MUNICIPAL CORPORATION OF GREATER BOMBAY versus P. S. MALVENKAR AND ORS.

MUNICIPAL CORPORATION OF GREATER BOMBAY

P. S. MALVENKAR AND ORS.

May 5, 1978

[P. N. BIIAGWATI AND JASWANT SINGH, JJ.]

Tern1ination of 3ervice-Co1npetent authority puts the initials in the draft order arul tfie order co1111111111icated by his Executive Assistant, lVhether valid.

Industrial E1nployn1en1 (Standing Orders) Order, 1946 S. 21(2), 23 and 26, scope vf.

The services of Respondent No. 2, permanent clerk in the Bombay. Electric Supply and Trails port Undertaking, which is run by the appellant were terminated from the close of work on January 23, 1968 as her record of service was unsatisfactory. The communication dated January 20, 1968 was from the Executive Assistant to the (ieneral Manager and it also stated that she should be paid one month's wages in lieu of notice and would also be eligible for all the benefits as might be admissible under the Standing Orders and Service Regulations of the Undertaking. The appeal pr1?:ferred by her against this order to the Assistant General Manager having remained un-successful she made an application before the Labour Court under Section -42 ( 4) of the Bombay Industrial Relations Act contending that the order termi-nating her services was invalid, as it was not passed by the competent authority as envisaged by the Standing Order and that the so called Executive A'lsistant to the General Manager had no authority to terminate her services because no validity sanctioned Post of that designation existed on 20th or 23rd January, 1968. It was also contended that the aforesaid order besides being ma/a fide. was violative of the principles of n<itural justice in as much as the same was passed without holding any enquiry. The Labour Court dismissed the appli-cation. The respondent's appeal before the President of the Industrial Court was however allowed. The Industrial Court held that 1he impugned orders bore only the initials of the General Manager and therefore it was passed by an authority which was lacking in authority, the wording ''unsatisfactory service record'' cast stigma and was patently punitive attracting the non-observance of Standing Order No. 26 which did not create an absolute right in the management to terminate the services of an employee for misconduct without holding an enquiry or giving her fair opportunity of being heard. Writ application filed by the appellant was dismissed holding inter alia that the fact that Standing Order 26 required reasons to be mentioned in the order terminating the services of an emtiloyee did not mean that an order of dis-missal on the ground of misconduct could be converted into an order ot discharge simpliciter by mentioning therein the nature of misconduct.

Allowing the appeal by special leave, the Court

HELD : 1. Whether written document or order bea.rs full signatures or only initials of the competent authority does not, 01ake any significant difference nor does the affixation of signature by initials on document or order detract from its authenticity unless the law or the rule specifically requires full signature to be affixed thereto to make it authentic. [1005 ElF]

~n the ins~ant case : (~) the _impunged order terminating the respondent's services was in fact and in reality passed by the General Manager himself who was the competent authori~ as defined by clause (e) of Standing Order 3 and wa~ me~elJ; comm1;1n1cated by his Executive Assistant to the res-pondent; (b) since 1t ts established on the record that the impugned order

.was in fact .and in reality n1ade by the General Manager and there is nothing :to indicate that it was not consciously made by him, it could not have been •quashed on the ground that it was passed by an incompetent autho~ rity. [1005 C, G-HJ

2. ·rhe question whether particular order terminating the service of an .employee is by way of punishment or not has to be determined on the facts .and circumstances of each case and the form of the order is not decisive of the matter. i I 006 BJ

Under Standing Orders, two po\vers are given to the management; one is ..the power to impose punishn1ent for misconduct after disciplinary. inquiry .under clause (2) of the Standing Order 21 read with Standing Order 23 and -the other is the power to terminate the service of an en1ployee by one ,,.(). calendar month's written notice or pay in lieu thereof under Standing Order 2.6. \ The question is as to which power has been exercised by the :rvl<1nagc111ent in _a particulnr case and this question has to be determined having regard to the substance of the matter and not its form. Now, one thing n1ust be borne in mind that these are t\\'O distinct and independent powers and as far as possible, neither should be construed so as to en1asculate the other or to render it ineffective. One is the pO\\'er to punish an employee for nlisconduct ·v.1hile the other is the po\ver to terminate simpliciter th~ service of <in e1n-ployee without any other adverse con~equences. [1006 B-D]

