THE TATA OIL MILLS CO., LTD. versus WORKMEN & ANR.

25.C.R.

used by the employees on leave and license. What-ever payment.w~s received f~om them ~as not them· fore "rent" w1thm the meanmg of cl. (u).

Our conclusion therefore is that no tax is leviable under the Punjab Urban Immova?li; pr?-perty Tax Act, 11140, in respect of the buildmgs m these two appeals. The High Court therefore rightly quashed the orders of assessment. The appeals are accordingly dismissed with costs.

Appeals 'dismissed.

THE TATA OIL MILLS CO., LTD.

WORKMEN & ANR.

(P. B. GAJENDRAGADKAR, M. HIDAYATULLAH and J. C. SHAH JJ.)

Industrial Disputt-'.l'ermination of service of an employee an payment of one month's salary in lieu of notice-Order of termination purported ta be discharg• under R. 40 (1) of Service Rules-Jurisdiction of the Tribunal to examine whether it amounU to discharge or dismi8Sal.

Mr. Banerjee was an employee of the appellant. His services were terminated on the ground that the appellant had lost confidence in him and in Heu of notice he was paid one month's salary. The union to which Mr. Banerjee belonged took up his cause and on the failure of the parties to reach settlement the matter was referred to the Industrial Tribunal by the Government.

The appellant contended before the Tribunal that the order of termination of service of Mr. Banerjee was an order of discharge which it was competent to make under R. 40 (I)

l963 Stat1 ofol'unjab •• Britcl India iorpoT<tifJll Ltd. D., Gupu /,

1965 --

1963 t'A1 T.t. Oll Mi/IJ .. c,, .. , Lt6. •• Workmm

of the Service Rules. It was contended by the respondeat that the termination was no: dischari:e 1implicittr but was in suhstancc di>miss:il and that the Trihunal was entitled to consider the propriety uf the appellant's action .

The Tribunal held that it had jurisdiction to look into the reasons behind the discharge of an employee. On the exa-mination of the evidence the Tribunal found that no malajid"8 on the part of the employer had been proved and that the termination of service did not amount to victimi1ation or unfair labour practice. Even so it held that the discharge was not justified and directed the reinstatement of Mr. Banerjee. The present appeal is by way of special leave.

Before this Court, in addition to the above contention the appellants contented that in the light of the evidenre before the Tribunal its finding that the discharge was not justified, was wrong.

Held, that in the matter of an order of discharge of an employee the form of the order is not decisive. An Industrial Tribunal has jurisdiction tu examine the substance of the matter and decide whether the termination is in fact discharge simpli-citer or it amounts to dismissal which has put on the cloak of discharge simpliciter. The test always has to be whether the act of the employer is bonafide or whether it is malafide and colourable exercise of the powers conferred by the terms of contract or by the standing orders.

Buckingham & Carnatic Co. Ltd. v. Workmen of the Company (1951) II L. L.J. 314, (Jhart<red Bank, Bombay v. Chartered Bank Employees Union (1960) II L. L.]. 222 and U. B. DuU & Co. (Private) Ltd. v. Its Workmen, (1962) II L. L.J. 374, referred to.

Since the reasons given by the Tribunal in support of its conclusion were wholly unsatisfactory its order must be set aside.

CIVIL APPELLATE JuRISDICTION : Civil Appeal No. 322 of 1962.

Appeal by special leave from the Award dated

September 13, 1961, of the Second Labour Court, West Bengal, in Case No. VIII-C-40 of 1960.

M. 0. Setalvad, J. B. Dadachanji, 0. 0. Mathur and Ravinder Narain, for the appellant.

2 S.C.R.

C. K. Daphtary, Solicitor General of India and Janardhrm Sharma, for the respondent No. 1.

1963. February 15. The Judguent of 'the Court was delivered by

GAJENDRAGADKAR J.-Mr. R. K. Banerjee had been employed by the appellant,. the Tata Oil Mills Co. Ltd., as Salesman on April 3, 1956, as probationer and he was confirmed on November 5, 1956. On December 5, 1959, his services were terminated and he was informed that the appe-llant had lost confidence in him, and so, it had decided to discharge him. Accordingly, in lieu of notice, he was paid month's salary and was told that he ceased to be the employee of the appe-llant as from the date next after he received the order from the appellant. The discharge of Mr. Banerjee was resented by the Union to 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 ofWest 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 dis-charge of Mr. Banerjee became an industrial dispute between the appellant and the respondents, its work· men 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. Banerjee 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.

