orders to dismiss or suspend and its power under Cl. 20 to discharge an employee are both covered by Cl. 10 of the power of attorney. If there by nothing in law to prevent these powers being delegated to the Resident Engineer there could be no escape from the conclusion that the exercise of the power under Cl. 20 in the present case by the Resident Engineer amounted in law to an exercise of the power by the company itself. Is there anything in law which bars such delegation? We are unable to find any. It is obvious and admitted that when a company has to exercise its powers in connection with the management of its business it is not all the share-holders of the Company that have to meet to exercise the power. How the Company will regulate its business is prescribed in its Articles of Association. It is nobodys case that in the Articles of Association of the Jabalpur Electric Supply Co., there is anything barring the delegation of the disciplinary powers of the Company to any of its officers. In law therefore delegation of the functions of the Company may properly be made having regard to the exigencies of the business and the Articles of Association. It cannot be reasonably disputed that where the Head Office of the Company is at Calcutta and the main business is to be carried on at Jabalpur the exigencies of the business do require delegation of the Companys power to take disciplinary action against its employees to a responsible official like the Resident Engineer. But whether or not the Company might have done without such delegation is a matter which it is unnecessary for us to enquire into. The delegation was made and neither on principle nor on authority is it possible to say that the delegation was against the provisions of law.9. Nor can we see that the words "subject to the Standing Orders from time to time given by the Company" with which Cl. 10 of the power of attorney opens affects the delegation. On a proper interpretation of these words their only effect is that in exercising the power to appoint, dismiss, suspend or terminate the services of the employees at Jabalpur the delegate cannot do anything beyond what the Company itself can do under the Standing Orders. On no reasonable construction of the words can they mean that the delegate cannot exercise these powers at all, because under the Standing Orders the Company itself is given these powers. Whether it is the power to take action under Cl. 19 or under Cl. 20 of the Standing Orders the delegate can exercise these powers under Cl. 10 of the power of attorney in the same way as if the delegate was the Company itself.