3. Proviso (i) to clause (I) of Standing Order 26 requires 1hwt the reason for termination of the employn1ent should be given in writing to the en1ployee when exercising the po\ver of termination of service of the en1ployee under Standing Order 26. Therefore, when the service of an employee is terminal· ed simpliciter under Standing Order 26, ·the reason for such tern1ination has to be given to the employee nnd this provision has been niadc in the Standing ·Order with view to ensuring that the n1anagement does not act in an arbitrary manner. The managen1ent is required to articulate the reason which ·operated on its mind in terminating the service of the employee. But merely because the reason for tern1inating the service of the employee is required to be given-and the reason must obviou<;ly not be arbitrary, capricious or irrelevant-it \Vould not necessarily in every case make the order of termina-tion punitive in character so as to require compliwnce \Vith the requirement <>f clause (2) of Standing Order 21 read with Standing Order 23. Otherwise, the po\ver of tern1ination of service of an employee under Standing Order 26 would be rendered meaningless wnd futile, for in no ·,::ase it would be possible io exercise it. Of course, if niiscond uct of the en1ployee constitutes the foundation for terminating his service, then even if the order of termination is purported to be n1ade under Standing Order 26, it 1nay be liable to be regarded as punitive in character and hence attracting procedure of clause (2) of Standing Order 21 read v,rith Sta•nding Order 23, though even in such case it may be argued that the management has not punished the emiJl.oyee but has '.~merely tern1inated 'his service under Standing Order 26. [1006 D-:H]

In the present case, the order of termination cannot be regarded ::is punitive in character so as to invoke the applicability of clause (2) of Standing Order read with Standing Order -23. The reason given for terminating the service of the respondent 'vas unsatisfactory record of service. No misconduct was alleged against the respondent nor \\[1]as any misconduct made the foundation for passing the' impugned order of termination. The order of termination was clearly not passed 'by ·way of punishing the respondent for any misconduct. ·the view that the service of the respondent was not satisfwctory was un-doubtedly based on past incidents set out in the record but for each of these incidents punishment in one form or another had a1ready been meted out to her and it w.as not 'by way of punishment for any of these incidents, but because as gathered from these incidents, her record of service was unsatis-factory that her service ·was terminated by the management under Stanrlin!l Ordor .26. [1006 H, 1007 A-Bl 13-329 SCI/78

Even if the view were taken that the impugned order of termination of service of the respondent \Vas punitive in character and could not have been. passed save and except as result of disciplinary inquiry held under clause (2) of Standing Order 21 read with Standing Order 23, the impugned order cannot be struck down as invalid the· ground of non~compliance with. the requirement of the Standing Orders, since respondent no. 2 availed of the opportunity open to her before the Labour Court when the appellant a<lducect;. sufficient evidence justifying the action taken by the management. The appellant. produced satisfactory evidence to show that the in1pugned order terminating the service of the respondent was justified and hence the impuigned order must be sustained despite its having been passed \vithout complying with rhc require-ments of clause (2) of Standing Order 21 read with Stand"ing Ofder 23. No distinction can be made between cases where the domestic enquiry is invalid-or defective and those where no enquiry has in fact b-een held as required by the relevant Stau.ding Orders and in either c·ase it is open to the en1ployer t<Y justify his action before the Labour Tribunal by adducing all relevant evi-dence before it. [1007 C-E]

The Punjab National Bank Ltd. v. lts Workmen, [1960] l S.C.R. 806, Manage1nent of Ritz Theatre (P) Ltd. v. Its J+'orknien, [1963] J S.C.R. 461, Workmen of Matipur Sugar. Factory P. Ltd. v. Moripur Sugar Factory, [1965f 3 S.C.R. 588, Delhi Cloth and General l\.1ills Co. Ltd. v. Ludli Budlz Singh, [1972] l LU 180. State Bank of India v. R. K. Jain and Ors. [1972] l S.C.R. 755, Workmen of M/s Firestone Tyre and Rubber Conrpany of I'ndia (P) Ltd: v. Manageff1ent and Ors. [1973] 3 S.C.R. 587 and Cooper Engineerin.: Ltd. V-Shri P. P. Mw1dhe (1976] I S.C.R. 361 followed.