The material facts leading to the termination of Mr. Banerjee's services lie within very narrow compass. In November, 1959 Mr. Banerjee was working in the Assam area and as such, had to work

IY63 7 ke TMa Oil Milis Co., Lti. v. Worhn"11

G•jendr~r · /,

1963 T/'11 Tote Oil Mil(J Co., l.Jd. v. Workmr"

......... •·· ................

as Salesman at Dhubri, Bongaigoan, Rangia and Tejpur. The appellant expected that as its Sales-man ).[r. Banerjee should \'isit dealers in his ;irca and carry ou intelligent and intensive propaganda to popularise the sale of the appellant's products. The appellant has Sales Office in Calcutta and the manager of the said Office visits the areas within his jurisdiction to inspect the workof Salesmen. Accord-ingly, 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 Salesman. In particular, he noticed that whereas Mr. Banerjee had reported to the Office that the Bongaigoan Stockists had 20 boxes of dried up and deshaped 501 Special Soap which could not be dis-tributed in the market, he had in fact not opened single box and had not cared to satisfy himself that the soaps had either dried up or had heen de-shaped. 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 boxe• were in good condition. Thereupon, !\fr. Gupta made report to the zonal Manager on November 2, 1959, adversely commenting on .Mr. Banei:jee's 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. Baner-jee was sent for and his explanation taken; Mr. ·Gupta then made another report expressing his dis-satisfaction with the explanation given by Mr. Baner-jee. This report was sent on November 24, 1959. The Head Office accepted this report and on December 5, 1959, issued to Mr. Bane1jee 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.

2 S.C.R. SUPREME COURT REPORTS

The appellant had alleged that the termination of Mr. Banerjee's services was not dismissal but was discharge simpliciter, and according to it, the discharge was justified by the terms of contract between the appellant and Mr. Banerjee as embodied in Rule 40 (1) of the Service Rules of the appellant. The appellam, therefore, urged that the Labour Court had no jurisdiction to consider the propriety <;>f the appellant's action in discharging Mr. Baner-jee.

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 propritty of the appellant's action. Basing them-selves on the plea that the discharge amounted to dismissal, the respondents pleaded that the failure of the appellant to hold an enquiry against Mr. Baner-jee introduced serious infirmity in the order passed against him; and they argued that the conduct of the · appellant was malafide and the dismissal of Mr. Banerjee amounted to victimisation.The Labour Court has found that according to the terms of contract under which Mr. Banerjee was employed by the appellant, the appellant was entitl-ed to discharge Mr. Banerjee from its employment under Rule 40 (1) of the Service Rules; but it held that merely because the order served on Mr. Baner-jee 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 con-sidered that evidence, the Labour Court has found that the respondents' plea about the malafides of the.

The 1 nta Oil J!ills Co .. Ltd. v. H"(J1kmen

1·1,, Tala Oil ,\[11/s Co., /.tJ. v. W,'arkmen

appellant was not proved and it held that the termination of Mr. Banerjee's services could not be said to amount to an act of victimisation or an un· fair labour practice. Even so, it held that the dis-charge was not justified, and so, it has directed the appellant to reinstate '.\Ir. Banerjee. It is the vali· dity of this order that is challenged before us by :\fr. Setalvad on behalf of the appellant.

The t.rue 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, contract of employment or provisions in Standing Orders authorise an industrial employer to ter111inate the service of his employees after gi\'ing notice for one month or paying salary for one month iu lieu of notice, and normallv, an employer may, in proper case: be entitled to ~xcr· cise the said power. But where an order of dis-charge passed by an employer gives rise to an industrial dispute. the form of the order by which the employee's 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 simpli-dler or it amouots to dismissal which has put on the cloak of discharge sirnpliciter. If the Industrial Court is satisfied that the ordlr of discharge is puniti\'e, that it is malafule, or that it amounts ll victimisation or unfair labo,ir practice, it is compe· tent to !he Imlu,trial Court lo set aside the order and in proper case, direct the reinstatement of the employee. In some cases, the tcrmiuation of the employee's 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 bo1~•fidF. The test alwavs has to be whether the :!ct of the employer is '""'".fide or not. If the act is m(1[,..Jidr, or appears to be colonrable

2 S.C.R SUPREME COURT REPORTS

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 fit case. This position was recognised by the Labour Appellate Tribunal as early as 1951 in Buckingham and Curnatic Co Ltd., v. Workers of the Company, ('), and since t1fon, it has been consistently followed vide Chartered Bank, Bombay, v. Chartered Bank Employees' Union ([2]). and U. B. Dutt & Co. (Private) Ltd. v. Its Workmen ([3]). In the present case, the Labour Court has made definite finding in favour of the appellant that its action in terminating the services of Mr. Banerjee was not malafide and did not amount to victimisa-tion. Even so, it proceeded to examine the propriety of the said action and came to the conclusion that Mr. Banerjee's 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. Banerjee's 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 general character. This comment again cannot be justified because Mr. Gupta stated in clear terms the defects in Mr. Banerjee's 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 ~pecific instances had been cited. In regard to the question as to whether the 20 boxes had been opened by Mr. Banerjee before he made his report (I) (1951) II L.L.J. 314. (21 (1960) II L,L.J. 221,

Thi Tata Oil Milli C• .. Ltd, •• w~rkmm --!aje11irU'Jikcr J.

!aje11irU'Jikcr J.

(3J (1962) I L.L.J. 37t.

