Case: Ruby General Insurance Company, Limited Vs. P.P. Chopra

ny is carrying on business in general insurance and has its registered office in Calcutta. It has a branch office in Delhi. On 18 July, 1966, its Delhi branch appointed the respondent as a stenographer on a salary of Rs. 307 a month. No letter of appointment was then issued to the respondent, but on being asked to sign a pro forma Ex. M. 1, which contained certain terms and conditions of service, he filled it and signed the same on 21 July, 1966. Presumably thinking that this was sufficient, the company did not issue a formal letter of appointment. On 2 April, 1967 the respondent wrote to the company demanding a letter of appointment. In its reply dated 17 April, 1967, Ex. M. 5, the company informed the respondent that his appointment was as a probationer for one year with effect from 18 July, 1966. In the meantime, the respondent had approached the Labour Commissioner with a request that the management should be directed to issue, as required by the Delhi Shops and Establishment Act, 1954, and the rules thereunder, the said letter of appointment. On being so required, the company issued on 26 June, 1967 a letter of appointment, Ex. W. 4. On 17 July, 1967 the company terminated the respondents service stating that his services were no longer required.2. The companys case was that its staff rules required that all appointments in the company were, in the first instance, to be on probation for one year, that accordingly the respondents appointment was as a probationer for one year, and that period having expired, it was competent to and did in fact terminate his services as they were no longer required. In the alternative, its case was that even if the respondents appointment was not proved to be one as a probationer, the said staff rules as also the terms and conditions contained in the said pro forma, signed by the respondent, empowered the company to terminate the services of its employees on giving one months notice or a months salary in lieu thereof, and that therefore, the company was entitled to terminate his services and such termination could not be challenged. The respondents case, on the other hand, was that at the very first interview, he had with the companys regional manager in response to the companys advertisement for the post of a stenographer, he had made it clear that he was not interested in any appointment of a year, that if he was to be considered for the post his appointment should be a permanent one, that on that it was agreed between him and the regional manager of the company that he would be appointed as a permanent employee, that though the staff rules of the company may have provided that all appointments must, in the first instance, be on probation, there was nothing to prevent the company from making permanent appointment, and that in any event he was never shown those staff rules, nor informed that he was being appointed as a probationer subject to those staff rules. According to him, the companys claim that he was appointed as a probationer was not true and the companys stand to that effect was only an afterthought to justify termination of his services. As against the companys case that this was, in any event, a case of termination of services simpliciter, his case was that the order terminating his services was in truth a punitive order dismissing him and was not in bona fide exercise of the companys power of termination and was therefore not a valid order.3. A dispute having thus arisen, the respondent moved the Central Government who referred the question to the tribunal under S.10(1) read with S.2A of the Industrial Disputes Act, 1947. The tribunal, on evidence adduced by the parties, held(a) that the company had failed to prove that the respondent was appointed as a probation for one year;(b) that the order of terminating his services was not one of termination simpliciter, but was an order punishing the respondent and thus amounted to dismissal; and(c) that such an order of dismissal, having been passed without holding any enquiry, was invalid and had, therefore, to be set aside.It directed reinstatement of the respondent and payment of half of his salary from the date of termination of his services till reinstatement.4. In reaching this conclusion the tribunal was impressed by two allegations made by the respondent : firstly, that the management felt resentful against him for his having complained to the authorities against their failure to issue the letter of appointment, and secondly, that they were annoyed with him for his having demanded extra payment in respect of work he was made to do in relation to certain concerns in which the company was interested. As evidence for having done such work he had retained with him copies of letters dictated to him and which he produced as Exs. W. 10 to W. 42 before the tribunal. From this evidence the tribunal found that the management had made the respondent do work in respect of concerns other than the company, that his demand for extra payment must have annoyed the management, and that that coupled with the resentment against his having approached the authorities in the matter of the letter of appointment made them terminate his services. The company obtained special leave from this Court and filed this appeal against the said order of the tribunal.

Reasoning:
On this concession we proceed on the assumption that the respondents appointment was not as a probationer and that the companys order discharging him from service was not termination simpliciter, but dismissal which was not valid.The normal rule is that in cases of invalid orders of dismissal industrial adjudication would direct reinstatement of a dismissed employee. Nevertheless, there would be cases when it would not be expedient to adopt such a course. Where, for instance, the office of the employer was comparatively a small one and the dismissed employee held the position of the secretary, a position of confidence and trust, and the employer had lost confidence in the concerned employee, reinstatement was held to be fair to either party.In the present case, we are of the view that reinstatement directed by the tribunal was inexpedient. The respondent had served the company in all for a period of twelve months. It was not as if he had been induced to give up any employment he was engaged in for joining the service of theThe companys establishment in Delhi was comparatively a small establishment. There can be no doubt that the position of a stenographer in such an establishment would be one of confidence and trust as he would be taking down dictation and typing out all kinds of matters including sometimes confidential and even secret matters. For example, a report of the working of this branch to the companysby the branch manager, or a report as regards the working of other rival insurance companies in Delhi area, or a report regarding promotion and even demotion of some of the members of the staff of the branch office, and such other matters would be of a highly confidential nature. If the branch manager were, for one reason or the other, to lose confidence and trust in a stenographer working under him, it would obviously be impossible for him to give dictation on such matters to such a stenographer. On the assumption that the respondent was made to take dictation and type out letters in connexion with other concerns in which thewas interested and the respondent was not paid any extra remuneration for such work, the respondent was, on his admission, retaining with him surreptitiously copies of those communications. As the tribunal has remarked, the respondent did so in order to preserve evidence that he was made to take down letters relating to concerns other than theWhether in terms of his employment as a stenographer the regional manager could take such work or not is a matter in which we need not go, but he did admittedly retain with him copies of as many as 32 such communications which he exhibited as Exs. W. 10 to W. 42. These copies were clearly the property of the company which the respondent in no event could retain in his possession without the consent of his employers. If the regional manager were to entertain a feeling that, if reinstated, the respondent would in future also retain with him copies of documents of a confidential nature whenever the respondent felt that such retention would be of use or advantage to him, such a feeling on the part of the regional manager that he can no longer trust the respondent with any confidential matter cannot be regard as altogether unjustified. The regional manager might well fell that if the respondent was capable of collecting evidence against the company, he might in future collect perhaps evidence of a more dangerous and harmful nature. Obviously, if he cannot repose confidence in the respondent, if reinstated, he cannot make any use of his services as a stenographer. In the circumstances, we think that the tribunal ought not to have directed his reinstatement despite its conclusion that the termination of his services was wrongfully made, but ought to have awarded suitable compensation instead.8. As to the suitable compensation, considering the fact that the respondent had served the company only for a year and that it is not too difficult nowadays for competent stenographers to obtain suitable employment, we think it fair to direct the company to pay to him compensation equivalent to one years salary at the rate of Rs. 307 per month. This was what was done in the case of Utkal Machinery, Ltd. [1966I L.L.J. 398] (vide supra).