No. 2161 of

CIVIL APPELLATE JURISDICTION : Civil Appeal 1977.

Appeal by Special Leave from the J udgmeht and Order dated' 5-7~1977 of the Bombay High Court in Special Civil Application No. 614/72.

K. K. Singhvi, P. H. Pa,-ekh, D. C. Shroff, C. B. Singh, Kai/ash Ba,udtv and Mrs. Manju Sharma for the Appellant.

K. Ra;endra Choudhary and Mrs. V. D. Khanna for Respondent

The Judgment of the Court was delivered by

JASWANT SINGH, J. This appeal by special leave which is directecf against the judgment and order dabod J_uly 5. _ 1977 of t~e Bombay High~· Court d1sm1ssmi; the appellant's specml €1v1l apphcat1o'n No. 614 of · '-1972 and refusmg to quas)l the order dated Apnl 5, 1972 of the · President, Industrial Court, Maharash:rn, Bomiray, whereby the latter , set aside the order of the 4th Labour Court at Bombay and directed reinstatement in service of Miss M. P. Padgaonkar, respondent No. z. (hereinafter referred to as 'the respondent') with full back wages on [[,., ]]' the ground that her termihation of service was had in Jaw raises the: following questions :-

[[,., ]]'

"whether the termination of service of permanent em-ployee of the Bombay Electric Supply and Transport Under-taking on account of his unsatisfactory record of service can l>o regarded as punitive so as to cGJmpel the employer to hold disciplinary enquiry ?

BOMBAY CORPORATION v. MALVENKAR (laswallt Singh, l.) 1003

whether such terminatioh can be effected by giving in writing to the employee the aforesaid reason for termination and one calendar month's written notice or pay including allo\vanccs adwissible in lieu thereof ?

For proper determination of the abovementioned questions, it is desirable to state the circumstances which have given rise to the appeal. The respondent who was working since February 4, 1959 as clerk in grade A/G-V in the Consumers Department (North) of the B.E.S.T. (Dombay Electric Supply & Transport) Undertaking (hereinafter refer-red to for the sake of brevity as 'the Undertaking') which is run by the appellant was informed by the Executive Assistant to the General Ma'nager of the Und,"rtaking vide communication dated January 20. 1968, that her services would stand terminated from lhe close of work on January 23, 1968, as her record of service was unsatisfactory. It was, however, otated in the communication that she would be paid one month's wages in lieu of notice and would also be eligible for all the benefits as might be admissible under the Standing Orders and Service Regulations of the Undertaking. The appeal preferred by her against this order to the Assistant Gcll'~ral Manager having remained unsuc-cessful, the respondent made an application before the Labour Court under section 42 ( 4) of the Bombay Industrial Relations Act con-tending that the order ~orminati'ng her services was invalid as it was not passed by the competent authority as envisaged by the Standing Order and that the so called Executive Assistant to the General Manager had no authority to terminate her services because no validly sanc-tioned post of that designation existed on 20th or 23rd January, l 968. It was also contended by the respondent that the aforesaid order ter-minating her services besides being ma/a fide was violative of the principles of natural justice inasmuch as the same was passed without holding any enquiry or giving her reasonable opportunity of defend-ing herseli against the vague and general allegations which formed the basis of the order. The Labour Court dismissed the application observ-ing thac though the post of Executive Assistant did not exist at the relevant time, the termination did not suffer from the vice of ma/a fides nor could it be said to be invalid as it was actually effected by the General Manager and was merely communicated by his Executive Assistant. The Labour Court further held that despite the fact that unsatisfactory record of service was mentioned as the reasm for ter-mination, it could not be said to be punitive. Aggrieved by this order of the Labour Court, the respondent filed an appeal to the President of the Industrial Court which was allowed by him vide his order dated April 5, 1972 on the findings that J. P. Fernandes who used the appel-lation of the Executive Assistant to the General Manager was not competent or authorised to terminate the service of the respondent; that the conclusion of the Labour Court that the impugned order was made by the General Manager himself was not warranted by the facts and conduct of the parties; that the law required the authority in-vested with the power of terminating the services of an employee to exercise that power in conscious manner reflecting • due care and

·--:- i '_,, -·- - ...