1 Jr, Tata Oil Mills Co., Ltd .. 1-\."arkmtn

132 SUI'l~EME COURT REPORTS [l!l64] VOL.

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 anq there w<" no particular reason to believe one in preference to the other. ;-\ow, it is clear that such an observa. tion 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 J\lr. Gupta, but by saying·~hat there is no reason why one should be believed rather than the other, the Labour Court left this part of the dispute entirely undecided. Similarly, the Labour Court has accepted the fact that i\'ir. Gupta tha called for and received '.\lr. Bancrjee's explanat.on and to that extent it has rt'jccted .:\Ir. Banc r/ee' suggestion that he had not given any explana tion all ; but even so, the Labour Court has not considered the effect of this conclusion on the main controversy between the parues. In our opinion, therefore, the masons given by the Labour Court in support of its conclusion that the discharge of i\lr. Banerjee was not justified are wholly unsatisfactory and so, it has become necessary for us to examine the evi-dence ourselves.The first report made by l\.fr. Gupta expressly states six grounds on which Mr. Banerjee's work was found to be unsatisfactory. Mr. Gupta took the view . that '.I.Ir. Banerjee was very slow in his work as Salesman, that he was not able to judge the capacity of the dealers and to give them suflicicnt 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 reluc-tant to put hardand intelligent work. It is remark-able that when Mr. Banerjee was asked bout this report in cross·exami1mtion, he frankly stated that

2 S.C.R.

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 considera-tions in discharging Mr. Banerjee. This report was made by Mr. Gupta soon after he inspected Mr. Banerjee's work and there is no reason, whatever, why the Labour Court should have been reluctant to accept this report.

Confining ourselves to the main complaint against Mr. Banerjee that he had not examined even 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 al I. They were intact in the company's 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 marketted at the company's 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 ha,·e them res trapped and nailed. It is clear that the strapping is done in factory by machines. Mr. Banerjee, however, suggested that he could manage to get the straps put and nailed with hands. This evidence is patently unr~liable. Besides, it is significant that when he gave his expla-nation 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. Gupta's statement is absolutely true and that Mr. Banerjee had made his repent about the

The ra1a Oil MU.ls Co., Lt•. v. Workmen

'n1 T.ro Oil Mi/11 Ce.JI.Ari. •• Wo1km1n

. -............ -.,, ...

unsatisfactory condition of the contents of the '.LU boxes without as much as opening any one of them. 1 hat being so, it is difficult to understaud how the Labour Court could have come to the conclusion that the order of discharge was not justified. '

The learned Solicitor General, however, attempted to argue that there was nothiug on the record to show that the 20 boxes which :\.Jr. 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 giYen by Mr. Gupta and Mr. Banerjee and the explanation offered bv the latter when he was called to Calcutta by Mr. c;upta, there is any room for such an ingeni· ous suggestion. Both parties knew that the) v.crc 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 ,\ir. Banerjee had rn;1de his report. It was also suggested on behalf of the rcspondrnts that Mr. Gupta did not admit that he had received some letters from Mr. Banerjee iu 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 i\.Jr. Gupta was asked about these letters, he said be did not remember if he had received them. \\"c do not think that the answers given by Mr. Gupta in respect of these letters can be of any assistance to the respon · dents in discrediting .:\fr. Gupta"s evidrnce in any manner. On the whole, we have 110 hesi1atio11 in holding that the appellant acted bo11ajide in discharg-ing i\Ir. Banerjce's services when it accepted Mr. Gupta's report and concurred with his conclu-sions that the explanation given by Mr. Banerjee was not satisfactory.

The result is, the ppcal is allowed and the order passed by the Labour Court directing the

2 S.C.R. SUPRE~fE C< r 1RT REPORTS

appellant to reinstate Mr. Banerjee is set aside. In the circumstances of the case, there would be no order a~ to costs.

Appeal allowed.

RANENDRA CHANDRA BANERJEI

UNION OF INDIA

(P. B. GAJENDRAGADKAR, K. N. WANCHOO,

M. HrnAYATULLAH, K. C. DAS GuPTA and j. C. SHAH jj.)

P11blic Servant-Probationer-Discharg• from servir;,, for unsali•faclory work-If tntitled to 7irottrtion under the Con•ti-tution and the Rule8-Ci·•il Sm·ices (Cla•sification, Control «nd Appeal) Rul11, rr. 3 (a), 49, 55-B-Con8titution of India, Art. 311 (2).

The appellant was appointed on probation for one year as Programme Assistant on May 3, 1949, on condition that his 1ervice1 might be terminated without any notice and cause being assigned during that period. He agreed and joined ser-vice on these terms on July 4, 1952, he was called upon to show cause why his services should not be terminated and as the explanation given was not satisfactory, his services were termi-nated after August 31, 1952. On an application moved under Art. 226 of the Constitution the High Court dismissed the application and held that the appellant was not entitled to the protection of Art, 311 (2) of the Constitution, that rr. 49 and 55-B of the Civil Services Rules did not apply and that he was governed by the contract of hio service.

Held, that in the present case the appellant was pro· bationer and the termination of his service was not by way of punishment and could not amount to dismissal or removal within the meaning of Art. 311. As prob•tioner he would be liable to be discharged during that period subject to the

Thi T•t• Oil Mill• Co,, Lti. v. W1.1rkmen Gajendrag5ikar J.

Feiruary 11.