. [J978J 3 S.C.1<-

\ . . attention and the draft order (fa..l)ibit 41) wt.ich merely bore the faitials of the General Manager cou''1 not be regarded as valid sub-stitute for the conscious exercise of the power; that the order which expressly stated the unsatisfactory record of service as the reason for -terminating the respondent's services and thus cast stigma on her was· patently punitive and that Standing Order 26 did, not create an absolute·right in .the management to terminate the services of an em-ployee for misconduct without holding an enquiry or giving him fair opportunity of being heard. Accordingly, the Industrial Court held that the impugned order was bad in law on ·both the count~ viz. · (i) that it was passed by an authority which was absolutely lacking in competence and (ii) that despite its punitive character, it was passed without holding domestic enquiry or giving an opportunity . to show cause thereby violating the principles of natural justice. The . appellant thereupon made· an application. to the High Court under - Article 226 of the Constitution challenging the order of the President of tl1c Industrial Court. The High Court dismissed the petition hold-ing inter alia that the fact that Standing Order 26-required reasons to be mentioned in the order terminating the services of an employee did not mean that an order of dismissal on the ground o[ misconduct could be converted into an order of discharge simpliciter by mention- . ing therein the. nature of misconduct. It is against this judgment and order o[ the High Court that the present appeal is directed. ·

Appearing for· the appellant, Mr. K. K. Singhvi has, in· the first instance urged that the order terminating the respondent's services could not be held to have been passed by an authority which was lacking in competence as it was actually made by the General Mana~ ger and was merely communicated over. the signatures of his Execu-tive Assistant. Mr. Singhvi has alternatively urged that the Corpora-tion having accorded sanction to the creation of the post of Executive Assistant on the Management Establishment (which was from time to time included in the Establishment Schedule prepared and sanction-. ed by the B.E.S.T. Committee) for the period beginning from 25th July 1967 to 30th September 1974 vide Resolution No. 1083 passed by it under section 460-R of the Bombay Municipal Corporation Act No. III of 1888 at its meeting held on 16th December, 1974, even the Executive Assistant had plenary authority to take the impugn.ed · .. action. '.The learned counsel has next contended that the impugned order was one of discharge or termination of service simpliciter and could not be regarded as punitive regard being had to the fact. that besides one inpnth's pay in lieu of notice, the respondent was paid all the benefits admissible to her under the Standing Orders and Ser- . vice Regulations; that it was only. to satisfy the requirement of pro-viso (i) to Standing Order 26 that unsatisfactory record of service was mentioned in the order as the reason for termination; that Stand-ing Orders gave two ·options to the appellant (1) to terminate the service of the respondent in the manner it had one, or (2) to impose the penalty of dismissal as. result uf domes ti<: enquiry. . He has further submitted that everi if the order is treated as. punitive which could not have been passed without the prescribed enquiry, it could not be held to be bad in law as it was made good by the appellant. on merits by adducing evidence· before the Labour Court.

It has, on the other hand, been argued by the !earned counsel appearing on behalf. of: the, respondent that tl)e order, sufj'ered .. fro111 an inherent infirmity in that it, was passed by the. Exe.cutiye ,Assistant to .the General Manager who did not have· d~jwe existence on, the rci\)Nant date, in view, of the fact.that .the durationc.of .the:post,held: by him.1 hatj not been validly extended by the Corpo.ration. He has further contended, that as the impugned .order which, clearly .cast asper-sion· 011 th0 n;sppndent.amou11ted to an order o( dismiss.al1 it could not have been passed withou.t complying with the. formaliiies prescrilled by, the Standing Orders.

All these rival contentions require careful examination,

The question as to whether the post of Executive Assistant. to th1; General. Manage,, validly existed on the relevant date or not does not require to be gone into as. wr:, are satisfied that the, impµ!J1le.d order. terminating. the . .respondent's services was ii\, facLaµd in .. reality pas~ed by the. General· Manag~r, himself whq, was. the compe!ei1t author.ity as defined by clause ( e) of Standing. Orde.r 3 and, was merely communicated . by his. Executive Assistant to . the respondent. This is amply borne out from the material placed. before the Labour Cimrt. The draft of the termina.tion order (Exhibit. 41) which has been duly proved by Dande.kar who was working,a~,Pe1sonnel Officer on the relevant date clearly shows that it ·was pu~ .up, before, the Gene-ral• Manager by the Superintendent of the COnsumers Department and was duly approved. and initiallect. by the former. In this state.of, affairs, we are unable to appreciate. the observations of the. Industrial Court that since the decision to terminate the service, of: ap .employee is an, act consciously to be undertaken. and perfor,n1ecL by, the con-cerned officer, the. mere initialling of the draft order by .. the, General :l.fanag~r was not enough to make it an authenticated, order of termi-nation. Whether written document or order bears full signatures or. only initials of the competent authority does not, in our juctgm.en\; make any significant. difference nor does the affu<atiol'\ of signature. by initials on document. or order detract from its. authenticity unless the law or the rule specifically requires full signature, to. be. affixed thernto. to make it authentic, fa Volume., S of Stroud!s Judicial Dic-tionary ot, Words and,.Phrases (Fourth Edition), it, is -stated by refe-rence. to the dedsion in .Re Wing~oye 15 Jur. 91 that signatnre by initials is good. Again. as stated in Black's Law. Dictionary. (1951 Edition) speaking generally when a. person attaches his simature, to written document• he, does so. in token of, kn.owledge, app,roval or acceptance. Then. again accordi!lg. to Chambers . New English Dic-tionary, the word 'sim' means mark. with meaning. We are, therefore, of the opinion that since it is established. on .the record That the impugned order was in fact. and in reality. ma.(.le. by the. General Manager and there is nothing to indicate that. it was not consciously. made by him, it could not have been, quashed on the, gtound that it was passed by an incompetent authority.

Let us now proceed to consider whether the impugned order was covered by Standing Order 26 or it was punitive in character and could not, therefore, be passed except after disciplinary inquiry under clause (2) of Standing Order 21 read with Standing Order 23, It is now well settled that the question whether particular order terminating the service of an employee is by way of punishment or not have to be determined on the facts and circumstances of each case and the form of the order is not decisive of the matter. Here, under Standing Orders, two powers are given to the management; one is the power to impose punishment for misconduct .after disciplinary in-quiry under clause (2) of Standing Order 21 read with Standing Order 23 and the other is the power to terminate the service of an employee by one calendar month's written notice or pay in lieu there-c of under Standing Order 26. The question is as to which power has been exercised by the management in the present case and this ques-tion has to be determined having regard to the substance of the matter and not its form. Now, one thing must be borne in mind that tl)ese are two distinct and independent powers and as. far as possible, neither should be construed so as to emasculate the other or to render it in-effective. One is the power to punish an employee for misconduct while the other is the power to terminate simpliciter the service of an employee without any other adverse consequence. Now, proviso (i) to clause ( 1) of Standing Order 26 requires that the reason for te_t-mination of the employment should be given in writing to the em-ployee when exercising the power of termination of service of the employee under Standing Order 26. Therefore, when the service of an employee is terminated simpliciter under Standing Order 26, the reason for such termination has to be given to the employee and this provision has been made in the Standing Order with view to ensur-ing that the management does not act in an arbitrary manner. The management is required to articulate the reason which operated on its mind in terminating the service of the employee. But merely be-cause the reason for terminating the service of the employee is re-quired to be given--and the reason must obviously not be arbitrary, ·-capricious or irrelevant-it would not necessarily in every case make the order of termination punitive in character so ns to require com-pliance with the requirement of clause (2) of Standing Order 21 read with Standing Order 23. Otherwise, the power of termination of ser-vice of an employee under Standing Order 26 would be rendered meaningless and futile, for in no case it would be possible to exercise it. Of course, if misconduct of the employee constitutes the-founda-tion for terminating his service, then even if the order of termination is purported to be made under Standing Order 26, it may be liable to be regarded as punitive in character attracting the procedure of clause (2) of Standing Order 21 read with Standing Order 23, though _even in such case it may be argued that thti management has not punished the_ employee but has merely terminated his service under Standing fl Order 26. It is, however, not necessary for us in the present case to pronounce on this controversy, since we find that in the present case the reason given for terminating the service of the respondent ".'as un-satisfactory record of service. No misconduct was alleged ag-_unst the

,,-r ·BOMBAY CORPORATION v. MALVENKAR (Jaswa,;t Singh,·).)1001

~ ' \ ' . " -~ . ~--- ---~ -· - __,, -·. :, : :respondent nor was .any misconduct.made. the,foundationJor passing . the ;iinpuiiJed order of:term'na\ion. ·,The order, of,:. territlna\ion . was .·clearly .. not 'passed hy way d, pt<llishingtbe.'respondentJor ,any .mis-' conduct. . The. viev. that the service of the respondept. was .,J:\Ot satis-factory was undoubtedly based· on past incidents set out iri the record :but for_ each of these incidents punishment in one form or another had already been meted out to her and it was not by way of punishment • for any of these incidents, but because as gathered from these inci-dents, he« record of service was unsatisfactory that her service was -terminated by the management under Standing Order 26. It is, there-• fore, not possible for us to regard the order of termination as punitive in character so as to invite the applicability of clause (2) of Standing Order 21 read with Standing Order 23.

But even if the view were taken that the impugned order of termi-nation of service of the respondent was punitive in character and ·could not have been passed save and except as result of discipli-nary inquiry held under clause (2) of Standing Order 21 read with Standing .Order 23, the impugned order cannot Ile struck down as in-valid on the ground of non compliance with the requirement of these :Standing Orders, since the respondent No. 2 availed of the opportunity open to her before the Labour Court when the appellant adduced suffi-cient evidence justifying the action taken by the management. The appellant produced satisfactory evidence to show that the impugned order terminating the service of the respondent was justified and he_i1ce <he impugned order must be sustained despite its having been passed witbout complying with the requirements of Clause (2) of Standing ·Order 21 read with Standing Order 23. We are fortified in this view by cutena of decisions of this Court where it has been consistently. held that no distinction can be' made between cases where the domes-· tic enquiry is invalid or defective and those. where no enquiry has in ·fact been held as required by the relevant Standing Orders ~nd in ·either case it is open to the employer to justify his action before the Labour Tribunal by adducing all relevant evidence before it. (See The Punjab National Bank Ltd. v. Its Workmen (1960) l S.C.R. '806, Management of Ritz Theatre (P) Ltd. v. Its Workmen (1963) ·3 S.C.R. 461, Workmen of Motipur Sugar Factory (Private) Ltd. v. Motipur Sugar Factory (1965) 3 S.C.R .. 588, Delhi Cloth and Gene-ral Mills Co. Ltd. v. Ludh Budh Singh (1972) 1 LLJ 180, State Bank • of /tldia v. R. K. Jain and Ors. (1972) 1 S.C.R. 755, Workmen of ,Messrs Firestone Tyre & Rubber Company of India . (P) Ltd. v. Management & Ors. (1973) 3 S.C.R. 587 and Cooper Engineering .Limited v. Shri P. P. Mundhe (1976) 1 S.C.R •. 361. .

For. the foregoing reasons, we allow the appeal, set aside the judg-ment and order of the High Court and' uphold the impugned action of the appellant's management. In view of the Court"s order dated ~eptember 19, 1977, the appellant shall pay costs quantified at Rs. 1,5001- (One thousand and five Iiundred) to respondent No. 2. This judgment should not, however, stand in the way of respondent, No. 2 being paid Rs. 15,000/- by the appellant which, in view of

1008 SUPREME COUTR REPOTR~ [1978) 3 S.C.R.

former's unfortunate p<lsition, the appellant's learned counsel was. good enough on our suggestion to agree to pay her as an ex-gratia pay-ment. This amount of Rs. 15,000/- shall be in addition to the amount of Rs. 1,500- which the appellant is required to pay to respondent No. 2 by way of costs.

S.R. Apvcal alimiw/.

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